metlife alico

Title page

MetLife Alico

Internship ReportAcknowledgment

In the name of ALLAH, the Most Beneficial and the Merciful. I have completed my internship in MetLife Insurance Corporation of Pakistan. I am very pleased to have practical insight of the professional world. My internship proved to be a very informative learning experience.My internship was consisted on six weeks and during these six weeks I worked in different departments of the company. I am very much thankful to all of the staff members who helped me a lot to make my internship a wonderful learning experience.

I am also grateful to my honorable teacher Mr. Nadeem Altaf Nasir who motivated me to work hard and taught me the techniques to learn from the practical life.

Table of Contents Introduction------------------------------------------------------------------------------------05

Types of Insurance-----------------------------------------------------------------------------05

Types of Insurance Companies---------------------------------------------------------------07

History of Insurance Industry in Pakistan---------------------------------------------------07MetLife Insurance Corporation------------------------------------------------------------09

Vision Statements------------------------------------------------------------------------------10

Mission Statements----------------------------------------------------------------------------10History-------------------------------------------------------------------------------------------11

Nature of Organization------------------------------------------------------------------------12

Business Volume-------------------------------------------------------------------------------13

Product Line------------------------------------------------------------------------------------14Organizational Structure--------------------------------------------------------------------17

Main Offices------------------------------------------------------------------------------------20

Organizational Structure----------------------------------------------------------------------21Practical Experience and Analysis--------------------------------------------------------22

Financial Analysis------------------------------------------------------------------------------30

Vertical Analysis-------------------------------------------------------------------------------30

Horizontal Analysis----------------------------------------------------------------------------31

Ratio Analysis----------------------------------------------------------------------------------32

Marketing Strategy----------------------------------------------------------------------------45

Major HR policies-----------------------------------------------------------------------------46

Departments------------------------------------------------------------------------------------47My Internship----------------------------------------------------------------------------------53

Duties--------------------------------------------------------------------------------------------54Accomplishments------------------------------------------------------------------------------54Problems Encountered------------------------------------------------------------------------54

How internship experience impacts my career--------------------------------------------55Recommendations----------------------------------------------------------------------------55

Conclusion-------------------------------------------------------------------------------------56

References & Sources used----------------------------------------------------------------57

List of TablesTable 1--------------------------------------------------------------------------------30

Table 2--------------------------------------------------------------------------------31

Table 3--------------------------------------------------------------------------------34

Table 4--------------------------------------------------------------------------------35

Table 5--------------------------------------------------------------------------------36

Table 6--------------------------------------------------------------------------------37

Table 7--------------------------------------------------------------------------------38

Table 8--------------------------------------------------------------------------------39

Table 9--------------------------------------------------------------------------------40

Table 10-------------------------------------------------------------------------------41

Table 11-------------------------------------------------------------------------------42

The story of life insurance is very inspiring. The idea against guarding of risk is all most as old as mankind. Centuries ago in England, little groups banded together in guild and societies. Members of those guilds and societies by paying small sums were assured that a certain measure of relief would be given to their families if the breadwinner were taken away. In 1705, Amicable Society for a Perpetual Assistance Office was established and it became Englands first Life insurance company.

According to the U.S Life Insurance Association Inc. Life Insurance is defined as:Life Insurance provides a sum of money if the person who is insured dies whilst the policy is in effect.Insurance is a contract between two parties whereby one party called insurer undertakes in exchange for a fixed amount of money called premium, to pay the other party called insured a fixed amount of money on happening of an event.

Insurance is a contract between two parties whereby one party agrees to undertake the risk of another in exchange for consideration known as premium and promises to pay a fixed amount of money to the other party on happening of an uncertain period (death) or after expiry of a certain period in case of life insurance or to indemnify the other party at an uncertain event in case of a general insurance

Types of InsuranceLife InsuranceGroup Insurance

General Insurance

Health Insurance

Types of Insurance CompaniesThere are two types of insurance companiesLife Insurance CompaniesThe principal event that Life Insurance Company insures against is death. Upon the death of a policyholder a life insurance company agrees to pay a lump sum amount or a series of installment to the beneficiary of the policy.Property and Casualty Insurance Companies

