EFU Life Assurance Limited (EFUL)

Research Team

Table of Contents

In the fiscal year ending 2023, EFU Life Assurance Limited experienced fluctuations in its financial performance. The Gross Premium, inclusive of Takaful contributions, amounted to Rs. 37.47 billion, marking a decline from Rs. 39.56 billion in the previous year. This decline was mirrored in Individual Life regular premium, which decreased to Rs. 31.65 billion from Rs. 33.59 billion in 2022. Similarly, Individual Life New Business saw a notable decrease, amounting to Rs. 5.56 billion compared to Rs. 7.14 billion in the prior year.

In terms of profitability, Net Revenue amounted to Rs. 75.75 billion, resulting in a profit before tax of Rs. 4.00 billion after including investment income and net gains on financial assets. Despite the imposition of a 10% annual super tax for 2023, the company achieved an after-tax profit of Rs. 2.07 billion, up from Rs. 1.69 billion in 2022.

Earnings Per Share for the year stood at Rs. 20.66, reflecting an increase from Rs. 16.92 in the previous year. The Directors recommend a dividend of Rs. 10.50 (105%) per share to the Shareholders of the Company, in addition to interim cash dividends of Rs. 4.50 per share (45%) declared during the year. This recommendation is subject to the shareholders.

As per the figures compiled by the Insurance Association of Pakistan, EFU Life Assurance Limited holds a market share of 32% in the private life insurance sector companies based on gross premium and contribution income, as of 30 September 2023.

Renewal premium, critical for long-term profitability, slightly decreased to Rs. 26.09 billion from Rs. 26.45 billion in 2022. A high rate of surrender within EFU Life Assurance Limited’s customer base can indeed pose a significant challenge to its profitability.

Group Benefits maintained stability, with group premium, including Takaful contributions, remaining steady at Rs. 5.46 billion. Single Premium witnessed an increase to Rs. 982 million from Rs. 719 million in 2022. Hemayah, EFU Life Assurance Limited’s Window Takaful Operations, celebrated its ninth year of operations, contributing significantly to the company’s topline with a gross Takaful contribution of Rs. 8.55 billion, reflecting a 1% growth.

However, the Individual Family Takaful New Business decreased to Rs. 1.87 billion from Rs. 2.53 billion in 2022.

Nevertheless, the Renewal contribution for Takaful witnessed robust growth, amounting to Rs. 5.74 billion compared to Rs. 5.14 billion in the previous year. Group Family Takaful business also demonstrated significant growth, reaching Rs. 816 million, up from Rs. 608 million in
2022. Looking ahead, EFU Life Assurance Limited anticipates its Takaful line of business to continue contributing positively to its topline in the coming year.

The company remained committed to efficient claim settlement in 2023, with total death and disability claims amounting to Rs. 3.85 billion. Individual Life claims stood at Rs. 1.16 billion, while Group Life claims amounted to Rs. 2.69 billion. Effective management of policyholder funds in highinterest-rate environments led to an increase in the net asset value of all unit-linked funds under management to Rs. 187 billion, up from Rs. 159 billion in 2022. Net Investment Income reached Rs. 40 billion.

EFU Life Assurance Limited faces challenges posed by escalating business costs and the imposition of Super Tax, alongside the withdrawal of tax credit on life insurance premiums, further compounded by a pending petition for Sales Tax. Moreover, low consumer awareness, particularly within the untapped low-income and unbanked segments,underscores the need for targeted awareness initiatives to broaden market reach.

Important Disclosures
Disclaimer: This report has been prepared by Chase Securities Pakistan (Private) Limited and is provided for information purposes only. Under no circumstances, this is to be used or considered as an offer to sell or solicitation or any offer to buy. While reasonable care has been taken to ensure that the information contained in this report is not untrue or misleading at the time of its publication, Chase Securities makes no representation as to its accuracy or completeness and it should not be relied upon as such. From time to time, Chase Securities and/or any of its officers or directors may, as permitted by applicable laws, have a position, or otherwise be interested in any transaction, in any securities directly or indirectly subject of this report Chase Securities as a firm may have business relationships, including investment banking relationships with the companies referred to in this report This report is provided only for the information of professional advisers who are expected to make their own investment decisions without undue reliance on this report and Chase Securities accepts no responsibility whatsoever for any direct or indirect
consequential loss arising from any use of this report or its contents At the same time, it should be noted that investments in capital markets are also subject to market risks This report may not be reproduced, distributed or published by any recipient for any purpose

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