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The Pakistan Credit Rating Agency Limited

Date
06-Dec-2016
Analysts
Amara Gondal
amara.gondal@pacra.com

Muneeb Rashid
muneeb.rashid@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 | Insurance | General (Nov 15) [View]
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PACRA Maintains IFS Rating of TPL Direct Insurance Limited
 Rating Type IFS
Current
(06-Dec-2016-)
 Action Maintain
 Long Term A
 Short Term -
 Outlook Stable
 Rating Watch -

The rating reflects established position of the company in niche market - personal line auto insurance. Third largest player in motor segment, TDIL holds ~10% of industry's GPW in the segment. The rating incorporates strength of the governance framework of TDIL with Greenoaks Global Holdings (GGH), providing requisite oversight. Advanced technology infrastructure has continued providing an edge to the company - amidst high competition. Rolling out new business strategy, the company launched corporate line insurance in fire and marine segments effective Jun-16. This has added diversity to product slate of TDIL. Capitalizing on strong foothold in niche market - Direct Insurance - TDIL is establishing relationships with intermediaries; bankers and auto manufacturers. Window takaful volumes are growing, though profitability is yet to materialize in this segment. With rise in business size, the underwriting profitability must transpire. Currently, the financial risk profile is equipped with sound liquidity, however, needs to be monitored carefully as the company takes the trajectory of growth.

The rating is dependent upon the company's ability to increase its system share, inline with expansion strategy, thereby, adding diversification to revenue stream. Translation of the same in the form of enhanced profitability is beneficial. Cohesiveness and sustainability in the management team is important. At the same time, liquid as well as earning investment book is essential.
About the Entity
TPL Direct Insurance Limited (TDIL), formed in 1992 and listed on Pakistan Stock Exchange, is a majority owned (~69%) subsidiary of Greenoaks Global Holdings (GGH), followed by ~25% stake by TPL Group. GGH, incorporated in Jul'13 in UK, is owned by Greenoaks Capital Partners (GCP) - a UK based private equity fund. GGH is the holding company of insurance subsidiaries in Rwanda and Nigeria. The company continues to share common brand with TPL Trakker Limited, erstwhile majority shareholder until Oct'14.

TDIL's board of directors comprises seven members, including the CEO. The board is a balanced mix comprising two representatives of TPL, two of Greenoaks and two independent directors. The CEO, Mr. Saad Nissar, an MBA from IBA, has been the CEO of TDIL since Jan'09. He is supported by a team of 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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