RAM Ratings Lanka upgrades Janashakthi

RAM Ratings Lanka has upgraded Janashakthi PLC's claims-paying ability rating to A- from BBB+; the outlook is stable.

The rating upgrade is premised on Janashakthi's strong performance since the previous review, underpinned by its ability to improve its expense ratio and maintain a better claims ratio than most peers in the general segment. Janashakthi's rating continues to be supported by the company's strong competitive position in the general segment and its underwriting standards. RAM Ratings Lanka also viewed the introduction of a formalized 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 FYE December 31, 2009.

The company, which started in 1992, was able to achieve strong growth through its focus on the general segment. Premiums from this segment at present account for roughly 70 percent of the company's 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. In terms of life insurance, the company is the fifth largest taking up 5.87 percent of the industry's premiums. Janashakthi's Managing Director Prakash Schaffter said that company was delighted with the RAM Ratings upgrade.

"This is indicative of the strong position we're consolidating in Sri Lanka's insurance industry and the credibility we enjoy with the public of Sri Lanka," he said "We recently introduced a formalized investment management framework.

Our combined ratio in the general business charted an improving trend, backed by tight overhead controls. In terms of investments, the company has shifted to a more liquid stance with fixed deposits and Government securities taking up 60.51 percent of total investments. In fact our insurance liability to shareholders funds ratio stood at 3.35 times as at end-June 2010, healthier than similar-sized peers," he said.

Having acquired Rs 11 billion in assets in a short period of time, the company holds over Rs 3.8 billion in Government Securities and is also the only insurance company to acquire a state owned insurance company.

It was also the fastest to reach the Rs five billion mark in annual revenue and enjoys the highest stated capital of Rs 1.49 billion among quoted insurance companies.