PACRA maintains IFS Rating of Sindh Insurance Limited

In terms of Gross Written Premium (GWP), the general insurance industry has a total size of PKR 166bln in 9MCY23 compared to PKR 113bln in 9MCY22, exhibiting a growth of ~47%. The industry reported a growth of ~266% in underwriting results to PKR 9.9bln in 9MCY22 (9MCY22: PKR 2.7bln). The net income of the industry also experienced an increase of ~170% to PKR 20bln in 9MCY22 (9MCY22: PKR 7.4bln). The industry experienced a period without significant claims, contributing to the overall significant performance reported by the entire sector.
The assigned ratings of Sindh Insurance Limited (“Sindh Insurance” or “the Company”) reflects the parentage of Government of Sindh (GoS) and the potential to leverage the same for improved market positioning. The Company was incorporated with an objective to fulfill insurance needs for the assets owned and financed by the GoS, sanctioned after the legislation was passed by Sindh's provincial assembly through 'Sindh Insurance of Public Property Act, 2015’. Over the year, the Company has performed well by posting growth of ~98%, during 9MCY23; emanating mainly from Engineering segment (~72%), followed by Motor segment (~9%). Moreover, conventional portfolio stood affirm with value drive growth, as an impact of inflation. Volumetric growth was limited and main reliance remains toward the captive business i.e. , the business generated from various provincial government's departments and institutes. Customer concentration is considerably high, with ~78% of GPW emanating from Sindh Engro Coal Mining Company (SECMC), only. Considerable efforts have been undertaken by the Company for further enhancement of topline. However, focus towards penetrating in the non-captive avenues remain pivotal for the Company's growth, going forward. Bottom-line gathers support from the investment income mainly, along with prudent underwriting practices. Despite negligible claims, the underwriting profits remain on the lower when compared to the industry peers. On the financial risk front, the Company gathers support from strong investment book - primarily invested in government securities - providing substantial liquidity. Moreover, the cashflows and capital adequacy remains adequate. Going forward, Sindh Insurance will be actively involved in implementing crop insurance throughout the province of Sindh, following the directives issued by the GoS cabinet. Additionally, Sindh Insurance intends to establish a life insurance company to expand its presence in the life insurance market.
The rating is dependent on the Company’s ability to strengthen its market position with sustainable profitability. The financial risk profile should remain afloat along with growth. Furthermore, the Government’s backing and good governance practices are the key to sustained ratings.

About the Entity
Sindh Insurance Limited (“Sindh Insurance” or “the Company”) was incorporated as a non-listed public limited Company on 20-Dec-13. The Company operates as a general insurance company.
Government of Sindh (GoS) owns 100% stake in the Company through the Ministry of Finance (MoF). The Board is chaired Mr. Saleem Zamindar, while Mr. M. Faisal Siddique is the CEO of the Company. He is assisted by a professional team.