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The Pakistan Credit Rating Agency Limited
Press Release

Date
26-Aug-21

Analyst
Muhammad Noor Ul Haq
noorulhaq@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 Premier Insurance Limited

Rating Type IFS
Current
(26-Aug-21)
Previous
(26-Aug-20)
Action Maintain Maintain
Long Term A A
Short Term - -
Outlook Negative Negative
Rating Watch - -

The rating reflects continuing efforts of the new leadership to steer the Company towards positive performance. Premier Insurance is cautiously underwriting business, though the market share remained limited. Annual and three-month financials showed slight signs of improvement which bodes well for the Company going forward. Gross Premium and Underwriting results improved which is especially welcomed when considering these numbers are compared to pre COVID-19 pandemic slowdown. However, the equity levels going forward must be maintained as the unappropriated loss amount is concerning. The new leadership have envisaged a business plan in order to steer Premier Insurance into profitable growth. Efforts are afoot, upturn in economic activity is expected to expediate the recovery process.
In terms of Gross Premium Written (GPW), Pakistan’s general insurance industry had a total size of PKR ~108,322mln in CY20, (less than ~1% of its GDP), with a growth of ~3.7% from the previous year (CY19: PKR ~104,453mln). The insurance industry in Pakistan is relatively small compared to its peers in the region. The insurance penetration and density remain very modest as compared to other jurisdictions while the insurance sector remains underdeveloped relative to its potential. Gross premiums written of non-life insurers in India reached USD ~26.5bln in FY21, from USD ~26.4bln in FY20.
The rating is dependent on positive performance matrix. Meanwhile, the management has to carefully manage its insurance asset liability structure wherein timely realization of outstanding premium along with smooth settlement of claims is critical. Any further dilution in the risk profile of the Company may impact the rating.

About the Entity
Premier Insurance was incorporated in 1952 and is listed on the Pakistan Stock Exchange. It holds <1% market share and operates through two business Hubs; South and North. Crescent Group and its associated companies hold 70% shareholding. State Life Insurance Corporation is another major shareholder with 11%. The Crescent Group (CG) operates in diversified sectors of textile, steel, sugar, and power.
Premier Insurance has seven-member Board, including CEO, comprising five representatives of Crescent Group and one of State Life Insurance Corporation. Mr. Nadeem Maqbool is the new CEO of the Company, taking charge since Feb’20 after the passing of former CEO. Mr. Maqbool has been associated with Premier Insurance for more than 17 years and is also the CEO of Suraj Cotton, part of Crescent Group.

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.