As profits grow, State Life seeks global expansion

Insurance giant seeks greater presence in the Middle East.

KARACHI: As revenues from premiums jumped by over 25% in 2011, State Life Insurance Corporation – the largest insurance company in the country – announced that it has plans to expand its global presence, particularly in the Middle East, even as it continues to push for greater penetration rates in the Pakistani market.

“We opened new offices in Sharjah and Al Ain last year. Now we have a presence in Dubai, Abu Dhabi, Kuwait, Jeddah, Riyadh and Dammam,” said State Life chairman Shahid Aziz Siddiqui, in a briefing to journalists at the company’s headquarters in Karachi. He added that the insurance company was making an extra effort to attract non-Pakistani customers in the Gulf region.

The briefing on Wednesday did not make available the company’s financial statements or annual report for its financial year that ended December 31, 2011.

According to the insurance company’s chairman, State Life saw its premium revenues from first-time customers jump by about 25.5% to Rs12 billion in 2011, compared to the previous year. Revenues from existing customers jumped by about the same percentage to reach Rs24.7 billion. Meanwhile, the company’s income from its investment portfolio increased by about 10.3% to Rs30.3 billion in 2011.

The life insurance sector in Pakistan is tiny, with total industry assets equal to about 0.35% of the total size of the economy. This compares unfavourably even to neighbouring India, which has an industry equal to about 5% of the total size of the much larger Indian economy.

State Life is the dominant player in the industry, covering about 3.7 million of the 4.1 million life insurance policyholders in Pakistan.

The number of policy holders jumped by about 11.5% in 2011. State Life’s asset portfolio for its life insurance policyholders, meanwhile, increased from Rs230.4 billion in 2010 to Rs269 billion in 2011, a 16.8% increase. The company is easily the largest institutional investor in the country.

Bancassurance – or the distribution of insurance policies through banks – however, does not seem to be a channel that the state-owned insurance giant particularly enjoys using. “Policy renewal often becomes problematic if the bank manager gets transferred within a year,” complained Siddiqui.

State Life has, by far, the largest sales force in the country. “Entire families are now involved in the insurance agency business. We have about 20,000 female agents.”

The company is also seeking greater efficiency in its real estate portfolio, from which it drew about Rs750 million in rental income last year. “We expect income from real estate to go up to about Rs1 billion,” the chairman said.

The company was also particularly pleased with its group life insurance and pension segment, where the number of lives covered increased by a whopping 55% to 5.93 million in just one year. Premium income from that segment expanded by 26% to reach Rs5 billion in 2011.

Published in The Express Tribune, January 19^th, 2012.