Press Release

JCR-VIS reaffirms the IFS rating of Security General Insurance Company Limited at A+

Karachi, December 21, 2011: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has reaffirmed the Insurer Financial Strength (IFS) rating of Security General Insurance Company Limited (SGI) at ‘A+’ (Single A Plus). Outlook on the rating is ‘Stable’.

The reaffirmation takes into account strong capitalization of the company. As planned, SGI has posted consistent growth in business volumes which was manifested in all segments with enhanced proportion of direct business. Following prudent underwriting policy, the company continues to write quality business as reflected in relatively low net claims ratio. However, underwriting profitability has remained compromised due to high expense ratio. SGI has a conservative retention policy that in turn inflates expense ratio on net basis. Cognizant of the fact, the management intends to enhance its retention in a phased manner so that it does not affect the underwriting performance. Meanwhile, SGI has a reputable panel of re-insurers having adequate treaty capacities vis-à-vis current business size.

The rating also takes into account SGI’s sizable strategic investment portfolio with a history of consistent dividend payout. While these investments may not be readily saleable, given their strategic nature, the dividend earnings thereon result in significant generation of fresh liquidity year-on-year. This has allowed the company to gradually reduce the level of outstanding borrowings. Liquidity generation from underwriting portfolio may benefit from improved collections against outstanding premiums. The company has a strong internal control mechanism with robust Management Information System.

For further information on this rating announcement, please contact the undersigned or Ms. Sobia Maqbool, CFA (Ext: 506) at 021-35311861-70 or fax to 021-35311872-3.

Faheem Ahmed
President & CEO

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 2011 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited