Internship Report on Pak – Qatar Family Takaful

Submitted by: Tanzeel Ur Rehman

Registration No: UW-16-MGT-BBA-

030

Specialization: Marketing

Supervised by: Dr. Anam

Javeed

Department of Management Sciences

University of Wah

Wah Cantt

Session 2016-2020
 Internship Report on Pak Qatar Family Takaful

Submitted By: Tanzeel –Ur-Rehman

Registration No: UW-16-MGT-BBA-
030

Specialization: Marketing

Supervised By: Dr. Anam

Javeed

This internship report is submitted in partial fulfilment of requirement for

the level of Bachelor of Business Administration awarded by the

University of Wah
 Approval Sheet

Internship Report on Pak Qatar Family Takaful

By

Tanzeel Ur

Rehman

UW-16-MGT-BBA-030

Dr. Anam Javeed

(Report Supervisor)

Dr. Nasir Mehmood

(Head of Department)

Department Of Management

Sciences University of Wah

Wah Cantt

Session 2016-2020
 Pak Qatar Family Takaful

Address: 1st Floor Allied bank Palaza, Hazara Rd,

Hassan Abdal,

Supervisor Name:

Dr. Anam Javeed

 Dedication

This report is very given to the God on the planet that guides us to the proper course of
Islam, who is that the best world glorious to man that's our Holy Prophet Hazrat
Muhammad (P.B.U.H).
I might likewise commit all my work to my revered oldsters and Honorable Teachers,
while not them I am futile. could Almighty God furnish them with additional force and
long daily routine to steer us in our experiences at no matter purpose we have a tendency
to require. Ameen!
 Acknowledgement

Initially, I'd like to deliver my deepest thanks to Almighty Allah, who sceptered us to pursue
such a big business and to focus on Pak Qatar Family Takaful and also the ways to figure in the
Islamic Republic of Pakistan Marketing. I would also like to acknowledge the many directions
given by our esteemed pedagogue Dr. Anam Javeed. Typically, she raised and energized us in
the completion of this study. I appreciate Mr. Abdul Rasheed, who is the Unit Head at Pak-
Qatar Family Takaful. They need, given all the relevant details, alternative knowledge that is
characteristic of significant free factors. The very strong expertise I've had over the course and
the study. I am thankful and sufficiently fortunate to promote continuous consolation, support
and advice from a specialist who has helped us to finish my work effectively. I trust that you
simply can keep it up showing the internes of with an analogous unparalleled ingenuity and
mentality that was showed throughout our course of study.

Regards,

Tanzeel Ur Rehman
 Table of Contents
Chapter 1........................................................................................................................................1
1. Introduction..............................................................................................................................2
Statement of Vision...........................................................................................................................3
Statement of Mission.........................................................................................................................3
Core Worth........................................................................................................................................3
Rationale Logo..................................................................................................................................4
Managing Structure of Pak-Qatar Family Takaful............................................................................5
Board of Directors.............................................................................................................................5
Management Committee...................................................................................................................5
Promoters...........................................................................................................................................5
Managing Structure of Pak – Qatar Takaful Hassan Adbal Branch..................................................8
Our Goods.........................................................................................................................................9
Our Company's................................................................................................................................10
Timeline’s........................................................................................................................................12
Chapter 2......................................................................................................................................16
2. Overview of Economics.........................................................................................................17
Review of the Industry...............................................................................................................18
Ahead Company Issues..............................................................................................................18
Growth Prospects (Takaful / Insurance)....................................................................................19
Weather Investment...................................................................................................................19
Market in Equity..............................................................................................................................19
Market in Money.............................................................................................................................20
Financial Aspects.......................................................................................................................21
Income Contribution........................................................................................................................21
Production of Investment................................................................................................................22
Fund for Shareholders.....................................................................................................................22
Takaful Participant Fund............................................................................................................22
Productivity................................................................................................................................23
Break-up of Importance.............................................................................................................24
Post Balance Event.....................................................................................................................24
Treaties.......................................................................................................................................24
 Credit scores...............................................................................................................................24
Human Resource Management..................................................................................................25
Interactions with other Stakeholders..........................................................................................25
Risks and Complexities..............................................................................................................26
Chapter 3......................................................................................................................................27
3. POLICIES SIGNIFICANT ACCOUNTING.........................................................................28
Leasing 28
Leasing (Policy valid until 1 January 2019)....................................................................................28
Leasing (Policy effective from 1 January 2019).............................................................................28
Commitment of the lease period for renovation and cancellation contracts (service provider
as lessee).................................................................................................................................29
Estimated incremental borrowing rate.............................................................................................30
Property and facilities......................................................................................................................30
Inviolable properties........................................................................................................................31
Resources working-in-progress.......................................................................................................31
Investments......................................................................................................................................31
Classification 31
Original identification and assessment............................................................................................31
Funding categories and subsequent measurements.........................................................................32
Equal value by benefit or loss................................................................................................32
Recognition Date....................................................................................................................33
Disability of Non-Financial Properties............................................................................................33
Ijarah Measures...............................................................................................................................34
Creditors, Unpaid Liabilities and Provisions...................................................................................34
Takaful Obligations....................................................................................................................34
Final Instruments........................................................................................................................34
Off-Situations.............................................................................................................................35
Takaful Agreements...................................................................................................................35
Requirement of Pending Claims................................................................................................36
Reservation for Claims - Incurred but not recorded (IBNR).....................................................37
Reserve Contribution Deficiency...............................................................................................37
Chapter 4......................................................................................................................................39
4. Segment of Operations...........................................................................................................40
Financial Accounting Contributions...............................................................................................40
Withhold your Unearned Participation...........................................................................................41
Cost of Acquisition..........................................................................................................................41
Takaful Operative's Fee...................................................................................................................42
Fee for Modarib...............................................................................................................................42
Contribution Due but Not Paying....................................................................................................42
Responsibility Obligation Test........................................................................................................42
Price of Claims................................................................................................................................42
Dividend and Utilization of Reserves.............................................................................................43
Qard-e- Hasna............................................................................................................................43
MANAGEMENT TAKAFUL AND FINANCIAL RISK.........................................................43
Categories of Takaful Agreements.............................................................................................44
Long-term Takaful Agreements......................................................................................................44
Short-term Agreements...................................................................................................................45
Chapter 5......................................................................................................................................47
5. Conclusion..............................................................................................................................48
References.......................................................................................................................................48
 Chapter 1

INTRODUCTION

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 1. Introduction

Pak-Qatar Family Takaful Limited (PQFTL) is Pakistan’s first and largest dedicated Takaful
Family Company. PQFTL has been a progressive & technology-driven Shari’ah Compliant
company offering groundbreaking Takaful solutions since 2007. PQFTL is the fastest growing
Takaful family operator in the world.

The firm, which was incorporated in 2006 and started operations in 2007, is registered with and
supervised by the Securities and Exchange Commission of Pakistan (SECP). The independent
Shari’ah Advisory Board headed by Mufti Muhammad Hassaan Kaleem shall certify that all
Shari’ah products and operations comply. Mufti Muhammad Taqi Usmani has been the founding
chairman of the Shari’ah Advisory Board since its establishment and elected Mufti Hassaan
Kaleem as its successor in 2019. The business is rated “A+” (with Positive Outlook) by JCR-VIS
Credit Rating Co. Pakistan Credit Rating Agency (PACRA). The paid-up capital of the
Organization is more than Pakistani currency 1.81 billion.

PQFTL has a vision of providing financial security to all by Takaful. The company’s
shareholders include some of the strongest financial institutions in Qatar, such as the Qatar
Islamic Insurance Company (QIIC) and the Qatar International Islamic Bank (QIIB). The
business is further improved by its Re-Takaful agreements with Munich-Re and Hanover Re.
Pak-Qatar Family Takaful Limited has a strategic partnership between Banca Takaful and FWU
AG, the leading life insurance firm headquartered in Munich (Germany), to distribute Takaful
policies through banking channels.

