The Universal Insurance Company Limited

RATING REPORT | Jul-26

Logo
Rating History
Dissemination Date IFS Rating Outlook Action Rating Watch
24-Jul-26 A (ifs) Stable Maintain YES
25-Jul-25 A (ifs) Stable Maintain YES
26-Jul-24 A (ifs) Stable Maintain YES
27-Jul-23 A (ifs) Stable Maintain -
28-Jul-22 A (ifs) Stable Maintain -
About the Entity

The Company, incorporated in 1958, is listed on PSX. The Bibojee Group holds the majority stake in the Company (~86%), 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 Nov-23, leads the Company with Mr. Amir Raza as the Principal Officer, supported by a team of experienced professionals.

Rating Rationale

The IFS ratings of The Universal Insurance Company Limited ("Universal Insurance" or "the Company") reflect its strong association with the Bibojee Group, which continues to provide multifaceted support through capital injections, when required, and access to a stable stream of captive business. The Company transitioned from a co-insurance arrangement to directly underwriting the Group's captive business, marking a strategic shift in its operating model. This transition resulted in a meaningful recovery in business volumes. The motor segment remained the dominant line of business, accounting for approximately 68% of GPW in CY25 compared to 58% under the previous co-insurance structure. Consequently, GPW increased by approximately 143%. Despite the sharp growth, the Company's business profile remains concentrated, with premium generation largely dependent on captive business. Operating performance also improved during CY25. Although underwriting operations remained loss-making, the underwriting loss narrowed by approximately 74%, reflecting improved portfolio performance and scale benefits following the revised underwriting strategy. Meanwhile, the investment portfolio expanded and generated investment income of approximately PKR 27mln, compared to an unrealized investment loss of PKR 11mln in the previous year. The combined recovery in underwriting and investment performance enabled the Company to return to profitability, reporting a net profit of approximately PKR 40mln in CY25 compared with a net loss of PKR 5mln in CY24. Performance during 1QCY26 indicates that the recovery remains in its formative stage. GPW increased SPLY basis, reflecting continued support from captive business. However, underwriting operations remained in deficit, albeit significantly lower than loss reported in the corresponding period last year. Investment income improved modestly but remained insufficient to fully offset underwriting losses, resulting in a net loss of approximately PKR 6mln for the quarter. While underlying trends remain positive, these results suggest that the Company's earnings recovery is yet to become self-sustaining. On the financial risk front, the Company's capitalization continued to strengthen. Equity increased to approximately PKR 730mln as of Mar’26 (CY24: PKR 670mln), supported by retained earnings and fair value gains on available-for-sale investments. Nevertheless, paid-up capital remained at PKR 500mln, against the SECP's minimum paid-up capital requirement of PKR 1,000mln effective by end-2026. Management has communicated its intention to inject the remaining capital by Dec'26 to achieve regulatory compliance, while these new funds will be utilized to generate investment incomes. PACRA draws comfort from the Sponsors' demonstrated willingness to provide financial support, which remains a key rating consideration. Management has also articulated a broader strategic roadmap aimed at reducing reliance on captive business by gradually re-entering the open market from 2027 onward through branch network expansion and broader customer acquisition. While this strategy, if successfully executed, has the potential to materially strengthen the Company's business profile, its implementation remains at an early stage. Accordingly, PACRA maintains the Rating Watch, reflecting the Company's limited operating track record following its strategic transition, its continued dependence on a single-source captive business model, and the pending execution of its capital augmentation and retail expansion plans.

Key Rating Drivers

The rating is dependent upon sustained improvement in the relative position of the Company, augmenting its sustainability as envisaged. Timely execution of the planned PKR 500mln paid-up capital injection by Dec’26 (to meet SECP's MCR) and successful transition from a captive to an open-market underwriting base from 2027 are now key, near-term milestones for the rating.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

METHODOLOGY

RATING ANALYST

  • Muhammad Azmat Shaheen
  • azmat.shaheen@pacra.com
  • +92-42-35869504
  • www.pacra.com

The Universal Insurance Company Limited


Rating Analysis

Logo
Profile
Legal Structure

The Universal Insurance Company Ltd. ('Universal Insurance' or 'the Company') was incorporated as a public limited company on May 09, 1958 under the Companies Act, 1913 (now the Companies Act, 2017), and has been listed on PSX since inception. The Company is engaged in non-life (general) insurance business, with its registered office at Universal Insurance House, 63-Shahrah-e-Quaid-e-Azam, Lahore. The Company operates through its registered office, which is the only branch.


