The Pakistan Credit Rating Agency Limited
Press Release


Faiqa Qamar

Applicable Criteria

Related Research

This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains IFS Rating of The Universal Insurance Company Limited

Rating Type IFS
(27-Jul-23 )
(28-Jul-22 )
Action Maintain Maintain
IFS Rating A (ifs) A (ifs)
Outlook Stable Stable
Rating Watch - -

In terms of Gross Premium Written (GPW), the general insurance industry has a total size of ~PKR 41bln during 3MCY23 (3MCY22: ~PKR 34bln), exhibiting a growth of ~21.4%. Similarly, the underwriting performance of the industry also improved and reported at ~PKR 1.5bln during 3MCY23 witnessing an increase of ~25% (3MCY22: ~PKR 1.2bln). Improved underwriting and investment performance contributed to the industry's earnings reported at ~PKR 4.1bln during 3MCY23 (3MCY22: ~PKR 3.4bln). However, current economic conditions remain imperative for the overall performance of insurance industry.
The ratings reflect The Universal Insurance Company Limited ('The Universal Insurance' or 'the Company') strong association with Bibojee Group, that provides multi-faceted support to the Company, that includes: capital injection, if and when required, and room for captive business. Business strategy envisions benefitting from the captive business. Currently, the Company is underwriting captive business through a co-insurance agreement with a large sized insurance company. However, profitability remains subdued as the Company incurred loss in CY22, due to substantial claim booked by the co-insurer. Regardless, the management remains confident on the co-insurance agreement as that allows gradual entry into the market business. Going forward, the Company plans to start the non-captive underwriting business operations, once approved by the Board. This would enable the core business to grow through expansion of branch network and recruitment of business development officers. However, minimal load on the balance sheet - liabilities and/or claims - remains pivotal to materialize the envisioned plan.
The rating is dependent upon sustained improvement in 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 Ltd., incorporated in 1958, is listed on PSX. Majority ownership of the Company is held by Bibojee Group (~86%), through 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 seven members Board, constitutes four Non-Executive, two Independent and one Executive Director and is dominated by the sponsoring family. The Board is chaired by Mr. Lt. Gen (Retd.) Ali Kuli Khan Khattak. The Company is led by Mr. Amir Raza, the Principal Officer. He is aided 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.