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.
Jubilee Insurance Company Limited
Insurer Financial Strength Rating: AA,
JCR-VIS Reaffirmed Insurer Financial
Strength Rating AA to New Jubilee Insurance Company
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
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.
Housing Finance Limited
Entity: BB+/B, Outlook: Rating Watch
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
AHFL's core business activities
remained sluggish during the period, with only few
disbursements made under the umbrella of housing
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.