Property and Casualty Insurance Companies insure against wide variety of occurrences such as: Fire

Atmospheric Disturbances

Earthquake

Riot Strike damages

Explosion

Theft

Other damages

History of insurance Industry in Pakistan

At the time of Independence Pakistan had 77 Insurance companies out of 7 were local and 70 were foreign resident companies. These companies were regulated under the Insurance Act of 1938 There was neither reinsurance nor public sector in that time. The Government of Pakistan in 1948 established a Department of Insurance under the domain of Commerce Industry to protect the rights of Insured. This situation remained till 1952.In 1952; Government of Pakistan established Pakistan Insurance Corporation as a reinsurance company and asked all other insurance companies to cede 10% of all their businesses to Pakistan Insurance Corporation. For these reasons and due to some other factors 40 foreign companies wound up their business and left Pakistan.

National Coinsurance scheme was initiated to promote insurance culture in Pakistan and to assist small insurance companies in meeting financial requirements. Moreover, it aimed to have checks on the Government expenditure on insurance and to assist in the settlement in which government was the beneficiary. The formation of NCS yielded favorable results In 1958 Government of Pakistan for the first time amended the Insurance Act keeping in view the requirement of the domestic market and to have effective control over insurance premium rates. Economic growth in 1960s further promoted the insurance business in Pakistan and the number of Pakistani insurance companies increased to 26 and reached to 47 by 1971.However, number of foreign companies decreased from 77 in 1947 to 25 in 1972. In 1993, there were 57 insurance companies in private sector and 3 in public sector.

The department of Insurance further created the Controller of Insurance for regulating the premium rates that was abolished in 2000 when Security and exchange Commission of Pakistan (SECP) made responsible for supervising insurance business in the country.

Vision Statement

To be most innovate, finest and socially responsible insurance company providing best value to customers, partners, employees and shareholdersMission Statement

To build value for our policyholders, field force, employees and shareholders, by providing quality products and services through multiple distribution channels for the Pakistani market and through investing in Pakistani financial institutions, thereby serving the Pakistani people.HISTORYMetLife Alico was established in 1952 in Pakistan. It continued its operation until 1972, when the life insurance industry was nationalized. Since that time, the company had issued 72000 policies and had invested more than USD 36 million in countrys economy. After denationalization, MetLife Alico became the first foreign life insurer that had been granted a license in 1994 to operate in Pakistan. It started the operations on May 25, 1995 with a paid up capital of PKR 130 million. Today it is the largest capitalized private sector multinational company in Pakistan with a paid up capital of 500 million. MetLife Alico Pakistan is a listed company jointly owned by its American parent and the Pakistan public. Along with commitment, it brings to Pakistan extensive international experience and modern technology to conduct the insurance business in a sophisticated and professional manner.Nature of business

The company is a subsidiary of American Life Insurance Corporation (incorporated in United States of America) that holds 66.46% (2009: 66.46%) of the share capital of the company. The ultimate parent of the company is MetLife Inc.The company is engaged in life insurance, carrying on both participating and non-participating businesses. In accordance with the Insurance Ordinance, 2000, the company established a Shareholders Fund and separate statutory funds in respect of each class of life insurance business. The statutory funds established by the company, in accordance with the advice of the appointed Actuary are as follows: Life (Participating) Life (non-Participating)_Individual

Life (non-Participating)_Group

Accident &Health _ Individual Accident& Health _ Group Pension Business Fund Investment LinkedBUSINESS VOLUME

Business volume of an organization refers to the numbers of items sold

By company or the numbers of shares sold on Stock Exchange.

