Insurance: NEW JUBILEE INSURANCE COMPANY LIMITED - Year Ended December 31, 2006 (Audited)
"Once Again-NJI receives 'AA' Insurer Financial Strength Rating by Pacra and JCR-VIS" is proudly splashed by New Jubilee Insurance Company Limited in its latest annual report and it claims to be the only top Pakistani insurer with this distinction.
NJI is a public limited company incorporated in Pakistan on May 16, 1953 under the Companies Act, 1913 (now Companies Ordinance, 1984). The company is listed on Karachi and Lahore Stock Exchanges and is engaged in general insurance business comprising Fire, Marine, Motor, Liability, Accident & Health and Others. According to company profile, NJI's business philosophy can be summed up as Customer Protection, Customer Satisfaction and Customer Trust. During the year three branches have been opened, increasing the total number of NJI branches to 26.
The authorised capital of NJI is Rs 500 million, comprising 100 million shares of Rs 5 each. As on December 31, 2006 the paid up capital was Rs 439 million, which was held by 1,317 shareholders, of which 1,247 individuals held nearly 20% shares.
On this date Associated Companies including Pakistan Cables Limited, Hashwani Hotels Limited, Agha Khan Fund for Economic Development, Agha Khan Hospital, Trustee Hashwani Hotels- Employees Provident Fund, etc held 51.42% of total shares. The Directors, CEO, their spouse and minor children held 4% of the voting interest. The rest of the shares were distributed among a number of corporate entities including banks and DFIs.
Total assets of NJI increased by 57% to Rs 4.377 billion on December 31, 2006 compared to Rs 2.785 billion on December 31, 2005. The increases are seen in Cash, Investments, Premium Due but Unpaid, Reinsurance Recoveries against Outstanding Claim and Prepayments. Investment increase by 18% to Rs 1.262 billion (29% of Total Assets) compared to Rs 1.072 billion (38% of TA) as on December 31, 2005. Net increase in assets has been largely financed through increase in Shareholders Equity, Underwriting Provisions, Credits and Accruals.
Of the Investment, NJI had Available for Sale Securities as high as 82% (2005: 84%). The rest were investments Held to Maturity and investments in Associates. As per the notes to the financial statements, at December 31, 2006, the market value of Investments was Rs 1.749 billion (2005: Rs 2.215 billion). NJI holds 6.63% interest in New Jubilee Life Insurance Company Limited. Shareholders Equity on December 31, 2006 as percentage of Total Assets was 46% (2005: 47%), which reflects its high financial strength.
On assets side of the balance sheets as on December 31, 2006, NJI shows Negative Goodwill in an amount of Rs 69.726 million (2005: Rs 72.654 million). The company acquired the insurance business and specified assets and liabilities of the Pakistan branches of Commercial General Union Insurance International (CGUII) and the New Zealand Insurance Company Limited (NZI- A dormant company since December 31, 1997) with effect from January 1, 2003 under 'Asset Purchase Agreements' and the transaction has been approved by the SECP. The negative goodwill arising from above acquisition represents excess of fair value of net assets acquired over the cost of acquisition at the date of acquisition.
The company also shows Investment Properties at Rs 72.935 million as on December 31, 2006 (2005: Rs 73.591 million). The market value of the investment properties as per valuation carried out by professional valuers in 2005 is Rs 660.69 million.
Total gross premium recorded during the year ended December 31, 2006 was Rs 2.572 billion as compared to Rs 1.737 billion showing a year over year growth of 48%. The net premium revenue for the year however increased by 62% to Rs 1.486 billion as compared to Rs 0.917 billion for last year. The underwriting profit for the year was 43% higher at Rs 100 million (7% of net premium revenue) compared to Rs 70 million (8% of the net premium revenue) for the previous year. The company's investment income for the year under review was Rs 690 million as compared to Rs 487 million last year manifesting a growth of 42% over last year. Total income for the year increased by 52% to Rs 946 million compared to Rs 621 million for the previous year.
Despite 34% increase in general, administrative and other expenses, NJI achieved 51% increase in its profit after tax for 2006 to Rs 842 million as compared to Rs 556 million for 2005. ROE at 41% for the year is impressive though lower than the last year level (2005: 43%) due largely to increased equity at end of 2006.The Board recommended cash dividend at 40% (2005: 30%) and bonus issue at 25% (2005: 20%). Performance statistics are given below.
