Earning Review: EFUG's profitability declines on account of 100% rise in Net insurance claims

MG News | August 26, 2019 at 11:51 AM GMT+05:00

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August 26, 2019 (MLN): The EFU General Insurance Limited (EFUG) has announced its financial results for the half year ended on June 30^th 2019, wherein the company reported its net profits after tax (PAT) declined significantly by 56% to Rs 646.4 million from Rs 1.48 billion earned in the same period last year.

The financial results announced today were also accompanied with an interim cash dividend of Rs 1.5 per share i.e. 15% in addition to first interim cash dividend already paid at Rs 1.5 per share for the first Quarter ended March 31, 2019.

The decline in company’s profits is primarily due to increase in several cost generating streams of the company.

During the period, the company’s net insurance claims increased by 100%, net commission surged by 70%, insurance claims and acquisition expenses mounted by 90.6% and management expenses rose by 50%, all of these contributed in declining company’s profitability.

Furthermore, a considerable increase in income taxes of about 748% further helped in declining company’s profitability.

The Earnings per share of the company reported a decline of 68% to Rs 2.05 for the period mentioned above.

Profit and Loss Account for the half year ended June 30th 2019 (Rupees in '000)
	Jun-19	Jun-18	% Change
Net insurance premium	18,491,395	10,522,762	75.73%
Net insurance claims	(9,635,655)	(4,813,835)	100.17%
Net commission	(3,814,275)	(2,240,232)	70.26%
Insurance claims and acquisition expenses	(13,449,930)	(7,054,067)	90.67%
Management expenses	(2,279,340)	(1,515,035)	50.45%
Investment income - statutory fund	4,819,975	1,636,771	194.48%
Net realized fair value losses on financial assets	(5,567,340)	(496,676)	1020.92%
Net fair value loss on financial assets at fair value through profit and loss	1,019,971	(3,284,842)	-
Net change in insurance liabilities (other than outstanding claims)	(2,171,030)	1,158,369	-
Underwriting results	863,701	967,282	-10.71%
Investment income	348,282	368,834	-5.57%
Rental income	53,351	49,995	6.71%
Other income	153,915	74,463	106.70%
Other expenses	(49,615)	(39,390)	25.96%
Results of operating activities	1,369,634	1,421,184	-3.63%
Finance cost	(8,412)	-	-
share of profit associate	-	103,952	-
Profit from window takaful operations - Operator's fund	88,216	53,230	65.73%
Profit before tax	1,449,438	1,578,366	-8.17%
Income tax expenses	(803,005)	(94,671)	748.21%
Profit after tax	646,433	1,483,695	-56.43%
Earnings per share - basic and diluted (Rupees)	2.05	6.47	-68.32%

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