Karachi, September 30, 2021 (PPI-OT): VIS Credit Rating Company Limited (VIS) has maintained the Insurer Financial Strength (IFS) rating of Alpha Insurance Company Limited (AICL) at ‘A’ (Single A). The rating signifies high capacity to meet policyholder and contractual obligations. Risk factors may vary over time due to business/economic conditions. Outlook on the assigned rating has been revised from ‘Negative’ to ‘Stable’. The previous rating action was announced on October 20, 2020.
Rating derives strength from AICL being a subsidiary of State Life Insurance Corporation of Pakistan (SLIC), the largest life insurance company of the country and owned by the Government of Pakistan. Assigned rating also takes into account the stability and experience of the management team. Strong re-insurers have been maintained on the company’s panel. Revision in rating outlook incorporates timely materialization of projected business growth as a result of ongoing rehabilitation program. Key features of the same include identifying new un-tapped market segments, re-enlistment and enhancement of limits with banks, improving efficiency through cost management; and consolidation through closure of un-productive branches, and opening new branches over the medium term.
New business generation has been a challenge in the outgoing year given the slowdown in economic activity due to COVID-19 outbreak. However, gross premium written witnessed growth and stood at a higher level in HY21 as compared to the preceding year. Reinsurance limits enhanced in 2020 with projected enhancement in the same with similar retention levels. Reinsurance treaties consist of a diversified panel of local and international reinsurers. Loss ratios deteriorated in CY20 on account of higher amount of carried forward claims expensed as compared to the preceding year. However, claims ratio on gross and net basis depicted improvement during 1H2021. Return from investments continues to support the underwriting operations of the company. As per management, the trend is expected to persist till a breakeven level of premium is achieved by AICL.
Liquidity profile has shown significant improvement on account of lower underwriting liabilities and adequate exposure in liquid assets. Net insurance debt (after accounting or impairment provisions) as a proportion of gross premium continues to remain within manageable limits. Moreover, capitalization levels continue to remain sound to support future growth plans. Leverage indicators have depicted improvement. Going forward, mandatory implementation of IFRS 17 (as planned to be implemented by Jan’23) would impact the overall capitalization metrics, the magnitude of which is unknown.
For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: bilal@jcrvis.com.pk
Website: https://www.vis.com.pk/