Looking at the bottom line, Jubilee General Insurance (KSE: JGICL) is doing alright. But when it comes to core insurance business, the financial picture is not so pleasing. Yet, despite deteriorating underwriting profit, the company concluded nine-months ended September 2014 with a profitability growth of 7 percent.
Net premiums grew by 6 percent year-on-year in 9MCY14. However, burgeoning claims and expenses wiped out the gains earned from rising premiums. Fire and property damage and accident and health segments, once again, landed in red. This took aggregate underwriting profit to slip by 10 percent year-on-year during the period.
On the other hand, investment income, often a rescuer for insurance companies, helped the bottom line land in green. JGICLs investment portfolio allocation appears well-built with over 70 percent parked in government securities and mutual funds. Higher percentage of fixed-income instruments means lesser volatility and greater comfort for the bottom line.
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Jubilee General Insurance
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Rs (mn) 9MCY14 9MCY13 chg
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Net premium revenue 2,707 2,545 6%
Net claims (1,640) (1,599) 3%
Expenses (713) (614) 16%
Net commission (255) (222) 15%
Underwriting result 99 110 -10%
Investment income 630 573 10%
General & administrative expense (39) (34) 15%
Share in profit of associate 55 38 45%
Profit before tax 865 827 5%
Taxation (97) (107) -9%
Profit after taxation 768 720 7%
EPS (Rs.) 5 5
Claims ratio -61% -63%
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Source: KSE announcement
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