ANALYSIS OF FINANCIAL STATEMENT OF JUBILEE LIFE INSURANCE

BASHIR AHMEDKHAN 4551

SARMAD KHALID 4582 MURTAZA ALI 4648 ABDUL RAFAY 4274 FAREEHA NAZ 5217

TABLE OF CONTENTS1. Preamble 2. Jubilee Life Insurance Overview3. Key players/companies of the industry4. Background of the company 5. Financial analysis6. Future financial plans of the company7. Conclusion and recommendation

PREAMBLE

PREAMBLE The Jubilee Life Insurance has the highest market

share in its industry. The retained earnings and Earnings per Share

(EPS) of Jubilee Life Insurance are highest in Life Insurance industry.

They work on minimizing liquidity risk to reinsure their investments and claims. It builds confidence to their policy holders.

The company focus on alternate distribution channels, such as bancassurance and are the pioneers of bancassurance.

The company maintain healthy reserves for uncertain claims and most of assets are in liquid forms.

They care about our policy holders like family members. They are not delaying the policy holder’s claims because they know the worth of their future potential customers.

The growth pattern of Jubilee Life Insurance shows increase in every year and that creates huge difference from its competitors.

OVERVIEW

The life insurance industry in the private sector grew by over one-third in 2014, a review of the latest annual reports of market players shows.

Total assets of the life insurance industry in the private sector stood at Rs139.1 billion at the end of 2014, which is 35.8% higher than the comparable figure from a year ago.

Total assets of Jubilee Life amounted to Rs49.6 billion last year, up 44.6% from a year ago.

Jubilee Life Insurance remained the most profitable entity among the six private life insurance companies that operated in Pakistan in 2014. Its net profit for the year was in excess of Rs1.3 billion, which constitutes more than 56% of the industry’s collective earnings.

Combined profits of all life insurance companies operating in the private sector amounted to Rs2.4 billion in 2014, up 20.2% from a year ago.

KEY PLAYERS/COMPANIES OF THE INDUSTRIES

KEY PLAYERS/COMPANIES OF THE INDUSTRY

Competitors of Jubilee and its market sharesCOMPETITORS MARKET

SHARESJubilee Life 45%

EFU Life Insurance 37%

Adamjee Life 10%

IGI Life 5%

Aisa care Health 0.7%

  East west Life Insurance 0.4%

BACKGROUN OF THE COMPANIES

GROWTH PATTERN FOR LAST SIX YEARS

Six Years Summary 2013 2012 2011 2010 2009 2008

Break up value per share (Rs.) 35.77 28.63 22.81 18.34 8.71 6.64

Gross Premium 17,076,588 12,080,180 8,215,262 5,802,439 4,363,155 3,435,119

Total assets 34,290,600 23,547,740 15,787,608 11,348,582 8,323,980 5,642,877

FINANCIAL ANALYSIS

CURRENT RATIOYear 2014 2013 2012 2011 2010 2009

Current Ratio 1.56 0.55 0.66 0.52 0.79 1.06

In 2009 the company shows higher value of current assets as compared to liabilities but after 2009 the company assets goes down as compared to the liabilities this decreasing pattern follows till 2013. In 2014 substantial growth for the company was recorded as it reaches a comfortable financial position.

2014 2013 2012 2011 2010 20090

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

Current Ratio

Current Ratio

RETURN ON EQUITY

Year 2014 2013 2012 2011 2010 2009

Return on Equity 43% 42% 31% 26% 13% 24%

Return on equity measures how much a company makes for each dollar that investors put into it. Stock holders invest to get return on their money and this ratio tell how well they are doing in a periodic accounting year. Investors always demands high return on equity. In last six years Jubilee Life Insurance almost gives high return on equity showing increasing pattern from 2010 till current year.

RETURN ON ASSETSYear 2014 2013 2012 2011 2010 2009

Return on Assets 3% 3% 2% 2% 1% 2%

Return on Assets measures how effectively the company produces income from its assets. The return on assets remains same from 2014 to 2013. While it remained low for the previous years. In 2010 it was the lowest comparatively to the six year analysis

COMPARISION OF PREMIUMName of Company Jubilee Life Adamjee Life EFU Life IGI Life

Total Gross Premium 21,823,383 5,214,947 18,219,910 2,535,167

Total Net Premium 21,085,925 4,976,433 17,595,939 2,435,929

In terms of total gross premiums, a key performance indicator in the insurance sector, Jubilee Life remained ahead of its rivals in 2014. After increasing by 27.8%, its total gross premiums amounted to Rs21.8 billion last year. Their Net premium also projected on top among competitors.

COMPARISION OF CURRENT RATIOName of Company Jubilee Life Adamjee Life EFU Life IGI Life

Current Ratio 1.56 1.82 3.36 1.34

If the current ratio is too high (much more than 2), then the company may not be using its current assets or its short-term financing facilities efficiently. This may also indicate The higher the ratio, the more liquid the company is. Commonly acceptable current ratio is 1.5; it's a comfortable problems in working capital management. The current ratio of EFU Life is 3.36 that shows the company not utilize its current assets efficiently. Jubilee Life has 1.56 that shows company utilizes its current assets efficiently.

COMPARISION OF PROFITName of Company Jubilee Life Adamjee Life EFU Life IGI Life

Profit Before Tax 2,001,463 18,685 1,423,373 82,615

Profit After Tax 1,361,532 15,006 950,901 55,352

E.P.S (Rupees) 18.88 0.16 9.51 1.11

The companies Earning per share was also double as compared to its main competitor EFU Life Insurance. While it also showed that the profit after tax of Jubilee Life was comparatively higher in 2014 as they became the most profitable life insurance company recently. Jubilee Life shows an increase of 43% from EFU life’s profit after tax. PAT is greater as compare to EFU, IGI and Adamjee because Jubilee Life has 45% of total market share

COMPARISION OF ASSETS & EQUITIES Name of Company Jubilee Life Adamjee Life EFU Life IGI Life

Net Shareholder Equity 3,159,865 363,903 2,834,273 825,502

Total Assets 49,613,503 9,189,232 67,228,482 11,862,586

The share holder equity of Jubilee Life is 11.48% greater as compare to EFU and total assets of EFU are 35% greater as compare to Jubilee Life that shows EFU is not utilizing its assets efficiently and not build their shareholder’s equity as compare to its own assets.

Year 2014 2013 2012 2011 2010 2009

Debt Ratio 0.93 0.93 0.92 0.9 0.89 0.93

DEBT RATIO

Debt ratio can be interpreted as the proportion of a company’s assets that are financed by debt. The higher this ratio, the more leveraged the company and the greater its financial risk.A debt ratio of greater than 1 indicates that a company has more debt than assets. Meanwhile, a debt ratio of less than 1 indicates that a company has more assets than debt. Used in conjunction with other measures of financial health, the debt ratio can help investors determine a company's risk level. Jubilee Life has more assets than its debts in all the comparing years indicating low financial risk.

2014 2013 2012 2011 2010 20090.87

0.88

0.89

0.9

0.91

0.92

0.93

0.94

Debt Ratio

Debt Ratio

FUTURE FINANCIAL PLAN OF THE

COMPANY

FUTURE PLAN

The company has deposited 20years Pakistan Investments Bonds amounting to Rs.86 million (2013) with the State Bank of Pakistan under section 29 of the Insurance Ordinary 2000.

ACHIEVEMENT Your company is the largest private sector life

insurance in the country in terms of gross written premiums, which grew 28% from Rs 17077 million (2013) to Rs 21823 million (2014)

Your company has been rate “AA” based on very stable financial condition of the company.

CONTINGENCYWhile finalizing the company income tax assessment for the accounting year ended December 31,2013 and 2012. The taxation officer raised addition tax demand of Rs 8.27 million for 2012 and Rs 9.86 million for 2013 on the company on account of non-deduction withholding tax. The company filed on appeal with the Commissioner Inland Revenue Appeal (CIRA) contesting that the tax officer had misunderstood the contracts of life insurance. However, the (CIRA) reject the company appeal. The company has now filed an appeal with the Appealated Tribunal challenging the order passed by CIRA.

RECOMMANDATION

RECOMMANDATIONJubilee Life Insurance is quiet optimistic in its higher growth in the current financial year. The company strong financial position and free cash flow generating ability would also help investing in the different market table securities with high interest rate and the company should invest in those sectors which have less liquidity risk.