EFU Life Assurance (KSE: EFUL), the countrys second-largest private sector life insurer, is growing steadily, evident in the 12 percent bottomline growth seen in the latest nine-month period ending September 2014.
The life insurers operational standing seems convincing. With a double-digit premium growth of 31 percent in 9MCY14, the firm seems to be feasting on its adequately-fostered insurance portfolio. However, whether the growth in premiums has stemmed from sale of new insurance business or renewals of existing insurance policies can only be found out later when detailed financials are available.
The worrying factor, however, is the rise in claims expenses overshadowing the growth in premiums. Yet, a rise of 36 in underwriting profits is to be savored.
On the investment side, the PIB bonanza seems to have done the trick for EFUL. Taking clue from the financials as of June 2014, PIBs represented 71 percent of the investment portfolio of the company. With a high proportion of well-paying sovereign instruments, impressive growth in investment income seems a fair payback. Also, dividend income from listed equity instruments is likely to have lent a good hand.
Be that as it may, the current level of profitability growth shouldn be regarded as the highest score. EFUL seemingly bears the strength to reach a much higher level of profitability growth. With the continuous investments on the technological front, the launch of point-of-sale systems through bancassurance network, and the introduction of two-way SMS facility, higher premiums and better profitability may just be the outcomes.
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EFU Life Assurance Limited
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Rs (mn) 9MCY14 9MCY13 Chg
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Revenue 17,714 12,779 39%
Expenses (16,759) (12,038) 39%
Surplus available
in revenue account 955 741 29%
Profit before tax 869 767 13%
Profit after taxation 575 515 12%
EPS (Rs) 5.75 5.14
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Source: KSE announcement
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