PACRA maintain IFS Rating of Dawood Family Takaful Limited

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. Despite the challenging operating environment, Dawood Family managed to maintain its topline at PKR~ 2,070mln (CY21: PKR~ 2,047mln). Over the years, the Company has experienced growth and aims to further enhance its profitability by expanding its reach. The management has set its sights 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 remained stable and 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.
During FY23, Pakistan's Life Insurance sector faced challenges due to an unexpected rise in inflation which led to a decrease in disposable incomes. To adapt, sector players shifted their focus from first-year growth to second-year, prioritizing enhanced top-line performance. During the said period, unit-linked products remained attractive, offering fixed-rate investment opportunities amidst high policy rates. The sector's outlook is expected to remain Stable, supported by investment income in the next financial year. However, muted economic growth could adversely impact the sector if not timely mitigated.
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 73 branches, with the Head Office in Karachi. Dawood Family Takaful is majorly owned by Dawood Group (FDG) holding 50.4% stake, followed by the financial & non-financial institutions 22.01%, Directors hold a stake of~ 13.65%, while foreign companies~ 8.09% and individuals hold a stake of~ 5.85%. The Company has a seven-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.