A.M. Best Assigns Credit Ratings to EFU General Insurance Limited

LONDON--(BUSINESS WIRE)-- A.M. Best has assigned a Financial Strength Rating of B+ (Good) and a Long-Term Issuer Credit Rating of “bbb-” to EFU General Insurance Limited (EFUG) (Pakistan). The outlooks assigned to these Credit Ratings (ratings) are positive.

The ratings reflect EFUG’s balance sheet strength, which A.M. Best categorises as strong, as well as its strong operating performance, neutral business profile and marginal enterprise risk management (ERM).

The positive outlooks reflect the strengthening of EFUG’s ERM capabilities. The company has benefited historically from sound ‘silo’ risk management practices; however, EFUG has undertaken steps in recent years to establish an enterprise-wide risk-aware culture and to implement tools to consistently manage its risk exposures. A.M. Best expects that further anticipated improvements will lead to an ERM framework that is appropriate given the scale and complexity of EFUG’s operations.

EFUG’s balance sheet strength is underpinned by very strong risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by good internal capital generation. However, the company’s balance sheet strength is offset by a concentrated investment portfolio, which is restricted by regulation to Pakistan, and its exposure to non-rated reinsurers through mandatory cessions to the state-owned reinsurer.

EFUG has a track record of solid operating performance, with a five-year average return on equity of 16.0% (2013-2017) supported by positive underwriting and investment activity. The company has generated robust and consistent technical profits, with a five-year (2013-2017) average combined ratio of 83.6%, demonstrative of EFUG’s underwriting discipline and understanding of its operating market.

EFUG maintains a leading position in Pakistan’s insurance market, with a market share (as measured by gross written premiums) of approximately 26%, writing a diversified portfolio across non-life business segments. In 2017, the company’s gross written premiums reached PKR 20.4 billion (USD 185.1 million) when combining conventional and Takaful operations. EFUG has successfully leveraged its long-standing relationships with clients to maintain a defendable competitive advantage, demonstrating its ability to navigate its challenging business environment.

This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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A.M. Best

Emily Thompson

Associate Financial Analyst

+44 20 7397 0291

[email protected]

or

Salman Siddiqui, ACA

Associate Director, Analytics

+44 20 7397 0331

[email protected]

or

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

[email protected]

or

Jim Peavy

Director, Public Relations

+1 908 439 2200, ext. 5644

[email protected]

Source: A.M. Best