PACRA Maintains IFS Rating of Adamjee Life Assurance Company Limited
Adamjee Life under the umbrella of Nishat Group is a mid-sized life insurance company. Synergic benefits with the group bank (MCB) are being unlocked. The business volumes have declined as the company shifts its strategy towards regular premium. Persistency in subsequent years renewal is increasing. The company has registered a surplus in CY19 whereas the window takaful operations have added significant volumes. Adamjee General Insurance has taken the remaining 26% stakes in the company from IVM Intersurer, the deal was approved by the regulator in early-2020. The management has expanded its branch network and also has built a sales force around agency model in order to recoup business volumes. The company has witnessed heightened increase in regular premium, as a result. Meanwhile, comfort is drawn from Adamjee Life's strong risk absorption capacity, represented by sufficient liquidity and overall quality of its investment portfolio. The company aims to sustain its position in light of the current pandemic.
Prior to COVID-19, the life insurance industry witnessed miniscule growth of 1% YoY as single premium declined due to multiple factors. The current pandemic has further affected the life insurance industry, with the growth expected to plummet. Additional reduction in investment linked policies and heightened claims are expected. Moreover, increase in surrenders is likely as a result of economic stagnation. The large investment book is however likely to cushion any impact. The industry intends to sustain its existing position while aiming to launch innovative products.
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.
Adamjee Life Assurance Company Limited (ALAC) was incorporated in Pakistan on 4 August 2008 as a public unlisted company and started its operations from 24 April 2009. Recently, Adamjee General Insurance has acquired the full control of this subsidiary. The branch network comprises 34 branches; two branches in Karachi, two in Hyderabad, two in Lahore, two in Multan and each in Islamabad, Sialkot, Faisalabad, Gujranwala, Sargodha and Sukkur.
The company’s BoD comprises seven members, including the CEO – Mr. Umer Mansha. Board elections were held in April-19 and after the elections all Board members are representative of Adamjee General Insurance.