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The Pakistan Credit Rating Agency Limited
Press Release

Date
28-Aug-20

Analyst
Maryam Ijaz
maryam.ijaz@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains IFS Rating of Takaful Pakistan Limited

Rating Type IFS
Current
(28-Aug-20 )
Previous
(29-Aug-19 )
Action Maintain Maintain
IFS Rating A- A-
Outlook Stable Stable
Rating Watch - -

Takaful Pakistan Limited, a dedicated Takaful company, has demonstrated unprecedented growth since the takeover by new shareholders and the CEO in 2018. Initially a motor-centric company, Takaful Pakistan has expanded its footprints into the health segment. The company has increased focus on its customer service experience through interplay of technology and digital customer interactions which has provided an edge to the company-amidst high competition. The company has diligently worked on innovative ideas by employing latest technologies and it expects that such strategy will create value by improving customer service. The equity position is expected to be enhanced; the company lags its peers in this regard. The business has picked up sizably and consistent rapid growth is quite visible in audited financials. In the foreseeable future, momentum is expected to continue as a result of sustained effort to propel business growth. Reinsurance arrangements have been augmented in line with increased growth of the company.
Prior to COVID-19, the general insurance industry witnessed a growth of 11% YoY. The current pandemic affected the volumes, which led to a contraction in the growth. However, volumes have picked up post-June 2020 amidst increase in economic activities throughout the country. The volumes need to sustain, indeed, improve in tandem with the longer historical trend. The interest rate regime would impact the fixed income stream, but the equity market is improving though requiring a prudent approach.
The rating is dependent on the management's ability to capitalize on the group's well-built platform for business expansion. At the same time, the equity level must improve, and segmental income stream should likewise go up. Liquidity needs to be upheld. Sponsors have resolved to inject capital which will boost risk absorption capacity while supplementing the liquidity; this will ultimately have positive implications on the rating.

About the Entity
Takaful Pakistan Limited (TP) is an unlisted public limited company incorporated in June-06, with its registered head-office in Karachi.
Takaful Pakistan has a seven-member board. Mr. Rizwan Hussain is the CEO of Takaful Pakistan. He brings more than 30+ years of experience as a seasoned Insurance/Takaful industry professional. He has been able to builda a team of qualified professionals in past two years. The leadership and team of experienced professionals have helped the company to maintain healthy profitability along with rapid growth. Along with Mr. Rizwan Hussain and Family, Mr. Salim Godil is also one of the major shareholders, he also owns significant business interests including Toyota Central Motors, one of the largest Toyota auto dealerships in Pakistan. Mr. Rizwan Hussain and Mr. Salim Godil owns around 69% shareholding along with their families. Other shareholders include, Al Baraka Bank Pakistan Limited, House Building Finance Company (Owned by State Bank of Pakistan), Mal Al Khaleej Investment LLC and Sitara Chemical Industries Limited.

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.