Press Release

VIS Reaffirms IFS Rating of Pak Qatar General Takaful Limited

Karachi, November 1, 2019: VIS Credit Rating Company Limited has reaffirmed the Insurer Financial Strength Rating of Pak Qatar General Takaful Limited (PQGTL) at ‘A-’ (Single A Minus). 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 August 27, 2018.

Current rating of PQGTL derives strength from financial profile of its sponsors including Qatar based financial institutions. However, it is constrained by trend in low capitalization levels and high leverage ratios in comparison to peers.

With the current economic downturn, Pakistan’s insurance market continues to face stiff competition in terms of contribution rates and business volumes. During 2018, gross contribution of the company grew at a steady pace similar to industry rate of 10%; growth in the same is expected to remain at similar levels given the prevailing dynamics of the economy. Claims management of the company has remained sound, during the outgoing year, with loss ratios improving on a timeline basis. On account of higher net retention, risk of the company has increased in terms of business booked. Going forward, extent of risk on own account would be an important rating driver.

Equity base of the company has depicted an increasing trend with increase in bottom line profit over the years. However, risk absorption capacity of the company in comparison to net sum assured weakened over the years and may need to be strengthened to be commensurate with current rating. Level of equity would remain a function of business volumes along with alternative sources of revenue generation. Management continues to divert efforts to arrest the growing trend in takaful receivables in order to improve its liquidity position. The rating would remain dependent upon capitalization levels, leverage indicators, insurance debt and net retention levels.

For further information on this rating announcement, please contact the undersigned (Ext: 207) or Ms. Muniba Khan (Ext: 214) at 35311861-70 or fax to 35311872-3.

Jamal Abbas Zaidi

Applicable Rating Criterion: Takaful Companies (June 2019)

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 2019 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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