The Pakistan Credit Rating Agency Limited
26-Jan-24
Analyst
Faiqa Qamar
faiqa.qamar@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA maintains IFS Rating of Crescent Star Insurance Limited
| Rating Type | IFS | |
|
Current (26-Jan-24 ) |
Previous (27-Jan-23 ) |
|
| Action | Maintain | Maintain |
| IFS Rating | A (ifs) | A (ifs) |
| Outlook | Stable | Stable |
| Rating Watch | Yes | Yes |
The assigned rating reflects the modest position of the Company in terms of GPW in the general insurance space. The Company is focusing on growth arenas other than banking channels. Hence the liner of business that the Company underwrites reflects that very approach. The emphasis is on direct line insurance in credit & suretyship, along with miscellaneous segments. Overall, the commitment to underwrite risk-free business has resulted in a notable enhancement of Crescent Star's GPW, translating into improved performance on comparative terms. The liquidity of the Company was previously stuck in a major investment. Under a new arrangement, this liquidity is now flowing back. The Company has received PKR 150mln and hopes to receive the entire PKR 350mln in the coming days. This will beef up the liquidity of the Company. The management has expressed the intention to keep the amount in government securities or bank placements. Materialization of these initiatives, along with liquidity enhancement, remains crucial for the Company. On the financial risk side, the Company's current liquidity profile caters to its current portfolio only. The risks of the Company underwriting are granular and work under facultative agreements. Having a predecided treaty of reinsurance is preferred for insurance companies. Moreover, the Company's relative ability to meet liabilities towards the policyholders remains well.
The rating captures the Company's consolidation process in a merger of Crescent Star Foods into PICIC Insurance, while fulfilling regulatory and legal requirements. Transparency and governance standards remain important.
About
the Entity
Crescent Star Insurance Limited, a Company listed on the stock exchange since 1957, sees a significant ownership interest of ~97.8%, dispersed among a diverse group of individuals.
The Company has an eight-member Board (BoD), three Independent, two Non-Executive and three Executive Directors on the BoD. The BoD is chaired by Mr. Naim Anwar, who concurrently serves as the CEO of the Company.