PACRA maintain IFS Rating of Dawood Family Takaful Limited

Pakistan's Life Insurance market is dominated by the public sector (~66.6% share as of Dec-23), while the private sector holds only ~33.4%. The sector sector players have shifted their focus from first-year persistency to second-year, prioritizing Gross Premium Written (GPW) growth. During CY23, overall GPW showed a YoY growth of ~7.7%. Out of the total, ~46.6% of the GPW pertains to renewals, followed by group life without cash value (~37.2%). Net Premium also showed a YoY increase of ~7.4%. As policy maturities and surrenders have largely trickled in, net claims grew by ~31%. To adapt, the industry holds a substantial investment book (CY23: PKR 2,021bln, CY22: PKR 1,747bln) stabilizing the overall outlook.
The assigned rating incorporates Dawood Family Takaful Limited’s ('Dawood Family Takaful' or 'the Company') substantial capacity to meet policyholder and contractual obligations along with its ability to enhance takaful volumes. Substantial business acumen and an experienced management team supports the rating. The Company has expanding its reach through solidifying footprints in Punjab, KPK and Karachi. Moreover, sound IT infrastructure provides support to the operational efficacy of the Company. Dawood Family Takaful reaps benefits from its brand image impetus in building retail penetration. The Company's GPW has posted a dip (CY23: PKR 1,930mln, CY22: PKR 2,070mln) due to operational challenges. Despite low underwriting results, the Company managed its combined ratio well. Substantial support from the investment income benefits the Company's bottom-line. Dawood Family Takaful holds an adequate risk absorption capacity with substantial investments in risk-free government securities. The financial risk remains intact supported by adequate liquidity and risk appetite.
The rating is dependent on improving the competitive positioning of the Company. Moroever, improvement in core and operational profitability remains imperative. Solvency profile as indicated through reserves, must remain adequate, at all times.

About the Entity
Dawood Family Takaful Limited ('Dawood Family Takaful' or 'the Company') is a public unlisted Shariah-compliant company, incorporated in May-07. The Company started its takaful operations in May-08. Dawood Family Takaful operates majorly in takaful business, offering both individual and group family takaful schemes.
The Company is a subsidiary of First Dawood Group of Companies with ~36.35% shareholding. Rest of the shareholding resides between financial institutions, directors and foreign companies. The BoD is chaired by Mr. Ayaz Dawood. While, Mr. Ghazanfar-Ul-Islam head the company as the CEO. He is assisted by an experienced team of professionals.