Muhammad Harris Ghaffar
PACRA Maintains IFS Rating of East West Insurance Company Limited
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.
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.