ANALYSIS OF NON-LIFE INSURANCE COMPANIES IN PAKISTAN FOR THE YEAR ENDED 31 st DECEMBER 2017

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Lynette Shields
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1 ANALYSIS OF NONLIFE INSURANCE COMPANIES IN PAKISTAN FOR THE YEAR ENDED 31 st DECEMBER 2017

2 CONTENTS Introduction Gross Premium Retention Ratio Loss Ratio Commission Ratio Expense Ratio Investment Ratio Profit Before Tax Return on Equity Underwriting Profits Takaful Window Conclusion

INTRODUCTION We have analyzed financial statements of 20 NonLife Insurance Companies whose financials were available as at 26 th April 2018.

3 INTRODUCTION We have analyzed financial statements of 20 NonLife Insurance Companies whose financials were available as at 26 th April Companies Included in the analysis 1 Adamjee Insurance 11 Habib Insurance* 2 EFU General Insurance 12 TPL Direct Insurance* 3 Jubilee General Insurance 13 Reliance Insurance 4 The United Insurance* 14 Premier Insurance 5 Sindh Insurance 15 Century Insurance 6 UBL Insurance* 16 Saudi Pak Insurance* 7 Atlas Insurance 17 Asia Insurance* 8 Askari General Insurance 18 Shaheen Insurance 9 SGI Insurance 19 The Crescent Star Insurance 10 East West Insurance 20 The Universal Insurance* *A few companies were observed to change presentation of financial statements as per Insurance Rules 2017 For furhter information contact us at info@paragonact.com

4 GROSS WRITTEN PREMIUM Gross Written Premium (Top 5) 20,000 17% 14% 15,000 10,000 2% 5,000 18% EFU Adamjee Jubilee United UBL (5,000) % Increse/(Decrese) 3,000 2,500 2,000 1,500 1, Gross Written Premium (Others) Total Gross Premium Written by the 20 insurance companies showed an increase of 6% from PKR 65.4 billion to PKR 69.3 billion Highest growth is observed for Asia and East West at 22% Negative Growth is observed for the following companies Sindh Insurance (83%) Crescent Star (41%) Premier (24%) Universal (21%) Habib (17%) Reliance (4%) SGI (4%) Jubilee (2%) Results for IGI Insurance one of the Key Players are not available to date

RETENTION RATIO 10 9 8 92% 92% 86% 86% 85% 8 7 67% 66% 62% 61% 59% 6 5 4 53% 52% 45% 43% 43% 41% 29% 26% Highest retention ratio is shown by TPL at 92%, with more than 85% of GWP in motor

5 RETENTION RATIO % 92% 86% 86% 85% % 66% 62% 61% 59% % 52% 45% 43% 43% 41% 29% 26% Highest retention ratio is shown by TPL at 92%, with more than 85% of GWP in motor portfolio The lowest retention ratio of 26% is reflected by SGI The average retention ratio is 56% The retention ratios have been calculated as ratio of net earned premium and gross earned premium

32% 32% 29% 29% 29% 28% 28% LOSS RATIO 6 5 43% 43% 4 36% 36% 25% 23% 18% 17% 12% 7% 5% Highest loss ratio is observed for Sindh Insurance at 43%, followed by Adamjee at around

6 32% 32% 29% 29% 29% 28% 28% LOSS RATIO % 43% 4 36% 36% 25% 23% 18% 17% 12% 7% 5% Highest loss ratio is observed for Sindh Insurance at 43%, followed by Adamjee at around the same level The lowest loss ratio of 5% is reflected by SGI. The average loss ratio is 28% The loss ratios have been calculated as ratio of net claims and net earned premium

lowest commission ratio of 1% is reflected by SGI The average commission ratio is 6% The

7 COMMISSION RATIO 18% 18% 18% 16% 16% 15% 14% 12% 12% 9% 9% 8% 7% 7% 6% 4% 2% 6% 6% 6% 5% 5% 4% 2% 2% 2% 1% Highest commission ratio is shown by Crescent Insurance at 18%, whereas lowest commission ratio of 1% is reflected by SGI The average commission ratio is 6% The commission ratios have been calculated as ratio of net commission and gross written premium

of 6% is reflected by Sindh Insurance The average expense ratio is 18% The expense

8 EXPENSE RATIO 6 52% 5 44% 4 37% 36% 36% 29% 25% 24% 23% 19% 18% 16% 15% 14% 14% 12% 11% 6% Highest expense ratio is shown by TPL Insurance at 52%, whereas lowest expense ratio of 6% is reflected by Sindh Insurance The average expense ratio is 18% The expense ratios have been calculated as ratio of management and G&A expense and gross earned premium

INVESTMENT RATIO 12% 11% 8% 8% 8% 7% 6% 5% 5% 5% 4% 2% 4% 4% 3% 2% 2% 1% 1% 1% 1% 1% 2% 4% 2% 3% 3% Highest investment ratio is shown by Crescent Insurance at 11%, whereas lowest investment ratio of

9 INVESTMENT RATIO 12% 11% 8% 8% 8% 7% 6% 5% 5% 5% 4% 2% 4% 4% 3% 2% 2% 1% 1% 1% 1% 1% 2% 4% 2% 3% 3% Highest investment ratio is shown by Crescent Insurance at 11%, whereas lowest investment ratio of 3% is reflected by Reliance Insurance The average investment ratio is 4% for the year The investment ratios have been calculated as a ratio of net investment income and assets at the beginning of the period

10 PROFIT (BEFORE TAX) FOR THE PERIOD Profit (Top 5) 4,500 4,054 4,000 3,781 3,500 3, ,000 2,500 2,121 2,000 1,854 1,616 1,500 1,278 1,186 1, EFU Adamjee Jubilee SGI Atlas Profit (Others) (100) (26) (98) (200) (300) (400) Highest profit is shown by EFU at 3.4 billion Overall the profits have declined from 13.9 billion to 11.8 billion for the year 2017 i.e. a decrease of 16%; mainly attributable to decline in investment income and underwriting results Losses are observed for Reliance and Premier Insurance during the year The Profit shown is Profit Before Tax as per financial statements of the companies

reflected by Premier at The average return on equity is 11%.

11 RETURN ON EQUITY 25% 15% 17% 15% 15% 14% 12% 11% 9% 8% 8% 8% 8% 8% 7% 7% 5% 5% 6% Highest return on equity is shown by Atlas Insurance at, whereas lowest is reflected by Premier at The average return on equity is 11%. The return on equity has been calculated as ratio of profit after tax and equity at the beginning of period

FIRE UNDERWRITING PROFIT 12,000 10,714 10,000 6% 3% 8,000 2% 1% 23% 12% 15% 3% 9% 5% 1% 6,000 4,000 2,000 5,020 1,990 825 609 819 333 11% 1,458 27% 24 67 22% 27% 35% 469 335 323 401 192 95 53 10 4 5

12 FIRE UNDERWRITING PROFIT 12,000 10,714 10,000 6% 3% 8,000 2% 1% 23% 12% 15% 3% 9% 5% 1% 6,000 4,000 2,000 5,020 1, % 1,458 27% % 27% 35% Highest net earned premium is shown by EFU at 10.7 bilion, with underwriting profit ratio of 6% The average underwriting profit ratio is 5%. The highest underwriting profit ratio is shown by Atlas at 23%; mainly small insurers showed negative results during the year The underwriting profit ratio is calculated as a ratio of underwriting profits and earned premium

MARINE UNDERWRITING PROFIT 2,500 2,000 15% 1,500 1,000 2,171 14% 16% 24% 888 614 54% 29% 765 16% 21% 84% 3% 658 43% 4% 2% 13% 14% 1% 10 5 31% 5 10 500 250 320 183 144% 77 27 33 239 172 100 65 46 13 9

13 MARINE UNDERWRITING PROFIT 2,500 2,000 15% 1,500 1,000 2,171 14% 16% 24% % 29% % 21% 84% 3% % 4% 2% 13% 14% 1% % % Highest net earned premium is shown by EFU at 2.1 bilion, with underwriting profit ratio of 15% The average underwriting profit ratio is 18%. The highest underwriting profit ratio is shown by Atlas at 54% followed by Century (43%) and East West (29%); TPL (144%) and Habib (84%) show high negative results The underwriting profit ratio is calculated as a ratio of underwriting profits and earned premium.

MOTOR UNDERWRITING PROFIT 9,000 8,000 7,000 6,000 5,00012% 4,000 3,441 3,000 2,000 1,000 8,140 19% 6% 1,360 3% 6% 847 486 13% 291 27% 814 3% 1,230 235 39 5% 38% 34% 13% 12% 8% 14% 22% 319 165 282 276

14 MOTOR UNDERWRITING PROFIT 9,000 8,000 7,000 6,000 5,00012% 4,000 3,441 3,000 2,000 1,000 8,140 19% 6% 1,360 3% 6% % % 814 3% 1, % 38% 34% 13% 12% 8% 14% 22% Highest net earned premium is shown by Adamjee at 8.1 bilion (mainly business written is outside Pakistan), with UW profit ratio of 6% The average underwriting profit ratio is The highest UW ratio is shown by Century (38%), Shaheen (34%) and SGI () The underwriting profit ratio is calculated as a ratio of underwriting profits and earned premium.

HEALTH UNDERWRITING PROFIT 1,800 6% 1,674 4 1,600 1,400 1,200 11% 1,287 1,000 800 600 400 200 5% 444 4% 5% 21% 152 162 72 11 Highest net earned premium is shown by Adamjee at 1.

15 HEALTH UNDERWRITING PROFIT 1,800 6% 1, ,600 1,400 1,200 11% 1,287 1, % 444 4% 5% 21% Highest net earned premium is shown by Adamjee at 1.7 bilion, with underwriting profit ratio of 6% The average underwriting profit ratio is 1%. Underwriting Profit Ratio is negative for Jubilee (11%) and Habib (21%) The underwriting profit ratio is calculated as a ratio of underwriting profits and earned premium.

MISC. (OTHERS) UNDERWRITING PROFIT 2,500 2,000 1,500 1,403 2,331 22% 8% 6% 1,424 2,150 11% 4% 24% 7% 1% 1,670 5% 19% 11% 5% 8% 25% 4% 1,000 500 608 915 431 148 31% 9 104 30 64 193 254 343 63 33 2 4

16 MISC. (OTHERS) UNDERWRITING PROFIT 2,500 2,000 1,500 1,403 2,331 22% 8% 6% 1,424 2,150 11% 4% 24% 7% 1% 1,670 5% 19% 11% 5% 8% 25% 4% 1, % Highest net earned premium is shown by Jubilee at 2.3 bilion, with underwriting profit ratio of 6% The average underwriting profit ratio is 9%. High UW profit is shown by Shaheen (25%), Askari (24%), Adamjee (22%) and EFU () The underwriting profit ratio is calculated as a ratio of underwriting profits and earned premium.

ALL LINES OF BUSINESS COMBINED 20,000 18,000 17,730 17,146 16,000 14,000 9% 12,000 7% 5% 5% 10,000 8,000 7,581 6,000 4,072 4,000 2,000 24% 2,468 2,345 16% 2,205 1,918 1% 1,760 28% 21% 7% 6% 6% 1% 3%

17 ALL LINES OF BUSINESS COMBINED 20,000 18,000 17,730 17,146 16,000 14,000 9% 12,000 7% 5% 5% 10,000 8,000 7,581 6,000 4,072 4,000 2,000 24% 2,468 2,345 16% 2,205 1,918 1% 1,760 28% 21% 7% 6% 6% 1% 3% 13% 1,412 1,284 27% 1,188 1, Highest net earned premium is shown by EFU at 17.7 bilion, with underwriting profit ratio of 9% The average underwriting profit ratio is 8%. Underwriting Profit Ratio is negative for Crescent (27%), Premier (13%) and Asia (3%); highest ratio is shown by Shaheen (28%), Atlas (24%), Century 21% and Askari () The underwriting profit ratio is calculated as a ratio of underwriting profits and earned premium.

18 Gross Contribution TAKAFUL WINDOW GWC Gross Written Contribution 1,800 1,600 1,400 1,200 1, Sindh EFU United TPL Adamjee Jubilee UBL Askari SPI Premier Atlas Reliance Asia Century Ins , , Highest gross window takaful contributions were written by EFU during the year The main line of business for takaful window operation has been motor Overall, the GWC from the year 2016 (3.5 billion) has increased by 163% i.e. 5.8 billion for year 2017

Profit Before Tax TAKAFUL WINDOW Profit Profit Before Tax 250 200 150 100 50 (50) Sindh EFU United TPL Adamjee Jubilee UBL Askari SPI Premier Atlas Reliance Asia Century Ins 2016 6 49 36 4 16 (5) 6 7

19 Profit Before Tax TAKAFUL WINDOW Profit Profit Before Tax (50) Sindh EFU United TPL Adamjee Jubilee UBL Askari SPI Premier Atlas Reliance Asia Century Ins (5) 6 7 (28) (2) (2) 3 (1) (1) 2 Highest profit before tax is observed for United during the year Century insurance observed a loss from Takaful Window operations during the year Overall, the profits from the year 2016 (0.1 billion) has increased by 533% i.e. 0.5 billion for year 2017

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General Insurance Sector Update

General Insurance Sector Update October 2017 Insurance Sector Overview Gross Premium Written No.of players CY16 (PKR mln) Rated PACRA Rated JCR Dual Rated Large (>5%) 4 46,209 4 2 2 Medium(2-5%) 12 22,179