Pak-Qatar Family Takaful Limited has one of the largest Takaful branch networks in Pakistan
(over 100 branches in 90 cities), in addition to more than 3,500 bank branches in more than 200
cities offering Banca Takaful goods.

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Statement of Vision

Providing financial security to everyone by Takaful

Statement of Mission

 Promote Takaful among the citizens, including knowledge and training, and present a
picture that is consistent with our values and attitudes.
 Adhere to the highest ethical principles in all facets of our activities, while upholding the
Shariah and the law of the land.
 Encourage our employees by encouraging, directing, enabling and helping them.
 Ensure that we serve the society and the world with excellence.
 Ensure customer loyalty by providing premium goods and services customized to their
needs.
 Ensure optimal returns to its shareholders.

Core Worth

Practicing stuff in a way that cannot be achieved differently with available resources.

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Rationale Logo

The logo is a combination of the shield, which implies the aspect of defense, and the two swoosh
act as the foundation for the shield.

The company logo (shield) consists of strong Urdu calligraphy along with design motifs
embodied in it, depicting Islamic art and portraying a strong Islamic philosophy as an Islamic
financial institution that observes Islamic Shariah and regulations.

The blazer and Green slogan under the cap badge represent the flag colors of Pakistan and Qatar,
meaning unity, solidarity and financial agreement between the two powers.

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Managing Structure of Pak-Qatar Family Takaful

Board of Directors

 Sheikh Ali Bin Abdullah Thani J. AI Thani – Chairman

 Said Gul – Director
 Abdul Basit Ahmad – Director
 Ali Ibrahim AI Abdul Ghani – Director
 Muhammad Owais Ansari – Director
 Zahid Hussain Awan – Director

Management Committee

 Azeem Iqbal Pirani – Chief Executive Officer

 Muhammad Kamran Saleem – Director Finance & Company Secretary
 Tariq Saeed Chaudhry – Head of Corporate Distribution (Group Life/Group Health)
 Muhammad Waqas Durani – Head of Individual Life, Agency & Marketing
 Muhammad Ahsan Qureshi – Chief Financial Officer
 Imran Irshad – Head of Operation (Group Health/Group Life)
 Pervaiz Altaf – Head of Operations (Individual Life)
 Muhammad Shahzad – Head of Underwriting (Individual Life)
 Ahsan Yameen – Head of Actuarial services
 Muhammad Shoib Akhtar – Head of International Audit
 Muhammad Umair – Head of International Technology & Systems

Promoters

Pak-Qatar Family Takaful is funded by some of the most famous and leading financing institutions
in the State of Qatar which are as follows:

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The Qatar International Islamic Bank (QIIB) is one of the most
popular Islamic banks in Qatar. QIIB is a privately held Islamic
bank in the State of Qatar providing personal and commercial
Islamic banking solutions. Produced in 1991, QIIB remains true to
its Qatari
roots and beliefs. QIIB's forward-thinking strategy to Islamic banking and Shari'ah-compliant
goods has made a huge contribution to creating a large consumer base.

The QIIB team continues to offer market-leading groundbreaking banking solutions tailored to
the needs of our customers. Managed by the Qatar Central Bank and highly regarded for the cash
reserves and outlook of international credit rating agencies, QIIB works to offer the best
Shari'ah- compliant savings, finance and insurance products to its valued customers, in
compliance with local and international standards.

Qatar Islamic Insurance Company (QIIC) is a

pioneering Takaful Company in the State of Qatar.
QIIC has expanded steadily to become the world's
largest insurance firm, Takaful. Trying to combine
commitment to the ideals of Islamic Sharia with
creative and dynamic management, QIIC has
continuously modernized its
strategies and is now leading the field in bringing new products and services to its customers.

From over years, QIIB has received tremendous levels of growth, with remarkable gains across
all classes of its market amid intensified regional and local contest. This performance reflects the
strong financial position of the Company and its ability to respond to changes in the market
climate.

Pak-Qatar Investment is a community business that

extends its capital & real estate sector wings. Pak-Qatar
Investment (Private) Limited (PQIL) is one of the

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shareholders of the Pak-Qatar Takaful Group. Established
in

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2017, PQIL currently represents private equities and intends to extend its horizons by investing
in a variety of avenues.

PQIL specializes in providing its clients with unbiased reviews and unique investment advice.
The business is focused on providing individual and corporate investors with an objective
viewpoint, customized planning and comprehensive management consulting.

PQIL trading strategies are designed to generate value within possibilities and optimize returns
for investors. The business seeks prospects that provide its investment partners with the highest
risk- control likelihood of achieving outsize returns. PQIL is focused on providing investors with
dedicated and clear services that they can always rely on.

FWU is one of the world's leading suppliers of Takaful goods.

The FWU Association is a relatively young group of
businesses. Established in 1989 along with its Fund-linked Life
Insurance on the market since 1994, it is now one of the largest
independent financial products and services operating globally.
The holding company is FWU AG, based in Munich and
Luxembourg.

FWU has a total of 5 divisions, namely “ATLANTICLUX Lebensversicherung S.A.,

Luxembourg, PREMIUM SELECT LUX S.A., Luxembourg, FWU Commission Factoring
GmbH, Munich, FWU Payment Services GmbH, Munich and FWU Pension Management
GmbH, Munich.”

The FWU Group currently sells its products in both European (Germany, Austria, France, Italy,
Luxembourg) and non-European (United Arab Emirates, Saudi Arabia, Kuwait, Malaysia,
Pakistan) marketplaces.

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Managing Structure of Pak – Qatar Takaful Hassan Adbal Branch

HEAD OF AGENCY
SALES

REGIONAL HEAD

ZONAL MANAGER

GROUP MANAGER

SENIOR BRANCH
MANAGER

BRANCH MANAGER

ASSISTANT BRANCH
MANAGER

SALES CONSULTANT

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Our Goods

Through our goal of providing financial security to everyone through Takaful. Pak-Qatar Family
Takaful is proud to give its members a variety of goods and services that not only provide them
with financial security, but also investment opportunities, thereby enabling them to fulfil their
long-term dreams. If you're saving for the bright future of your child or constructing your dream
home, we have a strategy that's ideally suited for everyone.

All our goods are Shari'ah compliant and have been approved by an autonomous Shari'ah
advisory committee chaired by Mufti Muhammad Hassaan Kaleem. Services are offered in our
ever- growing Takaful network of branches throughout Pakistan, with more than 100 branches in
much more than 90 regions, in addition to more than 3,500 bank branches in even more than 200
cities providing BancaTakaful services.

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Our Company's

What is Takaful?

A Shari'ah-compliant option to insurance.

Concept of Takaful

Takaful is a community-oriented structure based on the idea of brotherhood and mutual

assistance. Participants are donating to the fund to support those who need it most in times of
financial real difficulties. Example of Takaful can be found in the early Islamic history when
Muslim traders used Takaful security to shield carvans from travel hazards such as stroms or
robbers.

Our Credibility in Shari'ah

The independent Shari'ah steering committee headed by Mufti Muhammad Hassaan Kaleem shall
certify that all Shari'ah products and operations comply.

Mufti Muhammad Taqi Usmani has been the human capital of the Shari'ah Advisory Board since
its establishment and elected Mufti Hassaan Kaleem as its successor in 2019.

Global Honors and Acknowledgement

Pak-Qatar Community is the recipient of a variety of national and international recognition and
awards. The FPCCI Karachi 'Brand of the Year' Award 2018. 'Best Global Takaful Operator' by
the IFN Award 2017 in Malaysia, 'Best Takaful Operator in Pakistan' by the 10th International
Takaful Summit in London 2016 and 'Best Takaful Business in Pakistan' by the year 2015 by the
RTC Award in Islamabad.

Global Presence Branch

The Pak-Qatar Takaful Unit has one of the highest Takaful Branch network throughout Pakistan
(more than 100 branches in 90 + cities)

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Such branches represent more than 700,000 individuals throughout the world. In addition, the
Takaful Community also represents more than 1,100 representatives of covered companies
across Pakistan.

