Final PR
The Pakistan Credit Rating Agency Limited

Amara Gondal

Shoaib Afzal

Applicable Criteria

  • General Insurance and Takaful Operator (Jun 16) [View]
  • Rating Modifiers | Outlook and Rating Watch (Jun 16) [View]

Related Research

  • Sector Study | Insurance | General (Nov 15) [View]
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PACRA Assigns Positive Outlook to IFS Rating of The United Insurance Company of Pakistan Limited
 Rating Type IFS
 Action Upgrade
 Long Term AA-
 Short Term -
 Outlook Stable
 Rating Watch -

The rating reflects UIC's strong business fundamentals emanating from a sustained growth in GPW, hence enabling UIC to emerge as a fourth largest player in the country; UIC has sustained market share above 5% from the last four quarters. At the same time, underwriting profitability has seen decent uptick - mainly from motor, and miscellaneous insurance. The Company is led by strategic vision of the chairman of United International Group - Mian M. A. Shahid, an insurance veteran. Going forward the company will continue to focus on enhancing its market position. Core to expansion strategy remains branch network and experienced sale team. The growth in business volume is diluting the impact of historically high business acquisition cost. Currently, liquidity profile of the company reflects room for augmentation. Incremental cash float have been deployed in in strategic investment - APNA Microfinance Bank; the sizeable market value of the same provides significant supplement to the liquidity position of the company.

The Positive outlook takes in to account company's strengthening business risk profile. While, group’s expansion strategy may absorb cash, liquid investments must be nourished. The company should benefit from the supplemental income emanating from enhanced investment book. The Company's recently implemented "Claims Tracking system", along with planned intelligence tools, should improve MIS system, hence, claims turnaround time.
About the Entity
UIC, established in 1959, is listed on the Pakistan Stock Exchange. It is operating through an extensive network of more than 100 branches - concentrated in the North region. The company is part of The United International Group (UIG) which controls (91.3%) shareholding in the company. UIG is led by its chairman Mian M. A. Shahid.

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. Two members represent UIG, four members are non-executive and one is independent director. Going forward, two new members will be inducted to replace the existing members. The CEO, Mr. Rahat Sadiq, a qualified chartered insurer from UK has been associated with the company for nearly a decade. He is assisted by 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.