5th Pillar Family Takaful Limited ("5th Pillar" or "the Company") was incorporated as a public unlisted company on March 05, 2020, under the Companies Act, 2017.

The Company is an emerging player in Pakistan's Family Takaful sector, supported by strong sponsors from Kuwait and Pakistan. It commenced operations with the sector's largest initial paid-up capital of PKR 2bln and maintains separate statutory funds for Individual and Group Family Takaful business, along with a Waqf Fund, in line with the applicable regulatory framework. The registered office of the Company is situated in Karachi, Pakistan.

The Company operates in the Family Takaful segment through Individual and Group Family Takaful businesses, offering Shariah-compliant savings and protection solutions. Its flagship products include the Hajj Savings Plan and Umrah Savings Plan, supported by an integrated ecosystem comprising 5th Pillar Travel (Private) Limited and 5th Pillar Arabia for pilgrimage-related services. Business is primarily generated through bancatakaful partnerships and a direct sales force, while digital distribution channels are expected to commence operations during 2026.

The Company is sponsored by Kuwait International Investment Holding Company (KIIC), IFA Group Kuwait, 5th Pillar Holdings Limited (DIFC, UAE) and the Muhammadi Family & Associates of Pakistan. As per the shareholding pattern, KIIC holds ~41.75%, 5th Pillar Holdings Limited holds ~26.25%, Mr. Muhammad Ali holds ~24.999%, Ms. Saima Sohail Tabba holds ~7.00%, and Directors collectively hold ~0.002%. Foreign shareholders own ~68% of the Company, while Pakistani interests hold the remaining ~32%.

Ownership of the Company remained stable during CY25, with the existing sponsor consortium maintaining its strategic shareholding. The continuity in ownership demonstrates the sponsors' long-term commitment to the Company's operations and future growth plans.

KIIC, founded in 1973 and headquartered in Kuwait, is owned by leading Kuwaiti business houses including the Kuwait Investment Authority (KIA). IFA Group Kuwait, incorporated in 1974, is a multi-billion US Dollar consortium with diverse investments in Takaful, Hospitality, Financial Services and Real Estate, including ownership of hotels comprising ~11,500 five-star room keys across four continents. The Muhammadi Family has been engaged in the Takaful/Insurance sector in Pakistan for over three generations. The Sponsors' combined expertise and diversified portfolios provide substantial strategic and financial support to the Company.

The Company derives financial strength from its sponsors, supported by their sound financial profile and demonstrated commitment to the business. The sponsors have continued to provide capital support, ensuring compliance with regulatory capital requirements and supporting the Company's growth strategy.

The overall control of the Company rests with an eight-member Board, comprising seven Non-Executive Directors and one Executive Director, including the CEO. Of the total Board members, five Directors represent the foreign sponsors, while two Directors represent the Pakistani sponsors, ensuring an appropriate balance of international expertise and local market knowledge.

The Board comprises seasoned professionals possessing diversified expertise across insurance, Islamic finance, investment management, corporate finance, and business development. The Chairperson, Mr. Saleh Saleh Naser Al-Selmi, serves as Vice Chairman & CEO of International Financial Advisors (IFA) Holding and has over 20 years of experience in insurance and financial services. Mr. Yusuf Abdul Rahman Saleh Al-Shaya, Founder & Chairman of 5th Pillar Holdings Limited, has extensive business interests across Islamic finance, technology, real estate, education, and travel & tourism. Mr. Tariq Sayed Jamal Al-Rifai brings over two decades of experience in Islamic banking and finance, having held senior positions at Kuwait Finance House, S&P Dow Jones Indices, and HSBC. Mr. Rami A. Habli, Head of Investment at Al-Bahar Group, possesses over 23 years of experience in investment management, corporate finance, private equity, and mergers & acquisitions. Mr. Mirza Baseer Baig, Founder and Executive Director of Business Development at 5th Pillar Holdings Limited, has more than 25 years of experience in financial-sector advisory and M&A across Pakistan and the GCC. Mr. Muhammad Ali, Director & COO of F&M Ventures (Private) Limited, contributes over a decade of experience spanning insurance brokerage and diversified business operations. Ms. Zulekha Sohail Tabba brings governance and business management experience through her association with the Tabba business group.

The Board is supported by Board-level committees, namely the Audit Committee (four meetings held during the year), the Investment Committee (two meetings) and the Ethics, Human Resource, Remuneration & Nomination Committee (two meetings), each chaired by a non-executive director. Written notices of Board meetings, along with agenda and working papers, are circulated at least seven days in advance, and minutes are appropriately recorded and circulated.

The external auditors, Crowe Hussain Chaudhry & Co., Chartered Accountants, issued an unqualified audit opinion on the Company's financial statements for the year ended December 31, 2025, with an emphasis of matter drawing attention to pending litigation on the applicability of provincial sales tax to the life insurance/family Takaful sector. The Board has recommended the continued appointment of Crowe Hussain Chaudhry & Co. as external auditors.

The Company operates through Sales & Distribution, Underwriting, Group Operations, Corporate Solutions, Finance, Claims, Actuarial/Risk Management/Retakaful, Information Technology, Human Resources and Customer Services & Grievance functions. All functional heads report to the Chief Executive Officer, who in turn reports to the Board. The Compliance Officer/Head of Internal Audit reports functionally to the Audit Committee.

The Company's senior management comprises experienced professionals with diverse insurance, finance, sales, and operations expertise. Mr. Nasar us Samad Qureshi, CEO, brings 50+ years of experience, including 15 years as Founding MD & CEO of Alfalah Insurance. Mr. Nasir Ali Syed, Executive Director – Operations, has 28+ years of experience, including senior roles at Pak-Qatar Takaful Group and CEO positions at Pak-Qatar General and Family Takaful. Mr. Awais Hanif, CFO/Company Secretary, is an ACA with 13+ years of experience, including Company Secretary at IGI Life Insurance. Mr. Raja Muhammad Adnan, National Sales Head – Bancassurance, has 20+ years of experience, including senior sales roles at Adamjee Life and Standard Chartered Bank. Overall, the management team possesses extensive experience across insurance, Takaful, finance, bancassurance, sales, and risk management.

The management structure is supported by three operational committees: (i) the Underwriting & Retakaful Committee, (ii) the Claims Settlement Committee, and (iii) the Risk Management and Compliance Committee, each of which met four times during the year. These committees facilitate decision-making and oversight across underwriting, claims and risk functions, and their results are reported to the Board through the relevant Board committees.

The Company processes claims through a structured claims management framework overseen by the Claims Settlement Committee, which reviews claims performance on a quarterly basis. Reported outstanding claims are settled within one year in line with the Company's stated claims policy.

Investment decisions are made by the Investment Committee, chaired by Mr. Muhammad Ali (over 15 years of experience in insurance and business development), comprising Board and management representatives including Mr. Rami A. Habli (23 years of experience in Corporate Finance and Private Equities). The Committee met twice during the year and oversees the Company's Shariah-compliant investment portfolio, which is invested predominantly in Government of Pakistan Ijarah Sukuk, listed equities and Shariah-compliant mutual funds.

The Company has established a structured Enterprise Risk Management (ERM) framework operating through five stages — risk identification, assessment and measurement, risk response and action, monitoring, and reporting — with risks systematically recorded in risk registers and reported to the Board through the Risk Management and Compliance Committee and senior management.

The life insurance sector in Pakistan recorded Gross Premium Written (GPW) of PKR ~496.9bn in CY25, up ~13.8% YoY, driven by strong growth across both public and private segments. The public segment remained dominant with a ~58.6% share (PKR ~291.2bn, +8.8% YoY), while the private segment outpaced growth at ~21.7% YoY to PKR ~205.7bn, increasing its share to ~41.4%. Despite sustained expansion, the sector remains underpenetrated versus regional peers, though growth is supported by improving macroeconomic conditions, rising bancassurance penetration, and regulatory reforms including IFRS 17 and risk-based capital framework enhancements. The premium mix continued to shift toward quality, with individual regular premiums rising to ~52.8% (CY24: ~47.7%) amid lower inflation and improved purchasing power, while group business moderated to ~38.1% and single premiums declined to ~9.1%. On the claims side, gross claims increased ~7.3% to PKR ~412.7bn, with a decline in surrender claims to ~40.5% reflecting improved retention, while maturity and death claims increased with a growing in-force portfolio. The sector’s investment portfolio remains predominantly concentrated in government securities, mainly Treasury Bills, Pakistan Investment Bonds (PIBs), and Sukuks. This allocation reflects a regulatory-driven and risk-averse investment strategy focused on capital preservation, liquidity management, and stable long-term returns. Sector profitability remained broadly stable at PKR ~23.7bn (-0.8% YoY), as strong premium growth was offset by a ~13.5% decline in investment income due to monetary easing and a sharp reduction in policy rates.  (Source: PACRA Sector Study)

5th Pillar remains a small player within Pakistan’s private life insurance sector, with a market share of less than 1%. Its positioning is differentiated by its focused presence in the Hajj and Umrah savings segment, supported by an end-to-end value chain and bancatakaful partnerships.

The Company's first-year persistency improved to 49% in CY25 (3MCY26: 19%; CY24: 42%), supported by the seasoning of the policy book and a growing renewal base, with renewal contributions reaching Rs. 156mln. 

During CY25, gross contributions increased by ~224% YoY to PKR 1,815.6mln (3MCY26: 546.2mln; CY24 560.4mln), driven primarily by a significant expansion in the Individual Family Takaful business. Individual Family Takaful GPW grew by ~204% to PKR 943mln, supported by increased business generated through bancatakaful channels and continued demand for the Company's Hajj and Umrah savings products. Group Family Takaful premium also increased by ~30% to PKR 272.7mln, indicating broad-based growth across business segments, while single contributions rose to PKR 444mln, reflecting higher uptake of savings-oriented plans. Consequently, net contribution revenue increased by ~274% to PKR 1,663.5mln in CY25 (3MCY26: PKR 491.7mln).

During CY25, 5th Pillar reported a loss before tax of ~PKR 353.5mln (3MCY26: loss of ~PKR 89.4mln; CY24: loss of ~PKR 168.4mln), and a loss after tax of ~PKR 319.6mln (CY24: loss of ~PKR 140.5mln), translating into a loss per share of PKR 1.60 (CY24: PKR 0.70). The higher loss was driven by a substantial net change in takaful liabilities of ~PKR 1,138.6mln (CY24: ~PKR 267.4mln), reflecting rapid growth in the unit-linked investment component of participants' funds, along with higher acquisition expenses of ~PKR 418.6mln (CY24: ~PKR 172.7mln) and marketing and administration expenses of ~PKR 622.7mln (CY24: ~PKR 462.7mln), in line with the Company's business expansion. As typical of the initial years of any life insurance/family Takaful company, the Company's bottom line continues to reflect the upfront costs of building its distribution and operational infrastructure. Going forward, disciplined expense management alongside a maturing renewal book is expected to support the path toward profitability.

In CY25, the Company's investment book increased by ~33% YoY to PKR 2,478.8mln, primarily supported by higher contribution inflows and deployment into Shariah-compliant instruments. Government Ijarah Sukuk remained the core investment class at ~79% of the portfolio, increasing by ~54% to PKR 1,949.9mln, while mutual fund investments grew by ~27% to PKR 404.6mln. In contrast, equity exposure declined by ~56% to PKR 124.3mln, indicating a shift in portfolio allocation toward fixed-income instruments. Despite the larger investment base, investment income declined by ~16% to PKR 188.2mln during CY25, mainly due to lower yields following the decline in the policy rate during CY25.

The Company's sustainability is supported by its growing market presence in Pakistan's Family Takaful sector, underpinned by a multi-channel distribution model comprising bancatakaful partnerships and a dedicated sales and distribution setup. Its focused Shariah-compliant savings and protection proposition, particularly Hajj and Umrah solutions, provides a differentiated niche supported by an end-to-end Hajj services value chain. The Company continues to strengthen customer accessibility through its physical distribution footprint, while planned digital distribution, mobile application and web-based engagement channels are expected to broaden outreach and enhance customer servicing. Oversight by the Shariah Advisor, supported by a dedicated Shariah framework, reinforces adherence to Islamic principles across products and investments.

The Company's claims profile remains manageable, with the increase in net claims largely reflecting the expanding and maturing policy portfolio. During CY25, net claims rose to PKR 211.4mln, primarily due to higher surrenders under the savings-oriented individual portfolio. Retakaful recoveries of PKR 159.5mln provided meaningful risk mitigation, keeping the net claims ratio at 12.7%, while the claims management framework supports timely settlement.

The Company's retakaful arrangements provide effective risk transfer and help manage mortality exposures across its Individual and Group Family Takaful portfolios. The arrangement with Hannover Retakaful Company, rated AA by S&P, provides comfort on counterparty strength and supports the Company's ability to manage larger risk exposures.

The Company's liquidity profile remains comfortable, supported by cash and bank balances of PKR 251.7mln and a liquid investment portfolio comprising Government Ijarah Sukuk and mutual funds. Total liquid assets of PKR 2,606.2mln provided substantial coverage of outstanding claims of PKR 107.0mln, translating into a claims coverage ratio of 24.4x. Operating cash flow turned positive at PKR 682.4mln in CY25 (CY24: outflow of PKR 219.4mln), supported by higher underwriting cash inflows of PKR 1,335.4mln. The sizeable liquid asset base and positive operating cash flows provide adequate headroom to meet policyholder claims and ongoing operating obligations.

As of CY25, the Company's total equity declined by ~21% to PKR 1,401.7mln (3MCY26: PKR 1,281.7mln; CY24: PKR 1,780.2mln), primarily due to the accumulated loss for the year, which increased accumulated losses to PKR 422.9mln. The paid-up share capital remained unchanged at PKR 2,000mln, with no dividend declared during the year.