Background

The Bibojee Group of Companies, founded by Lt. Gen. R. M. Habibullah Khan Khattak, established the Company in 1960 to enter the insurance market. The Company is a subsidiary of Bibojee Services (Pvt.) Limited (the Holding Company), which held 42,981,788 ordinary shares (85.96%) of the Company as at both December 31, 2025 and March 31, 2026. The Bibojee Group's portfolio spans four sectors:

- Textile: Janana De Malucho Textile Mills Ltd., Rahman Cotton Mills Ltd., Bannu Woollen Mills Ltd.

- Automobile, Tyre & Rubber: Ghandhara Industries Ltd., Ghandhara Automobiles Ltd., Ghandhara Tyre & Rubber Company Ltd., Ghandhara DF (Pvt.) Ltd.

- Insurance: The Universal Insurance Company Ltd.

- Construction: Gammon Pakistan Ltd.

- Other: Business Vision (Pvt.) Ltd. (related real estate dealings), Bibojee Services (Pvt.) Ltd. (holding company).

This diversified group base underpins the Company's captive-business strategy launched in July 2025 (see Business Risk section).


Operations

As per the Board's approved revival strategy, the Company started underwriting direct captive business of selected classes, effective July 01, 2025, in the first instance prioritising group/associated-company business, with a longer-term plan to expand into open-market business through a country-wide branch network. The major products include Fire & Property Insurance, Marine Insurance, Motor Insurance, Machine Breakdown Cash-in-Transit / Cash-in-Safe and Personal Accident for the areas in Punjab, Sindh, Khyber Pakhtunkhwa (KPK), and Islamabad Capital Territory (ICT).  Major clients include Ghandhara Industries Ltd., Ghandhara Automobile Ltd., Ghandhara Tyre & Rubber Company Ltd., Ghandhara DF (Pvt.) Ltd., Janana De Malucho Textile Mills Ltd., Rahman Cotton Mills Ltd., Bannu Woollen Mills Ltd., Educational Services (Pvt.) Ltd., BPS (Pvt.) Ltd.


Ownership
Ownership Structure

Per the pattern of shareholding as at December 31, 2025, Bibojee Services (Pvt.) Ltd. held 85.96%, Directors/CEO and their families held 1.54%, Executives held 0.01%, Insurance Companies/NIT-ICP/Banks & DFIs held a nominal ~0.07% combined, and the General Public (local) held 12.00%.


Stability

Ownership remains stable, funnelled through the Group, with gradual induction of the next generation into Group businesses further enhancing this stability.


Business Acumen

The sponsoring family entered business in the 1960s and has since built a diversified group spanning textile, automobile, tyre & rubber, construction, and insurance.


Financial Strength

The Group's diversified investments across automobile, textile, tyre & rubber, insurance, and construction sectors continue to support the Company's financial stability and capacity for capital support if needed.


Governance
Board Structure

The Board comprises seven members: four Non-Executive Directors, two Independent Directors, and one Executive Director (five male, two female). Female representation is via Dr. Shahin Kuli Khan Khattak (Executive Director/CEO) and Mrs. Shahnaz Sajjad Ahmed (Non-Executive Director). Five Board meetings were held during FY25; attendance ranged between 2 and 5 per director. All seven retiring directors (including both Independent Directors) are re-elected for a further three-year term commencing May 25, 2026, at the 66th AGM scheduled for April 27, 2026.


