Press Release

JCR-VIS reaffirms IFS Rating of Askari General Insurance Company Limited

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Karachi, January 22, 2013: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the Insurer Financial Strength (IFS) rating of Askari General Insurance Company Limited (AGICO) at ‘A’ (Single A). Outlook on the assigned rating is ‘Stable’.

Sponsored mainly by Army Welfare Trust (AWT), AGICO occupies a noticeable market share in the Punjab region. In 2012, the company has posted growth in business volumes on the back of a single risk underwritten in the last quarter; this has materially changed the business mix which was tilted in the favor of motor segment until 9M12. The ability of the company to achieve sustained growth along with a balanced business mix will continue to be tracked by JCR-VIS. The company has posted underwriting profit in both 2011 and 9M12. Overall profits have increased, with support from investment income. Risk arising from the company’s investment portfolio is considered manageable.

The company has adequate reinsurance arrangements in place with Scor Re as the lead re-insurer in most treaties having an IFS rating of ‘A+’ from S&P. AGICO was able to negotiate capacity enhancement in treaty limits during 2012; simultaneously, retention has also increased. Following a rights issue of Rs. 50m and internal capital generation, total equity has increased on a timeline basis, easing pressure on leverage indicators to some extent. External capital injection would be required if internal capital generation is not able to keep pace with growth in business volumes.

Operating cash flows of the company witnessed improvement with low level of premium ceded to reinsurers. However, insurance debt registered an upward trend mainly due to upsurge in unpaid premium; which needs to be arrested, to improve liquidity profile of the institution.

For further information on this rating announcement, please contact Mr. Abdur Rahim, ACII at 021-35311861-70 (Ext. 508) or Mr. Maimoon Rasheed at 042-36610681-84 or fax to 021-35311873.

Jamal Abbas Zaidi
Deputy CEO

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited VIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2013 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited