The Pakistan Credit Rating Agency Limited
Press Release


Muhammad Noor Ul Haq

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PACRA upgrades IFS Rating of TRAFCO Insurance Company Limited

Rating Type IFS
(09-Jun-23 )
(13-May-23 )
Action Upgrade Maintain
IFS Rating BBB++ (ifs) BBB+ (ifs)
Outlook Stable Stable
Rating Watch - -

The rating reflects Company's unwavering commitment to financial stability and good performance. Trafco Insurance has implemented proactive measures to enhance its solvency requirements, leading to the fulfillment of the Minimum Capital Requirement in 2022. The Company's underwriting portfolio is currently in development stage, which will be growing as envisaged by the management. The Company deals in “Fire and Property Damage”, “Marine, Aviation and Transport”, “Motor” and “Miscellaneous” segments. The Company’s ultimate forte resides with the motor segment ~65.37% followed by fire & property (~18.67%) and miscellaneous (~15.94%). The underwriting losses can partially be accredited to a negligible net insurance premium. Currently, the management of the Company is actively engaged in developing its investment portfolio, which shows promising potential. The quantum of liquid profile stood at PKR 2mln as at end-Dec22. An upgrade in rating is further supported by Trafco Insurance's efforts in improving solvency and compliance with laws while progressing towards a sustainable organization. Additionally, Trafco Insurance has taken significant strides by enlisting reinsurance treaties, which provides room to grow and a layer of cushion for risks arising out of underwriting.
The Company's success in achieving GPW targets and the expectation of the induction of the new sponsor who aligns with Company's core values, vision and commit to excellence remains crucial to the assigned rating. This should translate in improved underwriting performance and augmented liquidity. The rating would gain benefit provided the Company meets all statutory requirements and captures a sizeable share in the market while achieving breakeven in its core operations. At the same time, the liquid earning investments profile of the Company must rise.

About the Entity
Trafco Insurance Company Limited was incorporated in Pakistan as an unlisted public limited company on October 25, 1979.The Company operates within the conventional general insurance space through three branches in Pakistan and has no Window Takaful operations. The registered office and principal place of the Company is located at Trafco House, Lahore. The company’s seven-member board is chaired by Mr. Tahir Malik. The composition of the board consists of four non-executives, an independent and two executive members. The CEO is Mr. Muhammad Nawaz Shahid. He possesses around three decades of related experience.

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.