RAM upgrades Janashakthi Insurance PLC’s ratings
View(s):RAM Ratings Lanka has upgraded Janashakthi Insurance PLC’s long- and short-term claims-paying ability ratings to A and P2, respectively from A- and P2. The outlook on the long term rating is stable.
The upgrade reflects the continued improvement in the company’s life segment where it now compares well against its higher rated peers, the rating agency said.
“The company’s ratings are supported by its good competitive position, underwriting performance in the life segment and above-average capitalisation levels. On the other hand, the ratings are tempered by its average, albeit improving, underwriting performance in the highly competitive general segment,” it said.
RAM acknowledged that Janashakthi has been successful in managing its claims in both segments whilst also implementing tight cost controls that have aided its overall performance. The improvement in Janashakthi’s claims experience is reflected in its easing claims ratio in both general and life segments over the recent years, it said.
“Resultantly, its life segment has charted an uptrend in underwriting performance, the net underwriting losses in Janashakthi’s general segment has contracted over the years.
The company’s general segment net underwriting loss during 1H FY Dec 2013 of Rs. 129 million also remained similar to that of last year amidst the competitive climate. In addition, Janashakthi’s cost controls are also reflected in the expense ratio which stood at around 42 per cent in the last three years despite expansion of operations. As such, the net underwriting margin improved to negative 4.59 per cent as at end-March 2013 compared to negative 8 per cent as at end-December 2009.”
Janashakthi is Sri Lanka’s third-largest general insurer, accounting for 11.45 per cent of the industry’s gross written premiums (GWPs) as at end-December 2012. Its good competitive position is underpinned by its extensive geographical reach. In terms of life insurance, Janashakthi is the fifth-largest player, making up 5.44 per cent of industry GWPs as at end- December 2012, RAM said.
RAM said it positively views Janashakthi’s ability to keep its claims intact, with reduced life claims and relatively unchanged general claims aided by its measures to manage its claims and weed out unprofitable business in the general segment.