Karachi: The Pakistan Credit Rating Agency Limited (PACRA) has reaffirmed the Insurer Financial Strength (IFS) rating of Alfalah Insurance Company Limited. This rating reflects the company's strong affiliation with the Abu Dhabi Group and Bank Alfalah Limited (BAFL), as well as its robust financial profile supported by significant business volumes and a consistent income stream from investments.

Alfalah Insurance, a non-life insurance provider, operates primarily in the conventional insurance market, which accounts for approximately 85% of its business. In the calendar year 2024, the company reported a topline growth of around 8%, mainly due to improved performance in its health segment, followed by the fire and property segment.

Despite pressure on underwriting income from increased claims in the health segment and rising management expenses, the company achieved a net gain of approximately 27%. This was largely due to the strong investment income of about PKR 1,001 million, a significant increase from the previous year's PKR 571 million.

The company plans to expand its portfolio to enhance underwriting profitability and improve digital inclusion efforts, which are expected to bolster overall performance. Alfalah Insurance benefits from its strategic relationship with BAFL, one of Pakistan's largest private banks, which aids in business acquisition and revenue diversification. The company's window takaful operations also contribute to topline stability.

Investment income remains a key driver of the company's bottom-line strength, supported by enhanced liquidity and healthy cash flow generation. The investment portfolio is managed prudently, and risk management is bolstered by internationally rated reinsurers. The company's stable equity base supports its operations, with strong corporate governance practices and an experienced management team further underpinning its rating.

The reaffirmed rating indicates Alfalah Insurance's ability to enhance its market position within a competitive landscape while maintaining strong underwriting performance. Strengthening its liquidity profile and exercising prudent management of claims and receivables will be crucial to sustaining this rating.