Members’ Profile

Lt. Gen. (Retd.) Ali Kuli Khan Khattak serves as Chairman, with two decades of Board experience and positions on other Group company boards. Dr. Shahin Kuli Khan Khattak has served as CEO since November 2023, bringing over four decades of experience spanning education, board memberships, lecturing, editorial work and authorship in Islamic studies. Mr. Ahmad Kuli Khan Khattak serves as a Non-Executive Director with almost three decades of experience.


Board Effectiveness

The Board operates through three Board-level committees , Audit (4 meetings in FY2025), Ethics, Human Resource & Remuneration (1 meeting), and Investment (2 meetings), and three Management committees, Underwriting, Re-insurance & Co-insurance (2 meetings), Claims Settlement (2 meetings), and Risk Management & Compliance (2 meetings). Five of seven directors have completed Directors' Training Program (DTP) certification; the remaining two meet the exemption criteria.


Transparency

External auditors M/s. Shinewing Hameed Chaudhri & Co., Chartered Accountants, expressed an unqualified opinion on the CY25 financial statements (dated April 01, 2026). The firm is QCR-rated and falls in category 'B' of the SBP auditor panel; the Board has recommended their re-appointment for FY2026.


Management
Organizational Structure

The Company's operations are managed through department heads reporting to the Principal Officer, who reports to the Board. The heads of Internal Audit, Investment and Ethics, and Human Resource & Remuneration functions report to their respective Board Committees and to the CEO administratively.


Management Team

Organisational structure, MIS, claim management, and investment management function remain unchanged from the prior review: department heads report to the Principal Officer (Mr. Amir Raza), who reports to the Board; the CFO is Mr. Amir Nazar and the Company Secretary is Mr. Liaqat Ali Shaukat. The Company uses an integrated ERP/SQL-based system with Crystal Reports for real-time performance reporting. Claims are centrally processed and independently surveyed before payment; the Investment Committee operates under a structured Investment Policy Statement; and risk assessment begins at branch/head-office level using SECP-panel licensed surveyors.


Effectiveness

The management is supported by three management Committees: Underwriting, Re-insurance & Co-insurance, Claims Settlement, and Risk Management & Compliance. All the management committees meet on a quarterly basis. The minutes of these meetings are adequately maintained.


MIS

The Company utilizes an integrated ERP solution with a SQL-based database and Crystal Reports II for real-time business performance reporting and analysis by period, agent, branch, and segments, supporting the risk management department's grading system.


Claim Management System

Claim processing is centralized, with each claim verified by a surveyor before being reported to the head office. The survey report undergoes scrutiny by the Claims and Internal Audit Department. Once cleared by internal audit, payment is issued to the claimant.


Investment Management Function

The Investment Committee oversees the investment function with a structured Investment Policy Statement (IPS) that provides primary guidelines and execution structure to the investment process.


Risk Management framework

Risk assessment begins at the branch level under the supervision of the respective principal and head office. Licensed surveyors from the SECP panel conduct onsite surveys, assessing all potential risks to the insured and advising clients on necessary precautions for safety.


Business Risk
Industry Dynamics

Business Risk: Pakistan's General Insurance Sector continues to exhibit steady premium growth, underpinned by improving economic activity, higher vehicle sales, expanding commercial exposures, and increasing adoption of Shariah-compliant insurance solutions. During CY25, the Sector's Gross Premium Written (GPW) grew by ~11.5% YoY to PKR ~245.2bln, while Net Premium Written increased by ~17.5%, reflecting stronger business retention. However, underwriting profitability remained under pressure as elevated claims and higher acquisition and operating expenses pushed the Sector's combined ratio marginally above 100%, increasing reliance on investment income as the primary earnings stabilizer. Regulatory initiatives, including the phased implementation of IFRS 17, the Risk-Based Capital (RBC) framework, and mandatory Motor Third-Party Liability insurance, are expected to enhance market depth, transparency, and insurance penetration over the medium term. Meanwhile, continued expansion of digital distribution channels and the growing General Takaful segment are likely to support sustainable premium growth despite a still-low non-life insurance penetration of approximately ~0.2% of GDP.


Relative Position

Universal Inurance holds a market share of less than ~1% as at CY25, and is classified as a small general insurance company.


