State-owned companies in Pakistan are generally categorised as white elephants and rightly so - PIAs financial results just recently is a case in point. But, there are always exceptions to the rule and State Life Insurance Corporation of Pakistan (SLIC) fits the bill here. The life insurance market leader yesterday announced a bonus amounting to Rs.23.45 billion to its policyholders, which is the highest ever in the Companys rich history.
The bonus amount is 26 percent higher than the previous years Rs.18.59 billion. The record bonus announcement came on the back of stupendous financial performance of SLIC during the period. State Lifes life funds size grew by 17 percent year on year to Rs.269 billion in 2011 as against Rs.230 billion in 2010.
Moreover, SLICs smart investment policy also reaped fruits as the investment income soared by a decent 9 percent year on year to Rs.30 billion during 2011. The Companys investment is mainly skewed towards PIBs - investment in stock and banks follow.
As per the law, State Life annually allocates 97.5 percent from its actuarial surplus income as bonus to policyholders, which is added to with-profit policies of the valued policyholders and the remaining 2.5 percent is invested in Government of Pakistans long-term economic plans.
What needs to be mentioned here, that the bonus announced by SLIC is of conventional nature, which is different from the private insurance players who normally offer unit-linked bonus. State Life believes the conventional bonus to be a much secure and safer product to the policyholder as it carries minimum risk and the absolute amount is attached to the policyholder, which is realised either upon maturity or in case of surrender in policy, in which case, the policyholder gets a discounted return.
On the other hand, the unit linked bonus carries high risk as the encashment value is based on the unit prices which can vary from time to time. That said, SLIC does plan to introduce the unit-linked product for its policyholders in the future as an optional product, for the policyholders to opt for or against as per their risk appetites.
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