The Pakistan Credit Rating Agency Limited
30-Dec-16
Analyst
Ayesha Qasim
ayesha.qasim@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- General Insurance and Takaful Operator | Jun-16
- Rating Modifiers | Outlook and Rating Watch | Jun-16
Related Research
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PACRA Maintains IFS Rating of The Universal Insurance Company Limited
| Rating Type | IFS | |
|
Current (30-Dec-16 ) |
Previous (31-Dec-15 ) |
|
| Action | Maintain | Upgrade |
| IFS Rating | BBB | BBB |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
The rating reflects association of the company with strong sponsors – Bibojee Group. The rating takes into account sustained risk profile of the company. Downsizing, since 2015, boded well in creating space to resolve structural issues and rationalizing of financial position. The liquidity size produces adequate risk absorption capacity to current operations. The GPW is small, restricted to captive business and selected quality no-captive underwriting. Comfort is drawn from company’s strategic investments – backing by Bibojee Group, that has recently experienced significant unrealized gains due to strong fundamentals of underlying entity. The company is now in process of revisiting its business strategy whereby key consideration pertains to expansion beyond captive business. Another key decision being considered is re-allocation of funds to liquid investments.
The rating upgrade is dependent upon enhancement of liquidity position of the company, augmenting its risk absorption capacity. Meanwhile, roll out of a comprehensive business plan is also imperative for rating elevation.
About
the Entity
Universal Insurance Company Limited (UVICL) incorporated in 1958 and is listed on Pakistan Stock Exchange (PSX). Downsized beginning 2015, the company is operating through one branch (Lahore) employing 22 people. Majority ownership of the company is held by Bibojee Group (87%), through holding company “Bibojee Services Private Limited” (BSL). Bibojee group is well established in having various industrial sectors including Textile, Auto, Tyres & Rubber and Engineering.
Ten members BoD constitutes six members from sponsoring family- including the CEO, three are employees of the group – including MD of UVICL, and one independent director lately inducted. The CEO, Mr. Gohar Ayub Khan, replaced in succession to Begum Zeb Gohar Kahn (Late), in Jan-16. Mr. Gohar, a Pakistani politician, businessman and retired army official; is supported by Managing Director – Mr. Amir Raza, who is an experienced insurance professional long associated with the company.