Karachi, December 30, 2016: JCR-VIS Credit Rating Company Limited has maintained the Insurer Financial Strength (IFS) rating of The Pakistan General Insurance Company Limited (PGI) at ‘A-’ (Single A Minus). Outlook on the assigned rating has been revised from ‘Positive’ to ‘Stable’. The previous rating action was announced on January 15, 2016.
Ratings assigned to PGI take into account adequate capitalization levels of the company while quantum of liquid reserves carried on the balance sheet in relation to outstanding liabilities provide support to the financial risk assessment. The leverage indicators of the company are lower than peer group companies indicating room for growth in business volumes. Given the business mix cession is considered low which at higher leverage level may impact PGI’s risk profile.
Fire, property damages and marine segment continues to lead the business mix. The company underwrites relatively smaller sized risks. Business volumes during the ongoing year are lower as compared to the preceding year. In addition to this, there is sizeable accumulation of insurance debt on the balance sheet. Management has made progress in recovering a material portion of the insurance debt during the last quarter for FY16.
During FY16, reinsurance arrangements were shifted completely to non-proportional treaties barring crops and livestock; the same arrangement is expected to continue during FY17. Non-proportion treaties have increased retention of claims on company’s net account with occurrence of large claims requiring reinstatement of higher layers of treaties. In view of this, ability of the management to maintain sound underwriting quality would be critical.
Adjusting for one-time gain realized on sale of property during FY15, profitability remained depressed during the ongoing year owing to decline in investment income coupled with increase in operating and net commission expense. Net claims ratio improved on a timeline basis with notable improvement reported in marine and miscellaneous segment.
For further information on this rating announcement, please contact the undersigned at 021-35311861-70 (Ext. 234) or Mr. Waqas Munir, FRM at 042-35723411-13 (Ext. 8010).
Applicable Rating Criteria: General Insurance (Sept, 2016)
Information herein was obtained from sources believed to be accurate and reliable; however,
JCR-VIS Credit Rating Company Limited (JCR-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. JCR-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. JCR-VIS is not an NRSRO and its
credit ratings are not NRSRO credit ratings. JCR-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.
JCR-VIS Credit Rating Company Limited. All rights reserved.
Contents may be used by news media with credit to JCR-VIS.