PACRA Maintains IFS Rating of Asia Insurance Company Limited

Pakistan's general insurance industry reached a total size of ~PKR 215bln in CY24, marking ~15% growth in Gross Premium Written (GPW) from the previous year. The sector's financial performance showed significant improvement, with underwriting results surging by ~180% to PKR 14bln. This positive trend was complemented by a ~51% increase in overall investment income, which reached PKR 37bln. Despite this strong growth, the industry's performance remains highly susceptible to prevailing economic conditions.
Asia Insurance Company Limited ('Asia Insurance' or 'the Company'), an established player in the non-life insurance market, offers both Conventional and Takaful products, with Conventional business making up ~90% of its operations. The Company's rating is characterized by its long-standing market position and a strategic association with the InsuResilience Investment Fund. This partnership, an initiative of the German Development Bank (KfW), not only provides requisite capital injection but also strengthens the Company's governance framework through nominee representation. Focusing on IT integration and new product development, Asia Insurance saw a modest GPW growth of ~2.3% in CY24, reaching PKR 1,380mln. Fire (~48.7%) and Marine (~17.1%) are the Company's largest GPW generating segments. The Company's net insurance premium grew by ~40%. Despite posting an improvement, the combined ratio remains comparatively high at ~96.8%. Consistency in the income from the core operations, along with an improved investment income of PKR 152mln (CY23: PKR 54mln), has helped the Company to achieve a net profit of PKR 174mln (~112% higher than CY23's net profit of PKR 82mln). The Company's financial risk remains a focus area, where equity has increased by ~14% to PKR 1,120mln. Though capital structure is considered adequate, a formal plan to enhance its core equity in line with SECP directives is pivotal for future stability. This, along with the support from an investment portfolio valued at PKR 1,012mln as of CY24, provides essential liquidity and a cushion against operational fluctuations. Holding an association with strong reinsurers bodes well for the Company. The Rating Watch has been removed after six consecutive quarters of underwriting profits, showcasing a stability in the Company's core operations.
The rating is dependent on continued growth in core business along with support from the investment side so as to enhance profitability. Sustaining underwriting profits will be crucial, going forward. This along with the preserving the liquidity needs attention. Sustaining the financial risk remains imperative to the rating.

About the Entity
Asia Insurance Company Limited ('Asia Insurance' or 'the Company') was established in 1979 as a General Insurance Company and was listed on the Pakistan Stock Exchange. The Company operates a network of 28 branches across the country.
Mr. Ihtsham ul Haq Qureshi and family holds majority (~67.8%) stake in the Company. Whereas, InsuResilience Investment Fund (IIF) holds ~25.4% of the shareholding. The Company's Board is chaired by Mr. Ihtsham ul Haq Qureshi. While, the Company is led by Mr. Zain ul Haq Qureshi as the CEO. They are aided by a team of experienced professionals.