Press Release

JCR-VIS Upgrades IFS Rating of Askari General Insurance Company Limited

Karachi, February 18, 2014: JCR-VIS Credit Rating Company Limited (JCR-VIS) has upgraded the Insurer Financial Strength (IFS) rating of Askari General Insurance Company Limited (AGICO) to ‘A+’ (Single A Plus) from ‘A’ (Single A). Outlook on the assigned rating is ‘Stable’.
Subsequent to the acquisition of majority stake in Askari Bank Limited (AKBL), Fauji Consortium (FC) now indirectly holds a sizeable portion of outstanding shares of AGICO through AKBL, in addition to which some shareholding has also been directly acquired from the market. This change is expected to positively contribute to the company’s business volumes.
Recurring business volumes recorded healthy growth on an annualized basis during 9M13. In contrast to peer companies, business mix of the company is dominated by motor and health segments. Strategy to focus on motor and health segments is mainly driven by limited corporate sector business in the markets in which the company operates. Necessary controls have allowed the company to maintain claims ratio in the motor segment within manageable limits; claims ratio in the health segment is however high, depicting considerable deterioration in 9M13. The management intends to curtail loss ratio in health segment by way of non-renewal of loss making clients.
Reinsurance coverage has been largely obtained from companies rated in the Single A and Double A bands, denoting sound financial standing of the reinsurers. Treaty limits along with risk borne on net account remained almost unchanged during 2013. Given the nature of treaty in place, motor risks are largely retained on net account and meaningful proportion of health risk is also retained on net account.
AGICO has consistently posted underwriting profit over the past three years. The company has maintained a conservative investment strategy with a sizeable portion of portfolio comprising money market and income funds that have generated stable stream of income.
Insurance debt of the company in relation to gross premium compares favorably to peers. Overall liquidity profile has nevertheless room for further improvement. Given the growth in business volumes, capitalization indicators remain under pressure. Leverage indicators need to be rationalized.
Stability is evident in senior management team of the company. The CEO has been associated with the company for the last 3.5 years and is a Certified Public Accountant by profession. A team of experienced professionals assists him. AGICO has partially implemented new ERP system namely Insurance Management System (IMS) which has brought efficiency in operations. The management has envisaged further improvement in database structure, going forward.
For further information on this rating announcement, please contact Ms. Sobia Maqbool at 021-35311861-70 or Mr. Maimoon Rasheed at 042-36610681-84.

Jamal Abbas Zaidi
Deputy CEO

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