Habib Insurance Company Limited

CREDIT RATING REPORT | Nov-25

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Rating History
Dissemination Date IFS Rating Outlook Action Rating Watch
04-Nov-25 A++ (ifs) Stable Maintain -
15-Nov-24 A++ (ifs) Stable Maintain -
01-Dec-23 A++ (ifs) Stable Maintain -
09-Dec-22 A++ (ifs) Stable Maintain -
31-Mar-22 A++ (ifs) Stable Harmonize -
About the Entity

Habib Insurance Company Limited ("Habib Insurance" or "the Company") was incorporated in 1942 as a public listed company. The principal activity includes managing non-life insurance through Conventional and Window Takaful in Fire and Property, Marine, Accident and Health, Motor and Miscellaneous segments. The major stake of the Company lies with the House of Habib (~70.8%), mainly through the Trust and Individuals. Earlier, the Board was chaired by late Mr. Rafiq M. Habib. While Mr. Syed Ather Abbas serves as the Company's CEO. He is assisted by a team of experienced professionals.

Rating Rationale

Habib Insurance Company Limited's ("Habib Insurance" or "the Company") assigned rating gathers comfort from its association with the House of Habib, a well-established business group, and a streamlined governance framework. The Company operates in the general insurance industry, which held a size of ~PKR 214bln in CY24, exhibiting a growth of ~14% in GPW. An increase of ~70% was witnessed in the underwriting results, while the overall investment income grew by ~34% in CY24. Habib Insurance generated GPW from both conventional (~84%) and window takaful (~16%) operations. The GPW trickles in from diversified segments, where fire & property remains the major contributor with ~37.5% in the total GPW, followed by motor (~34%), marine & transport (~15%), miscellaneous (~ 13%), and health (~0.2%) segments. The Company’s GPW rose to PKR 4bln in CY24 (CY23: PKR 3.7bln), reflecting a growth of ~9%, staying in line with the industry parameters. However, consistently high-level claims continued to keep the combined ratio inflated, leading to a stressed underwriting performance. The Company has booked an underwriting loss of PKR 251mln during CY24. However, bottomline gathers support from a healthy investment income of PKR 490mln as of Dec-24, which was primarily sourced from dividend income, gains on disposal of equity investments, deposits, and government securities. Liquidity remains adequate with an investment book of ~PKR 3.4bln, supported by a steady equity base of ~PKR 2.2bln as of Dec-24. The Company benefits from a panel of strong-rated reinsurers. Going forward, greater inclusion of digitization is expected to support business volumes and operational improvements. A clear focus on the elevated standing of claims and efforts to gather support from the captive and non-business business is important.

Key Rating Drivers

The rating is based on the Sponsor's profile and the relative position of Habib Insurance in the general insurance industry. A cautious approach to improve the business volumes that support the underwriting results remains critical. Growth in the investment income, along with an enhanced liquid profile is imperative for the rating.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Habib Insurance Company Limited

rating analysis

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Profile
Legal Structure

Habib Insurance Company Limited ("Habib Insurance" or "the Company") was incorporated as a public listed company in 1942.


Background

The Company is owned by the House of Habib; one of the leading groups of Pakistan. In 1942, the Company commenced its commercial operations as a life and general insurance company in Bombay. In Aug-47, the Company moved its headquarters to Karachi. In 1972, after the nationalization of life insurance, the Company only manages general insurance operations.


Operations

The Company operates in both Conventional and Takaful business. Within both, the Company is engaged in fire & property, marine & transport, motor, group hospitalization and miscellaneous segments. The Company operates through a network of 16 branches across Pakistan.


Ownership
Ownership Structure

The major stake of the Company is held by the House of Habib (“Habib Family”) through Individuals and Trusts (~70.8%). While State Life Insurance holds (~5.02%) of the shareholding. The remaining (~24.18%) is held by the general public.


Stability

Ownership of the Company seems to remain stable as the sponsors hold a prominent position in various sectors of the Country.


