The Pakistan Credit Rating Agency Limited
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Faraan Taimoor

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PACRA Upgrades IFS Rating of East West Insurance Company Limited

Rating Type IFS
Action Upgrade Maintain
Long Term AA- A+
Short Term - -
Outlook Stable Positive
Rating Watch - -

The rating takes into account the improved fundamentals of the company. The sound business profile has enabled the company to improve its market share. Prudent underwriting practices along with a focus on diversified products helped the company to demonstrate continued healthy underwriting profitability, hence supplementing the bottom-line.The implementation of advanced IT infrastructure and real time insurance solution in the key offices is considered positive. The sustainability of the company has been augmented with the creation of independent structure for the ownership, identification and induction of future leadership of the company. The strength of liquidity position and strong financial risk profile of the company lend support to rating. The sponsors are at advanced stage of beefing up the equity. This may be achieved by inducting a new foreign partner or by the way of right issue, for which the sponsors are on the same page. The rating incorporates the effective working capital management, though with growing volumes, this will be a challenge.
The rating is dependent in company’s ability to improve its market position with continued profitability. The liquidity position and, hence, financial risk profile should remain afloat along with growth. Effective utilization of upgraded IT infrastructure and MIS should benefit in bringing sophistication in structure and reporting. Succession of key roles is essential.

About the Entity
East West Insurance commenced commercial operations as a general insurance company in 1983 and is listed on the Pakistan Stock Exchange. Yunus family effectively holds the majority shareholding (~64%) in the company.

The eight member board of directors is equally split between the sponsors - four members (including the CEO - Mr. Naved Yunus) belonging to Yunus family and independent directors - four members. In addition to CEO, two other family board members are part of the management team. Mr. Naved, well-qualified from the US and UK, has been associated with the company for the last three decades as CEO. He is assisted by a professional team.

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.