PACRA Maintains IFS Rating of East West Insurance Company Limited | Assigns ‘Positive’ Outlook

Pakistan's General Insurance industry has a total size of PKR 182bln during CY23 (CY22: PKR 143bln), exhibiting a growth of ~27%, in terms of Gross Written Premium (GWP). The industry reported a growth of ~46% in underwriting results (CY23: PKR 4.7bln, CY22: PKR 3.2bln). The net income of the industry also experienced an increase of ~60% to PKR 18bln during CY23 (CY22: PKR 11bln). Overall, the industry's outlook remains stable with substantial liquidity available with players.
The assigned rating of East West Insurance Company Limited ("East West" or “the Company") reflects the Company's improved fundamentals. East West posted growth of ~25% during CY23, primarily driven by its conventional portfolio and ~14% growth during 3MCY24. Fire & Property (~31%) and Engineering (~26%) remain key segments driving Gross Premium Written (GPW) for the Company. The underwriting business benefits from a diverse range of products, resulting in sustained and healthy underwriting profits. During CY23, the Company experienced a slight fluctuation in underwriting results due to increased underwriting expenses and the inflationary impact on management expenses. During 3MCY24 underwriting results showed ~26% growth, indicating strong performance for the upcoming year. The Company has delivered superior performance among its peers. The Company also reported a ~118% increase in supplementary income (Investment Income) during CY23, reflecting significant improvements in its investment book, predominantly in money market funds, which grew by ~46%. This growth demonstrates the sponsors' strong commitment to improving the Company's liquidity profile. On the financial risk front, a recent equity injection of PKR 263mln through a rights issue strengthens the Company's capital structure. Healthy cash flows and substantial liquid assets support the rating. The extended receivable days pose a challenge, and impairment needs to be avoided. As part of ongoing succession planning, sponsors are nurturing future leaders. The induction of the younger generation provides essential support to the existing governance framework.
The rating is dependent on the Company’s ability to improve the market share and augment profits. The financial risk profile through sustained liquidity position must remain in line with the growth. Substantial cushion from the underwriting business along with strengthening of underwriting discipline will be considered crucial, going forward.

About the Entity
East West Insurance Company ("East West" or “the Company") was incorporated as a Public Listed Company (listed on PSX) and became operational in 1983. The Company operates as a general insurance company. Yunus family holds majority shareholding, i.e. ~75%, of the Company. The Board, dominated by the sponsoring family, is chaired by Mr. Umeed Ansari after his appointment in April 2024. Mr. Naveed Yunus leads the Company as CEO, supported by Mr. Saad Yunus as Deputy MD. He is assisted by a professional team.