The company is one of the constituent members of Lakson Group of Companies which is one of the largest groups in Pakistan. Century Insurance has been assigned an Insurers Financial Strength Rating (IFSR) 'A' by the credit rating company JCR-VIS. This rating signifies "high capacity" to meet policy holders and contract obligations. The stable outlook of the company provides more assurance that the stable outlook of the company is consistent.
The company was also awarded the highest F&J Ranking of 'A+' by vital information services. It was awarded the 'Top 25 Companies Award' of Karachi Stock Exchange twice consecutively in 1997 and 1998.
This insurance company successfully meets the general insurance needs of prestigious local as well as multinational companies. During FY 2004, the company's gross premium declined by 4% mainly because of the company's strategic decision to reduce motor insurance business.
However its net premium increased by 15%, under writing profit by 318% profit before taxation by 137% and net profit after taxation by 118% over the corresponding figures of previous FY 2003.
Century Insurance Company Ltd (CICL) is a public limited company incorporated in October 1985 in the province of Sindh having its registered office located at Building No 2 Lakson Square Sarwar Shaheed Road Karachi where its corporate office is also situated.
The company is operating from its head office in Lakson Square Building No 3 and having its physical presence across Punjab and Federal capital, through its 4 branches network, in Lahore, Islamabad, Rawalpindi and Faisalabad. The last two branches were established during the financial year 2004, under review (FY 2004).
CICL commenced its business in 1989 and since then the company has maintained continuous growth. CICL is engaged in the general insurance business which has four primary business segments for reporting purposes, viz. fire, marine, motor and miscellaneous.
CICL's operating businesses are organised and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.
CICL's motor insurance segment provides comprehensive vehicle coverage and indemnity against third party loss. The policy can also be extended to include accidental personal injuries and Death of Driver and passengers. The net premium of motor business amounted to Rs 195.25 million which works out 79.58% of aggregate net premium of FY 2004. By and large this business is the largest business segment.
In terms of net claims, this also topped among its various business segment. Net claims in this insurance business amounted to Rs 141.35 million and were 72.39% of motor business's net premium and 90% of total net claims of the company.
This analysis subscribes to the hypothesis that the motor insurance business remains highly risky business because of very difficult law and order environment. The leadership in CICL most probably thought of this situation and took far sighted strategic decision to substantially reduce underwriting fresh motor business during the year under review.
The impact of this decision was visible to a great extent as that Gross Premium was 3.54% less at Rs 358.70 million from Rs 371.85 million written in the preceding FY 2003. The positive side which the directors, pointed out that the existing motor business has turned profitable into Rs 25 million. Accordingly there is a paradigm shift in the strategic decision to focus on businesses in other three segments ie fire, marine and miscellaneous (other classes).
The company's fire insurance segment provides insurance covers against damages caused by fire, riot and strike, explosion, earthquake, atmospheric damage, flood, electric fluctuation and impact. During the year under review the company booked net premium revenue fire and property insurance at Rs 17.14 million which was 6.98% of the total net revenue received by the company.
Net claims in this segment amounted to Rs 4.54 million and were 26.52% of its net premium revenue and at the same time 2.88% of total claims handled the company. It would be interesting to compare the net claims analysis of with this segment viz-a-viz Motor Insurance Segment.
The CICL's marine insurance segment provides coverage against cargo risk, war risk and damages occurring in inland transit. This insurance covers imports and exports as per the needs of the clients.
The company generated net premium revenue of Rs 23.76 million in marine, aviation and transport insurance business and this revenue works out to 9.7% of total revenue. Net claims amount in this account was minimal at Rs 4.42 million which is 18.6% of net premium revenue in this segment and 2.81% of total claims the company.
The miscellaneous insurance segment provides cover against burglary loss of cash in safe and in transit, personal accident, engineering losses and other coverages.
The net premium revenue from this segment was Rs 9.20 million and net claims 6.9 million which is 75% of net revenue in this segment. The underwriting profit of the company amounted to Rs 65.69 million which increased was by 318% over Rs 15.79 million posted in the preceding year.
Pretax profit amounted to Rs 70.90 million (FY 2003: Rs 29.91 million) registered 137% growth over the preceding year's.
Net profit after taxation at Rs 48.40 million produced EPS at Rs 3.86 as against Rs 1.77 in the preceding year. The company declared cash dividend at 10% and stock dividend at 20%. The cumulative dividend @30% has highly elevated the investors confidence. The company's prevalent share price at Rs 34 per share pushes PER about 9 times of the EPS. During the last one year the market value of the share peaked at Rs 41.75 from Rs 25.60 per share.
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Performance Statistics (Million Rupees)
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December 31 2004 2003
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Share Capital-Paid-up: 125.44 109.08
Retained Earnings 0.56 0.36
Reserves 68.00 48.76
Shareholders Equity 194.00 158.14
Provision for Outstanding
Claims (including IBNR) 38.07 69.04
Provision for Unearned Premium: 139.31 153.34
Commission Income Unearned: 12.56 15.17
Total Underwriting Provisions: 189.94 237.55
Deferred Liability-Staff
Retirement Benefit 0.47 0.42
Creditors & Accruals-Amounts Due
to Other Insurers/Reinsures: 22.39 8.84
Accrued Expenses: 1.90 0.85
Other Creditors & Accruals: 5.49 6.03
Total Creditors & Accruals: 29.78 15.72
Other Liabilities: 12.82 0.36
Total Liabilities: 233.01 254.05
Cash & Bank Deposits: 91.54 60.41
Investments: 115.46 133.28
Deferred Taxation: 0.38 0.30
Other Assets: 201.20 200.85
Fixed Assets Tangible: 18.23 17.16
Fixed Assets Intangible: 0.20 0.19
Total Assets: 427.01 412.19
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Revenue Profit & Pay Out Net Premium Revenue From:
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Fire & Property: 17.14 N/A
Marine, Aviation & Transport: 23.76 N.A
Motor business: 195.25 N.A
Miscellaneous (Other Classes): 9.20 N.A
Aggregate Net Premium: 245.35 213.86
(Net Claims): (157.22) (163.70)
(Expenses): (18.63) (24.40)
Net Commission: (3.81) (10.06)
Underwriting Results (Profit): 65.69 15.70
Investment Income: 22.58 26.26
Other Income: 1.85 2.00
General & Administration
(Expenses): (19.22) (14.05)
Profit Before Taxation: 70.90 29.91
Profit After Taxation: 48.40 22.25
Dividend Cash 10% (2003: 10%): (12.54) (9.09)
Reserve For Issue
of Bonus Shares: (25.09) (16.36)
Earning Per Share (Rs): 3.86 1.77
Share Price (Rs) on 01-06-05: 34.00 -
Gross Premiums Written: 358.70 371.85
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Financial Ratios
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Price/Earning Ratio: 8.80 -
Book Value Per Share: 15.46 14.50
Price/Book Value Ratio: 2.20 -
Net Profit/Underwriting Profit (%): 73.68 141.72
Net/Gross Premium (%): 68.40 57.51
Net Claims/Net Premium Ratios (%): 64.08 76.55
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Total Underwriting Provisions/Total
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Liabilities (%): 81.52 93.50
Amounts Due to Other Insurers/Reinsurers/
Total Liabilities (%): 9.60 3.48
R.O.E. (%): 24.95 14.07
R.O.A. (%): 11.33 5.40
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