According to the Directors' Report difficult conditions continued to prevail, particularly in Fire and Property class of business in 2006 in the international reinsurance market, resulting in higher cost of reinsurance. The strengthening of the company's capital base and reserves will enable it to reduce its reliance on reinsurance and also reduce the outflow of foreign exchange. The company appears confident to take advantage of the new opportunities which it expects to arise following the infrastructure projects, and maintain the growth momentum in 2007.
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Performance Statistics (Audited) (Rs, 000)
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Balance Sheet (As on December 31) 2006 2005
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Cash, bank and deposits: 1,686,561 862,115
Investments: 1,261,854 1,071,853
Investment Properties: 72,935 73,591
Deferred taxation, etc: 37,246 35,503
Premium due but unpaid: 465,210 290,027
Amounts due from re-insurers: 43,750 48,686
Other current assets: 752,681 391,420
Total Current Assets: 4,320,237 2,773,195
Total Fixed Assets: 126,274 84,758
Total assets: 4,376,785 2,785,389
Paid up capital: 439,432 366,193
Reserves & Retained earnings: 1,594,819 936,842
Shareholders Equity: 2,034,251 1,303,035
Underwriting provisions: 1,760,772 1,075,138
Total Creditors, accruals: 581,762 407,216
Total Liabilities: 2,342,534 1,482,354
Total Liabilities & Equity: 4,376,785 2,785,389
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Ratios: 2006 2005
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Cash and bank/Total Assets: 39% 31%
Investments/Total Assets: 29% 38%
Premium due but unpaid/Total Assets: 11% 10%
Total Current Assets/Total Assets: 99% 100%
Fixed Assets/Total Assets: 3% 3%
Shareholders Equity/Total Assets: 46% 47%
Underwriting Provisions/Total Assets: 40% 39%
Total Liabilities/Total Assets: 54% 53%
Book Value (Par Rs 5/share)-Rs: 23.15 17.79
Quoted Price (Par Rs 5 ) (8-6-07)-Rs: 100.00 -
Quoted Price/Book Value Ratio-X: 4.32 -
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Revenue Account (Y end Dec. 31,) 2006 2005
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Net premium revenue: 1,486,429 917,118
Net claims: 887,587 554,264
Expenses, net commissions, etc: 499,166 293,251
Total, claims, expenses, commission: 1,386,753 847,515
Underwriting result: 99,676 69,603
Investment income: 690,178 487,252
Rental and other income: 156,050 64,347
Total Income: 945,904 621,202
Total Gen. and admn. Expenses: 9,111 6,795
Profit before tax: 936,793 614,407
Provision for Taxation: 95,060 58,206
Profit after tax: 841,733 556,201
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Ratios: 2006 2005
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Underwriting Result/Net Prem. Revenue: 7% 8%
Underwriting result/Total Assets: 2% 2%
Underwriting result/Total income: 11% 11%
Investment income/Total Income: 73% 78%
Profit after taxation/Total Assets: 19% 20%
Profit after tax/Total Equity: 41% 43%
EPS (Par Rs 5)(Year end capital)-Rs: 9.58 7.59
Price Earning Ratio-Times: 10.44 -
Cash Flow Summary 2006 2005
Total cash flow from Operating: 426,896 105,564
Total cash flow from Investing: 593,833 227,834
Total cash flow from Financing: -196,283 -79,505
Net cash from All activities: 824,446 253,893
Cash at beginning of period: 862,115 608,222
Cash at end of period: 1,686,561 862,115
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COMPANY INFORMATION: Chairman: Towfiq H. Chinoy; Managing Director & CEO: Tahir Ahmed; Director: Masood Noorani; Legal Advisor: Liaquat Merchant Associates; Medical Advisor: Dr. Tajuddin Manji; Actuarial Advisors: Nouman Associates
Company Secretary: Atiq Anwar Mahmudi; Registered/Head Office: 2nd Floor, Jubilee Insurance House, I.I. Chundrigar Road, Karachi, Pakistan; Auditors: KPMG Taseer Hadi & Co., Chartered Accountants; Web Address: www.nji.com.pk
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