Business Acumen

The sponsors have strong acumen and diversified business portfolio providing significant support to the ownership structure.


Financial Strength

The Company gathers financial strength from the House of Habib, if needs be. The Group entities rated by PACRA include Habib Metropolitan Bank (AA+/A1+).


Governance
Board Structure

The overall control of the Company rests with the Company's Board, which currently comprises eight (08) members, including three Executive Director - including the CEO, two Non-Executive Directors, and three Independent Directors. The Board holds considerable independence and female presence, which bodes well for the policy formation process.


Members’ Profile

The Board was previously chaired by Mr. Rafiq M. Habib. He held diversified experience of more than six decades. Post Mr. Rafiq's recent demise, the vacancy of the Board's chairman is yet to be filled. Moreover, Ms. Maleeha Humayun Bangash resigned as an Independent Director from the Board. This vacancy is also yet to be filled. Other BoD members carry diversified professional experience and have served at leading positions in various sectors.


Board Effectiveness

During the year, the Board met four times. Three sub-committees namely; Audit; Investment and Ethics, Nomination, Human Resource & Remuneration committee, assist the Board. All committees are headed by an Independent Director and meet on regular basis or whenever the need arise. The meetings of the Committees except Ethics, Nomination, Human Resource & Remuneration Committee, were held at least once every quarter.


Transparency

External Auditors M/S. Grant Thornton Anjum Rahman has given unqualified audit opinion on the financial statements of the Company for CY24. The internal audit function is outsourced to M/s. BDO Ebrahim & Co. Chartered Accountants. Both, firms for external and internal audit, are QCR rated and on SBP's panel in category "A."


Management
Organizational Structure

The Company has defined reporting lines. The Company operates through six departments namely: ERM, Underwriting, Risk Management, Sales and Marketing, Finance and IT. Headed by CFO, the Finance department has sub-departments namely: Investments, Administration & HR, Credit and Retail sales. All the Heads of respective departments directly reports to the CEO, who reports to the BoD.


Management Team

Mr. Syed Ather Abbas, the CEO, has overall experience of more than three decades in the insurance industry. He has been the CEO since Sep-22 and associated with the Company since Apr-22. Mr. Murtaza Hussain has served as the CFO since 2017. He possesses an overall professional experience of more than two decades and associated with the Company since 2003. The management holds relevant experience.


Effectiveness

The Company has three management committees namely: Underwriting, Re-insurance & Co-insurance Committee, Claim Settlement Committee and Risk Management & Compliance Committee. These committees meet on regular basis to discuss pertinent operational matters, and the minutes of these meetings are adequately maintained. 


MIS

A real-time General Insurance System (GIS) is deployed by Sidat Hyder. The MIS generates comprehensive reports including daily, monthly and quarterly business reports of the Company.


Claim Management System

The Company has a centralized claim management system. Claims amounting less than PKR 0.1mln are approved by the Branch Managers, greater than that are forwarded to the Head Office. However, claims greater than PKR 1mln requires approval from the CEO.


Investment Management Function

The Board's investment committee oversees the investment function, with support being taken from the CFO of the Company. 


Risk Management framework

The Company's risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. The system and policies are reviewed regularly to reflect changes in market conditions and the Company's activities


Business Risk
Industry Dynamics

Pakistan's general insurance industry has a total size of ~PKR 214bln during CY24 (CY23: ~PKR 188bln), exhibiting a growth of ~14% in Gross Premium Written (GPW). The industry reported an increase of ~70% in underwriting results (CY24: ~PKR 12bln, CY23: ~PKR 7bln). Overall, the investment income experienced an increase of ~34% to ~PKR 25.bln during CY24 (CY23: ~PKR 19.1bln). However, current economic conditions remain imperative for the overall performance of the insurance industry.


Relative Position

As a medium-tier player, the Company holds a market share of ~1.8% in terms of GPW in CY-24.


