Muhammad Noor Ul Haq
PACRA Maintains IFS Rating of TPL Life Insurance Company Limited
|IFS Rating||A (ifs)||A (ifs)|
The rating reflects sustained progression of TPL Life to achieve a sizeable position in life insurance industry. The rating of TPL Life derives comfort from the strong group support that has been witnessed over the past years by way of equity injections and diverse pool of investments of its holding company "TPL Corporation". TPL Life had been pursuing both life and health insurance businesses in the past; however, recently the Company is striving to accentuate its life insurance business. To foster greater awareness and improve the enhance penetration of life insurance, TPL Life has prioritized the introduction of short-term, innovative products. Management expenses have traditionally been on the higher side as the Company envisages aggressive growth target and to attain this, the acquisition expenses have also risen. While TPL life has successfully reduced its underwriting expenses during CY22, repetitive deficits incurred entail a grave concern. The Company’s underwriting and operating results are not commensurate with the industry and have consistently been following a downward trajectory. However, the management envisages a boost in margins in the forthcoming years by way of dynamic marketing of its products.
During FY23, Pakistan's Life Insurance sector faced challenges due to an unexpected rise in inflation which led to a decrease in disposable incomes. To adapt, sector players shifted their focus from first-year persistency to second year, prioritizing top-line growth. During the said period, unit-linked products remained attractive, offering fixed-rate investment opportunities amidst high policy rates. The sector's outlook is expected to remain Stable, supported by investment income in the next financial year. However, muted economic growth could adversely impact the sector if not timely mitigated.
The rating is dependent on the Company’s ability to execute its existing business plan in an efficient manner; herein, consistent growth in top-line and underwriting profits are essential. Maintenance of liquidity levels are pivotal for rating while the addition of foreign partner will provide added strength.
Incorporated in 2008, TPL Life Insurance Limited obtained the license to carry out operations in 2009. The Company is majority owned by TPL Corporation, which maintains 97.38% stake in the Company while the remaining 2.62% is cumulatively held by the directors and their spouses. Mr. Saad Nisaar, the CEO of the Company, is a seasoned professional with a vast experience in the insurance industry. The Company offers a wide range of life insurance solutions for individuals, small to large corporates and microfinance segment.