Karachi, The Pakistan Credit Rating Agency Limited (PACRA) has maintained its IFS rating of Habib Insurance Company Limited, reflecting the company's stable position in the general insurance industry. The industry as a whole has seen significant growth in terms of Gross Premium Written (GPW) but has faced a decrease in underwriting performance.
According to The Pakistan Credit Rating Agency Limited, the general insurance industry reported a growth of about 28% in GPW, reaching approximately PKR 84 billion during the first half of 2023. Despite this growth, the industry's underwriting performance declined by about 72%, with earnings reported at approximately PKR 863 million during the same period. The industry's earnings were supported by investment income, which amounted to about PKR 7.7 billion. The current economic conditions are noted as crucial for the overall performance of the insurance industry.
Habib Insurance, supported by the House of Habib, maintains a stable standing in the general insurance market. The company benefits from a well-structured governance system and the prominent position of its sponsors in various business sectors, which generates captive business. However, this contributes minimally to the overall GPW. Habib Insurance, which operates both conventional and window takaful businesses, has shown a stable trajectory in GPW over the years. This growth is primarily driven by the motor segment, along with fire, property, health, and miscellaneous segments. The recent increase in GPW by about 20% is attributed mainly to inflation, with limited volume increases, particularly from the motor segment. This has led to stressed underwriting results and a high combined ratio. Nevertheless, the company's bottom line is supported by adequate investment income, mainly from government securities.
The rating is influenced by the profile of Habib Insurance's sponsors and its relative position in the industry. The company is advised to adopt a cautious approach to improve business volumes, supporting underwriting results. Growth in investment income and enhanced liquidity are deemed imperative for maintaining the rating. Despite the challenges, Habib Insurance's equity base remains stable, and its strong rated reinsurer panel supports its operations.
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