Press Release
VIS Reaffirms IFS Rating of Security General Insurance Company Limited
Karachi, December 31, 2020: VIS Credit Rating Company Limited VIS) has reaffirmed the Insurer Financial Strength (IFS) rating of Security General Insurance Company Limited (SGICL) at ‘AA’ (Double A). The IFS rating of ‘AA’ denotes very high capacity of meeting policyholder and contractual obligations. Moreover, the risk is modest, though may vary slightly with possible changes in economic conditions. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on December 04, 2019.
The rating assigned to SGICL take into account its association with a large diversified conglomerate “Nishat Group” having business interests in banking, textile, cement, power generation, real estate and paper products. Growth momentum of the company in terms of gross premiums was impacted by the economic disruption and initiation of industry-wide price war amidst the outbreak of COVID-19; SGICL, however, remained focused on retention of existing business with no active participation in price war. Sound capitalization and leverage indicators exhibiting strong loss absorption capacity remain the key rating factor. Going forward, growth in business may emanate from recovery in motor segment, introduction of new products in healthcare, crop, and engineering segments and rollout of an online insurance platform.
Credit risk emanating from reinsurance panel selection remains sound with all reinsurers, except one, rated in category ‘A’ or higher. The conservative approach towards underwriting insurance policies, effective pre-screening of market-based clients for their past track record, and adequate reinsurance coverage led to consistently good claim performance. The rating derives strength from sizeable recurring dividend income emanating from investment in blue chip companies, though dividend income decreased during the period under review due to temporary regulatory suspension of dividends from banks. The liquidity profile of the company is considered adequate reflected by sizeable liquid assets maintained in relation to borrowings and technical reserves. However, insurance debt in relation to gross premium needs to remain within the peer group parameters.
For further information on this rating announcement, please contact Syed Fahim Haider at 042-35723411-13 (Ext: 8006) or the undersigned at 021-35311861-70 (Ext. 301) or email at info@vis.com.pk
Faheem Ahmad
President & CEO
Applicable Rating Criteria: General Insurance (November 2019)
https://www.vis.com.pk/kc-meth.aspx