Final PR
The Pakistan Credit Rating Agency Limited

Amara Gondal

Applicable Criteria

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

Related Research

  • Sector Study | General Insurance (Nov 16) [View]
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PACRA Maintains IFS Rating of The Universal Insurance Company Limited
 Rating Type IFS
 Action Upgrade
 Long Term A-
 Short Term -
 Outlook 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.
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.