Insurance Surveyors Sought Intervention of SECP

The Insurance surveyors have sought intervention of Chairman Securities and Exchange Commission of Pakistan (SECP) to restrict ED Ms Nasreen Rasheed for flouting SECP Ordinance 2000 and Rules 2002, .
It has been found that the Executive Director, Insurance Division, Nasreen Rashid has called the insurance surveyors for the interviews for the renewal of their licenses which is against the SECP Ordinance 2000, and Rules 20002, thus causing harassment and fear among the insurance surveyors. The insurance surveyors while terming it gross violation of rules asked the Chairman SECP to intervene as it is an unprecedented act and feared that it will breed corruption. As per details the renewal of existing insurance surveyors licenses had always been renewed as governed by clause 112 (40 and only an application for renewal in accordance to sub rules 2(b) of rules 19 of the insurance rules 2002 with declaration under sub rule (3) and (4) of rules 19 of the insurance rules 2002, with a paid challan of Rs2000/- for each class of insurance surveyor.
So, it is unprecedented to call existing insurance surveyors for renewal of licenses, and the ulterior motives are best known to the initiator, they said.

New Jubilee Insurance Company
Company overview
New Jubilee Insurance Company Limited (NJI) is one of the renowned general insurance companies of Pakistan. NJI was incorporated in 1953 and is listed on Karachi and Lahore stock exchanges. In 2003, NJI acquired Commercial General Union’s operations of Pakistan. Moreover, the company along with AKFED (Aga Khan Fund for Economic Development) also acquired majority stake of Commercial Union Life Assurance Company of Pakistan ltd. In terms of strong financial base and gross direct premium, the company is ranked amongst top three insurance companies of Pakistan having coverage in diverse sectors under general insurance. Besides on the shelf services, the company also offers tailor made risk coverage products along with risk management services. Major shareholders of the company include Aga Khan Fund for Economic development, Habib Bank Limited and Hashoo Group.
Insurance coverage
* Property insurance
* Marine insurance
* Motor insurance
* Engineering insurance
* Bond
* Group health insurance
* Miscellaneous insurance
* ViaCare travel insurance
* Personal Line insurance
* Specialized insurance
Premium contribution during 2008
During 2008, major chunk of premium revenue was contributed by motor insurance with 31% share in total premium, followed by fire & property damage having 23% contribution. Generally, motor category is assumed as the riskiest business segment due its highest claim ratio. However, being riskier, motor category also attracts lucrative premiums. Due to subdued performance by domestic auto industry, the premium of motor segment depicted muted growth of 5% during the year at PRs691mn.
Claims
During the period under review, motor segment’s claims drained off major chunk of premium. Claims against fire & property damage remained 2nd on the list.
Earnings grew by 38% in 9M09
In 9M09, the company recorded net earnings of PRs348mn as compared to PRs253mn in the same period of last year - 38% higher. Underwriting performance remained impressive with an increase of 112% to PRs97mn due to 3pps drop in net claim ratio. Underwriting profit also received due support from decline in commission expenses. However, net premium grew by only 4% to PRs1.7bn on account of smaller growth in marine, motor and health insurance segments. In addition to healthy performance from underwriting business, investment income increased by 36% to PRs169mn due to record gain in equity market during 9M09. High interest rates during the period helped the company to realized better return on its banks deposits. The company’s return on banks deposits grew by 99% to PRs116mn versus PRs58mn in the last year’s same period.
However, in 3Q09, the growth in profitability reversed and net earnings dropped by 5% on Y-o-Y to PRs92mn. Underwriting results dropped by 54% to PRs25mn in the wake of decline in net premium (down 4%) earned and increase in claim ratio (6pps increase). On the other hand, investment income and return on banks deposits grew by 85% and 73% to PRs43mn and PRs26mn, respectively.
Historical performance
The company has recorded consistent rise in gross premium revenue with average annualized growth of 23% since 2000. Gross premium earned has increased from PRs0.8bn in 2000 to PRs3.5bn in 2008. However, pace of growth slowed in 2008 to only 3% due to domestic economic slowdown. In 9M09, the company has earned PRs3.4bn gross premium - higher 18 % over the same period of last year. Inline with gross premium, net premium also grew but with relatively higher momentum. Net premium posted annual growth of 27% in 2001-2008. During 9M09, net premium increased by 4% to PRs1.7bn. However, underwriting results remained choppy with a negative PRs207mn in 2007 and record figure of PRs108mn in 2008. Huge underwriting losses are largely due to sharp increase in claim ratio as a result of catastrophic event which spurred wave of riots in the country. As per the management, being one of the largest insurers in Pakistan, the company had incurred the claim amounting PRs320mn as a result of that event. In 9M09, the company earned PRs97mn in underwriting business as compared to PRs46mn in the same period of last year. The company is also depicting a consistent claim ratio with exception in 2007. Barring 2007, the company’s claim ratio averaged at 61%.*  
Sources 
Research: First Capital Equities Ltd