The Pakistan Credit Rating Agency Limited
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Faraan Taimoor

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PACRA Maintains IFS Rating of Sindh Insurance Limited

Rating Type IFS
(24-Feb-21 )
(25-Feb-20 )
Action Maintain Maintain
IFS Rating A+ A+
Outlook Stable Stable
Rating Watch - -

The rating reflects Sindh Insurance Limited’s strong parentage - the Government of Sindh (GoS) and its ability to leverage on the same. The company gains impetus from underwriting captive business of Government of Sindh (GoS); a substantial chunk is yet to be captured. This provided shield amidst COVID-19 as volumes remained intact from the captive business. The company expects improved business volumes in 2021 from "Universal Accidental Insurance Scheme (UAIS)", initiated by GoS, by virtue of which the premium size has squeezed though the cash balance has stayed with the company. The company has also created a reserve against IBNR on account of UAIS. Further enhancement in top-line is anticipated through captive underwriting, extensive efforts are being undertaken by the company in this regard. The large investment pool provides comfort to the profitability in the form of investment income. The company further aims to develop a market-related business in the medium term; it is pivotal moving forward.
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. The volumes need to sustain, indeed, improve in tandem with the longer historical trend. The interest rate regime would impact the fixed income stream, but the equity market is improving though requiring a prudent approach.
The ratings are dependent on the sustained business and financial risk. The risk absorption capacity needs to be upheld, while good governance practices are the key to sustained ratings.

About the Entity
Sindh Insurance Limited (SIL), incorporated as an unlisted public company in Dec-13, is a wholly-owned entity of Government of Sindh (GoS). GoS has presence in most dimensions of the financial market through Sindh Bank Limited, Sindh Leasing Company Limited, Sindh Modaraba, Sindh Insurance Limited, and Sindh Microfinance Bank.

SIL has a seven-member board, chaired by Mr. Muhammad Bilal Sheikh. He is a seasoned banker with over four decades of diversified experience in banking. The CEO of the company, Mr. Muhammad Faisal Siddique, brings with him a diversified experience of more than a decade in life and general insurance. He is supported by core management team comprising qualified and experienced professionals.

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.