Press Release

JCR-VIS Reaffirms Rating of Pak-Kuwait Takaful Company Limited at A-

Karachi, December 28, 2011: JCR-VIS Credit Rating Company Limited has reaffirmed the financial strength rating of Pak-Kuwait Takaful Company Limited (PKTCL) at ‘A-’ (Single A Minus). Outlook on the assigned rating is ‘Stable’.

With broad-based growth in business achieved by the company in 2010 and the on-going year, business mix has improved relative to 2009. Motor continues to lead the business mix; however, its proportion has declined to 55% (2009: 71%) in nine months ended September 2011. Within the motor segment, underwriting has become more selective, translating into overall improvement in net claims ratio of the company for the period. Even with improvement in the net claims ratio, the company reported an underwriting loss for nine month period ending September 2011, on account of increase in expense ratio. Operational loss was more than offset by investment income, translating into overall profit for this period. In view of this, CY11 is expected to be the first profitable year for the company.
Leverage indicators of the company have increased with growth in business volumes outpacing growth in equity base. In absence of external equity injection, leverage may continue to rise, unless arrested by higher pace of internal cash generation. Retakaful arrangements with retakaful operators having sound ratings lend support to loss absorption capacity of the institution. While at present liquidity profile is considered adequate, it has experienced decline on a timeline basis. JCR-VIS will closely track the trend in capitalization and liquidity indicators of the institution.
Sponsors of PKTCL comprise domestic and international financial institutions. Largest shareholder is Etiqa Overseas Investment with associated companies operating in Malaysian takaful market. The company benefits from the technical expertise of its largest shareholder.

For further information on this rating announcement, please contact the undersigned (Ext: 508) or Ms. Sabeen Saleem, CFA (Ext: 510) at 021-35311861-70 or fax to 021-35311873.



Syed Ziauddin Ahmed
Advisor

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 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 December 28, 2011 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.