Lahore: VIS Credit Rating Company Limited (VIS) has reaffirmed the Insurer Financial Strength (IFS) rating of United Insurance Company of Pakistan Limited (UICPL) at 'AA+ (IFS)', signaling a very strong capacity to meet policyholder and contract obligations. The outlook for this rating remains 'Stable', consistent with the previous evaluation on July 27, 2023.
According to VIS Credit Rating Company Limited, the rating reflects the robust business profile of the United International Group, which includes interests in insurance, information technology, dairy, and vehicle tracking, with UICPL as the flagship entity. The company's leadership in general insurance and its expanding takaful business segment contributed to a positive assessment. Despite economic pressures both globally and domestically, UICPL saw growth in its Gross Written Premium (GWP) during the review period, buoyed by a slight recovery in domestic economic activity and improved conditions such as reduced interest rates, rupee stabilization, and lower inflation.
The evaluation also takes into account a higher than average loss ratio due to increased claims in the motor and crop segments, although effective reinsurance ceding helped maintain a low net loss ratio. Operational efficiencies and scale expansion have slightly improved the expense ratio, resulting in a stable combined ratio that indicates profitable underwriting operations.
The report highlights sound reinsurance arrangements with reliable counterparties and appropriate risk retention strategies that align with UICPL’s risk appetite. The liquidity profile of the company remains strong, supported by a proportionate amount of liquid assets against net technical reserves. The investment portfolio continues to bolster the bottom line, with manageable associated credit and market risks.
VIS notes that future ratings will depend on the company’s ability to manage its financial risk profile in a challenging business environment, address operational leverage issues, and update claims management. The focus on digital technologies aims to enhance customer experience, streamline processes, and expand online insurance offerings.