Press Release

VIS Revises IFS Rating of EFU Health Insurance Limited (formerly Allianz EFU Health Insurance Limited)

Karachi, November 23, 2023: VIS Credit Rating Company Ltd. (VIS) has revised the Insurer Financial Strength (IFS) rating of EFU Health Insurance Limited (EFUH) (formerly Allianz EFU Health Insurance Limited) from ‘A+(IFS)’ (Single A Plus IFS) to 'A (IFS)' (Single A IFS). The IFS rating of ‘A (IFS)’ denotes strong capacity to meet policy holders and contract obligations. Risk factors are low, and the impact of any adverse business and economic factors is expected to be small. Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on April 20, 2022.

The revision in the assigned rating factors in weakening in the financial risk profile over the rating review period. Given that high loss ratios are characteristic of the health insurance industry, the overall combined ratio of the Company has remained on a higher side in comparison to peers; the same has also resulted in underwriting losses recorded on a timeline. During the ongoing year, uptick in net claims ratio in line with inflationary pressure coupled with increase in underwriting expense ratio largely stemming from downward revision in commission rates from reinsurers have further impacted underwriting performance. The bottom-line, however, was supported with improvement in investment income in conjunction with rising policy rates. The rating also takes into account the exit of the majority shareholder, Allianz SE, a Germany-based financial services provider and holding company of the Allianz Group (rated AA on the international scale). Nonetheless, the rating is underpinned by the sponsorship backing of the EFU Group, one of Pakistan's leading insurance providers, which has taken up the main equity stake.

Although EFUH maintains adequate risk profile in terms of reinsurance coverage; however, the same still remains limited as the local reinsurer is the sole reinsurance provider. Moreover, both operating and financial leverage indicators have dipped over the rating review period on account of greater business volume relative to expansion of equity. The equity base exhibited limited growth on a timeline as persistent underwriting losses restricted internal capital generation. On the other hand, the rating reflects adequate liquidity given close to full coverage of net technical reserves. Moreover, aging of claims is considered sound with no outstanding claims due for more than a year at end of the ongoing year. Going forward, the rating remains sensitive to improvement in underwriting profitability and leverage indicators while maintaining liquidity metrics.

For further information on this rating announcement, please contact Ms. Maham Qasim (Ext: 8010) or the undersigned (Ext: 207) on 021-35311861-64 or email at

Sara Ahmed

Applicable Rating Criteria: General Insurance (October 2023)

VIS Issue/Issuer Rating Scale

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