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The Pakistan Credit Rating Agency Limited

Date
13-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 Sindh Insurance Limited
 Rating Type Insurer Financial Strength(IFS)
Current
(13-Mar-2017)
Previous
(04-May-2016)
 Action Upgrade Maintain
 IFS Rating A+ A
 Outlook Stable Stable
 Rating Watch - -

The rating reflects Sindh Insurance Limited's strong parentage of the Government of Sindh (GoS) and its strong positioning to leverage on the same. In addition to a sizeable capital in cash, the Government of Sindh has provided a platform to establish Sindh Insurance Limited in a competitive insurance industry. The introduction of the “Universal Accidental Insurance and Social Benefit” scheme, initiated by the Government of Sindh, has brought a sizeable increase to the business of Sindh Insurance Limited, thereby heavily increasing its topline. Herein, incidence of claim and pattern is yet to be established. However, GOS’s coverage to claims exceeding scheme’s premium base provides net protection to the company. Stable stream of investment income from sizable and deployed investment book significantly supports the bottom-line. The direct benefit from the scheme has heaved in the form of liquidity – premium received in advance. Legislation passed by provincial assembly of Sindh effective March- 15, provides exclusive rights to Sindh Insurance to underwrite public property of Government of Sindh. Though property under insurance net has been acquired, untapped business is yet to be pitched. Meanwhile, the company is actively pursuing a mass scale motor third party insurance, going forward.

The rating is dependent on management's ability to capitalize on its brand and group's well-built platform for business expansion. Herein, the sustainability of key business lines, along with ensuing profitability would play an instrumental role in sustaining the rating. At the same time, the liquidity level should be upheld.
About the Entity
Sindh Insurance Limited (SIL), incorporated as an un-listed public company in Dec-13, is a wholly owned entity of Government of Sindh (GoS). GoS has presence in most dimensions of financial market through Sindh Bank Limited, Sindh Leasing Company Limited, Sindh Modaraba, Sindh Insurance Limited and Sindh Microfinance Bank.

SIL has a seven-member board, chaired by Mr. Muhammad Bilal Sheikh, CEO Sindh Leasing Company Limited, Director of Sindh Bank and Chairman of Sindh Modaraba Management Limited. Mr. Sheikh is a seasoned banker with over 48 years of diversified experience in banking. The CEO of the company, Mr. Muhammad Faisal Siddiqui, brings with him diversified experience of more than a decade in life and general Insurance. He is supported by core management team comprising qualified and experienced 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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