KNOW THE COMPANY: Having the largest Bancassurance network and a branch set-up of nearly 129 outlets in different areas of the country, Jubilee Life Insurance (formerly Jubilee Life Insurance Company Limited), gulps the major chunk of life insurance segment in Pakistan with a market share of 41 percent.
The company was incorporated in Pakistan in 1995 as a public limited company and became operational in 1996. It is listed on KSE with a market capitalisation of Rs 10.97 billion and a paid up capital of Rs 627 million. Jubilee Life is a subsidiary of the Aga Khan Fund for Economic Development (AKFED), Switzerland which is the economic development arm of the Aga Khan Development Network (AKDN). This allows the company to draw on its global experience and resources.
9MCY13 - FINANCIAL PERFORMANCE Despite tough competition in the insurance industry, Jubilee Life Insurance has constantly managed to increase its business. The gross premiums written during the period ended September 2013 rose to Rs 11.8 billion, showing an increase of 44 percent when judged against the same period last year.
Whereas, on the income side, dividend income grew to Rs 21 million, reflecting a rise of 28 percent over the corresponding period last year while return on government securities declined by Rs 6.8 million. This decline in return on government securities was absorbed by the increase in dividend income to a great extent, thereby providing some breathing space to the performance of the company. Moreover, a drastic drop in gain on disposal of investments to Rs 4 million during the aforementioned period from Rs 15 million in the same period last year exerted toll on company's bottomline.
By virtue of above mentioned factors, net investment income and other revenues fell by 12 percent to Rs 124 million during nine months ended September 2013. But with the rise in other revenue and investment income, expenses showed a hefty increase of 141 percent to stand at Rs 41 million which dented profitability before appropriation of surplus to shareholders funds as it declined from Rs 124 million last year to Rs 83 million in 9MCY13.
Thanks to surplus appropriated to shareholders' funds from ledger account that almost doubled to Rs 785 million, thereby bringing the bottomline back to the green zone, else the company would have faced a downturn this year. Net profitability of the company showed a handsome growth of 63 percent, as net profit after tax soar to Rs 587 million during the aforesaid period vis-à-vis the same period last year.
2012 - FINANCIAL PERFORMANCE 2012 was indeed another wonderful year in the profitability history of Jubilee Life Insurance as the net profitability of the company marked a sizable rise of 48 percent to clock in at Rs 553 million.
Hefty rise in return on government securities, gain on disposal of investments and reversals recorded on impairment of investments remained the key drivers in boosting in the bottomline of Jubilee Life Insurance during 2012. Surplus appropriated to shareholder's funds from ledger fund granted further impetus, rising by 23 percent to Rs 650 million in 2012. As a consequence, earnings per share surged to Rs 8.82 per share from Rs 5.97 per share in 2011.
Owing to improved bottomline, profitability ratios depicted a pleasant picture. Return on equity perked up to 31 percent in 2012 (2011:26 percent), while the return on capital employed climbed up to 45 percent from 41 percent in 2011. On the cash flow front, the upward trend in net cash inflow from operating activities continued in 2012, where it increased to Rs 5 billion in 2012 from Rs 3.3 billion last year. Total assets of the company surged by 49 percent to Rs 23 billion in 2012 mainly on the back of investments (including bank deposits) made during the year as a result of which the ratio of paid up capital to total assets improved to 3 percent (2011: 4 percent). With healthy cash flow position and strengthened profitability, the company paid out a dividend per share of Rs 4.5 during the year (2011: Rs 3 per share), taking the dividend payout ratio to 51 percent from 50 percent witnessed in 2011.
INDUSTRY OUTLOOK Although the insurance industry in Pakistan has been limping along for quite a long time, the presence of Bancassurance has enabled the growth in life insurance segment to surpass the non-life insurance segment in yesteryears. But even then the penetration level of insurance industry in Pakistan is trifling.
While this channel of Bancassurance has been a success so far, a massive mob that falls under the unbanked population leaves a huge room for penetration. This calls for a need for insurance companies to extend their outreach to this unbanked mass by means of alternative distribution channels along with developing tailor made products to suit the needs of specific segments of the population that has been left abandoned in the past. In this regard, focusing on one or two key segments initially will assist in deep penetration within these segments.
And last but not the least, the significance of creating awareness amongst masses cannot be denied. Awareness campaigns, seminars and workshops particularly with collective efforts by the entire insurance industry and the regulators will assist in promoting the growth of this sector.
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JUBILEE LIFE INSURANCE - FINANCIAL HIGHLIGHTS
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Rs ('000) 2011 2012 chg
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Investment income not
attributable to statutory funds 88,095 115,152 31%
Gain on disposal of investments 750 24,299 3140%
Total investment income 74,841 185,542 148%
Investment related expenses (103) (74) -28%
Net investment income 74,738 185,468 148%
Gain on disposal of fixed assets 5,155 1,068 -79%
Other revenues 3,619 2,029 -44%
Total investment income and other revenues 83,512 188,565 126%
Expenses not attributable to statutory funds (31,156) (29,896) -4%
Profit before appropriation
of surplus to shareholders funds 52,356 158,669 203%
Surplus appropriated to
shareholders' fund from ledger account 530,000 650,000 23%
Profit before tax 582,356 808,669 39%
Taxation (207,763) (255,296) 23%
Proft after taxation 374,593 553,373 48%
Earnings per share (Rs) 5.97 8.82
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Source: Company accounts
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