PACRA Maintains IFS Rating of The Universal Insurance Company Limited | Assigns ‘Rating Watch’

The ratings for The Universal Insurance Company Limited (‘Universal Insurance' or 'the Company') reflect its association with the Bibojee Group, which provides multifaceted support, including capital injections when needed and access to captive business.The Company relies primarily on group business and underwriting through a co-insurance agreement with a large insurance company, with ~72% of GPW driven by the motor segment. This strategy has limited the Company's ability to capture market business, resulting in a weak topline and market share. The Company's underwriting performance has been under stress, showing consistent losses. The investment book, reported at PKR 516mln as of CY23, provides some support to the liquid profile with an investment income of PKR 7mln. The investment book's size is relatively small to effectively support core business operations. The Company meets the minimum capital adequacy requirement, with total equity reported at PKR 668mln as of CY23. The equity base has declined due to ongoing losses and the Sponsors' commitment of capital injection provides comfort to the rating. Going forward, the Company plans to start the non-captive underwriting business operations, once approved by the Board, remains susceptible. The Company requires a strategy revamp to manage the business and financial risk, along with sustaining its position in the industry. PACRA assigns a Rating Watch registered by significant dilution of equity along with substantially weak performance. The Company must build itself around a sizeable business, going forward.
The rating is dependent upon sustained improvement in the relative position of the Company, augmenting its sustainability as envisaged. Meanwhile, continued improvement in the business and financial profile of the Company remains imperative for the rating.

About the Entity
The Universal Insurance Company Limited (‘Universal Insurance' or 'the Company'), incorporated in 1958, is listed on PSX. The Bibojee Group holds the majority stake in the Company (~86%), with the remaining shares held by Directors, Executives, and Corporations (~3%), and the General Public (~11%). The Board, chaired by Mr. Lt. Gen (Retd.) Ali Kuli Khan Khattak, is dominated by the sponsoring group. Dr. Shahin Juli Khan Khattak, appointed as CEO in November 2023, leads the Company with Mr. Amir Raza as the Principal Officer, supported by a team of experienced professionals.