More than six decades have passed since Habib Insurance Company was incorporated as a public limited company in the year 1942. The company is engaged in General Insurance services in the sphere of Fire, Marine Motor and Miscellaneous businesses. The shares of the company are quoted on the Karachi and Lahore Stock Exchanges.
On 13th January 2005 the market price of its five-rupee share was closed at Rs 48.50 which is nearly 10 times of its par value. During the last one year the market value of the share registered steep rise from Rs 34 to Rs 70 per share.
The registered office of the company is situated at Habib Square, M.A. Jinnah Road Karachi. It has been reported in the Half Yearly Report of the company as a contingency item about rent of its premises.
In April 2004, the learned VIIth Additional District Judge passed an order in respect of the appeals filed by the State Life Insurance Corporation against the company to increase the rent of the premises from Rs 2 to Rs 12 per square feet. The Honourable Judge while passing the order increased the rent from Rs 2 to Rs 5 per square feet retrospectively from 1992.
It is further stated that the management on the basis of an opinion of the legal advisor filed a writ petition against the above judgement in the High Court of Sindh.
Provision for the additional rent amounting to Rs 3.9 million has not been made in the financial statements under review as the management is confident that the case would be decided in favour of the company.
The company maintains good track record of profit distribution. Last year in 2003 the company had announced cash dividend @25% and bonus stock dividend @30%, prior to that in the year 2002, cash dividend payout rate was @20% and bonus stock dividend at 33.33%.
During the half year from January to June 2004 (HY 2004) the company wrote gross premium at Rs 150.64 million the figure for the same period last year (SPLY) is not available in the report under revenue.
During HY 2004, the net premium amounted to Rs 84.95 million as against Rs 67.45 million exhibiting 25.94% increase over the figure of SPLY. This shows impressive growth in the business. Net premium works out to 56.39% of the gross premium after various amounts ceded on account of re-insurance, prepaid insurance premium and reinsurance expense.
In terms of the hierarchy of business segments the highest gross premium was written for fire and property insurance at 33.9% of total gross premium. This was followed by marine and transport business at 27.2%, other classes business at 20.7% and motor business at 18.2%.
The analysis further evidences that the monitoring of claims was better than SPLY as net claims to net premium ratio was lower at 50.3% from 53.8% in the SPLY. While motor business segment topped the net premium receipt at Rs 31.51 million it recorded lowest under writing profit (result) at only Rs 2.42 million. The erosion in the profitability in motor business was because of relatively large amount of claims.
On the other hand fire and property business remained stable and shows sustained profitability. Its underwriting result was the highest at Rs 7.97 million although in term of net revenue it was pushed down to third position.
"Other classes" business segment produce negative underwriting result.
But the stellar contributor to its profitability remained investment income at Rs 36.11 million although it was much lower than Rs 43.34 million posted in the SPLY.
The company's profit figure was adversely impacted because of relatively large amount of loss on sale of fixed assets at Rs 13.75 million. Profit before tax was lower but profit after taxation was higher at Rs 26.60 million (HY 2003: Rs 21.97 million) because of lower provision for taxation.
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Performance Statistics (Million Rupees)
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Balance sheet -As At-
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June 30 December 31
2004 2003
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Share Capital-Paid-Up: 130.00 100.00
Retained Earnings: 37.13 10.54
Reserves: 69.12 99.12
Shareholders Equity: 236.25 209.66
Provisions For Outstanding
Claims (including IBNR): 53.62 102.89
Provisions for unearned premium: 134.74 148.85
Premium Deficiency Reserves: 4.44 0.50
Commission Income Unearned: 18.33 19.99
Total Underwriting Provisions: 211.13 272.23
Deferred Liabilities: 4.72 4.97
Creditors & Accruals: 119.61 166.84
Other Liabilities: - 25.00
Cash & Cash Equivalents: 27.63 67.52
Loans to Employees: 1.01 1.07
Investments: 290.32 270.69
Current Assets-Others: 223.73 307.86
Fixed Assets: 29.02 31.56
Total Assets: 571.71 678.70
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Profit & Loss A/c for the
Half Year Ended June 30 2004 2003
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Revenue Profit & Pay Out
Net Premium Revenue from:
Fire & Property: 18.52 NA
Marine Aviation & Transport: 25.84 NA
Motor: 31.51 NA
Other Classes: 9.08 NA
Aggregate Net Premium: 84.95 67.45
Administrative Surcharge Revenue: 3.25 2.75
(Net Claims): (42.71) (36.32)
(Expenses-Premium Deficiency): (3.94) (0.87)
Expenses): (24.06) (23.17)
Net Commission: (3.22) 1.94
Underwriting Result: 14.26 11.78
Investment Income: 36.11 43.34
Profit On Sale Of Fixed Assets: 0.47 0.09
Gen & Admin (Expenses): (13.75) (10.74)
Profit Before Taxation: 37.09 44.47
Profit After Taxation: 26.60 21.97
Earning Per Share (Rs): 1.02 1.10
Share Price (Rs) Dated 13/01/05: 48.50 -
Gross Premium Written: 150.64 NA
Financial Ratios:
Price/Earning Ratio: 47.54 -
Book Value Per 5 Rupees Share: 9.09 10.48
Price/Book Value Ratio: 5.33 -
Net/Gross Premium Ratio (%): 56.39 -
Net Claims/ Net Premium Ratio (%): 50.28 53.85
R O E (%): 11.26 10.48
R O A (%): 4.65 3.23
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