Lahore, April 20, 2022 (PPI-OT):The rating reflects the stable business profile of the Company. The organization takes benefit from synergistic approach at group level – United International Group (UIG) – and replicate the group’s established practices. The Company is actively engaged in co-insurance both at group level and independently. The convergence of group business is expected to be streamlined in the form of a single company; sponsors are in the process of merging SPI Insurance into “The Unite Insurance Company Limited of Pakistan” (UIC). The merger is in court proceedings at the Honourable Sindh High Court, which are expected to be accomplished by June-22.

In the recent period the growth has been muted due to multiple factors especially due to merger of SPI Insurance with group company, United Insurance. Almost all business is being directed towards group company UIC, with which SPI Insurance will eventually merge. The Company witnessed decreased turnover as at Dec-21. The contribution from alternative income stream, investment book, have reduced; needs to improve. The company booked a revaluation gain on its investment in Apna Micro Finance Bank whereas the liquidity is adequate considering the claims outstanding. However, the receivables are sizable in quantum, management needs to pay attention. The experienced board members provide comfort to the corporate governance structure.

The general insurance industry witnessed a growth of ~19% on YoY basis as of Sep-21. The recent pandemic affected the volumes, which led to a contraction in the growth. However, volumes have picked up post-June 2020 amidst increase in economic activities throughout the country. The volumes need to sustain, indeed, improve in tandem with the longer historical trend.

The rating watch captures the challenges with regards to the company’s growth and its intention to build liquidity. The Company’s merger with and into “The United Insurance Company of Pakistan Limited (UIC)”, group entity, is expected to finalized in near future. The IFS rating of the Company will be withdrawn once entity ceases to exist.

For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com