our vision - pgi.com.pk strategic decision making and ... auto cover is a complete auto insurance...
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Our Vision
The Pakistan General Insurance Company Limited is
committed to provide quality insurance services and
improved coverage by virtue of sound professionalism
and risk management expertise, to provide better
coverage and satisfaction of their customers.
Our aim is to provide cost effective insurance cover to
our customers which is achieved by increasing the
productivity of our employees.
We follow good governance and sound professionalism
to become a well reputed and respected corporate
entity in the eyes of government and society.
We strive to maintain a customer focused approach by
ensuring that our services are delivered to the
customer in time, according to the required
specifications and within our stipulated cost.
Our Mission
Our overall objective is to produce consistent
underwriting results by structuring exceptional
programs and providing superior service and to grow
our business every year.
This objective will be accomplished by creating a
workplace where employees are challenged to
improve our work product. We will strive to make
certain that our people understand the link between
their performance and the success of the company;
that goals are established, responsibilities are given,
and measurements are installed to ensure
accountability across functions; and that we operate a
company with integrity where mutual respect and
teamwork are more than mere words.
In todays’ rapidly changing economic climate, we like
to think of ourselves as both challenged and fortunate
to be able to serve our insured in ways they have grown
to trust us in the past. Our goal at The Pakistan General
Insurance Company Limited is to do just that, as we
strive for a better and brighter future.
Our Objectives
Risk Management
“Good Risk Management fosters
vigilance in times of calm and
instills discipline in times of crisis”
Ch. Manzoor AhmedChairman
67Annual Report 2008 05Annual Report 2008
C O N T E N T S
COMPANY PROFILE
MANAGEMENT INFORMATION
BOARD COMMITTEES
KEY FINANCIAL DATA
SHAREHOLDERS’ INFORMATION
PROXY FORM
DIRECTORS’ REPORT TO THE SHAREHOLDERS
STATEMENT OF COMPLIANCE WITH BEST PRACTICES AND CORPORATE GOVERNANCE
AUDITORS’ REPORT TO THE MEMBERS
BALANCE SHEET
STATEMENT OF CHANGES IN EQUITY
PROFIT AND LOSS ACCOUNT
CASH FLOW STATEMENT
STATEMENT OF PREMIUMS
STATEMENT OF CLAIMS
STATEMENT OF EXPENSES
STATEMENT OF INVESTMENT INCOME
NOTES TO THE FINANCIAL STATEMENTS
NOTICE OF ANNUAL GENERAL MEETING
CEO’s MESSAGE
REVIEW REPORT TO THE MEMBERS ON STATEMENT OF COMPLIANCE WITH BEST PRACTICES AND CORPORATE GOVERNANCE
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The Pakistan General Insurance Company Limited06 The Pakistan General Insurance Company Limited06
Company Profile
Board of Directors Re-Insurance & Co-Insurance Committee Ch. Manzoor Ahmed (Chairman) PSP Inspector General of Police (Retd.) Director General Intelligence Bureau (Retd.)
Nasir Ali (Chairman)
Ch. Zahoor Ahmed (Chief Executive)
Muhammad Maqsood Peracha
Nasir Ali (President) ACII (London)
Abdul Majid (Secretary)
Dr. Mahmod ul Haq
Ch. Athar Zahoor
Auditors
Usman Ali
M. Yousuf Adil Saleem & Co.
Ch. Mazhar Zahoor
Chartered Accountants
Rehan Beg
(A member firm of Deloitte Touché Tomatsu)
Ch. Muhammad Saleem
Kamran & Co.
Chartered Accountants
Chief Executive Officer
Ch. Zahoor Ahmed
Legal Adviser
Law Inn. Mr. Javed Iqbal (Advocate)
Chief Risk Officer
Ch. Muhammad Maqsood (Advocate)
Nasir Ali
Share Registrar
Chief Financial Officer
Corplink (Private) Limited
Azhar Hafeez Ch.
Tax Consultants
Chief General Manager
Kamran & Co.
Ch. Ghulam Mustafa
Chartered Accountants
Company Secretary
Bankers
Ch. Muhammad Saleem
National Bank of Pakistan Limited
Habib Bank Limited
Audit Committee
Allied Bank Limited
Rehan Beg (Chairman)
Bank of Punjab Limited
Mazhar Zahoor
United Bank Limited
Ch. Athar Zahoor (Secretary)
MCB Bank Limited
Standard Chartered Bank Limited
Investment Committee
Bank Alfalah Limited
Ch. Zahoor Ahmed (Chairman)
Soneri Bank Limited
Ch. Manzoor Ahmed
NIB Bank Limited
Javed Iqbal Khan (Secretary)
Bank of Khyber Limited
K.A.S.B Bank Limited
Claims Committee
Registered & Head Office
Major (Retd.) Munir A. Kazi (Chairman)
Cooperative House, 5 Bank Square
Ch. Ghulam Mustafa
Shahrah-e-Quaid-e-Azam
Fazal Dad Malik (Secretary)
Lahore
Underwriting Committee
Contact
Malik Muhammad Asghar (Chairman)
Tel.: +92(042) 732-4404; 722-3224
Zahid Iqbal Zia
735-2182; 732-3569
Muhammad Yousuf (Secretary)
Fax: +92(042) 723-0895; 723-0634 Email: [email protected]: www.pgi.com.pk
67Annual Report 2008 07Annual Report 2008
Company Profile
Early days to - date
PGI Philosophy
Presence around the country
The Pakistan General Insurance Company Limited came into existance in the year 1947. Since its
inception PGI has grown into a reputed name in the insurance industry. With expertise in the field of
insurance and risk management of over 60 years and on the basis of well-governed procedures
founded on the highest ethical and moral practices, PGI has instituted a good business footing in the
non-life insurance sector in Pakistan.
With an asset base of over 500 million rupees, PGI is one of the emerging quoted insurance companies
in Pakistan and has been listed on the Karachi, Lahore and Islamabad Stock Exchanges since July
1995. The organization is also on the approved list of most scheduled banks operating in the country
since its inception.
During the year 2007, The Pakistan General Insurance Company Limited took over Pak Equity
Insurance Company Limited in order to enhance its capital base while excelling in new regions and
potential markets.
Our philosophy at PGI is to provide our customers and clients with peace of mind. We are dedicated to
maintaining the highest standards of integrity and sound dealing in our relationships with all
stakeholders: customers, intermediaries, employees, shareholders and business partners. In every
action we seek to make a positive contribution towards community activities and are committed to
perform in a socially responsible manner. With technical expertise in the field of non-life insurance,
PGI offers unparallel advice and personalized services in all spheres of general insurance: fire,
marine, motor, engineering, travel and miscellaneous category.
With an aim to relentlessly cater to the needs of its customers and clients across the nation, PGI has a
wide network (with one of the biggest network of branches in the country) of its offices across the
country.
With an unrelenting drive to expand and further establish itself, PGI has enhanced its presence in
almost all areas of business. The Company's proven ability to manage associated risks, along with its
substantial risk absorption capacity, provides significant cushioning to make inroads into relatively
high-risk areas. PGI continues to maintain re-insurance agreements with highly reputable and world
renowned reinsurers including Labuan Re and Malaysia Re.
PGI has been awarded Insurer Financial Strength (IFS) Rating of 'BBB' with a stable outlook by JCR-VIS, denoting an adequate capacity to meet policyholder and contract obligations.
The rating also recognizes the Company's sound underwriting philosophy, prudent management,
effective strategic decision making and implimentation and healthy profitability, though the overall
performance is currently under pressure on account of declining investment income.
The Pakistan General Insurance Company Limited08
Company Profile
Products and Services
i) Fire & Allied Perils Insurance
i) Marine Insurance
iii) Motor Cover
iv) Miscellaneous Insurance
Reinsurance Arrangements:
This cover is property insurance for factories, offices and homes. It provides coverage against
perils like fire and lightning which can be extended to cover the following: impact damage,
storms, earthquakes, rain-flood damage, riot and strike damage, burglary and malicious
damage etc.
Covers imports and exports of consignments, loss or damage of cargo during transit by Air, Sea
and Rail/Road; it also covers dispatch of finished goods from the insured factory to anywhere
in Pakistan. This kind of coverage is provided to transport related businesses such as Ship
Agents, Freight Forwarders, Terminal Operators, Stevedores, Courier Services, etc.
Auto Cover is a complete auto insurance plan for both individuals and corporate offering:
A comprehensive cover including theft, snatching, armed hold up, accidental damage,
third party liability and terrorism.
Guaranteed settlement of Snatching / Theft / Total Loss claims within 15 days of
completion of required documents.
We also provide customized insurance solutions for our corporate clients. The covers range
from the insurance of engineering projects to electrical equipment and machinery.
We are re-insured with world renowned and highly reputed international re-insurers holding the
highest ratings in their respective businesses. These are:
i
−
−
Labuan re
Malaysian re
African re
Pak re
Best re
Trust International
67Annual Report 2008 09Annual Report 2008
Management Information Management Chief Executive Officer Ch. Zahoor Ahmed
President & Chief Risk Officer Nasir Ali. ACII (London)
Company Secretary Ch. Muhammad Saleem
Chief Financial Officer Azhar Hafeez Ch.
