The Pakistan Credit Rating Agency Limited
20-Apr-20
Analyst
Faraan Taimoor
faraan.taimoor@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Maintains IFS Rating of SPI Insurance Company Limited
| Rating Type | IFS | |
|
Current (20-Apr-20 ) |
Previous (29-Nov-19 ) |
|
| Action | Maintain | Maintain |
| IFS Rating | A | A |
| Outlook | Stable | Stable |
| Rating Watch | Yes | - |
SPI is classified as an emerging company wherein which the company is building a diversified insurance portfolio. In the recent period the growth has been muted due to multiple factors specially the slowdown in the economic environment of the country. Given the prevailing challenges on account of COVID-19, the future growth pattern is also expected to be slightly uneven. The organization takes benefit from synergistic approach at group level - United International Group (UIG) - and replicate the group's established practices. The company is actively engaged in co-insurance both at group level and independently. The loss ratio is in acceptable range. The contribution from alternative income stream – investment book – is small; needs to improve. The company booked a revaluation gain on its investment in Apna Micro Finance Bank. The liquidity is adequate considering the claims outstanding. However, the receivables are sizable in quantum, management needs to pay attention. The experienced board members provide comfort to the corporate governance structure.
The rating watch captures the challenges with regards to the company’s growth and its intention to build liquidity. At the same time, the level of liquidity must improve. The increase in GPW should reflect in improved profitability especially during challenging economic scenario.
About
the Entity
SPI Insurance Company Limited (SPI), an unquoted public limited company, was established in 2005. The company is majority-owned by UIG (70%), followed by Silkbank (23%) and Saudi Pak Leasing (7%). The overall control of the company vests in a BoD comprising seven members; five members represent UIG, whereas two members represent Silkbank. UIG is a diversified group having interests in insurance, tracking business, IT, agriculture, insurance brokerage and microfinance-banking.
Mr. M. A. Shahid, CEO/MD since beginning June 2011, is a law graduate having extensive insurance industry experience, especially with The United Insurance Company of Pakistan – a flagship company of UIG. He is assisted by a team of experienced professionals.