The Pakistan Credit Rating Agency Limited
29-Jun-20
Analyst
Faraan Taimoor
faraan.taimoor@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA maintains IFS Rating of TPL Life Insurance Company Limited
| Rating Type | IFS | |
|
Current (29-Jun-20 ) |
Previous (27-Dec-19 ) |
|
| Action | Maintain | Maintain |
| IFS Rating | A- | A- |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The company has been witnessing increased business volumes though the margin is minuscule. Management expenses have traditionally been on a higher side as the company envisages aggressive growth target. This has led to a high deficit, a concern. The Loss Ratio is high in group health business. Support has been received from the sponsor in the form of equity injection through a right issue. Further liquidity is expected to be acquired; the sponsor is exploring different avenues in this regard. Going forward, the company envisages improved topline while simultaneously increasing profitability. Reduction of the loss-making segment while underwriting prudential business is vital.
Prior to COVID-19, the life insurance industry witnessed miniscule growth of 1% YoY as single premium declined due to multiple factors. The current pandemic has further affected the life insurance industry, with the growth expected to plummet. Additional reduction in investment linked policies and heightened claims are expected. Moreover, increase in surrenders is likely as a result of economic stagnation. The large investment book is however likely to cushion any impact. The industry intends to sustain its existing position while aiming to launch innovative products.
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.
About
the Entity
TPL Life Insurance Limited was incorporated in 2008 and obtained license to carry on life and related line of business in 2009. TPL Life allotted 10mln Right shares at PKR 10/ share to TPL Corpo Limited, increasing its holding to 82.27% whereas the remaining 17.73%% is shared by Sindh Bank and two individuals.
Mr. Faisal Abbasi, the CEO of the company, is an experienced professional with over 23 years in Life Insurance and banking sector. He is assisted by a team of experienced professionals