Pakistan Life Industry Growth

1. Pakistan Life Industry Growth • Pakistan’s Life Insurance Market has displayed significant growth over the last 2 years • Year on year growth over the last two years has been around 29% • State Life continues to dominate the market with a 62% share

2. Growth Drivers (Life) • Success in developing distribution channels has been the main factor for the life industry’s success • The growth in the last few years has been mainly driven by growth in bancassurancewhich constitutes a significant proportion of the business of most of the private sector players • The life industry may have also benefited from the tax incentive introduced bringing the industry at par with mutual funds in allowing a tax credit for premiums paid into a life insurance policy

3. Significant Changes (Life) • The most significant change in the last couple of years has been the exit of yet another multinational from the life industry • Metlife ALICO has decided to exit Pakistan • As in the case of Commercial Union’s exit the life company has been bought over by a major non-life company – in this case IGI • Major global multinationals do not appear to have an interest in Pakistan • This has, however, probably more to do with our overall security environment rather than market dynamics • The other potential significant change – the possibility of introduction of window takaful players in 2012 – was pre-empted by the family takaful players taking the SECP to court and having the 2012 Takaful Rules suspended

4. The Future (Life) • The life industry has only 9 players ignoring Postal Life (SECP 18 May 2013) • The industry, given its recent growth, has shown that there is room for more players • It is understood that there are a couple of parties interested in setting up new life companies • The major constraint appears to be human resources • This is an area where the industry has to focus if the impressive growth of the past few years is to be carried forward into the future