April 25, 2008	Friday	Rabi-us-Sani 18, 1429

KARACHI, April 24: Adamjee Insurance booked claims in the staggering sum of Rs1.4bn during the first quarter (Jan-March) of 2008.

The figure uncovered the damage inflicted to the property of its customers in the riots and civil commotion, following the assassination of Benazir Bhutto in the closing days of 2007.

As misfortunes do not come in singles, the company also had to bear the brunt of losses suffered by Berger Paints on account of a fire to its factory in Karachi. The financial results announced by Adamjee on Thursday did not segregate the claims attached to each of these two events.

But the ‘motor’ department reported the heaviest amount of Rs623 million in net claims, followed by ‘fire and property damage’ at Rs455 million.

Comparable aggregate claim numbers during the first quarter of the previous year stood at Rs692 million, evidencing a huge jump of 103 per cent in the quarter under review.

The impact of heavy claim numbers travelled down to the bottom line on the profit & loss account. The company thus posted profit after tax (PAT) in the sum of Rs88 million, translating into earnings per share (eps) at Rs0.86 and representing 84 per cent drop from PAT at Rs562 million and eps at Rs5.49 in the corresponding period of the previous year.

Investors, already nervous over the incessantly falling market since the beginning of the week, dumped the Adamjee stock on Thursday, which closed at its ‘lower circuit’ (representing maximum permissible 5 per cent decline a day). The share lost Rs19.10 to close the day’s trading at Rs363.65 with volume of 1.7 million shares.

The company’s net premium was noted to have increased by 21 per cent to Rs1.6 billion, but the advantage was almost totally lost in ‘claims’, resulting in the company ending up with underwriting loss of Rs175 million, in place of an underwriting profit of Rs279 million in the previous comparable quarter.

Investment income declined by 23 per cent to Rs342 million from Rs445 million in the similar period of 2007.

Investors were obviously taken by surprise at the hefty amount in claims, given the knowledge that the company had the comfort of reinsurance treaties with world renowned firms, Munich Re and Swiss Re.

If what is shown in the Adamjee accounts is the company’s portion of the claims burden, investors would be eager to know exactly how high did the total claim amount stand.