Press Release

VIS Reaffirms IFS Rating of Pak Qatar Family Takaful Limited
 

Karachi, October 15, 2019: VIS Credit Rating Company Limited has reaffirmed the Insurer Financial Strength Rating of Pak Qatar Family Takaful Limited (PQFTL) at ‘A+’ (Single A Plus). The rating signifies high capacity to meet policyholder and contractual obligations. Risk factors may vary over time due to business/economic conditions. Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on July 18, 2018.

Current rating of PQFTL incorporates the strong sponsor profile and exhibited support to the company on a timeline basis. The rating assigned reflects high capacity to meet policyholder obligations reflected by the company’s adequate capitalization and liquidity profile.

In view of recent general economic slowdown in the country, growth in business volumes for life insurance is expected to remain subdued in the coming years. Functioning as one of the two existing Family Takaful operators in the country, PQFTL witnessed pressure on contribution rates and reported a moderately lower premium base of Rs. 7.8b at end-December 2018 vis-à-vis Rs. 8.3b at the end of the preceding year. Given the prevailing investment environment and life insurance being largely investment linked, surrenders and withdrawals adversely impacted persistency levels. Maintaining high persistency levels and surrender rate within manageable limits will be important for sustainable growth. Business generated through the bancatakaful channel has been the highest contributor to top-line; going forward, rating will remain dependent on maintenance of bancatakaful share in premium income.

Liquidity profile is sound with liquid assets, largely comprising equities and fixed income instruments, providing adequate coverage against the company’s liabilities. Given weakening of stock market on a timeline basis, the company allocation in equities created a drag on its overall return, despite a positive return on its fixed income funds. Increased focus on asset allocation and reinstatement of returns on investments would be amongst the key rating drivers, going forward, along with continuation of healthy profitability metrics.

For further information on this rating announcement, please contact Mr. Atiq Anwar Mahmudi (Ext: 207) or Ms. Muniba Abdullah, CFA (Ext: 215) at 35311861-71 (10 lines) or fax to 35311873.


Javed Callea
Advisor

Applicable Rating Criteria: Life Insurance & Family Takaful (February 2018)
http://vis.com.pk/kc-meth.aspx

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