The year 2006, was another year of success for the company. Underwriting (Results) profitability of the company increased by 25.9% to Rs 68.4 million in year 2006 as compared to Rs 54.30 million for the year 2005. Pre-tax profit increased by 2.8% to Rs 59.4 million as compared to Rs 57.8 million for the year 2005. The directors said that they focused on portfolio diversification and portfolio consolidation in 2006.
The portfolio became a lot more balanced than it was a couple of years ago. Fire and miscellaneous classes of business showed remarkable growth of 35% and 49% respectively in the year 2006 as compared to the year 2005. Whereas motor business decreased by further 2%. Motor business of the company stands at 68.22% of aggregate gross premium for the year 2006.
Net profit after taxation amounted to Rs 50.98 million showing decline by 8.0% as compared to Rs 55.39 million in the preceding year although the revenue from core activity ie underwriting profit increased as mentioned earlier, by 25.9%. The main reason was that the company recorded an unrealised loss of Rs 14.3 million on its held for trading investments due to serious drop in stock exchange index during specified period of 2006.
Shaheen Insurance Company Ltd was incorporated under the Companies Ordinance, 1984, as a public limited company in March 1995 and it obtained certificate for commencement of business in July 1995.
It was registered with the controller of Insurance in November 1995 to carryout non-life insurance business comprising fire, marine, motor, aviation, engineering, transportation, etc. The shares of the company are listed on Karachi, Lahore and Islamabad stock exchanges.
Its head office and registered office are located at Shaheen Commercial Complex, Karachi. Its zonal offices are in Lahore (Askari Villas, Lahore Cantt), Islamabad (Khayban-e-Suhurwardy) and Faisalabad (Sitara Towers Civil Lines). It has also its presence in all provinces and Azad Kashmir through branches except in Balochistan. It has two branch offices in Karachi and one each in Hyderabad, Sialkot, Peshawar, Multan and Mirpur A.K.
It is a strong insurance company as evidenced from improved "A-" (Single A Minus) Insurer Financial Strength Rating given by Pacra (Pakistan Credit Rating Agency Ltd) and this also depicts "stable outlook," signifying good credit quality. According to the company's Annual Report 2006 (ended December 31, 2006) the stable outlook of the company provides more assurance of the consistency of the company's financial strength.
As regards ownership of its equity, its associated undertakings hold 92.59% and investors from general public own 7.24% of the company's 10 million shares of Rs 10 each. Among the associated undertakings the shareholdings of Shaheen Foundation, Pakistan Airforce comprised 20.5% of The Holland Company Ltd, South Africa 31.7% Central Non Public Fund, Pakistan Airforce 12.5%.
Its paid up capital in the preceding year, FY05, had amounted to Rs 80 million which increased to Rs 100 million in FY06 by issuing bonus stock @25%. The Board of directors has taken strategic decision to expand its capital base by proposing bonus stock dividend @75%. This will provide internal resources to avail opportunities because of country's growing economy. The company has maintained good track record of profit distribution since the last four years in terms of regular dividend announcements and attractive rates going upward with the passage of each year.
As regards operating results, the company's gross (Direct) premium amounted to Rs 671.33 million in FY06 showing marginal increase at 0.11% over preceding year FY05 at Rs 670.61 million.
Net premium revenue amounted to Rs 565.33 million (FY05: Rs 527.10 million) reflecting 7.25% increase over preceding year and at the same time the amount is highest while in terms of growth rate it is the lowest.
Claims (incurred) were in the sum of Rs 352.57 million in FY06 as against Rs 353.15 million in FY05 and as a percentage of net premium claims were 62.4% (FY05: 67%) and lowest ratio of last three years.
The company's reporting system is based on business segments. "A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. The company accounts for segment reporting using the classes of business as specified under the Insurance Ordinance 2000 and the SEC (Insurance) rules 2002 as the primary reporting format.
Motor business net premium revenue at Rs 458.21 million remained the largest business segment.
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Performance Statistics (Mln Rs)
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December 31 2006 2005
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Share Capital-Paid-up: 100.00 80.00
Reserves & Surplus: 119.33 88.35
Shareholders Equity: 219.33 168.35
Provision for Outstanding
Claims (including IBNR): 112.56 98.82
Premiums Deficiency Reserve: 1.41 1.41
Provision for Unearned Premiums: 271.85 262.27
Commission Income Unearned: 8.57 8.60
Total Underwriting Provisions: 394.39 371.10
Creditors & Accruals: 41.49 77.97
Other Liabilities: 19.77 18.32
Total Liabilities: 455.64 667.39
Cash & Bank Deposits: 197.36 155.72
Loans to Employees: 0.92 0.74
Investments: 211.12 172.03
Investment Properties: 6.70 16.79
Other Assets: 234.79 268.46
Fixed Assets Tangible: 22.75 20.00
Intangible Assets: 1.34 2.00
Total Assets 674.98 635.74
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Revenue Profit & Pay Out
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Net Premium Revenue from:
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Fire & Property Damage: 39.53 -
Marine, Aviation & Transport: 18.88 -
Motor: 458.21 -
Others: 48.71 -
Treaty: - -
Net Premium Revenue: 565.33 527.10
(Net Claims): (352.57) (353.15)
Premium Deficiency Expense: - (0.42)
Management (Expenses): (56.49) (49.62)
(Net Commission): (87.89) (69.61)
Underwriting Result: 68.38 54.30
Investment Income: 28.82 44.10
Rental Income: 1.78 1.90
Other Income: 9.06 0.13
Gen & Admin (Expenses): (48.69) (42.58)
Profit Before Taxation: 59.35 57.85
Profit After Taxation: 50.98 55.39
Dividend Bonus Share %(2005 %): 75.00 25.00
Earning Per Share (Rs): 5.10 5.54
Share Price (Rs) on 02/05/07: 87.40 -
Gross Direct Premium: 671.33 670.61
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Financial Ratios:
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Price/Earning Ratio (Times): 17.14 -
Book Value Per Share (Rs): 21.93 16.83
Price/Book Value Ratio (Times): 3.98 -
Net/Profit/Underwriting
Result ratio (%): 74.55 102.01
Net/ Gross Direct
Premium Ratio (%): 84.21 78.60
R.O.E. (%): 23.24 32.90
R.O.A. (%): 7.55 8.71
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COMPANY INFORMATION: : Chairman: Air Vice Marshal Syed Imtiaz Hyder (Retd); Chief Executive Officer: Sheharyar Akbar; Director: Air Commodore Qazi Mahmud Gul (Retd); Chief Financial Officer & Company Secretary: Asif Suleman; Head Office/Registered Office; 10th Floor, Shaheen Complex, A.R. Kayani Road, Karachi; Website. Not Reported; Lahore Office: 14, Askari Villas, Main Shami Road Lahore Cantt.
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