Revenue

CY25 Gross Premium Written (GPW) rose ~143% to PKR 56mln (CY24: PKR 23mln), driven by the Board's decision to begin underwriting captive business directly from July 01, 2025, concentrated on Motor (~68% of GPW), Marine & Transport (~14%), Fire & Property Damage (~13%), and Others (~5%). 3MCY26 (unaudited) GPW was PKR 9mln versus PKR 3mln in 3MCY25, and net insurance premium for 3MCY26 was PKR 14.987mln (3MCY25: PKR 4.850mln), indicating the captive-business strategy is sustaining momentum into FY2026 — though management expenses (PKR 21.46mln in 3MCY26) continue to outpace net premium, keeping the quarter's underwriting result negative.


Profitability

CY25 underwriting loss narrowed ~74% to PKR 17mln (CY24: loss of PKR 65mln). Combined with a recovery in investment performance and higher other income, the Company returned to profitability with net profit of PKR 40mln (CY24: net loss of PKR 5mln); EPS improved to Rs. 0.80 (CY24: Rs. (0.10)). 3MCY26 recorded a net loss of PKR 5.9mln, narrower than the PKR 7.1mln net loss in 3MCY25, consistent with the modest but improving underwriting activity typical of Q1.


Investment Performance

CY25 investment portfolio grew ~19% to PKR 572mln (CY24: PKR 480mln), driven by higher holdings in mutual funds and Pakistan Investment Bonds (PIBs), following disposal of quoted associate investments (Bannu Woollen Mills Ltd. and Ghandhara Industries Ltd.) during the year. Investment income was PKR 26.9mln in CY25 versus a loss of PKR 22.1mln in CY24 (the audited statement of profit or loss shows a CY24 investment loss of PKR 22.084mln, not PKR 11mln as in the earlier summary). As at 3MCY26, the investment portfolio stood at PKR 579mln, with 3MCY26 investment income of PKR 3.061mln (3MCY25: PKR 1.694mln).


Sustainability

Management remains focused on expanding the underwriting portfolio through greater market penetration and leveraging captive business opportunities to enhance premium generation. Sustained growth in business volumes, coupled with disciplined underwriting and consistent profitability, will remain important in strengthening the Company's franchise and earnings profile. Furthermore, continued capital accumulation to meet the SECP's enhanced minimum capital requirement of PKR 2bln by 2030 will remain a key rating consideration. The Company plans to have capital boosted through rights issue and raise the paid up capital to PKR 1000mln by end of CY26. Alongside, the Company is strategically moving towwards retail business to enhance premium base.


Financial Risk
Claim Efficiency

Gross outstanding claims (including IBNR) declined to PKR 74.6mln at CY25-end (CY24: PKR 96.9mln). Net insurance claims expense showed a net recovery of PKR 16.5mln in CY25 versus an expense of PKR 4.5mln in CY24, aided by favourable reserve movements and reinsurance recoveries. As at 3MCY26, outstanding claims (including IBNR) rose modestly to PKR 76.1mln, broadly stable versus year-end.


Re-Insurance

Reinsurance arrangements combine surplus, quota share, and excess-of-loss (XoL) treaties. The reinsurance panel includes PakRe (rated AA by VIS) and Asian Insurance (rated B+ by AM Best); the latter's relatively lower rating warrants continued monitoring for counterparty risk.


Cashflows & Coverages

Liquidity remains strong: the liquidity ratio (Liquid Assets / Outstanding Claims including IBNR) stood at 7.0x at both December 31, 2025 and March 31, 2026 (3MCY25: 4.4x–4.5x), reflecting a comfortable buffer to meet outstanding insurance liabilities. Liquid investments/equity stood at ~72–73% across the latest two reporting periods.


Capital Adequacy

Equity strengthened to PKR 727.2mln at CY25-end (CY24: PKR 668.9mln) on the back of the return to profitability and a PKR 17.8mln fair value gain on available-for-sale investments. As at March 31, 2026 (unaudited), equity stood at PKR 730.4mln.
 
