Press Release

VIS Reaffirms IFS Rating of Askari General Insurance Company Limited

Karachi, November 17, 2022: VIS Credit Rating Company Limited (VIS) has reaffirmed the Insurer Financial Strength (IFS) rating of Askari General Insurance Company Limited (AGICO) at ‘AA+ (IFS)’ (Double A Plus). The IFS rating of ‘AA+’ denotes very high capacity of meeting policyholder and contractual obligations. Moreover, the risk is modest, though may vary slightly with possible changes in economic conditions. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on March 31, 2022.

The rating assigned to AGICO derives strength from its association with its primary shareholder Army Welfare Trust which has presence in various sectors of the economy. The rating incorporate business growth in all segments of the company during CY21 and 9M2022. The company’s premium base was largely provided by health and miscellaneous segment in CY21; however as a result of company’s deliberate strategy, health segment witnessed a dip and proportion of fire insurances increased. With projected slowdown in the economic activity due to high interest rates, rupee devaluation, and elevated inflation levels, key focus area for the management is motor segment and reducing exposure in the health segment which would be important from the underwriting risk in management perspective.

The rating also incorporates reinsurance arrangements largely with counterparties having sound credit risk profiles. Ratings factor in reduction in overall underwriting profit for CY21 to Rs. 193.7m (CY20: Rs. 231.9m) on account of losses incurred in the health segment and reduction in quantum of profit from the motor segment given higher claims in the same. Support to the underwriting performance in 9M2022 was contributed by profits in the accident & health segment attributable to several initiatives taken by the company including increase in pricing as well as deployment of specialized staff for enhanced screening of claims, strengthening of internal controls and quarterly meetings with the management of major clients. With lower cession for the motor segment, the impact of net claims on the company’s accounts is elevated. VIS expects further claims to emanate from the crop insurance in the remaining part of the ongoing year as crop exposure accounted for 17% of total GPW in 2021; however comfort is drawn from higher cession of risk on these accounts. Quantum of the amount of losses is yet to be seen.

Liquidity, in terms of liquid assets in relation to technical reserves have remained adequate. Although net operating cash flows increased in absolute terms, net operations cash flows as a percentage of net premium were recorded lower during the review period. Going forward, the decline in net operating cash flows in relation to net premiums needs to be arrested in order to improve the liquidity profile of the company. Investment income has supported underwriting profitability on a timeline basis, though some decrease in the same was noted during 9M2022 due to subdued equity market performance. Investment income is considered to have lower market risk given a major portion of investment portfolio comprising held-to-maturity PIB exposure. Ratings are constrained by high operating and financial leverages; capitalization support to retain risk profile is needed as the company continues to grow its business volumes. Going forward, the rating would remain sensitive to projected growth in business volumes while maintaining sound underwriting quality and adequate liquidity indicators amidst subdued economic activity.

For further information on this rating announcement, please contact Ms. Asfia Aziz (Ext: 212) or the undersigned (Ext: 201) at (021) 35311861-66 or email at

Javed Callea

Applicable Rating Criteria: General Insurance (March 2022) General Insurance - 20220331 - FinalFinal.pdf

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