KARACHI, June 6: New Jubilee Insurance Company recorded about 22 per cent increase in its investment income during the first quarter of this fiscal year but like all other corporates it did see return on its bank deposit fall significantly.
According to the quarterly balance sheet of NJI its investment income rose to Rs20.4 million during January-March 2003 up from Rs16.7 million in a year-ago period. But the insurance company saw a decline in return on bank deposits — down to Rs3.4 million from Rs5.1 million. A senior official of the company told Dawn that the fall was attributable to a general decline in returns on bank deposits. The average deposit rate of all banks combined fell 79 basis points during January-March this year — from 3.60 per cent to 2.81 per cent.
“We are now trying to invest more in the stock market,” said the NJI official adding that there was enough scope for picking up some blue chips and holding them on for profit taking. When asked if his company was interested in making investment in TFCs he said since TFCs carried a floating interest rate tied mostly with the treasury bills and Pakistan Investment Bonds rate their effective yields have fallen over time. The TFCs that use the SBP discount rate as base rate are also offering lower return due to fall in discount rate.
The NJI official said Pakistan Investment Bonds themselves are also offering lower return these days and as such investment in the bonds too was also not worthwhile. Senior bankers say the 10- year PIBs are currently trading around 5.5 per cent—against its coupon rate of 11 per cent. They link the fall in the PIBs rate to end-June off-loading by some banks that are trying to book capital gains. The investment income of NJI includes dividends and rent; return on bank deposits and TFCs and capital gains.
The NJI quarterly balance sheet shows that the company earned a handsome after-tax profit of Rs135.6 million in January/March 2003 up from Rs31.5 million earned in the corresponding period of last year. The company wrote Rs380 million worth of premium in the first quarter of this year up from Rs270 million in a year-ago period. Its net premium revenue also went up to Rs137 million from about Rs112 million. Underwriting business also earned the company Rs30.5 million in January-March this year up from Rs20.2 million a year earlier.
During the quarter under review NJI acquired the business of Pakistan branches of Commercial General Union International Insurance of UK (CGUII) and The New Zealand Insurance Company —the latter being a dormant company since December 31, 1997.
NJI is engaged in a variety of insurance activities and its net premium revenue is generated from insurance of fire and property; marine, aviation and transport, motor vehicles; accident and health and others. In January-March 2003, the company earned the highest net premium revenue of Rs49.2 million through marine, aviation and transport insurance followed by motor vehicles insurance (Rs46.9 million). A senior official of NJI told Dawn that marine, aviation and transport insurance business might keep up a rising trend as international trading has started picking up.