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The Pakistan Credit Rating Agency Limited

Date
27-Feb-2017
Analysts
Amara Gondal
amara.gondal@pacra.com

Mahina Majid
mahina.majid@pacra.com

+92-42-35869504
www.pacra.com
Applicable Criteria

  • General Insurance and Takaful Operator (Jun 16) [View]
  • Rating Modifiers | Outlook and Rating Watch (Jun 16) [View]

Related Research

  • Sector Study | General Insurance (Nov 16) [View]
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PACRA Maintains IFS Ratings of Adamjee Insurance Company Limited
 Rating Type Insurer Financial Strength(IFS)
Current
(27-Feb-2017)
Previous
(26-Feb-2016)
 Action Maintain Upgrade
 IFS Rating AA+ AA+
 Outlook Stable Stable
 Rating Watch - -

The rating reflects the strong and sustained fundamentals of the company. AICL has been able to grow its business besides keeping the cost under check, thus resulting positive for the core profitability. Clarity in the business plan, stability in higher management and the team's concerted efforts have yielded benefits. The company continues to enjoy the perk of being the only company operating outside Pakistan, however, foreign operations need to supplement profitability further. The added efficiency in the MIS setup has resulted into improved proficiency in claims settlement. The company's sizeable investment portfolio, albeit concentrated in few group companies, continues to supplement its profitability and financial strength. Meanwhile, the rating takes into account the association of AICL with Nishat flagship companies. The business strategy, going forward, is focused on increasing its market share through expansion of branch network - home and abroad - along with product innovation; retail and microinsurance. Furthermore, AICL is eyeing geographical diversification in other regions, as well.

The rating is dependent on stability in the management team and their efforts to execute the business plan. AICL must continue to strengthen its market position, while achieving sustainability in underwriting profits. With a strengthened claims management system in place, maintaining lower claims turnaround time (TAT) remains vital.
About the Entity
AICL is the second largest general insurer of Pakistan, holding 15% of the country's GPW at end-Sep16. The company, incorporated in 1960, is owned and controlled by Nishat flagship companies since 2004, mainly through MCB Bank Limited. It is listed on Pakistan Stock Exchange. It operates a network of 27 branches and divisions in Pakistan and three branches in the UAE.

The eight-member board of directors, including the CEO, has five non-executive directors and two independent directors. The chairman of BoD is Mr. Umer Mansha. The board includes professionals having exposure to textile, sugar, leather and banking sectors. Mr. Muhammad Ali Zeb is the CEO of the company since June 2013, who also remained CEO for three years until 2011. He is assisted by a team of experienced professionals.
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.
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