Press Release

JCR-VIS maintains IFS rating of Reliance Insurance Company Limited at A- with Stable Outlook

Karachi, December 4, 2008: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has maintained the Insurer Financial Strength (IFS) rating of Reliance Insurance Company Limited (RICL) at ‘A-’ (Single A Minus). Outlook on the rating is ‘Stable’.

The company was able to sustain business growth during FY07. However most of the growth was steered by motor business, which is generally prone to higher risk of claims. During FY07, the company experienced higher level of claims in all segments, except marine. While experiencing a slight decline, the company has nevertheless been able to maintain positive results from underwriting operations. In the second half of the on-going year, RICL has made a conscious decision to reduce motor business, the impact of which on underwriting results will be tracked by JCR-VIS. The IFS rating also draws strength from the reinsurance panel of the company which is led by M/s. Mitsui Sumitomo Re.

The company draws strength from an experienced management team, with turnover having remained minimal. However, further strengthening is required in the internal audit function and information technology resources. RICL has acquired new insurance software, which is currently in process of implementation.

While a large part of investment income has originated from the equities portfolio so far, almost 40% of the portfolio is deployed in either fixed income securities or income funds. The return on equities posted by insurance companies during the last few years largely comprised capital gains which are considered volatile. Liquidity profile has weakened with decline in marketability of portfolio holdings, as well as reduced cash flows from operations, resulting from an increasing amount of insurance debt.

For further information on this rating announcement, please contact the undersigned (Ext: 508) or Ms. Sobia Maqbool (Ext: 506) at 5311861-70 (10 lines) or fax to 5311872-73.


Syed Ziauddin Ahmed
Advisor

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 2008 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .