Press Release

VIS Reaffirms IFS Rating of EFU Life Assurance Ltd

Karachi, March 15, 2019: 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 & 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 further information on this rating announcement, please contact the undersigned (Ext: 201) or Mr. Jamal Abbas Zaidi (Ext: 207) at 021-35311861 - 70 or fax to 021-35311873.

Javed Callea

Applicable Rating Criteria: Life Insurance & Family Takaful Rating (October 2017)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2019 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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