Adamjee Insurance with almost extraordinary
performance over last 25 years, suffered heavy losses in the UAE
resulting into the company having to post a loss of Rs 500 million in
the year 2001 Annual Accounts.
This has been a matter of concern for the
management of the company and quite naturally steps had to be taken to
avoid recurrence of such a loss and make-up the loss in the coming
years. Happily the year 2002, which is now subject to quarterly
accounts by the Security & Exchange Commission of Pakistan, has
already shown a profit of Rs 53 million.
This is a good start of the recovery process and
the management expects that by the end of the year the company will
have a reasonable profit, which will be a major step forward.
Some of the positive things about the company are
that it has an exceptionally strong client base with majority of the
multinational and international companies supporting the company and
yield a premium of Rs 1 billion or more, in Pakistan. Similarly all
major Pakistani clients in every industry are Adamjee clients and have
shown great loyalty to the company in the recent months.
The total premium of the company within Pakistan is
expected to be Rs 3.5 billion during the year 2002. The overseas
business, principally in Dubai and Sharjah has been curtailed, and we
expect to make a total income of Rs 4 billion, at the end of the year.
Better quality premium with better rates is expected to yield higher
profit, which is the need of the hour for the company.
Another factor helping the company is the
improvement of the stock market, which is showing an upward trend, and
at the present time the value of the index of 100 companies is close
to 1,800 points as against 1,300 points as at 31st December 2001. This
improvement makes considerable difference to a company like Adamjee
who has, and rightly so, prudently invested in stocks and shares of
companies from the stock exchange. The company has always benefited in
the past from the stock exchange and it is hoped that by the end of
the year the market will show even better strength, to give the
company considerable increase in its invested wealth.
On the subject of profit or loss of insurance
companies, it is desirable to submit that the best companies of the
world also produce underwriting losses and some of the very best show
an underwriting loss almost every year. They rely on the profit on
their invested income, built by them over hundreds of years.
In Pakistan we have had no opportunity to build
companies on international lines, mainly due to paucity of business,
anxiety of the domestic market to pay a dividend more and more and,
show better underwriting profit every year.
It may be surprising to know that the total volume
of premium of Pakistan is a mere US $ 262 million as compared to
world's total premium volume of US $ 909 billion. Our share in the
world volume is a mere 0.03%. With this kind of premium we cannot be
seen to be performing like a high quality international company. If we
were to examine the performance of international companies it will be
apparent that the combined ratio of top 100 insurance companies of the
world is 110.35%. The combined ratio consists of premium on the one
hand and loss, acquisition cost, and expense combined on the other.
There is a clear indication of top international companies of the
world losing money. However they do manage to pay some dividend to
their shareholders entirely out of their investment income, built by
them over hundreds of years, with the support of strong international
It is very unfortunate that Adamjee Insurance has
been criticized for losing money for one year, that is in 2001, which
was entirely because of heavy Dubai losses. However we have turned the
situation around and the company is now in profit. Al hamdo lillah and
inshallah it will continue to produce positive result quarter after