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The Pakistan Credit Rating Agency Limited

Date
29-Sep-2017
Analysts
Jhangeer Hanif
jhangeer@pacra.com

Muneeb Rashid
muneeb.rashid@pacra.com

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

  • Methodology | Insurer Financial Strength (IFS) Rating | Life (Jun 17) [View]

Related Research

  • Sector Study | Insurance | Life (Apr 17) [View]
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PACRA Maintains IFS Rating of IGI Life Insurance Limited
 Rating Type Insurer Financial Strength(IFS)
Current
(29-Sep-2017)
Previous
(09-May-2017)
 Action Maintain Initial
 IFS Rating A+ A+
 Outlook Stable Stable
 Rating Watch - -

Packages Group, with the brand of IGI, has been operating in the industry since 1953. IGILife is a step towards holistic presence in insurance industry. This would unlock synergistic benefits. The rating encapsulates IGILife's improving performance evident from rise in market share (1HCY17: ~4%, CY16: 4.2%, CY15: 2.4%). This stems from a stream of pre-dominantly single premium business, which has lately been facing challenge and may take time to pick up. The agency network of the company has continued to expand, whereas, bancassurance arrangements with some of the leading banks of the country are yielding benefits. The company has a diverse product slate, targeting all segments of the market. Going forward, IGILife aims to further penetrate the market, on the back of expansion in branch network and gradually building up shariah compliant portfolio. Further, improvement in persistency levels is critical for sustaining business and hence, profitability. The rating takes into account sustained liquidity profile, providing coverage to the company's obligations. The company's association with Packages Group engenders sound governance framework, a key rating factor.

The rating is dependent on sustained improvement in business and financial risk profile of the company in line with its relative positioning with in the industry. At the same time, liquidity profile should continue to cushion the policyholder's liabilities. While finalization and smooth implementation of new IT system is critical.
About the Entity
IGI Life Insurance Limited (IGILife), a quoted public company, listed on the Pakistan Stock Exchange, started its operations in May-1995. With its head office in Karachi, the company operates through three business Hubs - South, Central and North - with a total of 21 branches. IGILife is majority owned and controlled by IGI Insurance Limited. In 2013, IGI Insurance Limited entered into a share purchase agreement with American Life Insurance Company for acquisition of majority stake (69.67%) in its Pakistan business. IGI Insurance Limited obtained control in Apr-14. During the year, pursuant to share purchase agreement, an additional stake (12.28%) was acquired, thereby, increasing the cumulative shareholding to 81.97%.

The overall control of the company vests in seven member board of directors. Two are executive directors, two independent while remaining are non-executive directors including the chairman. Mr. Syed Hyder Ali, the CEO of the company since Apr-14, carries more than three decades of experience of different industries. Currently, he is also serving as CEO of Packages Limited. 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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