International experts presently urged that it is an exciting time in the insurance sector internationally, as insurers are spending greater than ever to transform their business models and seize subtly dissimilar growth opportunities almost all over the globe. Of course, macroeconomic issues, demographic shifts and latest competitive threats are the main problems and part of what energizes leaders of this sector. They have also recorded that there are two main channels by which the insurance sector can assist the economic and social development of any country: first, by reducing unrest, and second, by generating long-term financial resources. Studies also recorded that the insurance sector playing a supportive role in the development of other financial institutions and markets as well. For example, both availability of funds and insurance facility, permit financial intermediaries to enter into new markets.
In Pakistan, Takaful Pakistan Limited is managed and supervised through a qualified and distinguished Shariah Adviser, the Company has the capacity to underwrite risks in all avenues of General Insurance namely, Property (Fire & Engineering), Marine, Motor, Liabilities, etc. In addition, the Company has the expertise and arrangements with overseas ReTakaful operators enabling it to offer comprehensive coverage for large infrastructure projects, specialized risks and umbrella/blanket covers specifically tailored for Islamic banking operations as well as for large corporate groups.
For the year 2018, the financial experts of the company recorded in the statement that the Gross Written Contribution enormously grew by 151 percent year on year (YoY) and clocked in at Rs. 375.8 million. There is tremendous rise of 374 percent from last year 2017 in Motor Business. Net contribution closed in at 145 million depicting a rise of 5 percent. 11 The financial experts noted that the unearned contribution stands at Rs. 216.6 million which is expect to earn in upcoming year. Net claims during 2018 were grown by 40 percent as against to the last year, due to rise in business chiefly attributable to motor & miscellaneous.
The management of the Company aims to lead the contemporary insurance/Takaful market ensuring that its operations are riba-free and are in line with the Islamic rules. Furthermore statistics also recorded that owing to vulnerability and volatility of Stock Market Index in 2018, Company booked impairment loss on equity investments by Rs. 9.3 million. This caused Total Net Investment Income to reduce by 13 percent YoY. No doubt, Takaful Pakistan Limited also provide a unique option of return of surplus to its clients whereby any balance remaining in its Waqf-Fund shall be returned to the participants in proportion to their original contributed amount. Takaful Pakistan
’s Management manages, as Takaful Operator, the general Takaful operations for the participants of its Participants’ Takaful Fund (PTF) 40 percent of gross contribution as Wakala fee to meet the general and administrative expenses of the company.
The financial statement of the Company showed that in 2018 the Company managed to earn Wakala Fees of Rs. 70.3 million which is 48 percent of the Net Takaful Contribution earned in the year 2018. Unearned Wakala Fees stands at Rs. 87 million which will be earned in the following year. Total Gross Investment income registered at Rs. 22.9 million depicting a rise of 13 percent YoY. The rise is attributable to Shareholders Fund Investment Income that grew by 23 percent YoY. In 2018 Shareholders Fund recorded a Net Loss After Tax of Rs. 77.2 million. The statistics also explained that combined ratio has grown from 103.2 percent in 2017 to 163.4 percent in 2018 because of significant rise in Management Expenses by 72 percent that caused the Underwriting Expense Ratio to rise by 46.8 percent YoY.
While Loss Ratio has also grown by 13.4 percent YoY because of rise in Net Claims Expense on account of rise in Business especially in Motor & Miscellaneous. Profitability Ratios were affected negatively due to losses in Shareholders’ Fund, on account of substantial rise in Management Expenses. While Participant Takaful Fund managed to closed in surplus, majority of the Gross Contribution Revenue written in Year 2018 will be earned in ensuing year.
Experts also recorded in the financial statement of the Company that the shareholders’ Return on Equity and Assets has declined to 23.2 percent and 8.1 percent respectively. It is important to note that the Wakala Fee of Rs. 87 million on Gross Contribution Written in 2018 would be earned in ensuing year that will assist to raise ROE & ROA.