Press Release

VIS Reaffirms IFS Rating of Allianz EFU Health Insurance Limited

Karachi, June 12, 2020: VIS Credit Rating Company Ltd. (VIS) has reaffirmed Insurer Financial Strength (IFS) rating of Allianz EFU Health Insurance Limited (Allianz EFU) at ‘A’ (Single A). The IFS rating signifies high capacity to meet policyholder and contractual obligations. Risk factors may vary over time due to business/economic conditions. Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on July 3, 2019.

Rating incorporates the implicit support of the sponsors including EFU group and Allianz SE, a Germany-based financial services provider and holding company of the Allianz Group (Allianz SE rated AA by Standard & Poor’s and A+ by A.M.Best). The rating take into account the continuing trend of low capitalization levels, high leverage ratios and significant loss ratios in comparison to peers.

During 2019, the company’s business levels depicted a healthy growth rate and resulted in a top line amounting to Rs. 2.4b. Given the prevailing competition in the insurance market, the company continues to face significant pressure on pricing. However, prevailing uncertainty in sector dynamics due to coronavirus outbreak, prolonged lockdown, overall contraction in demand and challenging economic environment may pose as challenges for growth in the insurance industry during the coming years. Retaining market leadership in health insurance business with a market share of 18.2% in 2019 would pose challenges and would be an important rating driver.

While investment income of the company improved, underwriting operations posted a significant loss of Rs. 141.6m in 2019 vis-à-vis a profit of Rs. 34.3m in 2018. With a higher reported loss ratio for the outgoing year, bottom line of the company reported a loss. Given the future growth plans of the company, risk adjusted capitalization levels need to increase in order to keep leverage indicators within manageable levels. Management of liquidity indicators, which declined during the outgoing year, would be important going forward.

For further information on this rating announcement, please contact Mr. Jamal Abbas Zaidi (Ext: 207) or Ms. Muniba Abdullah, CFA (Ext. 215) at 021-35311861-70 or email at

Faryal Ahmad Faheem
Deputy CEO

Applicable Rating Criteria: General Insurance (November 2019)

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