LONDON-A.M. Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of Jubilee General Insurance Company Limited (Jubilee) (Pakistan). The outlook of these Credit Ratings (ratings) remains stable.

The ratings reflect Jubilee’s track record of good operating performance, well-established business profile in Pakistan and solid risk-adjusted capitalisation. An offsetting rating factor is the elevated economic and political risks associated with operating in Pakistan.

Jubilee General continues to maintain its track record of good operating performance generating a five-year average return on equity of 20.4% (2012-2016). Over the same period, the company delivered a strong combined ratio of 90.4% (2012-2016), with continual improvements reducing the ratio to 87.4% in 2016. Despite strong technical results, investment income dominates the company’s operating profits. In 2016, the company achieved profits before tax of PKR 1.9 billion in 2016 (USD 17.9 million) increasing from PKR 1.7 billion (USD 16.5 million) in 2015.

Jubilee maintains a well-established business profile in the domestic insurance market, ranking as the third-largest player in the market with an approximate market share of 12% by gross written premium in 2016. The company writes a diversified underwriting portfolio, reporting gross premiums of PKR 8.3 billion (USD 79.7 million) in 2016. Going forward, Jubilee seeks to achieve material growth, gaining additional market share through the continuation and development of underwriting operations within niche business lines and further growth from its Takaful window. Drivers of future growth stem from innovative online platforms, enhancing the distribution and increased penetration.

The company’s risk-adjusted capitalisation strengthened in 2016 and remains supportive of Jubilee’s ratings. The company has a history of good internal profit retention, evidenced by an increase of shareholders’ equity by 11.7% to PKR 6.6 billion (USD 63.8 million) at year-end 2016. A.M. Best expects prospective risk-adjusted capitalisation to remain at a solid level, with projected underwriting growth over the medium term supported by continued internal capital generation.

An offsetting rating factor is A.M. Best’s view of Jubilee’s concentrated investment and underwriting exposure to Pakistan. A.M. Best deems Pakistan as having high levels of political and economic risk. Despite Jubilee’s history of strong operating performance within this challenging market, the possibility of significant business disruption remains heightened. A.M. Best will continually monitor developments in Pakistan and assess the impact this may have on Jubilee’s ratings.