Press Release

VIS Reaffirms IFS Rating of Alpha Insurance Company Limited

Karachi, November 16, 2022: VIS Credit Rating Company Limited (VIS) has reaffirmed the Insurer Financial Strength (IFS) rating of Alpha Insurance Company Limited (AICL) at ‘A+ (IFS)’ (Single A Plus). The rating signifies strong capacity to meet policyholders and contractual obligations. Risk factors are low, and the impact of any adverse business and economic factors is expected to be small. Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on March 31, 2022.
Rating derives strength from AICL being a subsidiary of State Life Insurance Corporation of Pakistan (SLIC), the largest life insurance company of the country owned by the Government of Pakistan. Assigned rating also takes into account the stability and experience of the management team. Diversified panel of local and international re-insurers have been maintained on the company’s panel with capacity enhancement noted in the outgoing year. Plans for growth in scale of operations to achieve break-even on the underwriting level include entering into untapped markets segments and expanding the branch network. Materialization of the same over the rating horizon will be important from a ratings perspective.
Aided by recovery in economic activity post COVID-19 and efficient branch operations, growth in gross premiums underwriting witnessed an increase in 2021 and HY2022 attributable to Fire & Property and Motor segments. Retention levels are expected to report in the range of 65-70% over the rating horizon. Ratings incorporate consistent underwriting losses constrained by small topline; however, quantum of the same reduced in 2021 attributable to lower claims. However, underwriting losses increased in the ongoing year being a function of unexpected claims. Return from investments continues to support the overall profitability profile of the company. However, with subdued market performance in HY22, support from investment income was also limited yielding losses to the Company. Consequently, management plans to replace loss-yielding equity securities with fixed income instruments to ensure a stable flow of income going forward. Going forward, the projected increase in GPW and the realignment of investment strategy is expected to improve the overall profitability of the company.
Ratings factor in strong liquidity profile and sound capitalization indicators. Liquidity profile remains strong on account of significant exposure in government securities and listed shares, which ensures sufficient liquid asset coverages against obligations. Net insurance debt (after accounting or impairment provisions) as a proportion of gross premium is also within manageable levels, as full provisioning is recorded for receivables that are overdue for more than a year. Sound capitalization levels are evident from low levels of operating and financial leverage vis-à-vis peers offering ample room for growth in business operations of the company going forward. Going forward, mandatory implementation of IFRS 17 (as planned to be implemented by Jan’23) will impact the overall capitalization metrics, the magnitude of which is unknown.
For further information on this rating announcement, please contact Ms. Asfia Aziz (Ext: 212) or the undersigned (Ext: 207) at (021) 35311861-66 or email at

Sara Ahmed

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

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .