Press Release

IFS Rating of Alpha Insurance Company Limited

Karachi, December 07, 2016: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the Insurer Financial Strength (IFS) rating of Alpha Insurance Company Limited (AICL) at ‘A’ (Single A). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on December 15, 2015.

The assigned rating incorporates financial profile and demonstrated support of the parent institution, State Life Insurance Corporation of Pakistan (SLIC), the largest life insurance company in the country & owned by the Government of Pakistan. Rating also reflects adequate capitalization and liquidity profile of AICL. Rating is constrained by persistent trend in underwriting losses, high levels of insurance debt in relation to gross premium, sizeable amount of claims not recognized on company’s balance sheet and room for improvement in overall control environment of the institution.
Over the last two years (2014 & 2015), gross premium written by the company have witnessed noticeable decline. While decline in business volumes continued in the ongoing year till 1H16, some recovery has been noted in 3Q16 on account of initiatives taken by the management including incentive scheme for sales force. Further strengthening of the business development function is warranted for achieving projected business volumes.
With low business volumes and higher claims ratio, underwriting loss in the ongoing year has increased. Given the projected growth in business volumes, underwriting losses are expected to continue. Over the last five years, the company had managed to post profits on account of support from investment income. However, the company incurred a loss during 1H16 due to increase in underwriting loss and lower investment income on account of decline in interest rates.
Board and management team has witnessed several changes during 2015 and in the ongoing year. Moreover, the position of MD/CEO has witnessed frequent changes. Stability in top management may facilitate the company in achieving its business targets in coming years. Moreover, addressing control weaknesses is also considered important.
For further information on this rating announcement, please contact the undersigned (Ext: 207) or Mr. Javed Callea (Ext: 201) at 021-35311861-71 or fax to 021-35311872-3.

Jamal Abbas Zaidi

Applicable Rating Criteria: General Insurance (Sep 2016)

Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited (JCR-VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. JCR-VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report. JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings. JCR-VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2016 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited