An Analysis
LISTED INSURANCE SECTOR IN
PAKISTAN
Principal, Hailey College of Banking & Finance, University of the Punjab, Lahore Pakistan,
Email: kamjadsaeed@yahoo.com – Website: www.kamjadsaeed.edu.pk Mob: 03334363363
Member Governing Council, International Federation of Accountants (IFAC) (1997-2000),
President, South Asian Federation of Accountants (SAFA) (1997), President, Institute of
Cost and Management Accountants of Pakistan (1997-2000), President, Association of
Management Development Institutions of South Asia (AMDISA) (1993-96), Pro ViceChancellor University of the Punjab, Lahore (1994-1996), Founder Director, Institute of
Business Administration (IBA), University of the Punjab, Lahore (1973-1996).
PRELUDE
In an earlier article, potential of Life Insurance in Pakistan was well
highlighted. This piece looks at the Insurance Sector in Pakistan with special
focus on the listed insurance companies in the country. There were thirty (30)
listed companies on the Karachi Stock Exchange as on November 30, 2006.
CONSTITUENTS
This piece has been divided into the following parts:
PART
I
II
III
FOCUS
Insurers/Re-insurers Registered companies under the Insurance
Ordinance, 2000
Listed Insurance Sector Review:
November 30, 2006
KSE Insurance Sector:
Selected Companies Product Analysis 2005
The above are now reviewed below:
PART–I: INSURERS/RE-INSURERS REGISTERED UNDER THE
INSURANCE ORDINANCE, 2000
SECP has displayed names and contact numbers of insurers/re-insurers
registered under the Insurance Ordinance, 2000. An abridged position in
respect of fifty-two (52) is tabulated below:
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Table: 1
SECP: List of Insurers/Re-insurers Registered Under the Insurance
Ordinance, 2000
S. No.
Particulars
Number
%
1
Non-Life/General Insurers
42
81
2
Others:
02
 Foreign non-life Insurance
(Private Sector)
02
 Local Life Insurance (Private)
02
 Foreign Insurers (Private)
01
19
 State Owned Life Insurance (SLIC)
01
 Takafal (non-life) Co.
01
 State Owned Re-insurers
01
52
100
Compiled from: Download material from: http://www.secp.gov.pk / Insurance Companies.htm on 12-04-2006.
The above table presents the names of various Insurance/Re-insurance
Companies in Pakistan.
PART–II: LISTED INSURANCE SECTOR REVIEW
There are thirty (30) insurance companies listed on Karachi Stock Exchange.
Their broad position is captured in the following table:
Table: 2
KSE: Insurance Sector: Above Par and Below Par Share Value Analysis
S. No.
Particulars
Number
%
1
Above Par Value
24
80
2
Below Par Value
06
20
30
100
Source: Compiled from: Daily Quotations of Karachi Stock Exchange (Guarantee) Limited, November 30, 2006.
There is a need to undertake review of six (06) companies whose market price
of shares is below their par value. Ideally there should be no listed insurance
company with its market price below par. This is very important to inspire
confidence in the world of business. Good management / business practices
should be operationalized to ensure success and to be excellent performers on
the stock market. Securities and Exchange Commission of Pakistan (SECP) may
initiate research to examine the situation for improvement. Similar initiative
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may also be undertaken in the Ministry of Commerce, Government of Pakistan,
Islamabad.
The following table has been prepared showing significant indicators:
Table: 3
Listed Insurance Companies in Pakistan
Significant Indicators
S. No.
1
2
3
4
5
Particulars
KSE Listed
Companies (Number)
Paid Up Capital
(Rs. billion)
Turnover
(Number billion)
January–October
2006
Market
Capitalization
(Rs. billion)
GDP ($b)
Total Number
Insurance Sector
Percentage
652
30
5
518
07
1.35
0.56
0.57
1.02
2.,952
73
2.47
128
1.21
0.94
Source: Computed From: Daily Quotations of Karachi Stock Exchange (Guarantee) Limited, November 30, 2006.
An analysis of above table reveals the following:
1)
There is a tremendous potential to be exploited relating to development
of insurance sector in Pakistan.
2)
Stakeholders moot is needed to develop a marketing strategy for
promoting insurance culture in Pakistan with an emphasis on:
(i)
Develop new products to meet the needs of the society. One can
benefit from global experiences.
(ii)
HRD be accelerated to attract and absorb executives for focusing
attention on:
(a)
Increase in Premium business.
(b)
Maximize investment yield on available funds.
(c)
Insurance education needs to be given top priority by all
Universities.
(d)
Graduates be given an intensive four months training to
utilize their services for leg work for expansion in insurance
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business. Solid institutionalized arrangements be made
with appropriate logistics.
(e)
Performance
–
reward
system
for
incentives
and
compensation be conceived and later introduced.
(f)
Periodical monitoring relating to performance by insurance
executives be institutionalized.
(g)
All other factors constituting marketing strategy be
included
to
evolve
a
consensus
building
insurance
marketing strategy.
3)
P3
(Public Private Partnership) be introduced with facilitation support
by the Ministry of Commerce, Government of Pakistan for strengthening
insurance sector in Pakistan.
4)
Sound bench marks be established. Short-term (One Year) medium-term
(3 to 5 Years) and long-term (10 Years) plans be developed to achieve
high profile targets compared to the best practices benchmarks for
achieving success.
PART–III: KSE: INSURANCE SECTOR:
SELECTED COMPANIES PRODUCT ANALYSIS: 2005
Research reveals that there are only four major revenue drivers in non-life
insurance sectors in Pakistan. This position is captured below:
Table: 4
Products Offered as Revenue Drivers by Listed Insurance Companies in
Pakistan
S. No.
Products
1
Fire
2
Marine
3
Motor
4
Miscellaneous
4
Adamjee Insurance Company Limited has released performance of ten (10)
leading insurance companies in Pakistan for the year 2005. Their names are
listed below:
Table: 5
Ten (10) Leading Pakistani Insurance Companies
Name
Insurance Company
Adamjee
Adamjee Insurance Company Limited
Askari
Askari General Insurance Company Limited
Atlas
Atlas Insurance Limited
East West
East West Insurance Company Limited
EFU
EFU General Insurance Limited
Habib
Habib Insurance Company Limited
IGI
International General Insurance Company of Pakistan
NJI
New Jubilee Insurance Company Limited
Premier
The Premier Insurance Company of Pakistan Ltd
Shaheen
Shaheen Insurance Company Limited
S. No.
1
2
3
4
5
6
7
8
9
10
Source: Extracted from: Comparative Study for the year ended December 31, 2005, Adamjee Insurance Company
Limited, P.1.
The following research based table has been prepared in respect of gross
premium written of Rs. 18.6 billion:
S. No.
1
2
3
4
Table: 6
Gross Premium Written 2005
Company
Rs. Billions
Adamjee
6.7
EFU
6.6
NJI
1.7
15.0
Other* Seven (07)
3.6
18.6
%
36
36
09
81
19
100
Source: Computed from: Comparative Study for the year ended December 31, 2005, Adamjee Insurance Company
Limited, P.16.
* Shaheen, IGI, Premier, Askari, Atlas, Habib and East-West.
This table shows that three (03) companies dominate the scene (81 %) and the
remaining seven (07) have 19% share of the market share in gross insurance
premium. This presents a wake up call for expansion and development of
insurance sector in Pakistan.
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A detailed analysis reveals the following results in respect of the foregoing ten
(10) leading insurance companies in Pakistan. The results are tabulated below:
Company
Adamjee
EFU
NJI
Others:
-Atlas
Fire
36
25
07
68
32
Table: 7
Revenue Drivers
Marine
33
24
08
Motor
22
40
04
Miscellaneous
31
10
22
08
73
27
Others:
-Shaheen
05
71
29
Others:
-Askari
Others:
100
100
100
05
68
32
100
Source: Computed from: Comparative Study for the Year Ended December 31, 2005, Adamjee Insurance Company
Limited, PP. 3-4.
It is apparent that there is a crying need for diversification of revenue drivers
and development of insurance business in Pakistan. All concerned may start
thinking of a breakthrough approach for the development of the insurance
sector in the overall economic development of Pakistan.
CONCLUSIONS & SUGGESTIONS
Various conclusions have been drawn from analysis of insurance sector in
Pakistan in the foregoing pages. Recommendations have been offered with
humble approach. It is time now that all stakeholders may address the
challenges identified and respond positively with a sense of urgency. The
earlier this is done the better.
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