ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has suspended the guarantee business of United Insurance Company of Pakistan Limited, prohibiting the company from issuing new guarantees or renewing existing ones.
The decision was taken following a show-cause notice served on the company. United Insurance had obtained a stay order from the Lahore High Court on Feb 21 last year. However, on April 10 this year, the court dismissed the petition filed by United Insurance, deeming it without merit.
United Insurance had deliberately refused to encash called guarantees on various pretexts over time, resulting in the accumulation of guarantees amounting to Rs2.2 billion by December 2023. Further complaints totalling Rs822 million regarding the non-encashment of guarantees were received during 2024 and 2025.
Despite being provided multiple opportunities for a hearing, United Insurance failed to demonstrate the required compliance with regulatory standards to continue its guarantee business.
The company also made a materially false statement to the SECP during the proceedings concerning the settlement of one guarantee, amounting to around Rs1bn. The matter regarding the false statement will be addressed separately by the SECP under the relevant provisions of the Ordinance.
To safeguard the interests of policy and guarantee holders and to uphold public trust in the insurance sector, the SECP decided to immediately cease the guarantee business of United Insurance. The company has been prohibited from issuing new guarantees or rolling over existing ones.
Published in Dawn, May 22nd, 2025
