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The Pakistan Credit Rating Agency Limited

Date
30-Jun-2017
Analysts
Jhangeer Hanif
jhangeer@pacra.com

Iqra Bashir
iqra.bashir@pacra.com

+92-42-35869504
www.pacra.com
Applicable Criteria

  • General Insurance and Takaful Operator (Jun 16) [View]
  • Rating Modifiers | Outlook and Rating Watch (Jun 16) [View]

Related Research

  • Sector Study | General Insurance (Nov 16) [View]
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PACRA Maintain Entity Ratings of EFU General Insurance Limited
 Rating Type Insurer Financial Strength(IFS)
Current
(30-Jun-2017)
Previous
(01-Jul-2016)
 Action Maintain Maintain
 IFS Rating AA+ AA+
 Outlook Stable Stable
 Rating Watch - -

EFU Group continues to enjoy leadership in insurance industry – General and Health while securing second position in Life Insurance. In window takaful, EFU General Insurance remained leader with 25% market share, with Participants’ Takaful Fund and Operators’ Fund both in surplus. This furnishes strength to the brand and ability to serve diverse client needs and ability to capture large client base in the market. The company has posted strong profitability from underwriting and investment portfolio. The rating interprets the company's vision to lead both in terms of size and profitability. Sponsors (Bhimjee family and JS Group), board and the management are aligned on this, enabling a better focus in strategy and efforts. Increasing emphasis on customer service including concerted efforts to bring efficacy in claims settlement process with support from technology helps in sustaining market share. Strong liquidity and sound cash flow generation ability provide strength to the rating. The business strategy, going forward, is envisaging substantial benefit emanating from CPEC related projects and overall dynamism in the economy.

The rating is dependent on sustained competitiveness of the company. Keeping in view heightened competition in the industry, increase in insurance pie and penetration thereof is a prerequisite for sustaining the growth rate particularly for large companies. Claim settlement process with high transparency and customer convenience is required to boost policy holder confidence and growth in business volume.
About the Entity
EFU General, incorporated in 1932, is the largest general insurance company in Pakistan (25% market share in gross premium written in 2016) and is listed on Pakistan Stock Exchange. Significant shareholders of EFU General include JS Group and Bhimjee Group. Among EFU companies are EFU General, EFU Life and Allianz EFU Health Insurance. EFU General's BoD comprises nine members including the CEO. The Chairman of the board, Mr. Saifuddin N. Zoomkawala - seasoned insurance professional, has been associated with EFU Group since 1964. The board elections are being held in July, 2017. Mr. Hasanali Abdullah, the company's CEO & MD since July-11, is associated with the EFU Group since 1979. He is supported by a team of experienced professionals, long associated with the company. The emphasis on longevity of association needs careful balance with needs of energy and dynamism.
The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.
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