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Performance of Life Insurance Companies  Source BOI

The total premium collected by the five life insurance companies during the year ended December 31, 2001 stood at Rs. 8,060 million, indicating a 7.6 percent increase over the previous year. Of this, Rs. 1,392 million represented first year premium collection by life insurance companies, which represented an increase of 9.35 percent from last year. Group premium also registered a significant growth of 19.27 percent to Rs. 1,598.90 million during the year. On the whole, the state-owned SLIC remained the dominant player in the life insurance market with a share of 86.2 percent in terms of premium. The market share of the five life insurance companies, in terms of premium collected during the calendar year 2001, is presented in the table below.
Premium of Life Insurance Companies
(January 1, 2001 December 31, 2001
(Rs. in Million)
Company
First Year Premium
Renewal Premium
Single Premium
Group Premium
Annuity
Total Premium
SLIC
1,121.14
4,564.56
0.04
1,256.48
2.51
6,944.73
Commercial Union(CU)
71.74
113.48
-
178.09
-
363.31
EFU Life Assurance Limited
151.73
270.85
34.95
105.15
-
562.68
American Life Insurance Company (ALICO)
39.83
61.71
0.72
47.21
-
149.47
Metropolitan Life Assurance Company
7.80
20.19
-
11.97
-
39.96
Total
1,392.24
5,030.79
35.71
1,598.90
2.51
8,060.15
Performance of General Insurance Companies

General insurance business in Pakistan depicts an oligopolistic composition with 10 companies accounting for almost 83 percent of the total private sector general insurance business. The total gross direct premium underwritten by general insurance companies, excluding the state-owned NICL, during the calendar year 2001 was Rs. 10.9 billion. Of this amount, Rs. 9.1 billion was attributable to the 10 largest companies while remaining gross direct premium of Rs. 1.8 billion was underwritten by the remaining 41 companies. Premium underwritten by NICL for the year ended December 31, 2001 amounted to Rs. 2.3 billion.

In Pakistan, general insurance companies underwrite four main classes of business, i.e., fire, marine, motor and miscellaneous. The premium earned by general insurance companies in each class of business during the year ended December 31, 2001 is presented in the table below.

Paid-up Capital and Gross Premium of General Insurance Companies
(January 1, 2001 December 31, 2001)

(Rs. in Million)
S.No.
Company
Paid-u p capital
Premium
Fire
Marine
Motor
Miscellan eous
Total
1.
Adamjee Insurance
543.20
1,292.70
796.94
1,461.15
682.50
4,233.28
2.
EFU General Insurance Limited
170.00
628.92
350.85
881.59
513.07
2,374.43
3.
New Jubilee Insurance (NJI)
209.37
148.94
119.29
175.30
331.63
775.16
4.
Premier Insurance Company
115.44
178.46
51.83
69.47
26.84
326.60
5.
CGU International
-
77.07
83.61
121.63
33.59
315.90
6.
New Hampshire Company
240.71
46.17
30.11
202.26
18.42
296.96
7.
Habib Insurance Company Limited
75.00
105.62
51.89
59.23
25.36
242.11
8.
Askari General Insurance
76.04
22.05
37.45
98.97
54.17
212.64
9.
Royal & Sun Alliance
-
83.34
26.37
49.80
17.01
176.52
10.
East West Insurance Company Limited
101.63
62.56
14.96
43.98
20.17
141.67
11.
Remaining 41 Companies
-
634.50
414.27
460.18
316.12
1,825.07
  Total
 
3,280.3 3
1,977.57
3,623.56
2,038.88
10,920.34

Under the Insurance Ordinance, 2000, general insurance companies are required to raise their paid-up capital to Rs. 50 million by December 31, 2002 and, subsequently, to Rs. 80 million by December 31, 2004, failing which the companies would not be permitted to continue their operations. The minimum paid-up capital requirement under the repealed Insurance Act was Rs. 1.5 million. The enhanced capital requirement is likely to usher in consolidation in the insurance sector, as under-capitalized companies would either have to merge together to meet the regulatory requirement or opt for an orderly exit. At present, a few cases of mergers and acquisition are in process. Consolidation through mergers and acquisition is expected to result in fewer but financially stronger insurance companies, which will have better Claims Paying Ability (CPA) and higher solvency margins.

 

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