The largest non-life insurance company of Pakistan, Adamjee Insurance, has begun the decade on a dismal note as its first quarterly results show a massive 44 percent decline in after tax profits.
The economic slowdown at home showed on AICLs core business as premiums fell by three percent- marginally cushioned by a six percent drop in claims over the same period last year.
Investment income is believed to be an integral part of insurance companies profitability, a rule to which AICL is no exception. The rather relative lacklustre performance of the KSE-100 index during the period under review slashed AICLs other income by 43 percent, causing a big dent to the bottom line.
Adamjee Insurance has diversified its business interests beyond the shores of Pakistan. Attracted by the higher consumptions thresholds, the company re-entered the UAE market in 2007.
Primary instruments on the offering list were auto insurance products. Premium revenue from UAE operations increase by 13 percent compared to the turbulent first quarter 2009. AICL has recently announced plans to expand its interests in the Middle East in the coming years.
Despite the fact that Pakistan has one of the lowest insurance penetration ratios in the region, the future outlook for the company remains stable and economic fundamentals are improving in Pakistan in line with the recovery of the global economy. Managers at AICL can potentially do well to diversify investment products into regional markets as a hedge mechanism.
==============================================
AICL P&L
==============================================
Rs (mn) 1Q2010 1Q2009 % chg
==============================================
Net Premium Revenue 1722 1780 -3%
Net Claims 1067 1139 -6%
Underwriting Results 232 199 17%
Investment Income 221 385 -43%
PAT 248 441 -44%
EPS (Rs) 2.2 3.93 -44%
==============================================
Source: KSE notice
Comments
Comments are closed for this article.