Karachi, November 08, 2016: JCR-VIS Credit Rating Company Limited (JCR-VIS) has upgraded the Insurer Financial Strength (IFS) rating of The Co-operative Insurance Society of Pakistan Limited (CISPL) to ‘BB’ (Double B) from ‘BB-’ (Double B - minus). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on September 23, 2015.
The ratings assigned to CISPL take into account adequate liquidity profile of the company in relation to the business volumes written. The claims ratio has remained negligible in the recent years while higher management expenses in relation to business generated has led to continued underwriting losses. The ratings remained constrained on account of limited scale of business of the company.
The majority of insurance business is routed through CSIPL’s largest shareholder; Provincial Cooperative Bank Limited (PPCBL) reflecting high concentration. While underwriting operations continues to report losses, investment and rental income supported the bottom line with CSIPL posting profit during the outgoing year. Reinsurance panel and treaty terms remained unchanged with reinsurance coverage arranged through Pakistan Reinsurance Company Limited.
Liquid asset on balance sheet comprises listed equities carrying sizeable unrealized revaluation surplus. The paid up capital of the CSIPL increased to Rs. 500m (FY14: Rs. 300m) through transfer of revaluation surplus on land and building amounting to Rs. 200m. Given depressed business volumes, operating and financial leverage remains low.
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 (September 2016)
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