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PACRA maintains IFS Rating of Shaheen Insurance Company Limited

Lahore, August 26, 2022 (PPI-OT):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 and 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.

For more information, contact:
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com