Press Release

JCR-VIS Reaffirms IFS Rating of Reliance Insurance Company Limited

Karachi, December 8, 2010: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the Insurer Financial Strength (IFS) rating of Reliance Insurance Company Limited (RICL) at ‘A-’ (Single A minus). Outlook on the assigned rating is ‘Stable’. The rating denotes high capacity to meet policyholder and contract obligations. Risk factors may vary over time due to business/economic conditions.

Rating is supported by the presence of a strong re-insurer in lead on the company’s panel. The management of the company has also remained stable. The implementation of new software, planned to be achieved by year-end, is expected to smoothen the flow of information within the organization.

The general insurance market is characterized by high level of competition, on account of which underwriting margins have continued to remain under pressure. With the combined ratio exceeding acceptable limits, RICL has posted losses from underwriting operations, mainly in the motor segment, though the quantum has reduced in the on-going year. Underwriting guidelines may need to be revisited in terms of the scope of risk appraisal to include financial profile of counterparties as well. Liquidity from core operations needs to be strengthened by controlling the rising level of insurance debt. The investment portfolio provides some cushion both in terms of liquidity and earnings.

For further information on this rating announcement, please contact Syed Ziauddin Ahmed (Ext: 508) or Ms. Sobia Maqbool, CFA (Ext: 506) at 021-35311861-71 or fax to 021-35311872-3.



Javed Callea
Advisor

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