Banca Takaful: Exploiting Branch Network of Pakistan Currencies

Pak-Qatar Family Takaful Restricted has a strategic Banca Takaful partnership through FWU
AG to spread Takaful policies across banking channels. The business continues to utilize more
than 3,500 Pakistan-based banking divisions in more than 200 states across the globe. The
strategic initiative to use the widespread network of bank branches is aligned with the efforts of
the Pak- Qatar Party to provide Takaful security to the masses in every area of Pakistan.

Technology and Innovation

In line with the strategic goals, the organization has one of the most technologically advanced
capabilities for product distribution. The business has built an industry standard by delivering
integrated services at different marketing touch points, including 24/7 Telephone Helpline, smart
phone-based applications and cyberspace connectivity through various digital media channels.

Family Takaful-Individual Plan for Saving & Security

Pak-Qatar Family Takaful, in line with the company's vision of providing security to all, has
offered a hallmark of products that appeal to the customer. This involves a range of Shari'ah-
compliant and uniquely creative product options for individual members to provide Takaful
Security combined with long-term reinvestment plans.

Family Takaful-Group: Family (life) & Health Coverage Group

Pak-Qatar Family Takaful Offers various risk coverage programmers to workers of different
company and non-business organizations. These special arrangements provide the defense of
death or disability in the case of the Takaful family community. Whereas the Heath Takaful
Community package offers medical coverage for every cause, significant medical costs including
day-to-day medical needs around the globe.

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Timeline’s

 2007

The company gets a license from SECP Insurance Division for the business of Family Takaful,
the first family Takaful operator in Pakistan to operate in three main cities. Within the first year
of service, the company paid out capital worth Rs. 451.7 million and enters into an agreement
with FWU AG to distribute Takaful goods from bank counters throughout the state.

 2008

During the first full year of activities, we achieved several benchmarks, including a record-
breaking live installation of the Perna Takaful system within 8 months, an overall operating
contribution of Rs. 129 million, supported by paid-up capital of more than Rs. 532.97 million,
and a significant progress into 13 main cities and towns.

 2009

We enjoy a strong gross contribution of Rs. 466.6 million, with a presence in 14 major cities of
Pakistan, beginning in the first year of Banca Takaful 's company via two of the country's
leading banks. We have also received a host of awards and distinctions, including Best Family
Takaful Operator in Pakistan, Best usage Technology in Islamic Finance (CPI Financial UAE),
Brands of the Year Honor, and also the Top 4 Best Marketing Campaign at the World Takaful
summit meeting.

 2010

Year turning out to be a fruitful one for us as we extended our presence to 23 cities, achieved a
contribution base of over 1 billion ropes, added a third leading bank to our Takaful distribution
network, and strengthened our credit score to A, (A minus) with JCR-VIS from over Rs. 608.5
million in paid-up money.

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  2011

As our paid-up capital amounted to more than Rs. 710.63 million and our overall contribution to
more than Rs. 1.87 billion, we have built ourselves in 25 cities in Pakistan. Our pioneering goods
have been embraced and sold by six of the nation's biggest banks, and we were the first company
in the country to survive with Sap.

 2012

Bending industry benchmarks, we achieved our first year of profit in only the fifth full year of
operation, accounting for more than Rs. 26.67 million after-tax profit. Our participation base
crossed the three-billion-rupee mark, our country-wide presence was now in 34 cities, 7 banks
were now distributing our goods, and JCR-VIS strengthened our ranking to A with a limited
impact.

 2013

Widening our services to 39 cities across the country, we saw remarkable progress, with post-tax
income growing to Rs. 49.97 million and the participation base growing to Rs. 4.46 billion. We
often strengthened our foothold on bank counters, as our goods were now available to 10 of the
country's leading banks.

 2014

Year turned out to be a promising one, as our contribution revenue amounted to Rs. 5.08 billion
mark and our company paid premiums in increased to rs. 1.3 billion compared to Rs. 955 million
in 2013. With the incorporation of JS Bank. Our goods are now available to 11 leading banks.

 2015

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Growing to incredible levels, Pak-Qatar Family Takaful Limited was able to produce profit
before tax in increased to rs. 100 million with a net contribution in excess of Rs. 6.7 billion. The
Participant Takaful Fund (PTF) for of line of business was surplus at the end of the year. The
company's performance in the Group Health segment was commendable as it repaid more than
fifty percent of Qard-e-Hasna to the shareholder fund in addition to being in surplus at the end of
the year. We have been challenging ourselves at every stage and our search for excellence has
earned us many awards, including the "Best Takaful Company in Pakistan" for the year 2015 at
the Islamic Banking Awards. At the 10th International Takaful Summit 2016 in London, we
were recognized as the "Best Takaful Operator in Pakistan."

 2016

Your group announced a pre-tax profit of PKR 165.8 million, an improvement of 23.9 per cent
over the previous year. Repayment of Qard-e-Hasna by the Health Community division, along
with the total overall revenue for the year, resulted in an accumulated deficit of PKR 113.7
million at the beginning of the year, resulting in an accumulated surplus of PKR 70.9 million at
the end of the year. Net total equity was 781.6 million, an increase of 31 per cent over the
previous year, leading to a break-up of Rs. 11.00, which was Rs. 8.40 at the end of 2015.

 2017

A profit before tax of Rs. 174.4 million was recorded by the company. Net shareholder equity
was in excess of Rs. Last year, I billion against Rs. 781.6 million. Dividends in the form of bonus
shares were rendered to established shareholders and the paid-up capital was further increased by
the correct allocation of the shares, which was completely subscribed. The company is currently
the largest paid-up capital operator of Takaful, with the largest Takaful branch network with
more than 70 branches in 58 + cities across the world.

 2018

The Insurer Financial Strength Rating (IFS Rating) of the Company was upgraded by JCR-VIS
and The Pakistan Credit Rating Agency from "A" (Single A) to A+ (Single A+) with a stable

15 | P a g e
outlook. During the outgoing year your Company recorded gross contribution of Rs. 7.82 billion
and profit before tax of Rs. 154.8 million.

 2019

Adjusted gross contribution over the year amounted to Rs. 8.3 billion, a rise of 6% over the last
year. The Company business hit a 2 billion mark, with a net rise of 16.6 per cent. Rs. 65.3
million were raised as dividends to company's shareholders and the Company's branch network
strengthened to more than 100 branches in more than 90 cities across Pakistan.

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 Chapter 2

COMPANY PORTFOLIO

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2. Overview of Economics

After a sharp slowdown in the last three quarters of 2018, the rate of global economic activity
remained weak. In general, the rate of manufacturing activity has dramatically weakened to
levels not seen since the global financial crisis. Growing exchange and geopolitical tensions have
raised confusion about the future of the global trading system and international collaboration
more broadly, impacting corporate trust, investment decisions and global trade. The marked
move towards enhanced monetary policy accommodation through both activity and
communication has stifled the effect of these strains on financial market perception and activity,
while a generally stable service sector has boosted employment growth. That said, the outlook
was still shaky.

Pakistan, the growth of the Gross Domestic Product (GDP) slowed as economic policies to
resolve the twin deficits took effect Growth Swede to 3.3 per cent in FY19, a 2.2 per cent
decrease compared to the previous year due to the stabilization steps pursued by the authorities.
Over the past year, the exchange rate was allowed to depreciate, with a cumulative depredation
of 25.5%, the development budget was cut, energy prices increased, and the policy rate increased
by 575 bps. As a consequence, growth in private consumption decreased from 6.8 per cent in
FY18 to 4.1 per cent in FY19, while spending decreased by 8.9 per cent. On the supplier side,
growth in the industrial sector slowed to 1A per cent in FY19 compared to 4.9 per cent in FY18.
The services sector developed at 4.7%. 1.5 percent lower than in the year 18. Bad weather
conditions have dampened agricultural output and growth inhibition to 0.8% in FY19, slightly
lower than the goal growth of 3.8%. Average headline inflation rose to 7.3 per cent in FY19
comparison to 3.9 per cent in FY18, mostly due to the exchange rate.

