The Pakistan Credit Rating Agency Limited
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Maryam Ijaz

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PACRA Maintains IFS Rating of Jubilee General Insurance Limited

Rating Type IFS
(05-Nov-20 )
(29-Nov-19 )
Action Maintain Maintain
IFS Rating AA+ AA+
Outlook Stable Stable
Rating Watch - -

The rating reflects Jubilee General's robust risk management framework facilitating the company in sustaining sound profitability. The persistent investment income augers well for the bottom line of the company giving it a strong cushion though underwriting profitability needs to be enhanced. The rating recognizes the management's efforts of penetrating relatively untapped segments, reflected in its diverse premium mix. Jubilee General has sound equity base and sufficient liquidity engendering strong risk absorption capacity. The ability of key sponsor, Aga Khan Development Network (AKDN), to foster synergies amongst its financial institutions operating in Pakistan - HBL, Jubilee General, and Jubilee Life - and in the group's different insurance companies across the globe, is also a consideration. The business strategy, going forward, is focused on improving its market position and consequent profitability from core business.
Prior to COVID-19, the general insurance industry witnessed a growth of 11% YoY. The current pandemic affected the volumes, which led to a contraction in the growth. However, volumes have picked up post-June 2020 amidst increase in economic activities throughout the country. Upsurge in auto sales and health products has been pivotal. Underwriting profitability i.e. core business has been cushioned through reduced management expenses while innovative products are being envisaged. The liquid investment book is almost two third diverted towards fixed term avenues, while the rest is deployed in equities. The rating is dependent upon sustained competitiveness of the company while upholding the profitability.

About the Entity
Jubilee General, incorporated in 1953, is the third largest general insurance company in Pakistan and is listed on Pakistan Stock Exchanges. Significant shareholders of Jubilee consist of Aga Khan Development Network including Habib Bank Limited (58.8%) and Hashoo Group (16%). AKDN represents a group of development agencies having ownership stake in commercial ventures operating in sectors like insurance, banking, hotels, education, and tourism. HBL is the country's largest private sector bank and is rated 'AAA'.

Jubilee General's BoD comprises ten members including the CEO. The Chairman of the board, Mr. R. Zakir Mahmood, is a distinguished banker with over 35 years of experience. Mr. Hassan Khan, the company's MD since Jan-2020, is a graduate engineer, MBA, with extensive experience in the field of insurance. A team of qualified professionals assist the MD.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.