JCR-VIS reaffirms Insurer Financial Strength rating of United Bank Limited Insurers Limited

Karachi, December 23, 2015 (PPI-OT): JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the Insurer Financial Strength (IFS) rating of UBL Insurers Limited (UIL) at ‘A+’ (Single A Plus). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on November 13, 2014.

The rating derives strength from the institutional backing of the company, with shareholders comprising one of the largest commercial banks in Pakistan as its major sponsors. In addition to financial support from sponsors, the company also has business support from United Bank Limited (UBL).

As the company continues to enhance its presence in the market, proportion of business from related parties has declined over time. The assigned rating also reflects adequate liquidity profile and improved claims performance of the company. Moreover, leverage indicators of the company remain on the higher side as compared to peers on account of current capitalization levels.

In recent years, growth in business volumes has primarily emanated from fire and motor segments, which is almost entirely passed on to reinsurers. As a result, retention levels have continued to decline and growth in net premium has been much slower than gross premium. Adequate set of treaty arrangements has kept the net account protected. UIL has an adequate reinsurer panel featuring ‘A-’ and above rated reinsurers for both proportional and non-proportional treaties.

UIL posted notable improvement in underwriting results in 9M15, on the back of better net claims performance. Some increase in insurance debt was witnessed in the ongoing year, albeit aging profile of the same is considered satisfactory. The company also plans to launch takaful window operations in the coming year. Its impact on future underwriting results will be tracked by JCR-VIS.

The company’s investment portfolio comprises more than half of exposure in government papers while the remaining is deployed in income funds, debt instruments and listed equities at end-9M15. Since inception, UIL had a conservative stance towards investments with no exposure in the equity market. However, the company took fresh exposure in stock market in 9M15. Ability to generate a steady stream of income and support to the bottom line from investments will continue to be tracked by JCR-VIS.

For more information, contact:
Ms. Sobia Maqbool
CFA
JCR-VIS Credit Rating Company Limited
VIS House, 128/C,
25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: sobia@jcrvis.com.pk

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