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The Pakistan Credit Rating Agency Limited
Press Release

Date
07-May-21

Analyst
Faraan Taimoor
faraan.taimoor@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 Upgrades IFS rating of TPL Insurance Limited

Rating Type IFS
Current
(07-May-21)
Previous
(27-Aug-20)
Action Upgrade Maintain
Long Term AA- A+
Short Term - -
Outlook Stable Stable
Rating Watch - -

TPL has been augmenting its market positioning as it holds a substantial share in motor segment in the industry. Advanced technology infrastructure has continued providing an edge to the company. The third largest player in the motor segment, TPL continues to witness increased business volumes in Window takaful. The company is making concerted efforts to diversify its business composition as it captures non-motor segment, enhancing product slate of TPL Insurance Limited. Underwriting profitability has been enhanced, this augers well for the risk profile. Impetus is gained from abundant liquidity in the company enabled in the form of high liquid investments and cash reserves. Reinsurance treaties provide sufficient coverage to the risks.

The rating takes into account the induction of a German based institution, DEG, as an equity partner into the company. DEG, a wholly owned subsidiary of KfW Group based in Cologne, Germany, has acquired a 19.9% equity stake in TPL Insurance by investing PKR 466mln. The investment supports DEG’s vision into expanding in the financial sector of nascent, but growing markets like Pakistan. TPL is expected to gain strategic impetus in the growth of non-motor segment of the company. The retail-centric company expects to launch innovative non-motor products, deriving benefit from DEG’s experience. The equity injection is further expected to improve the financial strength which will aid the underwriting capabilities of the company.
The rating is dependent upon the company's ability to diversify its revenue stream. The inclusion of the foreign partner should provide oversight and impetus to the business and financial risk profile while aiding growth trajectory of the company. Additional capital received in the form of equity should be kept in cash equivalent or liquid investment.

About the Entity
TPL Insurance Limited (TIL), formed in 1992 and listed on Pakistan Stock Exchange, a majority-owned (~59%) subsidiary of TPL Corp. TPL Corp – close to five billion rupee corporate conglomerate in turnover terms – has expanded its footings in diversified business avenues with a sizable portfolio of strategic investments. Major companies in the group include ; TPL Properties, TPL Trakker, TPL Insurance, TPL Life Insurance amongst others.

TPL has an eight member Board of Directors including the CEO. The Chairman of the board is Mr. Jameel Yousuf. The CEO, Mr. Aminuddin, carries significant experience in the insurance industry. He is supported by a team of 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.