PACRA Maintains IFS Rating of Premier Insurance Limited
| Rating Type|| Insurer Financial Strength(IFS)|
|Current(06-Apr-2017-) ||Previous(30-Sep-2016) |
| Action|| Maintain|| Maintain|
| IFS Rating|| A|| A|
| Outlook|| Stable|| Stable|
| Rating Watch|| -|| -|
Premier Insurance has had certain challenges lately. A specific risk exposure (accidental coverage) did not behave as expected. Desired results of aggressive business team expansion could not be achieved. These led to sizeable losses in CY16. The company (including its sponsors and BoD) took cognizance of these developments ably and requisite responses are in place. The rating recognizes this.
Premier Insurance rating reflects its strong liquidity position even after incorporating ensuing losses. This emanates from an adequately diverse investment book. This, while providing alternative revenue stream, provides cushion to absorb losses while upholding the financial profile of the company. The company has rolled back network expansion, drag of related cost is no more there. Barring one risk exposure, the company has good underwriting pattern. This should yield core profits. Moreover, to keep a cap on loss pattern, the management has shifted from excess of loss to proportional reinsurance treaty arrangement. The company is strengthening the risk management and procedural framework. The business strategy is focused on consolidating tested risks and relationships while capturing organic growth. The company plans to enhance motor business. These should help hold its industry position. At the same time rating takes comfort from sustained interest of the sponsoring shareholder in the company; the sponsor remains committed.
The rating is dependent on fast ascend to positive performance matrix. Meanwhile, the management has to carefully manage its insurance asset liability structure wherein timely realization of outstanding premium along with smooth settlement of claims is critical. Any further dilution in the risk profile of the company may impact the rating.
About the Entity
Premier Insurance was incorporated in 1952 and is listed on Pakistan Stock Exchange. It holds 2% market share at end-Sep' 16 and operates through two business Hubs South and North. Crescent Group holds 70% shareholding, exercising control through Mr. Zahid Bashir. State Life Insurance Company is another major shareholder (11%). The Crescent Group (CG) has been in the business since 1910, and, through its different streams as of now, operates in diversified sectors of textile, steel, sugar, software, and power.
The eight member board, including CEO, includes six representations of Crescent Group and one of State Life Insurance. Currently, the company has no independent director. Mr. Muhammad Asif Arif, CEO of the company since Apr15, possesses insurance related experience of over three decades.