Press Release

JCR-VIS Reaffirms IFS Rating of EFU General Insurance Limited

Karachi, June 29, 2018: JCR-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 previous rating action was announced on August 25, 2017.

EFU General Insurance Limited (EFU) continues to maintain its competitive position in the private insurance industry with an increased market share of 27% as at end-December 2017. Assigned rating also derives strength from adequate capitalization and liquidity levels along with sustained profitability in business segments. Leverage indicators of the company depict significant room to grow its business.

Top line of the company grew at a higher rate than the industry growth rate of 8.1%. Business growth was largely a function of higher volumes given stiff competition has adversely impacted premium rates. EFU has a diversified and balanced business mix with property contributing a significant proportion of gross business. On the Takaful front, business is expected to grow mainly in motor.

A strong equity base and adequate reinsurance coverage provide resilience to EFU’s risk profile. Moreover, size of maximum per risk claim remained unchanged which on net account is considered manageable in relation to the company’s loss absorption capacity. Rating will remain to be underpinned by continued prudence in underwriting policies and sound reinsurance treaty arrangements.

Results from underwriting operations have remained positive with underwriting profitability reported lower on account of higher incidence of claims. Historically, bottom line has also been supported by a steady stream of income from its investment portfolio. We understand that market risk exposure in equity securities is being monitored closely.

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

Javed Callea
Advisor

Applicable Rating Criteria: General Insurance (September 2016)
http://www.jcrvis.com.pk/kc-meth.aspx

Information herein was obtained from sources believed to be accurate and reliable; however, 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, 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 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 June 29, 2018 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.