PACRA Maintains IFS Rating of Dawood Family Takaful Limited

The assigned rating incorporates Dawood Family Takaful Limited (DFTL)’s strong capacity to meet policyholder and contractual obligations while reflecting its ability to continue enhancing takaful volumes. The businesses were primarily affected in the first half, but there was reasonable recovery seen in the last two quarters. DFTL has achieved 10.5% growth in new business and 12.1% in overall revenue. The company has grown over the years, achieved net profitability position and aims to enhance it further through increasing its outreach. The management aims 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 DFTL. The company reaps benefit 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 has improved from the last year as portfolio of investments is beefed up with government securities. Rating positively takes in to account the track record and presence of experienced management team which possesses considerable experience in the insurance business.
During CY20, the total GPW of the industry grew by 4.6% to PKR 233bln in CY20 as against a decline of 1.2% to PKR 223bln in CY19. COVID-19 is an ongoing challenge. While it has taken a toll on many businesses, its ramifications are still unfolding. However, due to present pandemic situation, the demand for Life Insurance products is expected to increase over near term which in-turn is expected to result in new business growth for the industry.
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 (DFTL) is an unlisted Shariah-compliant Life Insurer which came into existence in May 2007 and commenced operations beginning 2009. It operates through a branch network of 58 branches, with the Head Office in Karachi. DFTL is majorly owned by First Dawood Group (FDG) holding 52% stake, followed by the Bank of Khyber (15%), BRR Guardian Modaraba (10%) and the GulfCap (8%).
DFTL has a six-member BoD, which includes CEO, three representatives of Dawood Group, one of BoK, and one independent directors. Mr. Ghazanfar-ul-Islam, who had been associated with the company for eight years as CFO, was appointed as CEO in Mar’18. He possesses vast Takaful industry and Islamic finance experience. A team of professionals assists the CEO.