KARACHI: Adamjee Life Assur­ance Company Ltd (ALACL) is going public to raise at least Rs700 million, a regulatory filing said on Thursday.

The offer consists of 25m ordinary shares — 10 per cent of the company’s post-listing paid-up capital — to be sold at a floor price of Rs28 per share, according to a draft Offer for Sale document posted to the website of the Pakistan Stock Exchange (PSX) to seek public comments by Dec 3.

Based on the interest from investors in the book-building process, the strike price can go up to Rs39.20 per share or 40pc higher than the floor price.

Although bidders will place bids for 100pc of the shares on sale, successful investors will be provisionally allotted only 75pc of the offer (18.75m shares). The remaining 25pc (6.25m shares) will later be offered to retail investors at the strike price determined through the book-building process.

One of the 10 life insurance companies operating in the country, ALACL is a part of the Nishat group of Mian Muhammad Mansha. Incorporated in 2008, the company sells both conventional and Islamic insurance products. Adamjee Insurance Company Ltd, which is a listed general insurance company, owns 99.9pc shares in ALACL.

“The principal purpose of the offer for sale is to enable the holding company to realise a gain on its investment in ALACL. Further, the public offering will enable the company to broaden its shareholder base by bringing in public shareholders, HNWIs [high net worth investors] and financial institutions,” said the document.

Speaking to Dawn, Topline Securities Associate Director of Research Umair Naseer said business growth in life insurance has been “considerably better” than that in general insurance. “Its products are also sold through bancassurance, which makes its target market bigger,” he said.

According to the draft document, the company generated 90pc of its total premiums from bancassurance, thanks to its partnership with 12 banks and microfinance institutions. In addition, the company runs its direct distribution channel with more than 2,300 agents that work out of 64 sales offices.

“It’s a promising company. It’s posted good growth, which will translate into profitability going forward. The life insurance industry has low penetration, which means the growth potential is very high,” JS Global Head of Research Amreen Soorani told Dawn.

Life insurance penetration, which reflects premiums as a percentage of GDP, has barely inched up in the last many years. It currently stands at only 0.6pc, significantly lower than prevailing rates in comparable economies.

From gross premiums of Rs192m in 2014, the country’s insurance industry grew at an annualised rate of 9.6pc to Rs334m in 2020. Premiums in the life segment alone registered an annualised growth rate of 10.4pc over the same six-year period.

Going by the gross premiums written by private-sector life insurance players in 2020, ALACL was the third largest player with a 14pc market share. The top players were Jubilee Life (41pc) and EFU Life (27pc).

Published in Dawn, November 26th, 2021