PACRA Maintains IFS Rating of TPL Life Insurance Limited | Assigns Rating Watch

Pakistan's Life Insurance market is dominated by the public sector (~66.6% share as of Dec-23), while the private sector holds only ~33.4%. The sector players have shifted their focus from first-year persistency to second-year, prioritizing Gross Premium Written (GPW) growth. During CY23, overall GPW showed a YoY growth of ~7.7%. Out of this total, ~46.6% of the GPW pertains to renewals, followed by group life without cash value (~37.2%). Net Premium also showed a YoY increase of ~7.4%. As policy maturities and surrenders have largely trickled in, net claims grew by ~31%. To adapt, the industry holds a substantial investment book (CY23: PKR 2,021bln, CY22: PKR 1,747bln) stabilizing the overall outlook.
The rating reflects TPL Life Insurance Ltd. ('TPL Life' or 'the Company') efforts to manage its position in the life insurance sector. The rating drives comfort from the support of the parent company, TPL Corp Ltd. (TPL Corp), as witnessed in past through an equity injection. TPL Life has been pursuing in life and health insurance businesses; however, recently the Company is striving to accentuate its life insurance business. TPL Life has prioritized the introduction of short-term innovative products. Despite a YoY growth of ~29.4% in the GPW, the Company's topline remains low and consequently unable to absorb fixed expenses. The increased acquisition expenses have impacted the underwriting expenses, and in turn the underwriting performance of the Company. TPL Life's combined ratio remains significantly elevated with minimal support from the investment income. Resultantly, the Company booked a loss on net level. On the financial risk front, depleting liquidity and eroding risk appetite remains a concern. PACRA assigns a Rating Watch registered by significant dilution of equity along with substantially weak performance. The Company must build itself around sizeable business, going forward.
The rating is dependent on the Company’s ability to improve gross premiums and in turn underwriting profits. Maintaining adequate liquidity is pivotal for the rating. Solvency profile as indicated through reserves, must be stregthened.

About the Entity
TPL Life Insurance Limited (“TPL Life” or “the Company) is a public unlisted company, incorporated in Mar-08. The Company commenced its business in Mar-09 TPL Life Insurance Limited obtained the license to carry out operations in 2009. TPL Life is mainly engaged in life insurance business including ordinary life business and accidental and health business.
The Company is a subsidiary of TPL Corp. with ~97.61% shareholding. Rest of shareholding resides with members other than directors. The BoD is chaired by Mr. Jameel Yusuf. While, Mr. Saad Nisar heads the Company as the CEO. He is assisted by an experienced team of professionals.