PACRA Maintains IFS Rating of Premier Insurance Limited

Pakistan's General Insurance industry has shown strong growth, with its total size reaching PKR 214bln in CY24, up from PKR 188bln in CY23. This represents a ~14% growth in terms of GWP. The industry's profitability also saw slight improvement. Underwriting profits surged by ~70%, from PKR 7.2bln in CY23 to PKR 12.2bln in CY24. Net income increased by ~33%, climbing to PKR 24bln in CY24 from PKR 18bln the previous year. The overall outlook for the industry remains stable, supported by substantial liquidity across its key players.
Premier Insurance Ltd.'s ('Premier Insurance' or 'the Company') rating is largely influenced by its affiliation with the Crescent Group, a major conglomerate with significant interests in Pakistan's textile, sugar, steel, and power sectors. The Company also benefits from its long-standing history within the insurance industry. In CY24, the Company's performance showed some positive developments. GWP grew by ~4% to PKR 731mln. A reduction in net insurance claims expenses led to an underwriting profit. Net income saw a jump to PKR 68mln, driven by an increase in investment income. However, challenges persist as the Company has not been able to attract substantial volume of new business. While the GWP has increased, the growth remains modest, and the expansion in captive business has also been limited. Although the combined ratio slightly improved, it remains elevated due to higher legacy claims, particularly from the accident and health segment. Management is aware of this and must adopt a more cautious approach to risk management. Although the Company has strong coverages, stretched claims efficiency continues to strain its financial risk profile. To address these issues, a stringent strategy to enhance the Company's equity base in line with SECP's guidelines will be crucial. This is a pivotal step for the Company's future stability.
The rating's trajectory depends on the Company's performance metrics. It's crucial for management to prudently manage the insurance asset-liability structure, which includes ensuring timely premium collection and efficient claims settlement. A sustained improvement in financial performance, alongside effective risk mitigation strategies, is essential for maintaining the rating. The Company's risk profile will require diligent and continuous monitoring.

About the Entity
Premier Insurance Limited ('Premier Insurance' or 'the Company') was incorporated as a listed concern, on PSX, in 1952. The Company operates through two business hubs: South and North. The Crescent Group (the Group) and its associated companies hold ~70% shareholding of the Company, followed by State Life Insurance Corporation holding ~11% stake. The Group operates in diversified sectors of textile, steel, sugar, and power. The Board is chaired by Mr. Khalid Bashir. While, the Company is headed by Mr. Nadeem Maqbool, as the CEO. He is aided by a team of experienced professionals.