The Pakistan Credit Rating Agency Limited
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Waqas Ahmad

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PACRA Maintains IFS Rating of SPI Insurance Company Limited

Rating Type IFS
(19-Apr-22 )
(12-Apr-22 )
Action Maintain Harmonize
IFS Rating A+ (ifs) A+ (ifs)
Outlook Stable Stable
Rating Watch Yes Yes

The rating reflects the stable business profile of the Company. The organization takes benefit from synergistic approach at group level – United International Group (UIG) - and replicate the group's established practices. The Company is actively engaged in co-insurance both at group level and independently. The convergence of group business is expected to be streamlined in the form of a single company; sponsors are in the process of merging SPI Insurance into “The Unite Insurance Company Limited of Pakistan” (UIC). The merger is in court proceedings at the Honorable Sindh High Court, which are expected to be accomplished by June-22.
In the recent period the growth has been muted due to multiple factors especially due to merger of SPI Insurance with group company, United Insurance. Almost all business is being directed towards group company UIC, with which SPI Insurance will eventually merge. The Company witnessed decreased turnover as at Dec-21. The contribution from alternative income stream, investment book, have reduced; needs to improve. The company booked a revaluation gain on its investment in Apna Micro Finance Bank whereas the liquidity is adequate considering the claims outstanding. However, the receivables are sizable in quantum, management needs to pay attention. The experienced board members provide comfort to the corporate governance structure.
The general insurance industry witnessed a growth of ~19% on YoY basis as of Sep-21. The recent pandemic affected the volumes, which led to a contraction in the growth. However, volumes have picked up post-June 2020 amidst increase in economic activities throughout the country. The volumes need to sustain, indeed, improve in tandem with the longer historical trend.
The rating watch captures the challenges with regards to the company’s growth and its intention to build liquidity. The Company’s merger with and into “The United Insurance Company of Pakistan Limited (UIC)”, group entity, is expected to finalized in near future. The IFS rating of the Company will be withdrawn once entity ceases to exist.

About the Entity
SPI Insurance Company Limited (SPI), an unquoted public limited company, was established in 2005. The company is majority-owned by UIG (70%), followed by Silkbank (23%) and Saudi Pak Leasing (7%). The overall control of the company vests in a BoD comprising seven members; five members represent UIG, whereas two members represent Silkbank. UIG is a diversified group having interests in insurance, tracking business, IT, agriculture, insurance brokerage and microfinance-banking.
Mr. Saleem Sheikh, the CEO of the Company is a banking professional with over 40 years of banking experience, as well as management expertise. He is assisted by a team of experienced professionals.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.