EFUG is a non-life insurance company with products in the motor, marine, fire & property, and others like travel, liability, money, credit card insurance etc. The firm’s revenues i.e. net insurance premiums showed no growth in 1HCY19 and 2QCY19, which is one factor in squeezing the bottom-line.

Its underwriting results turned negative during the 2QCY19 and dropped by almost 70 percent in 1HCY19 due to cost increase be it net claims, commissions or management expenses. The effect of this is significant in 2QCY19 especially as the ratio of underwriting results to net premium fell from 12.9 percent in 2QCY18 to negative 3 percent in 2QCY19.

Growth in investment income that usually is the savior for the bottom-line of an insurance company remained flat for EFUG in 1HCY19, but dropped by around 5 percent due to the turbulence in the stock market. The investment income largely constitutes dividend income as well as income from equity and debt securities. Nonetheless, with a share of 25 percent in 1HCY19 total revenue (net premium) for EFUG, investment income played its role in lifting the company’s earnings. EFUG also announced an interim cash dividend of Rs1.5per share in addition to Rs1.5 already paid for 1QCY19.

Being one of the biggest players in the private non-life insurance segment, EFUG enjoys a significant market share, which according to the firm’s annual accounts stood at 24 percent for 2018. And because of its position in the sector, the company is poised for growth as it continues to introduce new products as well as strategize old ones.

However, where the rising interest rate environment can help the company and the sector raise more investment income; it seems that the opportunity that has long been talked of is now fading away. The country is in austerity mode. Insurance sector that expanded in 2017 due to accelerated economic and industrial activity, allowing conventional insurers to operate window Takaful business, relatively low inflation and increase in the use of technology, is now facing economic headwinds - though the opportunity to capitalise from the development of Special Economic Zones (SEZs) under CPEC still remains in reach for the non-life sector.