The Pakistan Credit Rating Agency Limited
16-May-17
Analyst
Iqra Bashir
iqra.bashir@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- General Insurance and Takaful Operator | Jun-16
- Rating Modifiers | Outlook and Rating Watch | Jun-16
Related Research
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PACRA Upgrade Entity Ratings of TPL Direct Insurance Limited
| Rating Type | IFS | |
|
Current (16-May-17 ) |
Previous (06-Dec-16 ) |
|
| Action | Upgrade | Maintain |
| IFS Rating | A+ | A |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The rating reflects established position of the company in its niche market personal line auto insurance. The company has been sustainably augmenting its market positioning. Third largest player in motor segment, TDIL holds substantial share in industry's GPW of the segment. Advanced technology infrastructure has continued providing an edge to the company amidst high competition. Rolling out new business strategy, the company launched corporate line insurance in fire and marine segments. With structured efforts, TDI intends to fortify its inroads in commercial lines. This has added diversity to product slate of TDIL. Capitalizing on strong foothold in niche market Direct Insurance TDIL is establishing relationships with intermediaries; bankers and auto manufacturers. Window takaful volumes are growing, though profitability is yet to materialize in this segment. With rise in business size, the underwriting profitability must transpire. Currently, the financial risk profile is equipped with sound liquidity, however, needs to be monitored carefully as the company takes the trajectory of growth.
The rating is dependent upon the company's ability to increase its system share, inline with expansion strategy, thereby, adding diversification to revenue stream. Translation of the same in the form of enhanced profitability is beneficial. Cohesiveness and sustainability in the management team is important. At the same time, the absolute & proportional size of liquid as well as earning investment book is essential.
About
the Entity
TPL Direct Insurance Limited (TDIL), formed in 1992 and listed on Pakistan Stock Exchange, a majority owned (~69%) subsidiary of Greenoaks Global Holdings (GGH), followed by ~25% stake by TPL Group. Greenoaks Global Holdings (GGH) an international shareholder in TDI, is offloading its stake in TDI and TPL Group intends to buy it back. This will bring change in ownership structure and accordingly will modify the governance framework. Consequently, TPL group’s shareholding and representation on board will increase.
The CEO, Mr. Saad Nisar, an MBA from IBA, has been on the position since Jan-09, and is supported by a team of experienced professionals.