Press Release

JCR-VIS upgrades IFS rating of Security General Insurance Company Limited

Karachi, September 14, 2017: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has upgraded the Insurer Financial Strength (IFS) rating of Security General Insurance Company Limited (SGI) from ‘AA-’ (Double A Minus) to ‘AA’ (Double A). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on June 16, 2016.

Ratings assigned to SGI take into account its association with Nishat Group, a large conglomerate operating across diversified sectors of the country. Ratings also take into account conservative risk appetite of the company along with robust capitalization related indicators depicting strong loss absorption capacity.

Cession ratio of the company is higher in comparison to peers. During FY16, gross claims ratio stood higher, however, given adequate reinsurance coverage, impact of claim on net account has been minimal. Underwriting result also improved on account of lower net claims ratio, whereas investment income continues to provide support to profitability of the company.

During past few years, business from associated companies accounted for around one-third of the overall gross premium; going forward, the management aims to gradually increase the proportion of market based business by pursuing clients having satisfactory track record. With regards to the business mix, fire segment constitute more than three-fourth of the gross premium. Initiation of window takaful operation is also planned for the ongoing year. The impact of these measures would be seen over time.

Reinsurer panel of SGI is diversified with reinsurers having sound financial strength national/international ratings. Liquid assets stood higher on account of increased investment in mutual funds and higher bank placements. Liquidity profile of the institution in terms of liquid assets as a proportion of net outstanding claims remained robust. Insurance debt as a proportion of gross premium is relatively on the higher side.

For further information on this rating announcement, please contact the undersigned (Ext: 201) at 021-35311861-70 (10 lines) or Mr. Maimoon Rasheed at 042-35723411-13 or fax to 021-35311873.

Javed Callea

Applicable Rating Criteria: Methodology: General Insurance (March 2017)

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 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 2017 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