The Pakistan Credit Rating Agency Limited
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Waqas Ahmad

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PACRA Maintains IFS Rating of Dawood Family Takaful Limited

Rating Type IFS
(29-Jun-22 )
(31-Mar-22 )
Action Maintain Harmonize
IFS Rating A+ (ifs) A+ (ifs)
Outlook Stable Stable
Rating Watch - -

The assigned rating incorporates Dawood Family Takaful Limited’s (Dawood Family Takaful) strong capacity to meet policyholder and contractual obligations while reflecting its ability to continue enhancing takaful volumes. The Company has achieved 10% YoY growth in new business and 11.6% YoY in overall gross contribution. The Company has grown over the years, achieved a net profitability position and aims to enhance it further through increasing its outreach. The management aims to establish strong footprints in Punjab, KPK and Karachi regions in order to garner increased business. Moreover, a sound IT infrastructure provides support to the operational efficacy of Dawood Family Takaful. The Company reaps benefits from its brand image, impetus in building retail penetration. The rating captures the resilience of the Company over the years and also factors in adequate risk absorption capacity. Liquidity of the Company has improved from the last year as the portfolio of investments is beefed up with government securities. Rating also takes into account the track record and presence of an experienced management team which possesses considerable experience in the takaful business.
Gross Premium Written (GPW) of the Life Insurance industry in Pakistan stood at PKR~95bln during 1QCY22 (1QCY21: PKR~62bln; CY21: PKR~291bln; CY20: PKR~233bln), showing a YoY growth of ~53%. Major growth was observed in Govt. sector. Past year has been very challenging due to the COVID-19 which has caused immense stress on most businesses. CY21 has shown a recovery in business and a positive trend in the growth of the industry, as compared to the corresponding period. Recent hike in the policy rate will be a source of safe return for the Companies on Govt. investments. On the other hand, a massive hike in inflation is also going to affect the surplus income of the general public.
The rating is dependent upon continued improvement in the Company's system share, surplus in takaful fund, and sustained liquidity position. At the same time, upholding strong governance practices are critical.

About the Entity
Dawood Family Takaful Limited is an unlisted Shariah-compliant Life Insurer that came into existence in May 2007 and commenced operations in the beginning of 2009. It operates through a network of 80 branches, with the Head Office in Karachi. Dawood Family Takaful is majorly owned by Dawood Group (FDG) holding 53% stake, followed by the Bank of Khyber (15%), the Gulf Cap (8%) and Habib Metropolitan Bank (5%).
The Company has a six-member board of directors including the CEO. The CEO – Mr. Ghazanfar-ul-Islam, who has been associated with the Company since over a decade. He is accompanied by a team of professionals.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.