Press Release
JCR-VIS reaffirms IFS Rating of EFU Life Assurance Ltd at AA-
Karachi, January 2, 2012: JCR-VIS Credit Rating Company Limited has reaffirmed the Insurer Financial Strength (IFS) Rating of EFU Life Assurance Ltd. (EFUL) at ‘AA-’ (Double A Minus). Outlook on the assigned rating is Stable. The rating reflects very high capacity to meet policyholders’ obligations.
The rating assigned to EFUL takes into account the strong franchise value of the company established over the years as evident from its largest market share in the private life insurance sector, even after experiencing decline in recent years in the face of rising competition. In a bid to maintain its competitive position, EFUL continues to focus strategically on its dedicated agency sales force while it has also expanded distribution channels by building partnerships with multiple banks for distribution of its products. EFUL has also enhanced its product diversity to cater to different market niches. As and when the regulatory environment becomes enabling, the company plans to venture into family takaful business. EFUL also has plans to expand overseas in the medium term.
Given the low penetration of life insurance in Pakistan, there is significant room for growth in the market. The ability of the company to continue to grow in part also depends on performance of funds under management, as given the nature of bulk of individual life policies, asset side risk is transferred to the policyholders. In 2010, return of the largest fund managed by EFUL suffered on account of hike in interest rates, as the company holds long term PIBs in its portfolio. With market benchmark rates having adjusted downwards, performance has been favourably impacted in 2011, despite the stock market registering negative return, and the returns on the company’s unit linked funds have been competitive vis-a-vis the market. EFUL has consciously realigned its investment strategy and fixed income exposure during 2010 and 2011 has mainly been built in short term government securities. Over the year, the investment decision making and monitoring process has been strengthened within the company. Liquidity and capitalization indicators remain strong.
For further information on this rating announcement, please contact Mr. Syed Ziauddin Ahmed (Ext: 508) or Ms. Sobia Maqbool, CFA (Ext: 506) at (+92-21) 35311861-70 or fax to (+92-21) 35311873.
Faheem Ahmed
President & CEO