Announcements

Jubilee Tanzania taken off rating watch

The national scale TShs currency claims paying ability rating accorded to The Jubilee Insurance Company of Tanzania Limited (“Jubilee”) has been affirmed at A+ (single A plus), with the rating taken off rating watch. The rating is a reflection of above average protection factors, although there is an expectation of variability in risk over time due to economic and/or underwriting conditions.

Jubilee has achieved robust organic growth throughout the review period, leveraging off its franchise value and operational capacity derived from the Group. The Group’s stated objective is to be the largest insurer in each of its markets. Accordingly, Jubilee’s strategic focus has been predominantly top-line orientated, with growth over the past two years notably exceeding the peer group average. In line with Group policy, Jubilee has placed emphasis on accident lines, and medical in particular, as a means of attaining above-average premium growth and capturing market share. This has been facilitated by the Group’s strong technical abilities and processes within these more specialised lines (in terms of both systems and human resources).

Jubilee’s statutory solvency measured an improved 1.7x in F10, above GCR’s comfort level of 1.5x. Management has set its internal comfort band at 1.8x to 2x going forward. Furthermore, the international solvency margin equated to an adequate 82% in F10, albeit tracking below the peer group average. Capital protection is bolstered by the insurer’s conservative investment portfolio, which has also allowed for comfortable liquidity metrics. Jubilee’s management expense ratio has been recorded at very competitive levels relative to the peer group average. This notwithstanding, the deterioration in the earned loss ratio in recent years has been noted. In this regard, the maintenance of sound underwriting disciplines will be required to support solvency during the medium term growth phase.

Rates pressure is likely to persist in the short to medium term, as new entrants in the market compete for market share. Margin pressure is expected to be further exacerbated by the decelerated growth in the industry’s underlying markets. Industry stability is undermined by the cross-placements of facultative risks with unrated or lower-rated counterparties. This practice is conducted by the majority of local players, owing to regulatory requirements to exhaust local capacity.

Marc Chadwick
https://globalratings.net/uploads/files/Aug_Insights_2011.pdf

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