PACRA Maintains IFS Rating of The Universal Insurance Company Limited | Assigns ‘Rating Watch’

The ratings for The Universal Insurance Company Limited (‘Universal Insurance' or 'the Company') reflect its association with the Bibojee Group, which provides multifaceted support, including capital injections when needed and access to captive business. The Company relies primarily on underwriting through a co-insurance agreement with a large insurance company, with ~58% of GPW driven by the motor segment. This strategy has limited the Company's ability to capture market business, resulting in a weak topline and market share. The Company's underwriting performance has been under stress, showing consistent losses. The investment book, reported at PKR 480mln as of CY24, remains unable to support the Company, reporting an unrealized loss on the investment of ~PKR 11mln. The investment book's size is relatively small to effectively support core business operations. On the financial risk front, the Company holds a stressed equity base of ~PKR 670mln as of CY24. Going forward, a stringent strategy is required to enhance the Paid up capital as per SECPs requirement of PKR 2bln by the end of 2030. However, Sponsors' commitment of capital injection provides comfort to the rating. Lately, the Company has strategized to expand its size through captive business and market reach. The same has been approved by the Board. The Company's standing remains dependent on the execution of this strategy to manage the business and financial risk, along with sustaining its position in the industry. PACRA assigns a Rating Watch registered by significant dilution of equity along with substantially weak performance. The Company must build itself around a sizeable business, going forward, to recoup the lost market standing.
The rating is dependent upon sustained improvement in the 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 Limited (‘Universal Insurance' or 'the Company'), incorporated in 1958, is listed on PSX. The Bibojee Group holds the majority stake in the Company (~86%), with the remaining shares held by Directors, Executives, and Corporations (~3%), and the General Public (~11%). The Board, chaired by Mr. Lt. Gen (Retd.) Ali Kuli Khan Khattak, is dominated by the sponsoring group. Dr. Shahin Juli Khan Khattak, appointed as CEO in Nov-23, leads the Company with Mr. Amir Raza as the Principal Officer. They are supported by a team of experienced professionals.