General Accident retains CariCRIS ratings

Kingston, Jamaica: General Accident Insurance Company Jamaica Limited (GenAc) has maintained the jmA- (Foreign Currency Rating) issuer/corporate credit rating and jmA (Local Currency Rating) on its Jamaica national rating scale assigned by Caribbean Information and Credit Rating Services Limited (CariCRIS). CariCRIS also maintains a stable outlook on the ratings.

CariCRIS first issued these ratings on December 16, 2021.

The regional credit rating agency reaffirmed the ratings, noting that they speak to the level of creditworthiness of GenAc while taking into consideration the good creditworthiness of other obligors in Jamaica.

According to CariCRIS, “The ratings of GenAc reflect its good market position as a long-established player with strong brand equity in the Jamaica general insurance industry. The company’s good capital adequacy, supported by low-risk retention and strong network of reinsurers also support the ratings.”

Moreover, the ratings indicate that GenAc possesses a moderately diverse investment portfolio with good returns and liquidity, while its history of profitability and strong enterprise risk management also support the ratings. Notwithstanding, CariCRIS has measured these strengths against concentration risks associated with the company’s exposure to the Jamaican economy.

Commenting on its outlook on the company, CariCRIS explains, “The stable outlook is based on our expectation that GenAc will continue to be profitable over the next 12 to 15 months and maintain its key credit drivers. While our outlook is predicated on Jamaica’s anticipated continued economic improvement, inflation and rising interest rates are expected to continue to exert downward pressure on GenAc’s investment portfolio and inflate claims expenses.”

Additionally, CariCRIS expects GenAc will maintain good capitalisation and good liquidity metrics that exceed the regulatory minimum, even though the implementation of the IFRS 17 accounting standard in 2023 can potentially lower the company’s capitalisation level.

IFRS 17 requires a company to measure insurance contracts using updated estimates and assumptions that reflect the timing of cash flows and any uncertainty relating to insurance contracts.

Managing director of GenAc Sharon Donaldson notes that the ratings “are a testament to our company’s strong business fundamentals despite downside risks such as higher reinsurance rates, inflationary pressures that have driven up the cost of claims, and rising interest rates.

“GenAc is committed to maintaining strong capital adequacy and driving profitability while managing local and global risks,” she adds.

The company has a 21 per cent market share in the general insurance industry and in 2022 generated $15.11 billion in gross written premiums. Net profit after tax rose by 300 per cent to $597.23 million.

Donaldson believes that the company’s digital transformation over the last year has enabled GenAc to realise operational efficiencies, and therefore an increase in market share.

Headquartered in Kingston, Jamaica, GenAc began operating in the 1920s as an agent of Scotland-based insurer General Accident Fire and Life Assurance Corporation Limited (GAFLAC). In 1981 Musson (Jamaica) Limited acquired a majority shareholding in the company and after renaming it, incorporated the company as General Accident Insurance Company Jamaica Limited — a wholly owned subsidiary of the Musson Group. In 2011, Musson Group listed 20 per cent of GenAc’s shares on the Jamaica Stock Exchange.

The company also operates in the Barbados and Trinidad and Tobago markets. In Barbados, GenAC was incorporated in 2019 and began operations in May 2020.