PACRA maintains ‘AA’- IFS rating to The United Insurance

September 27, 2019: Pakistan Credit Rating Agency (PACRA) has assigned IFS rating of ‘AA’ to The United Insurance Company of Pakistan Limited. Meanwhile the outlook forecasted on this rating is ‘stable’.

As per an official press release by the agency on this occasion, the rating reflects sustainability of the company's established position in the industry. The diversity reflects in the fact that all segments contribute to business and misc. segment consists of the different business line. This has added to the strength of the company over the year.

The company has strong profitability from underwriting operations, which is also a consideration. The company has a strong reinsurance panel led by Swiss Re (rated AA- by S&P), all other reinsurers are in the A category. The reinsurance coverage provides strength to risk absorption.

The company has experienced a significant turnaround in one of its associates - Apna Bank. After booking losses over the last two years, the bank has booked a profit at end CY18 and this momentum was carried through 6MCY19. The CAR of the bank has improved, though it is less than the regulatory benchmark for which management has to plan to recoup.

Furthermore, the liquidity of the company without considering APNA BANK investment is lower but taking into account the performance of APNA Bank they can drive comfort from the total investment book. The management also plans to generate liquidity through divestment of some stake from its investment book. The management is committed to achieving higher benchmarks in transparency and control environment as the detailed system review is underway.

The ratings are dependent upon the envisaged plan of sustaining its relative positioning and its control environment. Continued generation of internal capital and enhancement of liquidity are considered essential. Meanwhile, all governance standards must be upheld.