Profile
Legal Structure
TPL Insurance Limited ('TPL Insurance' or 'the Company') was
incorporated in 1992. The Company has been listed on PSX since Sep-2011.
Background
The Company started its operations in 1992. In 2005, the
Company became Pakistan's 1st Direct Insurance Company. Later, in 2021, DEG
Germany Equity Investments invested in the Company. In 2014, the Company
started its Window Takaful operations. Over the years, the Company has
developed state-of-the-art Insurtech infrastructure and has grown in delivering
superior and hassle-free insurance products to individual and corporate
clients.
Operations
The Company operates in both Conventional and Takaful
business. Within both, the Company is engaged in Auto, Fire, Marine, Health,
Home, Travel, Mobile, Cyber Risk, Engineering, Agriculture, and Miscellaneous
segments. The Company operates through a network of six branches, including the
HO in Karachi.
Ownership
Ownership Structure
A major stake of the Company ~54.61% lies with the Sponsors
through associated companies. Foreign investors, including DEG (~15.87%) and
Finnish Fund for Industrial Cooperation Limited (~17.02%), hold cumulatively
~32.9%. Financial Institutions and Mutual Funds hold (~2.91%) stake. While
Directors and senior management hold ~0.43% stake. The remaining stake is held
by the general public (~5.11%), others hold (~4.04%).
Stability
Ownership restructuring is anticipated with VEON Group
Holding Company Limited acquiring a substantial stake in the Company.
Business Acumen
The Sponsors possess robust expertise and a diversified
business portfolio through their various subsidiaries.
Financial Strength
The financial profile of the Sponsoring groups is quite
sound, reflected by their highly successful business ventures in various
sectors. This provides financial strength to the Company, if needed.
Governance
Board Structure
The overall control of the Company lies with an eight-member
Board - three Non-Executive, two Nominated, one Executive, and two Independent Directors.
The Board has female presence and is dominated by the representatives of the
Sponsors. Going forward, governance restructuring is expected with the transition
in ownership.
Members’ Profile
The Chairman of the Board, Mr. Jameel Yusuf, has been
associated with the Company since its inception. He has more than three decades
of experience. Mr. Aqueel E. Merchant, an Independent Director, has more than
three decades of experience in consulting services covering banking, FMCGs, and
government clients. He has been associated with the Company since 2022. All
other members possess diversified backgrounds and acumen.
Board Effectiveness
During CY24, the Board met four times. The Board is assisted
by four committees, namely: (i) Audit, (ii) Investment, (iii) Ethics,
Nomination, Human Resource & Remuneration. Ethics, Nomination, Human
Resource & Remuneration Committee met twice, while all other committees met
quarterly. All Committees are headed by a Non-Executive and Independent
Director. Minutes of the meeting are being documented extensively.
Transparency
M/S. BDO Ebrahim Chartered Accountants & Co. issued an
unqualified audit report on the financial statements as of CY24. For CY25, the
Company has appointed M/S. Grant Thornton Anjum Rehman Chartered Accountants as
external auditors. Both firms are QCR-rated and on SBP's panel in category
"A".
Management
Organizational Structure
The Company operates through six departments, namely: (i)
Underwriting, (ii) Claims, (iii) Sales, (iv) Operations, (v) Finance, and (vi)
Digital Department. The HoD reports directly to the CEO, who then reports to
the BoD. However, the Head of Internal Audit and HR administratively reports to
the CEO and functionally reports to their respective BoD Committees.
Management Team
Mr. Mohd. Aminuddin has been associated with the Company as
the CEO since Aug-18. He has more than three decades of professional
experience. The CFO, Mr. Yousuf Zohaib Ali, has been associated with the
Company since Oct-20 and has more than two decades of experience. He is
assisted by a team of professionals. Going forward, management restructuring is
expected with the ownership transition.
Effectiveness
The Company has four management committees, namely: (i)
Underwriting, (ii) Re-insurance & Co-insurance, (iii) Claim Settlement, and
(iv) Risk Management & Compliance Committee. These committees are chaired
by the Independent Directors and meet quarterly.
MIS
The MIS generates monthly comprehensive reports for the BoD.
This also provides management with sophisticated management tools in a
structured way, which helps the Company to bring operational efficiency.
Claim Management System
Claims approval is centralized at HO. The loss executive or
the agent (call center) captures the incidence of claims in 'Claim Intimation
Slip (CIS)' when verbal intimation is received through (i) 24/7 call center of
TPLI, (ii) Trakker Business Partners (TBPs) (i.e., TPL's dealers), or (iii) the
claims department.
Investment Management Function
The Board's investment committee oversees the investment
function with the CFO's support.
Risk Management framework
The Company's risk management policies are designed to
control risks to align with market conditions and company activities.
Business Risk
Industry Dynamics
Pakistan's general insurance industry has a total size of
PKR ~102bln during 6MCY25 (6MCY24: ~PKR 99bln), exhibiting a growth of ~3%, in terms
of Gross Written Premium (GWP). However, the industry reported a decline of ~3.3%
in underwriting results (6MCY25: ~PKR 5.7bln, 6MCY24: ~PKR 5.9bln). The investment
income of ~PKR 12.2bln (6MCY24: ~PKR 11.7bln) supported the net income reported
at ~PKR 11.89bln (6MCY24: ~PKR 11.86bln). Overall, the industry outlook remains
stable with substantial liquidity available to players.
Relative Position
TPL Insurance is a medium-tier player with a market share of
~3% in terms of GWP as of 6MCY25.
Revenue
The Company generated GWP from Conventional (~49.7%),
followed by Window Takaful (~50.3%). During CY24, the Company generated GWP of
~PKR 5bln (CY23: ~PKR 4.1bln), a value-driven increase of ~23%. Motor stood as
the top-performing segment, contributing ~64% to GWP, followed by Fire &
Property (~17%), Accident and health (~11%), Miscellaneous (~5.2%), and Marine
& Transport (~3%). During 6MCY25, the Company reported GWP of ~PKR 2.6bln
(6MCY24: ~PKR 2.4bln), an uptick of ~8% due to an increase in business from the
motor segment. Going forward, GWP is expected to follow the same trajectory.
Profitability
During CY24, the Company reported an underwriting profit of
~PKR 37mln (CY23: ~PKR 155mln-loss) due to controlled management expenses. Investment
income supported the bottom line reported at ~PKR 72mln (CY23: ~PKR 1.1bln).
During 6MCY25, the Company reported an underwriting profit of ~PKR 39mln
(6MCY24: ~PKR 4mln-loss) due to a decrease in acquisition expenses. At the net
level, the Company reported a profit of ~PKR 2mln (6MCY24: ~PKR 42mln) due to a decrease in
investment income. Upholding prudent underwriting practices will remain
beneficial, resulting in an improved bottom line going forward.
Investment Performance
The investment book of the Company majorly comprises Cash
and Bank balances (~83%), followed by Equity Instruments (~6%), Subsidiaries
(~6%), and Government Securities (~5%). During CY24, the Company reported
investment income of ~PKR 389mln (CY23: ~PKR 445mln), a decline due to a reduction
in policy rate during the year. During 6MCY25, the Company witnessed a decrease
of ~50% in investment income reported at ~PKR 105mln (6MCY24: ~PKR 209mln) due
to a decrease in policy rate. Going
forward, prudent investment management would enhance the bottom line.
Sustainability
The Company needs to prioritize operational efficiency to add value to its existing operations. Lately, VEON Group Holding Company Limited (VEON) has expressed
an intention to acquire the shares and control of TPL Insurance. This will
restructure the Company's governance framework and managerial practices, going
forward. The modalities of this acquisition, along with its timely and
successful completion, are important; hence, PACRA assigns a Watch to the
Company's maintained IFS rating.
Financial Risk
Claim Efficiency
As of CY24, the claims outstanding days increased and stood
at ~149 days (CY23: ~140 days). Outstanding claims increased ~10.5% and stood
at ~PKR 1bln (CY23: ~PKR 952mln). Net insurance/takaful claims increased ~9.3%
and stood at ~PKR 1.6bln (CY23: ~PKR 1.5bln). Motor claims inflate claims efficiency
days and require more time due to surveys and due diligence activities. As of
6MCY25, claims outstanding days improved, reported at ~126 days (6MCY24: ~149
days), demonstrating efficiency in claims settlement. However, net claims
increased by ~25%, reported at ~PKR 1bln (6MCY24: ~PKR 805mln). It is pivotal
to minimize claims to enhance operational efficiency.
Re-Insurance
Reinsurance arrangements are with reputable reinsurers;
Reinsurer panel for conventional business: Hannover Re (rated 'AA-' by
S&P), PRCL (A by VIS), SAVA Re (A by A.M. Best), Trust Re (A- by A.M.
Best), Labuan Re (A- by A.M. Best), Arche Re (A+ by S&P), Saudi Re (A- by
S&P), Singapore Re (A by A.M. Best), Kenya Re (B by A.M. Best) and Oman Re
(BBB- by Fitch).
Cashflows & Coverages
As of CY24, the liquid assets/net insurance premium ratio
improved and stood at ~1.2x (CY23: ~1.1x) due to an increase in liquid assets
by ~7% reported at ~PKR 4.2bln (CY23: ~PKR 3.9bln). Liquid assets/outstanding
claims ratio deteriorated slightly to ~3.9x (CY23: ~4x) due to an increase in
outstanding claims. As of 6MCY25, the liquid assets/net insurance premium ratio
deteriorated slightly to ~1.1x (6MCY24: ~1.2x) due to an increase in net
premium. However, the liquid assets/outstanding claims ratio improved to ~3.3x
(6MCY24: ~3.1x) due to an increase in liquid assets by ~11%, reported at ~PKR 4.4bln
(6MCY24: ~PKR 4bln). In the future, it is imperative that liquidity is
maintained to support the sustainability of the ratio.
Capital Adequacy
Total equity increased ~4% and stood at ~PKR 2.7bln as of
CY24 (CY23: ~PKR 2.6bln), owing to increased profit accumulation. As of 6MCY25,
the Company reported total equity of ~PKR 2.68bln (6MCY24: ~PKR 2.64bln), an
increase due to an uptick in accumulated profits. Paid-up capital remained consistent
at ~PKR 1.9bln. Going forward, maintaining an optimal level of capital adequacy
is essential.
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