VIS maintains AA+ rating for United Insurance Company

September 29, 2025 (MLN): VIS Credit Rating Company Limited (VIS) has reaffirmed the Insurer Financial Strength (IFS) rating of AA+ (Double A Plus) for The United Insurance Company of Pakistan Limited (PSX:UNIC).

The outlook on the rating has been revised to Stable.

The assigned rating reflects UNIC’s very strong ability to meet policyholder and contractual obligations, with risk factors considered to be very low, according to VIS.

The impact of any adverse economic or business developments is expected to be minimal.

The company’s profile is supported by its position as the flagship entity of the United International Group (UIG), which has diversified interests in insurance, IT, dairy, and vehicle tracking.

UNIC holds a strong competitive standing in Pakistan’s general insurance sector and continues to grow its takaful operations, which now form a significant share of gross written premium (GWP).

Premium volumes continued to expand in both conventional and takaful segments during CY24, helping UNIC gain market share.

Miscellaneous insurance remains the company’s largest business line, boosting revenue but also exposing the firm to higher underwriting risks due to limited reinsurance in this category compared with fire, marine, and other segments.

The insurer posted stronger underwriting profitability in the review period, supported by improved claims ratios, prudent underwriting, and tighter cost controls.

However, lower recurring investment income weighed on overall performance, leading to a higher operating ratio for CY24.

UNIC’s liquidity position was assessed as sound, with liquid assets comfortably covering technical reserves. Its investment strategy remains conservative, with a significant allocation to government securities, limiting exposure to market fluctuations.

Reinsurance coverage continues to be robust, with treaties placed with well-rated international reinsurers.

During the year, the Securities and Exchange Commission of Pakistan (SECP) directed UNIC under Section 60 of the Insurance Ordinance, 2000, to discontinue its guarantee business.

The company challenged the directive in the Islamabad High Court, which granted a stay order. Subsequently, SECP withdrew its press release on the matter dated May 21, 2025.

Looking ahead, the company’s ratings remain contingent upon effective management of underwriting risks and maintaining profitability.

With regulatory attention focused on the guarantee business under the miscellaneous segment, UNIC is expected to strengthen its risk management practices and internal controls to mitigate potential challenges.

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