PACRA Maintains IFS Rating of Salaam Takaful Limited

Salaam Takaful Limited (“Salaam Takaful” or “the Company”) is a dedicated takaful operator. The assigned Insurance Financial Strength (IFS) rating is underpinned by the presence of financially sound and experienced sponsors, supported by a structured and evolving governance framework. Over the years, the Company has demonstrated consistent, value-driven growth in Gross Premium Written (GPW), primarily emanating from the fire & property, motor, and health segments. This growth trajectory reflects the Company’s sizeable market penetration and expanding business footprint within Pakistan’s takaful landscape. The Company has pursued a fast-paced growth model since coming under the incumbent leadership. However, FY2025 witnessed a slowdown in growth momentum. In addition to moderation in overall business volumes, the motor and health segments underperformed. Furthermore, the expense ratio increased during the period. These factors collectively resulted in a sizeable deficit. In response, management has reassessed its strategic philosophy and implemented requisite corrective measures. The projected performance reflects an improving trend, which remains crucial for sustaining a stable and resilient risk profile. The recent equity injection serves as a testament to the sponsors’ commitment and their intent to strengthen and upscale the Company’s performance. Investment income, largely supported by revaluation gains on investment properties, requires continued discipline to ensure stability and sustainability of earnings. The Company’s financial risk profile remains moderately constrained by a relatively static investment book, predominantly comprising investments in subsidiaries and associates — namely Salaam Family Takaful and Salaam Properties — as well as investment properties. While capitalization remains adequate, liquidity indicators continue to face pressure. Coverage of liquid assets requires improvement, and the claims-to-liquid investments ratio remains elevated. Consequently, effective liquidity management remains critical, particularly until the life takaful and property segments mature into sustainable cash-generating businesses. Management has expressed intentions to further strengthen its family takaful arm. However, such investments require higher capital deployment and involve a longer gestation period, necessitating prudent oversight. This, coupled with real estate-related investments, has diluted the Company’s financial flexibility. Accordingly, continued equity support and improved profitability will be essential to restore historical equilibrium. Pakistan’s general insurance industry reported total GPW of approximately PKR 138.1bln as of Sep’25 (Sep’24: PKR 151.8bln), registering a year-on-year decline of around 9.0%. The industry’s underwriting performance declined markedly, with underwriting results decreasing by 50% YoY to PKR 4.8bln in 9MCY25 (9MCY24: PKR 9.6bln). Additionally, investment income declined by approximately 16.4% YoY to PKR 22.9bln (9MCY24: PKR 27.4bln), primarily attributable to monetary easing.
The assigned rating remains contingent upon the successful execution of the Company’s strategic initiatives, particularly enhancement of liquidity, diversification of revenue streams, strengthening of profitability, reinforcement of equity levels, and avoidance of excessive capital allocation toward non-cash-generating investments.

About the Entity
Salaam Takaful Limited (“Salaam Takaful” or the “Company”) is an unlisted public limited company incorporated in June 2006. The Company operates as a dedicated takaful provider in the non-life segment. The majority shareholding (~78.6%) is held by Mr. Salim Habib Godil, Mr. Shahzad Salim Godil, Mr. Rizwan Hussain, and Mr. Salman Hussain. The remaining ~21.4% stake is owned by House Building Finance Company Limited, Al Baraka Bank Limited, Mal Al Khaleej Investment LLC, and Sitara Chemical Industries Limited. Mr. Salim Habib Godil serves as Chairman of the Board, while Mr. Zeeshan Raza leads the Company as Chief Executive Officer. They are supported by a team of experienced professionals.