JCR-VIS maintains IFS rating of Saudi Pak Insurance Company Limited

Karachi, December 28, 2012 (PPI-OT): JCR-VIS Credit Rating Company Limited has maintained the Insurer Financial Strength (IFS) rating of Saudi Pak Insurance Company Limited (SPICL) at ‘BBB+’ (Triple B Plus). Outlook on the assigned rating has been revised from ‘Negative’ to ‘Stable’. The rating reflects adequate capacity to meet policyholder and contract obligations. Risk factors are considered variable over time due to business/economic conditions.

During the year, SPICL has undergone a change of ownership whereby Saudi Pak Industrial and Agriculture Investment Company Limited (SAPICO) has sold its partial stake in the company to United International Group (UIG). Resultantly, the management of the company was taken over by UIG. Following the transfer of ownership, expected to be completed by March 2013, UIG will become the major shareholder. A name change of the company may also be expected at this time.

SPICL has expanded its branch network to extend outreach. During the on-going year, the company has posted growth in business volumes. Apart from fire, other business segments have remained profitable in FY11 and 9M12; consistency of results has however yet to be established.

Overall profitability has also improved on a timeline basis, resulting in internal capital generation. External equity injection may however be required if internal capital generation is not able to keep pace with growth in business volumes. Expense ratio of the company, though improving on a timeline basis, continues to be high in comparison to peers.

Equity injection may also be required to support the liquidity profile of the institution. Insurance debt has escalated in proportion to gross premium and continuing increase may exert further pressure on the liquidity profile of the institution.

For more information, contact:
Mr. Javed Callea
JCR-VIS Credit Rating Company Limited
Tel: +9221 35311861 (10 lines) (Ext: 501)
Fax: +9221 35311872-3
E mail: javed.callea@jcrvis.com.pk

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