Reliance Insurance Company Limited

CREDIT RATING REPORT | Nov-25

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Rating History
Dissemination Date IFS Rating Outlook Action Rating Watch
17-Nov-25 A++ (ifs) Stable Upgrade -
22-Nov-24 A+ (ifs) Stable Maintain -
24-Nov-23 A+ (ifs) Stable Maintain -
30-Dec-22 A+ (ifs) Stable Initial -
About the Entity

Reliance Insurance Company Limited ("Reliance Insurance" or “the Company") was incorporated as a public listed company, listed on PSX in 1981. Principal activity involves managing non-life insurance through conventional and window takaful operations in fire and property mainly.
The Company is majorly (~64%) owned by Al-Noor and Amin Bawany Groups. Mr. Irfan Zakaria Bawany chairs the Board, while, Mr. A. Razak Ahmed is the CEO/MD of the Company. They are assisted by an experienced management team.

Rating Rationale

Reliance Insurance Company Limited's ("Reliance Insurance" or “the Company") IFS rating derives strength from its association with the renowned sponsoring Groups, Al-Noor and Amin Bawany. Both Groups operate diversified businesses that add strength to the Company's overall policy framework. The Company underwrites non-life insurance policies. Overall, the non-life insurance sector has exhibited a growth of ~14% in terms of Gross Premium Written (GPW) during CY24. The underwriting results surged by ~70%. This, combined with better investment income, provided suitable support to the sectors' overall profitability. The players hold substantial liquidity; however, the prevailing economic conditions will continue to be a crucial factor for the industry's sustained performance. Reliance Insurance holds a market share of less than ~1%. The Company mainly provides conventional insurance, which is ~89% of Reliance Insurance's overall GPW. While window takaful operations generate ~10% of the Company's overall GPW. Despite posting organic growth over time, the Company gathers minimal support from its captive business. GPW posted a value-driven growth of ~10% in CY24, and ~25% in 9MCY25, where the majority (~54%) of the GPW trickles in from the fire and property segment only. Thus, the segmental concentration remains elevated. Core income remains steady, while a significant uptick in investment returns supplemented the Company's overall performance. This growth was attributed to the revival of the equity market, as the majority (~82%) of investment is tilted towards equity instruments. Diversifying focus towards better margin-generating segments that improve the Company's market share and manage concentration remains important. Moreover, the investment book might require attention according to the current shift in market returns. The financial risk profile is characterized by an adequate liquidity position. The Company maintains an adequate risk appetite, evident from the agreed treaties with creditworthy reinsurers. Enhancing pure equity, though gradual, to fulfil the SECPs increased MCR standing remains important to the assigned IFS rating, going forward. A formal equity injection plan has been undertaken by the management; adherence to which remains important. This, along with disciplined financial management, adds the requisite cushion. Better governance and managerial practices bode well for the Company. Thus, PACRA upgrades Reliance Insurance's IFS rating.

Key Rating Drivers

The rating is dependent on the Company’s ability to improve its market position with sustained profitability. The liquidity position, hence, the financial risk profile should remain afloat with growth. Growth in the underwriting profits, along with equity enhancement as per SECP's requirement, remains crucial, going forward.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Reliance Insurance Company Limited

rating analysis

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Profile
Legal Structure

Reliance Insurance Company Limited ('Reliance Insurance' or 'the Company') was incorporated in 1981 as a public limited company and is officially listed on the Pakistan Stock Exchange (PSX).


Background

The Company was jointly established by two distinguished industrial conglomerates: the Al-Noor Group (founded by the late Mr. Ismail H. Zakaria) and the Amin Bawany Group (founded by the late Mr. M. Amin Ahmed Bawany). This heritage provides the Company with a foundation rooted in extensive successful industrial and commercial project implementation across diversified business portfolios.


Operations

The Company is fully authorized to underwrite the full spectrum of General Insurance and Takaful business. Operations are currently conducted through a nationwide network of 25 branches across Pakistan. The business portfolio is concentrated primarily in the conventional segment (~85%), with a dominant focus on the Fire segment (major contributor at ~47%).