Chief General Manager Ch. Ghulam Mustafa
Department and Regional Heads
Head of Human Resource Department Usman Ali
Head of Internal Audit Department Abdul Rasheed
Head of Underwriting and Claims Malik Muhammad Asghar
Head of Underwriting – Marine and Miscellaneous Muhammad Iqbal
Head of Underwriting – Motor Muhammad Yousuf
Advisor to CEO Major (Retd.) Munir A. Kazi
Senior Vice President (Accounts and Finance) Javed Iqbal Khan
Vice President Re Insurance and Claims Muhammad Maqsood Piracha
Vice President Marketing and Public Relations Ch. Siddiq Sabir
Head of MIS and Information Technology Department Sajjid Bhatti
Joint President (South Zone) Raja Gul Saeed Ahmed Khan
General Manager (Lahore Zone I) Shiekh Azmat Ali
General Manager (Lahore Zone II) Ch. Habib Ullah
General Manager (Lahore Zone III) Shiekh Muhammad Anwar
General Manager (Lahore Zone IV) Muhammad Saeed Khokhar
General Manager (North) Malik Fazal Dad
General Manager (Multan Region) Syed Fahim Waris
General Manager (Bahawalpur Region) Ch. Muhammad Ali
Executive Vice President (Karachi) Haroon Ghani Memon
Senior Vice President (Hyderabad Region) Muhammad Shafi Chundrigar
Vice President (Capital City Islamabad) Raja Basit
Vice President (Quetta) Mohammad Siddique
The Pakistan General Insurance Company Limited10
Management Information PGI Branch Offices Network
Lahore
Registered and Head Office Ch. Gulzar Ahmed
Cooperative Bank House, 5 Bank Vice President
Square, Shahrah-e-Quaid-e-Azam,
Lahore
212-213 Abid Market, Qurtaba Chowk, Lahore
Tel
732-3569; 732-5382
Tel
636-0959; 630-1187
732-4404; 735-2182
Fax
723-0634
Lahore (Zone III)
Muhammad Anwar Shiekh
President and Chief Executive Office
General Manager (Zone III)
Gardee Trust Building
2nd
Floor, Asif Plaza, 19 Abbott Road
Thornton Road, Lahore
Lahore
Tel
722-3224; 731-0685
Tel
731-0590; 723-0892; 723-0894
Fax
723-0895
Lahore (Zone IV)
630-4646; 630-6513
Muhammad Saeed Khokhar
Principal Office
General Manager (Zone IV)
PGI House, 5-A, Bank Square
226 Mozang Market, Ewing Road,
Shahrah-e-Quaid-e-Azam, Lahore
Nila Gumbad, Lahore
Tel
731-2992; 731-2962
Tel
735-6202; 724-0965
711-3551; 711-3552
Fax
731-2997
Karachi
Haroon Ghani Memon
Lahore (Zone I)
Executive Vice President
Shiekh Azmat Ali
Room # 508, 5th
Floor Uni Plaza
General Manager (Zone I)
I. I. Chundrigar Road
1st
Floor Gulberg Center, Main Boulevard,
Karachi
Gulberg, Lahore
Tel
240-0755; 274-2491
Tel
576-3146
Islamabad
Zaheer-ul-Hassan Qadri
Raja Basit Ali
Vice President
Vice President
27 K, Gulberg II, Lahore
Room # 13, 2nd
Floor
Tel
575-9553; 575-8893
Hill View Plaza, Blue Area
Islamabad
Lahore (Zone II)
Tel
Ch. Habib Ullah
General Manager (Zone II)
Raja M. Ifrahim Satti
89 A, Temple Road
Assistant Vice President
Lahore
Flat # 283, Wasal Plaza
287-6274
Tel
636-6997; 637-2891
Plot # 1/F, Bazar # 5, Sector 1-10/1
844-3534; 636-1206
Islamabad
Tel
443-5886; 443-5007
(042)
(042)
(042)
(042)
(042)
(042)
(042)
(042)
(042)
(042)
(042)
(042)
(021)
(051)
(051)
11Annual Report 2008
Management Information PGI Branch Offices Network
Multan Quetta Syed Fahim Waris Mohammad Siddique
General Manager Assistant Vice President
Shopping Center # 3, Room No. 1, 2nd Floor
Opposite Shangrila Bakery Agha Siraj Complex, Circular Road
Shahrah-e-Quaid-e-Azam Quetta
Multan
Tel 454-3130; 458-1227 Muzaffarabad (Azad Kashmir) Tahir Masud Minhas
Faisalabad 91 Light Road
Zaffar Hanif Shiekh Muzaffarabad
Vice President Tel 43830
Opposite Iqbal Park
Dhobi Gate, New Garden Town Hyderabad
New Khan Road Runner
Muhammad Shafi Chundrigar
Kokab shopping Center
Senior Vice President
Faisalabad
Room No. 1 and 2, 3rd Floor
Tel 261-5774
Al-Falah Chambers, Tilac Incline
Fax 262-2874
Hyderabad
Tel
263-5128; 263-0545
Rahim Yar Khan
300-9002
Muhammad Iqbal
Fax
261-0140
Branch Manager
9-A , Babar Colony
Gujranwalla
Rahim Yar Khan
Muhammad Arif Butt
Tel
872-060
Vice President
Bahawalpur
58 B, Trust Plaza, GT Road
Ch. Muhammad Ali
Gujranwalla
General Manager
Tel
373-5997
1st
Floor, Al -Karim Plaza
Circular Road
Sahiwal
Bahawalpur
Ch. Iqbal Hussain
Tel
287-6535
Executive Vice President
147 Railway Road, Sahiwal
Syed Waqar Ali Rizvi
Tel
422-0825; 446-7130
Assistant Vice President
Zahoor Market, Eid Gah Road
Sukkur
Bahawalpur
Raja Gul Saeed Ahmed Khan
Joint President
Peshawar
16
Mehran Markaz
Malik Fazal Dad
Sukkur
General Manager
Tel
561-3508
Room No. S/3 and 4, 2nd
Floor, Belore Palace
Peshawar
Tel
5184; 527
Fax
527-1077527- - 5405
(061)
(041)
(0685)
(062)
(091)(091)
(041)
(058810)
(022)
(022)
(055)
(040)
(071)
The Pakistan General Insurance Company Limited06 The Pakistan General Insurance Company Limited12
Management Information PGI Branch Offices Network
Abbotabad Vehari Ahsan Rasheed Mirza Ch. Muhammad Ali
Branch Manager General Manager
119 Iqbal Shopping Complex 47 B, Grain Market
The Mall Vehari
Abbotabad Tel 365-228; 365-828
Tel 336-087 Fax
361-046
Sargodha
Jhang
Ch. Zaffar Niaz
Mian Zulfiqar Ali Khan
Regional Manager
Vice President
Shaheen Plaza
Mughal Market, Yousuf Shah Road
Railway Road
Jhang
Sargodha
Tel
762-1943
Tel
372-2435
Kot Addu
Muhammad Taufeeq Piracha
Muhammad Nadeem Khan
Branch Manager
Branch Manager
99 Trust Plaza, Fatima Jinnah Road
Flat No. 4, Abbass Plaza
Sargodha
Kot Addu
Tel
372-1418
Tel
242-847
Sialkot
Chishtian
Mirza Azam Baig
Muhamamd Amin Javed
Vice President
Vice President
Aurangzeb Market, Karimpura Road
Gala Mandi
Sailkot
Chishtian
Tel
458-6223
Tel
250-3042
Mianwali
Muhammad Khan Baloch
Assistant Vice President
Bank Street, Mianwali
Tel
233-130
DG Khan
Syed Fahim Waris
General Manager
10 Z, Model Town, DG Kha n
Tel
246-1101; 246-4969
Mian Javed
Branch Manager
Quaid-e-Azam Road, DG Khan
(0992)
(048)
(048)
(052)
(0459)
(064)
(0673)(0673)
(047)
(0662)
(063)
67Annual Report 2008 13Annual Report 2008
Board Committees
Audit CommitteeIn line with the best practices, the Board of Directors has established the audit committee. The Terms of Reference of the committee have been developed on the lines as laid down in the Code of Corporate Governance and approved by the Board.
These include:
i) To recommend to the Board of Directors the appointment of external auditors by the Company's shareholders and consider any questions of resignation or removal of external auditors, audit fees and provision by external auditors of any service to the Company in addition to audit of its financial statements;
ii) To review the quarterly, half-yearly and annual financial statements of the Company, prior to their approval by the Board of Directors;
iii) To facilitate the external audit and discussion with external auditors of major observations arising from interim and final audits and any matter that the auditors may wish to highlight;
iv) To review the management letter issued by external auditors and management's response thereto;
v) To ensure coordination between the internal and external auditors of the Company;vi) To review the scope and extent of internal audit and ensuring that the internal audit function
has adequate resources and is appropriately placed within the Company;vii) To consider the major findings of internal investigations and management's response thereto;viii) To ascertain that the internal control system including financial and operational controls,
accounting system and reporting structure are adequate and effective;ix) To determine compliance with relevant statutory requirements; andx) To monitor compliance with the best practices of corporate governance and identification of
significant violations thereof.
The audit committee comprises of the following members:
Rehan Beg Non-executive & Independent Director (Chairman)Mazhar Zahoor Non-executive DirectorCh. Athar Zahoor Non-executive Director & Secretary to the Committee
Human Resource CommitteeHuman Resource Committee assists the Board in fulfilling its obligations relating to human resources and related matters and to establish a plan of continuity and development of senior management for PGI.
The Terms of Reference of HR Committee are as follows:
i) To review and recommend the compensation and benefits philosophy and strategy within the Company;
ii) To review and recommend to the Board the Company's strategy respecting human resources management and planning, including recruitment, retention, training, performance management and related matters and to report the Board on the implementation of these strategies at least once a year;
The Pakistan General Insurance Company Limited14
iii) To review the Company's strategy for succession planning across all management levels and to ensure that comprehensive succession plans are in place for senior executive positions;
iv) To review and recommend, in consultation with the CEO, the appointment and compensation of all its employees, including incentive, benefit and retirement plans;
v) To review the amount of incentive bonus based on corporate and individual performance, for the purpose of incentives calculation; and
vi) To review and recommend the CEO's compensation, including incentive, benefit and retirement plans, to the Board for approval.
The human resource committee comprises of the following members:
The underwriting committee comprises of the following members:
Ch. Manzoor Ahmed Non-executive Director (Chairman)Dr. Mahmod – ul – Haq Non-executive DirectorRehan Beg Non-executive & Independent DirectorUsman Ali Head of HR Department & Secretary to the Committee
The underwriting committee formulates the underwriting policy of the Company;It sets out the criteria for assessing various types of insurance risks and determines the premium policy of different insurance covers; andIt regularly reviews the underwriting and premium policies of the Company with due regard to relevant factors such as its business portfolio and the market development.
Malik Muhammad Asghar Head Underwriting - Fire (Chairman)Zahid Iqbal Zia SVP Underwriting (Fire & Miscellaneous)Muhammad Yousuf VP Underwriting (Motor) & Secretary to the Committee
Underwriting Committee••
•
Claim Settlement Committee•
•
•
•
The underwriting committee formulates the underwriting policy of the Company. This committee devises and reviews the claims settling policy of the Company;It oversees the claims position of the Company and ensures that adequate claims reserves are made;It determines the circumstances under which the claims disputes shall be brought to its attention and decides how to deal with such claims disputes; andIt also oversees the implementation of the measures for combating fraudulent claims cases.
Major (Retd.) Munir A. Kazi Advisor to CEO (Chairman)Ch. Ghulam Mustafa Chief General Manager (Member)Fazal Dad Malik EVP / General Manager (Member & Secretary to the
Committee)
The claims settlement committee comprises of the following members:
67Annual Report 2008 15Annual Report 2008
Board Committees
Re-Insurance & Co-Insurance Committee:
Investment Committee
•
•
•
This committee ensures that adequate reinsurance arrangements are made for the Company's businesses;
It peruses the proposed re-insurance arrangements prior to their execution, reviews the arrangements from time to time and subject to the consent of the participating reinsures, makes appropriate adjustments to those arrangements in the light of the market development; and
It also assesses the effectiveness of the reinsurance programs for the future reference.
