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The Pakistan Credit Rating Agency Limited
Press Release

Date
31-Jan-20

Analyst
Rohail Amjad
rohail.amjad@pacra.com
+92-42-35869504
www.pacra.com

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PACRA Maintains IFS Ratings of Crescent Star Insurance Limited | Rating Watch Re-affirmed

Rating Type IFS
Current
(31-Jan-20)
Previous
(20-Jul-19)
Action Maintain Maintain
Long Term A- A-
Short Term - -
Outlook Stable Stable
Rating Watch Yes Yes

Crescent Star Insurance predominantly has a holding company structure through building its noninsurance strategic book. IFS rating of the company reflects the company's liabilities towards the policyholders. The company has deployed sizeable funds in Dost Steels Limited (DSL), funded through internal sources and equity injection; herein, management of associated risks will be important. Dost Steel Limited has halted its production as its management ponders its future strategy. Moreover, it has entered the FMCG sector - CSFoods and CSLuxury. While CS Technologies is aimed at providing group support. 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 losses, though the expense ratio is still alarmingly high. The company's liquidity profile matches the risk parameters for the current size of business operations, however, going forward, should the insurance business increase, improvement in liquidity profile is essential. The business volumes of the company remain relatively low with regards to its peers, however, improvement is expected.
The rating watch captures the company's consolidation process in Dost Steel Limited and backward merger of CSFoods into PICIC Insurance while fulfilling regulatory and legal requirements. The insurance business volumes are low, accordingly, management prefers facultative arrangements. Crescent Star Insurance holds a major stake in Dost Steel Limited, herein, smooth running of operations and consequent turnover build-up is critical. The 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 invariably revamped the entire operating structure of the company with a new business strategy. The company is listed on Pakistan Stock Exchange. The auditors of the company are Ilyas Saeed & Co., Chartered Accountants.
Mr. Naim Anwar chairs the board which comprised of eight members. Members of BoD, nominated by the sponsors, comprise professionals belonging to technology, engineering, health sciences and NBFCs sectors.

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.