EFU General Insurance - the titan of EFU General Insurance - was formed under the financial backing of Agha Khan III and the Nawab of Mughal. It, however, came into being in 1932 where Mr Ghulam Muhammad led the formation of this company. While securing a prominent footing in the country's insurance sector, the insurer is engaged in offering insurance schemes in the field of property, marine/aviation, motor and miscellaneous products. Besides, the company enjoys reinsurance arrangements with leading re-insurers such as Swiss Re of Switzerland, SCOR of France, Hannover Re of Germany, and Lloyd's of London.
It is, however, pertinent to note that the top 5 insurers continue to rule the market with a cumulative share of 65 percent while the market shares of remaining 23 insurers (total insurers reported by IAP= 28) remain trifling and hover in the range of 0-3 percent.
However, the investment income ratio of the firm, which stands at 14 percent, is on the lower side when weighed against the industry average of 31 percent. In that sense, the firm is positioned better considering that it doesn't depend heavily on its investment income for profitability growth. Moreover, government securities frame nearly 13 percent of the investment portfolio of EFU General, while the remaining is invested in mutual funds.
No wonder the insurer has been doing a remarkable job in improving its claims management and the drastic decline in its claims ratio from 54 percent in CY13 to 46 percent in CY14 bears testament to that. Hence, in a bid to improve the quality of its insurance portfolios, the firm seems to have adopted a prudent approach to boost the premium growth. This is evident as the growth in premiums remained minimal at 3 percent during the year. All these factors have fared well for the firm in terms of healthier underwriting profits and cleaner portfolios.
If the firm is able to keep up the pace with its aggressive book-cleaning exercises, then better underwriting profits will be the feasts in coming periods. Moreover, investment income also lent a good hand in uplifting the bottom line growth by registering an impressive increase of 19 percent during the year. Capital gains on equities and government securities seem to have done the trick for the insurer during the year. And there was another reason for investors to smile as the company announced a cash dividend to the tune of Rs 5 per share in addition to interim dividend disbursed during the year.
Be that as it may, creating awareness and development of alternative distribution channels are the crucial ingredients to expand the country's insurance penetration levels.

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EFU General Insurance - Financial Highlights
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Rs (mn)                             CY12      CY13      CY14    1QCY15
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Net premium revenue                6,009     6,341     6,532     1,693
Net claims                       (3,297)   (3,406)   (2,973)     (891)
Management expenses              (1,285)   (1,375)   (1,482)     (393)
Net commission                     (748)     (788)     (760)     (187)
Underwriting result                  679       772     1,317       222
Investment income                    851       772       915       240
Share of profit of an associate      390       398       404       131
General& administrative expenses   (512)     (524)     (592)     (154)
Profit before taxation             1,615     1,623     2,263       485
Profit after taxation              1,566     1,392     1,830       398
Net claims to Net premium ratio      55%       54%       46%       53%
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