Johannesburg, 09 July 2021 – GCR Ratings (“GCR”) has affirmed The Jubilee Insurance Company of Tanzania Limited’s (“Jubilee Tanzania”) national scale financial strength rating of A(TZ) and revised the Outlook to Rating Watch Positive, from Stable.
|Rated Entity / Issue||Rating class||Rating scale||Rating||Outlook/Watch|
|The Jubilee Insurance Company of Tanzania Limited||Financial strength||National||A(TZ)||Rating Watch Positive|
The Rating Watch Positive reflects the pending regulatory approval for the transaction between Allianz SE and Jubilee Holdings Limited, which will have a material impact on the rating of Jubilee Tanzania. We have considered the credit profile of Jubilee Tanzania and that of the continuing medical business and noted improvements in the financial profile, which could enhance the rating once the transaction is bedded down.
The Rating Watch Positive reflects the pending regulatory approval from the Tanzania Insurance Regulatory Authority on the unbundling of the general business, and our positive view on the financial profile of the composite business. We also anticipate a strengthening in the financial profile of the continuing medical business that more than offsets the moderation in the business profile. We expect to update the ratings by January 2022 or soon after all regulatory approvals are received, and the transaction is finalised.
The rating could be upgraded if liquidity and capitalisation metrics are sustained within a strengthened range, with the possibility of a multiple notch upgrade should the GCR CAR and liquidity coverage measure sustainably above 2x and 2.5x, respectively. Conversely, the rating could revert to stable or be downgraded if liquidity and risk adjusted capitalisation are managed in line, or below, the historical trend and remain sensitive to dividend extraction and increasing reinsurance receivables exposures.
|Primary analyst||Godfrey Chingono||Deputy Sector Head: Insurance|
|Johannesburg, ZA||GodfreyC@GCRratings.com||+27 11 784 1771|
|Committee chair||Matthew Pirnie||Group Head of Ratings|
|Johannesburg, ZA||MathewP@GCRratings.com||+27 11 784 1771|
Related criteria and research
|Criteria for the GCR Ratings Framework, May 2019|
|Criteria for Rating Insurance Companies, May 2019|
|GCR Ratings Scales, Symbols & Definitions, May 2019|
|GCR Country Risk Scores, July 2021|
|GCR Insurance Sector Risk Scores, April 2021|
The Jubilee Insurance Company of Tanzania Limited
|Rating class||Review||Rating scale||Rating class||Outlook/Watch||Date|
|Claims paying ability||Initial||National||A+(TZ)||Stable||May 2007|
|Financial strength||Last||National||A(TZ)||Stable||July 2020|
|Premium||The price of insurance protection for a specified risk for a specified period of time.|
|Provision||The amount set aside or deducted from operating income to cover expected or identified loan losses.|
|Rating Horizon||The rating outlook period|
|Rating Outlook||See GCR Rating Scales, Symbols and Definitions.|
|Reinsurance||The practice whereby one party, called the Reinsurer, in consideration of a premium paid to him agrees to indemnify another party, called the Reinsured, for part or all of the liability assumed by the latter party under a policy or policies of insurance, which it has issued. The reinsured may be referred to as the Original or Primary Insurer, or Direct Writing Company, or the Ceding Company.|
|Retention||The net amount of risk the ceding company keeps for its own account.|
|Risk||The chance of future uncertainty (i.e. deviation from expected earnings or an expected outcome) that will have an impact on objectives.|
|Securities||Various instruments used in the capital market to raise funds.|
|Security||One of various instruments used in the capital market to raise funds.|
|Senior||A security that has a higher repayment priority than junior securities.|
|Short Term||Current; ordinarily less than one year.|
|Underwriting||The process of selecting risks and classifying them according to their degrees of insurability so that the appropriate rates may be assigned. The process also includes rejection of those risks that do not qualify.|
|Upgrade||The rating has been raised on its specific scale.|
SALIENT POINTS OF ACCORDED RATINGS
GCR affirms that a.) no part of the rating process was influenced by any other business activities of the credit rating agency; b.) the rating is based solely on the merits of the rated entity, security or financial instrument being rated; and c.) such rating is an independent evaluation of the risks and merits of the rated entity, security or financial instrument.
The credit rating has been disclosed to the rated party. The rating was solicited by, or on behalf of, the rated entity, and therefore, GCR has been compensated for the provision of the rating. The rated entity participated in the rating process via virtual management meetings, and other written correspondence. Furthermore, the quality of information received was considered adequate and has been independently verified where possible.
The information received from the rated entity and other reliable third parties to accord the credit rating included:
- Composite audited financial results as at 31 December 2020;
- Composite four years of comparative audited financial statements to 31 December
- Separate proforma financial statements for 2020 and 2021 budget
- Jubilee Insurance General Tanzania Limited proforma financial statement for 2020 and 2021 budget
- Full year composite budgeted financial statements for 2021;
- Unaudited composite interim results to 31 March 2021;
- Reinsurance cover notes for 2021; and
- Other relevant documents.