The Pakistan Credit Rating Agency Limited
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Muhammad Noor Ul Haq

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PACRA Maintains IFS Rating of Alfalah Insurance Company Limited

Rating Type IFS
(16-Jun-23 )
(17-Jun-22 )
Action Maintain Maintain
IFS Rating AA+ (ifs) AA+ (ifs)
Outlook Stable Stable
Rating Watch - -

The rating reflects the Company's healthy financial profile, supported by robust business volumes in the health, fire, and motor segments, consistent profitability and a substantial income stream from its investment book. The rupee's devaluation has served as a driver for an upsurge of Gross Premium Written (GPW), supplementing the Company's organic growth.
The assigned rating also takes comfort from the Company's association with Abu Dhabi Group. Moreover, Alfalah Insurance capitalizes on its unique portfolio in the health segment, which accounts to a significant portion of the total Gross Premium Written (GPW). The Company's prudent risk retention strategy in the motor segment has yielded higher underwriting profitability. The synergies with Bank Alfalah Ltd. (BAFL), one of the largest private banks in Pakistan, have positively influenced business volumes in the motor segment and facilitated growth in the health product. The Company's non-captive business volumes have shown consistent growth over the years, further strengthened by diversification into smaller segments. This diversification provides stability to the Company's topline. The Company's substantial involvement in window takaful operations has provided a noteworthy boost to its top line, contributing to its overall growth. Additionally, the Company's investment income is robust and contributes to the overall strength of the bottom line. Enhanced liquidity and sound cash flow generation capability add further strength to the assigned rating. Alfalah Insurance has demonstrated its commitment to shareholders by paying dividends, highlighting its financial stability. The presence of internationally recognized and highly rated reinsurance companies provide additional support to the Company's risk management framework. The rating also takes into account the Company's effective corporate governance practices and the presence of an experienced management team that has been associated with the firm since its inception.
The assigned rating is dependent on the Company's ability to augment its market position within the competitive landscape while maintaining a strong underwriting performance. It is crucial for the Company to strengthen its liquidity profile and exercise prudent management of claims and receivables.

About the Entity
Alfalah Insurance Company Limited, commencing business in Sep'06, is engaged in providing non-life insurance services. Alfalah Insurance, operates through two business Hubs North and South with a total of 11 branches. The sponsoring family, consisting of members of UAE's ruling family and leading businesses, owns Alfalah insurance through key sponsoring individuals and group companies including Bank Alfalah Limited.
The Company’s seven-member board, including the CEO, is chaired by H.H. Sheikh Nahayan Mabarak Al Nahayan. Three board members come from the sponsoring family; two members represent Bank Alfalah Limited, while one member holds an executive position in Dhabi Group. The CEO, Mr. Abdul Haye, is assisted by a team of professionals and possesses around three decades of related experience.

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.