Non-life insurance segment grows 60%

Largest insurer Adamjee’s profit rises by 17 per cent.

KARACHI:

The non-life insurance sector recorded a stellar increase of 60 per cent in net profit during January to March due to higher interest rates.

The growth in earnings also stems from core underwriting business and higher investment income, according to Topline Securities.

Excluding a large jump of Rs255 million in earnings of Central Insurance, the sector’s profit growth comes to 32 per cent. Overall scenario looks better for the insurance business with better outlook of capital markets, gradual economic recovery and availability of ample avenues for business penetration, said Topline Securities analyst Mohammed Millwala in a research note.

Earnings drivers: underwriting and investment income

Underwriting business of the companies grew by an impressive 32 per cent due to nine per cent growth in net premiums of the sector, the note added.

Interestingly, administrative expenses remained under control and grew by seven per cent. Moreover, high interest rate scenario, better capital markets and provisioning reversals led investment income to grow by an impressive 60 per cent, further augmenting the bottom-line, the note said.

Central Insurance posted the highest earnings growth of 392 per cent primarily while the largest insurer Adamjee’s profit grew by 17 per cent.

Published in The Express Tribune, May 7^th, 2011.