Muhammad Harris Ghaffar
PACRA Maintains IFS Rating of The United Insurance Company of Pakistan Limited
United Insurance Company is among the large sized players in the insurance industry. The company was able to depict improved topline (approx.7%) amidst the pandemic. The company has a balanced portfolio representing all segment of the insurance industry. Miscellaneous segment dominates the top-line. This is largely comprised of bond business, travel and livestock segment. There was noticeable rise in the re-insurance, led by cessation in miscellaneous and motor segments. This may be of crucial impetus in future, as this will determine the risk appetite and profitability. The investment income remains miniscule as the company employs funds in its associated concern, Apna Bank. The bank, after sailing through turbulent times, has been profitable for the last couple of years, subsequently improving the CAR. The liquidity of the company without considering the investment in the bank is lower however the uptick in profitability provides comfort.
The company has a strong reinsurance panel led by Swiss Re (rated AA- by S&P), nearly all other reinsurers are in the A category. The reinsurance coverage provides strength to risk absorption. The management is committed to achieving higher benchmarks in transparency and control environment as the system review is underway. The sponsors intend to merge one of UIG’s group company, SPI Insurance with and into UIC. Approval from BOD has been received; targeted timeline for completion is end of year.
The ratings are dependent upon the envisaged plan of sustaining its relative positioning and its control environment. Continued generation of internal capital and enhancement of liquidity is considered essential. Meanwhile, all governance standards must be upheld.
UIC, established in 1959, is listed on the Pakistan Stock Exchange. It is operating through an extensive network more than 110 branches concentrated in the North region of Pakistan. The company is part of The United International Group (UIG) which controls 85.79% shareholding in the company. The Company is led by the strategic vision of the chairman of United International Group Mian M. A. Shahid, an insurance veteran. UIG has sizeable stake in microfinance banking, through Apna Microfinance Bank, and insurance industry, through UIC and SPI Insurance. The group's presence in insurance is being augmented through takaful operations in both insurance companies. Other ventures include tracking business, farming, and software.
The overall control of the company vests in seven-member BoD. Three members represent UIG, three members are non-executive including chairman and the two independent directors. Mr. Javaid Sadiq is the Chairman of the Board and possesses over three decades of experience.