Rs420b is the value of State Life’s
total assets at the end of 2013 CREATIVE COMMONS
State Life Insurance Corporation of Pakistan failed to publish its financial accounts after 2011 because of an incomplete board of directors and the absence of a full-time chairman.
With the appointment of a chairperson in October and formation of the board of directors in November last year, State Life is set to publish annual reports for 2012 and 2013 in coming weeks.
For the time being, however, State Life has quietly put up selected indicators of its financial performance on its website. The selected indicators show the company is keeping up with its growth pace that it gathered following 2008.
For example, total premium income, which is one of the key indicators of a life insurance company’s performance, amounted to Rs65.7 billion in 2013, which is 17.3% higher than State Life’s total premium income of Rs56 billion in 2012.
Data shows total premium income earned by State Life increased at an average of 23.4% per year between 2009 and 2013. On the other hand, the average annualised increase in the combined total gross premiums collected by all private-sector life insurance companies over the same period clocked up at 32.8%.
The industry-wide growth rate of total gross premiums also accounts for the premiums collected by two new players – Adamjee Life and Asia Care Health – that entered Pakistan’s life insurance market during or after 2009.
Total assets of State Life stood at Rs420.8 billion at the end of 2013, which was up 20.5% from a year ago. In contrast, total assets of all private-sector life insurance companies in Pakistan equalled Rs102.4 billion in 2013, up 37% from 2012.
Former State Life Chairman Shahid Aziz Siddiqi was sacked by the PML-N government after it came into power in May 2013. He was removed from his position for allegedly being a ‘political appointee’ although the company recorded unprecedented growth under his chairmanship from 2008 to mid-2013.
First-year premiums grew at an average rate of 29% per annum between 2008 and 2012. Similarly, average growth in renewal premiums under his watch remained 24% per year from 2008 to 2012.
Speaking to The Express Tribune, State Life Executive Director Izqar Khan said the top management of the company was quickly making decisions on key issues that remained pending after the ouster of its last chairman. He added that financial accounts for 2014 should be out before the end of April.
Replying to a question, Khan said comparing the profitability of State Life with those of its private-sector rivals was unfair. Life Insurance (Nationalisation) Order, 1972, makes it mandatory for State Life to distribute 97.5% of its actuarial surplus – the amount by which the company’s fund exceeds the amount it must pay out in benefits – among its policyholders while pay the rest of 2.5% to the government as dividends every year.
In contrast, private life insurance companies are required to distribute 90% of their actuarial surplus among their policyholders.
Published in The Express Tribune, January 14th, 2015.
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