The Pakistan Credit Rating Agency Limited
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Muhammad Noor Ul Haq

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PACRA Maintains IFS Rating of The Universal Insurance Company Limited

Rating Type IFS
(10-Aug-21 )
(08-Feb-21 )
Action Maintain Maintain
IFS Rating A- A-
Outlook Stable Stable
Rating Watch - -

The rating of Universal reflects strong parentage of the Company – Bibojee group. The group has provided multi-faceted support to the Company: a) injection of capital from different times of the crisis, b) sustenance in the cleansing period spanning over a couple of years, c) captive business. The business strategy envisages tapping captive business through co-insurance with an established group, with gradual entry into the market business in the pipeline. Currently, the Company is underwriting captive business through a co-insurance agreement with a large sized Company. Universal Insurance expects to start direct underwriting business operations in the near future, depending upon the 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. All head of departments are in place; moving forward the Company is ready to build a team of professionals once the direct underwriting commences. It has minimal amount of liabilities and claims on its balance sheet which will provide the company impetus moving forward. Enlistments with some of the leading banks have been completed as the management envisages improved business volumes moving forward.
In terms of Gross Premium Written (GPW), Pakistan’s general insurance industry had a total size of PKR~108,322mln in CY20, (less than ~1% of its GDP), with a growth of ~3.7% from the previous year (CY19: PKR~104,453mln). The insurance industry in Pakistan is relatively small compared to its peers in the region. The insurance penetration and density remain very modest as compared to other jurisdictions while the insurance sector remains underdeveloped relative to its potential.
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 (87%), 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. Seven members BoD is constituted by five members from sponsoring family and two independent directors. One casual vacancy of chairman BOD was previously vacant due to resignation of director/ chairman Lt. Gen (R) Ali Kuli Khan Khattak. Now, Mr. Raza Kuli Khan Khattak is appointed as chairman BOD with effect from 08 April,2021. 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.