Research Analyst
Dec 14 - 20, 2009

EFU General insurance Ltd is engaged in the non-life insurance business, including fire and property, marine, and motor.

During the year ended Dec 31, 2008, the company operated through 67 branches in Pakistan and one branch in Jeddah, Saudi Arabia. The company operates in four business segments: fire and property, marine, motor, and miscellaneous.

The fire insurance business provides insurance covers against damages caused by fire, riot and strike, explosion, earthquake, terrorism, atmospheric damage, flood, electric fluctuation, and engineering losses. The marine insurance segment provides coverage against cargo risk, war risk, aviation hull liability, and inland transit damages.

The motor insurance segment provides vehicle coverage and indemnity against third party losses. The miscellaneous insurance segment provides cover against burglary, loss of cash in safe and cash in transit, personal accident, money, etc.


Cash and bank deposits 1 122 399 1 303 684
Investments 12 679 956 11 831 998
Investment properties 246 589 259 084
Premiums due but unpaid - net 2 475 626 1 752 417
Fixed assets-tangible & intangible 516 812 533 524
Total assets 22 901 418 21 229 692
Earnings per share (Rs) 5 .87 3.00 (Unaudited)

During the nine months period ended 30th Sep 2009, the written premium of the company was Rs. 7, 797 million as against Rs. 7, 755 million in the corresponding period of last year. The net claims for the period were Rs. 3,012 million compared to Rs. 3,288 million in corresponding period of 2008. The total underwriting profit for the nine months period was Rs. 97 million.

The Property Department suffered an underwriting loss of Rs. 159 million mainly due to claims from heavy rain in July in Karachi. The investment income for the nine months period was Rs. 693 million as compared to Rs. 233 million in the corresponding period of last nine month. This was due to improvement in the prices of shares in the stock exchange during the period, which resulted in appreciation in value of investments held by the company.

The KSE 100 index rose from 5,753 points as at 31 Dec 2008 to 9,310 points as at 30 Sep 2009. The after tax profit for the nine months was Rs. 675 million compared to Rs. 345 million in the corresponding period of last year.


During the last 4 years, gross premium of general insurance companies in Pakistan grew approximately 15% annually while the penetration reached 0.4% (Rs 33 billion) of GDP by the end of 2007. The growth in the gross premium was mainly attributable to the decent economic growth during that era. The gross premium of the general insurance in Pakistan was ended at Rs 35 billion mark in 2008. While growth was 6% over 2007, insurance penetration was lower at 0.33% at the end of 2008 versus that of 0.4% a year earlier. The decline in insurance penetration is attributable to the overall economic slowdown, particularly to the bleak auto sector performance.

Undoubtedly, the motor segment has been regarded as the major growth propeller for the insurance sector in last 5 years. This was mainly attributable to abundance financing facilities and rise in personal income. The growth of the sector however, remained stagnant in 2008 on the back of subdued car sales and industrial production.

Moreover, slowdown in the trade activities amid global economic crisis also affected the marine insurance. Another problematic factor for the insurance companies is the increase in the reinsurance rates by the major reinsurance companies in the world. The reinsurance companies have increased their rates due to growing demand of reinsurance and changing risk environment.

(Rs in 000)

Adamjee Insurance 3,064,485 Cooperative Ins. 11,284 PICIC Insurance 99,949
Agro Gen. Ins. Co. - Crescent Star 58,435 Premier Ins. 157,797
Alfalah Ins. Co 150,063 East West Insc. 201,004 Reliance Insurance 159,137
Alpha Insurance 32,694 Universal Ins. 181,859 Saudi Pak Ins. 69,787
Asia Insurance 16,311 Excel Insurance 6,222 Security Gen. Insc. 57,733
Askari Gen. Insc. 397,687 Habib Insurance 178,379 Shaheen Insurance 253,523
Atlas Insurance 224,801 IGI Insurance 285,268 Silver Star Insc. 97,856
EFU Gen Insurance 2,789,304 New Hampshire Ins. 198,658 TPL Direct Ins. 98,574
Central Insurance 6,107 New Jubilee Ins. 1,140,553 UBL Insurer 140,746
Century Insurance 100,012 Pakistan Gen. Ins. 56,057 United Ins. 284,672


The enhancement of federal excise duty from 5%-10% will have a negative impact on the company's profitability. Pakistan is on the front line of the fight against international terrorism.

Outbreaks of violence in Pakistan are common. Some of these have prompted significant insurance losses. Thus, increasing high instability in the country may pose high risks to EFU general insurance in terms of higher claim rates. The company should focus on expanding its underwriting base and improving operations to strengthen the business.