Announcements Insurance Rating Alerts

GCR places Jubilee Tanzania’s Outlook on Rating Watch Positive, due to pending regulatory approval for general business unbundling, amidst positive financial profile trends

Rating action

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

Rating rationale

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.

Outlook statement

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.

Rating triggers

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.

Analytical contacts

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

Ratings history

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

Glossary

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.
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