Press Release

JCR-VIS Reaffirms IFS rating of Alpha Insurance Company Limited

Karachi, December 30, 2011: JCR-VIS Credit Rating Company Limited has maintained the Insurer Financial Strength Rating of Alpha Insurance Company Limited (AICL) at ‘A’ (Single A). Outlook on the assigned rating has been revised to ‘Negative’.

Rating assigned to AICL incorporates the strength of the sponsoring institution, The State Life Insurance Corporation of Pakistan (SLIC), with financial support demonstrated by equity injection of Rs. 101m in 2009 and another Rs. 100m approved to be injected soon. This is likely to bridge the weakening in stand-alone financial strength of the company.

The company has posted some growth in premium levels in recent periods. Claims performance has also showcased improvement. Despite this, underwriting losses have persisted, due to high management expenses. Return on investments has supported both profitability and cash flows of the company. Risk profile of the investment portfolio is considered manageable. With fixed income portfolio planned to be enhanced with the proceeds from the rights issue, equity portion will dilute further.

Liquidity generation from underwriting operations remains stressed. The outstanding level of insurance debt and its ageing profile is a source of concern. There may also be significant calls on cash in future, with rising amount of outstanding claims. Progress towards implementation of sound IT infrastructure may also need to be accelerated to improve the control environment and resolve issues related to reconciliation of outstanding balances, going forward. Existing staff resources may need to be optimized, while simultaneously improving the staff skill set available. A new Managing Director has recently assumed office and is working to address the issues identified above.

For further information on this rating announcement, please contact Mr. Syed Ziauddin Ahmed (Ext. 508) and Ms. Sobia Maqbool, CFA (Ext. 506) at 021-35311861-70 (10 lines) or fax to 021-35311873.



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 December 30, 2011 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.