Press Release

VIS Credit Rating Reaffirms Entity Ratings of the United Insurance Company of Pakistan Limited

Karachi, July 27, 2023: VIS Credit Rating Company Limited has reaffirmed the Insurer Financial Strength (IFS) rating of United Insurance Company of Pakistan Limited (UICPL) at ‘AA+(IFS)’ (Double A Plus IFS). The rating signifies very strong capacity to meet policy holders and contract obligations. Risk factors are very low, and the impact of any adverse business and economic factors is expected to be very small. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on March 31, 2022.
The rating assigned to UICPL takes into account the sound business profile of the United Group with business interests in insurance, information technology, dairy and vehicle tracking. UICPL being the group’s flagship company is a major player among the leading general insurers and has an established and growing takaful segment of the business. Rating derives comfort from growth in topline and improvement in underwriting performance during the review period despite stressed global and domestic economic environment prevalent. The business risk profile of insurance industry is elevated owing to projected slowdown in the domestic economic activity due to high interest rates, rupee devaluation, heightened inflation levels, destruction caused by floods coupled with expected rate hardening by international reinsures. The rating incorporates slight increase in loss ratios both on gross and net basis on a timeline during the period under review owing to higher incidence of claims reported in all segments barring motor coupled with high retention on net account. However, on the other hand, expense ratio improved slightly in line with rationalization of management expenses and enhancement of operating scale. Subsequently, combined ratio remained unchanged exhibiting profitable underwriting operations.
The rating further incorporates reinsurance arrangements largely with counterparties having sound credit risk profiles with appropriate risk retention on net account to maintain risk appetite of the Company. Assigned rating also accounts for the stability and expertise of the management team in the insurance sector. Moreover, the liquidity profile remained sound as exhibited by liquid assets maintained in relation to net technical reserves. The rating takes note of the planned completion of divestment of illiquid strategic investment in a microfinance bank that was previously a drag on profitability and liquidity indicators. In addition, the investment portfolio continues to support the bottom line; the credit and market risks originating from the same are also manageable. The operating leverage increased on a timeline and is higher than the medium of peer companies; the same needs to curtailed going forward in order to avoid risk accumulation. Moreover, the ageing of claims compares unfavorably to majority of peers and needs to be addressed. The projected improvement in key performance indicators with successful execution of merger with SPI Insurance Company Limited has been in built in the rating. Going forward, the rating remains dependent upon effective management of financial risk profile amid challenging business environment.
For further information on this rating announcement, please contact Ms. Maham Qasim at 042-35723411-13 (Ext. 8010) and/or the undersigned at 021-35311861-64 (Ext. 106) or email at

Muhammad Bilal Aftab

Applicable Rating Criteria: General Insurance (March 2022)

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