Press Release

JCR-VIS Reaffirms IFS Rating of Pakistan Reinsurance Company Limited at AA

Karachi, November 28, 2014: JCR-VIS Credit Rating Company Limited has reaffirmed the Insurer Financial Strength (IFS) Rating of Pakistan Reinsurance Company Limited at ‘AA’ (Double A). Outlook on the rating is ‘Stable’. The previous rating action was announced on October 28, 2013.

The rating incorporates sovereign sponsorship represented through State Life Insurance Corporation of Pakistan and Ministry of Commerce. By virtue of being the sole reinsurer in Pakistan, all insurance companies must offer at least 35% of their business to PRCL under treaty arrangements, whereby the company enjoys discretion to accept that business. In view of this, business has continued to grow even though there are significant gaps in the senior management cadres, including at the helm of the organization. Timely appointment of key executives is considered essential from a governance perspective as also the future business strategy.

The rating also reflects PRCL’s strong capitalization built over a period of time through internal profit generation. Liquidity indicators remain sound, drawing strength from the positive cash flows, which have allowed the company to build a sizeable investment portfolio over the years. More than half of PRCL’s investment portfolio comprises equities and mutual funds while around 40% is deployed in government securities. Portfolio valuation has benefited from the upward rally in the stock market, with the company carrying sizeable unrealized gains.

The proportion of business written under treaty arrangements increased in 2013. With higher incidence of claims, underwriting operations posted lower income as compared to the preceding year. Terms of the treaties available to PRCL remained the same for 2014 with overall profile of reinsurers on the panel remaining sound.

For further information on this rating announcement, please contact Mr. Abdur Rahim, ACII (Ext: 508) or Ms. Sobia Maqbool, CFA (Ext: 604) at (+92-21) 35311861-70 or fax to (+92-21) 35311873.


Jamal Abbas Zaidi
Deputy CEO

Applicable Rating Criteria: General Insurance (Nov 2013)

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 2014 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .