The Pakistan Credit Rating Agency Limited
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Muhammad Noor Ul Haq

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PACRA maintains IFS Rating of Sindh Insurance Limited

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

Its rating reflects the parentage - Government of Sindh (GoS) and the potential to leverage on the same to establish Sindh Insurance in a competitive insurance industry. The Company was incorporated with the objective to fulfill insurance needs for huge assets owned and financed by GoS sanctioned after the legislation passed by the provincial assembly of Sindh, ‘Sindh Insurance of public property Act, 2015’. Over the year, all segments of the Company have performed admirably and contributed to a better top line with inclination towards engineering and motor segments. Further enhancement in topline is anticipated through captive underwriting, extensive efforts are being undertaken by the Company in this regard. Prudent underwriting practices along with a focus on diversified products helped to demonstrate continued healthy underwriting profitability. Stable stream of investment income further supports the bottom line. The direct benefit from "Universal Accidental Insurance and Social Benefit” has heaved in the form of liquidity – as means of investment. The Company has also created a reserve against IBNR on account of UAIS. The Company further aims to develop a market-related business in the medium term which is essential moving forward.
Company posted the growth of ~48% in GPW during 9MCY22 as SIL reported a GPW of PKR 761mln (9MCY21: PKR 514mln). The Company is generating gross written premium mainly form engineering segment (74%) followed by motor segment (10.8%). The investments are deployed entirely in liquid avenues dominated by Term Deposits, PIBs and TFCs. The Company showed a ~18% YoY increase as Company reported an investment income of PKR 359mln for 9MCY22 (9MCY21: PKR 304mln) due to increased return on government securities (PIBs).
The rating is dependent on the Company’s ability to strengthen its market position with sustainable profitability. The financial risk profile should remain afloat along with growth. Furthermore, the Government’s backing and good governance practices are the key to sustained ratings.

About the Entity
Sindh Insurance Limited (SIL) was incorporated as a non-listed public limited Company on December 20th, 2013. Government of Sindh (GoS) owns 100% stake in the Company through Ministry of Finance (MoF). SIL has an eight members board, chaired by Mr. Syed Akhtar Ul Islam. There are two non-executive directors, while the remaining members are independent directors. The CEO, Mr. Muhammad Faisal Siddique, brings with him a diversified experience of more than two decades in life and general insurance.

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.