PACRA Maintains IFS Rating of Asia Insurance Company Limited | Rating Watch

Asia Insurance Company Limited (‘Asia Insurance’ or ‘the Company’) reflects the Company’s long and stable standing in the insurance industry. The Company is operating in non-life insurance ambit while offering both conventional and takaful products, where conventional business constitutes ~90% of operations. The rating also reflects Asia Insurance's association with InsuResilience Investment Fund an initiative created by KfW, the German Development Bank, on behalf of the German Ministry for Economic Cooperation and Development (BMZ). The fund drives adaptation to climate change by improving access and use of insurance in developing countries. Along with the capital injection, the fund also strengthens the governance framework of the Company through a nominee representation. With a focus on IT integration and the development of new products, GPW reported an uptick of ~22% during CY23, reaching PKR 1,349mln (CY22: PKR 1,102mln); where fire (~41%) and miscellaneous (~21%) remain the major contributing segments. During the period, the net insurance premium grew by ~13%, facilitating positive underwriting results. However, sustainable profits remain crucial for the rating, going forward. The Company maintained an investment book of PKR 951mln as of 3MCY24 (CY23: PKR 902mln), concentrated in cash and bank balances (~72%) to supplement its core operations and to provide liquidity. Combined ratio poses an improvement; however, remains high (CY23: ~98%, CY22:~107.3%). On the net level, the Company posts a profit of PKR 83mln, during CY23 (CY22: loss of PKR 71mln). The equity of the Company grew by ~9% during CY23, reaching PKR 982mln (CY22: PKR 900mln). However, financial risk is considered adequate where efficienct management of claims requires focus. Capital structure remains adequate. The Companys has been assigned a rating watch is assigned untill consistency in robust income generation from core operations is achieved; here, investment income must support to offset challenges, where required.
During 3MCY24, GPW of the General Insurance industry held a total size of PKR 48bln (3MCY23: PKR 41bln), posting growth of ~17%. Underwriting performance also improved by ~103% (3MCY24: PKR 3bln, 3MCY23: PKR 1.5bln). Improved underwriting and investment performance contributed to the industry's earnings (3MCY24: PKR 6.3bln, 3MCY23: PKR 4bln). However, current economic conditions remain imperative for the overall performance of the insurance industry.
The rating is dependent on continued growth in core business along with support from the investment side so as to enhance profitability. Sustaining underwriting profits will be crucial, going forward. This along with the preserving the liquidity needs attention. Any further deterioration in financial risk may impact the rating.

About the Entity
Asia Insurance Company Limited ('Asia Insurance' or 'the Company') was established in 1979 as a General Insurance Company and was listed on the Pakistan Stock Exchange. The Company operates a network of 28 branches across the country.
Mr. Ihtsham ul Haq Qureshi and family holds majority (~67.8%) stake in the Company. Whereas, InsuResilience Investment Fund (IIF) holds ~25.4% of the shareholding. The Company's Board is chaired by Mr. Ihtsham ul Haq Qureshi. While, the Company is led by Mr. Zain ul Haq Qureshi as the CEO. He is aided by a team of experienced professionals.