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SLIC yet to release its annual report for 1998

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  4. SLIC yet to release its 1998 accounts

Board of Directors have already approved the report but the delay is startling

By Syed M. Aslam
Oct 25 - 31, 1999

The public sector State Life Insurance Corporation of Pakistan is known for not caring much about releasing its financial reports on time. It has yet to release its annual report for the year ended December 31, 1998 although the report has been approved by its Board of Directors recently.

However, this did not discourage the Chairman of SLIC, Dr Najeeb Samie, to address a hurriedly called press briefing on October 19 to highlight the financial performance of the Corporation during the first nine months of the current year ended September 30.

Comparing the nine-month performance with the comparative period last year Najeeb declared that SLIC’s life fund increased by over 29 per cent to Rs 4.6 billion during the first three quarters of this year as compared to the same period last year. He also said that the renewal premium level ‘which has been historically hard to maintain’ also scaled up to Rs 2 billion during the same period up from Rs 1.9 billion during the comparative period last year.

He also talked about the stability and strength of the Corporation saying that it was confirmed by the increase in the size of the Life Fund which stood at Rs 55.5 billion as on December 31, 1998. It is estimated to have increased to Rs 60 billion on September 30 this year.

During the first nine months of this year the total premium stood at Rs 4.45 billion— Rs 621 million from Individual Life, Rs 2 billion from the Renewal Premium and Rs 827 million from Group Insurance.

The SLIC chairman stressed that the strength of the Corporation was confirmed by its strong growth in the size of the life fund which was estimated at Rs 60 billion as on September 30 this year when compared with Rs 55.5 billion on December 31, last year. However, at a glance SLIC’s annual results during last many years show deterioration from many other aspects.

For instance, the renewal premium has decreased drastically from Rs 4.7 billion in 1996 to Rs 1.9 billion last year and only increased by 6 per cent to Rs 2 billion during the first nine months of the current year.

Similarly, the group premium which stood at Rs 1.4 billion in 1997 declined by 40 per cent from Rs 1.4 billion in 1997 to Rs 827 million during the first nine months of this year. The total premium has also declined by less than half from Rs 7.3 billion in 1997 to Rs 3.45 billion during the first nine months.

While the chairman made no mention of the overall expense ratio of the SLIC the same increased from 36.7 per cent in 1994 to 43.2 per cent in 1997 according to the last annual report published by the SLIC in 1997.

The same has been the case of the number of ordinary policies in force which declined from 2.09 million in 1996 to 2.03 million as on December 31, last year.

Besides approving the accounts for the year ended December 31, 1998, the SLIC Board of Directors also approved the Actuarial Valuation for the two -year period ended on the same date. They also revealed that the SLIC has an actuarial surplus of Rs 6 billion enabling it to enhance its bonus rates for its Ordinary Whole Life Policy Holders from Rs 84 in 1996 to Rs 91 in 1998. And from Rs 76 to Rs 83 per thousand sum assured per annum on endowment policies for 20 years and over. The rates of terminal bonus, and bonus for endowments have also gone up though they were quantified by the chairman.

Talking to PAGE, highly placed sources in the insurance industry said that the change of the government prompted the SLIC to approve its 1998 accounts as well as the two-year actuarial valuation, a practice which has never been witnessed by the SLIC in the past. This is evident from the release of 1996 Annual Report in last quarter of 1997, and 1997 Annual Report in December 1998.

They also said that SLIC which enjoyed a complete monopoly of the life insurance business in Pakistan since early 1970s when the life insurance business was nationalised in the country till it was deregulated to let the private companies enter the business in early 1990s was mismanaged at all levels. For instance, one of the source said that SLIC which enjoyed the major portion of the market even after a number of private life insurers entered the market, spent heavily on travel expenses.

Sources also alleged that it was an open secret that SLIC did not use to close its accounts and it was usual for it to keep accepting businesses till, as late as April, May and June despite the fact that its accounting year officially closed on December 31. This was done to provide an exaggerated volume of business for the year, they added.

State Life’s Financial Performance (In Rs)

1997 1998 Nine months Ended Sep. 30, ‘99

Total Premium 7.3 B — 3.45 B

Investment Portfolio 48.3 B 54 B 58.6 B

Investment Income 5.9 6 B 5.4 B

No. of Policies in force (Ordinary Life) 2.09 m — 2.03 m

Life Fund 51 B 55.5 B 60 B