PACRA Maintains IFS Rating of TPL Life Insurance Limited

The life insurance sector is primarily dominated by the public sector, holding ~61% market share as of Dec-24, while the private sector accounts for ~39%. The industry’s Gross Premium Written (GPW) stood at ~PKR 434bln during CY24 (CY23: ~PKR 404bln), reflecting a YoY growth of ~7%. On the claims side, Net Claims stood at ~PKR 374bln in CY24 (CY23: ~PKR 366bln). The industry's bottom line was supported by robust investment income of ~PKR 467bln during CY24 (CY23: ~PKR 292bln), representing a YoY increase of ~60%, which contributed to improved Profit After Tax (PAT) of ~PKR 23bln in CY24 (CY23: ~PKR 20bln). The total investment portfolio of the insurance industry stood at ~PKR 2,518bln as of CY24 (CY23: ~PKR 2,027bln). Going forward, the industry outlook remains stable.
The rating reflects TPL Life Insurance Limited. ('TPL Life' or 'the Company') efforts to manage its position in the life insurance sector. TPL Life has become a publicly listed company after a reverse merger with Dar-es-Salaam Textile Mills Limited (DSML) on 10-Jun-24. The rating drives comfort from the support of the parent company, TPL Corp Ltd. (TPL Corp), evident from the presence of the Sponsor on the Board and through an equity injection during the year. TPL Life has been pursuing the life and health insurance businesses; however, the Company has been striving to accentuate its life insurance business. TPL Life has prioritized the introduction of short-term innovative products while reducing the underwriting business of group policies. However, the Company witnessed a YoY decline of ~10% in GPW during CY24. The increased acquisition expenses have impacted the underwriting expenses, and in turn, the underwriting performance of the Company. Although the investment income increased slightly by ~12% during CY24, however remained minimal to support the bottom line, resulting in an increase in loss by ~39%. Moreover, the combined ratio remained significantly high primarily due to the one-time cost incurred under the reverse merger (~PKR 95mln) and bad debt provisions (~PKR 75mln). On the financial front, although the liquid assets of the Company have increased, equity continued to deplete. The Company must build itself around a 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 strengthened.

About the Entity
TPL Life Insurance Limited (‘TPL Life’ or ‘the Company’) was incorporated as a public unlisted company in Mar-08 and got listed on the PSX in Jun-24. The Company commenced its business in Mar-09 after obtaining the license to carry out operations. TPL Life is mainly engaged in the life insurance business, including ordinary life business and accidental and health business.
The Company is a subsidiary of TPL Corp. with ~95.32% shareholding. The rest of the shareholding resides with members other than directors. The BoD is chaired by Mr. Jameel Yusuf. Mr. Saad Nissar heads the Company as the CEO. He is assisted by an experienced team of professionals.