Press Release

VIS Reaffirms IFS Rating of EFU General Insurance Limited
 

Karachi, July 30, 2019: VIS Credit Rating Company Limited has reaffirmed the Insurer Financial Strength (IFS) Rating of EFU General Insurance Limited (EFU) at ‘AA+’ (Double A Plus). Outlook on the assigned rating is ‘Stable’. The rating indicates very high capacity to meet policyholder and contract obligations. Risk is considered modest, but may vary slightly over time due to business/economic conditions. The previous rating action was announced on June 29, 2018.

EFU General Insurance Limited (EFU) continues to maintain its leading position in the private insurance sector in Pakistan with a market share of 24% (2017: 27%) as at end-December 2018. The assigned rating takes into account sound capitalization and liquidity indicators of the company. Adequate profitability and favorable leverage indicators vis-à-vis peers are also reflected in the assigned rating.

Top line of EFU has depicted improvement with gross premium (including contribution from Takaful operations) reported at Rs. 20.8b (2017: Rs. 20.4b) at end-2018. Business mix remained similar to the preceding year with fire and property segment constituting the largest segment on gross basis. Due to higher retention on net basis, motor segment represents the largest segment in terms of net premium. Going forward, management believes that top line of the company is expected to be driven by increase in the sum insured.

Sound equity base and adequate reinsurance arrangements provide comfort to the risk profile of the company. The company has reinsurance arrangements in place with diverse panel of reinsurers. Size of maximum per risk claim remained unchanged during the outgoing year and is considered manageable in relation to the company’s loss absorption capacity on net basis. Maintaining prudent underwriting quality and sound reinsurance arrangements is considered important from ratings perspective.

Overall profitability, while remaining at an adequate level, was reported lower in 2018 on account of reduced income from underwriting operations. Bottom line was supported by higher income from investment portfolio.

For further information on this rating announcement, please contact Mr. Javed Callea (Ext: 201) or the undersigned (Ext: 208) at 35311861-70 or fax to 35311872-73.


Atiq Anwar Mahmudi
Advisor


Applicable Rating Criteria: General Insurance (March 2017)
https://s3-us-west-2.amazonaws.com/backupsqlvis/docs/Meth-GenInsurance201702.pdf

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Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited(Formerly JCR-VIS Credit Rating Company Limited) (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS(Formerly JCR-VIS Credit Rating Company Limited), the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS(Formerly JCR-VIS Credit Rating Company Limited) is not an NRSRO and its credit ratings are not NRSRO credit ratings.VIS(Formerly JCR-VIS Credit Rating Company Limited) is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2019 VIS Credit Rating Company Limited(Formerly JCR-VIS Credit Rating Company Limited). All rights reserved. Contents may be used by news media with credit to VIS(Formerly JCR-VIS Credit Rating Company Limited).

VIS Credit Rating Company Limited (Formerly JCR-VIS Credit Rating Company Limited)