The Pakistan Credit Rating Agency Limited
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Faraan Taimoor

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PACRA Maintains IFS Rating of Premier Insurance Limited

Rating Type IFS
(26-Aug-20 )
(30-Nov-19 )
Action Maintain Maintain
IFS Rating A A
Outlook Negative Negative
Rating Watch - -

The rating reflects sustained efforts of the new leadership to steer the company out of prevalent challenges. The company is cautiously underwriting proftabile insurance business, though the market share remains limited; efforts are underway to regain its share. The fall in GPW is a consideration though greater decrease in amount of underwriting losses is essential. Liquidity is essential and must be maintained at high levels. The company has adequate equity; maintenance is imperative. The new leadership have envisaged a business plan in order to steer Premier into profitable growth. Efforts are afoot, upturn in economic activity is expected to expediate the recovery process.
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 on positive performance matrix. Meanwhile, the management has to carefully manage its insurance asset liability structure wherein timely realization of outstanding premium along with smooth settlement of claims is critical. Any further dilution in the risk profile of the company may impact the rating.

About the Entity
Premier Insurance was incorporated in 1952 and is listed on Pakistan Stock Exchange. It holds 0.9% market share at end Jun' 20 and operates through two business Hubs South and North. Crescent Group and its associated companies hold 70% shareholding. State Life Insurance Company is another major shareholder (11%). The Crescent Group (CG) operates in diversified sectors of textile, steel, sugar, and power.
Premier Insurance has Seven-member board, including CEO, comprising five representations of Crescent Group and one of State Life Insurance. Mr. Nadeem Maqbool is the new CEO of the company, taking charge since Feb’20 after the demise of former CEO. Mr.Maqbool has been associated with the Premier Insurance for more than 17 years and is also the CEO of Suraj Cotton, part of Crescent Group.

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.