PACRA maintains IFS Rating of Shaheen Insurance Company Limited
The Company has witnessed slowing down of the business generated that impacted from increased competition within the General Insurance market. The Company experienced fall in GPW in conventional business, however, enjoyed growth in Takaful Business where Gross Contribution Earned significantly surged by ~66% during CY21. The rating denotes strong capacity to meet policyholders and contract obligations. Impetus is being added lately through the efforts of Shaheen Foundation, as they provide strategic oversight while sharing business volumes with Shaheen Insurance through subsidiaries. Shaheen Insurance has majority portfolio within motor segment. The Company aims to penetrate further in the non-motor segment both through captive & non-captive channels, pursuing an aggressive growth strategy to realize its goals. Support from investment income largely remained steady and bodes well for the Company. The rating derives comfort from the sound liquidity profile of the Company, especially the coverage it provides to insurance related liabilities. Going forward, growth in revenue stream along with sustaining equity level is crucial.
During CY21, the sector experienced ~7% growth YoY basis rising to PKR~703bln (CY20: PKR 656bln). Equity of the sector grew as well by ~5%. Underwriting grew up by ~75% YoY in CY21 as compared to CY20. During CY21, upsurge in auto sales and health products remained pivotal for growth. Underwriting profitability has been maintained through reduced management expenses while innovative products are being envisaged. However, current political instability and worsening economic condition could adversely impact insurance industry.
The rating is dependent upon sustained improvement in business profile of the Company. Growth in revenue streams along with sustaining equity levels are crucial. Improvement in liquidity is core to the rating. Ratings process vouched Investment Income and better Corporate Governance as well.
Shaheen Insurance commenced commercial operations as a general insurance company in 1995, and is currently listed on the Pakistan Stock Exchange. With its head office in Karachi, the Company has a nationwide network of 13 branches. Shaheen Insurance is majorly owned by Shaheen Foundation (73.4%), Hollard is second major shareholder (10.6%). Rest of the shareholding belongs to financial institutions (7.5%) and induvials (8.5%). Overall control of the Company vests in eight-member board. The Board comprises of two independent director, one executive and five non-executive directors. including the Chairman. Chairman of the Board Air Marshal M. Arif Pervaiz (Retd) has served the PAF for ~35 years and has held various Command and Staff appointments, besides he served as Managing Director of Shaheen Foundation for five years and currently is incumbent, well exposed to strategic, administrative and corporate environment. Other Members, as well, carry diversified experience. The Board houses retired PAF personnel and leading business professionals who have served at leading posts during their illustrious career. Mr. Rizwan Akhtar, CEO of the Company, joined Shaheen Insurance in Oct 21. He is associated with insurance industry for ~1.7 decades. Mr. Rizwan, CEO of the Company, is assisted by a team of professionals.