PACRA Maintains IFS Rating of East West Insurance Company Limited

In terms of Gross Premium Written (GPW), the general insurance industry has a total size of ~PKR 84bln during 6MCY23 (6MCY22: ~PKR 66bln), exhibiting a growth of ~28%. However, the underwriting performance of the industry witnessed a dip of ~72% and was reported at ~PKR 863mln during 6MCY23 (6MCY22: ~PKR 2.9bln). Investment income contributed to the industry's earnings reported at ~PKR 7.7bln during 6MCY23 (6MCY22: ~PKR 5.1bln). However, current economic conditions remain imperative for the overall performance of the insurance industry.
The assigned rating of East West Insurance Company Limited ("East West" or “the Company") takes into account the sustained fundamentals of the Company. East West has posted growth of ~36% during Jun-23, primarily driven by its conventional portfolio. Fire & Property (~30%) and Engineering (~26%) remain the key GPW driving segments for the Company. The underwriting business is supported by a diverse range of products resulting in sustained and healthy underwriting profits for East West. The underwriting results reflected a growth of ~24% during Jun-23. With the investment book majorly invested in mutual funds, the Company reported a healthy investment income reflecting a growth of ~108% during Jun-23. This supplemented the Company’s bottom-line. On the financial risk front, the recent equity injection of PKR 263mln, by way of a right, strengthens the Company's capital structure. Moreover, healthy cash flows along with substantial liquid assets support the rating. Challenge is on the receivable days, getting extended, impairment needs to be avoided. As an element of continued succession planning, sponsors are nurturing future leaders of the Company. The induction of the young generation provides essential support to the existing governance framework.
The rating is dependent on the Company’s ability to improve the market share and augment profits. The financial risk profile through sustained liquidity position must remain in line with the growth. Substantial cushion from the underwriting business along with curbing reliance on the co-insurance will be considered crucial, going forward.

About the Entity
East West Insurance Company ("East West" or “the Company") was incorporated as a Public Listed Company (listed on PSX) and became operational in 1983. The Company operates as a general insurance company.
Yunus family holds majority shareholding, i.e. ~75%, of the Company. The Board, dominated by the sponsoring family, is chaired by Chief Justice (R) Mian Mehboob Ahmad. While Mr. Naveed Yunus heads the Company as the CEO. He is assisted by a professional team.