Analyst
Maryam Ijaz
maryam.ijaz@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
PACRA Maintains IFS Rating of EFU General Insurance Limited
Rating Type | IFS | |
Current (21-Aug-20 ) |
Previous (24-Dec-19 ) |
|
Action | Maintain | Maintain |
IFS Rating | AA+ | AA+ |
Outlook | Stable | Stable |
Rating Watch | - | - |
The rating reflects the leading position of the EFU General in the general insurance sector. The company’s performance matrix provides comfort. The profitability has a healthy contribution from both underwriting and investment functions. Increasing emphasis on customer service including concerted efforts to bring efficacy in claims settlement process with support from technology helps in sustaining market share. Strong liquidity and sound cash flow generation ability provide strength to the rating. EFU Group continues to enjoy leadership in insurance industry – General and Health while securing second position in Life Insurance. The company’s strength is reflected in its sizeable underwriting profitability. In window takaful, EFU General Insurance remained leader, with Participant’s Takaful Fund and Operator’s Fund both in surplus. This furnishes strength to the brand and ability to serve diverse client needs. The company is well positioned to sustain the large client base in these distressed times.
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 rating is dependent on sustained competitiveness of the company. High growth in business volume, the industry leaders are expected to enhance their risk retention appetite with the emphases on risk management practices.
About
the Entity
EFU General, incorporated in 1932, is one of largest general insurance company in Pakistan (21% market share in gross premium written as at end-December 2019) and is listed on Pakistan Stock Exchange. Significant shareholders of EFU General include JS Group and Bhimjee Group. Among EFU companies are EFU General, EFU Life and Allianz EFU Health Insurance.
EFU General's BoD comprises nine members including the CEO. The Chairman of the board, Mr. Saifuddin N. Zoomkawala - seasoned insurance professional, has been associated with EFU Group since 1964. Mr. Hasanali Abdullah, the company's CEO & MD since July-2011, is associated with the EFU Group since 1979. He is supported by a team of experienced professionals, long associated with the company. The management has made significant strides to induct and build future leadership of the company.