Pak Qatar Takaful upgraded to ‘A+’ IFS on strong underwriting, sharia governance

July 18, 2025 (MLN): VIS Credit Rating Company Ltd. (VIS) has upgraded the Insurer Financial Strength (IFS) rating of Pak Qatar General Takaful Limited (PQGTL) to “A+ (IFS)” from “A (IFS)”, with a stable outlook, according to the latest press release issued by the rating agency.

The upgraded rating reflects PQGTL’s strong capacity to meet policyholder and contractual obligations, underpinned by a resilient financial position and a robust Sharia-compliant business model.

 Risk exposure remains low, and the company is well-positioned to withstand adverse economic developments.

PQGTL’s underwriting performance has shown notable improvement, driven primarily by enhanced claims management and a disciplined underwriting strategy.

 The reduction in net claims has contributed to a better combined ratio, indicating improved operational efficiency.

Despite facing pressure on market share within both the general insurance industry and the takaful segment, the company has demonstrated stability through prudent portfolio diversification and a sustained focus on small to mid-sized clients.

Its investment portfolio remains conservative, comprising low-risk Islamic mutual funds and government securities, which have ensured steady returns and supported profitability.

Growth in investment income has bolstered the company’s equity base and helped reduce financial leverage.

On the reinsurance front, PQGTL employs a well-structured risk mitigation framework, combining proportional and non-proportional treaties.

Although the health segment currently lacks reinsurance coverage, the overall panel is diversified and includes internationally rated reinsurers with strong creditworthiness.

The company’s liquidity position remains satisfactory, supported by adequate liquid assets relative to technical reserves and manageable insurance debt levels.

This financial flexibility reinforces its ability to meet near-term obligations while maintaining operational stability.

A key strength of PQGTL is its strong Sharia governance framework, led by a dedicated Sharia Advisory Board.

This board oversees all critical aspects including product certification, investment screening, and surplus distribution ensuring compliance with Islamic principles and enhancing stakeholder confidence.

Looking forward, PQGTL stands to benefit from untapped potential in Pakistan’s underpenetrated takaful market.

With experienced leadership, strong shareholder support, and a conservative risk posture, the company is strategically positioned to pursue sustainable growth, despite persistent macroeconomic challenges and rising competition.

Founded on the principles of Islamic finance, Pak Qatar General Takaful continues to reinforce its role as a key player in the country's takaful sector through operational integrity and customer-centric practices.

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