ADAMJEE INSURANCE COMPANY LIMITED...

MARIAM NASIR
Manager Research
June 25 - July 01, 2007

Adamjee Insurance Company Limited was incorporated as a public limited company on September 28, 1960 and is listed on Karachi and Lahore stock exchanges of the country. The company is also registered with the Central Depository Company of Pakistan Limited. AICL is involved in General Insurance business. The company started with a paid up capital of Rs. 2.5 million which has grown phenomenally to the current paid up capital of Rs. 1.022 billion which is the highest amongst all the general insurance companies. AICL enjoys a competitive edge in the insurance industry due its strong asset base, paid up capital, huge reserves, and balanced portfolio mix, steady growth in gross premium and continuous increase in share price at the stock market. The company has a major market share of engineering business in Pakistan. It provides Insurance protection to most of the private sector telecommunication industries. The company insures most of the textile mills, sugar mills and cement factories of the country. AICL pioneered the coverage of energy risks in Pakistan. Foreign concerns entering Pakistan to execute construction, erection or infrastructure development projects are insured by AICL. The company is the principal insurer in Pakistan for Kidnap & Ransom, Professional Indemnity, Product Liability and other specialized lines.

NEW MANAGEMENT

Adamjee insurance was taken over by the Mansha group in 2003 which is one of the largest business groups in Pakistan and it has its strong presence in banking, cement and textile businesses. The year 2004 was the first year of company's operations under new management. Since the change in management, profitability of the company displayed a growth of 100% annually over the past 3 years. The growth in profitability has been contributed by both underwriting and investment income.

(RS. IN MN)

FINANCIAL HIGHLIGHTS

2005

2006

CHANGE

Profit and Loss

Gross Premium

6,682

7,912

18%

Net Premium

3,997

5,280

32%

Underwriting Result

306

482

58%

Investment Income

1,147

1,515

32%

Profit Before Tax

1,278

1,685

32%

Profit After Tax

1,163

1,577

36%

Balance Sheet

Paid Up Capital

826

1,022

24%

Equity

2,426

3,788

56%

Investments (Book Value)

3,040

4,503

48%

Investments (Market Value)

6,599

8,062

22%

Cash & Bank

1,428

883

-38%

Total Assets

9,182

11,139

21%

Total Liabilities

6,756

7,351

9%

AICL broadly is involved in underwriting the following classes of businesses:

* Fire and Property
* Marine, Aviation and Hull
* Motor
* Miscellaneous business

ADAMJEE INSURANCE - ENTERS RETAIL BUSINESS

Adamjee Insurance launched its first retail product 'Faaslay Asaan' a worldwide travel insurance plan - meanwhile, it has already communicated its plan to launch 12-13 retail products in years to come. The product 'Faaslay Asaan' is being offered through an airline business. This timely entry in an untapped retail market would provide first mover advantage to the company and is expected to act as a catalyst to maintain the ongoing growth momentum of the company. The company recently along with Faysal Bank Limited signed an agreement which has mandated FBL to provide AICL with an Automated Cheque Printing System. This Automated Cheque Printing System is designed to add value to AICL's specific needs for streamlining and automating the claim payments process for its Northern Zone and with provision of end to end processing of AICL's cheques with secure signature printing of authorized signatories. This system will have a defining impact on AICL's commitment to provide superior client services.

ADAMJEE INSURANCE - JOINT VENTURE IN LIFE INSURANCE

Adamjee Insurance Company Limited is in advanced stage of talks with two foreign insurance companies for a joint venture in life insurance business. The company is in final stages of discussions for a joint venture with a South African and an Australian insurance giant to complete its diversification plan into life assurance business. The agreement would be inked with one of the two parties. Underwriting of life insurance business would be started before the end of the current year. The company would be able to augment its underwriting income from general insurance business through earnings from the new line of life insurance.

FUTURE OUTLOOK

Suitable decision to expand and restarting Dubai operations from 1Q2007 will help Adamjee in increasing its gross premium. The company is also planning to enter in a Life

Insurance business and it is likely in the last quarter of 2007. Moreover, the management will soon launch 10-12 more products (insurance cover on credit cards, mortgage loans etc) in order to cater retail business. The equity portfolio as on Dec 31, 2005 was Rs1.7bn whereas, the current market value of its portfolio is more than Rs6bn. Adamjee has booked capital gain of Rs800 million in 2006 only. It means from existing portfolio the company can make a capital gain of Rs500 million on an average for next 5 years. Apart from that we expect rising industrialization, growing trade activities, double digit growth in car sales and increasing awareness about insurance products will bode well for insurance sector on the whole and Adamjee in particular.