 

Jul-26

www.pacra.com

The Universal Insurance Company Limited


Financial Summary

Logo

(PKR mln)


 Mar-26
3M		 Dec-25
12M		 Dec-24
12M		 Dec-23
12M
A. BALANCE SHEET
1. Investments 579 572 480 516
2. Insurance Related Assets 107 110 99 101
3. Other Assets 48 53 123 95
4. Fixed Assets 171 173 150 147
5. Window Takaful Operations 0 0 0 0
Total Assets 905 908 851 859
1. Underwriting Provisions 15 22 13 10
2. Insurance Related Liabilities 153 151 163 167
3. Other Liabilities 7 7 6 14
4. Borrowings 0 0 0 0
5. Window Takaful Operations 0 0 0 0
Total Liabilities 175 181 183 191
Equity/Fund 730 727 668 668
B. INCOME STATEMENTS
CONSOLIDATED INCOME STATEMENT
1. Gross Premium Written/Gross Contribution Written 9 56 23 33
2. Net Insurance Premium/Net Takaful Contribution 15 41 20 45
3. Underwriting Expenses (24) (57) (85) (121)
Underwriting Results (9) (17) (65) (76)
4. Investment Income 3 28 (11) 7
5. Other Income / (Expense) (0) 33 66 20
Profit Before Tax (5) 45 (10) (49)
6. Taxes (0) (4) 5 (106)
Profit After Tax (6) 40 (5) (155)
PARTICIPANTS' TAKAFUL FUND - PTF
1. Gross Contribution Written 0 0 0 0
2. Net Takaful Contribution 0 0 0 0
3. Net Takaful Claims 0 0 0 0
4. Direct Expenses Including Re-Takaful Rebate Earned 0 0 0 0
Surplus Before Investment & Other Income/(Expense) 0 0 0 0
5. Investment Income 0 0 0 0
6. Other Income/(Expense) 0 0 0 0
Surplus for the Period 0 0 0 0
OPERATOR'S TAKAFUL FUND - OTF
1. Wakala Fee Income 0 0 0 0
2. Management, Commission & Other Acquisition Costs 0 0 0 0
Underwriting Income/(Loss) 0 0 0 0
3. Investment Income 0 0 0 0
4. Other Income/(Expense) 0 0 0 0
Profit Before tax 0 0 0 0
5. Taxes 0 0 0 0
Profit After tax 0 0 0 0
C. RATIO ANALYSIS
1. Profitability
Loss Ratio - Net Insurance & Takaful Claims / Net Insurance Premium or Takaful Contribution 14.2% -48.7% 33.7% 53.5%
Combined Ratio (Loss Ratio + Expense Ratio) 157.7% 140.9% 423.4% 267.6%
2. Investment Performance
Investment Yield 2.4% 5.4% -2.2% 1.3%
3. Liquidity
(Liquid Assets - Borrowings) / Outstanding Claims Including IBNR 7.0 7.0 4.5 2.0
4. Capital Adequacy
Liquid Investments / Equity (Funds) 72.7% 72.0% 64.7% 70.4%

