VIS Reaffirms IFS Rating of Askari General Insurance Company Limited - Press Release issued by VIS Credit Rating Company Limited.

Karachi -- November 17, 2022 (PPI-OT)

Following is the text of press release issued by VIS Credit Rating Company Limited

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VIS Credit Rating Company Limited (VIS) has reaffirmed the Insurer Financial Strength (IFS) rating of Askari General Insurance Company Limited (AGICO) at 'AA+ (IFS)' (Double A Plus). The IFS rating of 'AA+' denotes very high capacity of meeting policyholder and contractual obligations. Moreover, the risk is modest, though may vary slightly with possible changes in economic conditions. Outlook on the assigned ratings is 'Stable'. The previous rating action was announced on March 31, 2022.

The rating assigned to AGICO derives strength from its association with its primary shareholder Army Welfare Trust which has presence in various sectors of the economy. The rating incorporate business growth in all segments of the company during CY21 and 9M2022. The company's premium base was largely provided by health and miscellaneous segment in CY21; however as a result of company's deliberate strategy, health segment witnessed a dip and proportion of fire insurances increased. With projected slowdown in the economic activity due to high interest rates, rupee devaluation, and elevated inflation levels, key focus area for the management is motor segment and reducing exposure in the health segment which would be important from the underwriting risk in management perspective.

The rating also incorporates reinsurance arrangements largely with counterparties having sound credit risk profiles. Ratings factor in reduction in overall underwriting profit for CY21 to Rs. 193.7m (CY20: Rs. 231.9m) on account of losses incurred in the health segment and reduction in quantum of profit from the motor segment given higher claims in the same.

Support to the underwriting performance in 9M2022 was contributed by profits in the accident and health segment attributable to several initiatives taken by the company including increase in pricing as well as deployment of specialized staff for enhanced screening of claims, strengthening of internal controls and quarterly meetings with the management of major clients. With lower cession...