JCR-VIS Upgrades IFS Rating of Century Insurance Company Limited to A+,

Karachi, March 08, 2013 (PPI-OT): JCR-VIS Credit Rating Company Limited has upgraded the Insurer Financial Strength (IFS) rating of Century Insurance Company Limited (CICL) to ‘A+’ (Single A Plus) from ‘A’ (Single A). Outlook on the assigned rating is ‘Stable’.

The rating incorporates the sound capitalization and liquidity indicators of the company. Given the sizeable equity base, loss absorption capacity of the institution is considered sound. Even though leverage has increased on a timeline basis, it remains well within prudent limits and indicates further room for growth. Liquidity profile also depicts strength, with liquid assets providing coverage of more than two times against adjusted liabilities. Maximum amount of per risk retained on net account for different segments is low in relation to equity base of the company.

Gross premium depicted an annual growth of 19% in 2010 and 2011; while growth in gross premium has been subdued in 2012, growth in net premium revenue has remained steady. In addition to broad-based growth in different business segments, the company plans to focus on health segment in the on-going year. Expense ratio of the company has risen on a timeline basis; given that around 50% of the company’s business emanates from group concerns; there is room to bring down the same. Nevertheless, combined ratio of the company over the years has remained below 100%, reflecting positive underwriting results.

Overall profitability of the institution improved in 2012; primarily driven by increase in investment income. Investment portfolio of the company features a lower proportion of equities and higher exposure in money market funds. With reduction in equity portfolio, exposure of the investment portfolio to downside risk has reduced on a timeline basis and may result in greater stability in investment income, going forward.

Insurance debt in relation to gross premium is considered on the higher side; though most of the premium due but unpaid falls within the six-month bucket. JCR-VIS will continue to track the performance of the company against business projections; stability in the senior management team is considered important for materialization of targets envisaged in the business plan.

For more information, contact:
Mr. Javed Callea
Advisor
JCR-VIS Credit Rating Company Limited
Tel: +9221 35311861 (10 lines) (Ext: 501)
Fax: +9221 35311872-3
E mail: javed.callea@jcrvis.com.pk

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