Jul-26

www.pacra.com

The Universal Insurance Company Limited


Rating Scale

Logo

Jul-26

www.pacra.com

The Universal Insurance Company Limited


regulatory disclosure

Logo
  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
  2. Restrictions
    1. No director, officer, or employee of PACRA communicates the information acquired by him for use for rating purposes to any other person, except where required under law to do so. (Chapter III; 10-(5))
    2. PACRA does not disclose or discuss with outside parties or make improper use of the non-public information which has come to its knowledge during a business relationship with the customer. (Chapter III; 10-7-(d))
    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
    1. PACRA fulfills its obligations in a fair, efficient, transparent, and ethical manner and renders high standards of services in performing its functions and obligations. (Chapter III; 11-A-(a))
    2. PACRA uses due care in the preparation of this Rating Report. Our information has been obtained from sources we consider to be reliable, but its accuracy or completeness is not guaranteed. PACRA does not, in every instance, independently verify or validate information received in the rating process or in preparing this Rating Report. (Clause 11-(A)(p))
    3. PACRA prohibits its employees and analysts from soliciting money, gifts, or favors from anyone with whom PACRA conducts business. (Chapter III; 11-A-(q))
    4. PACRA ensures before the commencement of the rating process that an analyst or employee has not had a recent employment or other significant business or personal relationship with the rated entity that may cause or may be perceived as causing a conflict of interest. (Chapter III; 11-A-(r))
    5. PACRA maintains the principle of integrity in seeking rating business. (Chapter III; 11-A-(u))
    6. PACRA promptly investigates in the event of misconduct or a breach of the policies, procedures, and controls, and takes appropriate steps to rectify any weaknesses to prevent any recurrence, along with suitable punitive action against the responsible employee(s). (Chapter III; 11-B-(m))
  4. Independence & Conflict of Interest
    1. PACRA receives compensation from the entity being rated or any third party for the rating services it offers. The receipt of this compensation has no influence on PACRA’s opinions or other analytical processes. In all instances, PACRA is committed to preserving the objectivity, integrity, and independence of its ratings. Our relationship is governed by two distinct mandates: i) rating mandate - signed with the entity being rated or issuer of the debt instrument, and ii) fee mandate - signed with the payer, which can be different from the entity.
    2. PACRA does not provide consultancy/advisory services or other services to any of its customers or their associated companies and associated undertakings that are being rated or have been rated by it during the preceding three years, unless it has an adequate mechanism in place ensuring that the provision of such services does not lead to a conflict of interest situation with its rating activities. (Chapter III; 12-2-(d))
    3. PACRA discloses that no shareholder directly or indirectly holding 10% or more of the share capital of PACRA also holds directly or indirectly 10% or more of the share capital of the entity which is subject to rating or the entity which issued the instrument subject to rating by PACRA. (Chapter III; 12-2-(f))
    4. PACRA ensures that the rating assigned to an entity or instrument is not affected by the existence of a business relationship between PACRA and the entity or any other party, or the non-existence of such a relationship. (Chapter III; 12-2-(i))
    5. PACRA ensures that the analysts or any of their family members shall not buy, sell, or engage in any transaction in any security which falls in the analyst’s area of primary analytical responsibility. This clause, however, does not apply to investments in securities through collective investment schemes. (Chapter III; 12-2-(l))
    6. PACRA has established policies and procedures governing investments and trading in securities by its employees and for monitoring the same to prevent insider trading, market manipulation, or any other market abuse. (Chapter III; 11-B-(g))
  5. Monitoring and Review
    1. PACRA monitors all the outstanding ratings continuously, and any potential change therein due to any event associated with the issuer, the security arrangement, the industry, etc., is disseminated to the market immediately and in an effective manner after appropriate consultation with the entity/issuer. (Chapter III; 17-(a))
    2. PACRA reviews all the outstanding ratings periodically on an annual basis. Provided that public dissemination of annual review and in an instance of change in rating will be made. (Chapter III; 17-(b))
    3. PACRA initiates an immediate review of the outstanding rating upon becoming aware of any information that may reasonably be expected to result in downgrading of the rating. (Chapter III; 17-(c))
    4. PACRA engages with the issuer and the debt securities trustee to remain updated on all information pertaining to the rating of the entity/instrument. (Chapter III; 17-(d))
  6. Probability of Default
    1. PACRA’s Rating Scale reflects the expectation of credit risk. The highest rating has the lowest relative likelihood of default (i.e., probability). PACRA’s transition studies capture the historical performance behavior of a specific rating notch. Transition behavior of the assigned rating can be obtained from PACRA’s Transition Study available at our website. (www.pacra.com) However, the actual transition of rating may not follow the pattern observed in the past. (Chapter III; 14-3(f)(vii))
  7. Proprietary Information
    1. All information contained herein is considered proprietary by PACRA. Hence, none of the information in this document can be copied or otherwise reproduced, stored, or disseminated in whole or in part in any form or by any means whatsoever by any person without PACRA’s prior written consent.

Jul-26

www.pacra.com