The current account deficit (CAD) has declined. CAD decreased to US$ 13.5 billion (4.8 per
cent of GDP) in FY19 compared to US$ 19.9 billion (6.3 per cent of GDP) in FY18. This was
mainly driven by lower import growth (goods imports decreased by 7.4 per cent while services
imports decreased by 14.9 per cent). The largest decrease in imports was attributed to the
downturn in investment and industrial development in transport and machinery, followed by
food and metals. However, imports related to petroleum continued to rise (5.0 per cent), although
at a rate lower than last year (25 per cent).
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Review of the Industry

The global demand of Takaful reached a volume of US$ 23.7 billion in 2019. Global market is
also expected to hit US$ 48.1 billion by 2025, rising at a CAGR of 12.5 per cent by 2020-2025.
Although the Takaful contribution seems to be less, However, the overall impact and ability to
expand is immense. The policy ecosystem is undergoing change and innovation at an
unprecedented pace. The majority of earnings, i.e. more than 62%, are contributed by the Middle
Eastern economies. Among the countries of the Middle East, the Kingdom of Saudi Arabia is a
significant contributor to the Takafi industry. The incidence of traditional insurance is relatively
poor in wealthy Muslim regions such as the GCC. As a consequence, Takaful is viewed as a
crucial tool for raising insurance awareness and has significant opportunities in these countries.

Owing to circumstances such as ethical and open investment strategy, good growth opportunities
and market stability, Takaful is a strong business proposition and has a large share of non-
Muslim customers too. At present, General Takaful leads the market, having the largest share.
Throughout Pakistan, Takaful 's potential remains positive, and the industry needs to target its
services to market and household purposes.

Ahead Company Issues

Takaful is an attractive development sector in the Islamic financial services industry that has
shown sustained and exciting growth worldwide. The main issues found in the Takaful industry
concern operational, regulatory, legal and Shariah problems as well as market competition.
Almost all of the issues are meant to raise questions that should lead policymakers to focus on
their efforts to improve and establish the Takaful sector. Financial sector is a specialist field that
offers exciting opportunities for growth. The growing importance of the industry for Islamic
goods and other investors around the world is demonstrated by its steady growth in recent years.
Potential future growth opportunities are robust, backed by demographic patterns around the
world.

State, regulators and our companies should continue to work together, not only to broaden the
sector and sustain Pakistan's leadership in promoting Islamic finance, but also to become a
leading player in setting Shariah-compliant requirements.

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Takaful is still in its infancy in most markets, and its capability to replace the conventional
insurance in largest Islamic finance markets is largely untapped. Major challenges facing the
global Takaful industry include strong competition with standard insurance providers, low profit
margins, low consumer engagement, the need for skilled professionals, and an enhanced
regulatory environment. AnTech is also another area that is actively changing the industry's
dynarn la. FinTech in Islamic finance is still in the early stages of growth, but the outlook for the
future is bright, fueled by recognition among stakeholders and encouragement from commercial
banks.

Growth Prospects (Takaful / Insurance)

The modern economic digitalization revolution is also changing the service sector. It has now
become very apparent to represent consumers on this site. With investigation, skills and
understanding, the Takaful industry needs to offer added value to its clients to help them
succeed. There is also a need-of-the-hour contact with clients on the digital sector. The business
sector must take a longer view of its human capital strategies. It must invest in the production of
talent. The other potential solution is to create skills and expertise. The company needs to take
this positively if it wants to break new territory in realizing Takaful 's effectiveness. There is a
lack of awareness among the population in Pakistan of the value of coverage itself. there are
several individuals who are not covered by either Takaful insurance or traditional insurance, and
this segment can be a market penetration target for the Takaful industry, and there is definitely
more to come for Takaful companies when it comes of Fintech to better communicate with
consumers, dev. Over the next few years, the industry needs to invest in new products, new
technologies, improved branch networks and enhanced digital capabilities.

Weather Investment
Market in Equity

CY19 continues to remain a very volatile year for the country's financial market as the market
primarily traded in negative growth in the first eight months, but after reaching its bottom (down
by 27 per cent on CYTD) in mid-August, the industry not only recovered its previous losses but
also managed to close in positive territory by posting a return of 7.9 per cent on CY19. The
financial system also remained in the spotlight as expectations of strong earnings growth in the

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results of CY20 on the back of better Net Interest Margins (NIMs). Timetable has seen
individuals

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take the initiative and take a forceful position in the industry, whereas some market players, such
as managed funds, banks and insurance companies, along with foreign investors, took a
conservative stance on the supply chain. In the past few years, PSX remained a vibrant indicator
of economic glitches, as indicated by the benchmark index performance. Analyzing that the right
steps are being continued, the market has again signaled positive vibes for cautious investors.
PSX trades at attractive Earnings Price (P/E) multiples which can re-energize the interest of
international investors with a risk appetite and long-term valuation emphasis.

Moving ahead, we believe that the market will still have space to offer after a robust 45 per cent
turnaround from its lows, as the market is still trading at an attractive forward P / E multiple of
about 7 times. We also believe that, as a result of economic reforms, international firms are
likely to start taking an interest in the country's stock market. Although, on the basis of the
heightened uncertainty on our borders and in the Middle East, the first half of this academic year
may be able to check investors' nerves.

Market in Money

Pakistan 's growth has returned to recovery after two years of intense yet required stabilization
measures. Economic pulse is now showing some signs of change in the form of a decline in CAD
to US$ 13.8 billion in FY19 compared to US$ 19.9 billion in FY18; and the trend has continued
as CAD fell by 73 percent to US$ 319 million in November amounted to Us$ 1.17 billion in the
same month last year. FY20 CAD took five months to US$ 1.8 billion (or 1.6 per cent of GDP)
amounted to Us$ 6.7 billion (or 5.3 per cent of GDP) in the same timeframe last year due to a 21
per cent decrease in imports and a 5 per cent rise in shipments. The overall Consumer Price
Index (CPI) for the first half of the fiscal year was set at 11.11 per cent compared to 5.96 per cent
for the same period last fiscal year. For the fiscal year 2020, unemployment is forecast to
increase from 10% to 11%, according to the government of Pakistan due to the delayed effect of
rising inflation and supply side threats. CPI The key inflation tracker is expected to decline
significantly due to higher demand. Basic effect, drop in performance of global growth and
stabilisation of PKRUSD parity. Hopefulness for cooling inflation suggested space for monetary
easing, which started at the end of 3QFY20, due to the possibility of a wide application of the
Corona Virus pandemic and its ripple effects of the international trade process. Pakistan's
Growth rate will also face the impact of global and domestic shutdowns solution will be

22 | P a g e
implemented by governments around the world to

23 | P a g e
address the curse of the lack of availability of any proven drugs. The regional banking sector will
stay vigilant and a further reduction in interest rates by the start of the budget year remains
conceivable, taking into account both the trade outlook and the domestic economic
circumstances. The effect of the global pandemic has already spurred central banks to rescue the
delicate international trade that has been under extreme stress due to conflicts between economic
giants. The United States and China. The US has gone public with putting tariffs and trade
barriers on significant Chinese companies that have a strangling impact on the overall system. As
a result, the long-term trade outlook will remain under pressure due to the dynamics of the US
trade deal with China and the risks to major peace initiatives in different regions of the world.

The country's financial reserves improved from US$ 7.3 billion at the end of CY18 to US$ 10.7
billion at the end of CY19 due to the launch of the new IMF program, with the resumption of the
country's financial reserves. Circulates from international institutions, international trade in local
government bonds, and reduction of CAD. The aim of the Central Bank is to maintain a market-
based exchange rate regime that will continue to play a crucial role in stabilizing foreign-
exchange reserves.

