The Pakistan Credit Rating Agency Limited
Press Release


Muneeb Rashid

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PACRA Maintains IFS Rating of Shaheen Insurance Company Limited

Rating Type IFS
Action Maintain Maintain
Long Term A- A-
Short Term - -
Outlook Stable Stable
Rating Watch - -

The rating reflects SIC's strong parentage - Shaheen Foundation - ensuring financial soundness of the company while augmenting it's business operations and control environment through active vigilance. Shaheen Insurance has sustained market share keeping pace with the industry's growth. Dominating portfolio - motor - is depicting good underwriting results, enabling the company to nourish other segments. Accumulated losses have reduced significantly, strengthening equity base. The company envisages to continue expanding in motor segment, while exploring opportunities in the energy sector. Major focus is being directed towards tapping potential of captive business - PAF and related. The liquidity profile needs to be strengthened at a higher rate alongside quality business expansion. This provides comfort against the outstanding liabilities net of reinsurance. The bottom-line support from investment income needs to improve gradually. Nevertheless, the company is carrying a sizeable quantum of illiquid non-earning assets, though efforts are being made to minimize the ensuing impact.

The rating is dependent upon sustained improvement in business profile of the company with enduring emphasis on profitability. Uptick in the liquidity position would be essential.

About the Entity
SIC commenced commercial operations as a general insurance company in 1995, and is currently listed on the Pakistan Stock Exchange. With its head office in Karachi, the company has a nationwide network of 11 branches. SIC is majority owned by Shaheen Foundation Group (65%), Hollard is second major shareholder (14%). Hollard's stake is being acquired by SF, pending procedural delays.

The overall control of the company vests in the seven-member BOD (excluding the CEO). All directors represent SF, resulting in SF having complete control on the board. The company is in the process of bringing an independent director on the board. Chairman of the board, Air Marshal (R) Muhammad Jamshed Khan, is MD of SF. He has replaced Air Marshal (R) M. Arif Pervaiz, ex-officio. DMD of SF, Air Vice Marshal (R) Syed Razi Nawab, is a non-executive director of the company as well. Mr. Sohail kidwai, CEO of the company since Nov-13, was associated with the company at a senior position in the past; and possesses over two decades of insurance experience. He is assisted by a team of professionals.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.