Press Release

JCR-VIS Reaffirms IFS Rating of National Insurance Company Limited at AA+

Karachi, December 31, 2009: JCR-VIS Credit Rating Co. Ltd. (JCR-VIS) has reaffirmed the Insurer Financial Strength rating of National Insurance Company Limited (NICL) at ‘AA+’ (Double A Plus) with a ‘Stable’ outlook.

The rating of NICL derives significant support from a large capital base. NICL experienced substantial business growth during FY08 largely on account of growth in the marine segment fueled by rising oil prices as well as a depreciating rupee providing boost to dollar based premium accounts. In addition to the conventional insurance products, the company is now also providing cover for crop loans in liaison with National Bank of Pakistan. Treaty arrangements are in place for fire, engineering, marine and crop related risks, which are mostly XoL in nature. Specialized risks such as in the case of aviation are placed on facultative basis. In view of the large capital base, motor business is retained entirely on net account, in addition to some terrorism related risks.

The company’s underwriting profitability has witnessed a declining trend relative to 2007 with earnings from underwriting operations completely marginalized during 3Q09. This is largely attributable to a high incidence of claims in both the fire and engineering segments.

While investment policy had largely restricted exposure to government securities earlier, investment in stock market funds resulted in significant revaluation losses in 2008. Recovery in prices of portfolio holdings has been observed in line with market trend. The Board has also approved additional exposure in real estate, with significant deployment seen in this avenue in 2009, both local and overseas. Some of this is expected to start generating rental income soon. While liquidity indicators are currently sound, further increase in this exposure may need to be re-considered as this may not be a liquid investment avenue while also being subject to price risk.

Work on implementation of new MIS is on-going though complete switch over has seen delays. During FY08 a new Chairman and CEO was appointed, following which other initiatives have also been taken to improve the operational efficiency.

For further information on this rating announcement, please contact Mr. Syed Ziauddin Ahmed (Ext: 508) or Ms. Sobia Maqbool (Ext: 506) at 021-35311861-70 (10 lines) or fax to 021-35311872-3.



Faheem Ahmad
President & CEO

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2009 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .