PACRA Maintains IFS Rating of State Life Insurance Corporation of Pakistan

Pakistan's Life Insurance market is dominated by the public sector (~67% share as of Dec-23), while the private sector holds only ~33%. The sector players have shifted their focus from first-year persistency to second-year, prioritizing Gross Premium Written (GPW) growth. During CY23, overall GPW showed a YoY growth of ~7.7%. Out of the total, ~47% of the GPW pertains to renewals, followed by group life without cash value (~37%). Net Premium also showed a YoY increase of ~7%. As policy maturities and surrenders have largely trickled in, net claims grew by ~31%. To adapt, the industry holds a substantial investment book (CY23: PKR 2,021bln, CY22: PKR 1,747bln) stabilizing the overall outlook.
The rating of State Life Insurance Corporation of Pakistan (“State Life” or “the Corporation”), a Government of Pakistan (GoP) owned life insurance organizaion, derives strength from its substantial market share of ~67%. The Corporation is considered to have the most effective agency model that penetrates well into life insurance market. During CY23, State Life's Gross Premium Written (GPW) increased by ~10%, primarily driven by group premiums. The Corporation's diverse and innovative product offerings, coupled with operational excellence, have resulted in strong customer trust, as reflected in its robust persistency ratios. First-year persistency stands at ~81% with a renewal persistency of ~91%. However, due to higher claims, the Corporation reported an underwriting loss. This was primarily driven by increased death claims and a significant rise in surrenders caused by susceptible economic conditons. State Life's loss ratio increased to ~92%, impacting the combined ratio (~110%). The comfort is derived from State Life's strong risk absorption capacity, supported by sufficient liquidity and the overall quality of its investment portfolio, along with the Government of Pakistan's (GoP) guarantee for policyholders' liabilities. Experienced management team adds comfort to the overall rating; however, State Life must revamp its digital strategy to remain alongside the evolving requirement.
State Life's ability to maintain its leadership in the life insurance sector is important. Successful execution of envisioned strategies: including diversification and continued growth remains essential. Additionally, implementation of new ERP system will enable efficient business operations with the real time provision of services to all stakeholders.

About the Entity
State Life Insurance Corporation of Pakistan ("State Life" or "the Corporation") was incorporated in Nov-72. Currently, the Corporation operates through a widespread sales network throughout Pakistan and also holds presence in Middle East. The Corporation is the largest Life Insurer in Pakistan with ~67% market share.
The Corporation is governed by the Government of Pakistan (GoP) through the Federal Ministry of Commerce. The Board is Chaired by Mr. Suleiman S Mehdi, while Mr. Shoaib Javed Hussain is the CEO. He is assisted by a team of experienced professionals.