Press Release

JCR-VIS re-affirms IFS rating of Security General Insurance Company Limited

Karachi, April 22, 2015: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has re-affirmed the Insurer Financial Strength (IFS) rating of Security General Insurance Company Limited (SGI) at ‘AA-’ (Double A Minus). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on February 14, 2014.
The assigned rating incorporates sponsors’ support and robust capitalization in context of the risk retained on balance sheet. Overall cession has relatively been on the higher side in comparison to the industry; SGI has reputable reinsurers providing adequate coverage against risk. Overall liquidity profile of the company is also considered sound; operating cash flows are healthy with recurring earnings from a sizeable portfolio of marketable securities.
SGI procures a major chunk of business through associate companies, mainly in power projects which constitute more than one third of the overall business, where the company acts as a fronting agent. Growth in recent years has largely emanated from underwriting power project policies. Recently, the board has decided to discontinue market based business and underwrite group business only. Given the quantum of group business, the decision is likely to have a bearing on market share of the company; the impact will be seen overtime.
Overall claims performance slightly weakened on account of a large claim incurred in marine segment; however, SGI’s loss ratio still compares favorably to the industry. Profitability from underwriting operations has also remained strong while investment income continues to augment profitability of the company. Investments mainly comprise strategic stake in shares of associate companies; given the asset composition, the investment portfolio is subject to market risk.
The senior management team has depicted stability over the years. The company is in the process of implementing a web based IT system; the initiative is likely to strengthen the internal control environment.
For further information on this rating announcement, please contact Ms. Sobia Maqbool, CFA at 021-35311861-70 (Ext. 604) or Maimoon Rasheed at 042-35743411-13 or fax to 021-35311873.

Javed Callea
Advisor

Applicable Rating Criteria:
Methodology: General Insurance (Nov 2003)
http://www.jcrvis.com.pk/images/methodology.pdf

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 April 22, 2015 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.