Press Release

VIS Reaffirms IFS Rating of EFU Life Assurance Limited

Karachi, August 04, 2021: VIS Credit Rating Company Limited has reaffirmed the Insurer Financial Strength Rating of EFU Life Assurance Limited (EFUL) at ‘AA+’ (Double A Plus). The rating signifies very high capacity to meet policyholder and contractual obligations. Risk is modest, but may vary slightly over time due to business/economic conditions. Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on August 21, 2020.

The ratings assigned to EFUL take into account the company’s sizable footprint and dominant market positioning in the private sector life insurance sector of Pakistan as evident from market share of 14.7% at end-March’21. The rating is underpinned by strong shareholding, sustenance of business volumes, experience and stability in the senior management profile and sound governance framework. Slight dip in persistency levels was recorded during the outgoing year; decline was posed by the pandemic impacting the agent-client interface. Recovery of persistency levels to pre-pandemic levels would remain important from a rating perspective.

Financial risk profile of the company remains strong and within the assigned rating criteria despite recent market volatility; the increase in the claims ratios during the review period was a function of onslaught of Covid-19 given pandemic is covered under life insurance for existing policies. In addition, the rating takes into account the company’s strong capitalization in respect to nature of risks underwritten. Liquidity profile is also sound as liquid assets, largely comprising government securities, provide adequate coverage against the company’s liabilities. The rating further factors in reinsurance arrangements with counterparty having sound credit risk profile with appropriate risk retention on net account to maintain risk appetite of the company. Expense reduction initiatives and general favourable operating performance of EFUL’s core business lines, particularly new business generation, will remain key rating drivers. The management envisages that the current mix of equities and fixed income in the investment portfolio is positioned to provide competitive returns to policyholders coupled with supporting new customer acquisition and enhancing customer stickiness. Moreover, improvement in market share and a demonstrated ability to scale up business volume with a diversified and profitable product mix would remain key rating sensitivities.

For further information on this rating announcement, please contact Ms. Maham Qasim at 042-35723411-13 (Ext. 8004) and/or the undersigned at 021-35311861-66 (Ext. 306) or email at info@vis.com.pk .


Faryal Ahmad Faheem
Deputy CEO

Applicable Rating Criteria: Life Takaful (February 2018)
http://vis.com.pk/kc-meth.aspx

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