Financial Aspects
Income Contribution

Adjusted net contribution over the previous year amounted to Rs.8.3 billion, a rise of 6% over
the previous year. The rise came from all sources, where Individual Life recovered from a fall of
11.6 per cent in 2018 to a rise of 2.9 per cent in the outgoing year. Persistence levels increased
with an overall rise in human life persistence to 78% from 75%. Marginal, but encouraging,
increase with plenty of structural adjustments in the distribution structure, including the
strengthening of the branch network, giving an optimistic outlook for the year 2020.

Group business achieved a 2 billion label, with an overall increase of 6 per cent over 2018.
Family Community increased by 24.2 per cent, while Group Wellbeing increased by 14.3 per
cent.

24 | P a g e
Production of Investment

PQFTL handles connected and centralized connected funds in line with their investment strategy
and risk appetite. The Active and Balance Fund controlled market exposure and surpassed their
respective benchmarks. The progressive Fund has also executed in line with the benchmark
returns. PQFTL shall keep to distribute exposure to equity and fixed income in line with strategic
objectives.

Fund for Shareholders

The shareholders' fund generated an annualized return of 1731 per cent during the calendar year.
Finance exposure was allocated to Sharjah's fixed income and equity investment instruments.
Exposure to equities has been actively maneuvered to realize gains and manage dynamic market
conditions, taking into account yield curve shifts.

Takaful Participant Fund

Year ended with a total surplus of Rs. 31.5 million. The surplus for the year was lower than the
year before due to the deficit in the Rs. 113.3 million group health fund, where claims received

25 | P a g e
showed a significant increase over the previous year. In order to meet its liquidity needs, i.e. to
fulfil its obligations, the Group Health Fund was also assisted by the Shareholders' Fund, through
Qard-e-Hasna of Rs. 110 million, on the advice of the appointed actuary. A surplus of Rs. 55.50
million was allocated to individual family insurers throughout the year.

Productivity

Your company reported earnings before tax of Rs.84.1 million, down 45.7 per cent over last
year. A drop in profitability of nearly 50 percent compared to the previous year leaves a few
people questioning the company's operating performance. However, the decline has on its back
some strategic realignment in the distribution structure of the group as mentioned above,
including the expansionary strategy of the company in terms of its branch network. However, the
net overall income for the year was 85.6 per cent higher than the previous year, i.e. Rs. 104.8
million (2018: Rs. 56.4 million), contributing to an improvement in the net equity of the
Company. The company's management expects the changes to be positive, and the expanded
branch network that will enable greater application properties will help to meet the challenging
goals set for 2020.

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Break-up of Importance

The break-up valuation per share at the 2019 dose contributed to Rs. 10.01 (2018 ; 11.23). The
break-up value came into force following the implementation of the IFRS 1 6 issued by the
International Accounting Standards Board (IASB) discussed in notice 5.1 of the notes to the
financial statements and the capital allocation of the Shareholders' Fund to the Community
Healthcare Fund as Qard-e-Hasna mentioned above. If the accounting principles standard had
not been implemented and the capital contribution root had been required, the break-up value of
shares would have been Rs. 11.60 as at 31 December 2019.

Post Balance Event

Between the end of the financial year to which this capital structure applies and the date of the
Directors' Report, no significant adjustments and obligations affecting the financial condition of
the Company have occurred.

Treaties

Taking into account the post-Covid-19 economic conditions, dividend has not been strongly
advised (2018 ;5 per cent). This decision is intended to boost equity and improve asset quality
and liquidity. Enhanced liquidity would lead to the continuous failure of business & ability to
provide credit facilities to customers within the limits of the applicable policies & requirements.

Credit scores

Credit assessment is a systematic method for determining the creditworthiness of the obligor and
the stability of its debt obligations. It enables the rating holder to demonstrate its credit
worthiness to potential investors and partners, without revealing any confidential details, and to
make ties between the obligor and investors highly transparent and effective.

Your company has a strong credit rating of at (Single A+) from the two most renowned credit
rating agencies in the world, VIS Credit Rating Company Limited and Pakistan Credit Rating
Agency (PACRA). A good rating represents the financial status of the Company.

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Human Resource Management

Throughout the year 2019, a great deal of concentration was devoted to systematically bringing
more financial discipline, compliance and strict control to the management of Takaful
distribution- related HR Operations. This had been guided by the introduction of various policy
inclusions, revised operating procedures and the necessary training of staff. The year also saw a
number of important HR police officers being revised on the basis of employee comfort, to make
them more effective and to gain competitive advantage. Employees to the acquisition of
technical certifications and memberships is assisted in organizational learning and growth
programs. The company's training staff educated more than six Thousand applicants and agents
in different county-wide training programs – the highest number of people educated in a year
since the inception of the company. The same year also saw a massive influx of workers
undertaking various levels of Life Management research center (USA) tests, making Pak-Qatar
the only devoted Takaful Company to be a participant of LOMA. A significant number of
workers have successfully taken advantage of this membership by passing FLMI relevant
coursework. In order to take full advantage of technology, a considerable focus has been placed
on the formulation and management of the SAP Plod HR Portal to support HR automation
services. With a range of initiatives in the completion process, an improved digital
transformation of HR facilities for both workers and career-seekers will take place in 2020 and
will boost overall HR experience.

Continuing HR 's commitment to companion with business operations to enhance organizational

performance and results, HR 's sales interference has been improved and enacted with sales
leadership for all sales positions across the country. This was intended to enhance the hiring
process, assisting HR in identifying and referring prospective Takaful sales applicants.

Interactions with other Stakeholders

Your business continues to have a strong relationship with:

 Its workers by providing a positive work atmosphere

 Its customers by building faith and providing quality services
 The business community by honest and fair negotiating

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  The Governments & Regulators through the promotion of free enterprise along with a
dynamic capitalist model and compliance with all relevant laws
 Society in general by providing a secure and healthy work place and providing workforce.

Risks and Complexities

The Organization operates in a dynamic and competitive world and is thus exposed to a range of
external and internal threats that could pose a challenge to its performance and profitability.
Some of the major risks faded by the corporation include regulation risks, operational risk,
reinsurance risk, credit risk, reinsurance risk, liquidity risk and economic / political risk, etc.
Organization is integral to placing risk management at the forefront of the strategic decision-
making process, with a comprehensive risk assessment process that goes through all the activities
of the business. This places the Organization in such a desirable role that it protects its business
and stakeholders. The company decision taken is focused on balancing the related risks toward
rewarding opportunities, as we aim to take advantage of business opportunities that are
consistent towards the long-term vision.

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 Chapter 3

Investment & Policies

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3. POLICIES SIGNIFICANT ACCOUNTING

The accounting policies implemented in the preparation of these financial information are the
same as those applied in the preparation of the statement of financial position for the year ended
31 December 2018, with the exception of regarding accounting policies arising from the
implementation of IFRS 16

Leasing
Leasing (Policy valid until 1 January 2019)

The assessment of whether the agreement is a lease or includes a lease is dependent on the
content of the agreement and involves an evaluation of whether the performance of the
arrangement relies on the use of a particular asset or asset or whether the contract evokes the
right of ownership.

Company as a tenant

Leases that do not substantially transfer all of the risks and benefits incidental to the ownership
of the leased items to the Company are capital leases. Capital lease payouts shall be regarded as
an expense in the income statement on a straight-line basis over the lease phrase. Predicated rent
payable shall be regarded as an expense for the time in which it is incurred.

Leasing (Policy effective from 1 January 2019)

At the start of the contract, the Company shall decide if the contract is or includes a lease. That's
also, if the contract conveys the right to control the use of an intangible asset for a specified
period in exchange for considering.

Company as a tenant

The supplier shall apply a single identification and assessment approach to all leases with the
exception of short-term leases and low-value leases The Company shall identify lease liabilities

31 | P a g e
for the payment of leases and right-of-use properties that signify the right to use the underlying
assets.

Right to Use Properties

Either at start date of the lease, the right-of-use asset is initially measured at the present value of
the lease liability. Subsequently, ROU assets are assessed at expense, minus accrued
deterioration and any accumulated losses, and balanced for any reassessment of lease liabilities.
ROU assets are valued on a straight-line basis over the shorter duration of its projected useful life
and lease period.

