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The Pakistan Credit Rating Agency Limited
Press Release

Date
26-Nov-21

Analyst
Maryam Arshad
maryam.arshad@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
(26-Nov-21)
Previous
(27-Nov-20)
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. All segments of the Company have recorded splendid growth and contributed towards the better top-line over the last year wherein the tilt lies towards Fire and Engineering Segments. Conservative strategy involving prudent underwriting practices along with focus on diversified products helped to demonstrate continued healthy underwriting profitability, supplementing the bottom-line. Augmentation in equity and the liquid assets owing to healthier cashflows offers strength to the capital structure which in-turn lend support to rating. Elevating amounts of receivables, specifically ‘premiums due but unpaid’ on account of relaxation in premium payment terms to corporate clients in view of pandemic remains the matter of concern. A significant spike in the investment performance in the close supervision of key management personnel has been observed and it is expected that increased investment income amounting PKR~42mln in 6MCY21 (CY20: PKR~84mln; CY19: PKR~23mln) will supplement the bottom-line of the company on a consistent basis. As an element of continued succession planning, sponsors are nurturing future leadership of the company and consequently another director from the family has been added to the board.
The rating is dependent in company’s ability to improve its market position with sustained profitability. The liquidity position and, hence, financial risk profile should remain afloat along-with growth. Expected engagement from foreign partner would provide further strength to the capital structure.

About the Entity
East West Insurance Company (EWIC) commenced commercial operations as a general insurance company in 1983 and is listed on the Pakistan Stock Exchange. EWIC primarily operates in Fire, Engineering, Motor and Marine Insurance Segments, with Fire and Engineering Segments being the leading drivers constituting 31% and 27% of the exposure respectively. The trail is followed by Motor and Marine Segment which constitute 15% and 12% respectively. Yunus family effectively holds the majority shareholding in the company. Askari Life Assurance Co. Limited (formerly East West Life Assurance Co. Limited) is its associated Company. EWIC holds 22% shareholding in Askari Life along-with board representation.
The EWIC has nine-member board of directors - five members belonging to Yunus family. Four 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.