Revenue

The Company generated GPW from Conventional (~83%), followed by Window Takaful (~17%) business during 6MCY25. During CY24, the Company generated GPW of ~PKR 4,004mln (CY23: ~PKR 3,657mln) with an uptick of ~9% backed by value. Conventional business contributed ~PKR 3,370mln (CY23: ~PKR 3,075mln) whereas window takaful business contributed ~PKR 634mln (CY23: ~PKR 582mln). During 6MCY25, motor remained the top segment, contributing (~41.7%) followed by fire & property (~33.2%). During 6MCY25, the Company recorded a GPW of ~PKR 1,577mln (6MCY24: ~PKR 1,440mln) with an uptick of ~9.5% due to value driven increase. Going forward, expansion into untapped segments, coupled with increased digital integration, remains pivotal to strengthening business volumes and improving market share.


Profitability

During CY24, the Company incurred an underwriting loss of ~PKR 251mln (CY23: loss of ~PKR 218mln) owing to an increase in insurance claims by ~50%, mainly from fire & property and marine segments. Investment income supported the bottom line and the profit after tax stood at ~PKR 243mln (CY23: ~PKR 115mln), an increase of ~111%. During 6MCY25, the Company reported an underwriting loss of ~PKR 54mln (6MCY24: ~PKR 58mln). The loss has decreased due to a decrease in net insurance claims. At the net level, the profit was reported at ~PKR 145mln (6MCY24: ~133mln) due to an uptick of ~9% in the investment income. Going forward, rationalization of claims and operating costs will be essential to improve underwriting results and support sustainable profitability.


Investment Performance

During CY24, the Company recorded a surge in investment income recorded at ~PKR 490mln (CY23: ~PKR 331mln) mainly due to higher returns on equity instruments. During 6MCY25, the Company reported investment income of ~PKR 281mln (6MCY24: ~PKR 147mln). Going forward, the Company’s ability to maintain consistent returns amid market volatility will be critical to sustaining earnings support from investments.


Sustainability

Going forward, the Company is planning to expand operations, adding value in operations through process automation. Enhanced emphasize on digitization is expected to support business volumes and operational improvements. A clear focus on the elevated standing of claims and efforts to gather support from the captive and non-business business is important.


Financial Risk
Claim Efficiency

In CY24, claims efficiency worsened as claims outstanding days stood at ~205 days (CY23: ~192 days) due to late settlement of claims. However, in 6MCY25, claims efficiency improved as claims outstanding days decreased and stood at ~195 days (6MCY24: ~231 days). Moving forward, enhanced automation and process optimization are expected to further improve claims settlement efficiency.


Re-Insurance

The Company has reinsurance arrangements with leading reinsurers including Malaysian Re (rated A- by A. M. Best), Labuan Re (rated A-by A. M. Best), Saudi Re (rated A- by S&P), PRC (rated AA+ by JCR), Sing Re (rated A by A. M. Best ), and Swiss Re (rated AA- by S&P). The Company has a combination of surplus, quota share, and excess loss treaties for various segments.


Cashflows & Coverages

In CY24, the liquidity position of the Company improved as the liquidity cover stood at ~1.4x (CY23: ~1.1x) due to an increase in liquid assets and insurance premium. In 6MCY25, the liquidity cover improved slightly standing at ~1.4x (6MCY24: ~1.1x) due to an increase in liquid assets. Going forward, maintaining positive operating cash flows and adequate liquidity buffers will remain important to support operational stability.


Capital Adequacy

In CY24, the shareholders equity increased by ~26.5%, reported at ~PKR 2,164mln (CY23: ~1,606mln) due to an increase in reserves as unrealized gain on available-for-sale investments has increased. As of 6MCY25, the equity was reported at ~PKR 2,189 (6MCY24: ~PKR 1,830) due to increase in unappropriated profits and reserves.Going forward, with SECP’s revised framework raising the minimum paid-up capital for non‑life insurers to PKR 2,000mln (to be phased in by 2030), disciplined profit retention and conservative dividend policy will be critical to strengthen reserve buffers and support sustainable capital adequacy under the heightened regulatory benchmark.
 
