Karachi, December 31, 2021 (PPI-OT):VIS Credit Rating Company Limited VIS) has reaffirmed the Insurer Financial Strength (IFS) rating of Askari General Insurance Company Limited (AGICO) at ‘AA’ (Double A). 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 December 31, 2020.

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 draws comfort from business growth in all segments of the company during 9MFY21. Majority of the growth in absolute terms manifested in miscellaneous segment due to notable increase crop business, followed by accident and health, motor, and fire segments, while growth in marine segment remained steady. Albeit some slowdown is expected in economic activity due increase in interest rates, rupee devaluation, and higher inflation, the company intends to continue its steady growth momentum during FY22 by increasing focus on health segment, further penetration in motor segment, new projects in miscellaneous segment, and some increase in fire and marine segments.

The rating also incorporates reinsurance arrangements largely with counterparties having sound credit risk profiles. While the loss and combined ratios have remained rangebound over the years, these indicators are considered on the higher side and needs to be aligned with peers in order to further improve its underwriting performance. In order to arrest the increasing trend in loss ratio of accident and health segment, several initiatives are underway 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.

Liquidity, in terms of liquid assets in relation to technical reserves have remained adequate; however, net operations cash flows were recorded lower during 9MFY21. Going forward, the decline in net operating cash flows needs to be arrested in order to enhance liquidity profile of the company. Investment income has supported underwriting profitability on a timeline basis, though some decrease in the same was noted during 9MFY21. However, the rating is 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.

For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: bilal@jcrvis.com.pk
Website: https://www.vis.com.pk/