Besides providing the traditional insurance coverage, Askari General Insurance offers coverage in marine, motor and fire. Moreover, the Askari General also provides specialised insurance coverage on a variety of engineering risks. The company claims to be the market leader in health insurance business. The company possesses an extensive coverage of about 19 branches in different areas of the country. Its head office is based in Rawalpindi.
REINSURANCE: Askari General Insurance enjoys reinsurance arrangements and association with internationally renowned insurers such as Swiss Re, Korean Re, Hannover Re and SCOR Re. Internationally acclaimed reinsurance brokers including AON Group, MID and J.B. Boda also provide support to the company. With the company generating better reinsurance results, it is now being offered improved terms with the reinsurers. Since the company is focusing on building its reserves to bring it in line with the industry levels, it has slowed down its dividend stream.
ACQUISITION BY FAUJI GROUP: In 2013, Fauji group acquired Askari Bank. As a consequence, a sizeable holding of Askari General Insurance now lies in the hands of Fauji Group through its stake in Askari Bank.
CREDIT RATING: 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 in February 2014. The rating upgrade takes into account the backing of Fauji consortium, reinsurance arrangements with leading insurers having sound financial standing, its consistent profitability for the last few years and the conservative investment portfolio of the company. However, liquidity profile and capitalisation indicators have been highlighted as areas of improvement by JCR-VIS. Moreover, the takeover by Fauji Foundation is believed to bode well for the business volumes of the company
ASKARI GENERAL INSURANCE DURING 9MCY14:
During nine months ending September 2014, profitability of the company continued its upward march with its bottom line rising by nearly twofold. Growth came in primarily from top line where net premiums rose by nearly 17 percent year-on-year during the period. On the negative front, claims stayed on the higher side with its aggregate claims ratio surging to 57 percent in 9MCY14 from 55 percent in 9MCY13.
Investment income grew significantly by 80 percent, thus contributing its fair share in boosting the bottom line growth. Resultantly, investment ratio climbed up 400bps to 12 percent during the period ended September 2014. Mind you, company's investment portfolio is tilted towards money market funds that aim to generate stable income and carry low risk, thus translating into minimal level of risk for its policyholders and other stakeholders.
2013: REVIEW OF FINANCIAL PERFORMANCE Askari General Insurance closed 2013 on an overwhelming note with the company marking the highest profitability level over the last ten years. It achieved a profit after tax of Rs 119 million, a massive rise of 61 percent year-on-year. Premiums stayed healthy, whereby underwriting results surged by 25 percent year-on-year. Besides, burgeoning investment income also perked up the bottom line during the year.
However, the claims of marine, aviation and transport segment remained on the higher side with its claims ratio surging to 56 percent from 18 percent in the preceding year. Thanks to it's relatively smaller contribution standing at 5 percent (as a % of net premiums) in 2013. Resultantly, the aggregate underwriting profit stayed sound. Net claims ratio inched up a tad to 55 percent from 53 percent in the corresponding period last year. The share of motor segment remained the highest, contributing over 60 percent to the net premium revenues of the firm.
GOING ONWARDS: Company's profitability has been on a persistent rise since 2010. This is because premiums have been rising, underwriting profits are growing healthier while the low-risk investment portfolio continues to generate stable income, thus providing a level of comfort to the bottom line. Net claims ratio now stands at a relatively improved position; 57 percent in 9MCY14 versus 65 percent in 2009.
Talking about the operating processes, remodelling of its executive support system has been carried out by the company which will lend a hand in increasing the efficiency of its operations and hence its financial performance. As for the growth prospects, opportunities are numerous. Microinsurance, allowance of takaful operations and development of alternative distribution channels have been the key developments in the insurance industry in recent times. Though, there remains a need to explore alternative distribution channels including ATM networks, UBL Omni, collaborations with retail networks etc. This is specifically crucial in reaching out to the rural masses where access to financial services is not within reach. Lastly, the need to create awareness cannot be overlooked. For the purpose of creating awareness, the insurers, the government and the regulator need to join hands and work on a mass level.
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Askari General Insurance - Financial Highlights
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Rs (mn) CY12 CY13 9MCY14
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Net premium revenue 700 842 708
Net claims (373) (465) (406)
Expenses (195) (220) (184)
Net commission 34 50 47
Underwriting results 166 207 165
Investment income 55 65 83
General & administrative expenses (157) (147) (110)
Profit after taxation 74 119 125
EPS (Rs) 1.91 3.07 3.17
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Source: Company accounts