Glimpses of MetLife Business volume are in the following charts:

PRODUCT LINEIndividual Life Insurance PlanIndividual Life Insurance plan includes:

IGP Plus

Shareek-e-Safar

Vision for Retirement

Super Saver

Daughters Marriage

College Education Plan

Retirement

Vision for Education

Accelerated Saving Plan

Vision for Marriage

Vision for Financial Security

Personal Accident PlanPersonal accident plans include:

Circle of Protection

Safe Road-Car

Safe Road-Motor Cycles

My Child

Secure 3Banc Assurance PlanBanc insurance is the joint effort of the banks and insurance companies to provide insurance products to bank customers using banks distribution channels. Banc insurance was originated from France and now it has spread all over the world including Pakistan.Banc assurance not only provides the cost effective distribution channels for insurance companies but it also proved to be very useful for banks because of following reasons: Intense competition among banks has led to an increased marketing and administrative costs. New Banc Assurance can enhance profitability and increase productivity. Increased risk free income generated in the form of commissions.

Reduction of the effects of the banks fixed costs as they are now spread over Banc Assurance relationship. Staff productivity is increased as with Banc Assurance they can offer wider range of services to their clients. Customers investment preferences are changing specially for medium to long term there is a trend towards mutual funds and insurance products where the return is usually high than the return on traditional deposits products; Banc assurance helps banks meet this changing need of their customers.

Join needs-based banking and insurance products can be better for the customers as they provide more complete solution than traditional banking products

Higher customer turnover is one of the challenges faced by modern banks. Buying banking and insurance products from one source (banks) helps retaining the customer.

MetLife Alico Pakistan has established successful Banc assurance campaigns with leading Pakistani and multinational banks and provided innovative products best fitting customers requirements.

Some of the successful Banc assurance products of MetLife include:

Sarmaya Plus

Income Max

Capital Sure

Retire Easy

Future Secure

Saving Plans AcciShields

MetLife Insurance Corporation is head by the chairman who is Chief Executive of the company.

Board of DirectorsArif Sultan MuftiChairman and Chief Executive

Khalid Anis-ur-Rehman Director

Shahid SiddquiDirector

Michel KhalafDirector

Murul IslamDirector

Arif Abdul AzizDirector

Qasim RabbaniDirector

Company Secretary

Asim Iftikhar

Appointed Actuary

Shoaib Soofi

Audit Committee

Arif Abdul Aziz

Khalid Anis-ur-Rehman

Shahid Siddqui

Shahid HussainBankers

MCB Bank Limited

Standard Chartered Bank

Hong Kong Shanghai Banking Corporation

National Bank of Pakistan Limited

Citi Bank N.A

Habib Bank Limited

NIB Bank Limited

Bank Al-Habib Limited

Deutsche Bank

Barclays Bank

Summit Bank Limited

Legal Advisor

Surridge and Beecheno

Auditor

M. Yousaf Adil Saleem & Co Chartered Accountants member firm of Deloitte Touche TohmatsuMAIN OFFICESHead Office13 Floor Dolmen Executive Tower

Block 4, Clifton, Karachi 75000

Email: [email protected] Branch NetworkGujranwala

1. Mr. Khurram S Awan

Agency Executive Office

Floor 4, Ghouri Center

G.T Road Gujranwala

Fax: 055-3843583Telephone: 055-3843584Email:[email protected]. Asif Bilal AgencyFloor 4, Trade Centre

G.T Road Gujranwala

Telephone: 055-4444454

Fax: 055-44444467

Email: [email protected]. Awais Ikram Agency

Floor 4, Ghouri Centre

G.T. Road Gujranwala

Telephone: 055-3843583

Fax: 055-3843585

Email:[email protected]

ORGANIZATIONAL STRUCTURE

FINANCIAL ANALYSISVertical AnalysisTable: 120102009

Rs (000)%Rs (000)%

Balance Sheet

Net Shareholders Equity669,19315%581,06517%

Balance of Statuary Funds3,238,86375%2,318,14269%

Deferred Liabilities-0%-0%

Creditors & Accruals430,59910%436,84613%

Dividend270%16,6031%

Total Equity and Liabilities4,338,682100%3,352,656100%

Cash and bank deposits64,0251%106,5263%

Secured Loans83,0512%68,3062%

Investments3,795,70088%2,856,06985%

Current Assets337,3538%255,9238%

Deferred Taxation-0%-0%

Fixed Assets58,553165,8322

Total Assets4,338,682100%3,352,656100%

REVENUE AND PROFIT & LOSS ACCOUNT

Net Income2,297,2241001,685,754100

Claims & Expenditures(1,241,648)(54)(1,094,93)(65)

