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

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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 30th 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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Posted on: 2019-08-26T11:51:00+05:00

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