The Pakistani government wants to sell 60,000,000 (20 percent) shares of Pakistan Reinsurance Company Limited (PAKRI or “the Company”) via a Secondary Public Offering using the 100 percent Book Building Method through the Privatization Commission.
The shares will be offered through 100% Book Building, according to the draft prospectus. 75 percent of the Offer size (45 million shares) will be distributed to successful bidders, while 25% of the overall transaction (15 million shares) will be released to the general public.
Unsubscribed shares from the general public part will be distributed pro-rata to succeeding bidders.
Because PAKRI is a publicly-traded company, the Offer’s Floor Price will be revealed shortly after Book Building begins.
The Floor Price will be announced on the Pakistan Stock Exchange, Habib Bank Limited, and Next Capital Limited websites after approval by the Privatization Commission Board and the Cabinet Committee on Privatization (CCOP).
PAKRI is Pakistan’s only reinsurance firm, having been established as a public limited corporation in 2000. In order to promote the local insurance business, it took over all of the assets and liabilities of the former Pakistan Insurance Corporation (PIC), which was established under the PIC Act, 1952. It is a public sector firm that operates as an autonomous agency under the Ministry of Commerce of the Pakistani government, with the primary goal of developing the insurance and reinsurance industry in the country.
In view of the treaty and facultative business, it acts as the national reinsurer, providing reinsurance protection to the local insurance industry.
PAKRI improves the country’s foreign exchange retention capacity by providing reinsurance services locally. In the sphere of reinsurance, it also collaborates and participates with its foreign counterparts.
This is being done under the framework of the Economic Cooperation Organization (ECO), with the goal of minimizing foreign exchange outflows and raising the level of insurance and reinsurance services in the region. PAKRI is a founding member of the Federation of Afro-Asian Insurers and Reins.
Through the Ministry of Commerce, the Pakistani government owns around 45 percent of the Company’s shares.
The retail portion of this Offer does not require guaranteeing because it is being made through 100% book building with a 25% allocation to retail investors.
If the Offer remains unsubscribed, the unsubscribed shares will be distributed pro-rata to the successful bidders. The successful bidders have previously agreed to subscribe on a pro-rata basis to any unsubscribed shares.
The growth of the non-life insurance market, which is primarily driven by economic growth, is PAKRI’s primary revenue generator. As commercial activity grows, so does the demand for insurance, which leads to increased demand for the reinsurance company.
PAKRI’s primary revenue generator is the growth of the non-life insurance market, which is predominantly driven by economic growth. As the business expands, so does the demand for insurance, resulting in greater demand for the reinsurance company.
As businesses succeed, the demand for insurance will grow, ultimately increasing the demand for reinsurance. Being the only domestic reinsurance company, PAKRI is well-positioned to capture any anticipated growth in the insurance industry.
PAKRI’s gross premium has risen to Rs. 17-18 billion in recent years, up from Rs. 8-10 billion in 2014-18. This massive increase can mostly be attributed to new power projects that were reinsured over the period.
More projects under the CPEC program are likely to be constructed, providing the Company with a potential revenue stream. In addition, in 2018, the Company launched its Retakaful business, insuring Rs. 424.8 million in 2019 and Rs. 603 million in 2020.
There are three general takaful companies with 22 window takaful activities, according to the Insurance Association of Pakistan (IAP) Yearbook 2019-20. PAKRI has yet to capture the full market, which will boost the retakaful window’s contribution.
PAKRI has a well-diversified portfolio that includes debt, equity, mutual funds, and investment property. Except for mutual funds, which are outsourced to prominent asset management firms, it maintains these investments in-house.
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