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Karachi, November 24, 2014 (PPI-OT): JCR-VIS Credit Rating Company Limited has reaffirmed the Insurer Financial Strength rating (IFS) of The Universal Insurance Company Limited (UICL) at ‘BBB’ (Triple B). Outlook on the rating remains ‘Negative’. The previous rating action was announced on Dec 28, 2012.
UICL has not been able to arrest the declining trend in business volumes. Sponsors injected fresh equity during FY13 of Rs. 70m; however, additional capital was absorbed by the continuing losses from operations. Additional equity injection is required to reinstate the risk profile of the institution.
The management endeavored to curtail administrative expenses through closure/merger of branches and downsizing. However, given that business volumes are not commensurate with the expense base; high expense ratio continues to put a drag on underwriting profitability.
Asset quality warrants improvement and additional provisioning requirements may further increase operating losses. Given the investment portfolio size, support to profitability from investment income also remains minimal. Liquidity profile of the company is weak with considerable stress on operating cash flows. The company experienced some turnover at the senior management positions. Stability in management is considered important for effective implementation of business strategy.
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