The Pakistan Credit Rating Agency Limited
27-Aug-20
Analyst
Faraan Taimoor
faraan.taimoor@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA maintains IFS rating of TPL Insurance Limited
| Rating Type | IFS | |
|
Current (27-Aug-20 ) |
Previous (27-Aug-19 ) |
|
| Action | Maintain | Maintain |
| IFS Rating | A+ | A+ |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The rating reflects established position of the company in its niche market. TPL has been augmenting its market positioning as it holds a substantial share in motor segment in the industry. Advanced technology infrastructure has continued providing an edge to the company. The third largest player in the motor segment, TPL continues to witness increased business volumes in Window takaful. The company is making concerted efforts to diversify its business composition as it captures non-motor segment, enhancing product slate of TPL Insurance Limited. The company profile is expected to be bolstered through the induction of a foreign partner; the transaction is expected to be completed in due course of time. This would provide further impetus to the growth of non-motor segment of the company alongwith adding synergic benefits. The financial risk profile is equipped with adequate liquidity, however it needs to be monitored carefully as the company takes the trajectory of growth.
Prior to COVID-19, the general insurance industry witnessed a growth of 11% YoY. The current pandemic affected the volumes, which led to a contraction in the growth. However, volumes have picked up post-June 2020 amidst increase in economic activities throughout the country. The volumes need to sustain, indeed, improve in tandem with the longer historical trend. The interest rate regime would impact the fixed income stream but the equity market is improving though requiring a prudent approach.
The rating is dependent upon the company's ability to diversify its revenue stream. The inclusion of the foreign partner should provide oversight and impetus to the business and financial risk profile while aiding growth trajectory of the company. This would have positive implication for rating.
About
the Entity
TPL Insurance Limited (TIL), formed in 1992 and listed on Pakistan Stock Exchange, a majority-owned (~73%) subsidiary of TPL Corp. TPL Corp – close to three and a half billion rupee corporate conglomerate in turnover terms – has expanded its footings in diversified business avenues with a sizable portfolio of strategic investments.
TPL has seven member Board of directors. The Chairman of the board is Mr. Jameel Yousuf. The CEO, Mr. Mr Aminuddin, carries significant experience in the insurance industry. He is supported by a team of experienced professionals