The Pakistan Credit Rating Agency Limited
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Behrooz Fareed

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PACRA Maintains IFS Rating of The Universal Insurance Company Limited

Rating Type IFS
(28-Jul-22 )
(31-Mar-22 )
Action Maintain Harmonize
IFS Rating A (ifs) A (ifs)
Outlook Stable Stable
Rating Watch - -

Rating of The Universal Insurance Company Limited reflects strong parentage of the Company through Bibojee Group. The group has provided multi-faceted support to the Company: (a) Injection of capital in different times of crisis (b) Captive business. Business strategy envisages tapping captive business through co-insurance with an established group, with gradual entry into market business. Currently, the Company is underwriting captive business through a co-insurance agreement with a large sized insurance company. Universal Insurance expects to start direct underwriting business operations in the near future, depending upon strategic direction as decided by the BOD. Company plans to achieve business growth through expansion of branch network and recruitment of business development officers. This is expected to uplift the profitability, which is subdued currently. To realize its strategy, the Company is mulling to hire a team of professionals. Universal Insurance has minimal amount of liabilities and claims on its balance sheet which will provide the Company impetus moving forward.
During CY21, the sector experienced ~7% growth YoY basis rising to PKR~703bln (CY20: PKR~656bln). Equity of the sector grew as well by ~5%. Underwriting grew up by ~75% YoY in CY21 as compared to CY20. During CY21, upsurge in auto sales and health products remained pivotal for growth. Underwriting profitability has been maintained through reduced management expenses while innovative products are being envisaged. However, current political instability and worsening economic condition could adversely impact insurance industry.
The rating is dependent upon sustained improvement in relative position of the company, augmenting its sustainability, as envisaged by the board and the management. Meanwhile, continued improvement in the business and financial profile of the company is also imperative for the rating.

About the Entity
Universal Insurance Company Limited, incorporated in 1958, is listed on Pakistan Stock Exchange(PSX). Majority ownership of the Company is held by Bibojee Group (86%), through holding Company “Bibojee Services Private Limited” (BSL). Bibojee group is a well-established in having its presence in various industrial sectors including Textile, Auto, Tyres & Rubber and Engineering. The Company has Six members Board, constituted of three non-executive, two independent and one executive director. Chairman of the Company Mr. Khalid Kuli Khan studied at Saint Mary's Academy Rawalpindi and Aitchison college Lahore. He graduated from Pakistan Military Academy in 1993 and have an MBA degree. He joined Bannu Woollen Mills as Director Finance. He is also Chief Operating Officer in Gammon Pakistan Limited.. Board is dominated majorly by sponsor family and is supported by Principal Officer – Mr. Amir Raza, who is an experienced insurance professional long associated with the Company.

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.