 

Nov-25

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Habib Insurance Company Limited

financial summary

(PKR mln)

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Jun-25
6M		 Dec-24
12M		 Dec-23
12M		 Dec-22
12M
A. BALANCE SHEET
1. Investments 3,717 3,435 2,513 2,245
2. Insurance Related Assets 2,691 3,060 2,892 2,218
3. Other Assets 632 797 659 538
4. Fixed Assets 116 113 114 57
5. Window Takaful Operations 0 0 0 0
Total Assets 7,156 7,404 6,179 5,057
1. Underwriting Provisions 1,515 2,030 1,814 1,559
2. Insurance Related Liabilities 2,646 2,339 2,099 1,797
3. Other Liabilities 735 846 618 400
4. Borrowings 72 26 41 31
5. Window Takaful Operations 0 0 0 0
Total Liabilities 4,967 5,240 4,572 3,788
Equity/Fund 2,189 2,164 1,606 1,269
B. INCOME STATEMENTS
CONSOLIDATED INCOME STATEMENT
1. Gross Premium Written/Gross Contribution Written 1,577 4,004 3,657 3,022
2. Net Insurance Premium/Net Takaful Contribution 1,013 1,766 1,806 1,414
3. Underwriting Expenses (1,067) (2,017) (2,025) (1,399)
Underwriting Results (54) (251) (218) 15
4. Investment Income 281 490 331 141
5. Other Income / (Expense) (14) 142 49 10
Profit Before Tax 214 382 162 166
6. Taxes (69) (139) (47) (30)
Profit After Tax 145 243 115 136
PARTICIPANTS' TAKAFUL FUND - PTF
1. Gross Contribution Written 270 634 582 385
2. Net Takaful Contribution 44 101 157 128
3. Net Takaful Claims (97) (178) (213) (122)
4. Direct Expenses Including Re-Takaful Rebate Earned 42 57 36 24
Surplus Before Investment & Other Income/(Expense) (11) (20) (20) 31
5. Investment Income 4 31 26 9
6. Other Income/(Expense) 4 (5) (3) (15)
Surplus for the Period (4) 6 2 25
OPERATOR'S TAKAFUL FUND - OTF
1. Wakala Fee Income 104 178 141 58
2. Management, Commission & Other Acquisition Costs (161) (182) (99) (53)
Underwriting Income/(Loss) (57) (4) 43 5
3. Investment Income 15 0 0 7
4. Other Income/(Expense) 3 46 27 1
Profit Before tax (39) 42 70 13
5. Taxes 0 (12) (20) (4)
Profit After tax (39) 30 50 9
C. RATIO ANALYSIS
1. Profitability
Loss Ratio - Net Insurance & Takaful Claims / Net Insurance Premium or Takaful Contribution 57.1% 63.0% 64.5% 53.0%
Combined Ratio (Loss Ratio + Expense Ratio) 105.3% 114.2% 112.1% 98.9%
2. Investment Performance
Investment Yield 15.7% 16.5% 13.9% 7.2%
3. Liquidity
(Liquid Assets - Borrowings) / Outstanding Claims Including IBNR 2.0 2.4 1.6 1.7
4. Capital Adequacy
Liquid Investments / Equity (Funds) 168.6% 157.7% 155.5% 175.6%

Nov-25

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Habib Insurance Company Limited

rating scale

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Nov-25

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Habib Insurance Company Limited