The re-insurance & co-insurance committee members are as follows:
The purpose of the Investment Committee is to recommend to the Board the investment policy, including the asset mix policy and the appropriate benchmark. The investment committee also reviews the effectiveness of these policies and their implementation and the Company's Risk management approach.
The Terms of Reference of the investment committee are as follows:
I) To review performance for all asset classes and total portfolio relative to the appropriate benchmark;
ii) To review management's proposed annual rate of return to be included in the Company's budget;
Nasir Ali President / Chief Risk Officer (Chairman)Maqsood Peracha VP (Re-insurance) (Member)Abdul Majid Manager (Member & Secretary to the Committee)
iii) To review the risk assumptions and asset return assumptions imbedded in the current investment policy statement and, if changes have occurred, then review the policy asset mix and the weighted benchmark standard of performance;
iv) To approve investments beyond delegated limits; andv) To ensure compliance with applicable legislation.
The investment committee comprises of the following members:
Ch. Zahoor Ahmed Chief Executive (Chairman)Ch. Manzoor Ahmed Director (Member)Javed Iqbal Khan SVP Accounts and Finance (Member & Secretary to the
Committee)
The Pakistan General Insurance Company Limited06 The Pakistan General Insurance Company Limited16
Key Financial Data
Six years at a glance
re-stated
2008 2007 2006 2005 2004 2003
Financial results
Equity
Paid-up capital 200,000
200,000
120,000
80,000
80,000
80,000
General reserves 65,000
25,000
6,000
1,000
1,000
1,000
Retained earnings 2,367
18,894
14,097
8,245
6,407
4,460
267,367
243,894
140,097
89,245
87,407
85,460
Underwriting provisions 134,535
124,258
84,534
39,780
21,025
28,740
Investments (at realizable value) 19,303
15,862
7,376
10,376
10,376
10,376
Tangible fixed assets (at book value) 136,935
151,124
159,378
105,427
66,788
70,792
Cash and cash equivalents 47,979
106,034
58,166
32,353
33,763
39,800
Short term prepayments and receivables 5,550
3,871
473
19,765
32,460
27,718
Total assets (book value) 508,998
438,364
237,259
179,161
160,239
171,426
Operating results
Gross premium 196,084
167,330
100,493
62,962
53,467
52,185
Net premium 91,864
76,222
41,300
24,906
20,067
27,894
Net claims paid 20,574
17,093
9,368
4,894
7,266
3,284
Underwriting profit 51,080
50,446
22,732
8,260
2,334
10,514
Investment (loss) / income (1,347)
2,606
800
144
37
24
Profit before tax 25,405
25,694
9,887
2,380
614
13,549
Income taxes 3,135
1,151
368
1,125
266
2,505
Profit after tax 22,270
24,543
9,519
1,225
348
11,044
Management expenses 26,832
18,677
12,937
17,889
17,514
16,421
Employees remuneration 19,394
14,870
11,186
9,737
8,812
8,750
Financial ratios / trend analysis
Profit before tax to gross premium % age 12.96% 15.36% 9.84% 3.78% 1.15% 25.96%
Profit before tax to net premium % age 27.66% 33.71% 23.94% 9.56% 3.06% 48.57%
Profit after tax to gross premium % age 11.36% 14.67% 9.47% 1.95% 0.65% 21.16%
Profit after tax to net premium % age 24.24% 32.20% 23.05% 4.92% 1.73% 39.59%
Management expenses to gross premium % age 13.68% 11.16% 12.87% 28.41% 32.76% 31.47%
Management expenses to net premium % age 29.21% 24.50% 31.32% 71.83% 87.28% 58.87%
Employee cost to management expenses % age 72.28% 79.62% 86.47% 54.43% 50.31% 53.29%
Underwriting profit to net premium % age 55.60% 66.18% 55.04% 33.16% 11.63% 37.69%
Net claims to net premium % age 22.40% 22.42% 22.68% 19.65% 36.21% 11.77%
Return on assets % age 4.38% 5.60% 4.01% 0.68% 0.22% 6.44%
Liquidity and leverage ratios
Current ratio Time 2.05
1.79
5.36
2.57
2.82
2.89
Total assets turnover Time 0.18
0.17
0.17
0.14
0.13
0.16
Fixed assets turnover Time 0.67
0.50
0.26
0.24
0.30
0.39
Total liabilities to equity Time 1.90
1.80
1.69
2.01
1.83
2.01
Return on capital employed % age 5.39% 6.25% 4.31% 1.42% 0.43% 8.80%
Return on equity - before taxes paid % age 9.50% 10.53% 7.06% 2.67% 0.70% 15.85%
Return on equity - after taxes paid % age 8.33% 10.06% 6.79% 1.37% 0.40% 12.92%
Paid-up capital to total assets % age 39.29% 45.62% 50.58% 44.65% 49.93% 46.67%
Equity to total assets % age 52.53% 55.64% 59.05% 49.81% 54.55% 49.85%
Investment yield % age -6.98% 16.43% 10.85% 1.39% 0.36% 0.23%
Liquid assets to total assets % age 73.10% 65.53% 40.63% 35.27% 49.89% 52.70%
Liquid assets to fixed assets % age 271.71% 190.07% 48.87% 69.94% 139.92% 142.15%
----------------------------------Rupees in thousands----------------------------------
67Annual Report 2008 17Annual Report 2008
Key Financial Data For the Year
re-stated
2008 2007
PROFIT AND LOSS ACCOUNT
Gross written premium 196,084
167,330
Net written premium 97,558
89,316
Net earned premium 91,864
76,222
Claims incurred 79,009
59,304 Net claims expenses 20,574
17,093
Commission income 27,475
26,317
Commission expense 20,852
16,323
Underwriting profit 51,080
50,446
Direct expenses 26,832
18,677
Investment (loss) / income (1,347)
2,606
Profit before tax 25,405
25,694
Profit after tax 22,270
24,543
TECHNICAL RESERVE COVER
Fire and property damage 52,491
52,687
Marine, aviation and transport 24,050
23,366
Motor act 11,574
8,730
Miscellaneous 21,500
16,329
Total 109,615
101,112
CORPORATE ASSETS
Investment in fixed assets 136,935
151,124
Investments in:
- equity instruments 12,043
4,136
- properties 155,193
47,127
- other 11,726
11,726
Total investments 315,897 214,113
Total investments at realizable value 311,431 214,113
(Rupees in thousands)
The Pakistan General Insurance Company Limited18
Rupees in `000
2008 2007 2006 2005 2004 2003
Paid up capital
200,000200,000
200,000 200,000
120,000
80,000 80,00080,000
180,000
160,000
140,000
120,000
80,000
60,000
40,000
20,000
100,000
2008 2007 2006 2005 2004 2003
600,000
508,998
438,364
237,259
179,161160,239 171,426
500,000
400,000
300,000
200,000
100,000
Total Assets (at book value)
2008 2007 2006 2005 2004 2003
Underwriting Provisions
140,000
120,000
100,000
80,000
60,000
40,000
20,000
134,535
124,258
84,534
39,780
21,02528,740
267,367
243,894
140,097
89,245
87,407
85,460
Equity
2008
2007
2006
2005
2004
2003
2008 2007 2006 2005 2004 2003
General & Capital Reserve
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000 65,000
25,000
6,000 1.000 1,000 1,000
Liquid assets to fixed assets
0 50% 100% 150% 200% 250% 300%
48.87%
69.94%
139.92%
142.15%
271.71%
190.07%
2008
2007
2006
2005
2004
2003
2008
2007
2006
2005
2004
2003
Key Financial Data
67Annual Report 2008 19Annual Report 2008
Gross Premium 196,084
167,330
100,493
62,96253,467
52,185
200,000
2008 2007 2006 2005 2004 2003
150,000
50,000
100,000
1.11
1.23
0.79
0.150.04
1.38
0.20
0.40
0.60
0.80
1.00
1.20
1.40
Earnings Per Share
2008 2007 2006 2005 2004 2003
19,303
15,862
7,376
10,376 10,376 10,376
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
Investment (at book value)
2008 2007 2006 2005 2004 2003
Rupees in `000
Paid up Capital / Total Assets
46.67%
39.29%
45.62%
50.58%
44.65%
49.93%
0
10
20
30
40
50
60
2008 2007 2006 2005 2004 2003
5,000
10,000
20,000
30,000
40,000
50,000
55,00051,080
50,446
8,260
2,334
10,514
22,732
2008
2007
2006
2005
2004
2003
Underwriting Profit
2008 2007 2006 2005 2004 2003
Profit after tax
5,000
10,000
15,000
20,000
25,000
30,000
24,543 22,270
11,0449,519
1,225348
Key Financial Data
The Pakistan General Insurance Company Limited20
Listing on Stock Exchanges
Listing Fees
Stock Code
Investor Service Center
Services Standards
PGI equity shares are listed on Karachi Stock Exchange (“KSE”), Lahore Stock Exchange (“LSE”) and Islamabad Stock Exchange (“ISE”).
The annual listing fee for the financial year 2007 – 2008 has been paid to all three of the stock exchanges within the prescribed time limit.
The stock code for dealing in equity shares of PGI at KSE, LSE and ISE is “PKGI”
PGI’s share department is operated by Corplink (Private) Limited Registrar Services. It also functions as an investor service center. The investor service center is managed by a well experienced team of professionals and is equipped with the necessary infrastructure in terms of computer facilities and comprehensive set of systems and procedures for conducting the registration purposes. The team is headed by Mr. Saleem Iqbal Khawaja at Registrar Office and Mr. Ch. Muhammad Saleem Company Secretary at PGI Registered Office.
PGI share department has online connectivity with Central Depository Company of Pakistan Limited (“CDC”). The share department undertakes activities pertaining to dematerialization of shares, shares transfers and transmission, issue of duplicate / revalidated dividend warrants, issue of duplicate / replaced share certificates, change of address and other related matters.
PGI has always endeavored to provide investors with prompt services. Listed below are various investors' services and the maximum time limit set for the execution.
For requests received through posts Over the counter
Transfer of shares 45 days after receipt 45 days after receipt Transmission of shares 45 days after receipt 45 days after receipt Issue of duplicate share certificates 45 days after receipt 45 days after receipt Issue of duplicate dividend warrants 5 days after receipt 5 days after receipt Issue revalidated dividend warrants 5 days after receipt 5 days after receipt Change of address 2 days after receipt 15 mins after receipt Well reputed and experienced firm of the Share Registrar Services has been entrusted with the responsibility of ensuring that services are rendered within the specified time limits.
