JCR-VIS maintains Insurer Financial Strength rating of United Bank Limited Insurers Limited at ‘A’

Karachi, December 10, 2013 (PPI-OT): JCR-VIS Credit Rating Company Limited has maintained the Insurer Financial Strength rating of UBL Insurers Limited (UIL) at ‘A’ (Single A). Outlook on the assigned rating has been revised from ‘Stable’ to ‘Positive’.

The rating assigned to UIL takes into account the institutional backing of the company, with shareholders comprising one of the largest commercial banks in Pakistan and its major sponsors. In addition to financial support from sponsors, the company also has business support from United Bank Limited (UBL). As the company continues to enhance its presence in the market, proportion of business from related parties has declined over time.

Given lower business procurement cost, the company’s underwriting expense ratio compares favourably to peers. High net claims ratio has so far resulted in losses from underwriting operations, though there is a declining trend in same. Reinsurance coverage has been obtained from companies with sound risk profile, with treaty terms providing adequate cover vis-à-vis assumed risks. In 2013, the company acquired special surplus cover in fire and engineering segments to protect its net retention.

If the improving trend in results from underwriting operations persists, the company is likely to recover accumulated losses over the near to medium term. Overall profitability has been consistently positive since 2011 on the back of steady investment income.

UIL has a conservative investment approach with exposure in T-bill, cash funds and other interest bearing assets. Given the rising interest rate scenario, income levels from the portfolio are likely to increase. Liquidity indicators have experienced some weakening in the on-going year, though remaining commensurate with the assigned rating.

Stability has largely been observed at senior management level with the exception of the position of Chief Operating Officer for which an experienced resource has been hired. The management has focused on improvement of internal policy framework. UIL has been using Sidat Hyder’s General Insurance System (GIS) to fulfil its MIS needs.

For more information, contact:
Ms. Sobia Maqbool
CFA
JCR-VIS Credit Rating Company Limited
Tel: at 021-35311861-70
Fax: +9221 35311872-3

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