The Pakistan Credit Rating Agency Limited
18-Jan-19
Analyst
Zeeshan Munir
zeeshan.munir@pacra.com
+92-42-35869504
www.pacra.com
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Related Research
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PACRA Maintains IFS Ratings of Crescent Star Insurance Limited | Rating Watch assigned
| Rating Type | IFS | |
|
Current (18-Jan-19 ) |
Previous (14-Jun-18 ) |
|
| Action | Maintain | Maintain |
| IFS Rating | A- | A- |
| Outlook | Stable | Stable |
| Rating Watch | Yes | - |
The rating reflects CSInsurance's strategy to focus on direct line personal insurance in motor and health segments, targeting small ticket clients. The company has shredded its corporate health portfolio - amid high losses. This enabled the company to improve underwriting performance, though expense ratio is still alarmingly high. The company's liquidity profile matches the risk parameters for current size of business operations, however, going forward with rising business, improvement in liquidity profile is essential. CSInsurance is fast moving towards a holding company structure through building its non-insurance strategic book. The company has completed deployment of sizeable funds in Dost Steels Limited (DSL), funded through internal sources and fresh equity injection; herein, management of associated risks will be important. Moreover, it has entered FMCG sector - CSFoods and CSLuxury. While, CSTechnologies is aimed at providing group support. To further expand its footprint in the retail business, CSInsurance injected fresh equity through way of right issue.
The rating watch captures the company's consolidation process in DSL and backward merger of CSFoods into PICIC Insurance, while fulfilling regulatory and legal requirements. Profitability and curtailed expansion in insurance business along with unfilled casual vacancies on Board is also a consideration. CSInsurance holds major stake in DSL, herein, smooth running of operations and consequent turnover build-up is critical. Generation of cash return from subsidiaries is important. Meanwhile, risk absorption capacity needs to be kept intact.
About
the Entity
Crescent Star Insurance Limited (CSInsurance), a listed company, was established in 1957. In Feb-2013, new management has taken over the company, following acquisition. New board invariably revamped the entire operating structure of the company with a new business strategy. The company is listed on Pakistan Stock Exchange.
Mr. Naim Anwar chairs the board which comprise of eight members (approval of three members is pending with SECP). Members of BoD, nominated by the sponsors, comprise professionals belonging to technology, engineering, health sciences and NBFCs sectors.