Central Insurance is an arm of the Dawood group, one of the oldest business groups in Pakistan.
Over its long history of operations, Central Insurance has steadily strengthened its capital base through retention of its earnings.
These funds have been deployed towards developing a strong earning assets portfolio.
However, concentration within the investment portfolio remains high, with about 90 percent of the portfolio held in strategic shares.
Although this portfolio yields substantial earnings, it exposes the company to significant price and earnings fluctuations risks.
The business generated by Central Insurance had also remained largely limited to group and associated undertakings and claims and underwriting expense ratios have remained low.
This rating takes into consideration the recently developed strategy to procure market business. JCR-VIS will closely monitor the performance of the company vis-a-vis the strategy developed, its control on level of insurance debt and overheads.
Venturing into the market would require further strengthening of risk management and information system, and effective implementation of the planned MIS will be crucial.
Central Insurance has maintained lengthy association with re-insurers of international repute, though reinsurance terms are expected to be more stringent in FY2004 for Pakistan's general insurance market.