Press Release

JCR-VIS Reaffirms IFS Rating of EFU General Insurance Limited

Karachi, November 25, 2014: JCR-VIS Credit Rating Company Limited has reaffirmed the Insurer Financial Strength 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 December 9, 2013.

EFU’s rating derives strength from its sizeable market share, strong capitalization and liquidity profile and improving operational indicators. Management team of the company comprises highly experienced individuals that have been associated with EFU for several years. The assigned rating indicates a very high capacity to meet policy holder/contractual obligations; risk is considered modest.

EFU is the largest private sector general insurance company in Pakistan, having a market share of 27% in FY13. In line with industry growth, top line of EFU has also depicted healthy improvement of 13% in FY13. Growth momentum has continued in the on-going year, as premiums underwritten in 9M14 were 7% higher than the corresponding period last year. The company’s business mix is led by Fire segment that includes engineering and terrorism risks. EFU has reinsurance arrangements in place with entities having sound risk profiles. In line with business growth, the management has negotiated capacity enhancements in major segments, whilst keeping net retention at manageable levels. Growth momentum in business volumes is expected to be supported by commencement of Takaful window operations in future.

EFU posted notable improvement in underwriting results in 9M14, on the back of better net claims performance and an effective check on overheads. Support from investment income has continued as the local stock market remained buoyant. Some increase in insurance debt was witnessed in 3rd quarter 2014, albeit aging profile of the same is considered satisfactory. The company has a large investment portfolio, including its strategic holding in EFU Life Assurance Limited, which is one of the leading private sector life insurance company; other than this, the portfolio comprises a mix of equities, sovereign instruments, TDRs, real estate properties and mutual funds.

During FY13, the company made a successful transition to an Oracle-based General Insurance System (GIS); the new system allows improved MIS reporting. In line with requirements of the Code of Corporate Governance, the company has inducted an independent director on its Board during FY14.

For further information on this rating announcement, please contact Mr. Abdur Rahim, ACII (Ext: 508) or Ms. Sobia Maqbool, CFA (Ext: 604) at 35311861-70 (10 lines) or fax to 35311872-73.


Javed Callea
Advisor

Applicable rating criterion: Methodology: General Insurance (Nov 2003)

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