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The Pakistan Credit Rating Agency Limited

Date
10-Mar-2017
Analysts
Amara Gondal
amara.gondal@pacra.com

+92-42-35869504
www.pacra.com
Applicable Criteria

  • General Insurance and Takaful Operator (Jun 16) [View]
  • Rating Modifiers | Outlook and Rating Watch (Jun 16) [View]

Related Research

  • Sector Study | General Insurance (Nov 16) [View]
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PACRA Upgrades IFS Rating of Shaheen Insurance Company Limited
 Rating Type Insurer Financial Strength(IFS)
Current
(10-Mar-2017)
Previous
(17-Nov-2016)
 Action Upgrade Maintain
 IFS Rating A A-
 Outlook Stable Stable
 Rating Watch - -

Shaheen Insurance rating reflects significant improvement in its liquidity profile. This emanates from expected flow of fresh equity from lately announced issue of shares otherwise than right and conversion of previously illiquid investment property into stable yielding assets. Shaheen Insurance has sustained market share keeping pace with the industry's growth. Dominating portfolio ­ motor ­ is depicting good underwriting results, enabling the company to nourish other segments. However, while expanding into other segments, the company needs to strengthen its reinsurance panel. Accumulated losses have reduced significantly, strengthening equity base. The company envisages to continue expanding in motor segment, while exploring opportunities in other sectors. Major focus is being directed towards tapping potential of captive business - Shaheen Foundation and related. Enhanced equity (and liquidity) base, while improving investment income, should enable the company to invest in its marketing capabilities and technology infrastructure.

The rating is dependent upon sustained improvement in business profile of the company. This requires enduring emphasis on profitability, underwriting and building requisite human resource. Given increasing size of investment book, investment policy statement needs elaboration and performance tracking mechanism. The company has adequate balance between insurance assets and liabilities that should be kept intact.
About the Entity
Shaheen Insurance commenced commercial operations as a general insurance company in 1995, and is currently listed on the Pakistan Stock Exchange. With its head office in Karachi, the company has a nationwide network of 12 branches. It is majority owned by Shaheen Foundation Group with its shareholding increasing after the issue of shares to 69% (previous: 59 %).

The overall control of the company vests in the seven­member BoD. All directors represent SF, resulting in SF having complete dominance on the board. The company is in the process of bringing an independent director on the board. Chairman of the board, Air Marshal Muhammad Jamshed Khan (Retd.), is MD of SF. DMD of SF, Air Vice Marshal Syed Razi Ul Hassan Nawab (Retd.), is a non executive director of the company while Mr. Sohail Najam Kidwai, CEO of the company since Jan­14, was associated with the company at a senior position in the past; and possesses over two decades of insurance experience. He is assisted by a team of professionals.

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.
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