Ownership
Ownership Structure

The Company's ownership is primarily held by Individuals, Directors, CEO & other spouses and minor children (~71.67%) and Joint Stock Companies (~25.56%). The remaining shares are distributed among Government departments (~1.40%), Welfare and charitable trusts (~1.20%), and Insurance Companies (~0.19%).


Stability

The Company maintains a stable ownership structure, demonstrating no expected change in the foreseeable future.


Business Acumen

The sponsors have witnessed varous business cycles over time. Both sponsors hold strong business acumen across diversified business portfolios; thus, providing the ownership structure a requisite support in the long term.


Financial Strength

The sponsors hold strong financial footing across various sectors; thus, ensuring financial stability, going forward.



Governance
Board Structure

Control and strategic oversight vest with the ten-member Board of Directors (BoD). The composition promotes effective governance, comprising six Non-Executive Directors, three Independent Directors, and one Executive Director.


Members’ Profile

The BoDs profile is satisfactory, with a mix of experienced legal professionals and investment experts. Mr. Irfan Zakaria Bawany chairs the BoD and is certified director from the Pakistan Institute of Corporate Governance. He holds more than 3 decades of experience.


Board Effectiveness

The BoD meets every quarter and minutes of these meetings are adequately documented. The BoD is assissted by 4 committees - Audit, Investment, Human Resource & Remuneration and Nomination Committee. 


Transparency

M/s. BDO Ebrahim & Co., Chartered Accountants have expressed an unqualified opinion on financial statements for the CY24.


Management
Organizational Structure

The Company operates through Underwriting, Risk Management, Sales and Marketing, Finance and IT department. All departmental Heads reports to the CEO, who then reports to the BoD. While, the Head of Internal Audit & HR functionally reports to the respective BoD committee, and administratively to the CEO. The BoD makes key decisions.


Management Team

The CEO, Mr. A. Razak Ahmed, brings extensive insurance-related experience and a long association with the Group to his role. The broader management team possesses sound, relevant experience across their functional domains.


Effectiveness

To ensure the smooth functioning of the Company's activities, different management-level committees are in place. Reliance Insurance’s monitoring and evaluation structure is also effective, as evidenced by periodic management meetings.


MIS

The Company recognizes the importance of information technology and continually invests in expanding and upgrading its platform as needed. The IT strategy is aligned with operational requirements to provide swift services and maximize customer satisfaction.


Claim Management System

In the event of a claim, the Company pays policyholders as promptly as possible. Independent surveyors are assigned to assess the loss amount for claim processing and settlement, considering the nature of the claim. The Company also uses WK Webster as a claim’s settler.


Investment Management Function

The Company has a formal Investment Policy Statement,  and the BoD has constituted an Investment Committee that meets fortnightly for proposed investments. The Company’s portfolio is diversified across sectors, considering payout history, growth potential, and active trading.


Risk Management framework

The BoD has formed a Risk Management and Compliance Committee to oversee the monitoring and review of all material controls (financial, operational, and compliance), ensure robust risk mitigation, maintain the integrity of financial information, and ensure adequate disclosure of the Company’s risk framework and internal controls.


Business Risk
Industry Dynamics

The Pakistani general insurance industry experienced robust performance in CY24, with Gross Premium Written (GPW) expanding by ~18% to reach PKR 215bln (up from PKR 182bln in CY23). This top-line growth was supported by significant profitability improvements, as underwriting results doubled, increasing by nearly 100% to PKR 14bln (CY23: PKR 7bln), while overall investment income surged by ~95% to PKR 39bln billion. However, the 6MCY25 saw a marked moderation, reflecting challenging economic conditions: industry GPW growth slowed to a marginal ~2% (PKR 101bln vs. PKR 99bln in 6MCY24), and underwriting performance declined by ~4% (PKR 5.7bln). This contraction in underwriting results contributed to a slight dip in total industry earnings (PKR 11.6bln), underscoring the imperative role of the current economic environment on the industry's future performance.


