KARACHI, Feb 12: Adamjee Insurance Company Limited (AICL) has started underwriting operations in the Emirates of Dubai, a senior company official said on Monday, in reply to a query.
In the latest Directors’ report to the shareholders for the six months ended September 30, 2006, the company had informed that its licence for continuing underwriting operations in Dubai had been renewed by the relevant authorities.
The expanded scope would enable the company to augment its earnings in the core general insurance business.
AICL is the largest insurance company in the country with total assets in excess of Rs10 billion. Commenting on company’s financial figures for the nine months ended September 30, 2006, analysts at Arif Habib Limited, a stock brokerage firm, stated that the company had contributed 32pc to the sector’s total net premiums earned for the period and its average contribution towards total fire, marine aviation and transport underwriting businesses works out to around 20 per cent over the past four years.
Net premium revenue of the company rose by Rs1 billion to Rs3.89 billion for the half year ended Sept 30, 2006, from Rs2.93 billion in the corresponding period of the previous year and profit after tax increased 67 per cent to Rs1.28 billion from Rs772 million.
But the major increase in earnings came from investment income which stood at Rs1.19 billion for the six months ended Sept 30, 2006, from Rs628 million in the similar period of earlier year. Analysts calculated that net investment income contributed 85 per cent towards the bottom-line.
The company historically tends not to disclose the portfolio in the annual report and accounts.
Analysts, who follow the company, believe that it has stakes in PSO; Shell; OGDC; Siemens; GlaxoWellcome among others from various sectors on the KSE.
But the one stock that could have made the largest contribution by way of capital gains is Adamjee’s investment in 10 million shares of the group’s MCB Bank Limited.
Already in possession of 5 million shares, perhaps since the time of Nishat (Mansha) group’s hostile takeover of AICL on May 30, 2004, the company had sought shareholders’ approval to acquire another 5 million shares at the market price on Sept 19, 2005.
At the time, the bank’s stock was trading at Rs121. The price of the MCB share has now galvanised to Rs295, providing capital gains of Rs910 million in just about 17 months. The board had also secured shareholders’ approval in a members’ meeting held on December 4, 2006 for further acquisition of 5 million shares in MCB.
Informed sources believe that the company has not yet exercised that second option. And it might perhaps be too late to do so now at the current price of the bank’s stock that has been riding on the back of various rumours.