PACRA Maintains IFS Rating of Askari General Insurance Company Limited
Askari General Insurance Company Limited has a solid risk profile. This is reflected in the assigned rating of the company. Askari General has exhibited sustained business volumes and underwriting performance in recent times through its underwriting strategy, with a focus to augment the bottom-line profitability. This has led to improved combined ratio; a testament to sustained profitability in the recent times. The management efforts for sustaining the overall quality of control environment are supported by a real-time operating software. This provides tools for holistic oversight and efficient decision making. A subsidiary, AskTech, a venture focused on vehicle tracking solutions, has been set up to yield technological synergies; this is expected to create diversification by enhancing customer experience. The sustained liquidity profile provides a cushion to the risk absorption capacity. Askari Insurance continues to have a sound panel of reinsurers with favorable treaty terms. Going forward, it intends to fortify its position in non-conventional segments, while using alternative distribution channels. The rating, likewise, takes into account Askari General’s association with Army Welfare Trust (AWT).
Prior to COVID-19, the general insurance industry witnessed a growth of 11% YoY. The current pandemic affected the volumes, which led to a contraction in the growth. However, volumes have picked up post-June 2020 amidst increase in economic activities throughout the country. The volumes need to sustain, indeed, improve in tandem with the longer historical trend. The new interest rate regime has added momentum to auto-financing, which is a good sign for the insurance industry.
The rating is dependent upon the company's ability to sustain its market share and its profitability from the core business and investment income. At the same time, the proportional improvement must be recorded in its liquidity.
Askari General Insurance Company Limited, listed at Pakistan Stock Exchange, commenced commercial operations in 1995. The company operates a nationwide network of 20 branches with head office in Rawalpindi. The controlling stake is with AWT (59%). AWT was set up in 1971 by Pakistan Army for promoting the welfare of retired personnel of the Army and their families through the creation of income and employment generating activities. AWT is currently engaged in real estate, security services, sugar, and lubricants. It manages a sizable book of strategic investment, which yields a significant amount of dividend every year to the fund.
AGICO board comprises eight-members excluding the CEO. The board includes retired army officials, senior executives of AWT, and three independent members. Mr. Abdul Waheed, CPA (USA) - a seasoned professional having a deep understanding of insurance business - is CEO of AGICO since July 2010. A team of professionals assists him.