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The Pakistan Credit Rating Agency Limited
Press Release

Date
02-Mar-21

Analyst
Harris Ghaffar
harris.ghaffar@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains IFS Rating of Adamjee Insurance Company Limited

Rating Type IFS
Current
(02-Mar-21)
Previous
(04-Mar-20)
Action Maintain Maintain
Long Term AA+ AA+
Short Term - -
Outlook Stable Stable
Rating Watch - -

The rating captures the solid fundamentals of the company. Adamjee Insurance Company Limited has exhibited sustained growth in the business profile while maintaining operational efficiency, reflecting positively in the core profitability. The stability in the management team and concerted efforts are laudable. Adamjee Insurance Company Limited continues to enjoy the perk of being the only general insurance company with operations outside Pakistan. The overseas business took a dip as a result of COVID-19; however, it has witnessed strong recovery since June 20. The combined ratio continues to witness stability. The company's sizeable investment portfolio, albeit concentrated in few group companies, continues to supplement its profitability and financial strength. The business strategy, going forward, is focused on increasing its market share through expansion of branch network - home and abroad - along with product innovation; retail and micro insurance. Furthermore, Adamjee Insurance Company Limited keeps an eye on opportunities geographical diversification in other regions. The rating incorporates the effect of association of Adamjee Insurance Company Limited with Nishat Group.

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, business volumes have picked up post-June 2020 amidst revival of economic activities throughout the country. The business volumes need to sustain, indeed, improve in tandem with the longer historical trend. The lower interest rate regime has added momentum to auto-financing, which is a good sign for the insurance industry.
The rating depends on the stability and continuous efforts of the management team to execute the business plan. Adamjee Insurance Company Limited should continue to strengthen its market position along with its underwriting profits.

About the Entity
Adamjee Insurance Company Limited (AICL) is one of the largest general insurance company of Pakistan, and only general insurance company having operations outside Pakistan. It was incorporated in 1960 and is listed on Pakistan Stock Exchange. The company operates a network of 60 branches in Pakistan, three in UAE (Dubai, Abu Dhabi & Sharjah), and one branch in Export Processing Zone (EPZ). The operations are divided into 10 divisions; five in south, four in north, and one in UAE.

The overall control of the company vests in the eight-member BoD (including the CEO). Board has a majority of Nishat Group representatives. Before rejoining, Mr. Muhammad Ali Zeb had served as the CEO of the company since Jun-13, has been associated with Nishat Group for a long time. Previously, he was CEO of the company from 2008 until 2011. Since 2013, there has been no change in the top management of the company.

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.