The Pakistan Credit Rating Agency (PACRA) has upgraded the IFS rating of The United Insurance Company of Pakistan Limited (UIC) to “AA-“(Double A Minus). The rating denotes a very strong capacity to meet policyholder and contract obligations. Risk factors are modest, and the impact of any adverse business and economic factors is expected to be very small.
The rating reflects UIC’s strong risk absorption capacity emanating from a robust liquidity profile that amply supports contingencies towards the policyholders. The company’s business plan predominantly focuses on widespread small sized business volumes through an intensive marketing force. Although this has led to high business acquisition cost on a comparative scale, the benefits are accrued in the form of low loss ratio, engendering superior underwriting performance compared to peers. The rating incorporates improved control environment supplemented by real-time IT platform.
The rating is dependent on management’s ability to successfully execute its business strategy of growth while preserving underwriting profitability. Meanwhile, strengthening of the investment book, enhanced contribution from the investment income and efficiency in acquisition cost with economies of scale are important.
