The Pakistan Credit Rating Agency Limited
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Muhammad Noor Ul Haq

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PACRA Maintains IFS Rating of The United Insurance Company of Pakistan Limited

Rating Type IFS
(19-Apr-23 )
(19-Apr-22 )
Action Maintain Maintain
IFS Rating AA+ (ifs) AA+ (ifs)
Outlook Stable Stable
Rating Watch - -

United Insurance Company (“United Insurance” or “the Company”) is among the prominent players in the insurance industry. It has a strong presence throughout the Company. The Honorable Sindh High Court has approved the “scheme of merger” of M/S SPI Insurance Company Limited (SPI) with and into the United Insurance which would further augment the Takaful business. The management is committed to achieving higher benchmarks in transparency and control environment as the system review is underway. During CY22, the topline of the Company grew by 29.7% (including window takaful operations) as compared to the corresponding period last year. This is majorly supported by takaful business. The revenue from conventional business is highly concentrated to the miscellaneous category (47.3%), which primarily included hospitalization, travel, and bond business, followed by Fire & property damages (17.5%), crop (15.1%), motor(14.1%) and marine(6.0%). However, Company's Takaful business is majorly concentrated to the health segment (57.8%) followed by motor (26.0%), fire & property damages (9.0%) and marine & aviation (7.3%). The Company's underwriting performance exhibited a decline, attributed to a rise in claims incurred during CY22. Hence, an increase in claims amount also impacted the combined ratio, stood at 68.4%, representing an increaase from SPLY at 63.8%. This increase in the combined ratio demonstrates a decrease in the Company's underwriting profitability.
The Company's investment portfolio is majorly concentrated with Government Securities (44.8%). Whereas, United Insurance withdraws all of the investment from Apna Micro Finance Bank. Furthermore, the Company has envisaged a plan of diversifying into real estate and in life insurance business. Moreover, the Company continues to enjoy a sound re-insurance panel that provides extensive risk absorption coverage.
The ratings are dependent upon the envisaged plan of sustaining its relative positioning and its control environment. Continued generation of internal capital, enhancement of liquidity and opening of new venture (The United Life Assurance) in near future is considered essential.

About the Entity
The United Insurance, established in 1959, is listed on the Pakistan Stock Exchange. It is operating through an extensive network of 150 branches concentrated in the northern region of Pakistan. The Company is part of The United International Group (UIG) which controls 89.68% shareholding in the Company. Mr. Muhammad Akram Shahid entered the operational ambit of United Insurance as Chief Executive Officer. The Company is led by the strategic vision of the CEO of United Insurance as well as the Chairman of United International Group Mian M.A. Shahid, an insurance veteran.
The overall control of the Company vests in the seven-member BoD. Mr. Jamil Ahmed Khan, an independent director, has been inducted as the Board Chairman. There are two independent directors including the Chairman, two members executive directors including CEO and the remaining three members are non-executive directors.

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.