Documentos de Académico
Documentos de Profesional
Documentos de Cultura
Laraib Mohib
Presentedby:
AKDIML
Insurance
Sector
Life Non-Life
Takaful
Insurance Insurance
2
Regulatory Structure of Sector
• The insurance sector is governed by the Insurance Ordinance 2000 and regulated by SECP.
• Minimum Capital Requirement: PKR 400 mn by Dec 2016 and PKR 500 mn by Dec 2017
• All sources of income including dividend and capital gain will be taxed at 31% flat rate
• Imposition of WHT of 4% on premium of non-life insurance on non-tax filers and WHT of 1% on life insurance if the
premium amount exceeds Rs0.2mn for non-tax filers. This could slightly affect growth in insurance premium.
• At present, tax credit is available on the payment of life insurance premium up to Rs1.5mn. A new tax credit @ 5% of tax
payable or Rs100,000 whichever is less is proposed to be allowed on payment of premium of health insurance. Govt. has
also announced health insurance scheme which targets to distribute insurance policy to the tune of Rs9bn by FY18.
• At present, Commission paid to life insurance agents is taxed at the rate of 12% for filers. The rate of tax is being reduced to
8% for tax filers on commission received up to Rs500,000.
3
Global Insurance Sector Overview
Young tech savy population going for digital options, rising affluence levels,
Latin America more insurance needed against natural calamities, more construction
underway, changes in regulatory structure
Non- life insurance premium growth was 1.7% from 2% in 2015, in both the emerging and advanced
economies. This is because of slowdown in Western Europe markets and in emerging markets, Latin
America and CEE countries exhibited slowdown. On the life side, the global premiums were up by 3.3% in
2015 approximately as compared to 4.7% in 2014.
The global economy is expected to slightly improve in 2016. However, factors including global commodity
prices, rate hike by USA and growth pace of China will continue to impact the economies.
Based on the improving global outlook, the non-life premiums are expected to grow by 3% in 2016, and
3.2% in 2017 from 2.5% in 2015. The growth is expected to come from emerging economies mostly.
In the life segment, the challenges will remain in the form of tough regulatory environment, volatility in
financial markets and low interest rates. In advanced markets, premium income is likely to grow by 2.5%
in 2016 and 2017. More customer focused approach and new technologies will lead to a 10.7% growth in
premiums of life sector.
Suitable
Motor Economic
Regulatory
growth
Non – Life Insurance
framework
Fire & Property Awareness in
Infrastructure
people and
development
Marine, Aviation & Affluence
Transport
Health
Services and
Accident & Health Standards
7
Snapshot of the Main Company Performances
Name of
EPS* BVS P/E Ratio** P/B
Companies
Askari General Insurance 4.92 24.8 5.996 1.19
Adamjee Insurance 10.8 49.9 6.101 1.32
Atlas Insurance Limited 8.21 26.6 9.726 3.00
Century Ins 3.64 36.1 8.239 0.83
Cres.Star Ins 0.09 7.8 108.21 1.29
EFU General 11.49 83.1 13.034 1.80
Habib Ins. 1.36 8.4 14.176 2.29
IGI Insurance 8.96 102.7 31.362 2.74
Pak Reinsurance 5.013 24.4 8.076 1.66
PICIC Ins.Ltd.XR -0.56 1.7 -10.518 3.49
Premier Ins. -13.52 27.5 -1.590 0.78
Pak Gen.Insurance 0.853 15.9 12.246 0.66
Shaheen Insurance 0.56 8.6 15.000 0.98
United Insurance 3.76 15.6 6.144 1.48
Universal Insurance 0.253 14.2 73.026 1.30
Reliance Insurance 1.520 16.1 7.730 0.73
Adamjee Life
7,214,020.0 2,172,936.0 1,195,534.0 19,187,309.0 0.04 30.12 -
EFU Life
16,231,274.0 14,204,401.0 9,184,050.0 89,711,763.0 10.93 87.51 14.3
IGI Life
5,429,644.0 2,248,534.0 2,008,566.0 16,527,955.0 0.78 41.00 76.8
Jubilee Life
24,800,579.0 6,791,406.0 8,309,509.0 80,330,016.0 17.76 27.38 23.0
State Life -
45,743,004.0 24,457,622.0 45,572,258.0 577,755,817.0 28.53 53.47
Islamic finance has grown at a fast pace in the world. Takaful products are now sold in around 30 countries with more than
200 operatives.
Takaful Business
By 2014, the global gross Takaful contribution reached around US $14 billion and the growth rate has remained in double
digits since 2012. In many ASEAN countries, the strong economic conditions and demographic features have led to a CAGR
of 22% in the period 2012-2014.
Despite this, the global share of Takaful in total insurance is around 1-2% and there is strong potential of growth in the
Muslim countries.
In Pakistan, there are window operations of Takaful being run by insurance companies and separate Takaful companies
include:
The Takaful outlook is promising for the sector. The corporate and individual preference for Shariah Compliant products will
lead to more growth in future. Many companies like AICL, EFUG, JGICL are already operating their Window Takaful
operations. SECP also introduced Takaful Rules in 2012 to facilitate the set up of the Takaful operations.
There is only one re-insurance company at present; Pakistan Re-insurance Company Limited
PRCL is a public sector company under the administrative control of the Ministry of Commerce.
PRCL’s prime objective is the development of insurance and reinsurance business in Pakistan. The company provides
insurance solutions to departments including Aviation, Marine Cargo, Marine Hull, Engineering, Fire and Accident.
The company is a national reinsurer playing its role in the economic development of Pakistan. It provides reinsurance
protection to the local insurance industry in view of treaty and facultative business as well as managing insurance
schemes assigned by the Federal Government of Pakistan
Its insurance market holds 18% of the share whereas 45% of the share is covered by the reinsurance protection in
Pakistan.
P/B 1.70
P/E 8.50
Claim Ratio 51%
Investments 757 million
12
Future Outlook for Sector
The future outlook of Insurance sector is based on the macro-economic stability in the years to come.
The Government has set GDP growth target to 5.7% in FY17 and to take it to 7% in FY17.
Government expects me to keep inflation in single digit for the next three years, indicating that low interest rate environment
might prevail in the near term.
The investment in GDP ratio has been set to 29% from 19% for the next fiscal year.
Performance of the insurance companies also depends on the stock market and Government securities due to their large
investment income share. FYD return of PSX 100 stands at 24.23% with a target of 50,000-55,00 points for FY17. Furthermore,
interest rates are believed to have bottomed out , with increase in policy rate expected from CY17 monetary policy.
SECP has also issued a draft Insurance Bill 2016 to recommend improvements in the Takaful Industry as well as encourage
micro-insurance companies to enter the sector. Furthermore, SECP intends to increase the number of companies in Re-
insurance sector too.
13