KARACHI: The after-tax profit of EFU Life Assurance for six months ended June 30 dropped by over one-fifth in comparison with last year’s corresponding period, according to a notice the largest private-sector life insurance company sent to the Karachi Stock Exchange on Wednesday.
The latest financial result for the first six months of 2013 reveals that net profit of the company remained at Rs346.2 million, down 22.2% from Rs445.2 million in January-June 2012.
Speaking to The Express Tribune, EFU Life Assurance Chief Strategy Officer Mohammed Ali Ahmed noted that the decrease in net profit was due to the reduction in shareholders’ fund net investment income.
“Due to improving stock prices in January-June 2012, the company had booked a reversal in impairment of Rs119 million for certain available-for-sale investments in the shareholders’ fund, which had a direct positive impact on after-tax profit for that six-month period,” Ahmed said while explaining the reason for the dip in the company’s profit.
He added there had been no further reversal in impairment during the January-June period in the current year. “Thus, the difference appears as a reduction in after-tax profit,” he observed.
The result showed that EFU Life Assurance’s premiums net of reinsurance for the six-month period went up 14.8% to Rs6.1 billion compared to the corresponding period last year when they were Rs5.3 billion.
Calling the growth rate reasonable, Ahmed noted that it was satisfactory for the first half of the year at least. “We expect to improve upon this, as a major portion of our business is generated in the last few months of the year,” he said.
Increasing at a rate that is faster than growth in premiums net of reinsurance, management expenses of the company rose 17.3% to Rs1.9 billion for six months compared to last year’s comparable period. However, Ahmed said he considered the increase in management expenses to be “broadly in line” with the company’s business growth.
EFU Life Assurance is the only private-sector life insurance company, which has consistently paid interim, mid-year and year-end dividends. It declared the interim cash dividend for 2013 at Rs1.5 per share, or 15%.
The stock of EFU Life Assurance traded at Rs76 per share at the end of KSE trading session on Wednesday after shedding Rs0.96 during the day.
Meanwhile, EFU General Insurance also announced its financial result for the first six months of 2013, according to which, its after-tax profit decreased 28% to Rs585.8 million compared to last year’s corresponding period.
However, the after-tax profit for three months ended June 30 increased to Rs357.5 million after recording a rise of 65.8% over the similar period in 2012.
The rise in the three-month after-tax profit is because of a phenomenal increase in the company’s investment income, which surged from Rs5.1 million to Rs237.7 million on a year-on-year basis.