Jubilee General Insurance Company Limited (JGICL) was established in 1953. It is the third largest general insurance company in Pakistan's private sector. It has an operational history of more than 60 years.
Jubilee General, with its Head Office in Karachi, has an extensive and dynamic branch network in all major cities and towns of Pakistan. It is the highest rated general insurance company in Pakistan with an Insurer Financial Strength Rating of 'AA +' with 'Stable Outlook' assigned by both JCR-VIS and PACRA. This rating takes into account financial strength of the firm demonstrated by its strong capitalisation and liquidity indicators as well as a very strong capacity to meet policyholder and contract obligations.
Also, JGICL is the only insurance company in Pakistan to be accorded the FSR of "B++" (Good) and issuer credit rating of "BBB" by A. M. Best, which is the highest rating to be assigned by an International Rating Agency to any financial institution in Pakistan.
It has reinsurance relationships with internationally renowned reinsurers such as Swiss Re, SCOR Re, Lloyds, Hannover Re, Asia Capital Re and Korean Re. The company is also supported by internationally acclaimed reinsurance brokers including AON Group, Willis, Marsh, Lockton, Howden, UIB and Crescent Global. JBICL has a client-base in pharmaceutical, chemical, textile, cement, services (hospitals & hotels), oil & energy, manufacturing, FMCG, engineering, banking and financial sectors.
Jubilee General has underwriting in all classes of general insurance including Fire, Marine, Motor, Engineering, Health and General Accident. The insurance company not only offers wide risk coverage, but also provides related risk management services.
Amid the technological revolution globally, Jubilee General is first insurer in Pakistan to launch an online portal providing end-to-end solution complete with payment options. It also has the first ever android application for motor insurance and has also launched application for Bus Passenger's Personal Accident by the name of "Musafir" and a Health insurance application.
Shareholding pattern Jubilee General, listed on the Pakistan Stock Exchange has its major shares held by Aga Khan Hospital and Medical College Foundation, Habib Bank Limited, Aga Khan Fund for Economic Development and Hashoo Group (see illustration). Jubilee General's total outstanding shares held as on December 31, 2016 were 156,910,073 with a free float of 35,440,927.
Insurance sector overview Though the insurance industry has been around for a long time, insurance sector penetration to GDP remains very low in Pakistan - between 0.7-0.9 percent. While the lack of awareness has been a reason for the slow growth of the sector, the key reason has highlighted by Jubilee General CEO, Tahir Ahmed, in his recent conversation with BR Research is the existence of a large undocumented economy, which hinders insurance segment expansion.
The gross written premium, revenues for the insurance companies, during 2016 have seen a growth of around 9-11 percent, this growth trend was also seen in 2015 and 2014. And this growth is expected to continue, especially in the motor and property portfolios, while marine is likely to grow at a slower pace as commodity prices remain depressed. For the second year running, the industry did not face any catastrophic or major losses in property, and the motor portfolio also continued to perform well, which has led to the expectations that the market will have positive underwriting results. However, premium rates across the board are increasingly under pressure due to low risk.
Operational and financial performance In May 2015, Jubilee General launched its Window Takaful Operations (Islamic insurance) setup not only to cater to the requirements of the existing clientele but also to reach out to new market segments that had not been obtaining the benefits of General Insurance products.
Jubilee has been the fastest growing company from the period of 2004-05 till 2014. The company has been doing things differently by having a business mix where around 50 percent of the premium comes from non-traditional businesses like health, liability and miscellaneous, apart from the premiums from the fire, marine and motor traditional business lines. Within the miscellaneous category, the company has engineering insurance where engineering projects are insured in their construction phase and operational phase. This segment has picked up with CPEC. Other products in the miscellaneous segment are the banker's blanket, and terrorism insurance etc. A breakup of the product classes can be seen in the illustration.
The gross and net premium for the firm has increased by 52 percent and 51 percent, respectively over the period of 6 years. The premiums recently have increased due to underwriting of infrastructure projects related to CPEC.
The underwriting profit increased by 207 percent in 2016 as compared to the year 2011, whereas the investment income increased by 75 percent over the last six years. Investments make up over 50 percent of total assets for JGICL; in 2016, investments were 69 percent of total assets of the company compared to 6 percent in the year 2011. In general, 70 to 75 percent of income of non-life industry comes from investments, while only 25-30 percent comes from underwriting ie technical profits. The combined and claims ratios have declined from 94 percent to 88 percent and 61 percent to 48 percent, respectively over the six years reflecting strength in the underwriting profitability of the firm.
JGICL's return on equity in 2016 decreased by 5 percent year-on-year due to changes in tax laws pertaining to investment income and extension of super tax, which resulted increase in effective rate of tax for the company. The insurance industry faced harsh tax regime in the year 2016 due to changes in the tax structure of insurance companies where Income from all sources are now taxed at 31 percent, whereas up till December 2015 dividend income was taxed at 12.5 percent, and tax on capital gains ranged between 0 - 15 percent. This increased effective tax rate, according to the CEO of JGICL has impeded insurance companies' ability to develop reserves to increase their capacity to pay claims. This has resulted in more reinsurance, which means more outflow of foreign exchange.
Outlook By 2021, the firm projects to be a Rs 15-16 billion company. JGICL is working on going into retail sector, a relatively untapped segment. Currently, retail is three percent of Jubilee's business, and the firm plans to grow this to 15 percent of its business by 2021. As a result, JGICL expects to see its premiums to start growing once again. The firm also plans to take its Takaful business to around 18-20 percent of its total business by 2021. Jubilee General will continue to invest in technology and experienced manpower. The company will also continue to focus on special areas like infrastructure projects, retail and micro-insurance.
================================================================
Shareholding Pattern - JGICL Percentage
================================================================
Associated Companies, Undertakings and Related Parties:
================================================================
Hassanali & Company (Pvt.) Ltd 0.3%
Hashoo Holdings (Pvt.) Ltd 0.2%
Hashwani Hotels Limited 5.5%
Habib Bank Limited 18.3%
Aga Khan Fund for Economic Development 14.0%
Aga Khan Hospital and Medical College Foundation 20.6%
Jubilee Life Insurance Company Limited 0.5%
Aga Khan University Foundation 3.7%
Pakistan Services Limited 7.6%
Investment Corporation of Pakistan 0.0%
Directors, CEO & their Spouse and Minor Children 2.1%
Executives 0.2%
Public Sector Companies and Corporations 0.0%
Banks, Financial Inst., Modarabas etc. 0.5%
Individuals 24.2%
Others 2.4%
Total 100.0%
================================================================