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The Pakistan Credit Rating Agency Limited
Press Release

Date
27-Nov-20

Analyst
Harris Ghaffar
harris.ghaffar@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains IFS Rating of East West Insurance Company Limited

Rating Type IFS
Current
(27-Nov-20)
Previous
(29-Nov-19)
Action Maintain Maintain
Long Term AA- AA-
Short Term - -
Outlook Stable Stable
Rating Watch - -

The rating takes into account the sustained fundamentals of the company. The sound business profile has enabled the company to maintain its market share amidst COVID-19. Prudent underwriting practices along with a focus on diversified products helped to demonstrate continued healthy underwriting profitability, supplementing the bottom-line. Sponsors are nurturing future leadership of the company; Chief Operating Officer has been nominated for this purpose. 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. Succession planning is essential for future prospect of the company. The strength of liquidity position and strong financial risk profile of the company lend support to rating. The equity has been augmented through right issue, though liquidity needs to be beefed up in line with the Company’s relative position. The company plans to increase market presence in motor segment particularly through Window Takaful Operations. The rating incorporates the effective working capital management, though with growing volumes, this will be a challenge.
Prior to COVID-19, the general insurance industry witnessed a growth of 11% YoY. The current pandemic affected the volumes, which led to a contraction in the growth. However, volumes have picked up post-June 2020 amidst increase in economic activities throughout the country. Upsurge in auto sales and health products has been pivotal. Underwriting profitability i.e. core business has been cushioned through reduced management expenses while innovative products are being envisaged.
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.

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 in the company.
The EWI has nine-member board of directors - four members belonging to Yunus family . Three family board members are also 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.