Chairman may be removed despite State Life’s unprecedented growth

In the five years he led the company, many key indicators showed highest growth.

KARACHI: In a country where most public-sector enterprises (PSEs) are money-guzzling white elephants costing the national exchequer billions of rupees annually just to stay afloat, how does the government reward the man at the helm of one of the very few PSEs that are actually profitable and growing? It sacked the chairman of State Life Insurance Corporation unceremoniously, although his job contract was to expire just a month later.

Last week, media reports emerged that Shahid Aziz Siddiqi, who became State Life chairman in June 2008, had been sacked by the caretaker government allegedly because he was a ‘political appointee’ of the last government. However, sources in State Life said no formal termination notification of Siddiqi had been received at the Karachi head office until the filing of this report. At the same time these same sources do not categorically contradict the reports of the removal.

Unprecedented growth

Siddiqi presided over what can probably be described as the five-year period of highest growth ever recorded in the history of the life insurance giant, which came into being in 1972 with the nationalisation of 32 life insurance companies of the country.

Compounded annualised growth rates for key indicators of State Life for five-year periods dating back to 1978 show that the company’s performance between 2008 and 2012 remained unparalleled, especially in terms of premium collection. The first five-year period of State Life – from 1973 to 1977 – is not included in this analysis due to a lack of credible data, especially for 1974.



The first and foremost performance indicator of any life insurance company is the growth in its renewal premiums, which is reflective of clients’ loyalty and satisfaction level. Under Siddiqi’s stewardship, renewal premiums increased at an annualised rate of 24% between 2008 and 2012. The closest annualised growth rate that State Life achieved in its 34-year history under review was in the five-year period of 1983-87, when renewal premiums rose on an average of 20%.

Arguably, the second most important performance indicator of an insurance company is its first-year premiums, commonly known as FYP that is the premium falling due during the first year the policy is in force. They grew at an annualised rate of 29% under Siddiqi’s watch every year between 2008 and 2012. The second highest growth rate in FYP was recorded in the five-year period of 1978-82, which was 27%.

It is not just premium collection in which State Life did outstandingly well in the last five-year period. In terms of the company’s ‘total outgo’ – which reflects whether a life insurance company is meeting its obligations to its policyholders, such as claims, etc – the annualised growth rate remained 21% for 2008-12, which is the highest among all the seven five-year periods of State Life under review.

Most astounding was the annualised increase of 16% in the number of lives covered in group insurance between 2008 and 2012, as the growth rate in this category never exceeded 5% in the company’s history. Even if the increase in the number of lives covered through the Benazir Income Support Programme is accounted for, the rise of 16% remains phenomenal, as the industrial sector growth has largely been dismal over the same period.

As for other key performance indicators – namely, investment income, total income, life fund, total yield and number of individual lives covered – the last five years have been either the best or the second best in the company’s history. In particular, annualised growth rates for all key performance indicators for 2008-12 were higher than those in 2003-07 and 1998-2002 periods.

When contacted by The Express Tribune, the State Life chairman refused to comment on the story.

Published in The Express Tribune, May 8^th, 2013.

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