The Pakistan Credit Rating Agency Limited
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Faraan Taimoor

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PACRA Maintains IFS Rating of EFU General Insurance Limited

Rating Type IFS
(25-Jun-21 )
(21-Aug-20 )
Action Maintain Maintain
IFS Rating AA+ AA+
Outlook Stable Stable
Rating Watch - -

The rating incorporates EFU General’s leading position in the general insurance industry. Comfort is derived from the company’s performance matrix. Underwriting and Investment Income have provided a healthy contribution to the profitability. Focus on enhanced customer service and efficient claims settlement process, achieved through progressive technology, has enabled the company to maintain its market share. Strong liquidity and sound cash flow generation ability, leading to an impressive combined ratio, provides strength to the rating. EFU Group continues to enjoy leadership in insurance industry – General and Health, while securing third position in Life Insurance (Dec-20). The company’s underwriting profitability provides strength to the rating. Further, the rating takes comfort from the series of reinsurance treaties signed with internationally rated reinsurance companies. 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. Sustainable client coverage is deemed probable, should any adverse event arise.
The general insurance industry had a growth rate of 11% prior to Covid-19, however the pandemic affected the business volume, leading to growth contraction. Economic recovery was observed halfway through 2020, contributing to the progression of trade volumes.

The rating is dependent on sustained competitiveness of the company. Risk management and growth in business volumes are two detrimental factors for progression in current industry dynamics.

About the Entity
EFU General, incorporated in 1932, is one of largest general insurance company in Pakistan (22% market share in gross premium written as at end-December 2020) and is listed on Pakistan Stock Exchange. Significant shareholding of EFU General is held by JS Group and Bhimjee Group. The group companies of EFU include EFU General, EFU Life and Allianz EFU Health Insurance.

EFU General's BoD comprises ten 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.

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.