Press Release

JCR-VIS Assigns Positive Outlook to Pak Qatar Family Takaful Limited

Karachi, May 13, 2014: 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 ‘Stable’ to ‘Positive’.

Given low penetration of life coverage in the country, market dynamics for companies offering life insurance/family takaful products remain favorable. PQFTL is one of the two family takaful operators in Pakistan. The company is sponsored by some of the largest Qatar based financial institutions; the sponsors of PQFTL also have presence in the general takaful segment in Pakistan.

Growth in business volumes of PQFTL has been led by unit-linked individual family products, with the company having been able to capture a larger market share in recent years. A large part of this business is generated through the bancassurance partners. The company’s own sales force is also being strengthened to provide meaningful contribution towards achieving business targets. Persistency rates remained largely unchanged in 2013; these are lower than more established peers in the life insurance sector. Maintaining strong persistency while keeping surrenders within manageable limits will be critical for future business sustainability.

The assigned rating takes into account improvement in underwriting performance of PQFTL. Surplus in the Participant’s Takaful Fund has improved during 2013, with all three business units reporting surplus. There is room for further improvement in overheads associated with business acquisition; the same may rationalize with consistent growth in business volumes. Given the nature of unit-linked policies, asset risk stands transferred to policyholders once cash value exceeds sum risk assured. As a growing company, there are a sizeable number of policies with cash value less than sum risk assured, however crude death rate has remained low, which mitigates the associated risk. Moreover, investments comprise marketable securities which may be readily liquidated to meet policyholders’ claims.

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. In comparison with similar funds of other life insurance companies, returns have remained largely competitive. Exposure to listed equities remains moderate even in the aggressive fund, albeit having increased in 2013.

For further information on this rating announcement, please contact the undersigned (Ext: 508) or Ms. Sobia Maqbool, CFA (Ext: 604) at 021-35311861-70 (10 lines) 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 2014 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .