Insurance: CENTURY INSURANCE COMPANY LIMITED - Year Ended December 31, 2006 (Audited)
"Prompt settlement of claims and customers' satisfaction is management's top priority" is the motto of Century Insurance Company Limited (CICL), a Lakson Group company operating since 1989.
CICL is a public limited company incorporated in Pakistan on October 10, 1985 under the Companies Ordinance, 1984. The company, listed on Karachi and Lahore Stock Exchanges, is engaged in general insurance business comprising Fire, Marine, Motor and Miscellaneous. JCR-VIS has reaffirmed the company's Insurer Financial Strength Rating at "A" with stable outlook.
The authorised capital of CICL is Rs 300 million, comprising 30 million shares of Rs 10 each. As on December 31, 2006 the paid up capital was Rs 203 million, which was held by 993 shareholders, of which general public held over 39% shares. On this date Associated Companies namely Siza (Pvt) Limited, Siza Services (Pvt) Limited, Siza Commodities (Pvt) Limited and Premier Fashions (Pvt) Limited held over 21% of total shares. The Directors, CEO, their spouse and minor children held over 38% of the voting interest. The rest of the shares were distributed among a number of corporate entities including banks and DFIs.
Total assets of CICL increased by 23% to Rs 695 million on December 31, 2006 compared to Rs 567 million on December 31, 2005. The increases are seen in Investments, Reinsurance Recoveries against Outstanding Claims and Prepayments.
Investment increased by 61% to Rs 359 million (52% of Total Assets) compared to Rs 222 million (39% of TA) as on December 31, 2005. Net increase in assets has been largely financed through increase in Shareholders Equity, Underwriting Provisions and Amounts Due to Other Insurers / Re-insurers. Of the Investment, CICL had Available for Sale Securities as high as 80% (2005: 51%). The rest were investments Held for Trading (6%), Held to Maturity (11%) and investments in Associates (3%). Shareholders Equity on December 31, 2006 as percentage of Total Assets was 54% (2005: 51%), which reflects its financial strength.
Total gross premium recorded during the year ended December 31, 2006 was Rs 340 million as compared to Rs 318 million showing a year over year growth of only 7%. The net premium revenue for the year however decreased by 13% to Rs 209 million as compared to Rs 241 million for last year. According to the Directors' Report this was due to higher unearned premium reserve.
The company, during the year, effected planned decrease of 20% in Motor Portfolio. Due to this measure, the overall claims were lower by 31% The underwriting profit for the year was 13% higher at Rs 67 million (32% of net premium revenue) compared to Rs 59 million (24% of the net premium revenue) for the previous year.
The company's investment income for the year under review was Rs 66 million as compared to Rs 76 million last year manifesting a decline of 14% from last year. This decrease has been attributed to recording of an unrealized loss of Rs 7.2 million (2005: unrealized gain of Rs 6.6 million) by re-valuing Trading Securities to market value. Total income for the year marginally declined to Rs 141 million compared to Rs 143 million for the previous year.
Despite 43% increase in general, administrative and other expenses, CICL achieved slight increase in its profit after tax for 2006 to Rs 96 million as compared to Rs 94 million for 2005. ROE at 26% for the year is impressive though lower than the last year level (2005: 32%) due largely to increased equity at end of 2006.ROA for the year under review also declined slightly to 14% compared to 17% for the previous year. The Board recommended cash dividend at 10% (2005: 10%) and bonus issue at 25% (2005: 35%). Performance statistics are given below.
To accelerate growth and meet the challenges of increasing competition, the infrastructure of the company is continuously being developed and strengthened. Due to the increased competition in the industry, the company has already started to feel the stress on availability of professionals. The company has been reportedly successful in attracting quality professionals. New branches are being established to expand CICL's presence in the country and to better service the needs of the valued customers. During the year, the company has launched 'TRAVELSAFE' (Travel Insurance) in association reportedly with the largest travel insurance / reinsurance company of the world. Requirement by the European Union to have travel insurance as a pre-requisite to grant of visa has boosted this class of insurance.
According to the Directors' Report, the general insurance industry's growth is linked directly to the growth of the economy and with the positive stance of manufacturing and service industries; the future of insurance industry appears to be bright. Foreign Direct Investment and the Privatisation of state owned enterprises will also have a positive impact on the growth of insurance industry.
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Performance Statistics (Audited) (Rs 000)
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Balance Sheet (as on December 31,) 2006 2005
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Cash, bank and deposits: 79,417 110,346
Investments: 358,758 222,359
Deferred taxation, etc: 0 28
Premium due but unpaid: 77,051 107,746
Amounts due from re-insurers: 28,766 19,692
Other current assets: 123,782 84,709
Total Current Assets: 667,774 544,880
Total Fixed Assets: 25,883 21,220
Total assets: 695,426 567,345
Paid up capital: 203,219 150,533
Reserves & Retained earnings: 171,612 140,797
Shareholders Equity: 374,831 291,330
Underwriting provisions: 242,430 199,892
Total Creditors, accruals: 78,165 76,122
Total Liabilities: 320,595 276,014
Total Liabilities & Equity: 695,426 567,344
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Ratios: 2,006 2,005
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Cash and bank/Total Assets: 11% 19%
Investments/Total Assets: 52% 39%
Premium due but unpaid/Total Assets: 11% 19%
Total Current Assets/Total Assets: 96% 96%
Fixed Assets/Total Assets: 4% 4%
Shareholders Equity/Total Assets: 54% 51%
Underwriting Provisions/Total Assets: 35% 35%
Total Liabilities/Total Assets: 46% 49%
Book Value (Per Rs 10/ share)- Rs: 18.44 19.35
Quoted Price (Per Rs 10) (8-6-07)- Rs 50.00 -
Quoted Price/Book Value Ratio - X: 2.71 -
Revenue Account (Y end December 31, 2006 2005
Net premium revenue: 208,594 241,022
Net claims; 109,741 159,788
Expenses, net commissions, etc: 32,196 22,412
Total, claims, expenses, commission: 141,937 182,200
Underwriting result: 66,657 58,822
Investment income: 65,619 76,128
Rental and other income: 8,366 7,670
Total Income: 140,642 142,620
Total Gen and admn. Expenses: 35,543 24,869
Profit before tax: 105,099 117,751
Provision for Taxation: 9,298 23,440
Profit after tax: 95,801 94,311
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Ratios: 2006 2005
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Underwriting result/net prem. Revenue 32% 24%
Underwriting result/Total Assets: 10% 10%
Underwriting result/Total income: 47% 41%
Investment income/Total Income: 47% 53%
Profit after taxation/Total Assets: 14% 17%
Profit after tax/Total Equity: 26% 32%
EPS (Per Rs 10)(Year end capital)- Rs 4.71 6.27
Price Earning Ratio-Times: 10.61 -
Cash Flow Summary: 2006 2005
Total cash flow from Operating activities": 71,558 28,342
Total cash flow from Investing activities: -84,512 2,706
Total cash flow from financing activities: -14,975 -12,484
Net cash from All activities: -27,929 18,564
Cash at beginning of period: 103,246 84,682
Cash at end of period: 75,317 103,246
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COMPANY INFORMATION: Chairman: Iqbal Ali Lakhani; Chief Executive: Mir Nadir Ali; Director: Zulfiqar Ali Lakhani; Advisor: Sultan Ali Lakhani; Company Secretary: Ramzan Ali Halani; Registered/Corporate: Lakson Square, Building No 2, Sarwar Shaheed Road, Karachi-74200; Head Office: 11th Floor, Lakson Square, Building No 3, Sarwar Shaheed Road, Karachi-74200; Auditors: Ford Rhodes Sidat Hyder & Co, Chartered Accountants; Web Address: www.cicl.com.pk