The Pakistan Credit Rating Agency Limited
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Muhammad Noor Ul Haq

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PACRA Maintains IFS Rating of Askari Life Assurance Company Limited

Rating Type IFS
(14-Jul-21 )
(20-Jul-20 )
Action Maintain Initial
IFS Rating A- A-
Outlook Stable Stable
Rating Watch - -

The Rating of Askari Life Assurance Company Limited (the Company) is based on its core sponsorship from the Army Welfare Trust, unlocking synergistic benefits as well as providing explicit commitment in times of financial crisis. The Army Welfare Trust has an established presence in the insurance industry through Askari General Insurance (Rated AA). A deficit for the year has occurred due to its initial year of operations, however improvement in the profitability through growth in single premium revenue and regular premium revenue along-with increased exposure in bancassurance provides comfort to the rating. The risk absorption capacity and capitalization levels are moderate. Any dilution therein has the comforting backing of the sponsor. Increase in market share along with converting underwriting losses into profitability remains crucial. Moreover, maintenance of adequate capital in wake of increasing business volumes and consequent support from sponsors would remain important.
During CY-20, the total GPW of the industry grew by 4.6% to PKR 233bln, as against a decline of 1.2% to PKR 223bln in CY-19. COVID-19 is an ongoing challenge. While it has taken a toll on many businesses, its ramifications are still unfolding. However, due to current 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.
Sustained improvement in the business and financial risk profile of the company in line with their relative positioning in the industry remain vital to the rating. Concurrently, the liquidity profile of the Company should continue to cushion the policyholder's liabilities. Growth in topline and underwriting profits remain essential.

About the Entity
Askari Life Assurance Company Limited (ALAC), formerly known as East West Life Assurance Company Limited, a quoted public company, listed on the Pakistan Stock Exchange, commenced operations in Feb-1993. With its head office in Karachi, the company operates in main cities with branches in Lahore, Islamabad and Karachi. The company is majority owned by Army Welfare Trust (AWT) with a stake of 66.6%. AWT was set up in 1971 by Pakistan Army for promoting the welfare of retired personnel and Shuhada of the Army, 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.
ALAC’s board comprises of eight members including the CEO. The board includes senior executives of the sponsors, and two independent members. Mr. Jehanzeb Zafar, having significant experience of life insurance industry, is the CEO. A team of professionals assist him.

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.