The non-insurance sector of the country depicted a handsome growth of 17 percent in the first half of 2007 as the sector's combined profitability stood at Rs 3.3 billion as compared to Rs 2.8 billion in the corresponding period last year.
"Major factors behind this growth was increase in underwriting business and well supported by growth in investment income due to the extension of capital gain tax exemption for insurance companies till FY08," Haris Dagia, an analyst at JS Global Capital Limited said.
He said that Pakistan insurance sector was reaping the benefit of growing economy. Insurance sector reforms, soaring trade activities in the country, improving per capita income and competition among insurance companies were driving the recent growth witnessed in profitability of the non-life insurance sector.
Moreover, higher interest rates and capital gain tax exemption also supported the investment income of the companies, which provided further impetus to the insurance bottom-line.
The net premium of 17 non-life insurance companies, representing 85 percent of the total market capitalisation of the sector, increased by 13 percent to Rs 8.768 billion in the period under review against Rs 7.789 billion in the same period last year, whereas the net claim stood at Rs 5.311 billion, depicting an upsurge of 11 percent in this period against Rs 4.800 billion in the same period last year.
Although income from underwriting business of the sector augmented by 21 percent to Rs 1.2 billion in this period against Rs 1.0 billion in the first half of 2006, this healthy growth did not fully trickle down to the bottom line, mainly on the account of higher general and admin expenses, which increased by 17 percent to Rs 3.1 billion as compared to Rs 2.7 billion in the same period last year.
Investment income as percentage of total income, on the other hand, remained at 91 percent. During the period, claim ratio of the sector depicted a slightly decline of 100bps to 61 percent in the first half of 2006. Similarly, combined ratio of the sector stood at 79 percent versus 80 percent in the first half of 2006. Moreover, expense ratio of the sector stood at the level of last year ie 18 percent.
The earning growth of Adamjee Insurance was reached at 11 percent, Askari General Insurance 31 percent, Atlas Insurance -2 percent, Central Insurance 114 percent, Century Insurance 40 percent, Crescent Star Insurance 881 percent, EFU General Insurance 35 percent, East West Insurance -21 percent, Habib Insurance 59 percent, IGI Insurance 23 percent, New Jubilee Insurance -35 percent, Premier Insurance 120 percent, Reliance Insurance 10 percent, Shaheen Insurance 95 percent, Union Insurance -66 percent and United Insurance 2 percent.