Press Release

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

Karachi, December 19, 2014: JCR-VIS Credit Rating Company Limited has reaffirmed the Financial Strength Rating of Takaful Pakistan Limited (TPL) at ‘BBB+’ (Triple B Plus). The ‘Rating Watch - Developing’ status’ has been removed and ‘Stable’ Outlook has been assigned on account of settlement of pending litigation case with the regulator. The previous rating action was announced on December 16, 2013.

Capitalization indicators of TPL have benefited to some extent on account of transfer of amount held as collateral reserve, and recorded as liability earlier, to Participants Takaful Fund (PTF). However, overall capitalization indicators still remain constrained. Sponsors are considering equity injection in the on-going year which is expected to improve the risk profile of the institution. As and when this happens, the assigned rating will be re-visited accordingly.

Liquidity profile of the company is considered adequate in view of sizeable liquid cushion (liquid assets in relation to liabilities), positive operating cash flows and manageable level of insurance debt. While re-takaful program for major business lines is considered adequate, risk arising on account of absence of re-takaful cover for health and terrorism business is sizeable.

Business momentum has picked pace in the ongoing year, with contribution base being higher than the preceding year. Although underwriting profitability of the company remained under pressure in 2013, improvement has been witnessed during 1H14 with a decline in underwriting losses on the back of lower benefits ratio in the motor segment. Growth in business volumes along with appropriate pricing of policies is planned to improve underwriting profitability.

Management team of the company is spearheaded by Dr. Arif Hussain who has been associated with the company since October, 2013. There have been a number of changes at senior management level during 2014; these mainly relate to re-designation of a number of internal staff members whilst the long time vacant position of CFO has also been filled. Further strengthening of the Information Technology infrastructure is also being undertaken which is expected to be completed in 2015.

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.



Abdur Rahim, ACII
Advisor

Applicable Rating Criterion: General Takaful Rating (January 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 2014 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .