Determinants of Performance of Insurance Companies having Window Takaful Operations in Pakistan

Hafiz Rauf Iqbal

Muhammad Asghar Shahzad

Hafiz Ghulam Abbas

Muhammad Akmal

 

Abstract: This article examines the performance of window takaful (i.e., Shari’ah compliant insurance financial instrument) companies with specific reference to the Islamization of the economy in Pakistan. The Securities and Exchange Commission of Pakistan has allowed conventional insurance companies to start window takaful operations. An assessment of the performance of these operations is important to ascertain the sustainability of this model. Using data from 2010 to 2019, the top ten insurance companies, five of which are general and life insurance companies, have been selected for the analysis in this article. Ratio analysis is employed to analyse the financial performance of these entities before and after starting their operations in an event window setting. The results derived from the analysis are mixed as few indicators show better performance after starting a takaful business, but most indicators show results otherwise. Reasons for poor performance are lack of human resources, inadequate takaful business expertise, and injecting resources from conventional to takaful business. The findings of this study are important for understanding the performance of entities after starting a takaful business.