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
  2. Restrictions
    1. No director, officer, or employee of PACRA communicates the information acquired by him for use for rating purposes to any other person, except where required under law to do so. (Chapter III; 10-(5))
    2. PACRA does not disclose or discuss with outside parties or make improper use of the non-public information which has come to its knowledge during a business relationship with the customer. (Chapter III; 10-7-(d))
    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
    1. PACRA fulfills its obligations in a fair, efficient, transparent, and ethical manner and renders high standards of services in performing its functions and obligations. (Chapter III; 11-A-(a))
    2. PACRA uses due care in the preparation of this Rating Report. Our information has been obtained from sources we consider to be reliable, but its accuracy or completeness is not guaranteed. PACRA does not, in every instance, independently verify or validate information received in the rating process or in preparing this Rating Report. (Clause 11-(A)(p))
    3. PACRA prohibits its employees and analysts from soliciting money, gifts, or favors from anyone with whom PACRA conducts business. (Chapter III; 11-A-(q))
    4. PACRA ensures before the commencement of the rating process that an analyst or employee has not had a recent employment or other significant business or personal relationship with the rated entity that may cause or may be perceived as causing a conflict of interest. (Chapter III; 11-A-(r))
    5. PACRA maintains the principle of integrity in seeking rating business. (Chapter III; 11-A-(u))
    6. PACRA promptly investigates in the event of misconduct or a breach of the policies, procedures, and controls, and takes appropriate steps to rectify any weaknesses to prevent any recurrence, along with suitable punitive action against the responsible employee(s). (Chapter III; 11-B-(m))
  4. Independence & Conflict of Interest
    1. PACRA receives compensation from the entity being rated or any third party for the rating services it offers. The receipt of this compensation has no influence on PACRA’s opinions or other analytical processes. In all instances, PACRA is committed to preserving the objectivity, integrity, and independence of its ratings. Our relationship is governed by two distinct mandates: i) rating mandate - signed with the entity being rated or issuer of the debt instrument, and ii) fee mandate - signed with the payer, which can be different from the entity.
    2. PACRA does not provide consultancy/advisory services or other services to any of its customers or their associated companies and associated undertakings that are being rated or have been rated by it during the preceding three years, unless it has an adequate mechanism in place ensuring that the provision of such services does not lead to a conflict of interest situation with its rating activities. (Chapter III; 12-2-(d))
    3. PACRA discloses that no shareholder directly or indirectly holding 10% or more of the share capital of PACRA also holds directly or indirectly 10% or more of the share capital of the entity which is subject to rating or the entity which issued the instrument subject to rating by PACRA. (Chapter III; 12-2-(f))
    4. PACRA ensures that the rating assigned to an entity or instrument is not affected by the existence of a business relationship between PACRA and the entity or any other party, or the non-existence of such a relationship. (Chapter III; 12-2-(i))
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  5. Monitoring and Review
    1. PACRA monitors all the outstanding ratings continuously, and any potential change therein due to any event associated with the issuer, the security arrangement, the industry, etc., is disseminated to the market immediately and in an effective manner after appropriate consultation with the entity/issuer. (Chapter III; 17-(a))
    2. PACRA reviews all the outstanding ratings periodically on an annual basis. Provided that public dissemination of annual review and in an instance of change in rating will be made. (Chapter III; 17-(b))
    3. PACRA initiates an immediate review of the outstanding rating upon becoming aware of any information that may reasonably be expected to result in downgrading of the rating. (Chapter III; 17-(c))
    4. PACRA engages with the issuer and the debt securities trustee to remain updated on all information pertaining to the rating of the entity/instrument. (Chapter III; 17-(d))
  6. Probability of Default
    1. PACRA’s Rating Scale reflects the expectation of credit risk. The highest rating has the lowest relative likelihood of default (i.e., probability). PACRA’s transition studies capture the historical performance behavior of a specific rating notch. Transition behavior of the assigned rating can be obtained from PACRA’s Transition Study available at our website. (www.pacra.com) However, the actual transition of rating may not follow the pattern observed in the past. (Chapter III; 14-3(f)(vii))
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    1. All information contained herein is considered proprietary by PACRA. Hence, none of the information in this document can be copied or otherwise reproduced, stored, or disseminated in whole or in part in any form or by any means whatsoever by any person without PACRA’s prior written consent.

Nov-25

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