Lahore, May 15, 2023 (PPI-OT): TRAFCO Insurance Company Limited is the emergent player in general insurance space. The rating reflects group support by way of planned synergetic benefits between different ventures of TRAFCO Group. The Company's underwriting portfolio is currently in development stage, which will be growing as envisaged by the management. The Company deals in “Fire and Property Damage”, “Marine, Aviation and Transport”, “Motor” and “Miscellaneous” segments. The rating factors in TRAFCO’s weak solvency, which remains below the regulatory requirement.

The Company’s ultimate forte resides with the motor segment ~65.37% followed by fire and property (~18.67%) and miscellaneous (~15.94%). Further, TRAFCO continues to report weak profitability with high underwriting losses, thereby resulting in net losses of PKR 8mln during CY22. The underwriting losses can partially be accredited to a negligible net insurance premium. Presently, TRAFCO does not maintain an investment book. The quantum of liquid profile stood at PKR 2mln as at end-Dec22. TRAFCO's liquidity profile needs significant improvement.

The Company's success in achieving GPW targets and the expectation of financial support from the sponsor is essential. This should translate in improved underwriting performance and augmented liquidity. The rating would gain benefit provided the Company meets all statutory requirements and captures a sizeable share in the market while achieving breakeven in its core operations. At the same time, the liquid earning investments profile of the Company must rise.

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