Jubilee Life Insurance Company
Incorporated in 1995 as a public listed company, Jubilee Life Insurance Company (formerly known as New Jubilee Life Insurance) leads the private sector life insurance segment with a market share of 41 percent as of September 2013, according to the data provided by Insurance Association of Pakistan.
Armed with an asset base of Rs 34 billion as of December 2013, Jubilee Life possesses the largest Bancassurance network and has a set-up of nearly 129 outlets in different areas of the country. The Company is listed on KSE with a market capitalisation of Rs 18.11 billion and a paid up capital of Rs 627 million. Jubilee Life is a subsidiary of the Aga Khan Fund for Economic Development (AKFED), Switzerland, which is the economic development wing of the Aga Khan Development Network (AKDN). This provides the Company with an opportunity to bring into play global experience and resources.
CREDIT RATING: In March 2013, the Insurer Financial Strength (IFS) Rating of Jubilee Life Insurance was upgraded to AA (double A) from AA- (double A minus) by JCR-VIS Credit Rating Company Limited, along with a 'stable' outlook.
This strong rating, along with echoing healthy financial muscle of the Company, also reflects the strength of Company's sponsors. These sponsors include institutions that are part of Aga Khan Group including the largest private sector commercial bank of Pakistan, Habib Bank Limited.
MICRO-INSURANCE: Jubilee Life insurance is also involved in micro-insurance where micro-insurance initiatives at Jubilee Life revolve around providing life and health insurance benefits to the underprivileged segment of population at very low cost.
LIQUIDITY POSITION: Liquidity position of Jubilee Life Insurance appears to be sound. Out of total asset base of Rs 34 billion, a substantial part is invested in liquid assets as nearly 63 percent is invested in government securities. This provides the Company with adequate coverage against its liabilities.
2013: FINANCIAL PERFORMANCE Since 2009, Jubilee Life Insurance has consistently managed to successively increase its profitability. During 2013, the Company continued its upward march as it posted a healthy 70 percent year-on-year rise in its net profitability. Dividend income provided a major boost to the bottom line by posting a colossal increase of 175 percent year on year to Rs 48 million in 2013.
While, expenses increased by nearly two folds during the year to Rs 59 million in 2013, the surplus transferred to shareholders' fund of Rs 1.27 billion during the year (2012: Rs 650 million) provided a comfort zone to the profitability of the Company. This helped the bottom line profitability of the Company to land in green zone.
BUSINESS PERFORMANCE: Impressive growth in Bancassurance channel has enabled the individual life unit linked business to climb up the ladder briskly. This can be substantiated as the individual life unit linked business, forming nearly 86 percent of total gross premium of the Company, generated a gross premium of Rs 14 billion, depicting a notable surge of 44 percent year on year.
Conventional business, which makes up 8 percent of total gross premiums, grew meagerly by 3 percent to Rs 1.2 billion in 2013. Stiff competition in this segment coupled with high price sensitivity remained the key reasons behind slim profitability, according to Company's directors' report. Undeterred by rising cost of medical expenses, accident and health business emerged as the frontrunner in 2013, as the gross premium of this segment surged by 85 percent year on year to Rs 1.13 billion in 2013. On the contrary, the performance of overseas group life and health business remained dim during the year as the gross premium of this segment declined by 41 percent to Rs 38 million in 2013.
INVESTMENT PORTFOLIO: In 2013, the investment portfolio of Jubilee Life Insurance increased to Rs 28 billion from Rs 18 billion last year owing to additional investments in equities and government securities.
Delving into the details, due to fresh investments in treasury bills and Sukuks during the year, the government securities portion increased to Rs 21 billion, reflecting an increase of 55 percent year on year. As a result of fresh investments, the investment portfolio mix of the Company changed slightly. Consequently, equity exposure of Jubilee Life Insurance has now increased to 21 percent from 18 percent earlier. However, the equity exposure is still well under control and doesn't pose any threat to shareholders' interests.
OUTLOOK: The emergence of Bancassurance channel has proved to be a breakthrough for the entire life insurance segment and for Jubilee Life Insurance in particular due to its association with the largest commercial bank of the country. This vantage remains one of the key reasons for Jubilee Life Insurance to be able to grow at a much faster pace than its competitors and the insurance industry at large.
Moreover, Jubilee Life's focus on expanding its distributing channels to tap the untapped segment of the population has attained good outcome for Company's fortunes. While the Company is also planning to expand further in the micro-insurance segment, this initiative will further expand the client base of the Company and increase its outreach to the rural mass.
Talking about the industry at large, although the penetration of life insurance segment has increased at a faster pace and surpassed the growth of non-life insurance penetration level, the industry still has a lot of room to increase its penetration level and micro-insurance is one window which still needs to be pitched vigorously.
In this regard, the significance of creating awareness amongst masses cannot be denied. Awareness campaigns, seminars and workshops particularly with collective efforts by the entire insurance industry and the regulators will assist in promoting the growth of this sector.
JUBILEE LIFE INSURANCE - FINANCIAL HIGHLIGHTS
Rs ('000) 2011 2012 2013
Investment income notattributable to statutory funds 88,095 115,152 138,802
Gain on disposal of investments 750 24,299 1,642
Total investment income 74,841 185,542 172,405
Investment related expenses (103) (74) (75)
Net investment income 74,738 185,468 172,330
Gain on disposal of fixed assets 5,155 1,068 3,743
Other revenues 3,619 2,029 862
Total investment income and other revenues 83,512 188,565 176,935
Expenses not attributable to statutory funds (31,156) (29,896) (59,994)
Profit before appropriationof surplus to shareholders funds 52,356 158,669 116,941
Surplus appropriated to shareholders'fund from ledger accou 530,000 650,000 1,273,000
Profit before tax 582,356 808,669 1,389,941
Taxation (207,763) (255,296) (448,470)
Proft after taxation 374,593 553,373 941,471
Earnings per share (Rs) 5.97 8.82 15.01
Source: Company accounts