The Pakistan Credit Rating Agency Limited
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Iqra Bashir

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PACRA Upgrade IFS Rating of Adamjee Life Assurance Company Limited

Rating Type IFS
Action Upgrade Maintain
Long Term A+ A
Short Term - -
Outlook Stable Positive
Rating Watch - -

The rating reflects Adamjee Life's strengthening market position and achievement of core profitability. This has been possible through a relatively aggressive volume growth that mainly relied on bancassurance. Herein, synergies with group bank (MCB) benefited the most. It has achieved better persistency in subsequent years renewal. The company has achieved break-even and thereafter sustained surplus in CY16; ahead of plan, and is continuously improving. The company's statutory funds are now self-subsistence; accumulated deficit of statutory fund is down significantly. Consequently, Adamjee Life has improved equity base. Start of window takaful operations has boded well for the company, adding significant volumes. Lately, the management has built a sales force around agency model as well to add to its growth momentum. Meanwhile, comfort is drawn from Adamjee Life's strong risk absorption capacity, represented by sufficient liquidity and overall quality of its investment portfolio.

The continued self-subsistence of statutory funds, ability to improve its market position and strengthening of core profitability are integral for the rating. Moreover, prudent management of risk in wake of increasing business volumes and agency model remain important.

About the Entity
Adamjee Life Assurance Company Limited, starting operations in 2009, is a subsidiary of Adamjee Insurance (74%). The other major shareholder is IVM Intersurer B.V. (26%), a company of Hollard (a leading Insurance Group of South Africa). Adamjee Insurance is the second largest non-life insurance company in the country, rated 'AA+' by PACRA. It is a part of Nishat group - a leading business conglomerate in Pakistan with strong presence in banking, insurance, textile, cement and real estate sectors. Adamjee Life achieved 6% market share in CY16.

The company's BoD comprises seven members, including the CEO. Four members represent Adamjee Insurance while two represent IVM. Mr. Fredrik De Beer, associated with Adamjee Life since inception, has experience of over three decades in various sectors including life and general insurance business. He is assisted by a team of professionals.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.