Press Release

JCR-VIS Assigns Positive Outlook to IFS Rating of The Pakistan General Insurance Company Limited

Karachi, December 12, 2014: JCR-VIS Credit Rating Company Limited has maintained the Insurer Financial Strength rating (IFS) of The Pakistan General Insurance Company Limited (PGI) at ‘A-’ (Single A Minus). Outlook on the assigned rating has been revised from ‘Stable’ to ‘Positive’. The previous rating action was announced on Nov 25, 2013.
The assigned rating takes into account the company’s capitalization level, which compares favorably to peers in the industry. Moreover, the quantum of liquid reserves carried on balance sheet is considered satisfactory in relation to outstanding liabilities.
PGI was able to exhibit growth in business volumes during the on-going year, following a declining trend in preceding years. The company continues to underwrite relatively smaller sized risks while restricting exposure in volatile segments like motor and crop. PGI posted underwriting loss in 2013. While net claims ratio remained well below industry average, profitability was diluted largely on account of provisioning against receivables. The same was a book cleansing exercise; however, there is room for further improvement as the level of insurance debt is still high. There was considerable support to the bottom line from investment income in 2013 that has otherwise also remained steady over the years. Cash flow streams were healthy in 9M14 on the back of recoveries from clients. Moreover, underwriting performance depicted notable improvement during 9M14.
PGI’s reinsurance panel remains sound. Certain changes in reinsurance arrangements were witnessed for 2014. While the company managed to arrange 100% reinsurance cover for the year, new treaty type enhanced retention of claims on net account, though it still remains lower than peers. Given the diversification in risks, claims ratio is expected to remain within manageable limits. JCR-VIS will continue to monitor the performance of the company for trends in growth and ability of the management to maintain adequate underwriting quality indicators over time.
In line with governance best practices, there are four independent directors on the board. A new director representing minority shareholders was appointed in 2014.
For further information on this rating announcement, please contact Mr. Abdur Rahim (Ext: 508) at 021-35311861-70 or fax to 021-35311872-3 or Mr. Maimoon Rasheed at 042-36610681-84.

Jamal Abbas Zaidi
Deputy CEO

Applicable Rating Criteria: General Insurance (November, 2003)

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