STATE LIFE INSURANCE CORPORATION OF PAKISTAN

S.M.ABBAS ZAIDI,
(feedback@pgeconomist.com)
Research Analyst
, PAGE
Apr
19 - 25, 2010

State Life Insurance Corporation of Pakistan is headed by a chairman and assisted by the executive directors appointed by the federal government. The major function of the State Life Insurance Corporation of Pakistan is to carry out life insurance business however it is also involved in the other related business activities such as investment of policyholders' fund in the government securities, stock market, real estate etc.

The basic structure of the corporation consists of four regional offices, twenty-six zonal offices, a few sub-zonal offices, 111 sector offices, and a network of 461 area offices across the country for individual life insurance.

Four zonal offices and 6 sector offices with 20 sector heads for group & pension are involved in the marketing of life insurance plans policies and products offered by state life and a principal office.

The zonal offices deal exclusively with sales and marketing and underwriting of life insurance policies and the policyholder's services.

Regional Offices, each headed by a Regional Chief, supervise business activities of the Zones functioning under them. The Principal Office, based at Karachi, is responsible for corporate activities such as investment, real estate, actuarial, overseas operations, etc.

MAJOR ACHIEVEMENTS

On the commencement of the operations, the Corporation took a very important step by effecting reduction up to 33 per cent in the premiums on the past and potential life policies for the benefit of the policyholders.

INVESTMENT PORTFOLIO AS AT 31-12-2008 (RS IN MILLION)

PARTICULARS PORTFOLIO
Govt Securities 126,188
TFCs/Approved Govt. Securities 1,335
Equities 24,097
Bank Deposits 15,745
Investment properties 2,437
Policy Loans 13,268

The Investment Portfolio of State Life as at 31-12-2007 stood at Rs161.966 billions. Investment portfolio also includes investment in Real Estate which stood at a book value of Rs2.331 billion as at 31-12-2007 whereas its fair value is around Rs22.923 billion in the same period.

The Paid up Capital increased from Rs10 million in 1972 to Rs900 million in 2007. The Premium income increased from Rs0.317 billion in 1972 to 18.717 billion in 2007. Similarly Investment income including rental income increased from Rs0.81 billion in 1972 to 17.505 billion in 2007. Total statutory fund of State Life stood at Rs156.7373 billion in 2007 as against Rs1.494 billion in 1972.

State Life is smoothly striving towards its objective of making life insurance available to large section of the society by extending it to common man. As at December, 2007 the total number of policies enforced under individual life were 2.349 million and number of lives covered under group life insurance were 4.062 million.

FINANCIAL PERFORMANCE

During 2008, State Life Insurance Corporation performed exceptionally well in its core business operation despite of overall economic recession. Total Income of the State Life Insurance Corporation increased to Rs41,830 million as against Rs36,222 million in the preceding year, registering an increase of 15.5 per cent.

INVESTMENT INCOME AS AT 31-12-2008 (RS IN MILLION)
PARTICULARS PORTFOLIO
Govt. Securities 13,084
TFCs/Approved Govt. Securities 149
Equities 2,523
Bank Deposits 694
Investment Properties 342
Policy Loans 1,308
Other Income 1,086

Management expenses for the year 2008 were Rs8,000 million as compared to Rs 6,266 million in 2007 showing an increase of 27.67 per cent. Overall expense ratio for the year 2008 was 35 per cent as against 33.4 per cent for the year 2007. Payments to policyholders in the year 2008 was Rs12,779 million as against Rs10,783 million in 2007, an increase of 18.5 per cent.

Claims have mainly increased due to maturity of the old policies. Total amount of statutory funds of the State Life Insurance Corporation in 2008 was Rs177,459 million as against Rs156,737 million in 2007, showing an increase of 13.22 per cent.

BUSINESS PORTFOLIO WISE PERFORMANCE

First year premium income under Individual Life policies, during the year 2008 was a record Rs4,982 million as compared to Rs3,715 million in the year 2007, resulting in an increase of 34.10 per cent. Renewal premium was Rs 13,428 million in 2008 whereas Rs 11,630 million was in 2007, resulting in an increase of 15.46 per cent.

INDIVIDUAL LIFE BUSINESS - OVERSEAS OPERATIONS

First year premium income under Individual Life policies, during the year 2008 was Rs199 million as compared to Rs159 million in the year 2007, an increase of 25.16 per cent. Renewal premium was Rs642 million as compared to Rs502 million in 2007, showing an increase of 27.89 per cent.

GROUP LIFE BUSINESS

Premium under Group Life policies during the year 2008 was Rs3,564 million as compared to Rs2,822 million in the year 2007, showing an increase of 26.29 per cent.

REAL ESTATE

During the year 2008 net operating income from Real Estate portfolio was Rs342 million as against Rs316 million in 2007, an increase of 8.2 per cent. Increase in income was achieved as a result of renting of vacant spaces and renewal of lease agreements with tenants.

INVESTMENT

Net investment income including capital gains during the year 2008 was Rs18,791 million as compared to Rs17,187 million in 2007, showing an increase of 9.33 per cent.

CONCLUSION

State Life is profitable organization and it paid Rs2.242 billion as dividend to the Government of Pakistan since its inception in 1972. State Life has played very vital role in the economy by providing employment to the people of the country as permanent employees and as part of its marketing force and by investing the huge funds in different sectors of the economy.