Press Release

VIS Reaffirms IFS Rating of Reliance Insurance Company Limited

Karachi, December 31, 2019: VIS Credit Rating Company Limited has reaffirmed the Insurer Financial Strength Rating of Reliance Insurance Company Limited (RICL) at ‘A’ (Single A). Outlook on the assigned ratings is ‘Positive’. The rating signifies high capacity to meet policyholder and contractual obligations. Risk factors may vary over time due to business/economic conditions. The previous rating action was announced on December 31, 2018.

The current rating continues to derive strength from the sound leverage indicators and liquidity profile of the company. Moreover, underwriting quality is also considered prudent as claims ratios (both gross and net) remain on the lower side. Strong reinsurance program and sustainability in quantum of underwriting profits will continue to be key determinants for future direction of rating.

With the current economic downturn, Pakistan’s insurance market continues to face stiff competition in terms of premium rates and business volumes. Despite growth in the insurance market, gross premiums (including Takaful premiums) of RICL decreased by 20.4% largely on account of one of its largest client in the aviation segment closing its operations. Barring aviation, business underwritten in other segments has grown during 2018.

Reinsurance panel of the company is considered strong with Swiss Re as the lead reinsurer. Retention level and treaty capacities remained unchanged during the outgoing year. Going forward, extent of risk on own account would be an important rating driver. With lower business underwritten, underwriting profit of the company’s conventional business depicted a decline and amounted to Rs. 3.4m (FY17: Rs. 19.8m) in 2018; nonetheless, its Window Takaful operations resulted in a positive bottom line in the period under review.

Historically, underwriting operations have received sizeable support from its investment portfolio. However, in 9M19, the company incurred a loss on investments on account of downturn in equity market; the same is expected to pick up pace in the ongoing year. Management may need to strengthen its underwriting operations in order to sustain its profitability and capitalization indicators. Liquidity profile of the institution remains sound with sizeable liquid assets in relation to liabilities and low insurance debt in relation to gross premiums. Leverage indicators of the company are also considered sound and within prudent limits.

For further information on this rating announcement, please contact the undersigned (Ext: 208) or Ms. Muniba Abdullah, CFA (Ext: 215) at 021- 35311861-66 or email at

Atiq Anwar Mahmudi

Applicable rating criterion: Methodology: General Insurance (November, 2019)

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 not an NRSRO and its credit ratings are not NRSRO credit ratings.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 2019 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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