AM Best Affirms Credit Ratings of EFU General Insurance Limited

LONDON--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb” (Fair) of EFU General Insurance Limited (EFUG) (Pakistan). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect EFUG’s balance sheet strength, which AM Best assesses as adequate, as well as its strong operating performance, neutral business profile and marginal enterprise risk management (ERM).

EFUG’s balance sheet strength is underpinned by its risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), which fell marginally below the threshold for the very strong assessment at year-end 2025. Increased holdings of listed equities in addition to the excellent performance of the Pakistan Stock Exchange in 2025 led to an increase in the weighting of listed equities on the company’s balance sheet. EFUG’s capital requirements in BCAR are weighted significantly toward asset risk, and therefore, its risk-adjusted capitalisation is highly sensitive to changes in asset allocation. Further offsetting factors include the company’s high dependence on reinsurance and exposure to a non-rated reinsurance entity, through mandatory cessions to the state-owned reinsurer in Pakistan.

EFUG has a track record of solid operating performance, evidenced by a five-year (2021-2025) weighted average return on equity of 16.3%, supported by positive underwriting and investment results. The company has generated robust underwriting profits over the same period, with an average combined ratio of 88.2%. Despite softening market conditions, AM Best expects EFUG’s prospective underwriting performance to remain stable.

EFUG benefits from its leading market position domestically, with an estimated non-life market share of more than 20% in 2025. The company has a well-diversified underwriting portfolio across non-life business segments, and when combining conventional and takaful business, EFUG wrote consolidated gross written premium of PKR 46.9 billion (USD 167.7 million) in 2025. The company leverages its long-standing client relationships in the market, which has helped it to navigate the challenging business environment.

AM Best assesses EFUG’s ERM as marginal given the size and complexity of the company’s operations. The company’s risk profile remains exposed to Pakistan’s economic, political and financial system risks. While AM Best notes EFUG’s historical operational resilience to country risk factors, risk management challenges are presented by its concentration of business and assets in Pakistan.

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