PACRA Maintains IFS Ratings of 5th Pillar Family Takaful Limited

Life Insurance market is dominated by public sector company (~61% share as of Jun-23). While, the private sector holds only ~39% of the market share. Gross Premium (GPW) of the industry stood at PKR ~203bln during 6MCY23 (6MCY22: PKR~175bln), showing a YoY growth of ~16%. GPW is bifurcation i.e., between regular premium products (first year premium, second year renewal premium and subsequent year renewal premium), single premium products and group life policies. ~45% of the total premium pertains to renewal premium products, and is followed by premium booked under the category of group life without cash values at ~41% during Jun-23. Net Premium stood at PKR~ 199bln during 6MCY23 (6MCY22: PKR~171bln;), showing a YoY increase of ~16%. On the claims end, Net Claims stood at PKR ~179bln during 6MCY23 as compared to PKR ~122bln during 6MCY22. The total investment book of the insurance industry stood at PKR ~2,336bln during 6MCY23 (6MCY22: PKR ~2,009bln). Going forward, the overall outlook of the industry remains stable.
The ratings reflect emerging profile of 5th Pillar in the Life Insurance industry. The ratings is based on a unique business model, which combines commercial rationality and religious objectives into one binding package. The business is at the initial stages where the foundational work is being accomplished including signing up with the banks, undertaking training programs for the business development force and marketing tools etc. The ratings derive comfort from the strength and prominent position of the sponsors in international and local business market. The Company operates in takaful business by offering Hajj and Umra savings plan to lower middle and middle class people in the society. However, going forward the management aims to expand their product suite by offering various saving plans including; children education plans, marriage savings plans, retirement and pension plans. Moreover, the aim is to build the market share by investing in digitization. The business is expected to pick up from the next year. Meanwhile, support form the investment income is the mainstay. During this time period, the equity base has to support, wherein which, if dilution comes, sponsors are expected to come forward.
The ratings are dependent on the continued tangible support and guidance from the key sponsors. The successful unfolding of the model is of absolute necessity. The equity of the company needs to be kept liquid and in safe investment avenues.

About the Entity
5th Pillar Family Takaful Limited ("5th Pillar" or "the Company") was incorporated in Mar-20 as a public unlisted company. The Company operates in Takaful Life Insurance business. Major stake ~42% is held by Kuwait International Investment Holding Company. The Sponsors posses diversified experience in local and international investment and asset management services. The Company's Board is chaired by Mr. Saleh Naser Al - Selmi. While, Mr. Nasar us Samad Qureshi serves as Company's CEO. He is assisted by a experienced professionals.