Press Release

JCR-VIS Revises Rating of Pak-Kuwait Takaful Company Limited

Karachi, January 20, 2015: JCR-VIS Credit Rating Company Limited has revised the financial strength rating of Pak-Kuwait Takaful Company Limited (PKTCL) from ‘A-’ (Single A Minus) to ‘BBB’ (Triple B). The previous rating action was announced on December 6, 2013.

Gross contributions of Rs. 708.9m were underwritten by PKTCL during 9M14 vis-à-vis targeted contribution base of around Rs. 970m for FY14; the business target was revised downwards from Rs. 1.2b. Given the persistent losses from underwriting operations, the Participants Takaful Fund continues to remain significantly in deficit.

PKTCL is owned by prominent financial institutions from Kuwait, UAE and Pakistan, which have demonstrated financial support with equity injection of Rs. 50m recently; this has brought down leverage indicators though operating leverage continues to be higher than benchmarks stipulated for the assigned rating. Liquidity profile of the company has weakened on a timeline basis. This was mainly on account of increasing level of insurance debt, which is on the higher side in relation to most peers; management attributes this to the change in business mix. The rising trend in insurance debt needs to be arrested to ease the pressure on cash flows and overall solvency position of the company.

A business review by a team from key shareholder raised certain matters which are now being explored further to identify gaps in the company’s governance framework. The rating has been placed under ‘Rating Watch - Developing’ Status. Rating will be reviewed as and when further developments take place in this regard, including the extent of support that may be forthcoming from the sponsors. JCR-VIS believes that a new strategy would emerge following the completion of this exercise.

For further information on this rating announcement, please contact Mr. Abdur Rahim, ACII (Ext: 508) or Ms. Sobia Maqbool, CFA (Ext: 604) at 92-21-35311861-70 or fax to 92-21-35311873.


Jamal Abbas Zaidi
Deputy CEO

Applicable Rating Criteria: General Takaful Rating (Jan 2009)

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 January 20, 2015 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.