A SLEEPY small company until some years ago, the Crescent Star Insurance Company Limited has managed to join the mainstream insurance industry, while forging ahead in such diversified field as food franchising, tracking and steel.

Early last week CSIL in a filing with the stock exchange, announced incorporation of its wholly owned subsidiary Crescent Star Technologies (Pvt) Ltd. The subsidiary would undertake business of tracker/software programming and call center operations. It will also support CSIL and associated companies within the group through technology based solutions, while promoting sales of all products and services.

The CSIL managing director and CEO Naim Anwar told this writer last Thursday that the company was forging ahead in software, call centres and tracking. “With our own tracking company, CSIL would save on the rentals now being paid to other companies in this business”, says Mr.Naim. And finally, the company planned to make big investment of up to Rs450m in Dost Steel Ltd (DSL), with a holding of 37.4pc.

The new management which took over the reins a couple of years ago was said to be diversifying into new businesses that were visualised to provide sharply higher returns of 35-40pc against the declining rates in fixed deposits and government securities.

Starting with food franchising, the company has made initial investments in its wholly owned subsidiary Crescent Star Foods (CSF), which is set to bring the Texas-based fried chicken chain ‘Golden Chick’ to Pakistan. The initial plan is to open three restaurants, with a target of 30 outlets in the next five years. Mr. Naim Anwar says the first restaurant would open in May this year.

Yet, Mr. Naim emphasized that the expansion was not at the cost of neglecting the core insurance business. Earlier in Jan this year, CSIL singed a Memorandum of Understanding for acquisition of 62.5 percent controlling shares of Pak Kuwait Takaful Limited, subject to all necessary legal and corporate approvals. The price of acquisition is yet to be disclosed to the public.

The company CEO says that the Takaful business would allow the company access the Islamic insurance sector. “The Takaful firm would operate as a subsidiary of CSIL” Mr.Naim says. Conventionally insurance companies operate in a narrow product range which includes fire, marine and motor business. “However, CSIL visualises making inroads also into other non-conventional sectors which would be closer to the needs of the general public. The CSIL MD affirms that the company would soon venture into Life Insurance, which would complete the entire insurance spectrum with conventional, Takaful and Life insurance under the company’s fold.

Mr Naim lamented the abysmal low penetration of insurance in the country which stood at 0.8pc of the GDP, against the global penetration of 8pc. Directors’ report appended to the last available accounts for the nine months ended Sept 30, 2015 blamed the banking sector as a stumbling block to the development of insurance industry. The report says: “It is a matter of concern that the banking sector has a policy to discourage fair competition which is one of the biggest reason for low penetration of insurance in Pakistan as compared to the rest of the world. Every bank has its own unannounced criteria of issuing bank limits to each insurance company and the worst is that they have no spoken criteria to enlist insurance companies”.

The CSIL CEO says, in the last two years, the paid-up capital of the company had increased from Rs121m to Rs821m. The company maintained the free float of stock at 38pc, while 62pc equity was vested in the sponsors. Total assets, according to the last available accounts up to Sept 30, 2015, stood at Rs762m, up from Rs589m at the same time a year ago.

For the six months April-Sept 2015, CSIL recorded profit after tax at Rs99m, against net loss of Rs21m in the previous comparable period. The company’s net premium revenues grew by 120pc to Rs180m from Rs82m in the first half of 2014. The growth was reckoned to be due to increased insurance coverage from the health and auto sectors.

In the insurance segment, motor insurance products command the biggest share of 56pc in the company’s business, followed by accident and health benefit plans with 29pc. The company looks forward to continue supplementing the growth in net premium to a great extent from Yellow.

Published in Dawn, Business & Finance weekly, March 28th, 2016