Pakistan Credit Rating Agency assigns IFS rating to Silver Star Insurance Company Limited

Lahore, December 06, 2012 (PPI-OT): The Pakistan Credit Rating Agency (PACRA) has assigned the IFS rating of “A-” (Single A minus) to Silver Star Insurance Company Limited (SSICL). The rating denotes strong capacity to meet policyholder and contract obligations. Risk factors are moderate, and the impact of any adverse business and economic factors is expected to be small.

The rating reflects strength of SSICL’s risk absorption capacity emanating from a growing equity base. A dominant portion of this base is deployed in liquid investment avenues, providing sizable cushion against insurance claims.

Nevertheless, the return on investment is significantly low due to the composition of the portfolio. Hence, the company’s reliance on underwriting income is high. SSICL’s underwriting performance remains strong, backed by management’s prudent strategy to underwrite low risk small size businesses with diverse customer base. The rating takes into account the improvement in the company’s technology platform; though the associated MIS up gradation to enhance the decision making quality remains to be seen.

The rating is dependent on the management’s success in achieving its targeted business volumes and upholding the improving trend in its underwriting profitability. At the same time, consolidation of the operating platform in the wake of recent HR induction would be important. Meanwhile, any material decline in the business performance and/or significant piling up of insurance related assets, thereby increasing the credit risk, would have negative implication for the rating

For more information, contact:
Hammad Rashid
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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