Lahore, June 30, 2021 (PPI-OT):The rating of TPL Life Insurance Company Limited (TPL Life) derives comfort from the strong group support that has been witnessed over the past years by way of equity injections. TPL Corp – the Parent Company, is a rising conglomerate having foothold in insurance, real estate, transport, technology and financial sectors. TPL Life has continued with their strategy since 2016 of expanding the business by focusing primarily on group clients which has resulted in strong growth, however in spite of volume increases the margins remain miniscule.

Management expenses have traditionally been on the higher side as the Company envisages aggressive growth target and to attain this the acquisition expenses have also risen. This has led to a high deficit, which is a growing concern. The accumulated losses having eroded the equity has resulted in parent company approving injection of PKR 200mln while also deliberating the entrant of foreign partner. Going forward, the Company envisages improved topline while simultaneously increasing profitability. An equity injection from the parent is also on the horizon.

During CY20, the total GPW of the industry grew by 4.6% to PKR 233bln in CY20 as against a decline of 1.2% to PKR 223bln in CY19. COVID-19 is an ongoing challenge. While it has taken a toll on many businesses, its ramifications are still unfolding. However, due to present pandemic situation, the demand for Life Insurance products is expected to increase over near term which in-turn is expected to result in new business growth for the industry.

The rating is dependent on the Company’s ability to execute its existing business plan in an efficient manner; herein, consistent growth in top-line and underwriting profits are essential. Maintenance of liquidity levels are pivotal for rating while the addition of foreign partner will provide added strength.

For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com