Press Release

JCR-VIS Reaffirms IFS Rating of UBL Insurers Limited

Karachi, August 20, 2018: JCR-VIS Credit Rating Company Limited (JCR-VIS) has reaffirmed the Insurer Financial Strength (IFS) rating of UBL Insurers Limited (UIL) at ‘AA-’ (Double A Minus). Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on May 29, 2017.

The assigned rating takes note of UIL’s continued growth in business volumes, improved underwriting results and conservative investment profile. The rating also draws strength from the company’s strong sponsor profile and sound reinsurance panel.

Top line of the company grew at 18.3%, outpacing industry growth of 8.1% driven by motor and fire segments while exposure to health was curtailed. Given lower incidence of claims, the company’s underwriting results have continued to improve in 2017 and 1H2018. A similar improvement has been observed in the combined ratio of the company on a timeline basis on account of decrease in underwriting expense ratio. For ongoing year, UIL envisages focus on increasing penetration in rural market, new product development, and emphasis on social media marketing & digital distribution platforms. Going forward, ability to demonstrate a consistent and improving track record in underwriting performance and a strengthening trend in capital on both absolute and risk-adjusted basis will continue to be tracked by JCR-VIS.

Liquidity profile of the company is considered adequate. Insurance debt has increased in absolute terms and remains sizeable in relation to gross premium while ageing profile is considered satisfactory. Given the new regulations related to unpaid premium and ongoing collection efforts, receivables are projected to be reduced. Going forward, strengthening of liquidity indicators in general and operating cash flows in particular, as projected by the management, are considered important from a rating perspective.

The assigned rating remains underpinned by the sponsors’ profile, with shareholding vested with Bestway (Holding) Limited, and United Bank Limited. In 2017, the Abu Dhabi Group completely divested its stake in UIL to Bestway Cement Limited. A key change in senior management was appointment of Mr. Zeeshan Muhammad Raza as acting Chief Executive Officer in place of Mr. Babar Mahmood Mirza who resigned in the outgoing year.

For further information on this rating announcement, please contact the undersigned (Ext: 201) at (021)-35311861-71 or fax to (021)-35311872-3.

Javed Callea

Applicable rating criterion: Methodology - General Insurance (September 2016)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited 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.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.VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.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 2018 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited