Adamjee Insurance Sees Portfolio Value Growth Amid Market Rally

Karachi, Adamjee Insurance Company Limited (AICL) has reported significant expansion in its investment portfolio value, as per a recent analysis by JS Research. Despite the broader market's upswing, AICL's shares have not fully reflected the gains seen in its underlying investments, prompting analysts to reiterate a 'Buy' rating on the stock.

According to JS Global, AICL's equity portfolio value currently stands at Rs61 per share, significantly above the market price of Rs35.79 per share. This discrepancy is partly due to the company applying a 30% discount to the market value of its listed equities and valuing its unlisted investments at cost. The recent rally in the KSE100 Index has widened the discount between AICL's market capitalization and its equity portfolio to 40%. Notably, AICL's investment in MCB alone has reached Rs12 billion, matching the company's total market cap on the bourse.

Despite underperforming the KSE100 Index by 7% year-to-date in CY24, where the index returned 17% compared to AICL's 10%, the firm's key investments have outperformed the benchmark. These include significant holdings in FFC, ALIFE, and MCB, with respective returns of 36%, 35%, and 29%. Analysts see AICL's current market position as an attractive opportunity for investors to engage at a relative discount.

However, the company faces challenges abroad, particularly in the UAE where recent heavy rains and urban flooding are expected to lead to higher claims in AICL’s overseas Motor segment. This segment contributes over 35% to the company’s topline and has been under pressure, with losses recorded for six consecutive quarters before turning a profit in the first quarter of CY24. The adverse weather events are likely to affect the claims ratio significantly, potentially impacting the company's short-term financial performance.