PACRA Upgrades IFS Rating of Salaam Takaful Limited

Salaam Takaful Limited (STL or the Company), a dedicated Takaful company, has demonstrated unprecedented growth since the takeover by new shareholders and the CEO in 2018. Initially a motor-centric company, it has expanded its footprints into the other segment such as health and miscellaneous. 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. It has diligently worked on innovative ideas by employing latest technologies and expects that such strategy will create value by improving customer service. The business has picked up sizably and consistent rapid growth being quite visible. STL has achieved a significant Gross Contribution Revenue of PKR 2.2bln in CY21 (CY20: PKR 1.6bln), depicting a growth rate of 38% on a YoY basis. Such an achievement was materialized through efficient utilization of its branch network and online presence. Segmental concentration remains high in the motor and health segment, with further diversification in untapped segment being expected, going forward. The underwriting profitability of the Company has increased on account of considerable contribution from the health segment. The continued promising augmentation of equity position; owing to the shareholders injection of PKR 300mln as subscription money of right shares. Additionally, the Company has plans of further equity injection by end of first & third quarter of CY-22, which will likely boost liquidity and create room for further expansion. Such a strong sponsor commitment provides comfort to the rating. The shareholders are aligned on the business philosophy and share vision for future in a documented way. Going forward, business expansion combined with business diversification is projected in order to strengthen STL’s footprint in the general insurance industry.
During CY21, bank financing and automotive sector growth facilitated the industry progression. As COVID re-emerged through its “Omicron” variant, its potential implications remain yet to unfold in the coming year. Reduction in management expenditure and product innovation shall remain crucial for the industry participants in order to solidify market position.
The rating is dependent on the management's ability to capitalize on the group's well-built platform for business expansion. Upholding of liquidity and enhancement in equity levels along-with diversity in revenue stream and improved contribution from investments remain essential factors.

About the Entity
Salaam Takaful Limited (STL) is an unlisted public limited company incorporated in June 2006, with its registered head-office in Karachi. Salaam Takaful 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 build 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. 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.