Press Release

JCR-VIS Assigns Positive Outlook to Reliance Insurance Company Limited

Karachi, January 28, 2013: JCR-VIS Credit Rating Company Limited (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 has been revised from ‘Stable’ to ‘Positive’.
Rating incorporates the sound capitalization indicators of the company that have been strengthened over time on account of healthy growth in retained earnings. Leverage indicators of the company are low and reflect potential to enhance scale of operations. Liquid assets also provide adequate coverage against outstanding liabilities. While there have been changes in reinsurance arrangements of the company over time; maximum loss that can fall on net account has remained low vis-à-vis equity base of the institution.
Business volumes of the institution have picked pace in the on-going year; though net premium revenue has remained subdued as retention in fresh business written by the company is low. Even with few large claims in 9M2012, net claims ratio of the company has remained manageable in view of adequate reinsurance arrangements and compares favorably to peers. Expense ratio of the company, however, is on the higher side relative to peers. Improvement in underwriting performance is required to lend support to overall profitability of the company which has significant dependence on income from investments.
Exposure in listed equities comprises more than half of the investment portfolio of the company. Within the equities portfolio there is significant concentration in single scrip. While yield on investment portfolio of the company is considered healthy and income from investments has been sizeable in the past four years, there is considerable price risk associated with exposure in equities which may impact the bottom-line of the company.
On the management side, senior management team has remained stable. There has been some strengthening at the middle management level. Further capacity building is required which is being actively considered by the senior management.
For further information on this rating announcement, please contact Mr. Abdur Rahim, ACII (Ext: 508) or Ms. Sobia Maqbool, CFA (Ext: 604) at 021-35311861-71 or fax to 021-35311872-3.

Jamal Abbas Zaidi
Deputy CEO

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 2013 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .