Janashakthi Insurance spends heavily on restructuring eying key spot in crowded life market
Janashakthi Insurance PLC’S premium income rose and profits increased during the quarter ended September (3Q18) as the life insurer is vying for new business following the divestment of its general insurance business early part of this year.
In February Janashakthi Insurance sold its fully-owned general insurance subsidiary, Janashakthi General Insurance Limited, to the local unit of the German insurer, Allianz S.E. for a mammoth Rs.16.4 billion with a gain of Rs.7.08 billion to the group.
Janashakthi Insurance earned a gross written premium (GWP) of Rs.781.3 million for the three months from July to September, compared to Rs.765.4 million recorded for the same period, last year, up just 2.0 percent.
Now the company has a life insurance fund worth Rs.10.3 billion, compared to Rs.9.7 billion at the beginning of the year.
Following the divestment of its general insurance subsidiary, Janashakthi Insurance has been aggressively campaigning to position itself as a formidable player in the long-term insurance market.
It carried out a rebranding exercise under the brand ‘Janashakthi Life’ and unveiled a new logo aligned with the new brand identity.
Meanwhile, the company is also investing on a dedicated life branch network, which is expected to be completed by the end of this year. These activities led to a substantial increase in the overheads as the operating and administrative costs rose to Rs.254.6 million, from Rs.157.3 million a year earlier. The company said this was a natural impact from the separation of branches and discontinuation of shared services post the divestment.
“However, this is expected to bring about greater focus on the life business and increase in revenue; stringent control of expenditure has been a critical part of the restructuring and expansion activities,” the company said in an earnings release.
Meanwhile, the investment incomes of the company grew by Rs.37 million to Rs.377.2 million for the quarter under review from the same period last year, as the investment portfolio expanded with the premium incomes received from the new policy sales.
The company paid net fee and claims of Rs.455.9 million during the three months, significantly up from Rs.302.9 million recorded for the same period, last year. The company attributed this largely to the increase in surrenders.
The company reported earnings of 33 cents a share or Rs.104.6 million for the three months under review, compared to 4 cents a share or Rs.154.6 million reported for the corresponding period, last year.
The higher profits in the corresponding period was due to gains coming from the group’s general insurance business, which was part of the group at the time.
The per share earnings reported for the quarter under review were however higher due to the company repurchasing shares paying a consideration of Rs.11.67 billion in March, out of the divestment proceeds.
Meanwhile, for the nine months ended September 30, 2018, Janashakthi Insurance had Rs.2.2 billion in GWPS, up from Rs.2.1 billion in the same period a year ago.
The Schaffter family controls little under 80 percent of Janashakthi Insurance through Janashakthi PLC, Dunamis Capital PLC and a few other related parties.