Leasing liabilities

At the start date of the contract, the Company shall recognize the lease liability measured at the
current value of the evaluation (lease payments) to be made over the lease period and shall be
adjusted for lease principal payments The cash flows shall be discounted using the mortgage rate
implicit in the lease unless it is not readily determinable, in which case the lessor may use the
rate of the loan increment. After the date of payment of the corn, the carrying value of the lease
liability shall be increased to reflect the rise in interest and decreased for the lease payments
produced.

Commitment of the lease period for renovation and cancellation contracts

(service provider as lessee)

The term of the lease shall be determined by the Company as a non-cancellable term of the lease,
together with any period covered by an option to extend the lease if it is reasonably certain to be
exercised, or any period covered by an option to terminate the lease if it is reasonably certain not
to be exercised.

The Company has a range of lease arrangements that include extension and termination rights.
The Company shall exercise its judgement in deciding whether it is fairly certain whether or not
to exercise the option of renewing or terminating the contract. In other words, it considers all the
necessary factors that give rise to an economic opportunity for it to be either renewed or
terminated. After the starting date, the Company shall reassess the phrase of the lease if there is a
32 | P a g e
significant event or change in circumstances within its control that affects its ability to exercise
or

33 | P a g e
not to work out the option of renewal or termination (e.g. the renovation of significant lease
improvements or significant personalization of the lease agreement).

Estimated incremental borrowing rate

The Company cannot easily determine the interest rate implicit in the lease, and therefore uses its
incremental borrowing rate ('IBR') to measure lease liabilities. The IBR is the interest rate that
the corporation would have to charge to afford to buy for a similar period of time, and with a
similar security, the funds necessary to obtain an asset of equivalent caliber to the right-of-use
asset in a similar economic environment. The Company estimates that the IBR uses measurable
inputs (such as market interest rates) when available and is needed to make certain entity-specific
changes (such as hang-alone credit ratings or to represent the terms of the contract of the lease).

Property and facilities

Both are reported at the expense of less cumulative depreciation and disability, if any. Valuation
shall be charged using the reduced balance method at the rates set out in Note 8 to the financial
reports. Depreciation on additions shall be charged on the month in which the asset is available
for use and no depreciation shall be charged on the month of dumping. Losses and gains on
disposals shall be taken into account for profit and loss. Total liabilities, useful lives and
valuation strategies shall be checked and modified, as required, at each balance sheet date.
Additional expenses are included in the carrying sum of the assets or accepted as a separate asset,
as applicable, only if the potential economic benefits associated with the goods are expected to
flow to the Business and the expense of the item can be calculated accurately. Maintenance and
routine maintenance shall be paid to the financial statement. Asset is recognized when it is
disposed of or when no future economic benefits are expected from its use or recycling. Any
gains or losses resulting from the non-recognition of the asset (calculated as the difference
between the net proceeds of dumping and the carrying amount of the asset) is included in the
profit and loss of the year in which the asset is de-recognized.

34 | P a g e
Inviolable properties

Both are reported at cost less accrued depreciation and amortization and any allowance for
disability loss. Amortization of intangible fixed assets shall be paid to profits using the straight-
line approach at the rates set out in note 9 to the financial statements, taking into account, if any,
the residual value.

Complete month's asset value is measured from the month the properties are eligible for use,
whereby the expense of the asset worth is recouped over its projected useful life over which
economic benefits are supposed to flow to the Business.

Resources working-in-progress

All expenses connected with specific assets accumulated during deployment and construction
phase are carried under capital work in progress. It also social optimum to suppliers in terms of
non - current assets. They are transferred to specific assets as and when the assets are available
for use. Capital work-in-progress is reported at a lower cost, if any, of impairment in value.

Investments
Classification

Funds of specific amount of money payments and fixed growth, where the Firm has good intent
and willingness to hold to maturity, are known as held-to-maturity. Investments accumulated
solely for the purpose of selling or buying back in the near future shall be listed as being retained
for trading purposes. All investment decisions not classified both as held to maturity, held for
trading or as market value through profit or loss have been classified as available-for - sale. The
company does not hold any business plan held for trading purposes.

Original identification and assessment

All financial products shall be recognized in the financial statements when, and only when, the
company becomes a party to the contractual provisions of the instruments. All investments are
actually introduced at cost, being the fair value of the thought given, including management fees

35 | P a g e
associated with the investment, except those kept for selling investments and in the divisions of
Fair Value by Profit or Loss, where even the costs and risks are paid to the profit and loss account.

Funding categories and subsequent measurements

Equal value by benefit or loss

Investment funds in FVTPL include held-for-trading investments and investments other than
intended to hold-for-trading that are calculated at fair value by gains or losses.

 Retained-for-trading investments are investments that are acquired and held primarily for
the purpose of having to sell in the short to medium term or are responsible for the
process of identified securities that are jointly managed and for which there is evidence
of a recent actual pattern of short-term profit taking.
 Transactions other than intended to hold-for-trading that are classified at fair value are
defined as such if they remove or substantially minimize the inconsistency of calculation
or recognition that would otherwise result from the calculation of assets or liabilities or
the recognition of price movements on a separate basis.

All assets under bondholders' funds, except for assets in short-term deposits, are being listed as
being carried at market price through benefit or loss.

Investment funds classified as FVTPL are period indicated at their market price with market
price adjustments and came to realize profits and losses identified in their respective funds.
Reveal the extent which do not have a quoted market price in an open marketplace and whose
fair value cannot be calculated accurately shall be carried at rate.

Available for sale

All assets under the shareholder fund, except for assets in short-term deposits, have been listed as
available-for - sale assets. AFS investment funds are investments which are not categorized in any
of the other categories and are initially measured at cost. AFS assets are initially accepted at fair
value plus management fees that are directly due to their purchase and are reinforce the idea out
at fair value. Fair market value gains or losses of such investments shall be recognized
immediately in other revaluation surplus, except for impairment losses. A considerable or
prolonged decline in
36 | P a g e
the fair value of the stock below its price is considered when determining whether assets are
impaired. If any such proof exists for AFS investments, the net losses, calculated as the gap
between the purchase cost and the actual fair value, minus any accumulated depreciation on the
previously recognized investment is deducted from equity and recognized in benefit or losses.

Keep-to-Maturity

This describes fixed-term deposits held with Islamic commercial banks on a profits and losses-
sharing arrangement.

Evaluation of Fair / Market Worth

In the case of investment in government & other fixed income securities, fair / market value is
determined by reference to quotes obtained from brokers. The fair / actual value of the mutual
fund units shall be determined in accordance with the rates announced by the Pakistan Mutual
Funds Association (MUFAP). The fair / market value of the shares shall be decided on the basis
of the closing market values available on the Pakistan Stock Exchange.

Recognition Date

Daily purchases and sales of securities requiring delivery within the period laid down by the
Regulations or by the Business Agreement shall be accepted at the trading date. The trading day
shall be the date upon which Company undertakes to buy or sell the property.

Disability of Non-Financial Properties

The persistent and recurrent of the assets of the Company shall be reviewed at each balance sheet
date to determine whether there is any indication of impairment loss. If any such action potential,
the recoverable value of the asset is projected to explore the impact of the lease liability, if any.
An intangible asset shall be known for the amount by which the carrying amount of the assets
exceeds its depreciation expense. The recoverable amount is the higher the fair value of the asset,
the lower the cost to sell and the value to be used. Impairment losses shall be charged to the
financial statement.

37 | P a g e
Ijarah Measures

Ijarah rentals shall be recognized as an expense on an accrual basis as and when rentals become
due.

Creditors, Unpaid Liabilities and Provisions

Obligations for shareholders and other amounts payable shall be paid at a cost which is the
market price of the evaluation to be paid in the long term for goods and/or service provided,
whether or not paid to the corporation.

Protections are known when the Organization has a current legal or constructive responsibility as
a result of historical incidents, it is possible that an outflow of money and economic benefits will
be needed to settle the responsibility and a reliable estimation of the amount can be produced. At
each balance sheet date, the provisions are revised and updated to reflect the current best
estimate.

