GCR revises The Jubilee Insurance Company of Kenya Limited’s national scale financial strength rating to AA(KE); Outlook Stable

GCR revises The Jubilee Insurance Company of Kenya Limited’s national scale financial strength rating to AA(KE); Outlook Stable

Rating Action

Johannesburg, 27th September 2019 – GCR Ratings (“GCR”) has revised The Jubilee Insurance Company of Kenya Limited’s (“Jubilee Kenya”) national scale financial strength (formerly claims paying ability) rating to AA(KE), from AA-(KE), with a Stable Outlook.

Rated Entity / Issue Rating class Rating scale Rating Outlook/Watch
The Jubilee Insurance Company of Kenya Limited Financial strength National AA(KE) Stable Outlook

GCR announced that it had released new criteria for rating insurance companies in May 2019. Consequently, the rating for Jubilee Kenya was placed ‘Under Criteria Observation’. GCR finalised the review for Jubilee Kenya under the released Criteria for Rating Insurance Companies, May 2019. As a result, the rating for Jubilee Kenya has been revised in line with the new methodology and subsequently removed from ‘Under Criteria Observation’.

Rating Rationale

The rating of Jubilee Kenya is based on the strengths and weaknesses of the wider Jubilee Holdings Limited (“Jubilee group” or “the group”). Jubilee Kenya is a core operating entity of the Jubilee group contributing 60% of gross written premiums during the review year.

The rating reflects the group’s strong competitive position, supported by long standing client relationships, high business franchise across the East Africa region and a wide network that provides loyal business nodes. In this respect, the insurer holds market leadership positions in three of the markets of operation, registering high relative market strength, while market shares measured within a moderately strong range despite increased risk selection aimed at improving product portfolio quality.

Premium diversification is moderately strong, reflecting the insurer’s significant presence in five markets and a well-diversified exposure to both strategic business units and lines of business at relatively high scale levels and somewhat healthy granularity. This has supported economies of scale in major markets and active portfolio management, thus sustaining earnings at strong levels over the review period. As such, the review period operating margin equated to 13%, whereas the return on revenue showed relative stability at 22%.

Capitalisation is viewed to be neutral to the rating largely weighed down by relatively high exposure to market risks, while insurance and credit risks were relatively well contained. Note is however taken of the potential for solid internal capital generation to drive a higher factor assessment over the medium term. Liquidity is viewed to be negative to the rating, constrained by relatively high investment portfolio exposure to illiquid assets, resulting in a low operational cash coverage of 3 months and coverage of net technical liabilities of 1x.

Outlook Statement

The Stable Outlook reflects the expected balance between a possible improvement in capitalisation and risks of liquidity strain over the medium term.

Rating triggers

The rating could be upgraded on the back of a strengthening in risk adjusted capitalisation. Conversely, downward rating pressure may arise from a reduction in liquidity strength. Furthermore, a moderation in competitive position without offsetting increases in earnings capacity could result in negative rating movement.

Analytical Contacts

Primary analyst Godfrey Chingono Deputy Sector Head: Insurance Ratings
Johannesburg, ZA GodfreyC@GCRratings.com +27 11 784 1771
Committee chair Yvonne Mujuru Sector Head: Insurance Ratings
Johannesburg, ZA YMujuru@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, June 2019
GCR Insurance Sector Risk Scores, July 2019

Ratings History

The Jubilee Insurance Company of Kenya Limited

Rating class Review Rating scale Rating class Outlook/Watch Date
Claims paying ability Initial National AA-(KE) Stable May 2007
Last National AA-(KE) Stable July 2018


Risk scores Jubilee Kenya
Operating environment 9.00
Country risk score 4.50
Sector risk score 4.50
Business profile 1.50
Competitive position 1.00
Premium diversification 0.50
Management and governance 0.00
Financial profile 1.00
Earnings 1.50
Capitalisation 0.50
Liquidity (1.00)
Comparative profile 0.00
Group support 0.00
Government support 0.00
Peer analysis 0.00
Total score 11.50


