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The Pakistan Credit Rating Agency Limited

Date
30-Dec-2017
Analysts
Jhangeer Hanif
jhangeer@pacra.com

Iqra Bashir
iqra.bashir@pacra.com

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

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

Related Research

  • Sector Study | Insurance | General (Oct 17) [View]
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PACRA Maintains Entity Rating of Habib Insurance Company Limited
 Rating Type Insurer Financial Strength(IFS)
Current
(30-Dec-2017)
Previous
(29-Jun-2017)
 Action Maintain Maintain
 IFS Rating A+ A+
 Outlook Positive Positive
 Rating Watch - -

The rating incorporates the Company's association with astute sponsors Habib Family. This, while providing stability to revenue stream in the form of captive business, establishes a sound governance framework. The rating takes note of HIC’s business strategy that encompasses enhancing its market presence with innovative products while diversifying revenue stream. Product innovation and extended market outreach, capitalizing on Habib group banks, boded well for HIC’s business profile. The company's conservatism, in the form of low risk retention, has continued yielding profitability. Fully capitalizing on its strength of association with Habib Group, would be linchpin of growth strategy. There is a strategic down in growth trend as depicted in recent performance, mainly because of cutting loss making business. HIC maintains a reasonable, fundamentally strong and diverse investment portfolio, which not only provides risk absorption capacity, but also supports profitability.

The rating is dependent on strengthening of company's relative position in the market. In addition, improvement in the underwriting profitability is important. The liquidity profile is adequate for current level of operations, the strengthening is necessitated as the company grows. Improvement in claims monitoring system focusing on claims turnaround time (TAT) would also be key consideration for rating elevation.
About the Entity
Habib Insurance Company, part of Habib Group, was incorporated as a Public Limited Company in 1942. It is listed on Pakistan Stock Exchange, with a nationwide network of 15 branches. HIC is 68% owned by Habib Group, which is one of the renowned and well-established groups, having exposure in industrial and financial sectors.

The overall control of the company vests in the Board of Directors, comprising seven members, with six belonging to the Habib family. Mr. Aun Muhammad A. Habib, well-known figure of Habib family, though not on the board but entitled as Executive Director. Mr. Shabbir Gulamali, having over three decades of total experience and of that 18 years in insurance industry all of which is with HIC, is CEO of the company.
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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