KARACHI, June 22: Adamjee Insurance Company Limited has plans to enter the life insurance business, a senior company executive told Dawn on Thursday.

Answering a query regarding the company’s plans in that sphere, the company official said that making a debut in the lucrative life insurance sector was under ‘active consideration’.

Currently, there are four companies listed on the Karachi Stock Exchange that write life business: American Life Insurance Company; EFU Life Assurance; Metropolitan and New Jubilee Life Insurance. Shares in three of those four companies have recently moved up to trade at premiums, given an improvement in business and increasing share in the total business. An overwhelming piece of the cake in life insurance business, nonetheless, still vests with the public sector entity: State Life Insurance Company (SLIC).

The Adamjee executive stated that short-listing of professionals with in-depth experience of UAE market was currently underway and underwriting would begin in Dubai before the end of the current year.

In the annual report for the year ended December 31, 2005 the company had mentioned that the board of directors had obtained licence to re-start business in the UAE, which the company stated was “based on a reassessment of the booming regional market and considering opportunities available in the non-motor business”.

Adamjee had to temporarily halt UAE operations from Jan 1, 2005 because of heavy dependence on motor business that returned losses. “Instead of relying heavily on motor being the main class, we want a balanced mix of business”, the company stated in its annual report. Adamjee had also suffered losses in the textile and ginning sector in the last quarter of the previous year, though the company’s overall claim ratio stood reduced from 73 to 63 per cent year-on-year. Profit after tax for 2005 was up to Rs1,163 million, from Rs327 million in 2004.

Overall, the non-life insurance industry had recorded growth of 20pc in 2005. And the trend had intensified in the current year. A report on the sector performance for first quarter ended March 31, 2006, prepared by analysts at brokerage firm, JSCM observed: “On account of increased economic activities, robust equity market and structural reforms in financial sector, insurance companies have shown tremendous growth in their 1Q2006 results”. The JSCM report noted that there were 29 non-life listed companies, and a sample of majority of companies whose results were available, indicated surge in profitability by 151pc, amounting to Rs1.94 billion for the 1Q2006, from Rs0.77bn in the same period last year.

Non-life insurance companies that derive major premiums and profit from marine, aviation and transport; fire and property; miscellaneous and motor sectors -- almost in that order -- saw their investment income contribute higher share in the bottom-line, as the government granted insurance sector income tax exemption on capital gains, vide the budget 2005-06. Analysts expect gross premium of the insurance industry to grow by 25pc compound annual growth rate (CAGR) in next 5 years (2006-10).