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Karachi, December 18, 2013 (PPI-OT): Insurance sector PE exposition
The general insurance segment in Pakistan goes with the economy. Considering the fact that now industrial sector may really take-off, KASB Securities Limited sees underwriting profits of big companies to increase.
According to Standard Capital, however, these companies still bank on investment income wherein returns from stock market forms the core part. Most of the companies are vying for reforms since there is tough competition for core premium earnings among players in general and marine business.
Standard Capital is presenting some options in the segment for investor consideration:
Company Name Expected PBV Dividend ROE
PE Yield
United Insurance 3.9 0.9 0.0 16.3
Adamjee Insurance bonus adj 4.1 0.4 6.7 5.4
Pak Reinsurance 5.5 1.2 9.3 16.8
Century Insurance Company 5.8 0.7 7.9 11.4
Reliance Insurance 6.0 0.5 0.0 15.1
Habib Insurance Rs 5/sh par 6.6 1.6 11.8 20.3
Askari General Inusrance 8.3 1.3 0.0 14.8
TPL Direct Insurance 8.6 1.1 0.0 11.0
Atlas Insurance Limted 9.2 3.4 6.4 30.3
Jubilee General Insurance 9.8 2.3 4.4 20.3
EFU Life Assurance 11.2 3.6 7.1 43.7
EFU General Insurance 12.4 1.0 5.8 14.4
Jubilee Life Insurance 25.6 10.7 1.4 30.8
IGI Insurance 27.4 1.7 1.9 -4.1
PICIC Insurance 29.6 1.1 0.0 -11.7
Source: www.scstrade.com
Former insurance company bracketed in this segment
Cyan Limited 3.7 0.9 5.4 32.0
Source: www.scstrade.com
Standard Capital sees Adamjee Insurance – biggest private sector insurance company, still attractive even after the adjustment of hefty bonus of 182.93% and deciphering PE of 4x. Standard Capital expects CY13 adj. earnings could reach Rs 8.45/sh.
Among others Standard Capital sees value in evergreen Pakistan Reinsurance – biggest reinsurer (which too could be on a privatization list; foreign strategic stake has also been accumulated). PAKRI deciphers PE of 5.5x. The biggest government life insurer holds major stake in PAKRI and always look for dividend income and hence Standard Capital sees dividend yield of 9%.
Standard Capital also likes Century Insurance which spells PE of 5.8x. CYAN is a former insurer and currently holds beneficial ownership in HUBC.