Press Release

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

Karachi, June 23, 2017: 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’. Previous rating action was announced on December 4, 2015.

The ratings continue to be underpinned by its sponsor profile primarily comprising Qatar based financial institutions. With recent equity injection of Rs. 248.7m, sponsor support provides strength to the assessment of overall risk profile of the institution; equity of company was enhanced to Rs. 1.1b at end-March 2017. The rating assigned to Pak Qatar Family Takaful Limited (PQFTL) incorporates its sound capacity to meet policyholder obligations reflected by its adequate capitalization and liquidity profile.

Given the low penetration of life insurance/ family takaful in the domestic market, business volumes of private life insurance companies have witnessed considerable growth since 2010. Gross premium of PQFTL amounted to Rs. 7.5b in 2016 reflecting a market share of more than 9%. In addition to branch network of the institution, Islamic banks and Islamic windows of conventional banks have also facilitated in generation of business.

Growth in premium base largely emanated from premium policies for individuals and group health. Individual policies remain the largest constituent of business mix. While net claims ratio for individuals has remained low; net claims ratios for group policies was on the higher side in 2016 where underwriting policies may need to be reviewed. Nevertheless, management expenses in proportion to gross contribution stood at par with peers.

Exposure of investment portfolio to downside risk is low. On account of the declining interest rate scenario, all funds under management depicted lower returns in 2015. While remaining behind peers, performance of the same picked up pace for the aggressive and balanced funds in 2016.

For further information on this rating announcement, please contact the undersigned (Ext: 201) at (021)-35311861-71 or fax to (021)-35311872-3.

Javed Callea

Applicable Rating Criteria: Life Insurance & Family Takaful Rating (Jan 2009)

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