Press Release
VIS Assigns Initial IFS Rating to TRAFCO Insurance Company Limited
Karachi, June 24, 2026: VIS Credit Rating Company Limited (VIS) has assigned Initial IFS Rating to TRAFCO Insurance Company Limited (‘TICL’ or the ‘Company’) at ‘BBB (IFS)’ (Triple B (Insurer Financial Strength)). Medium to long term rating of 'BBB (IFS)' indicates good capacity to meet policyholder and contract obligations. Risk factors are moderate, and the impact of any adverse business and economic factors are expected to be manageable. Outlook on the assigned ratings is ‘Stable’.
TICL was incorporated in Pakistan as a public limited company on October 25, 1979 under the repealed Companies Act, 1913 (now the Companies Act, 2017). It is part of TRAFCO Group of Companies, a family-owned business. The Company is engaged in providing general insurance services. It offers a range of non-life insurance products to individuals and corporations. The Company deals in Fire and Property Damage, Marine, Aviation and Transport, Motor, Credit & Suretyship and Miscellaneous segments. The sponsoring Company, TRAFCO Group of Companies, acquired Credit Insurance Company in 2015 and subsequently changed the name to TRAFCO Insurance Company Limited.
Assigned rating of TICL reflect its small scale of operations and limited market share within the domestic non-life insurance sector. The credit profile is primarily constrained by a weak capitalization profile and persistent regulatory non-compliance, with net admissible assets remaining below statutory solvency requirements. These deficiencies are further reflected in the company’s failure to maintain the required statutory deposit with the State Bank of Pakistan. Governance risks are amplified by limited Board independence and vacancies in key management positions. A qualified audit opinion highlights unresolved issues such as solvency shortfalls, insufficient evidence for impairment assessments on related party receivables, and unsettled liabilities regarding taxes, payroll, and employee social security contributions. Collectively, these factors indicate significant weaknesses in the company’s financial reporting controls and regulatory adherence framework.
The Company’s underwriting profile remains highly concentrated in credit and suretyship business, primarily linked to construction and supply-related guarantees, while exposure to other segments remains limited. Although gross written premium has demonstrated steady growth over the review period, business diversification remains constrained. The Company’s underwriting performance has improved materially, supported by higher net retention, a favorable claims experience and improved combined ratio; resulting in underwriting profit. Liquidity indicators have shown some strengthening following the recovery of receivables and settlement of payables, yet capitalization remains significantly below the phased minimum capital requirement framework. This indicates reliance on future capital injection plans.
Future credit ratings for TICL remain sensitive to the timely materialization of capital injections to meet statutory requirements, the resolution of regulatory non-compliance and audit qualifications, and the stabilization of the management team. Failure to address the solvency shortfall or meet phased capital benchmarks could lead to downward pressure on the company's rating.
For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria: General Insurance
https://docs.vis.com.pk/docs/GeneralInsurance-2023.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf