Press Release

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

Karachi, April 26, 2016: 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 November 28, 2014.

The assigned rating takes into account the strong sponsorship with the sovereign directly and indirectly having a shareholding of 75% in the company. PRCL is the sole local reinsurer in Pakistan and enjoys confirmed business from insurance companies, for which it is compulsory for insurance companies to offer 35% of their surplus business to the company. Given that PRCL has first right of refusal, it has underwritten selective business over the years. Going forward, the management plans to increase its share of business, which is currently below the stipulated limit in most cases.

During 2015, casual vacancies were filled at the Board level. Moreover, some vacant senior management level positions were also filled including Chief Internal Auditor and Company Secretary. Position of CEO has remained vacant since 2013. Timely appointment of the same is considered essential from a governance perspective as also the future business strategy.

The rating incorporates sound capitalization level of the company that has strengthened over time on the back of improved internal capital generation. Moreover, leverage indicators have remained low indicating significant room for growth. The assigned rating also reflects adequate liquidity profile and improved claims performance of the company on net account. Over the years, the company has built a sizeable investment portfolio, a major portion of which is deployed in mutual funds and government securities, providing a source of earnings and liquidity. Insurance debt in relation to gross premium has remained on the higher side; rising trend in premium receivables may need to be arrested.

For further information on this rating announcement, please contact the undersigned at 021-3511861-70 or Mr. Maimoon Rasheed at 042-35723411-13.


Mohammed Khalid Ali
Advisor

Applicable Rating Criteria: Methodology: General Insurance (Nov 2003)
http://www.jcrvis.com.pk/images/methodology.pdf

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 2016 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .