Press Release

JCR-VIS upgrades IFS Rating of Pak Qatar General Takaful Limited to A-

Karachi, June 19, 2013: JCR-VIS Credit Rating Company Limited has upgraded the Insurer Financial Strength (IFS) rating of Pak Qatar General Takaful Limited (PQGTL) to ‘A-’ (Single A Minus) from ‘BBB+’ (Triple B Plus). Outlook on the assigned rating is ‘Stable’.

The assigned rating incorporates the ownership structure of PQGTL, comprising prominent Qatar based financial institutions. Sponsors have demonstrated financial support, with equity injection of Rs. 33.7m by end March 2013 and further Rs. 66.3m committed to be injected in two tranches by end July 2013. This equity injection is in line with earlier commitment of Rs. 100m by sponsors.

While the Participants’ Takaful Fund continues to be in deficit, improvement in results of the Shareholders’ Fund has contributed positively to aggregate capitalization indicators in FY12. Continuity of this trend is important for maintaining leverage indicators at reasonable levels while providing necessary room for growth, as envisaged in PQGTL’s ambitious business plan for FY13 and ahead.

Liquidity profile of the company is considered sound, with insurance debt maintained within manageable limits. Ageing of outstanding claims is also satisfactory. Keeping a conservative approach, investment policy largely entails exposure in government securities.

Losses from underwriting operations have been curtailed on account of reduction in expense ratio, achieved as a result of business growth. Moreover, loss ratio has also trended downwards; management’s focus on curtailing losses in motor business, the largest business segment, has contributed to the decline in loss ratio over time. There is nevertheless further room for improvement in the same. Underwriting in the health segment, which is retained on net account, is emerging as a sizeable proportion of the business mix. Contribution from conventional business segments remains limited. Significant reliance on motor and health business, where underwriting margins may be thin, raises some concern as regards future underwriting performance. There has been a change in re-takaful operators on the company’s panel; moreover, risk retention in fire and property segment has been enhanced. Impact of changing business mix and higher retention on underwriting performance will be closely monitored by JCR-VIS.

For further information on this rating announcement, please contact Mr. Abdur Rahim (Ext: 508) or Ms. Sobia Maqbool, CFA (Ext: 604) at 35311861-70 (10 lines) or fax to 35311873.

Faheem Ahmad
President & CEO

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 2013 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