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Topline Flash Note: Adamjee Insurance Company (AICL): Corporate Briefing Takeaways

• AICL has a total market share of 18% in Pakistan and 11% market share within Takaful operations. Equity and Asset base of the company over 5 years have registered a CAGR of 10% and 11%, respectively. Net Premium Revenues have grown at a CAGR of 19% over the last 5 years, while Gross Premium written have increased at a CAGR of 13%.
• COIVD-19 work culture (working from home) has reduced the traffic on road which has led to a decline in claims, However, Gross and Net premiums have also decreased by 19% and 11%, respectively until Sep-2020. The balance has resulted in an Operating Profit improvement of 5% YoY for the same period.
• The General Insurance industry is expected to depict flat growth for 2020 while a 5% increase is expected for 2021. The company is targeting similar levels of Operational Profits through effective claim management and rationalizing cost structures.
• Investment Income has seen an increase of 13%, however dividend income declined as SBP had imposed a moratorium on dividend payouts by banks.
• There was no impact on Rental Income as the company managed to receive payments as per agreements.
• Situation in UAE has toughened due to fierce competition with premium levels declining by 50% in 2020 YTD.
• Adamjee Life Insurance, a wholly owned subsidiary, is currently operating through 60 branches across Pakistan with around 10-15 new branches planned to be open in 2021.
• 85-90% of the revenues earned by the Adamjee Life Insurance is generated through bank assurance channels.
• The management claims that there is no timeline for the IPO of Adamjee Life Insurance but they anticipate that the right time and condition will definitely lead to its listing.

However, due to recent new regulations, Adamjee Life has witnessed depressed growth of 20-25% YoY as new regulations will put a cap to the commission income earned.