Islamabad: Crescent Star Insurance Limited (CSIL) has recommenced its guarantee business following a pivotal decision by the Islamabad High Court. The Court, presided by Justice Mohsin Akhtar Kayani, annulled the Securities and Exchange Commission of Pakistan's (SECP) order from November 5, 2024, which had previously mandated the company to halt the issuance of new guarantees. The judgment was delivered on July 29, 2025.
The Court's decision highlighted that the SECP's directive was issued without legal basis and did not adhere to the procedures specified under the Insurance Ordinance (2000). Specifically, the SECP failed to comply with Sections 62 and 63, which necessitate that an insurer be given the opportunity to address alleged violations through a compliance plan before any coercive measures are employed. The Court declared the entire process leading to the SECP's order as unlawful and beyond its jurisdiction.
CSIL argued that its guarantee business is categorized under Class VI, Credit and Suretyship, which is acknowledged as a segment of non-life insurance. Moreover, the company maintained its operations through legitimate facultative reinsurance agreements. The Court recognized the facultative reinsurance model, wherein risks are evaluated individually, and affirmed that there is no legal requirement for such insurers to obtain additional reinsurance. This decision is left to the insurer’s discretion based on its risk management strategies. The Court also noted the absence of any complaints from policyholders and criticized SECP's overreach in abruptly halting CSIL's business activities.
The ruling directed SECP to engage with CSIL in accordance with lawful procedures. According to information available from the Pakistan Stock Exchange (PSX), this development is significant for market stakeholders.
In response to the judgment, a spokesperson for Crescent Star Insurance commented on the affirmation of due process and regulatory responsibility by the Court. The company emphasized its dedication to compliance, transparency, and the safeguarding of policyholders' interests. CSIL expressed gratitude to its clients, stakeholders, and legal representatives for their support and expert counsel during the legal proceedings. The insurer is now focused on reinstating full operations to contribute to business and economic activities within Pakistan.
Crescent Star Insurance also acknowledged the legal expertise of Syed Ahmed Hassan Khan of Hassan, Kaunain & Nafees, and Saadat All Saeed of AHM & Co., who represented the company during the legal proceedings at the Islamabad High Court.