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First Al- Noor Modaraba

Entity: BBB/A-3, Outlook: Stable

JCR-VIS Reaffirmed Entity Ratings BBB/A-3 to First Al - Noor Modaraba

JCR-VIS Credit Rating Company Limited has reaffirmed entity ratings of First Al-Noor Modaraba (FAM) at 'BBB/A-3' (Triple B/A-Three). Outlook on the ratings is 'Stable'.

FAM is part of the Al-Noor Group and is engaged primarily in financing and trading activities. Operations of the modaraba are largely equity funded and debt leverage is projected to remain low over the rating horizon.

The increase in fresh disbursements facilitated growth in the net finance portfolio of the modaraba in the outgoing year and subsequently. During 2008, SECP approved 11 model financing agreements for modarabas, following which the management of the modaraba introduced Musawamah and Modaraba financing. Other models of Islamic financing are also planned to be introduced. Profitability of the modaraba was augmented by the trading activity in rice during FY08, where gross margins improved considerably in FY08. Keeping in view that margins on commodity trading tend to be volatile, the management is diversifying its trading portfolio.

As per management, net infection in the financing portfolio has been reduced to nil at the end of 2008. Trends with respect to portfolio quality indicators will be monitored by JCR-VIS.


New Jubilee Insurance Company Limited

Insurer Financial Strength Rating: AA, Outlook: Stable

JCR-VIS Reaffirmed Insurer Financial Strength Rating AA to New Jubilee Insurance Company Limited

JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has reaffirmed the Insurer Financial Strength Rating of New Jubilee Insurance Company Limited (NJI) at 'AA' (Double A). Outlook on the assigned rating is 'Stable'.

New Jubilee Insurance Company Limited (NJI) enjoys the rank of the third largest non life insurance company in the private sector. Having operated in the market for the last 55 years, the company enjoys significant franchise amongst stakeholders. NJI has pursued a diversified growth strategy with fire and marine segments representing a significant proportion of the business mix while motor has been restricted to about 20%. The company has also taken an initiative to diversify its product mix with the introduction of new products such as crop insurance. As per management, overall business growth level for FY2009 is expected to be robust.

In line with industry trends, NJI suffered underwriting losses on account of riots and unrest in the country towards the end of 2007, causing net claims ratio to escalate considerably. Overall claims performance has improved subsequently, with the company having reported a small underwriting profit for the nine month period ended September 2008. The company has placed greater emphasis on continuous surveillance of underwritten risks. JCR-VIS will closely monitor trends with respect to underwriting performance.

During the 9 months of 2008, liquidity indicators came under some stress, with payments due to claims resulting in cash outflows from underwriting activities, also compounded by rising level of insurance debt. However, by the close of the year, the company was able to curtail the level of insurance debt in line with historic trends. NJI has a diversified investment portfolio, with surplus liquidity channeled towards income funds over the last two years.

The strength of reinsurance program is a key rating driver. Treaty terms for 2009 largely remain similar to the preceding year with re-insurance cover also obtained for crop insurance products.


Asian Housing Finance Limited

Entity: BB+/B, Outlook: Rating Watch Developing

JCR-VIS assigns entity Rating BB+/B to Asian Housing Finance Limited

JCR-VIS Credit Rating Company Limited (JCR-VIS) has placed the entity rating of 'BB+/B' (Double B Plus/Single B) assigned to Asian Housing Finance Limited (AHFL) under 'Rating Watch- Developing Status'.

AHFL's core business activities remained sluggish during the period, with only few disbursements made under the umbrella of housing finance.

The sponsors of AHFL have decided to convert the company into a microfinance bank (MFB) and have applied with the State Bank of Pakistan (SBP) to operate as a district level MFB. Rating will be revisited once the company's future business strategy has been finalized.