JCR-VIS Reaffirms IFS Rating of Pakistan Reinsurance Company Limited at AA

Karachi, June 05, 2012 (PPI-OT): JCR-VIS Credit Rating Company Limited has reaffirmed the Insurer Financial Strength (IFS) Rating of Pakistan Reinsurance Company Limited at ‘AA’ (Double A). Outlook on the rating is Stable.

The assigned rating takes into account the strong sponsorship with the sovereign directly and indirectly having a shareholding of 75% in the company. PRCL is the sole local reinsurer in Pakistan and enjoys confirmed business from insurance companies, for which it is compulsory to cede 35% of their surplus business. Moreover, the first right of refusal has enabled PRCL to underwrite selective business.

While some of the larger exposures that have manifested into claims in 2011 have been written by the company under both treaty and facultative arrangements, overall gross claims ratio of facultative business still compares favorably to results from the treaty business. Retrocession arrangement is mostly with sound counterparties.

In 2011, claims ratio was maintained at the preceding year’s level. Underwriting profit however increased on account of lower retrocession while overall profitability also received support from earnings on investment portfolio.

Liquidity profile of the institution is considered strong while capitalization is adequate even after adjusting for the impact of un-reconciled balances. The rise in outstanding level of claims needs to be arrested.

For more information, contact:
Mr. Javed Callea
Advisor
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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