Press Release

VIS Reaffirms IFS Rating of EFU General Insurance Limited

Karachi, November 23, 2022: VIS Credit Rating Company Limited has reaffirmed the Insurer Financial Strength (IFS) Rating of EFU General Insurance Limited (EFU) at ‘AA++ (IFS)’ (Double A Plus Plus (IFS)). The IFS rating of ‘AA++(IFS)’ denotes very strong capacity to meet policy holders and contract obligations. Risk factors are very low, and the impact of any adverse business and economic factors is expected to be very small. Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on March 31, 2022.

The rating assigned to EFU is underpinned by its strong financial profile and dominant market positioning in the private insurance sector of Pakistan, as evident from its market share of 21.7% in 2021. During 2021, insurance industry growth did pick up pace, rising from 8% to 11%, which can broadly be attributed to 4 companies, which contributed 87% of this growth. Given the lackluster growth across the industry, insurance penetration in the country persists on the lower side. A change in trend has been noted, wherein industry growth was reported at 26% in H1’2022, which is viewed to be aligned with the uptick in inflation. Despite some market share losses over the years, owing to competitive pressures in the industry, overall growth in EFU’s underwriting remains close to industry growth.

EFU’s assigned rating is supported by a sound reinsurance panel, with majority of business lines reinsured by companies with ratings in the ‘A’ band. EFU’s cession, has trended down, falling closer to the peer median. Given sizable dividend payouts, the Company’s equity base has contracted on a timeline, which in combination with an increase in underwriting has translated in higher operating leverage. Despite the uptick, EFU’s operating leverage is viewed to be aligned with peers.
Overall, the Company’s liquidity indicators remain adequate. VIS has noted an increase net claims ratio in the ongoing year. Even though we continue to notice a declining trend in liquid asset coverage of net technical reserves, the same remains adequately high when compared to peers. The assigned ratings remain dependent on maintaining leverage and liquidity in line with the threshold.
For further information on this rating announcement, please contact Mr. Arsal Ayub, CFA (Ext: 215) at 35311861-70 or fax to 35311872-73 or email at

Javed Callea

Applicable Rating Criteria: General Insurance (March 2022)

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 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

VIS Credit Rating Company Limited