Press Release

JCR-VIS Reaffirms IFS rating of Reliance Insurance Company Limited

Karachi, December 29, 2011: 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 policy holder and contract obligations. Risk factors may vary over time due to business/ economic conditions.

While there has been modest growth in business volumes in 2010, net premium level of the company has depicted a decline on a year on year basis attributable to lower retention on net account. There has been reduction in motor business, particularly from the leasing channel, owing to high loss norms associated with the same. Quantum of underwriting loss has reduced in 2010 and the on-going year vis-à-vis 2009 on account of improvement in net claims ratio, which also compares favorably to peers. Overall profitability of the company has become more reliant on investment income, predominantly capital gains on equities. Given the significant proportion of equities in the portfolio, trend in investment income is expected to depict volatility.

Liquid assets provide adequate coverage for outstanding liabilities. Leverage indicators of the company are also considered sound and within prudent limits. Claim paying ability of the company is supported by sound reinsurance coverage; the company’s lead re-insurer is Mitsui Sumitomo Re, enjoying 45% share in treaty terms.

Middle management needs strengthening and efforts are underway to induct professionals with relevant expertise. Full fledged deployment of information system has not been achieved so far and is now targeted to materialize by end of CY11. In addition to these developments, progress of the company with respect to targets outlined in the business plan will be tracked by JCR-VIS.

For further information on this rating announcement, please contact the undersigned (Ext: 508) or Ms. Sabeen Saleem, CFA (Ext: 510) at 021-35311861-71 or fax to 021-35311872-3.

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