Operating since 1995 as a public limited company, Askari Insurance enjoys the financial backing of Army Welfare Trust which is involved in finance, banking, production of consumer goods and services. About 23 companies from diverse backgrounds fall under the umbrella of AWT where a bulk of these companies is also listed on stock exchanges of the country. Also, Askari General Insurance is listed on Karachi, Lahore and Islamabad stock exchanges and stands as one of the leading companies of AWT.
While providing the conventional insurance coverage like marine, motor and fire, the company also bears the capacity of providing specialised insurance coverage on various engineering risks. Also, the company claims to be the market leader in health insurance business. With a network of about 19 branches, the company maintains its presence in different areas of the country, with its head office based in Rawalpindi.
ACQUISITION BY FAUJI GROUP In the history of AGICO, 2013 carries great significance. Followed by Askari Bank's acquisition by Fauji Group in 2013, a sizeable holding of AGICO has gone in the hands of Fauji Group through Askari Bank.
CREDIT RATING In February 2014, JCR-VIS Credit Rating Company Limited upgraded the Insurer Financial Strength (IFS) rating of Askari General Insurance to 'A+' (Single A Plus) from 'A' (Single A) along with a stable outlook. According to JCR-VIS, holding of Fauji Group in Askari General Insurance will carry a positive impact on company's business volumes. Besides, backing by Fauji consortium, reinsurance arrangements with insurers having sound financial standing, consistency in profitability for the past three years and a conservative investment portfolio support the rating upgrade of the company, according to the press release issued by JCR-VIS. However, liquidity profile and capitalisation indicators have been highlighted as areas that still need to be improved.
1Q CY14: REVIEW OF FINANCIAL PERFORMANCE During the first quarter ended March 2014, the growth in underwriting income witnessed a downfall as it clocked in at Rs 55 million (down 10 percent year on year). Although net premiums posted a decent growth of 15 percent, the upsurge in net claims and other expenses gobbled up whatever gains the company achieved from increase in premiums. Claims ratio of the firm rose to 59 percent (1Q CY13: 50 percent) while the combined ratio shot up to 77 percent (1Q CY13: 70 percent). Thanks to strong investment flows that helped the bottom line to stay in decent health. Consequently, profit after taxation boasted an increase of 25 percent year on year. In terms of segments, motor insurance contributed the highest share of 62 percent, followed by accident and health (15 percent) and the rest 23 percent was contributed by miscellaneous, marine aviation and transport and fire and property damage segments.
2013: REVIEW OF FINANCIAL PERFORMANCE AGICO ended 2013 on a remarkable note by recording the highest ever profitability over the last ten years. Profit after taxation of the company clocked in at Rs 119 million, reflecting an increase of 61 percent from the corresponding period of last year. Strong underwriting income backed by robust growth in net premiums and healthy investment income sugar-coated bottom line growth. The claims ratio of marine, aviation and transport witnessed a significant upsurge from 18 percent in 2012 to 56 percent in 2013. Thanks to its small contribution to the insurance portfolio of AGICO, the underwriting result stayed on the safe side. Also, net claims ratio of the firm rose to 55 percent from 53 percent in the corresponding period of last year. Also, in line with historical trends, motor segment remained the major segment contributing a share of over 60 percent to the net premium revenues of the company.
FUTURE OUTLOOK Last three years have been quite impressive for Askari General Insurance where profitability of the firm has continuously been on an upward trend. Also, the company has been able to bring down its claims ratio to 55 percent in 2013 from as high as 65 percent in 2009. Continuous improvement in claims and rising premiums will further lend a hand in boosting the profitability growth of the firm. On the operational front, the company has recently remodelled its executive support system to further enhance the efficiency of its operations, which is expected to positively contribute to its performance in a positive manner.
As for the industry prospects, the insurance industry in Pakistan is lamenting over considerably low level of insurance penetration. However, this should be taken as an opportunity to move forward and expand the industry's market share as the rural population still remains untapped. Also, the industry needs to gear itself on the technological front. While some of the leading insurance companies have already started offering mobile insurance schemes, the rest of the insurers still need to get on the bandwagon to reach out to the rural mass through alternative distribution channels and micro-insurance and Takaful window are two key areas where the industry needs to spread out its wings. Lastly, the importance of creating awareness cannot be denied.
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Askari General Insurance - Financial Highlights
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Rs (mn) CY12 CY13 1QCY14
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Net premium revenue 700 842 235
Net claims (373) (465) (138)
Expenses (195) (220) (59)
Net commission 34 50 17
Underwriting results 166 207 55
Investment income 55 65 22
General & administrative expenses (157) (147) (34)
Profit after taxation 74 119 40
EPS (Rs) 1.91 3.07 1.03
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Source: Company accounts
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