Muhammad Noor Ul Haq
PACRA Maintains Entity Ratings of East West Insurance Company Limited
|IFS Rating||AA (ifs)||AA (ifs)|
The assigned rating of East West Insurance Company Limited takes into account the sustained fundamentals of the Company. Over the year, all segments of the Company have performed admirably and contributed to a better top line with a lean toward Fire and Engineering segments. Conservative strategy involving prudent underwriting practices along with a focus on diversified products helped to demonstrate continued healthy underwriting profitability, supplementing the top line. Augmentation in equity and liquid assets owing to healthier cashflows offers strength to the capital structure which in turn has lent support to the rating. A significant spike in investment performance in close supervision of key management personnel has been observed. Resultantly, an increased investment income supplements the bottom line of the Company on a consistent basis. As an element of continued succession planning, sponsors are nurturing future leaders of the Company.
In terms of Gross Written Premium (GWP), the general insurance industry has a total size of PKR 113bln in CY21 compared to PKR 102bln in CY20, exhibiting a growth of 11.1%. The industry reported a significant increase of 57% in underwriting results to PKR 7bln in CY21 (CY20: PKR 4bln). The net income of the industry grew by 30% to PKR 13bln in CY21 (CY20: PKR 10bln). However, recent floods have caused significant losses to the economy. This will affect the insurance industry’s performance during the ongoing quarters.
The rating is dependent in the company’s ability to improve its market position with continued profitability. The liquidity position and, hence, financial risk profile should remain afloat along with growth. Sustaining underwriting profitability will be crucial going forward.
East West Insurance Company (EWIC) commenced commercial operations as a general insurance company in 1983 and is listed on the Pakistan Stock Exchange. Yunus family effectively holds the majority shareholding in the company. EWIC board consists of nine members, including one female director and one executive director. Five members are of Yunus Family and the remaining four are independent directors. Four family board members are also part of the management team. Mr. Naved, well-qualified from the US and UK, has been associated with the company for the last three decades as CEO. He is assisted by a professional team.