Corporate results: Jubilee Life Insurance records impressive earnings

EPS increase to Rs2.8 from Rs1.77.

KARACHI:

Jubilee Life Insurance posted a net profit of Rs201.8 million in January-March, up a massive 58.8% from the comparable quarter of 2013, according to a notice sent to the Karachi Stock Exchange (KSE) on Tuesday.

The company’s earnings per share increased to Rs2.80 from Rs1.77 recorded in January-March 2013.

Speaking to The Express Tribune, Jubilee Life Insurance CEO Javed Ahmed said the substantial increase in profits is because of higher business volumes and better investment performance in the last quarter. “We consider this growth to be satisfactory, as it is in line with our business plan,” he added.

Year-on-year growth in the company’s premiums net of reinsurance for the first quarter of 2014 remained 33.7%. They increased to Rs4.4 billion from Rs3.3 billion recorded in the corresponding quarter of 2013.

Currently, the largest player in the life insurance industry of Pakistan is State Life Insurance Corporation, which controlled over 65% market share until 2011. The state-owned giant has yet to publish its financial accounts for 2012 as well as 2013.

In the private sector, however, Jubilee Life Insurance leads the way among all listed life insurance companies. With Rs17 billion in gross written premiums during 2013, the market share of Jubilee Life Insurance among listed, private-sector insurance companies was about 48%.

Its closest rival had gross written premiums of Rs14 billion during the same year.

Dispelling the view that the substantial increase in the revenues of the company was due to the low-base effect, Ahmed said growth in premiums, coupled with invested assets in excess of Rs36 billion, was based on the company’s pursuit of aggressive business growth and a judicious investment strategy for the last many years.

Jubilee Life Insurance’s investment income and other income in the quarter under review almost doubled compared to the comparable three-month period of 2013. It increased to Rs1.2 billion, up 96.9% from Rs624.5 million in January-March 2013.

“A bigger asset base coupled with better performance of the KSE has yielded higher investment income,” Ahmed said.

With a rapid increase in business, the company’s claims net of reinsurance also increased notably. They stood at Rs3.9 billion in the latest quarter, up 47.6% from the corresponding period during the last year. Ahmed insists the rise in claims net of reinsurance is in line with the overall increase in business. “Had it not been the case, our profitability would have been lower,” he said.

Similarly, the company’s management expense went up 30.5% annually to Rs1.3 billion in January-March. Ahmed says such an increase is normal for a fast-growing life insurance company, as a significant portion of its expenses is linked directly to the volume of business. The trend is likely to continue in the future, he added.

Published in The Express Tribune, April 23^rd, 2014.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.