Details

Case

Adamjee Insurance Co. Challenges

Syed Mubashir Ali

INDUSTRY : Insurance

AREA : Finance

ORGANIZATION : AdamJee Insurance Co

LENGTH : 26

LUMS No : 02-598-2003-1

PUBLICATION YEAR : 2003

KEYWORDS:

Adamjee Insurance,Challenges,Insurance Industry,Finance

DESCRIPTION:

The senior management at Adamjee Insurance Company met on December 28, 2000, to formulate a strategy to address the financial and operational issues faced by the company and to devise ways to improve its performance, given the recent changes in the regulatory framework which were encapsulated in the new Insurance Ordinance. Promulgated on 20 August 2000, the Ordinance was set to significantly alter the industry structure and force manifold changes in the management of insurance companies. The new law was drafted by local and foreign consultants and was part of the Capital Market Development Programme of the Government of Pakistan which was funded by the Asian Development Bank. However, many in the industry questioned the need for the new law, arguing that the existing Insurance Act of 1939 had stood the test of time and no drastic change was needed. Others argued that the problems of the industry were significant and required a new law to address the issues. Despite its having the largest market share, the company’s profit, like that of many other insurance companies, remained under pressure in 1999. It was operating in difficult economic circumstances which were a consequence of monetary restrictions imposed by the World Bank, the International Monetary Fund and the Asian Development Bank as a result of Pakistan’s nuclear tests in May 1998, and the military coup in October 1999. The new Ordinance would also require significant changes in the industry as well as the company. The management of Adamjee had to devise the operating and strategic policies for the company in such turbulent times.

LEARNING OBJECTIVES:

SUBJECTS COVERED:

Finance