Press Release

VIS Reaffirms IFS Rating of Reliance Insurance Company Limited

Karachi, December 31, 2020: VIS Credit Rating Company Limited has reaffirmed the Insurer Financial Strength Rating of Reliance Insurance Company Limited (RICL) at ‘A’ (Single A). Outlook on the assigned rating is ‘Positive’. The rating signifies high capacity to meet policyholder and contractual obligations. Risk factors may vary over time due to business/economic conditions. The previous rating action was announced on December 31, 2019.

In 2019, RICL’s business volume has posted contraction, as a result of which the company’s market share has decreased. The contraction was mainly a result of closure of operations of a large-sized ‘Marine, Aviation & Transport’ segment client. Subsequently, business mix has become relatively more tilted towards traditional business lines. The company’s underwriting profitability remained depressed during the period under review. RICL’s combined ratio remains aligned with peers. The company’s bottom line posted notable improvement on the back of improved investment performance, which was in line with the uptick in stock market performance and in tandem with other industry participants.

RICL’s liquid assets are sizable in relation to net technical reserves and in line with industry participants. RICL’s market risk is enhanced in view of the composition of the investment portfolio, which depicts a higher tilt towards equities. Insurance Debt to Gross Premium remains below peer median.

RICL’s capitalization metrics are notably better on a timeline. This is a result of stagnant business volume (net premium), improvement in profitability - on account of improved investment performance - and company’s continued policy of full capital retention. At present level both, operating & financial leverage, are aligned with the peer median. Reinsurance panel of the company is considered strong with Swiss Re as the lead reinsurer, with the remaining reinsurers on the panel also being of sound credit quality.

For further information on this rating announcement, please contact the undersigned (Ext: 208) or Mr. Arsal Ayub, CFA (Ext: 216) at 021- 35311861-66 or email at info@vis.com.pk.



Faryal Ahmed Faheem
Deputy CEO

Applicable rating criterion: Methodology: General Insurance (November, 2019)
http://vis.com.pk/kc-meth.aspx

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