Jubilee Insurance clinches top rating, stable outlook

The Jubilee Insurance House in Nairobi. FILE PHOTO | NMG 

By JAMES NGUNJIRI

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Summary

• GCR has affirmed Jubilee Insurance ratings at AA-(KE) with a stable outlook.
• The agency said Jubilee Kenya’s rating benefits from solid competitive position, reflecting a consolidated revenue market share of 12 per cent in 2017.
• This was on account of relatively strong long-term business revenue growth offsetting a fall in the short-term business market share to 9.2 per cent in 2017.

Johannesburg-based Global Credit Ratings (GCR) has affirmed Jubilee Insurance

ratings at AA-(KE) with a stable outlook on the back of sound liquidity supported by portfolio rebalancing into government securities.

GCR in its latest rating notification said Jubilee Kenya’s rating benefits from solid competitive position, reflecting a consolidated revenue market share of 12 per cent in 2017.

This was on account of relatively strong long-term business revenue growth offsetting a fall in the short-term business market share to 9.2 per cent in 2017.

However, the short-term business retained a leading market position despite a drastic industry-wide reduction in the medical portfolio, underlining the insurer’s competitiveness and the decision to shed non-performing portfolios.

“The insurer’s defensive business model is viewed to offer latitude for risk selection and absorbing shocks without materially impinging competitive strength,” said GCR.

The agency said Jubilee’s-risk adjusted capitalisation improved from a moderately strong to a strong level. This was supported by capital growth of 29 per cent in 2017, thanks to an elevation in capital generated from short term operations.

READ: Jubilee Holdings hits a 28-month high at the NSE

Jubilee’s risk profile reduced significantly as premiums lowered and high risk assets were diluted by government securities, offsetting the impact of higher risk premium charges on the long-term business.

“Given healthy internal capital generation and conservative revenue growth, risk adjusted capitalisation may remain strong over the rating horizon, albeit tempered by capital management risks in the absence of a formal framework,” said the rating firm.