INSURANCE COMPANIES' PROFITS DECLINE

TARIQ AHMED SAEEDI (tariqsaeedi@hotmail.com)
Sep
 07 - 13, 2009

Profits of general and life insurance companies of Pakistan declined in the first quarter ended March 2009 as compared to corresponding quarter 2008. The reasons were not increase in overall net claims and businesses underwritten by 31 member companies of insurance association of Pakistan (IAP). Insurance companies recorded total after tax profits at Rs985.99 million for the Jan-March of this calendar year. They posted after tax profits of Rs1.54 billion in the same period preceding year. Total pre-tax profits stood at Rs1.56 billion as against to Rs1.82 billion.

According to IAP statistics, during the first quarter 2009 net claims amounted to Rs3.04 billion as against Rs3.73 billion in the same quarter last year. Insurance companies underwrote total capital of Rs771.29 million in this quarter as against Rs.434.58 million in the preceding one. Overall results of insurers show that balance sheets of some of them were deteriorated on account of decline in investments and shrinking assets. Total assets of insurance companies stood at Rs85.75 billion at the end of first quarter in a stark contrast to Rs.102.72 billion as of March 2008. Similarly, investments including investment properties and bank deposits plummeted to Rs45.15 billion as against Rs60.08 billion. Shareholders' equity slid down to Rs45.94 billion in Jan-March 2009 where it amounted to Rs58.36 billion in the corresponding quarter last year. However, total paid up capital of insurance companies increased to Rs8.99 billion from Rs8.24 billion.

All 31 insurance companies earned income from investment and other sources during Jan-March 2008, whereas income from investment remained negative during Jan-March 2009. They incurred a negative income of Rs187.37 million on account of investments in first quarter ended March 2009, but it was compensated by income from other sources from where earning was Rs1.56 billion. In the same quarter last year, insurers earned cumulative income of Rs1.86 billion from gross investments including investment income, rental income, and return on deposits.

Total net commission expenses stood at R365.72 million for insurance companies during first three month of this calendar year while they footed the bill of Rs1.70 billion on account of premium deficiency, general and administration expenses, etc. Net commission and general and other expenditures were Rs412.40 million and Rs1.50 billion.

All member companies wrote cumulative premium including administrative surcharge of Rs.8.93 billion and depicted net premium revenue of Rs5.27 billion during Jan-March 2009. It is noticeable that during Jan-March 2008 although they wrote Rs8.83 billion as premium, net premium revenue remained Rs5.50 billion.

In terms of after tax losses, eleven companies posted losses for the quarter ended March 2009 according to results complied by IAP. The results did not include quarter results of some insurance companies such as Adamjee insurance, Agro Gen Ins. Co., Capital Insurance and Security Gen. Adamajee Insurance's pre-tax profit was recorded as Rs397.19 million in the quarter. Central Insurance was the biggest looser, recording after tax loss of Rs534.21 million followed by East West that posted after tax loss of Rs142.45 million, UBL Insurer Rs49.12 million, Askari Gen. Rs20.87 million, Excel Insurance Rs12.74 million, Century Insurance Rs11 million, Crescent Star Rs7.88 million, Alfalah Ins. Co. Rs5.04 million, Universal Ins. Rs3.96 million, Saudi Pak Ins. Rs3.76 million, and TPL Direct Ins. Ltd. Rs3.56 million.

During the comparable quarter, only four insurers recorded after tax losses. Saudi Pak Ins. faced loss of Rs10.10 million that was highest for that quarter. Trakker Direct Ins., UBL Insurer, and Excel Insurance posted after tax losses of Rs5.12 million, Rs4.82 million, and Rs636000, respectively.

As regard after tax profits IGI recorded Rs1.27 billion in the first three months of this calendar year. EFU Gen Ins earned Rs160.09 million, followed by New Jubilee Insurance Rs119.12 million, United Ins Rs46.70 million, Silver Star Rs39.33 million, Atlas Insurance Rs31.79 million, Premier Insurance Rs27.20 million, Habib Insurance Rs21.92 million, New Hampshire Ins. Rs19.85 million, Pakistan Gen. Ins. Rs15.76 million, Reliance Insurance Rs11.52 million, Asia Insurance Rs8.86 million, Alpha Insurance Rs3.80 million, Shaheen Insurance Rs2 million, PICIC over Rs1 million, and Cooperative Insurance Rs86000.

During Jan-March 2008, Security Gen. recorded after tax profit of Rs425.79 million, followed by EFU Gen Ins that posted after tax profit of Rs255.26 million, East West Rs221.02 million, IGI Rs94.87 million, Adamjee Insurance Rs88.42 million, Premier Insurance Rs52.25 million, New Hampshire Ins Rs48.80 million, Silver Star Rs47.24 million, United Ins Rs46.71, Central Insurance Rs44.32 million, Century Insurance Rs37.64 million, Habib Insurance Rs31.85 million, Atlas Insurance Rs31.79 million, Askari Gen Rs31.51 million, Shaheen Insurance Rs25.04 million, Universal Ins Rs15.21 million, Reliance Insurance Rs14.88 million, Pakistan Gen Ins Rs10.75 million, Alfalah Ins Co. Rs10.47 million, New Jubilee Ins Rs9.54 million, Alpha Insurance Rs.7.89 million, Agro Gen Ins Co. Rs7.82 million, Asia Insurance Rs5.19 million, Crescent Star Rs1.63 million, Capital Insurance Rs1.17 million, Cooperative Insurance Rs497000, and PICIC Rs225000.

During the first quarter ended March 2009, IGI brought about highest earning per share of Rs21.21 in a wide contrast to Rs2.38 as of March 2008. Alpha insurance recorded EPS of Rs0.23, Asia Insurance Rs0.55, Atlas Insurance Rs1.18, EFU Gen Ins Rs1.39, Habib Insurance Rs0.31, New Jubilee Insurance Rs1.81, Pakistan Gen Insurance Rs0.79, PICIC Rs0.05, Premier Ins Rs1.14, Reliance Insurance Rs0.50, Shaheen Insurance Rs0.11, Silver Star Rs2.33, and United Insurance Rs1.35 during. All other companies either posted negative EPS or nil. In the comparable period, Adamjee Insurance posted EPS of R0.86, Alfalah Rs0.46, Alpha Rs0.49, Asia Insurance Rs0.43, Askari Rs2.01, Atlas Insurance Rs1.18, Central Insurance Rs2.64, Century Insurance Rs1.48, Crescent Star Rs0.14, East West Rs10.93, EFU Gen Rs2.55, Habib Insurance Rs1.08, IGI Rs2.38, New Jubilee Insurance Rs0.17, PICIC Rs0.01, Premier Insurance Rs2.62, Reliance Insurance Rs0.65, Shaheen Rs1.43, Silver Star Rs3.78, United Insurance Rs1.54, and Universal Insurance Rs0.91. All other companies either posted negative EPS or nil.