Press Release

JCR-VIS Assigns Positive Outlook to UBL Insurers Limited

Karachi, December 10, 2013: JCR-VIS Credit Rating Company Limited has maintained the Insurer Financial Strength rating of UBL Insurers Limited (UIL) at ‘A’ (Single A). Outlook on the assigned rating has been revised from ‘Stable’ to ‘Positive’.

The rating assigned to UIL takes into account the institutional backing of the company, with shareholders comprising one of the largest commercial banks in Pakistan and 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.

Given lower business procurement cost, the company’s underwriting expense ratio compares favorably to peers. High net claims ratio has so far resulted in losses from underwriting operations, though there is a declining trend in same. Reinsurance coverage has been obtained from companies with sound risk profile, with treaty terms providing adequate cover vis-à-vis assumed risks. In 2013, the company acquired special surplus cover in fire and engineering segments to protect its net retention.

If the improving trend in results from underwriting operations persists, the company is likely to recover accumulated losses over the near to medium term. Overall profitability has been consistently positive since 2011 on the back of steady investment income.

UIL has a conservative investment approach with exposure in T-bill, cash funds and other interest bearing assets. Given the rising interest rate scenario, income levels from the portfolio are likely to increase. Liquidity indicators have experienced some weakening in the on-going year, though remaining commensurate with the assigned rating.

Stability has largely been observed at senior management level with the exception of the position of Chief Operating Officer for which an experienced resource has been hired. The management has focused on improvement of internal policy framework. UIL has been using Sidat Hyder’s General Insurance System (GIS) to fulfill its MIS needs.

For further information on this rating announcement, please contact Mr. Abdur Rahim (Ext: 508) or Ms. Sobia Maqbool, CFA (Ext: 604) at 92-21-35311861 or fax to 92-21-35311873.

Jamal Abbas Zaidi
Deputy CEO

Information herein was obtained from sources believed to be accurate and reliable; however, JCR-VIS Credit Rating Company Limited (JCR-VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. JCR-VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report. JCR-VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings. JCR-VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2013 JCR-VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to JCR-VIS.

JCR-VIS Credit Rating Company Limited