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The Pakistan Credit Rating Agency Limited

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

Mahina Majid
mahina.majid@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 Maintains IFS Rating of Habib Insurance Company Limited
 Rating Type Insurer Financial Strength(IFS)
Current
(30-Dec-2016)
Previous
(06-Jan-2016)
 Action Maintain Maintain
 IFS Rating A+ A+
 Outlook Positive Positive
 Rating Watch - -

The rating takes note of dynamic growth taken by the company, while ensuring diversification in segment mix. This growth is led by the realigned organizational structure and dynamism of the new leadership. The business strategy 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 conservative business strategy, in the form of low risk retention, has continued yielding profitability. There is more delegation coupled with close monitoring of management functions of the company. Fully capitalizing on its strength of association with Habib Group, particularly Bank Al Habib and Habib Metro, would be linchpin of growth strategy. HIC maintains a reasonable, fundamentally strong and diverse investment portfolio, which not only provides risk absorption capacity, but also supports profitability. 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 upgrade 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 is growing. Increased risk absorption capacity supported by higher liquidity would benefit the ratings. 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 18 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. Ali Raza D Habib, a financial industry veteran and well-known figure of Habib family, has taken up to the role of Executive Vice-Chairman after holding position of CEO from 1993 till July’2016. Mr. Zeeshan Raza, having over two decades of insurance related experience and of 17 years with HIC, has succeeded Mr. Habib.
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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