Relative Position

Reliance Insurance holds less than ~1% market share based on GPW posted during CY24 and 9MCY25.


Revenue

The Company operates in both conventional and Takaful segments, with the majority (~85%) of its business driven by conventional operations. The GPW has posted growth of ~10%, reporting at PKR 1,217mln during CY24 (CY23: PKR 1,106mln). The fire segment remained the major contributor (~47%), reflecting a high concentration risk. During 9MCY25, the GPW of the Company grew by ~25% reporting at PKR 1,017.mln (9MCY24: PKR 813mln). Considering the evolving dynamics of the industry, the Company requires stringent efforts to post substantial growth to stay at par with the industry. 


Profitability

The core income of the Company grew by ~76% during CY24 to PKR 95mln (CY23: PKR 54mln). During 9MCY25, underwriting results were reported at PKR 102mln (9MCY24: PKR 79mln). The investment income supplemented the overall performance of the Company. The net income grew by ~77% in CY24 to PKR 304mln (CY23: PKR 172mln) but it dropped to PKR 361mln in 9MCY25 (9MCY24: PKR 244mln). The combined ratio fell slightly at ~86.4% in CY24 (CY23: ~89.7%) and was relatively stable at ~80.4% during 9MCY25 (9MCY24: ~83%). The Company must strengthen its profitability, accompanied by solid investment income, for sustainability.


Investment Performance

The Company maintained an investment book of PKR 1,565mln as of CY24 (CY23: PKR 1,243mln). The investment book showed strong performance, delivering a consolidated return of ~40.1% during CY24. Investment income reflected a significant increase of ~60% during the period, amounting to PKR 429mln in CY24 (CY23: PKR 268mln). This growth was attributed to the revival of the equity market, with the majority (~84%) of investments in equity instruments. During 9MCY25, investment book of PKR 1.9bln (9MCY24: PKR 1.3bln) generated an investment income of PKR 460mln (9MCY24: PKR 271mln). As interest rates have reduced, efforts to redraft the investment book to generate a sizeable investment income would benefit the Company, going forward. 


Sustainability

Currently, the management holds conservative approach to increase the Company’s capital through owner's source. However, the Company foresees stable growth targets with a focus on its main segment i.e., fire and property segment. The Company aims to enhance its by increasing it business concentration in the other better margin generating segment.


Financial Risk
Claim Efficiency

Claims outstanding days increased to 192 days in CY24, compared to 163 days in CY23. As of 9MCY25, claims outstanding days were volatile at ~281 days (9MCY24: ~207 days). The insurance claims/liquid investments efficiency ratio fell slightly to ~44.8% in CY24 (CY23: ~48.7%), while as of 9MCY25, the efficiency was reported at ~25.5% (9MCY24: ~39.1%). Normalizing the Company's claims expenses remains important.


Re-Insurance

Reliance Insurance successfully concluded reinsurance arrangements for the year 2024. Swiss Re continues to be the lead reinsurance program for CY24. Underwriting capacity for certain lines of business has improved. The Company has proportional treaty arrangements. The Company ceded an insurance premium of PKR 445mln in 9MCY25 (9MCY24: PKR 374mln). The Company requires a combination of various treaties with optimal capacity, going forward. 


Cashflows & Coverages

The Company reported a strong current ratio of 2.0x in CY24 (CY23: 2.2x). As at 9MCY25, the current ratio improved to 2.5x reflecting strong liquidity position. The liquidity coverage for provisions of outstanding claims (including IBNR) reported a strong improvement, standing at ~6.0x as of 9MCY25 (9MCY24: ~4.7x). Maintaining a stable liquid position to meet its short-term obligations remains important.


Capital Adequacy

During CY24 the equity base experience an uptake of ~20% reporting at PKR 1,565mln (CY23: PKR 1,311mln).The Company’s equity base reported at PKR 2,074mln as at 9MCY25 reflecting an uptake of ~25% (9MCY24: PKR 1,663mln). The Company's capital adequacy going forward is dependent on the successful execution of its planned capital raise to meet the new Minimum Capital Requirement of PKR 2bln by 2030.
 
