There is a reason why Adamjee Insurance (AICL) has been outperforming the benchmark index at the local bourse. Led by significant turnaround in motor and miscellaneous segments, AICL has managed to increase its underwriting results nearly 15 times in the half year ending June 2015, leading up to a 89 percent growth in bottom line profits. Little wonder then that firms stock ended 2.34 percent higher on yesterdays close as against a broader market that was up 1.4 percent.

AICLs motor insurance segment had reported an underwriting loss of nearly Rs80 million in first half 2014. In the year to date, that segment reported an underwriting profit of Rs197 million. Similar turnaround is visible in its miscellaneous segment. Last year that segment reported an underwriting loss of Rs6.2 million, whereas for the half year ending June 2015, the segment reported an underwriting profit of Rs105 million.

Moreover, while the fire and property damage segment maintained its profits at last years level (Rs115mn), the marine, aviation and transport saw first profits grow from Rs1.4 million in 1HCY14 to about Rs58 million in the six months ending June 2015.

These turnarounds were primarily led by improvements in net claim ratio. AICLs net claim ratio dropped to 60 percent in 1HCY15 as against 65 percent in the same period last year, thanks mostly to motor segment and miscellaneous segments. Net claim ratio for the former eased to 58 percent in 1HCY15 from 67 percent last year, whereas that for the latter dropped to 52 percent from 77 percent in 1HCY14. Part of this turnaround came from the firms business written outside Pakistan which yielded an underwriting profit of Rs73 million in 1HCY15 as against a loss of Rs135 million in the year before.

Meanwhile, AICLs investment managers continued to make hay with the investment income - mainly dividend income from the firms equity-heavy portfolio - soaring to Rs1.47 billion in IHCY15 from Rs1 billion in same period last year.

However, two areas where AICL ought to watch out for are the rising net claims ratio in motor segment and the accident & health segment. Net claims ratio for the motor segment rose from 55 percent in the quarter ending March 2015 to about 61 percent in the period ending June 2015. That for accident & health segment rose from 88 percent in 1QCY15 to about 92 percent in 2QCY15. Keep in mind that the accident & health segment contributes about 21 percent to the firms net premium revenue but only 2 percent underwriting profits.