Takaful Obligations

These includes unresolved claims and technical assets containing a reserve for claims – accrued
but not documented (IBNR), a payment deficiency reserve (CDR) and a buffer for unpaid
contributions.

Final Instruments

Financial instruments and financial liabilities other than those resulting from Takaful contracts
shall be accepted at the time when companies become permanent member of the agreement. At
the time of initial recognition, financial cash flows are assessed at equal prices, which is the price
of consideration offered or obtained for acceptance. Financial instruments are not recognized
until the contractual right to potential working capital from the asset expires or is passed along
with the risk and reward of the asset. Financial liabilities are not accepted until the duty stated in
the contract is discharged, terminated or expired. Any benefit or loss on the non-recognition of
the financial assets and liabilities shall be recognized in the profit and loss report or in the
revenue account as applicable.

38 | P a g e
Off-Situations

The financial asset and monetary liability shall be offset and the net sum shall be listed on the
balance sheet when the Corporation has a legally enforceable right to set off the sums accepted
and plans either to settle on a relative basis or to carry out the asset and to settle the liability at
the same time.

Takaful Agreements

Takaful contracts are focused on the Waqf Wakala Model concepts. Takaful is a curriculum
based on a Shariah-compliant, accepted definition based on the ideals of peaceful support,
solidarity and fraternity.

The responsibility of Waqf to the obligations of Waqf participants is limited to the amount
available in the Waqf property. In the case that Waqf funds are inadequate to meet their current
payments with less receipts, the shortfall is financed by an interest-free loan (Qard-e-Hasna)
from the Shareholders' Fund to the Policy Holders' Funds (Takaful Business Legal Funds). The
sum of Qard-e-Hasna shall be refunded to the fundamental concept.

Technical resources shall be set at the value calculated by the designated actuary through the
actuarial valuation carried out at each balance sheet date in compliance with section 50 of the
Policy Regulation, 2000.

The key econometric assumptions used by the auditor in the estimation of technical reserves are:

 Responsibility in respect of Family Takaful Company and riders of all styles shall be
decided by the system of unwarranted contribution. Due provision shall be made for
claims incurred but not reported (IBNR) and contingencies over the period of coverage.

 Responsibility is computed by calculating up individual policy statistical reserves. The

statistical reserves are measured on an individual basis as of the valuation date.

39 | P a g e
Takaful Community

The takaful family group contracts are normally issued on an annual renewable basis. The
Organization provides its members social life and credit department programs.

Person Takaful Contracts

Unity-linked

The company provides Unit Linked Takaful Plans that provide Shariah with financial security
and investment vehicles for specific individuals. These programs have cash value. The nature of
the death benefit is based on the Constant Sum at Risk strategy, i.e. the amount protected is
charged up to the cash value. Plans give investment options to the consumer to direct their
investment related contributions on the basis of their risk / return objectives. There are no
investing promises offered. The risk premium shall be borne by the participants.

Period of life

The Business provides term life contracts that provide financial insurance to individual
participants. The nature of the death benefit is based on the declining value of the word, i.e. the
nominal value is decreased over time. The package provides options for financial security by
choosing variables to minimize the face value.

Requirement of Pending Claims

Responsibility for pending claims shall be acknowledged in respect of all claims made up to the
balance sheet date and shall include the estimated compensation costs, except for accident and
health claims / deductions / partial withdrawals, which shall be acknowledged as soon as
accurate estimates of the assertions amounts can be made.

Assertions where the intimation of the incident giving rise to the claim is issued or in support of
investment related business where the policy fails to engage in the earnings of the bondholders'
funds are recorded as claims in the revenue account.

40 | P a g e
Assert reversals receivable from the retractable operator shall be accepted at the same time as the
claim which gave rise to the right of recovery and shall be calculated at the sum expected to be
retrieved.

Reservation for Claims - Incurred but not recorded (IBNR)

Responsibility for claims-IBNR shall be decided by the Nominated Actuary and shall be
included in the qualified resources. The IBNR is calculated as a percentage of the earned
contribution on the basis of past claims reporting patterns.

Reserve Contribution Deficiency

The Corporation retains a provision in respect of contribution shortfall for the class of business
where the unwarranted contribution reserve is not appropriate to cover the estimated future
liability, following retaliatory claims and other potential costs expected to be incurred after the
balance sheet date in respect of the unregistered policies of that class of business on the balance
sheet date. The provision for contribution deficiency reserve shall be made in compliance with
the advice of the designated actuary. The motion in the investment deficit reserve shall be
reported as an expense / income in the revenue report.

Authority

The expenditure incurred by the Commission in obtaining and recording policies shall be accepted
as an expense in compliance with the pattern of recognition / receipt of contribution revenue.

Retakaful

Agreements entered into by the Business with a retaliatory operator, in which Waqf cedes the
risk assumed during the normal course of its business and according to which Waqf is liable for
losses on contracts provided by Waqf.

41 | P a g e
Retakaful Response

The Retakaful response is registered at the time the Retakaful is relinquished. The surplus from
the retaliatory operator is recognized in the revenue account.

Retakaful Cost

Retakaful costs shall be regarded as responsibility in compliance with the pattern of

acknowledgment of the relevant contribution.

Retakaful Income and Expenses

Retakaful assets reflect balances due from the retaliatory operator. The recoverable sums are
calculated in a way that is consistent with the relevant Retakaful treaties. Retaliatory losses are
balances attributable to retaliatory firms. Amounts payable shall be calculated in a way that is
consistent with the agreements in force. Retakaful assets are not counterbalanced against related
liabilities. Profits or expenditures of a retractable contract shall not be offset against the costs or
earnings of similar contracts as required by the Insurance Ordinance, 2000. Retakaful financial
assets are de-recognized when conduction happens are revoked or terminated.

Impairment of Retakaful Properties

A depreciation analysis of Retakaful assets is carried out at each balance sheet date. If there is
objective proof that the property is impaired, the Corporation shall reduce the carrying value of
the asset to its recoverable amount and shall reflect the impairment loss in the income statement.

42 | P a g e
 Chapter 4

SEGMENTATION

43 | P a g e
4. Segment of Operations

The operating segment is a category of assets and activities engaged in the provision of goods or
services that are subject to risks and returns that vary from those of other operating segments.
The business shall be liable for segment reports using courses or subtypes of company (Takaful
Business Statute Funds) as stipulated in the Insurance Ordinance, 2000.

The Company has three primary business segments for reporting purposes; Family Takaful
Person, Family Takaful Group and Health Takaful Group:

 The Specific Family Takaful section offers group insurance to individuals under unit-
based policies provided by the PTF.
 The Family Takaful family business section offers takaful family coverage to members of
business companies, corporate organizations and general interest groups under the takaful
group family schemes provided by the PTF.
 The Health Takaful Group section offers clinical care and inpatient / outpatient health
coverage to members of business entities and corporate organizations under group health
policies provided by the PTF.

Financial Accounting Contributions

Individual Families

 Accomplishments and single payments for the first year shall be accepted after the
relevant policies have been provided against receipt of the donation.
 Renewal investments shall be recognized on the basis of receipt.
 Top-up accomplishments shall be recognized against receipt of the contribution.

Family Group

Contributions The family efforts shall be recognized as and when due. As far as such
community strategies are concerned, the Organization continues to offer coverage even though
the donation is earned after the grace period.

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Health Group

Group Health contributions shall be recognized as and when due. As far as such community
strategies are concerned, the Organization continues to offer coverage even though the donation
is earned after the grace period.

Revenue from Investments

 Refund on deposit accounts and income on Islamic investment products is recognized on

an income statement.
 Benefit / failure on sale of available-for - sale investments and investments held at fair
value through other comprehensive shall be included in the profit and loss account or
generating profit, as appropriate, during the period of sale.
 Dividend payments is acknowledged when the right is formed to collect the dividend.

