PACRA Maintains IFS Rating of Askari Life Assurance Company Limited

Pakistan's Life Insurance market is dominated by the public sector (~66.6% share as of Dec-23), while the private sector holds only ~33.4%. The sector players have shifted their focus from first-year persistency to second-year, prioritizing Gross Premium Written (GPW) growth. During CY23, overall GPW showed a YoY growth of ~7.7%. Out of the total, ~46.6% of the GPW pertains to renewals, followed by group life without cash value (~37.2%). Net Premium also showed a YoY increase of ~7.4%. As policy maturities and surrenders have largely trickled in, net claims grew by ~31%. To adapt, the industry holds a substantial investment book (CY23: PKR 2,021bln, CY22: PKR 1,747bln) stabilizing the overall outlook.
Askari Life Assurance Company Limited (“Askari Life” or “the Company”) drives its strength from its association with Army Welfare Trust (“the Trust”). The Trust holds a broad and diversified business portfolio encompassing its established role in the insurance sector through Askari General & Life Insurance companies. Askari Life offers a range of products from savings and family protection plans to unit-linked plans and tailored health and life insurance coverage. During CY23, GPW of the Company improved by ~24%. The first year of business slightly decreased due to economic factors leading to reduced customers' purchasing power. The support was driven from renewal business along with group premiums. The Company reported renewal persistency of (~82%), while first-year persistency remains weak (~52%). The combined ratio has improved, however, remains substantially high due to high expense ratio (i.e. the acquisition cost). Though investment income provides some respite. The Company has booked a net loss, thus depleting the equity base. On the contrary, the Company maintains adequate liquidity cover and capital adequacy ratio. Askari Life requires a strategy revamp to manage operational expenses effectively, thereby achieving profitability and strengthening its industry standing.
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. The liquidity profile should continue to cushion the policyholder's liabilities.

About the Entity
Askari Life Assurance Company Limited (“Askari Life” or “the Company”), formerly known as East West Life Assurance Company Limited, is listed on the Pakistan Stock Exchange and commenced operations in Feb -93.
The Army Welfare Trust (the Trust) holds a majority of the shareholding (~66.6%), followed by East West Insurance Company (~19%), while rest of the shareholding is vested with individuals and directors. The Company’s Board is Chaired by Lt Gen. Nauman Mahmood (R.), while Mr. Jhanzeb Zafer is the CEO of the Company. He is assisted by a team of experienced professionals.