950806

Insurance cover

offered against

ransom, terrorism

KARACHI: Adamjee Insurance Company Ltd has taken a lead in Pakistan by concentrating on marine insurance and offering unique cover against ransom, kidnap and terrorism.

These are rampant crimes in Pakistan's commercial hub, the violence-plagued port city of Karachi, where the country's largest general insurance company gets most of its business.

But analysts said Adamjee's plans to fly higher concentrate on marine business, which soared 45 percent last year.

The 34-year-old company enjoys nearly a 35 percent share of general insurance business in Pakistan and nearly 71 percent of that is generated in Karachi, hit by ethnic, political and sectarian violence for several years.

The company, set up in 1960, offers a wide range of non-life insurance covers in motor, marine and fire. Other lines underwritten are engineering, banker's blanket, surety, hotels owner's all risk, protection and indemnity, computer and computer crime, golfers and shotgun liability.

"In addition to the traditional insurance covers, Adamjee has taken the lead in offering unique non-life insurance covers like ransom, kidnap and terrorism," said analyst Imran Amin of Lahore-based Trust Securities and Brokerage Ltd.

But the company has given no information yet about the response to the new covers offered, which no other company does in Pakistan.

Amin said fire and marine businesses were projected to be major premium earners for Adamjee in the years to come.

Marine hull business, in particular, accounted for the largest overseas business underwritten by Adamjee in 1994, its chairman Mohamed Hanif Adamjee said in company annual report.

Its net profit rose to 176 million rupees ($5.7 million) for the year ended December 1994, from 155 million ($5 million) in 1993. Its 10-rupee share rose 5.00 rupees to 135 on Wednesday.

"I expect a growth of about 50 percent through marine business in 1995," said Amin, whose company has 68 branches and agency offices in Pakistan, six branches in United Arab Emirates and Saudi Arabia and a contact office in London.

Its paid-up capital rose to 199.8 million rupees ($6.4 million) after it paid 25 percent bonus stocks in addition to a 40 percent cash dividend for the year ended in December, compared to 20 percent bonus stocks and a 40 percent dividend for 1993.

Adamjee was also writing life insurance until this sector was nationalised in 1972, and is reconsidering re-entering it now that private life insurance companies are allowed to operate in Pakistan, Amin said.

The company has a well-diversified share portfolio, with investments in almost all quoted sectors of the Karachi Stock Exchange spread over 233 quoted companies, Amin said.

"The book value of total investments is around 985 million rupees ($31.8 million) and the estimated market value even in depressed market conditions is around two billion rupees ($64.5 billion), with 800 million rupees ($25.8 million) unrealised gains in only share portfolio".

Adamjee maintains 50 percent of its assets in a diversified investment portfolio, said Nauman Latif Sheikh of Khadim Ali Shah Bukhari & Co Ltd, a brokerage house.

"The company's investments provide a hedge against a downturn in its main line of business," he said. "Consequently, investment income makes up 40 to 45 percent of total income."

Aditionally, Adamjee's innovative policy emphasising on customer service will ensure it a blue-chip status for years to come, Sheikh said. "Based on strong fundamentals and future growth potential, we recommend a long-term buy on Adamjee."

General insurance industry, with 38 local and six foreign companies, has made rapid strides recently, growing at an annual rate of 15 to 18 percent, Amin said.

"The privatisation process in Pakistan has opened new vistas of growth for various sectors, including insurance," he said.-Reuter