Karachi, December 04, 2015: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has maintained the Insurer Financial Strength (IFS) rating of Pak Qatar Family Takaful Limited (PQFTL) at ‘A’ (Single A). Outlook on the assigned rating has been revised from ‘Positive’ to ‘Stable’. The previous rating action was announced on May 13, 2014.
The rating assigned to PQFTL incorporates its sound capacity to meet policyholder obligations reflected by its adequate capitalization and liquidity profile. The ratings also take into account PQFTL’s association with Qatar based financial institutions; changes were witnessed in the shareholding structure with Qatar National Bank and Qatar Islamic Bank divesting their shareholding.
Overall gross contribution has depicted healthy growth during FY14 and in the ongoing year. Reliance on Banca channel continues to be high; increasing the size and productivity of the sales force is considered important for diversification of business mix. Management expenses in relation to gross contribution, albeit having declined, continues to be high in comparison to some of the more established players. Rating continues to draw comfort from adequate re-takaful coverage which is arranged through well reputed companies. However, all of the group health business, with greater underwriting risk, continues to fall on the company’s own account.
Underwriting performance of the company has weakened reflected by increasing net claim ratio and higher quantum of surrenders. Persistency rates have also declined; improving persistency while keeping surrenders within manageable limits will be critical for future business sustainability. Overall surplus in PTF after declining during FY14 improved during the ongoing year as individual family reported higher surplus. Group health segment reported losses during FY14 and 1HFY15.
All funds under management have posted lower return in the out-going year in comparison to the preceding year on account of decline in benchmark rates. Management aims to increase exposure to equities in an effort to augment funds return. The scope of risk and research related activities would need to to be strengthened to support such objectives.
For further information on this rating announcement, please contact the undersigned (Ext: 516) or Mr. Javed Callea (Ext: 501) at 021-35311861-3 or fax to 35311872.
Jamal Abbas Zaidi
Applicable Rating Criteria: Life Insurance & Family Takaful Rating Methodology (Jan 2009)
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