Lahore: The Pakistan Credit Rating Agency (PACRA) has maintained its 'A' insurer financial strength (IFS) rating for The Universal Insurance Company Limited, citing a stable outlook but placing the company under a "Rating Watch" due to challenges in its operational strategies and market performance.

According to The Pakistan Credit Rating Agency Limited, the maintained rating reflects the company's strong ties with the Bibojee Group, which provides essential support including capital injections and access to captive business. Despite these advantages, Universal Insurance heavily relies on group business, with approximately 72% of its gross premium written (GPW) coming from the motor segment. This reliance has curbed the company's ability to expand into broader market businesses, adversely affecting its revenue and market share.

The company's underwriting performance has consistently shown losses, raising concerns about its financial sustainability. Although the investment book, valued at PKR 516 million as of calendar year 2023, offers some support with an income of PKR 7 million, it remains too small to be effective for the core business operations. The company meets the minimum capital adequacy requirements, with a reported total equity of PKR 668 million. However, this equity base has diminished due to persistent losses, with the ongoing support from sponsors through capital injections providing some relief.

Looking ahead, Universal Insurance plans to initiate non-captive underwriting business operations pending board approval, a move that is crucial for its strategy overhaul. PACRA emphasizes the necessity for a substantial revamp in the company's approach to managing business and financial risks to sustain its industry position.