Movement in Policy holders liability (878,836)(38)(450,006)(27)

Surplus/Profit before Tax176,7048141,5558

Taxation(46,691)(2)(33,649)(2)

Surplus/Profit after Tax130,0136107,9066

HORIZONTAL ANALYSISTable:220102009AmountPercentage

BALANCE SHEET

RsRsRs%

Net Shareholders Equity669,193581,06588,12815%

Balance of Statuary Funds3,238,8632,318,142920,72140%

Deferred Liabilities--0%

Creditors & Accruals430,599436,846(6247)-1%

Dividend2716,603(16576)-100%

Total Equity and Liabilities4,338,6823,352,656986,02629%

Cash and bank deposits64,025106,526(42,501)-40%

Secured Loans83,05168,30614,74522%

Investments3,795,7002,856,069939,63133%

Current Assets337,353255,9238143032%

Deferred Taxation--0%

Fixed Assets58,55365,832(7,279)-11%

Total Assets4,338,6823,352,656986,02629%

REVENUE AND PROFIT & LOSS ACCOUNT

Net Income2,297,2241,685,754611,47036%

Claims & Expenditures(1,241,648)(1,094,93)(1132,155)13%

Movement in Policy holders liability (878,836)(450,006)(428,830)95%

Surplus/Profit before Tax176,704141,55535,14902%

Taxation(46,691)(33,649)(13,042)39%

Surplus/Profit after Tax130,013107,90622,10720%

Ratio AnalysisIn order to analysis the financial performance of the bank, investors and management use the ratio analysis in which following ratios are calculated:

1. Liquidity Ratios2. Profitability Ratios3. Market Ratios

4. Activity Ratios

5. Leverage Ratios

1. Liquidity Ratios

These Ratios are used to measure the ability of a firm to met short term obligations. These ratios compare the short term obligations with short term assets to meet the obligations. Liquidity ratios give an insight of present cash solvency of a firm which can determine the firms ability to remain solvent in the time of adversity. There are following types of liquidity ratios:

A) Current RatioB) Quick RatioA).Current RatioCurrent ratio is the comparison of current assets with currents liabilities. In other words current ratio measures that current assets are sufficient for meeting current liabilities or not. If the result is 1 then it means that firms current assets are sufficient to meet the liabilities but it should try to improve the financial position.Current Liabilities=Creditors& Accruals+ Dividend2009=436,846+16603=4534492010=430,599+27=430,626

2011=467,913+27

Table: 3Current Ratio=Current Assets/Current Liabilities

Year 2009Year 2010Year 2011(1st Quarter)

=255,923/453449

=0.58:1=337,353/430,626

=0.79:1=403,031/467,940

=0.86:1

B).Quick Ratio Quick ratio measures a firms ability to use its quick assets to retire its liabilities. Quick ratio is computing by diving current assets with total liabilities excluding share capital. Table: 4Quick Ratio=Total Assets/Total Liabilities*


=3,352,656/2,771,591=1.2:1=4,338,682/3,669,489=1.18:1=5,632,077/4,887,329=1.15:1

2. Leverage RatiosThese ratios show the capital structure of the firms. Leverage ratios can help in finding how the organization finances its activities. It is more important for lender to assess that the firm can repay the loan amount or not. Leverage ratios can be classified as:

A. Time Interest Earned

B. Debt Ratio

C. Debt to Equity Ratio

D. Debt to Tangible Net Worth

E. Total Capitalization RatioA). Time Interest Earned Time Interest Ratio tells how well a company can cover its interest payments on pretax basis.Table: 5Time Interest Earned=Profit before Tax+ Interest Earned


=141,555+1,349,482=1,491,037=176,704+1,893,849=2,070,553=1,163,28+17,784,95=1,894,823

B). Debt RatioDebt Ratio indicates what proportion of debt a company has relative to its assets. Higher the ratio, the greater will be the risk.Table: 6Debt Ratio=Total Debt/Total Assets*100


=31,743/3,352,656*100=0.94=45,585/4,338,682*100=1.05=58,195/5,632,077*100=1.03

C. Tangible Net WorthTangible Net Worth=Total Assets-Liabilities-Intangible Assets

2009 =3,352,656-2,771,591-58,665

=522,400

2010=4,338,682-3,669,489-57,164

=611,945

2011=5,632,077-4,887,329-52,527

=686781Table: 7Debt to tangible Net Worth=Total Debt/Tangible Net Worth


= 31,743/522,400=0.06=45,585/611,945=0.07=58,195/686781=0.08

C) Profitability RatiosIt is extremely important for investors to know the profitability of the firm. Profitability ratios are used to measure the profitability of a firm. Following ratios come under the category of Profitability Ratios:

A. Gross Profit Ratio

B. Net Profit Ratio

C. Return on assets

D. Return on Equity

E. Rates paid on fundGross Profit RatioGross Profit ratio tells us about the gross profit margin a firm can generate through its sales.Table: 8Gross Profit Margin=Gross Profit/Total Revenue


=141,555/1,267,953

=0.11=176,704/1,806,525

=0.09=116,238/1,997,502

=0.05

Net Profit RatioNet Profit Ratio indicates the amount of profit generated through sales after deducting taxes.Table: 9Net profit Margin=Net Profit/Total revenue

Year 2009Year 2010Year 2011 (1st Quarter)

=107,906/1,267,953=0.08=130,013/1,806,525=0.07=75,555/1,997,502=0.03

Return on AssetsReturn on assets is an indicator of how a company is profitable relative to its assets. ROA gives an idea as how efficient a management is at its assets to generate earningsTable: 10ROA=Net Income/Total Assets


=1,685,754/3,352,656=0.5%=2,297,224/4,338,682=0.5%=75,555/5,632,077=0.013%

Return on EquityROE means amount of net income returned as a percentage of shareholders equity. ROE measures a corporations profitability by showing how much profit a company generates with the money shareholders have invested. Table: 11Return on Equity=Net Income/Shareholders Equity


=1,685,754/581,065=2.9%=2,297,224/669,193=3.4%=75,555/744,748=0.1%

Marketing StrategyAgency Training and Monitoring ProgramsPrincipal strategy of the MetLife has been to strengthen its market share, while continuing to emphasize its core values of discipline in underwriting, efficient claims administration, tight management of expenses and innovation in products and client services. To achieve this, it continuously seeks to broaden distribution and intensify agency training and monitoring programs.Market Segmentation

Its agency force is cornerstone of its business. MetLife Alico relies on a three-tiered distribution operation for Ordinary life which focuses on segmenting the market into three income classes. By developing products which cater to the specific needs of each market we continue to make inroads in the local market and strive to make MetLife Alico household name.Personal Accident PlansDeveloping and promoting Personal Accident products is an integral part of its market strategy. Through Individual Accident & Health products and Diet Marketing initiatives we strive not only to increase the premium income, but also improve the commission earnings of the agents.MAJOR HR POLICIES AND PRACTICESEmployee TrainingCompany recruits staff on merit basis and provide the necessary training to develop professional expertise and believe in retention of best talent. The training is provided to local as well as regional level in all spheres of business activities, including technical and operational support.Company also has online training programs which provides online training to the employees according to their job requirement and enhances their skills.Recruitment of Local PersonnelCompany is staffed with the local personnel who are constantly studying the need of individuals and developing innovative products to the specific need of each market segment.Employee Benefits

The company provides full financial assistance and encourages employees to appear in the insurance diploma exams of the Life Office Management Association and the Society of Actuaries, USA

Administration Department

The duties of the administration department include: Providing equipment Opening new branch

Looking after new branch

Implementing Rules &Regulations

Guiding the staff to perform their duties.

Checking clients and proposals

Receive the cash from clients and maintaining the accounts.Accounts DepartmentCalculation of Premium

An insurance company sets a policys premium by multiplying the rate for each unit of insurance coverage by the total number of coverage being purchased. Most people pay premium once or twice a year. Other people choose to pay monthly installments. Accounts department is responsible to calculate premium on policies.Preparing ReportsQuarterly and Annual reports of the company are prepared by the Accounts department.Customer Services Front Desk Management Receiving guests

Managing postal mails

Listening to customers complaints

Explaining the procedure of the insurance policies.

Claim DepartmentClaim department handles all the claims and maintain the record of all the claims. There are three types of claims handled by this department: Death Claims Actuarial Claims

Medical Claims

Death ClaimsDeath claims are further divided into two categories that are early death claims and Non-early death claims. Death claim within early two years is known as early death and after that it is known as non-early death claim.In case of early death claim department do inquiry from general public, hospital and police station etc.Actuarial Department Task of Actuarial department is to

Calculate premium on the policies Dealing and maintaining all types of the products of the company

Computing Interest Rates

Agency Service DepartmentResponsibilities of the Agency Service departments are:

Keep the record of all the zonal and sector offices Issue code numbers to the field workers and maintaining the record of their business.

Sending and receiving licenses of field workers.

Arrange trainings for the sales force. Underwriting DepartmentTasks of this department are: To collect the information of all clients Verifying the information provided by the clients

Investigation of clients personal information

Compliance DepartmentCompliance department keep the record of the activities of every department of the company. After every six months, Auditors visits and check the data maintained by the compliance departments.Weaknesses and Short FallsHigher Rate of Turnover

As the sale force of the organization is commission based do there is a higher rate of turnover. Employees who fail to show the required outcome leave the organization rather improving their performance.

Increasing Rate of Surrender

Business of the company is dependent on the savings of the people. When there is an economic meltdown; savings of the people go down so they find themselves unable to continue the policy.Lack of Awareness A larger part of the population in Pakistan is living in the rural area, they are not aware about the insurance business. Beside this people living in the urban area are also not well aware.

DutiesMy duties include: Making Data Entries Filling Interview Forms

Documentation

Making calls to the customers Contacting the reference persons of the sales force

Collecting and verifying the information provided by sales representatives.

Accomplishments Completed the assignment of 100 project forms Collected 25 references.

Contacted with customers on telephone and arranged meetings with them

New Knowledge Acquired Marketing experience Dealing with Customers Better Communication Guidelines about salesProblems Encountered Biggest problem for me as internees was that there wasnt any culture in the company to conduct internship. So I was the first internee in the company. Impact on Career

I gained a chance to have practical insight of the professional world. I have gained experience of marketing by dealing with customers which will be very beneficial for me in my professional career.recommendations for improvement

1. Better training programs should be introduced in the company by conducting training need assessment of the employees.2. Work overload should be lessening and responsibilities should be divided equally so that employees can work effectively.3. System and operations should be more defined and organized.

4. Better incentive plans should be introduced so that employees can be motivated.5. IT infrastructure should be improved.6. Expenditures must be controlled.

7. Attractive and Appealing advertisement is needed to aware the public about MetLife and its products. 8. Islamic mode of insurance is emerging rapidly so MetLife should introduce pure Islamic products or interest free business.

9. The company should create a culture suitable for internees.

CONCLUSIONMy internship in MetLife Insurance Corporation proved to be a very informative and learning experience. I got a chance to understand the professional world in a very short span of time. MetLife is providing life security coverage in all over Pakistan. Beside this it is also becoming a cause of providing employment to many fresh graduates and unemployed youth.My internship experience has built my confidence. Now I am ready to face the challenges of professional life which is waiting for me ahead.References & Sources used

www.metlifealico.com Annual and Quarterly reports Pamphlets Brochures

Companys Sales Guide Book

1. Annexes

Financial Controller

Chief Marketing Officer

A&H Manager

Agency Director

Distribution &Products

Internal Auditor

HR Coordinator

Company Secretary

Compliance Officer

Chairman& Chief Executive

EMBED MSGraph.Chart.8 \s

Time Interest Earned


Current Ratio


Quick Ratio


Debt Ratio


Debt to Tangible Net Worth


Gross Profit Ratio


Net Profit Ratio


ROA

ROA


ROE

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metlife alico

Documents

financial analysis

vertical analysis

horizontal analysis

ratio analysis

met insurance corporation

types of insurance companies

history of insurance

wonderful learning experience