Share Registrar Office Registered Office Co-operative House, 5 Bank Square Shahrah-e-Quaid-e-Azam Lahore
M/s. Corplink (Private) Limited Wing Arcade, 1-K, Commercial Area Model Town, Lahore
67Annual Report 2008 21Annual Report 2008
Shareholders' Information
Statutory compliance
Book Closure Date
Investors' Grievances
Legal Proceedings
General Meetings and Voting Rights
Proxies
During the year, the Company has complied with all applicable provisions except as mentioned in the auditors' report, filed all returns / forms and furnished all the relevant information as required under the Companies Ordinance, 1984 and allied laws and rules, the Securities and Exchange Commission of Pakistan (“SECP”) regulations and the listing regulations.
The register of members and share transfer books of the Company will remain close from April 24, 2009 to April 30, 2009 both days inclusive.
As on date none of the investors or shareholders have filed any letter of complaint against any service provided by the Company to its shareholder.
No case has ever been filed by shareholders against the Company for non-receipt of share / refund.
Pursuant to section 158 of the Companies Ordinance, 1984, PGI holds the general meeting of the shareholders atleast once a year. Every shareholder has a right to attend the general meeting, the notice of such meeting is sent to all the shareholders atleast twenty one days before the meeting and also advertised in one English and one Urdu newspaper having circulation in Sindh and Punjab.
Shareholders having a holding of atleast ten percent of voting rights may also apply to the Board of Directors to call for a meeting of shareholders, and if Board does not take action on such application within twenty one days, the shareholders may themselves call the meeting.
All shares issued by the Company carry equal voting rights. Generally, matters at the general meetings are decided by show of hands in the first instance. Voting by show of hands operates on the principal of “one member one vote”. If majority of shareholders raise their hands in favour of the particular resolution, it is taken as passed, unless a poll is demanded. Since, the fundamental voting principle in a Company is “one share one vote”, voting takes place by a poll, if demanded. On a poll being taken the decision arrived by a poll is final, overruling any decision taken on a show of hands.
Pursuant to Section 161 of the Companies Ordinance, 1984 and according to the MOA and AOA of the Company, every shareholder of the Company who is entitled to attend and vote at a general meeting of the Company, can appoint another person as his/her proxy to attend and vote instead of himself/herself. Every notice calling a general meeting of the Company contains a statement that shareholder entitled to attend and vote is entitled to appoint a proxy who needs not to be a member of the Company.
The Pakistan General Insurance Company Limited06 The Pakistan General Insurance Company Limited22
Shareholders' Information
Web Presencewww.pgi.com.pk.
Shareholding Pattern
The instrument appointing proxy, duly signed by the shareholder appointing that proxy should be deposited with the Company not less than forty-eight hours before the meeting.
Updated information regarding the Company can be accessed at PGI web site, The web site contains the latest financial results of the Company together with Company's profile, the corporate philosophy and major products.
The shareholding pattern of the equity share capital of the company as on December 31, 2008 was as follows:
Share Holding Percentage
8,109,376 40.55
- -
1,000 0.01
- -
- -
-
-
-
-
71,221
0.36
11,818,403
59.09
-
-
20,000,000
Shareholders' Category
Directors, Chief Executive and Family
Associated Companies, Undertakings and Related Parties
Public Sector Copmanies and Corporations (NIT and ICP)
Banks, DFIs and NBFIs
Insurance Companies
Modaraba and Mutual Funds
Shareholders having more than 10% holdings
Other Companies
General Public
- Local
- Non Residents
100.00
23Annual Report 2008
Information as required under Code of Corporate Governance Categories of Shareholders as at December 31, 2008 Category Share Holding Percentage
Associated Companies, Undertakings and Related Parties
Associated Companies and Related Parties -
-
NIT and ICP
Investment Corporation of Pakistan Limited 1,000
0.01
Directors, Chief Executive Officer their Spouses and Minor Children
Ch. Manzoor Ahmed 505,000
2.53
Mr. Usman Ali 500,500 2.50
Mr. Mazhar Zahoor 608,500 3.04
Ch. Ather Zahoor 927,228
4.64
Ch. Zahoor Ahmed 898,132
4.49
Ch. Zahoor Ahmed (CDC) 172,000
0.86
Mr. Nasir Ali 1,022,800
5.11
Mr. Nasir Ali (CDC) 10,000
0.05
Ch. Muhammad Saleem 540,993
2.70
Mr. Mahmood-ul-Haq 539,500
2.70
Mr. Rehan Beg 85,000
0.43
Mrs. Qaiser Sultana W/O Ch. Manzoor Ahmed 110,000
0.55
Mrs. Rubina Mazhar W/O Mr. Mazhar Zahoor 515,750
2.58
Mrs. Parveen Akhtar W/O Ch. Zahoor Ahmed 879,973
4.40
Mrs. Mehvish Nasir W/O Mr. Nasir Ali 469,000
2.35
Mrs. Khalida Parveen W/O Ch. Muhammad Saleem 325,000
1.63
Public Sector Companies and Corporations
Azee Securities (Private) Limited (CDC) 5,500
0.03
Capital Vision Securities (Private) Limited (CDC) 500
0.00
Cliktrade Limited (CDC) 1,500
0.01
Darson Securites (Private) Limited 2,000
0.01
Durvesh Securities (Private) Limited 7,000
0.04
Excel Securities (Private) Limited 500
0.00
First National Equities Limited (CDC) 1
0.00
General Investment and Securites (Private) Limited (CDC) 10,000
0.05
Live Securities Limited (CDC) 32,000
0.16
Deputy Administrator Abondaned Properties Org (CDC) 1,220
0.01
Taurus Securites Limited (CDC) 10,000
0.05
Time Securities (Private) Limited (CDC) 1,000
0.01
Bank, Development Finance Institutions, Non Banking Finance Institutions
Banks, DFIs and NBFIs -
-
Leasing Companies
Leasing Companies -
-
Modarabas and Mutual Funds
Modarabas and Mutual Funds -
-
Insurance Companies
Insurance Companies -
-
Non Residents / Foreign Companies
Non Residents / Foreign Companies -
-
Shareholders holding more than 10% of capital
Shareholders holding more than 10% of capital -
-
General Public
General Public 11,818,403
59.09
20,000,000
100.00
The Pakistan General Insurance Company Limited06 The Pakistan General Insurance Company Limited24
CEO’s Message
On behalf of everyone at PGI, I would like to thank all of our clients for their support over the years. When wrapped up in day-to-day issues, it is sometimes difficult to step back and appreciate all of the hard work that has been necessary to get us to our 61st anniversary.
I take great satisfaction in the significant improvement of our key performance indicators, such as direct premiums, investment portfolios, high solvency margins and profitability.
The principal components of management are people and systems. Therefore, we need to foster high quality personnel to spearhead innovation and implement the most advanced systems. The quality of our people and their performance over the long term is what distinguish us from our competitors.
Our continued investment in technology has significantly increased our efficiency in the processing, storage and analysis of data, thereby enhancing our customer services and decision making capacity.
Through relevant technical training, appropriate human resource development programs; we have a well trained and highly motivated staff, working in an attractive, safe and comfortable environment.
We certainly could not have made it to this milestone without some very good people that work in our offices all over the country. As I tell our employees, PGI is not about me, it's about you. Our people take that to heart, and I hope that for those of you who do business with us, you experience motivated and helpful insurance professionals sitting across from you or on the other end of the telephone or email.
We are committed to provide our customers with top quality products and services at affordable prices and as we continue to grow, we are continuously looking for new avenues to better serve our customers across the country.
Finally, I would like to remind everyone that we get many of our best ideas at improving our Company from our valued clients. We are proud of the growth, new innovations, developments in risk management expertise and technological improvements we have experienced over the past few years.
Ch. Zahoor AhmedCEO
25Annual Report 2008
Directors' Report to the Shareholders
Economic Overview
Company Performance Review 2008
Segments at a Glance
Fire
Dear Fellow Shareholders,
The directors of The Pakistan General Insurance Company Limited take pleasure in presenting the annual report of your Company, together with the audited financial statements for the year ended December 31, 2008.
The year under review was a volatile period for the financial services sector globally. The economic picture during the last months of 2008 was extremely challenging due to a number of factors which were responsible for this situation; mainly led by international recession, market insulation due to the presence of an asset bubble accumulated over the years, macro-economic instability compounded with political uncertainty, surge in trade & current account deficits, weaker currency in response to forex reserve depletion, hike in interest rates and persistent rise in inflation.
After a reasonable start the year 2008 finished with a moderate closure, both in terms of our results and share price performance. Some of our business segments were minutely below par, nevertheless, the fundamental strength of our core operations remains intact and the Company has been able to maintain its operational performance, reflected by a 1.26% increase in underwriting profitability. The results however, have been adversely impacted by decline in investment income. Gross Written Premium (GWP) increased by 17.18%, from Rs. 167 million in 2007 to Rs. 196 million in 2008. The business mix has shifted to more profitable segments with share of fire, marine, motor & miscellaneous at 47%, 22%, 10% and 21% respectively. Premium growth has been achieved mainly in new businesses and focus on Company's Insurance philosophy.
Your company's net premium stands at 47% of GWP, up by 1% in 2008, mainly due to retention of good clients in fire portfolio. This impact was offset by a remarkable 20% increase in net claims, from Rs. 59 million in 2007 to Rs. 79 million in 2008. General & administrative expenses were increased by 7%, from Rs. 24 million in 2007 to Rs. 26 million in 2008. As there was significant decline in equity markets, the Company posted a loss of Rs. 4.4 million on its investment portfolio. Further the Company has also booked Rs. 5.8 million as provision for doubtful debts. Consequently the Company posted Rs. 25.4 million profit before tax in 2008 against Rs. 25.7 million profit before tax in 2007 and profit after tax of Rs. 22.2 million in 2008 against Rs. 24.5 million profit after tax in 2007. Earnings per share of the Company calculate to Rs. 1.11 in 2008 against Rs. 1.23 in 2007.
GWP grew by 5% from Rs. 86 million in 2007 to Rs. 91 million in 2008 and net premium earned increased by 11% from Rs. 35 million to Rs. 38 million. As losses increased by 20% from Rs. 17 million in 2007 to Rs. 21 million in 2008, underwriting profit increased by 8% from Rs. 20 million in 2007 to Rs. 21 million in 2008.
Marine, Aviation and TransportMarine business grew by 21% from Rs. 36 million in 2007 to Rs. 44 million in 2008. Net earned premium went up by 40%. Further the Company had to experience more losses in this segment which are increased by Rs. 5 million from Rs. 14 million in 2007 to Rs. 19 million in 2008. Underwriting profit increased by 3 million resulting in 4% increase over 2007 from Rs. 8 million in 2007 to Rs. 11 million in 2008.
The Pakistan General Insurance Company Limited06 The Pakistan General Insurance Company Limited26
Directors' Report to the Shareholders
Motor
Others (Miscellaneous)
Re-Insurance
Risk Management
GWP grew by 29% from Rs. 16 million in 2007 to Rs. 21 million in 2008 and net premium earned increased by 12% from Rs. 15 million to Rs. 17 million. As losses increased by 12% from Rs. 1.6 million in 2007 to Rs. 1.8 million in 2008, the underwriting results decreased by 20% from Rs. 10 million in 2007 to Rs. 8 million in 2008 in a year when all classes posted increased profitable results.
For Miscellaneous lines, which include engineering, contract and travel business, GWP increased by 40% from Rs. 29 million in 2007 to Rs. 40 million in 2008. Net Earned Premium increased by 37%, closing at Rs. 15 million. Underwriting profit increased by 16% from Rs. 9 million in 2007 to Rs. 10 million in 2008.
Your Company follows a policy of optimizing retention of risk through carefully designed reinsurance treaties with “A” rated and well reputed re-insurers lead by our leader Labuan Reinsurance Berhad. The focus of the re-insurance treaty program has been designed to protect the value at risk by ensuring timely and quality protection for individual risks and in catastrophic events.
In this challenging period of economic slowdown, declining prices and softening of local insurance markets, your Company's strategy of increasing its retention of risk will also help in achieving a positive net premium growth, thereby offsetting some of the impact of fall in premiums.
Insurance being the business of transfer of risks from client to insurer is viable only if underwriter has the ability to precisely assess the risk. Your Company's Risk Management approach is proficient in qualitative evaluation of risk, providing safety consultancy for loss reduction and suggesting measures for risk mitigation to the client. Your company is continuously striving to develop expertise in areas such risk pricing, Enterprise Risk Management, business continuity planning and consequence analysis which will help us in offering value added services to the clients.
Investments
Equity and Other InvestmentsOur investment objective is to achieve a superior total return on the investment portfolio adhering to our investment philosophy and the regulations as applicable from time to time. We are guided by value investing principles. The investment committee supervises the implementation of the investment policies laid down by the Board and guides the asset allocation strategy to ensure financial liquidity, security and diversification. Appropriate risk management practices are adopted with an objective to manage risks arising out of duration, market, credit, legal and operations.
Your Company's investment portfolio is invested with prudence while seeking a reasonable yield, in line with market conditions. The equity markets went through a roller coaster ride during the year. During the first half 2008, the markets continued their strong run of the previous year taking the major market indices to all time highs. In the second half of the financial year, concerns about synchronized global slow down and increase in inflation came to the fore. Interest rates continued their rising trend on inflationary concerns as the country slipped into the grip of a credit crunch.
Liquidity situation caused deep and continuous corrections in prices of most of the stocks. By the end of 2008, KSE–100 Index slipped to 5,865.01, down by 58.33% YoY basis and market capitalization was Rs. 1,859 billion against Rs. 4,330 billion as at the end of 2007.
67Annual Report 2008 27Annual Report 2008
Directors' Report to the Shareholders
Investment Properties
The book value of your Company's investments in equity instruments decreased from Rs. 12,042 million to Rs. 7,576 million, i.e., by Rs. 4.466 million during the year 2008.
Once the liquidity of credit markets is restored, the equity markets in general and our core investments portfolio have the potential to pay back. The Company will continue to place special emphasis in generating a significant portion of its investment income from sustainable sources such as interest and dividends.
Due to decline in the values of the equity investments the management of your Company decided to invest in real estate properties which will help the Company to generate consistant rental income. The investment in properties during the year has increased by 229% from Rs. 47 million in 2007 to Rs. 155 million in the year 2008.
Similarly the income from rentals also increased by 93% from Rs. 1.770 million in 2007 to Rs. 3.420 million during the year 2008.
Information Technology
Human Resource
Insurer's Financial Strength Rating
A Strategic initiative to leverage information technology for improved business performance continued yielding required results for the year 2008.
As a successful company, Human Capital is now an integral part of the organization, shifting from a hitherto support to a business partner role. Dynamic strategies are planned, developed and implemented to achieve the vision of the Company. Employee oriented incentives have been introduced to enhance retentions & motivation at all levels. For infusing fresh blood, Management Trainee Programs are introduced, thus helping new trainees to contribute to our business growth. Based on training needs analysis, courses on core and soft skills are continuously modified . Formal orientation programs for new entrants ensure quick integration into the business while good working environment continues to contribute in the productivity enhancement.
Our continued focus on equal opportunity employment goes a long way in maintaining a pool of employees with knowledge, experience and skills in their respective fields and employees remain our most valuable assets.
The JCR VIS Credit Rating Agency has assigned your Company, an “Insurer Financial Strength” (IFS) Rating of “BBB” (Triple B) and a Stable Outlook, on the basis of financial statements for the year 2007. The Insurer Financial Strength (IFS)
The management in line with its committment to implement the latest information technology and insurance software, is proud to announce the full and final implementation of the new “Computer Based Information System (CBIS)” which plays an integral role in efficient and secure underwriting, accounting and operation management. This development plays a vital role in increasing the efficiency of policy, accounting, branch and underwriting management, which helps to reduce cost and the ultimate benefit is passed onto our policy holders (clients).
A website of The Pakistan General Insurance Company Limited has also been developed which allows the user to obtain the Company related information about its history, services, list of reinsurers and financials.
denoting an adequate capacity to meet policyholder and contract obligations.
The Pakistan General Insurance Company Limited28
Appropriations The proposed appropriations are as under: 2008 2007 (Rupees in thousands) Transfer to general reserves 40,000 19,000 Auditors
Board of Directors
The present auditors M/s. Deloitte M. Yousuf Adil Saleem & Co., Chartered Accountants and M/s. Kamran & Co., Chartered Accountants, retire and being eligible, have offered themselves for reappointment. The external auditors hold satisfactory rating by the Institute of Chartered Accountants of Pakistan (ICAP) as required under their Quality Control Review Program. As suggested by the Audit Committee, the Board of Directors has recommended the appointment of M/s. Deloitte M. Yousuf Adil Saleem & Co., Chartered Accountants and M/s. Kamran & Co., Chartered Accountants, as auditors of the Company for the year 2009, at a fee to be mutually agreed.
The Directors of your Company were elected in the Annual General Meeting held on April 30, 2007 for a period of three years and we would like to take this opportunity of welcoming Ch. Athar Zahoor for joining the Board as non-executive director.
During the year, six (6) meetings of the Board of Directors were held and attendance by each Director is given below:
Name of Director Number of meetings attended
Name Ch. Manzoor Ahmed Ch. Zahoor Ahmed Nasir Ali Mehmud ul Haq
Rehan Beg
Ch. Mazhar Zahoor Usman Ali
Ch. Muhammad Saleem Mst. Tallat Zahoor Ch. Athar Zahoor
Designation Meetings attended
Non Executive Director and Chairman 6 Executive Director and Chief Executive 6 Executive Director and President 6 Executive DirectorExecutive Director
6
Non Executive and Independent Director
6 Non Executive Director 6
6 Executive Director 6 Non Executive Director (retired) 1 Non Executive Director (appointed) 5
Directors' Report to the Shareholders
No director remains absent from the meetings held in their tenure of directorship during the year.
As required under the Code of Corporate Governance, the audit committee continued to perform as per its terms of reference duly approved by the Board. The committee composition and its terms of reference are also attached with this report.
The audit committee had five (5) meetings during the year 2008.
Audit Committee
29Annual Report 2008
Directors' Report to the Shareholders
Code of Corporate Governance
Statement of corporate and financial reporting
Directors & spouses
Chief Financial Officer, Company Secretary and Other Executives
From its inception the Company has maintained a visible record of good corporate governance which is reflected merely by the growth of the Company over the years. In the phase of implementing the code of corporate governance as required by the listing regulations, the company has implemented all aspects of the code of corporate governance and the management is pleased to state that the fullest efforts have been made to comply with the provisions of the code.
1) The financial statements together with the notes forming an integral part of these statements have been prepared by the management of your Company in conformity with the Companies Ordinance, 1984 and the Insurance Ordinance, 2000 and present fairly its state of affairs, the result of its operations, cash flows and changes in equity.
2) Proper books of accounts of the Company have been maintained.3) Appropriate accounting policies have been consistently applied in preparation of these
financial statements and accounting estimates are based on reasonable and prudent judgment.4) The International Accounting Standards, as applicable in Pakistan, have been followed in
preparation of financial statements and any departure there from has been adequately disclosed.
5) The system of internal control is sound in design and has been continuously monitored by the internal audits. This is a continuing process and any weaknesses will be removed and its effective implementation shall be ensured.
6) There is no doubt upon the Company's ability to continue as a going concern.7) There has been no material departure from the best practices of corporate governance, as
detailed in the listing regulations.8) Key operating and financial data for the last six years is attached with this report.9) Outstanding taxes and duties are given in the financial statements.10) The Company policy of the valuation method as disclosed in note 3.5.22 attached to the
financial statements has been duly approved by the Board and the auditors' have made no adverse remarks in this regard.
11) The related party transactions are approved or ratified by the audit committee and the Board of Directors;
12) The trade carried out by the Directors, CEO, CFO, Company Secretary, Executives and their spouses and minor children, if any, in the shares of the Company is given below:
Mr. Nasir Ali purchased 294,800 shares.Ch. Athar Zahoor purchased 927,228 shares.Mrs. Mehvish Nasir purchased 344,000 shares.
Nil (No transactions)
13) All the major decisions relating to investments / disinvestments of funds, change in the policy of underwriting, if any, appointment, remuneration and terms & conditions of CEO are taken to the Board.
There have been no material changes and commitments affecting the financial position of your Company since December 31, 2008.
Material Changes
The Pakistan General Insurance Company Limited30
Directors' Report to the Shareholders
Pattern of Shareholding
Earnings Per Shares
Statement of Ethics and Business Practices
Insurance Ordinance, 2000
Explanation to the Auditors' Qualification
A statement showing the pattern of shareholding is attached with this report.
Earnings per share during the year have decreased by 10% from Rs. 1.23 (as re-stated) per share in 2007 to Rs. 1.11 in 2008.
The Board has adopted “Statement of Ethics and Business Practices”. Entire management and employees are aware of the statement and are obliged to observe the rules of conduct in relation to the business operations and regulations.
As required under the Insurance Ordinance and rules framed there under, the Directors confirm that:
• in their opinion and to the best of their belief the annual statutory accounts of the Company set out in the forms attached with this statement have been drawn up in accordance with the Insurance Ordinance and any rules made there under;
• the Company has at all times in the year complied with the provisions of the Ordinance and the rules made there under relating to the paid-up capital, solvency and re-insurance arrangements; and
• as at the date of the statement, the Company continues to be in compliance with the provisions of the Ordinance and rules framed there under as mentioned above.
With reference to the reservation shown by the auditors' in their report, it is pertinent enough to mention that the company has taken steps subsequent to the year end to comply with the provisions of the accounting policy adopted by the Company in this regard.
Future Outlook
Acknowledgment
The strength of the Company and the strategies pursued make us feel confident to achieve goals for 2009. By applying prudent policies and discipline in our business operations and using cost effective methods, we are confident that the targets set for the year will be achieved. We, however, cherish no illusions about the challenges ahead. Uncertainty still persists about credit markets and the national economy in general, while competition is increasing in all business segments. While challenges limit some opportunities, they create others. This may require us to track a different course. As a responsible corporate entity we will continue to conduct our business in a transparent way, working closely with the regulators to ensure compliance. Our aim is to exceed expectations of our shareholders, not only during the current year but beyond.
We would like to thank our customers, business partners and employees whose loyalty and dedication makes PGI a great Company that it is. We also take this opportunity to thank Securities & Exchange Commission of Pakistan, our brokers and reinsurers, including Pakistan Re-insurance Company Limited and the Bankers of the Company for support given to PGI during the year. Lastly, we would like to place on record our appreciation for the devotion, loyalty and continued hard work of the work force and the employees. For and on behalf of the Board
Ch. Zahoor AhmedChief Executive Officer
Lahore: April 3, 2009
31Annual Report 2008
Statement of Compliance with Best Practices and Corporate Governance
This statement is being presented to comply with the Code of Corporate Governance as contained in the Listing Regulations of respective stock exchanges and SRO 68(1)/2003 issued by the Securities and Exchange Commission of Pakistan for the purpose of establishing a framework of good governance, whereby a listed company is managed in compliance with the best practices of corporate governance.
The Company has applied the principles contained in the Code in the following manner:
1. The Company encourages representation of independent non-executive directors and directors representing minority interests on its Board of Directors. At present the Board includes four non-executive directors (out of which one represents independent director), including the Chairman, out of nine directors.
2. The directors of the Company have confirmed that none of them is serving as a director in more than ten listed companies, including this Company.
3. All the directors have given declaration that they are aware of their duties and powers under the relevant laws and the Company's Memorandum and Articles of Association and the listing regulations of the stock exchanges of Pakistan.
4. All the directors of the Company are registered as taxpayers and none of them has defaulted in payment of any loan to a banking company, a Development Financial Institution or a Non-Banking Financial Institution. None of the director is a member of a stock exchange.
5. No casual vacancy occurred in the Board during the financial year 2008.
6. The Company has prepared a 'Statement of Ethics and Business Practices' (Code of Conduct), which has been signed by all directors and employees of the Company.
7. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of the Company.
8. A complete record of particulars of significant policies along with the dates on which they were approved or amended has been maintained.
9. All the powers of the Board have been duly exercised and decisions on material transactions, including the appointment and determination of remuneration and terms and conditions of employment of the CEO and other executive directors, have been taken by the Board.
10. All the meetings of the Board were presided over by the Chairman. The Board met at least once in every quarter during the year. Written notices of the Board meetings, along with agenda and working papers, were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated.
11. The Board has established a system of sound internal control which is effectively implemented at all levels within the Company.
12. The Board has arranged an orientation course for its directors during the year to apprise them of their duties and responsibilities and to keep them informed of the enforcement of new laws, rules and regulations and amendments thereof.
The Pakistan General Insurance Company Limited32
Statement of Compliance with Best Practices and Corporate Governance
13. All material information as required under the relevant rules, has been provided to the stock exchanges and to the Securities and Exchange Commission of Pakistan within the prescribed time limit.
14. The Board has approved the appointment of Company Secretary, including his remuneration and terms and conditions of employment as determined by the CEO.
15. The directors' report for this year has been prepared in compliance with the requirements of the Code and fully describes the salient matters required to be disclosed.
16. The financial statements of the Company were duly endorsed by CEO and CFO before approval of the Board.
17. The directors, CEO and executives do not hold any interest in the shares of the Company other than that disclosed in the pattern of shareholding.
18. The Company has complied with all the corporate and financial reporting requirements of the Code.
19. The Board has formed Underwriting, Claims Settlement and Re-insurance & Co-insurance Committees.
20. The Board has formed an Audit Committee. It comprises of three members all of whom are non-executive directors including the chairman of the committee.
21. The meetings of the audit committee were held at least once every quarter prior to approval of interim and final results of the Company as required by the Code. The terms of reference of the committee have been formed and advised to the committee for compliance.
22. The Board has set-up an effective internal audit function manned by suitably qualified and experienced personnel who are conversant with the policies and procedures of the Company and are involved in the Internal Audit function on a full time basis.
23. The statutory auditors of the Company have confirmed that they have been given a satisfactory rating under the quality control review programme of the Institute of Chartered Accountants of Pakistan, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the Company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the Institute of Chartered Accountants of Pakistan.
24. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard.
25. We confirm that all other material principles contained in the Code have been complied with.
Ch. Zahoor AhmedChief Executive
Lahore: April 3, 2009
33Annual Report 2008
Review Report To The Members
On Statement Of Compliance With The Best Practices Of Code Of Corporate Governance
We have reviewed the Statement of Compliance with the best practices contained in the Code of Corporate Governance prepared by the Board of Directors of THE PAKISTAN GENERAL INSURANCE COMPANY LIMITED (“the Company”) to comply with the relevant Listing Regulations of Karachi, Lahore and Islamabad Stock Exchanges in Pakistan where the Company is listed.
The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors of the Company. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether the Statement of Compliance reflects the status of the Company's compliance with the provisions of the Code of Corporate Governance and report if it does not. A review is limited primarily to enquiries of the Company personnel and review of various documents prepared by the Company to comply with the Code.
As part of our audit of financial statements we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We have not carried out any special review of the internal control system to enable us to express an opinion as to whether the Board's statement on internal controls covers all controls and the effectiveness of such internal controls.
Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Company's compliance in all material respects, with the best practices contained in the Code of Corporate Governance as applicable to the Company for the year ended December 31, 2008.
KAMRAN & CO. M. YOUSUF ADIL SALEEM & CO.(Chartered Accountants) (Chartered Accountants)
Lahore. April 3, 2009 Lahore. April 3, 2009
The Pakistan General Insurance Company Limited34
We have audited the annexed financial statements comprising of:
(i) Balance sheet;
(ii) Profit and loss account;
(iii) Statement of changes in equity;
(iv) Cash flow statement;
(v) Statement of premiums;
(vi) Statement of claims;
(vii) Statement of expenses and
(viii) Statement of investment income
of THE PAKISTAN GENERAL INSURANCE COMPANY LIMITED (“the Company”) as at December 31,
2008 together with notes forming part thereof, for the year then ended.
It is the responsibility of the Company's management to establish and maintain a system of internal
control, and prepare and present the financial statements in conformity with the International
Financial Reporting Standards as applicable in Pakistan and the requirements of the Insurance
Ordinance, 2000 (XXXIX of 2000) and the Companies Ordinance, 1984 (XLVII of 1984). Our
responsibility is to express an opinion on these statements based on our audit.
The financial statements of the Company as at December 31, 2007 were audited solely by M/s Kamran
& Co., Chartered Accountants whose auditors' report dated March 08, 2008, expressed unqualified
opinion on the financial statements.
Except as stated in paragraph (a) below, we conducted our audit in accordance with the International
Standards on Auditing as applicable in Pakistan. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting policies and
significant estimates made by management, as well as, evaluating the overall financial statements
presentation. We believe that our audit provides a reasonable basis for our opinion and, after due
verification, we report that-
(a) As per accounting policy for staff retirement benefits the Company is required to establish
and operate a funded provident fund scheme and made monthly contributions at the rate of 10% of
basic salary. In contradiction with the said accounting policy, the Company has not made provision for
staff retirement benefits (please refer to note 7.1 to the financial statements). In absence of detailed
working in this respect, we were unable to determine the amount of provision required on account of
employee retirement benefits;
Auditors’ Report To The Members
35Annual Report 2008
In our opinion-
(b) proper books of accounts have been kept by the Company as required by the Insurance
Ordinance, 2000 and the Companies Ordinance, 1984;
(c) the financial statements together with the notes thereon have been drawn up in
conformity with the Insurance Ordinance, 2000 and the Companies Ordinance, 1984, and
accurately reflect the books and records of the Company and are further in accordance
with the accounting policies consistently applied, except for the change in accounting
policy as stated in note 3.5.22 to the financial statements with which we concur;
(d) The financial statements together with the notes thereon except for the effects of the
matter stated in paragraph (a) above, as might have been determined to be necessary
had we been provided with the required information, present fairly in all material
respects the state of the Company's affairs as at December 31, 2008 and of the profit, its
cash flow and statement of changes in equity for the year then ended, in accordance with
International Financial Reporting Standards as applicable in Pakistan, and the
information required to be disclosed by the Insurance Ordinance, 2000 and the
Companies Ordinance, 1984; and
(e) No Zakat was deductible at source under Zakat and Ushr Ordinance, 1980 (XVIII of 1980).
KAMRAN & CO. M. YOUSUF ADIL SALEEM & CO.(Chartered Accountants) (Chartered Accountants)
Lahore. April 3, 2009 Lahore. April 3, 2009
Auditors’ Report to the Members
The Pakistan General Insurance Company Limited36
508,998,390 438,364,035
AS AT DECEMBER 31, 2008
Balance Sheet
restated
2008 2007
EQUITY AND LIABILITIES Note Rupees Rupees
Share capital and reserves
Authorized share capital
30,000,000 (2007: 30,000,000) ordinary shares of Rs. 10 each 300,000,000
300,000,000
Issued, subscribed and paid-up share capital 4 200,000,000
200,000,000
Un-appropriated profit 2,367,429
18,893,998
General reserves 65,000,000
25,000,000
267,367,429
243,893,998
Surplus on revaluation of fixed assets 5 16,848,983
33,117,583
Underwriting provisions
Provision for outstanding claims (including IBNR) 8,585,317
12,136,933
Provision for unearned premium 109,614,056
101,112,495
Commission income unearned 16,335,867
11,008,202
134,535,240
124,257,630
Deferred liability
Deferred taxation 6 11,206,542
8,952,108
Creditors and accruals
Amounts due to other insurers / reinsurers 20,909,068 15,696,944 Accrued expenses 1,004,273
678,415
Other creditors 7 14,617,894
9,011,856
Current portion of liabilities against assets subject to finance lease 8 992,952
1,694,762
37,524,187
27,081,977
Other liabilities
Liabilities against assets subject to finance lease 8 141,009
1,060,739
Advance received against sale of land 9 41,375,000
41,516,009 1,060,739
TOTAL LIABILITIES 224,781,978 161,352,454
TOTAL EQUITY AND LIABILITIES
CONTINGENCIES AND COMMITMENTS 10
CH. ZAHOOR AHMEDCH. MANZOOR AHMED NASIR ALI CH. MUHAMMAD SALEEM
CHIEF EXECUTIVECHAIRMAN DIRECTOR DIRECTOR
The annexed notes from 1 to 34 form an integral part of these financial statements.
