The Pakistan Credit Rating Agency Limited
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Rohail Amjad

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PACRA Maintains IFS Rating of Premier Insurance Limited

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

The rating reflects significant risk absorption capacity of the company. It denotes sustained efforts of the incumbent leadership to steer the company out of prevalent challenges. The company is cautiously underwriting insurance business; the market share remains constant. The results are depicting a fall in GPW but with greater decrease in the amount of underwriting losses. The support comes from investment income, though largely contributed by relatively high-risk equity investments. The company has accumulated a high quantum of liabilities, protected by reinsurance receivables and liquid investments; some evasion therein is seen. The company has adequate equity ; maintenance is imperative. The reduction in the claims days are essential as to the loss ratio of the company.
The management of insurance assets to liability structure remains crucial wherein timely realization of outstanding premium along with the prompt settlement of claims is vital. Maintainace of equity reserves is vital.

About the Entity
Premier Insurance was incorporated in 1952 and is listed on Pakistan Stock Exchange. It holds 0.9% market share at end Sep' 19 and operates through two business Hubs South and North.
Crescent Group and its associated companies hold 70% shareholding. State Life Insurance Company is another major shareholder (11%). The Crescent Group (CG) operates in diversified
sectors of textile, steel, sugar, and power. The auditors for Premier Insurance, Ernst & Young Ford Rhodes Sidat Hyder & Co performed half-year review for 1H19. This is their first year of engagement.

Premier Insurance has eight-member board, including CEO, comprising five representations of Crescent Group and one of State Life Insurance. Mr. Asad ullah Khawaja has joined the Board
as an Independent Director since June 2017. Mr. Zahid Bashir has been in charge of the company since June'17.

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.