Takaful Financial Strength (TFS) Rating Scale & Definitions

AAA: Rated takaful companies have the strongest financial strength and the strongest capacity to meet policyholder obligations. Unfavorable business and economic conditions are unlikely to distress this ability.

AA: Rated takaful companies have very strong financial strength and a very strong capacity to meet policyholder obligations. No material change in this capacity is expected due to unfavorable business and economic conditions in future.

A: Rated takaful companies have sound financial strength and a strong capacity to meet policyholder obligations. An adverse change in business and economic conditions may slightly affect this capacity.

BBB: Rated takaful companies have adequate financial strength and sufficient capacity to meet policyholder obligations. However, unfavorable business conditions can affect the firm’s financial strength.

BB: Rated takaful companies have marginal financial strength and a low capacity to meet policyholder obligations. The entity remains vulnerable to changes in the business and economic environment.

B: Rated takaful companies have weak financial strength and a weak ability to meet policyholder obligations. The entity requires favorable business conditions to ensure payments.

C: rated takaful companies have very weak financial strength and a very weak capability to meet policyholder obligations. The firm is unable to benefit from prospective improvement in the economic environment.

D: Rated takaful companies have extremely weak financial strength and insufficient capacity to meet policyholder obligations. These companies require periodic external support or regulatory intervention, without which their continued viability is in doubt.

Note: IIRA appends modifiers ‘+’ or ‘–’ (plus or minus) to each generic rating classification from AA through B. The modifier ‘+’ indicates that the entity ranks in the higher end of its generic rating category; no modifier indicates a mid-range ranking; and the modifier ‘–’ indicates a ranking in the lower end of that generic rating category.

Entities rated ‘BBB- and above’ are in the secure range while those rated ‘BB+ and below’ are in the vulnerable range.