PACRA Maintains IFS Rating of Salaam Takaful Limited

In terms of Gross Written Premium (GWP), the general insurance industry has a total size of PKR 166bln in 9MCY23 compared to PKR 113bln in 9MCY22, exhibiting a growth of ~47%. The industry reported a growth of ~266% in underwriting results to PKR 9.9bln in 9MCY22 (9MCY22: PKR 2.7bln). The net income of the industry also experienced an increase of ~170% to PKR 20bln in 9MCY22 (9MCY22: PKR 7.4bln). The industry experienced a period without significant claims, contributing to the overall significant performance reported by the entire sector.
The assigned rating of Salaam Takaful Limited (“Salaam Takaful” or the “Company”), a sole takaful operator, takes into account the support from financially sound and experienced sponsors, along with a robust governance structure. Salaam Takaful has been exhibiting strong and persistent growth. Salaam Takaful's GPW, mainly trickling from Motor and Health segments, reported growth (~37%). Though the growth remains value-driven with limited volumes trickling in, concentration risk seems to have been minimally reduced in the segmental mix owing to a major expansion in the fire segment. The Company's underwriting performance struggled with higher reinsurance premiums and increased claims during the period. Investment income remains visible, attributed to revaluation gain on investment properties, however, it remains less supportive for the bottom line. On the financial risk front, the investment book reflected an increase of ~27%, primarily in Subsidiaries/Associates (Salaam Family Takaful and Salaam Properties) and Investment Properties. Though there is a recent equity injection of ~PKR 500mln, the Company's overall liquidity remains tied till the investments - in life insurance and property business - become cash generators for the Company. Going forward, timely and successful materialization of expansion plans remains imperative for sustaining the financial health of the Company.
The rating is dependent on the management's ability to capitalize on the Group's well-built platform for business expansion. Moreover, successful materialization of envisioned strategies - diversifying the revenue stream and stregthening the investment income - remains imperative. This along with upholding the liquidity profile and enhancement in equity levels are important for the ratings.

About the Entity
Salaam Takaful Limited (“Salaam Takaful” or the “Company”) is an unlisted public limited company incorporated in Jun-06. Key shareholders, include Mr. Salim Habib Godil, Mr. Shahzad Salim Godil, Mr. Rizwan Hussain, and Mr. Salman Hussain, collectively hold an equal stake of ~78.6%. ~21.4% stake is held by House Building Finance Company Limited, Al Baraka Bank Limited, Mal Al Khaleej Investment LLC, and Sitara Chemical Industries.
Mr. Salim Habib Godil serves as the Chairman of the Board; while, Mr. Rizwan Hussain holds the position of CEO of the Company. He is supported by a team of experienced professionals.