Press Release

VIS Reaffirms IFS Rating of UBL Insurers Limited

Karachi, November 17, 2020: VIS Credit Rating Company Limited (VIS) has reaffirmed the Insurer Financial Strength (IFS) rating of UBL Insurers Limited (UIL) at ‘AA’ (Double A). Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on September 27, 2019.

Reaffirmation of rating continues to draw comfort from UIL’s established market position (as sixth largest player in non-life insurance segment), strong franchise value and sponsor profile (UBL and its ultimate sponsor group). While the company has posted double-digit annual growth for over a half decade, new business generation in the ongoing year has been a challenge given the slowdown in economic activity due to Covid-19 outbreak. Leverage has depicted considerable improvement on timeline basis while liquidity profile is satisfactory and has room for improvement. Rating also take note of reinsurance arrangements largely being with counterparties having sound credit risk profiles while net retention remains lower than peers.

In 2019, business volumes (GPW) grew by ~18% (vis-à-vis ~9% of industry growth) and thus, market share improved to 4.8% (2018: 4.4%). Fire & Property (F&P) and Motor segment continue to remain the key growth drivers while contributing to more than three-fifth of topline. However, GPW witnessed no growth in HY20 and stood at similar level vis-à-vis corresponding period last year.

Underwriting performance depicted a favorable trend in 2019; however, the same has weakened in the ongoing year (in line with the industry trends) primarily due to high claims in health (as testing for covid-19 was covered) and one-off high claim in fire segment. Moreover, as the recent monsoon rains caused flooding and damaged vehicles on roads, motor claims may witness a rise on full year basis in 2020. While given the uptick in claims and underwriting expense, underwriting profit for HY20 was notably lower which is also reflected in combined ratio (HY20: 93.2%; 2019: 81.7%).

Insurance debt has increased significantly on a timeline basis while the same as percentage of gross premiums continues to lag VIS benchmark. This along with underwriting expense ratio and technical reserves to liquid assets not being aligned with peers is a rating constraint.

For further information on this rating announcement, please contact Mr. Muhammad Tabish (Ext: 205) or the undersigned (Ext. 201) at 021-35311861-70 or email at

Javed Callea

Applicable rating criterion: Methodology - General Insurance (September 2016

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2020 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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