 

Nov-25

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Reliance Insurance Company Limited

financial summary

(PKR mln)

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Sep-25
9M		 Dec-24
12M		 Dec-23
12M		 Dec-22
12M
Audited Audited Audited Audited
A. BALANCE SHEET
1. Investments 1,963 1,565 1,243 1,051
2. Insurance Related Assets 1,385 1,332 1,080 814
3. Other Assets 200 183 165 147
4. Fixed Assets 130 105 87 73
Total Assets 3,677 3,185 2,576 2,084
1. Underwriting Provisions 658 602 536 413
2. Insurance Related Liabilities 455 578 540 423
3. Other Liabilities 491 343 190 99
4. Borrowings 0 0 0 0
Total Liabilities 1,603 1,522 1,265 936
Equity/Fund 2,074 1,663 1,311 1,148
B. INCOME STATEMENTS
CONSOLIDATED INCOME STATEMENT
1. Gross Premium Written/Gross Contribution Written 1,017 1,217 1,106 858
2. Net Insurance Premium/Net Takaful Contribution 519 631 519 403
3. Underwriting Expenses (417) (535) (466) (354)
Underwriting Results 102 95 54 49
4. Investment Income 460 429 268 79
5. Other Income / (Expense) (59) (86) (64) (56)
Profit Before Tax 503 438 257 73
6. Taxes (143) (134) (85) (23)
Profit After Tax 361 304 172 49
PARTICIPANTS' TAKAFUL FUND - PTF
1. Gross Contribution Written 169 157 126 96
2. Net Takaful Contribution 30 34 14 5
3. Net Takaful Claims (23) (36) (27) (12)
4. Direct Expenses Including Re-Takaful Rebate Earned 4 2 8 9
Surplus Before Investment & Other Income/(Expense) 10 (0) (4) 2
5. Investment Income 0 0 2 1
6. Other Income/(Expense) 0 2 3 2
Surplus for the Period 11 2 0 5
OPERATOR'S TAKAFUL FUND - OTF
1. Wakala Fee Income 44 50 45 38
2. Management, Commission & Other Acquisition Costs (36) (39) (35) (30)
Underwriting Income/(Loss) 8 11 9 8
3. Investment Income 9 20 20 11
4. Other Income/(Expense) (1) (1) (0) 1
Profit Before tax 15 30 29 19
5. Taxes (4) (10) (8) (6)
Profit After tax 11 20 21 14
C. RATIO ANALYSIS
1. Profitability
Loss Ratio - Net Insurance & Takaful Claims / Net Insurance Premium or Takaful Contribution 22.6% 30% 32% 26%
Combined Ratio (Loss Ratio + Expense Ratio) 80.4% 85% 90% 88%
2. Investment Performance
Investment Yield 41.5% 40% 26% 8%
3. Liquidity
(Liquid Assets - Borrowings) / Outstanding Claims Including IBNR 6.0 4.2 4.2 5.1
4. Capital Adequacy
Liquid Investments / Equity (Funds) 94.6% 94% 95% 91%

Nov-25

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Reliance Insurance Company Limited

rating scale

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Nov-25

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Reliance Insurance Company Limited

