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Lahore, August 26, 2023 (PPI-OT): Pakistan’s insurance industry is relatively small when compared globally. Locally, among the service sector, share of insurance in GDP and density (premium per capita) remains modest as the sector remains underdeveloped as per its potential. In terms of GPW, Pakistan’s general insurance industry has a total size of ~PKR 41bln during 3MCY23 (3MCY22: ~PKR 34bln), showing a growth of ~21%. Moreover, improved underwriting and investment performance benefitted the industry’s bottom-line by ~21% (3MCY23: ~PKR 4bln, 3MCY22: ~PKR 3.4bln). Despite economic challenges and unprecedented pressures in the locally economy, insurance industry overall outlook remains stable.
The rating reflects Premier Insurance Ltd.’s (‘Premier Insurance’ or ‘the Company’) association with Crescent Group, which holds significant presence in textile, sugar, steel and power segments of Pakistan. The Company’s growth in GPW and resultantly its underwriting income remains sluggish. Moreover, the dwindling investment book’s performance further impacted the Company’s bottom-line and remains ineffective in offsetting the losses seeping in from the core business i.e., insurance.
The combined ratio has slightly improved, however remains inflated due to higher legacy claims from the fire and property segment. Consequently, the Company reported significant losses during that period. The management remains cognizant and needs a cautious approach to manage the risk profile of the Company. Despite strong coverages, stretched claim efficiency stretches the financial risk of the Company. However, equity base and reinsurance agreements remain stable.
The rating is dependent on the performance matrix. Additionally, the management must prudently handle the insurance asset liability structure, ensuring timely premium realization and efficient claims settlement. A sustained improvement in its financials, coupled with effective risk mitigation remains crucial to the rating. The risk profile of the Company needs to be monitored diligently.
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com
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