THE IGI Insurance Company Limited, sponsored by the Packages Group, is Pakistan’s largest insurance company by market capitalisation. At the closing market price of IGI stock on Friday, the company was valued at around Rs24 billion. Against the company’s total asset base of Rs13 billion on December 31, 2013, the figure does look impressive.

Jalees Ahmed Siddiqi, chief executive of IGI Insurance, tells Dawn that the success of the company is a result of 60 years of dedicated service. From January 1, 1954, when IGI began operations by writing its first policy to Syed Babar Ali, now the group’s chairman, the company has spanned across the country in seven cities, with a customer base of 4,000 corporates and 19,000 individuals.

Backed by the financial muscle of a strong conglomerate, IGI Insurance has continued to diversify and grow through acquisitions. In 2004, the company acquired Royal and Sun Alliance Plc UK’s Pakistan operations. In 2006, it entered into a buyout of American Express Bank’s shareholding in IGI Investment Bank.

Eight years down the road, IGI Insurance has ventured into the life insurance business through acquiring a controlling stake in the American Life Insurance Company (Pakistan) Limited (Alico). A week ago, the company paid Rs732 million to the American Life Insurance Company, Delaware, US — the parent company of Alico Pakistan — for a 69.69pc shareholding.

This, Mr Jalees says, will enable the company to set foot in the life insurance business. He asserts that it will give the company an edge in the insurance sector, as the general insurance companies are operating in a highly competitive environment.

Nearly 59pc of IGI’s paid-up shares are held by its directors and associated companies, with another 18.04pc by the general public.

Due to the stock’s comparatively low turnover, analysts at only a few brokerage houses follow the company, which is why the market appears to have overlooked the fact that the acquisition of Alico by IGI works out at around Rs22 per share, which is at almost a 100pc discount to the current market price of the life insurance company’s stock.

This should provide the company a huge windfall gain, which IGI shareholders may realise at the company’s upcoming annual general meeting on Wednesday, April 23. The market price of the IGI Insurance stock itself, which traded at just under Rs100 in December, has provided a mouth-watering return of 100pc in about 16 months.

Until the latest acquisition, IGI Insurance had been providing risk cover in fire, marine, aviation and transport, motor, health and miscellaneous business. In eight years from 2006 to 2013, it is reported to have settled 152,794 claims, to the sizeable sum of Rs5.49bn.

The company’s last annual accounts, drawn for the year ended December 31, 2013, shows its gross written premium at Rs2.035bn, and net written premium at Rs1.067bn, representing a growth of 10pc over the earlier year. This increase was several times higher than the nominal growth of 3pc (year-on-year) in the non-life insurance sector.

Net claims in 2013 increased to Rs61m from Rs9m a year ago, primarily due to flood losses and one off losses in the textile sector.

In the health insurance business, net claims jumped 34pc to Rs298m, from Rs222m, which the directors attributed to “losses from some large corporate clients”.

The company’s chairman, Syed Babar Ali, wrote in the directors’ report: “We have carefully analysed the losses in the health segment during the year and have introduced remedial measures, which should help to achieve better underwriting results”.

The company earned underwriting premium of Rs104m in 2013, which was supplemented by investment income in the sum of Rs673m.

And just as other insurance companies, IGI reaped rich returns from investment in the booming stock market. Book value of the company’s investments stood at Rs11.1bn at end-December 2013. Investment income increased by Rs260m YoY. This also enabled the firm to produce a shinning bottom line.

Earnings were further augmented by its share of profit from associated entities amounting to Rs443m, against a loss of Rs795m in the earlier year. The company posted a profit-after-tax for 2013 of Rs812m, which translated into earnings-per-share of Rs7.29. It represented a turnaround from a loss of Rs354m sustained in the previous year.

The Group lived up to its reputation of generously sharing the fruits of good harvest with its shareholders. IGI distributed Rs278m in cash dividends at Rs2.50 per share to its stockholders, tied to a bonus issue at 10 per cent.