Press Release

JCR-VIS Reaffirms Financial Strength Rating of Takaful Pakistan Limited at BBB+

Karachi, December 16, 2013: JCR-VIS Credit Rating Company Limited has reaffirmed the Financial Strength Rating of Takaful Pakistan Limited (TPL) at ‘BBB+’ (Triple B Plus).

The assigned rating incorporates strong benefits performance in motor business which is TPL’s core line of business. Rating also reflects adequate retakaful arrangements for key segments, low level of insurance debt and conservative investment profile. Rating is constrained by persistent trend in underwriting losses albeit having declined over time, uncertain liquidity profile, modest risk adjusted capitalization level and absence of re-takaful cover for terrorism and health business.

Gross contributions recorded growth of 28% in FY12. Growth in contributions was manifested in motor and health segments which account for over two-thirds of the total business volumes. Apart from focus on developing new products, TPL’s future business development strategy entails enhancing existing infrastructure by way of addition of new branches and hiring additional front office staff for achieving targeted business volumes. The company is targeting business volume of Rs. 1 billion by 2018. Although, overall benefits performance has depicted stability; further increase in business volumes is required to absorb the company’s expense base and bring about improvement in results from underwriting operations.

Net equity stood at Rs. 138m at end-1H13. Given that internal capital generation has remained limited, leverage indicators may trend upwards assuming targeted business volumes are achieved. Besides maintaining leverage within prudent limits, equity injection is also warranted to enhance the company’s loss absorption capacity and to achieve compliance with minimum solvency requirement (MSR). The management expects recovery from an investment to enable it to meet MSR. JCR-VIS will track progress in this regard.

Rating continues to be placed under ‘Rating Watch- Developing Status’. Management expects to achieve settlement in a major case in the near to medium term. As and when this happens, the assigned rating will be re-visited accordingly.

For further information on this rating announcement, please contact the undersigned (Ext: 408) or Ms. Sobia Maqbool, CFA (Ext: 604) at 021-35311861-70 or fax to 021-35311873.



Jamal Abbas Zaidi
Deputy CEO

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 2013 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .