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 specifically in the bancassurance. The surge in business volumes have been observed as company increase its focus towards single premium. The low discount rate is the leading factor behind this. Persistency in "subsequent years renewal" is decreasing due to enhanced volume of single premium in the overall mix. The company has registered a surplus in CY20 whereas the window takaful operations have added significant volumes. 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 second year premium, means higher clientage retention 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. Company is planning for IPO at the end of 2021 to increase their paid-up capital. This would boost the Company's financial pofile.
During CY20, the total GPW of the industry grew by 4.6% to PKR 233bln in CY20 as against a decline of 1.2% to PKR 223bln in CY19. COVID-19 is an ongoing challenge. While it has taken a toll on many businesses, its ramifications are still unfolding. However, due to present pandemic situation, the demand for Life Insurance products is expected to increase over near term which in-turn is expected to result in new business growth for the industry.
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. Adamjee Life is the wholly owned subsidiary of Adamjee General Insurance. The branch network comprises 60 branches mainly concentrated in Punjab and Sindh geographically.
The company’s BoD comprises seven members, including the CEO – Mr. Umer Mansha. AICL has majority representation on the board is from Adamjee General Insurance. Five out of seven directors from Adamjee General Insurance and two non-executive directors.