PACRA maintain IFS Rating of Dawood Family Takaful Limited

The life insurance sector in Pakistan remains largely dominated by public-sector insurers, accounting for ~61% of the market as of CY24, with private companies covering the remaining ~39%. During CY24, the industry recorded a Gross Premium Written (GPW) of ~PKR 434 bln, marking a healthy ~7% YoY increase from ~PKR 404bln in CY23. Net claims edged up slightly to ~PKR 374bln (from ~PKR 366bln), reflecting sustained claims activity. The sector’s profitability gathered support from a robust investment income of ~PKR 467bln, up ~60% from ~PKR 292bln, driving Profit After Tax (PAT) to ~PKR 23bln, up from ~PKR 20bln in the previous year. The industry's total investment portfolio also expanded, reaching ~PKR 2,518bln from ~PKR 2,027bln YoY. The overall outlook remains stable, underpinned by favorable underwriting metrics and continued strength in investment returns.
The assigned rating incorporates Dawood Family Takaful Limited’s ('Dawood Family Takaful' or 'the Company') substantial capacity to meet policyholder and contractual obligations, along with its ability to enhance takaful volumes. Substantial business acumen and an experienced management team support the rating. Dawood Family Takaful has been expanding its reach through solidifying footprints in Punjab, KPK, and Karachi. Moreover, the ongoing efforts towards digitalization provide support to the operational efficacy of the Company. Dawood Family Takaful reaps benefits from its brand image impetus in building retail penetration. The Company's GPW has posted an uptick (CY24: PKR 2,180mln, CY23: PKR 1,930mln) backed by a significant increase in single premiums, resulting in an increase in underwriting results. This helped the Company in managing its combined ratio well. Substantial support from the investment income benefits the bottom line. The Company holds an adequate risk absorption capacity with substantial investments in risk-free government securities. The financial risk remains intact, supported by adequate liquidity and risk appetite. Looking ahead, equity enhancement to ~PKR 3bln, in line with the SECPs requirement, remains imperative to the assigned IFS rating.
The rating is dependent on improving the competitive positioning of the Company. Moreover, improvement in core and operational profitability remains imperative. Solvency profile, as indicated through reserves, must remain adequate at all times.

About the Entity
Dawood Family Takaful Limited ('Dawood Family Takaful' or 'the Company') is a public unlisted Shariah-compliant company, incorporated in May-07. The Company started its takaful operations in May-08. Dawood Family Takaful operates primarily in the takaful business, offering both individual and group family takaful schemes.
The Company is a subsidiary of First Dawood Group of Companies with ~37% shareholding. The rest of the shareholding resides between financial institutions, directors, and foreign companies. The BoD is chaired by Mr. Ayaz Dawood. While Mr. Ghazanfar-Ul-Islam heads the Company as the CEO. He is assisted by an experienced team of professionals.