Accident An unplanned event, unexpected and un-designed, which occurs suddenly and at a definite place.
Accounting A process of recording, summarising, and allocating all items of income and expense of the company and analysing, verifying and reporting the results.
Agency An insurance sales office which is directed by an agent, manager, independent agent, or company manager.
Assets A resource with economic value that a company owns or controls with the expectation that it will provide future benefit.
Balance Sheet Also known as a Statement of Financial Position. A statement of a company’s assets and liabilities provided for the benefit of shareholders and regulators. It gives a snapshot at a specific point in time of the assets the company holds and how they have been financed.
Budget Financial plan that serves as an estimate of future cost, revenues or both.
Capacity The largest amount of insurance available from a company. In a broader sense, it can refer to the largest amount of insurance available in the marketplace.
Capital The sum of money that is invested to generate proceeds.
Capitalisation The provision of capital for a company, or the conversion of income or assets into capital.
Capital Adequacy A measure of the adequacy of an entity’s capital resources in relation to its risks.
Captive Insurance Company A company owned solely or in large part by one or more non- insurance entities for the primary purpose of providing insurance coverage to the owner or owners.
Cash Funds that can be readily spent or used to meet current obligations.
Catastrophe An event, which causes a loss of extraordinary magnitude.
Claim A request for payment of a loss, which may come under the terms of an insurance contract.
Commission A certain percentage of premiums produced that is received or paid out as compensation by an insurer.
Contract An agreement by which an insurer agrees, for a consideration, to provide benefits, reimburse losses or provide services for an insured. A ‘policy’ is the written statement of the terms of the contract.
Credit Rating An opinion regarding the creditworthiness of an entity, a security or financial instrument, or an issuer of securities or financial instruments, using an established and defined ranking system of rating categories.
Debt An obligation to repay a sum of money. More specifically, it is funds passed from a creditor to a debtor in exchange for interest and a commitment to repay the principal in full on a specified date or over a specified period.
Diversification Spreading risk by constructing a portfolio that contains different investments, whose returns are relatively uncorrelated. The term also refers to companies which move into markets or products that bear little relation to ones they already operate in.
Dividend The portion of a company’s after-tax earnings that is distributed to shareholders.
Equity Equity is the holding or stake that shareholders have in a company. Equity capital is raised by the issue of new shares or by retaining profit.
Experience A term used to describe the relationship, usually expressed as a percent or ratio, of premiums to claims for a plan, coverage, or benefits for a stated time period.
Exposure Exposure is the amount of risk the holder of an asset or security is faced with as a consequence of holding the security or asset. For an insurer, its exposure may also relate to the risk related to policies issued.
Financial Flexibility The company’s ability to access additional sources of capital funding.
Income Statement A summary of all the expenditure and income of a company over a set period.
Interest Money paid for the use of money.
Interest Rate The charge or the return on an asset or debt expressed as a percentage of the price or size of the asset or debt. It is usually expressed on an annual basis.
Investment Income The income generated by a company’s portfolio of investments.
Investment Portfolio A collection of investments held by an individual investor or financial institution.
Liabilities All financial claims, debts or potential losses incurred by an individual or an organisation.
Liquidity The speed at which assets can be converted to cash. The ability of an insurer to convert its assets into cash to pay claims if necessary. Market liquidity refers to the ease with which a security can be bought or sold quickly and in large volumes without substantially affecting the market price.
Loss The happening of the event for which insurance pays.
Market Risk Volatility in the value of a security/asset due to movements in share prices, interest rates, currencies, commodities or wider economic factors.
Net Profit Trading/operating profits after deducting the expenses detailed in the profit and loss account such as interest, tax, depreciation, auditors’ fees and directors’ fees.
Net Retention The amount of insurance that a ceding company keeps for its own account and does not reinsure.
Operational Risk The risk of loss resulting from inadequate or failed internal processes, people or systems or from external events. This includes legal risk, but excludes strategic risk and reputational risk.
Personal Lines Types of insurance, such as auto or home insurance, for individuals or families rather than for businesses or organisations.
Policy The legal document issued by the company to the policyholder, which outlines the conditions and terms of the insurance.
Policyholder The person in actual possession of an insurance policy.
Pool An organisation of insurers or reinsurers through which particular types of risk are underwritten and premiums, losses and expenses are shared in agreed-upon amounts.
Premium The price of insurance protection for a specified risk for a specified period of time.
Rating Horizon The rating outlook period
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.


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 was based solely on the merits of the rated entity, security or financial instrument being rated; and c.) such rating was an independent evaluation of the risks and merits of the rated entity, security or financial instrument.

The credit rating has been disclosed to The Jubilee Insurance Company of Kenya Limited. The rating above was solicited by, or on behalf of, the rated entity, and therefore, GCR has been compensated for the provision of the rating.

The Jubilee Insurance Company of Kenya Limited participated in the rating process via face-to-face 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 Jubilee Insurance Company of Kenya Limited and other reliable third parties to accord the credit rating included:

  • Audited financial statements as at 31 December 2018;
  • Four years of comparative audited financial statements to 31 December
  • Jubilee Holdings Limited audited financial statements, 2013 -2018;
  • Full year budgeted financial statements for 2019;
  • Reinsurance cover notes for 2019;
  • Other relevant documents.