37Annual Report 2008
AS AT DECEMBER 31, 2008
Balance Sheet
restated
2008 2007
ASSETS Note Rupees Rupees
Cash and bank deposits
Cash and other equivalents 80,635
6,462,779
Current and other accounts 1,390,437
69,062,853
Deposits maturing within 12 months 31,508,000
30,508,000
Deposits maturing after 12 months 15,000,000
-
47,979,072
106,033,632
Loans - unsecured; considered good
To employees 98,648
123,962
Investments 11 19,302,964
15,862,123
Investment properties 12 155,193,290
47,127,052
Current assets - others
Premiums due but unpaid - net - unsecured 13 51,019,037
29,943,398
5,818,755
5,740,979
15,074,049
12,066,829
Accrued investment income 4,023,023
1,915,642
Reinsurance recoveries against outstanding claims 5,383,256 9,612,497
Taxation - payments less provision 14 656,383 985,686 Deferred commission expense 12,429,204 7,558,446 Prepaid reinsurance premium ceded 50,191,580
47,384,433
Sundry receivables 15 4,894,288
2,884,878
149,489,575
118,092,788
Non current assets held for sale 16 42,000,000
-
Fixed assets
Tangible fixed assets
Owned
- land and buildings 68,453,932
123,034,409
- furniture, fixtures and office equipment 5,482,221
5,900,383
- vehicles 16,304,603
15,445,257
90,240,756 144,380,049Assets subject to finance lease
- vehicles 4,694,085 6,744,429
17 94,934,841 151,124,478
TOTAL ASSETS
The annexed notes from 1 to 34 form an integral part of these financial statements.
Premium and claim reserves retained by cedants
Amounts due from other insurers / reinsurers - unsecured
508,998,390 438,364,035
CH. ZAHOOR AHMEDCH. MANZOOR AHMED NASIR ALI CH. MUHAMMAD SALEEM
CHIEF EXECUTIVECHAIRMAN DIRECTOR DIRECTOR
The Pakistan General Insurance Company Limited38
restated
2008 2007
Note
Revenue Account
Net premium revenue 38,409,451
21,855,605
17,082,412
14,520,161
(3,785)
91,863,844
76,221,677
Net claims (10,200,399)
(5,183,424)
(2,867,346)
(2,295,403)
(27,894)
(20,574,466)
(17,092,611)
Expenses (13,672,792)
(6,646,124)
(3,110,745)
(3,402,279)
-
20 (26,831,940)
(18,676,953)
Net commission 6,942,362
1,200,360
(3,031,021)
1,510,875
-
6,622,576
9,993,820
Underwriting result 21,478,622
11,226,417
8,073,300
10,333,354
(31,679)
51,080,014
50,445,933
Investment (loss) / income (1,346,842)
2,605,606
Rental income 3,420,000
1,770,000
Other income 11,259
762,163
Loss on impairment of goodwill 18 -
(3,260,044)
Finance cost 19 (1,213,417)
(1,708,745)
General and administration expenses 21 (26,546,120)
(24,920,953)
(25,675,120)
(24,751,973)
Profit before tax 25,404,894
25,693,960
Provision for taxation 22 (3,134,985) (1,151,055)
Profit after tax 22,269,909
24,542,905
Profit and loss appropriation account
Balance at beginning of the year 18,893,998
12,084,197
Profit after tax for the year 22,269,909
24,542,905
Transfer to general reserves (40,000,000)
(19,000,000)
Incremental depreciation on revalued assets 1,203,522
1,266,896
Balance at end of the year 2,367,429 18,893,998
Earnings per share - basic and diluted 27 1.11 1.23
The annexed notes from 1 to 34 form an integral part of these financial statements.
Aggregate
-------------- Rupees ------------------------------------------------ Rupees ------------------------------------
Fire and
property
damage
Marine,
aviation and
transport
Motor act Miscellaneous Treaty
For the year ended December 31, 2008Profit And Loss Account
CH. ZAHOOR AHMEDCH. MANZOOR AHMED NASIR ALI CH. MUHAMMAD SALEEM
CHIEF EXECUTIVECHAIRMAN DIRECTOR DIRECTOR
39Annual Report 2008
Statement of Changes of EquityFor the year Ended December 31, 2008
restated
120,000,000
6,000,000
14,097,275
140,097,275
-
-
(2,013,078)
(2,013,078)
Balance as at December 31, 2006 - as restated 120,000,000
6,000,000
12,084,197
138,084,197
80,000,000
-
-
80,000,000
Profit for the year - as restated -
-
24,542,905
24,542,905
Transferred to general reserves -
19,000,000
(19,000,000)
-
-
-
1,266,896
1,266,896
Balance as at December 31, 2007 200,000,000
25,000,000
18,893,998
243,893,998
Profit for the year -
-
22,269,909
22,269,909
Transferred to general reserves - 40,000,000 (40,000,000) -
- - 1,203,522 1,203,522
Balance as at December 31, 2008 200,000,000 65,000,000 2,367,429 267,367,429
The annexed notes from 1 to 34 form an integral part of these financial statements.
Shares issued to shareholders of Pak Equity
Insurance Company Limited ("PEI") under scheme
of arrangement for merger
Transferred to un-appropriated profit on account
of incremental depreciation arising on surplus on
revaluation of tangible fixed assets (net of
deferred tax)
Transferred to un-appropriated profit on account
of incremental depreciation arising on surplus on
revaluation of tangible fixed assets (net of
deferred tax)
Change in accounting policy for revenue in respect
of administrative surcharge (net of income tax Rs.
1,083,965) Note 3.5.22
------------------------------------- Rupees -------------------------------------
Balance as at December 31, 2006 - as previously
reported
Share
capital
General
reserves
Un-appropriated
profit Total
CH. ZAHOOR AHMEDCH. MANZOOR AHMED NASIR ALI CH. MUHAMMAD SALEEM
CHIEF EXECUTIVECHAIRMAN DIRECTOR DIRECTOR
The Pakistan General Insurance Company Limited40
Cash Flow StatementFor the year Ended December 31, 2008
2008 2007
Rupees Rupees
Operating cash flows
a) Underwriting activities
Premiums received 174,808,429
151,927,580
Reinsurance premiums paid (98,525,883)
(78,013,679)
Claims paid (83,238,871)
(7,226,989)
Reinsurance and other recoveries received / (paid) 60,534,883
(24,477,648)
Commissions paid (32,345,730)
(18,250,939)
Commissions received 39,425,213
23,778,504
Net cash flow from underwriting activities 60,658,041
47,736,829
b) Other operating activities
Income tax paid (551,248)
(3,895,590)
General management expenses paid (37,896,978)
(17,531,566)
Loan repayments received 25,314
2,352
Other operating payments (2,711,982)
(19,968,669)
Other operating receipts 5,606,038
18,708,712
Net cash flow from other operating activities (35,528,856)
(22,684,761)
Total cash flow from all operating activities (a+b) 25,129,185 25,052,068
Investment activities
Profit / return received 976,585
2,605,606
Dividend received 35,425
- Rental income 3,420,000
1,770,000
Miscellaneous income 4,968
12,163
Acquisition of PEI - net of cash -
(67,040,498)
Payment for investments (7,907,074)
(8,485,723)
Proceeds from disposal of investments 41,375,000
-
Fixed capital expenditure (118,778,626)
(8,046,898)
Proceeds from disposal of fixed assets 240,000
25,000,000
Total cash out flow from investing activities (80,633,722)
(54,185,350)
Financing Activities
Share capital received -
80,000,000
Financial charges paid (928,483)
(1,708,745)
Repayment of finance lease liabilities (1,621,540)
(1,289,790)
Total cash (out) / in flow from financing activities (2,550,023)
77,001,465
Net cash (out) / in flow from all activities (58,054,560) 47,868,183
Cash at beginning of the year 106,033,632 58,165,449
Cash at end of the year 47,979,072 106,033,632
41
restated
2008 2007
RECONCILIATION TO PROFIT AND LOSS ACCOUNT Rupees Rupees
Operating cash flows 25,129,185
25,052,068
Depreciation expense (9,603,238)
(8,703,922)
Loss on impairment of goodwill -
(3,260,044)
Loss on remeasurement of investments (4,466,233)
-
Provision for doubtful debts (5,836,920)
(900,650)
Finance cost (928,483)
(1,708,745)
Investment income 3,083,966
2,605,606
Rental income 3,420,000
1,770,000
Dividend income 35,425
-
Other income 11,259 762,163
Decrease in assets other than cash 35,101,012 59,816,961 Decrease in liabilities (23,676,064) (50,890,532)
Profit after taxation as per profit and loss account 22,269,909
24,542,905
DEFINITION OF CASH
Cash for the purposes of the statement of cash flows consists of:
Cash and other equivalents 80,635
6,462,779
Current and other accounts 1,390,437
69,062,853
Deposits maturing within 12 months 31,508,000
30,508,000
Deposits maturing after 12 months 15,000,000
-
47,979,072
106,033,632
The annexed notes from 1 to 34 form an integral part of these financial statements.
