A.M. Best Rating Inc. assigns credit ratings to EFU General Life Insurance Limited

October 1, 2018 (MLN): An international rating agency A.M. Best Rating Inc. that is specialized in rating insurance companies only, has assigned a Financial Strength Rating of B+ (Good) and Long Term Issuer Credit Rating of ’bbb-’ to EFU General Life Insurance Limited (EFUG), Pakistan.

The outlook forecasted by the agency is ‘stable’.

As per an official statement issued by the agency, the ratings reflect EFUG’s balance sheet strength, which A.M Best has categorized as strong, as well as its strong operating performance, neutral business profile and marginal enterprise risk management (ERM).

“The positive outlooks reflect the strength 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 tool to consistently manage its risk exposures,” explained the statement.

The announcement further added that EFUG’s balance sheet strength is underpinned by very strong risk adjusted capitalization, 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% (2013-17) supported by positive underwriting and investment activity.

The company has generated robust and consistent technical profits, with a five-year average combined ratio of 83.6%, demonstrative of EFUG’s underwriting discipline and understanding of its operating market.

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