Press Release

JCR-VIS Maintains IFS Rating of Reliance Insurance Company Limited

Karachi, December 30, 2015: JCR-VIS Credit Rating Company Limited has maintained the Insurer Financial Strength Rating of Reliance Insurance Company Limited (RICL) at ‘A’ (Single A). Outlook on the assigned rating has been revised from ‘Stable’ to ‘Positive’. The previous rating action was announced on December 31, 2014.

The assigned rating to RICL incorporates strong liquidity profile, adequate capitalization indicators and reinsurance program along with improving underwriting performance. However, earnings and cash flows are mainly dependent on investment activity. While maintaining other key rating parameters, sustainability and quantum of underwriting profits will be the key determinant to the future direction of rating. RICL is backed by Amin Bawany and Al-Noor Group of Companies, two prominent industrial groups.

Gross premiums crossed Rs. 1b during 2014. Apart from miscellaneous segment, growth was witnessed across all business segments with major increase emanating from aviation segment which represents around half of total gross premiums. During FY15, growth has been manifested in the proportion of motor business. Going forward, management is targeting to increase the proportion of fire and motor in overall business mix.

Reinsurance panel of the company has witnessed improvement with the induction of Swiss Re on the panel as the lead reinsurer. While commission rates have declined, retention and treaty capacities have increased for FY15 and FY16. Impact of increased retention on net premium revenue and claims performance will be tracked by JCR-VIS. Gross and net claims ratios of the company have showcased improvement during 9M15 and compare favorably to industry. Resultantly, the company has managed to post underwriting profits during 9M15; however, expense ratio continues to be on the higher side in relation to peers.

Liquidity profile of the institution is considered adequate in view of sizeable liquid assets in relation to liabilities, manageable level of insurance debt and positive cash flow from operations. Capitalization levels of the institution have increased over time on account of retained profits. Leverage indicators are on the lower side and indicative of room for growth.

For further information on this rating announcement, please contact the undersigned (Ext: 516) or Mr. Javed Callea (Ext: 501) at 021-35311861-71 or fax to 021-35311872-3.

Jamal Abbas Zaidi
Advisor

Applicable rating criterion: Methodology: General Insurance (Nov 2003)
http://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 2015 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .