Policy of selectivity puts Philadelphia Insurance Co. on road to profitability

AMMAN — Selectivity rewarded Philadelphia Insurance with a JD0.9 million technical profit last year as the company also steered clear of price undercutting.

Net profit after deducting various expenses stood at JD0.8 million last year compared to a JD0.6 million loss in the previous year and a JD0.5 million deficit recorded in 2012.

The company's 2014 annual report, disclosed last week to the Jordan Securities Commission (JSC), described 2014 as "good" despite the challenges facing the sector, especially the volume of paid claims related to vehicle insurance, and the weak performance of local financial markets.

Philadelphia Insurance indicated in the report that gross written premiums realised last year amounted to JD6.9 million, slightly higher than the figure achieved in 2013.

Net paid claims were much higher in 2014 reaching JD5.3 million from JD4.8 million in the previous year.  

According to the disclosure, vehicle insurance was the main source of  earnings and generated most of the profit for the company last year as it netted JD0.7 million in income although the premiums from this category were lower at JD5.5 million.

In 2013, when premiums were higher at JD5.8 million, vehicle insurance was JD1 million in the red.

The company said the halt to third party liability compulsory insurance from August 5, 2014, until December 31, 2014, after reaching the level allowed under directives, was behind the transformation.

It added that the jump from loss to profit was also due to its modification of insurance policy and becoming more selective, such as rejecting some losing categories or raising the premiums on them.

Medical insurance was highly profitable as written premiums in this section reached JD1.2 million, 37 per cent higher than the JD0.9 million posted in 2013, the company indicated, noting that medical insurance generated JD133,386 profit last year.

Profits from marine/transport and fire/general accident insurance were marginal.

Philadelphia Insurance mentioned in the annual report that the Jordan Press Foundation/Al Rai' and the Ports Corporation became among its clients after it was successful last year in winning several insurance tenders with substantial volume.

According to the company, whose workforce comprises 53 employees, its share of the market with the exception of life insurance stands at 1.45 per cent as premiums account for 6.9 million out of a JD474.8 million gross market volume generated by 28 companies that operate in the local market.

To enhance its future investment portfolio and position, Philadelphia Insurance is conducting a feasibility study to confirm the viability of establishing a commercial building on a plot of land it owns in the Quweismeh neighbourhood of Amman.

The land carries a JD84,850 book value but its market value is much higher, just like the building in Jabal Al Hussein where Philadelphia Insurance has its head office.  

The building carries a JD152,239 book value but the market value is much higher.

Besides the real estate, the company's investments include shares in corporations listed on the Amman Stock Exchange and deposits at 10 banks earning interest between 3 per cent and 4.25 per cent.

"Despite market conditions, substantial increase in paid claims, and higher reserves, the company maintained good liquidity," the report said.

It indicated that cash in banks amounted to JD8.3 million, or 206 per cent of capital,  as of December 31, 2014, compared to JD8.8 million at the end of 2013. JD225,000 are restricted to the order of the Insurance Commission (IC).

The value of shares held by the company came at JD0.5 million, representing 12 per cent of the capital as of December 31, 2014, slightly lower than the amount at the end of the previous year. 

It also intends to activate its subsidiary, Philadelphia for Financial Development and Real Estate Development Company, with additional income from non-insurance business, especially housing projects.

The subsidiary, without staff, is capitalised at JD0.5 million  

The annual report, delayed for technical reasons and a difference of opinion with the IC, estimated the company's 2014 capital investment at JD4 million, unchanged from the previous year.

Financially, the balance sheet as of December 31, 2014, showed total assets at JD11.5 million, comprising mainly JD8.8 million of investments and JD2 million of receivables.

Capitalised at JD4 million, shareholders equity totalled JD3.8 million as it included JD0.7 million mandatory reserve and JD0.8 million accumulated losses.

Out of JD7.4 million in total liabilities, JD6.2 million were net provisions for claims and for unearned premiums.

Out of 158 investors, shareholders who own more than 5 per cent of Philadelphia Insurance's capital are Adham Nabih Al Idrissi (9.3 per cent), Hatem Mahmoud Hussein (10.5 per cent), Ahmad Hatem Mahmoud Hussein (8.8 per cent), Mahmoud Hatem Mahmoud Hussein (8.7 per cent), Moheiddin Mohammad Al Jamal (9.4 per cent), and Mahmoud Khalil Abdul Rahman Abul Rub (16.8 per cent).