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
  2. Restrictions
    1. No director, officer, or employee of PACRA communicates the information acquired by him for use for rating purposes to any other person, except where required under law to do so. (Chapter III; 10-(5))
    2. PACRA does not disclose or discuss with outside parties or make improper use of the non-public information which has come to its knowledge during a business relationship with the customer. (Chapter III; 10-7-(d))
    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
    1. PACRA fulfills its obligations in a fair, efficient, transparent, and ethical manner and renders high standards of services in performing its functions and obligations. (Chapter III; 11-A-(a))
    2. PACRA uses due care in the preparation of this Rating Report. Our information has been obtained from sources we consider to be reliable, but its accuracy or completeness is not guaranteed. PACRA does not, in every instance, independently verify or validate information received in the rating process or in preparing this Rating Report. (Clause 11-(A)(p))
    3. PACRA prohibits its employees and analysts from soliciting money, gifts, or favors from anyone with whom PACRA conducts business. (Chapter III; 11-A-(q))
    4. PACRA ensures before the commencement of the rating process that an analyst or employee has not had a recent employment or other significant business or personal relationship with the rated entity that may cause or may be perceived as causing a conflict of interest. (Chapter III; 11-A-(r))
    5. PACRA maintains the principle of integrity in seeking rating business. (Chapter III; 11-A-(u))
    6. PACRA promptly investigates in the event of misconduct or a breach of the policies, procedures, and controls, and takes appropriate steps to rectify any weaknesses to prevent any recurrence, along with suitable punitive action against the responsible employee(s). (Chapter III; 11-B-(m))
  4. Independence & Conflict of Interest
    1. PACRA receives compensation from the entity being rated or any third party for the rating services it offers. The receipt of this compensation has no influence on PACRA’s opinions or other analytical processes. In all instances, PACRA is committed to preserving the objectivity, integrity, and independence of its ratings. Our relationship is governed by two distinct mandates: i) rating mandate - signed with the entity being rated or issuer of the debt instrument, and ii) fee mandate - signed with the payer, which can be different from the entity.
    2. PACRA does not provide consultancy/advisory services or other services to any of its customers or their associated companies and associated undertakings that are being rated or have been rated by it during the preceding three years, unless it has an adequate mechanism in place ensuring that the provision of such services does not lead to a conflict of interest situation with its rating activities. (Chapter III; 12-2-(d))
    3. PACRA discloses that no shareholder directly or indirectly holding 10% or more of the share capital of PACRA also holds directly or indirectly 10% or more of the share capital of the entity which is subject to rating or the entity which issued the instrument subject to rating by PACRA. (Chapter III; 12-2-(f))
    4. PACRA ensures that the rating assigned to an entity or instrument is not affected by the existence of a business relationship between PACRA and the entity or any other party, or the non-existence of such a relationship. (Chapter III; 12-2-(i))
    5. PACRA ensures that the analysts or any of their family members shall not buy, sell, or engage in any transaction in any security which falls in the analyst’s area of primary analytical responsibility. This clause, however, does not apply to investments in securities through collective investment schemes. (Chapter III; 12-2-(l))
    6. PACRA has established policies and procedures governing investments and trading in securities by its employees and for monitoring the same to prevent insider trading, market manipulation, or any other market abuse. (Chapter III; 11-B-(g))
  5. Monitoring and Review
    1. PACRA monitors all the outstanding ratings continuously, and any potential change therein due to any event associated with the issuer, the security arrangement, the industry, etc., is disseminated to the market immediately and in an effective manner after appropriate consultation with the entity/issuer. (Chapter III; 17-(a))
    2. PACRA reviews all the outstanding ratings periodically on an annual basis. Provided that public dissemination of annual review and in an instance of change in rating will be made. (Chapter III; 17-(b))
    3. PACRA initiates an immediate review of the outstanding rating upon becoming aware of any information that may reasonably be expected to result in downgrading of the rating. (Chapter III; 17-(c))
    4. PACRA engages with the issuer and the debt securities trustee to remain updated on all information pertaining to the rating of the entity/instrument. (Chapter III; 17-(d))
  6. Probability of Default
    1. PACRA’s Rating Scale reflects the expectation of credit risk. The highest rating has the lowest relative likelihood of default (i.e., probability). PACRA’s transition studies capture the historical performance behavior of a specific rating notch. Transition behavior of the assigned rating can be obtained from PACRA’s Transition Study available at our website. (www.pacra.com) However, the actual transition of rating may not follow the pattern observed in the past. (Chapter III; 14-3(f)(vii))
  7. Proprietary Information
    1. All information contained herein is considered proprietary by PACRA. Hence, none of the information in this document can be copied or otherwise reproduced, stored, or disseminated in whole or in part in any form or by any means whatsoever by any person without PACRA’s prior written consent.

Nov-25

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