Withhold your Unearned Participation

The unpaid portion of the gross contribution net of wakala shall be set aside as a reserve and
shall be included in the professional resources. Such reserves are determined as a portion of the
gross contribution of each regulation, determined according to the ratio of the unexpired duration
of the policy and the total duration both determined to the nearest day.

Cost of Acquisition

These are costs incurred in the acquisition and maintenance of the Takaful initiatives and
include, without constraint, all forms of payments made to the Takaful agents. Commissions and
other expenses shall be recognized as expenses for the preceding financial year in which they are
paid and for the financial year where they become due and payable, except that the committee
and other expenses directly related to the acquiring or renewal of a specific contract shall be
recognized no later than the time frame in which the contribution to which they relate is
collected.

45 | P a g e
Takaful Operative's Fee

The shareholders of a company shall administer the family activities of the participants and, as
being such, the Company shall be entitled to meet its general and administrative expenses for the
administration of the takaful activity under the Waqf Fund. The fee for the Takaful operator shall
be remembered in advance.

Fee for Modarib

The shareholders of a company control the investment of the PTF as a Modarib and tax Modarib
share of profitable investment profits and benefit on bank balances generated by the PTF.

Contribution Due but Not Paying

These are actually introduced at fair value. The provision for impairment of the receivable
contribution shall be defined if there is objective proof that the Company may not be able to
recover all the sums due in compliance with the original duration of the receivables. Accounts
receivable are assessed according to their ageing and provision is thus maintained on a
progressing premise.

Responsibility Obligation Test

An appraisal has been put in place to ensure that the business provisions are sufficient Using
current forecasts of future cash flows, the appointed actuary has taken care of the corporation's
budget predictions to hold the reserve in the light of the expected future cash flows. recent
predictions are sufficient and no separate reserve needs to be set aside.

Price of Claims

Requirement shall be retained for all repaid claims against damages sustained up to the balance
sheet date calculated at the undiscounted value of the estimated future payments. Allegations
shall be acknowledged if the occurrence happens until the policy fails to engage in the earnings
of the funds

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Dividend and Utilization of Reserves

Dividends and appropriations for reserves other than those required by law or calculated by
actuary or permitted by Insurance Regulation 2000 shall be accepted in the year in that they are
accepted.

Qard-e- Hasna

When the PTF, including reserves, is inadequate to satisfy current payments with less invoices,
the deficit is financed by an interest-free loan (qarde-hasna) from the selling and promotion
effort.

MANAGEMENT TAKAFUL AND FINANCIAL RISK

The Organization shall issue contracts which pass the risk or financial risk or both to the
Company. This segment discusses these risks and the way the Organization handles them. 45.1
Takaful danger The PTF shall issue Takaful contracts which shall be classified in the following
segment.

 Individual family
 Family group
 Health group

The individual or family, including the (unit-linked) segment, provides family coverage to
individuals under unit-based policies issued by the PTF. The Takaful family contracts are
distributed through to the Direct sales team and Banca Takaful.

The Family Group section offers a takaful family coverage to representatives of business
companies and corporate organizations under community family takaful schemes provided by
the PTF. Takaful contracts through group family are distributed through the Direct Sales Force
and sales workers working by the Firm.

The Health Group division offers accident compensation and inpatient / outpatient health
coverage to employees of business companies and corporate agencies under group health
schemes provided by the PTF. Group health contracts are administered by the Direct Sales Force

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and sales personnel hired by the state.

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Categories of Takaful Agreements

 Long-term Takaful Agreements

 Short-term Takaful Agreements

Long-term Takaful Agreements

(a) Sources of unpredictability in the estimate of future pension contributions and

donation receipts.

Uncertainty in the estimation of future benefit payments and contribution receipts for long-term
contracts emerges from the unpredictability of long-term changes throughout overall mortality
levels and the variability in the behavior of the contract holder.

The Company shall use appropriate basic tables of standard death rates according to the form of
procurement entered into and the territory in which the insured person resides. An examination
of the actual experience of the Organization over the last few years is carried out and statistical
methods are used to change the crude mortality rate in order to provide the best estimate of the
predicted future mortality where the data are adequate to be statistically reliable. Stats created by
the data are used without reference to a sector table Where this is not based on standard industry
tables modified for the Company's overall experience, agreements that ensure survival. An
estimation is needed to potential mortality changes on the basis of patterns found in the data and
the continuous mortality reflected in this experience The Organization retains voluntary
termination statistics to examine the divergence of real termination experience from assumptions.
Statistical approaches shall be used to assess the required termination rates. The allowance is
then made for any data patterns to arrive at the best estimate of potential termination rates.

(b) The mechanism used to evaluate the

Assumptions Experience of death and morbidity:

Death rates / Morbidity tables are based on the risk rates paid by Re Takaful Operators serving
individual and g mug lines of business. These rates vary depending on age, sex, occupation and
the nature of the industry.

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Persistence rates for individual long-term policies:

An enquiry of the experience of the Com pa from time to time determines the appropriate rate of
persistence. Persistence rates differ by product type and length of the policy. The allowance is
then made for any data patterns to arrive at the best estimate of potential persistence rates, taking
into account the actions of the Respondents.

Expenditure and Inflation

All administrative and operational costs are paid to SHF; hence the aggregate demand costs are
borne by SHF. Investment Returns The value of the Participant Account of these Plans depends
on the actual investment returns earned under these initiatives.

Taxation

Taxes do not have a significant effect on the value of liabilities, potential income payments and
contribution.

Change of Assumptions

In the course of the year, there has been no change in the assumptions for the Takaful contracts.

Short-term Agreements

(a) Extent and Seriousness of Allegations

These contracts typically compensate a pre-determined long - term disability sum without any
sophistication or resignation value. These arrangements are provided to individuals and also to
employers to ensure that they are committed to their workers in the form of other employee
benefit programs.

The risk is affected by many factors, such as age, occupation, profit structure and lifestyle. The
Company helps to preserve this risk through its subscription, claims handling and Retakaful
strategy.

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(b) Citation of uncertainty in the prediction of future claims payments

Apart from the determination of the adequacy of the liability covering the unexpired risk at the
end of the repotting cycle, there is no need to estimate the mortality rate for the unexpired risk
due to the short term of these contracts. However, in the case of disability income claims
sustained, it is important to predict the rate of disability recovery for future years. Standard
recovery tables provided by reinsurers are used as well as the Company's experience in actual.
The effect of economic conditions on the actual recovery rate for individual contracts is a key
source of uncertainty for these figures.

Method used to evaluate the assumptions

The assumptions used for these contracts are the same as for long-term contracts.

Death Rate

Depending on the type of contract, an obvious place table of standard mortality is selected. The
Company's experience investigation is conducted from time to time. Where the data is sufficient
to be statistically reliable, the statistics generated by the data are used without regard to the
business table.

Morbidity

The rate of disability recovery is derived from industry experience studies, adjusted and
appropriate to the corporation's own knowledge.

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 Chapter 5

CONCLUSION

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5. Conclusion

I am extremely privileged to be a part Pak – Qatar Takaful Company during my internship period
I learned professional skills and involved in practical exercises. During this period my
professional career is more influenced by working under different cultural diversity. I feel like
this is the best part of my life as well as the best part of my educational history. I got exposure of
working in practical field which is important my career. The theoretical knowledge has great
importance due to this i understand the process and goals of the organization. I observed that the
organization has bright future if top management make decisions by capitalizing the emerging
opportunities with the strength of the organization and cover threats by enhancing or bring
changes in the weakness. The employees are capable enough and given the plat form to use their
full potential and give great outcomes. Pak – Qatar Takaful Board of Directors takes a keen and
personal interest in expansion of the organization.

The employees of the organization are fully motivated toward the work. Organization provides a
suitable friendly environment to the employees. All the employees of the organization have great
interaction with each other and they are always ready to help each other during job time.

Each coming day Pak – Qatar Takaful adopting new technology and focus on adopting new stuff
that leads to the better future of the organization.

References

www.pakqatar.com.pk

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