Press Release

JCR-VIS reaffirms IFS rating of EFU General Insurance Limited at AA

Karachi, November 29, 2011: JCR-VIS Credit Rating Company Limited has reaffirmed the Insurer Financial Strength Rating of EFU General Insurance Limited (EFU) at ‘AA’ (Double A). Outlook on the assigned rating is ‘Stable’.

With a market share of 26.8% in FY10, EFU is the largest private sector insurance company in Pakistan. Reinsurers on the company’s panel enjoy ratings in the Single A and Double A bands, indicating sound risk profile. Given the limited generation of fresh liquidity, overall liquidity profile has witnessed a declining trend. Nevertheless, capacity of the company to meet policyholders’ obligations is considered strong.

While a high combined ratio may be characteristic of large insurance companies, EFU has experienced underwriting losses in several of the past few years. The management, cognizant of the situation, is working to improve the same. Over the last three years, the company has been successful in generating profits from the motor segment. Moreover, its proportion in business mix is on a decline, due to the slowdown in pace of fresh car financing. Results from fire segment were adversely affected by the floods in 2010. There has been significant improvement in the same in 2011. Improved priority limits may help in reducing the impact of claims on net account. The management is working towards this end, particularly in the fire segment, which has been the driver of growth in 2011.

Given the high proportion of equities in the investment portfolio, the company’s exposure to price risk arising due to fluctuation in stock market is sizeable. Plans for enhancing investment management expertise and re-aligning the portfolio to improve yields are on the anvil. Developments in this respect will be closely tracked by JCR-VIS for impact on the company’s financial profile.

For further information on this rating announcement, please contact Syed Ziauddin Ahmed (Ext: 508) or Ms. Sobia Maqbool, CFA (Ext: 506) at 35311861-70 (10 lines) or fax to 35311872-73.



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