Dec 10, 2010 (LBO) - The claims paying ability of Sri Lanka's Janashakthi Insurance has been upgraded to 'A-' from 'BBB+' with a 'stable' outlook, on improving expense and claims ratios RAM Rating Lanka said.
"Janashakthi’s rating continues to be supported by the Company’s strong competitive position in the general segment and its moderate underwriting standards," the agency said.
"RAM Ratings Lanka also views the introduction of a formalised investment framework positively."
Janashakthi is Sri Lanka’s third largest general insurer, accounting for 12.76 percent of the general insurance industry’s premium in on 2009. It started in 1992.
General insurance makes up 70 percent of the firms income.
"Janashakthi’s strong competitive position is underpinned by its wide geographical reach, having a branch network only surpassed by the two largest insurance companies," RAM Ratings said.
"In terms of life insurance, the Company is the fifth largest taking up 5.87 percent of the industry’s premiums."
Janashakthi’s combined ratio in the general business had improved with tight overhead controls.
Janashakthi’s expense ratio had fallen from 47.36 percent in 2008 to 43.94 percent by end December 2009 and further to 41.60 percent by end-September 2010.
This, together with its relatively stable claims ratio, has helped bring down its combined ratio.
"However, we note its claims ratio weakened end-September 2010, due to floods claims," RAM said.
"However, we note that other general insurers were also affected by this."
Janashakthi's combined ratio, which improved from 112.88 percent in 2008 to 108.33 percent in 2009 had worsened slightly to 110.95 percent by end-September 2010.
"We note that all general insurance players have combined ratios of greater than 100 percent, and hence, are dependent on investment income for profits," the agency said.
The life segment expense ratio had improved to 49.33 percent by end-September 2010 from 52.14 percent in 2009. In 2008 it was also 52.14 percent.
Its combined ratio in this segment remained relatively stable due to an increase in claims.
Janashakthi had shifted to a more liquid stance with fixed deposits and government securities taking up 60.51 percent of total investments as at end-FY Dec 2009 (end-June 2010: 65.51 percent), up from 43.93 percent the previous year.
Janashakthi’s overall investment yield had increased to 15.70 percent by end-September 2010 from 15.16 percent in 2009 (end- Dec 2008: 14.99 percent).
The firm had introduced a formal investment management framework and appointed an independent director to the investment committee. RAM said the steps were viewed positively.
Janashakthi’s insurance liability to shareholders’ funds ratio was 3.35 times as at end-June 2010 which was healthier than similar-sized peers.
source - www.lbo.lk
No comments:
Post a Comment