Press Release

VIS Reaffirms IFS Rating of Security General Insurance Company Limited

Lahore, December 26, 2023: 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 Plus). The IFS rating of ‘AA+’ denotes very strong capacity to meet policy holders and contract obligations. Risk factors are very low, and the impact of any adverse business and economic factors is expected to be very small. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on December 29, 2022.
The rating assigned to SGICL takes into account its association with a large diversified conglomerate “Nishat Group” having business interests in banking, textile, cement, power generation, real estate and hospitality, automobile, dairy and paper products. With ongoing slowdown in the economic activity due to high interest rates, rupee devaluation, and elevated inflation levels, key focus area for the management remained fire segment. Financial and operating leverages have remained the lowest amongst peers; the same reflect strong loss absorption capacity along with sizable room for growth in the operating scale. In addition, SGI is considered sound from solvency risk point of view as the Company has adequate cushion in terms of admissible assets over its liabilities. Moreover, the rating reflects adequate liquidity position in terms of liquid assets in relation to technical reserves and borrowings. However, insurance debt in relation to gross premium was recorded on a higher side during the rating review period on account of cyclicality inherent in the insurance sector as majority of fire policies are renewed in July for SGICL; the aforementioned indicator is expected to revert back to normal range by end-CY23.
The rating further draws strength from reinsurance arrangements largely with counterparties having sound credit risk profiles with appropriate risk retention on net account to maintain risk appetite of the Company. The overall claims performance showed weakening both on gross and net basis during the rating review period on account of increase in value and number of claims specifically emanating from motor and fire segment. Nevertheless, the ratings take note that translation of loss to the net account in the fire segment was mostly mitigated in line with surplus treaties obtained for both group and non-group businesses. Moreover, overall conservative approach of the Company towards underwriting insurance policies, effective pre-screening of market-based clients for their past track record, and adequate reinsurance coverage will support claim experiences in the medium term. Furthermore, the recurring investment income continues to support the bottom line on a timeline basis. Given, SGIs entire investment portfolio is vested in equity-based securities, the price risk is present. Subsequently, management of market risk profile amid volatility prevalent in stock market performance will remain imperative for ratings going forward. In addition, the ratings will remain dependent on maintaining sound underwriting quality and liquidity indicators in line with the threshold.
For further information on this ratings announcement, please contact Ms. Maham Qasim at 042-35723411-13 (Ext: 8010) or the undersigned at 042-35723411-13 (Ext: 8008) or email at

Maimoon Rasheed

Applicable Rating Criteria: General Insurance

VIS Issue/Issuer Rating Scale

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