VIS Reaffirms IFS Rating of EFU Life Assurance Limited

Karachi, March 15, 2019 (PPI-OT): VIS Credit Rating Company Limited has reaffirmed the Insurer Financial Strength (IFS) Rating of EFU Life Assurance Ltd (EFUL) at ‘AA+’ (Double A Plus). Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on November 30, 2017.

The life insurance industry has depicted double-digit growth over the last 5 years and is largely supported by unit-linked policies. Given the low life insurance penetration in Pakistan, healthy growth in gross premiums is expected to continue. The assigned rating takes into account EFUL’s existing market position, diversified premium mix, very high capacity to meet policyholder liabilities, strong capitalization levels and sound liquidity profile.

Business profile is supported by favourable persistency levels and healthy growth in regular premium and group life business; however, business generated through single premium policies was lower since last review. EFUL plans to consolidate market position through faster growth in bancassurance and direct sales force (DSF) premium vis-à-vis peers. Size of DSF team and business generated through the same remains a competitive advantage. Productivity indicators have improved on a timeline basis.

Given the growth in unit-linked policies, assets under management have witnessed increase during the period under review. Overall investment strategy entailed reduction in equity exposure and increased fixed income allocation. Performance of the largest fund under management remained competitive. Ratings remain dependent on further strengthening of investment management function given the significant size of funds under management. Given the nature of the company’s business, generating consistent investment results and ability to cater to varying investor risk appetites may be key differentiating factors over the long term.

The rating also takes into account the senior management team at EFUL, which includes life insurance industry veterans with significant experience. Going forward, improvement in market share and a demonstrated ability to scale up business volume with a diversified and profitable product mix would remain key rating sensitivities.

For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873

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