The Pakistan Credit Rating Agency Limited
Press Release


Muhammad Noor Ul Haq

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PACRA maintains IFS Rating of Crescent Star Insurance Limited

Rating Type IFS
(27-Jan-23 )
(31-Mar-22 )
Action Maintain Harmonize
IFS Rating A (ifs) A (ifs)
Outlook Stable Stable
Rating Watch Yes Yes

Crescent Star Insurance Limited (CSIL or the Company) predominantly has a holding Company structure through building its non-insurance strategic book. IFS (Insurer Financial Strength) rating of CSIL portrays the Company's relative ability to meet liabilities towards the policyholders. The rating reflects Crescent Star Insurance's strategy directed towards direct line insurance in motor and miscellaneous segments. Focus remains on underwriting risk-free business. This has enabled the Company to improve underwriting losses, though the expense ratio is still high. A considerable investment has been undertaken by CSIL in Dost Steels Limited (DSL) which has remained non-cash producing over an extensive period. In order to convert DSL into an income generating unit, a revival plan is being chalked out for quite some time aimed at providing much required leadership, as well as requisite funding for working capital and operational needs. Further, a contingent merger of a subsidiary is further expected to unlock synergistic benefits for the Company, materialization of which remains crucial. The Company's current liquidity profile matches the risk parameters for the size of business operations, however, going forward, should the insurance business increase, improvement in liquidity profile is essential.
During CY22 economy, mired with multiple challenges i.e. natural disasters (Floods), the political instability trickles down toward a dip in business activities. Reduction in management expenditure and product innovation shall remain crucial for the industry participants in order to solidify their market position.
The rating watch captures the Company's consolidation process in Dost Steel Limited and merger of CS Foods into PICIC Insurance, while fulfilling regulatory and legal requirements. Keeping the business model, the management prefers facultative arrangements. The cash return from subsidiaries is important. Meanwhile, risk absorption capacity needs to be kept intact.

About the Entity
Crescent Star Insurance Limited (CSIL), a listed company, was established in 1957. In Feb-2013, new management invariably revamped the entire operating structure of the Company with a new business strategy. The auditors of the company are Crowe Hussain Chaudhury & Co. Chartered Accountants. Some of the major points that the auditors have raised are being addressed by the management, duly expected to reflect in the next report, as per the management representation. Mr. Naim Anwar chairs the board of directors which comprise eight members. Members of BoD, nominated by the sponsors, comprise professionals belonging to technology, engineering, health sciences and NBFCs sectors.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.