NEW JUBILEE LIFE INSURANCE COMPANY LTD.

S.KAMAL HAYDER KAZMI,
(feedback@pgeconomist.com)
Research Analyst
, PAGE
Apr
19 - 25, 2010

New Jubilee Insurance Company Ltd is a Pakistan-based company that is engaged in life insurance business. NJI Life has three business segments: individual life (unit linked), conventional business, and accident and health.

Individual life (unit linked) segment provides life insurance coverage to individual under unit based policies. Conventional business segment includes individual life (conventional) and group life. Accident and Health segment provides personal accident coverage to individuals, and inpatients and outpatients health coverage.

NJI Life Company is a subsidiary of the Aga Khan Fund for Economic Development (AKFED), Switzerland. The company commenced operations in 1996 as a public limited company, listed on the Karachi Stock Exchange.

FINANCIAL PERFORMANCE

During 2009, the gross written premium of the company was increased by 27 per cent to Rs4,363 million. The highest product-wise growth was achieved in individual life new business which increased to Rs1,581 million depicting an impressive growth of 72 per cent. Individual life renewal premium also increased by 48 per cent to Rs1,541 million due to the focus on persistency as one of the core business objectives.

FINANCIAL PERFORMANCE (RS IN 000)

INDICATORS 2009 2008 2007 2006
Gross premium 4,363,155 3,435,119 2,978,851 2,291,224
Profit before tax per P&L Account 160,744 (49,972) 150,028 94,798
Profit/loss after tax per P&L Account 129,943 (54,972) 125,456 82,655
Total assets 8,323,980 5,642,877 5,851,815 4,041,720
Others liabilities 989,164 596,858 402,597 366,668
EPS (Rs) 2.07 (0.88) 2.00 1.32

Due to the prevailing economic conditions and increased competition particularly from the new entrants, group life premium remained stagnant at Rs800 million.

Group health business also faced increased competition but increased by 28 per cent with a premium of Rs281 million.

The pre-tax profit of Rs161 million including the surplus of Rs100 million transferred from the revenue account. The profit after tax is Rs130 million as against the loss after-tax of Rs55 million recorded in 2008, and the profit of life insurance business increased to Rs318 million during 2009 from Rs159 million in 2008.

LIFE INSURANCE

At NJI Life, life insurance plans provide the dual benefit of saving for people's future financial requirements as well as providing financial security to their dependants against the unforeseen. The nature of life insurance savings products is such that they are designed for the long term and provide best results only when they are continued for their full term. NJI life offers their customers a full range of transparent and flexible products providing high value for money.

FUNDS

FUND NAME BID PRICE (PKR) PER UNIT EFFECTIVE (31.2.2009) BID PRICE (PKR) PER UNIT EFFECTIVE (31.2.2008)
Managed fund 459 351
Sarmaya fund 216 160
Meesaq fund 472 441
Yaqeen growth fund 503 475 (1.6.2009)

The company's products offer unique benefits like flexibility to choose protection levels, savings term, inflation protection, partial withdrawals and unique investment options.

GROUP INSURANCE

Group insurance schemes play a pivotal role in the provision of social security and welfare benefits. Companies prefer to offer this coverage in order to attract and retain employees.

NJI team takes the life and health of company's employees personally.

INSURANCE INDUSTRY

After strong growth in recent years, Pakistan's insurance sector faced a challenging 2008, as did the country at large. The already acute risks to Pakistan's security were accompanied by a sudden change of political leadership, which was followed by a period of precipitous fiscal and economic decline. In 2009, the political and economic situation has stabilised to an extent, while the security situation has deteriorated yet further. These cross-currents have been felt in the insurance sector.

On the core insurance business front, the insurance sector of Pakistan is relatively underserved as insurance penetration is currently at 0.5 per cent versus 1.3 per cent in emerging markets. Notwithstanding the sizable claims realized by the insurance sector, claims will normalize and curbing of economic derailment coupled with a stable law and order outlook should provide impetus to the mainstay fire and marine insurance businesses. However, keen competition, particularly with pricing, alongside the decline in growth of consumer vehicle loans is likely to dampen growth of the motor insurance segment.

FUTURE OUTLOOK

Amidst the political uncertainty and the difficult economic situation prevailing in the country, the company plans to lay emphasis on strengthening the underwriting discipline with a view to improving the quality further thereby making all classes profitable. NJI needs to work hard on its claims ratios and further improve its underwriting results by appropriate risk identification and premium charges. The company intends to further capitalize on the new opportunities expected to arise from the development of infrastructural projects and maintain its growth momentum in future years.