Cash Flow StatementFor the year Ended December 31, 2008
CH. ZAHOOR AHMEDCH. MANZOOR AHMED NASIR ALI CH. MUHAMMAD SALEEM
CHIEF EXECUTIVECHAIRMAN DIRECTOR DIRECTOR
The Pakistan General Insurance Company Limited42
CH
. ZAH
OO
R A
HM
AD
CH
. M
AN
ZO
OR A
HM
ED
NASI
R A
LICH
. M
UH
AM
MAD
SALE
EM
CH
IEF E
XECU
TIV
ECH
AIR
MAN
D
IRECTO
R
DIR
ECTO
R
Stat
emen
t of
Pre
miu
ms
For
the
Year
end
ed D
ecem
ber
31,
2008
Busi
ness
und
erw
ritt
en in
side
Pak
ista
n
rest
ated
Prem
ium
Rein
sura
nce
Clas
sW
ritt
enEa
rned
Open
ing
Clos
ing
Open
ing
Clos
ing
2008
2007
Dire
ct Fire
and
pro
pert
y da
mag
e91
,144
,981
52
,687
,307
52,4
90,5
34
91
,341
,754
53
,169
,381
27,6
64,2
94
27
,901
,372
52,9
32,3
0338
,409
,451
34,7
44,5
05
Mar
ine,
avi
atio
n an
d tr
ansp
ort
44,0
39,0
17
23,3
66,2
49
24
,049
,900
43,3
55,3
66
22,3
88,3
43
11
,127
,872
12,0
16,4
54
21
,499
,761
21,8
55,6
0515
,566
,768
Mot
or a
ct20
,693
,534
8,
730,
182
11
,574
,009
17,8
49,7
07
767,
295
-
-
76
7,29
517
,082
,412
15,3
00,0
97
Misc
ella
neou
s40
,210
,394
16
,328
,757
21,4
99,6
13
35,0
39,5
38
22
,200
,864
8,59
2,26
7
10
,273
,754
20,5
19,3
7714
,520
,161
10,6
08,3
38
Tota
l19
6,08
7,92
6
101,
112,
495
109,
614,
056
187,
586,
365
98,5
25,8
83
47,3
84,4
33
50,1
91,5
80
95,7
18,7
3691
,867
,629
76,2
19,7
08
Trea
ty Non
prop
ortio
nal
(3,7
85)
--
(3,7
85)
--
--
(3,7
85)
1,96
9
Gran
d to
tal
196,
084,
141
101,
112,
495
109,
614,
056
187,
582,
580
98,5
25,8
8347
,384
,433
50,1
91,5
8095
,718
,736
91,8
63,8
4476
,221
,677
The
anne
xed
note
s fr
om 1
to 3
4 fo
rm a
n in
tegr
al p
art o
f the
se fi
nanc
ial s
tate
men
ts.
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
- Rup
ees
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
Net p
rem
ium
res
erve
Rein
sura
nce
prem
ium
cede
d
Rein
sura
nce
expe
nse
Unea
rned
pre
miu
m r
eser
ve
Prep
aid
rein
sura
nce
prem
ium
ced
ed
43
CH
. ZAH
OO
R A
HM
ED
CH
. M
AN
ZO
OR A
HM
ED
NASI
R A
LICH
. M
UH
AM
MAD
SALE
EM
CH
IEF E
XECU
TIV
ECH
AIR
MAN
D
IRECTO
R
DIR
ECTO
R
State
ment
of
Cla
ims
For
the Y
ear
ended D
ece
mber
31,
2008
Busi
nes
s unde
rwri
tten
insi
de P
akis
tan
Out
stan
ding
Cla
ims
Rei
nsur
ance
Rei
nsur
ance
and
oth
erR
eins
uran
ce
reco
veri
es in
res
pect
of
and
othe
r
Cla
ssou
tsta
ndin
g cl
aim
sre
cove
ries
Ope
ning
Clo
sing
O
peni
ngC
losi
ng
reve
nue
2008
2007
Dir
ect
41,4
53,1
405,
657,
282
3,74
2,23
839
,538
,096
31,3
18,5
464,
235,
483
2,25
4,63
429
,337
,697
10,2
00,3
998,
770,
112
19,0
79,0
075,
560,
187
2,91
7,06
716
,435
,887
13,8
28,7
815,
099,
940
2,52
3,62
2
11,2
52,4
63
5,18
3,42
4
4,23
6,83
6
Moto
r act
1,79
1,61
981
0,15
91,
726,
012
2,70
7,47
2(4
29,8
74)
185,
000
455,
000
(159
,874
)
2,86
7,34
6
2,04
3,51
0
Mis
cellaneous
16,6
57,9
7010
9,30
520
0,00
016
,748
,665
14,3
95,3
3692
,074
150,
000
14,4
53,2
62
2,29
5,40
3
1,60
0,33
6
Tota
l78
,981
,736
12,1
36,9
338,
585,
317
75,4
30,1
2059
,112
,789
9,61
2,49
7
5,38
3,25
6
54,8
83,5
48
20,5
46,5
72
16,6
50,7
94
Tre
aty
Non p
roport
ional
27,8
94-
-27
,894
--
--
27,8
94
441,
817
Gra
nd t
ota
l79
,009
,630
12,1
36,9
338,
585,
317
75,4
58,0
1459
,112
,789
9,61
2,49
7
5,38
3,25
6
54,8
83,5
48
20,5
74,4
66
17,0
92,6
11
Cla
ims
expe
nse
Out
stan
ding
Net
cla
ims
expe
nse
Rei
nsur
ance
and
othe
r
reco
veri
es
rece
ived
/
(pai
d)
Mari
ne,
avi
ati
on a
nd
transp
ort
Fir
e a
nd p
ropert
y
dam
age
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
- R
upee
s --
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
--
Cla
ims
paid
The
anne
xed
note
s fro
m 1
to 3
4 fo
rm a
n in
tegr
al p
art o
f the
se fi
nanc
ial s
tate
men
ts.
The Pakistan General Insurance Company Limited44
CH
. ZAH
OO
R A
HM
ED
CH
. M
AN
ZO
OR A
HM
ED
NASI
R A
LICH
. M
UH
AM
MAD
SALE
EM
CH
IEF E
XECU
TIV
ECH
AIR
MAN
D
IRECTO
R
DIR
ECTO
R
Busi
ness
und
erw
ritt
en in
side
Pak
ista
n
rest
ated
Com
mis
sion
Oth
erNe
t un
derw
riti
ng e
xpen
ses
Clas
sPa
id o
rDe
ferr
ed
Net
man
agem
ent
paya
ble
Ope
ning
Clos
ing
expe
nses
expe
nses
2008
2007
Dire
ct
Fire
and
pro
pert
y da
mag
e13
,107
,786
3,49
2,22
0
6,61
3,16
0
9,98
6,84
6
13,6
72,7
92
23
,659
,638
16,9
29,2
08
6,73
0,43
0
4,26
6,81
3
Mar
ine,
avi
atio
n an
d tr
ansp
ort
6,37
1,48
4
1,72
0,77
3
3,70
5,50
6
4,38
6,75
1
6,64
6,12
4
11,0
32,8
75
5,
587,
111
5,44
5,76
4
2,38
1,47
2
Mot
or a
ct2,
982,
199
1,
265,
891
1,
217,
069
3,
031,
021
3,
110,
745
6,
141,
766
-
6,14
1,76
6
2,64
1,39
7
Misc
ella
neou
s3,
261,
685
1,
079,
562
89
3,46
9
3,44
7,77
8
3,40
2,27
9
6,85
0,05
7
4,
958,
653
1,89
1,40
4
(656
,806
)
Tota
l25
,723
,154
7,55
8,44
6
12,4
29,2
04
20
,852
,396
26,8
31,9
40
47
,684
,336
27,4
74,9
72
20,2
09,3
64
8,
632,
876
Trea
ty
Non
prop
ortio
nal
-
-
-
-
-
-
-
-
50
,256
Gran
d to
tal
25,7
23,1
54
7,
558,
446
12
,429
,204
20,8
52,3
96
26
,831
,940
47,6
84,3
36
27
,474
,972
20,2
09,3
64
8,
683,
132
The
anne
xed
note
s fr
om 1
to
34 fo
rm a
n in
tegr
al p
art
of t
hese
fina
ncia
l sta
tem
ents
.
For
the
Year
end
ed D
ecem
ber
31,
2008
Stat
emen
t of
Exp
ense
s
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
- Rup
ees
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
Unde
rwri
ting
expe
nses
Com
mis
sion
from
rein
sure
rs
45Annual Report 2008
Statement of Investment IncomeFor the Year ended December 31, 2008
2008 2007
Note Rupees Rupees
Income from non - trading investments
Available for sale
Dividend income 35,425
-
Loss on revaluation of available for sale investments - quoted 11.1 (4,466,233)
-
Less: investment related expenses (3,415)
-
Held to maturity
Return on deposits and other securities 3,087,381
2,605,606
Net investment (loss) / income (1,346,842)
2,605,606
The annexed notes from 1 to 34 form an integral part of these financial statements.
CH. ZAHOOR AHMEDCH. MANZOOR AHMED NASIR ALI CH. MUHAMMAD SALEEM
CHIEF EXECUTIVECHAIRMAN DIRECTOR DIRECTOR
The Pakistan General Insurance Company Limited46
1 STATUS AND NATURE OF BUSINESS
1.1
1.2
2 BASIS OF PRESENTATION
3
3.1 Statement of compliance
3.2 Initial application of a standard or an interpretation
3.3 Standards, amendments and interpretations to published approved accounting standards effective in current year
3.3.1
3.3.2
Notes to the Financial StatementsFor The Year Ended December 31, 2008
The Pakistan General Insurance Company Limited ("the Company") was incorporated in Pakistan as a public limited
company on July 26, 1947 under the Companies Act, 1913 (repealed by Companies Ordinance, 1984) and is quoted on
Karachi Stock Exchange (Guarantee) Limited, Lahore Stock Exchange (Guarantee) Limited and Islamabad Stock Exchange
(Guarantee) Limited on July 25, 1995. The Company is engaged in providing general insurance services in spheres of Fire
and property damage, Marine, aviation and transport, Motor act and Miscellaneous. The registered office of the Company
is situated at Cooperative Bank House, 5-Bank Square, Lahore.
These financial statements are presented in Pak Rupees, which is the Company's functional and presentation currency.
These financial statements have been prepared in accordance with the format prescribed under Securities and Exchange
Commission (Insurance) Rules, 2002 ["the SEC (Insurance) Rules, 2002"].
The following standards, amendments and interpretations to published approved accounting standards are mandatory for
the Company's accounting periods beginning on or after January 01, 2009:
IFRS 8 "Operating Segments" (effective for annual periods beginning on or after January 01, 2009) introduces the
“management approach” to segment reporting. IFRS 8 will require a change in the presentation and disclosure of
segment information based on the internal reports that are regularly reviewed by the Company’s “chief operating
decision maker” in order to assess each segment’s performance and to allocate resources to them. Currently the
Company presents segment information in respect of its business and geographical segments. This standard will have no
effect on the Company’s reported total profit or loss or equity.
SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared in accordance with the requirements of the Insurance Ordinance 2000,
the SEC (Insurance) Rules, 2002, the Companies Ordinance, 1984 ("the Ordinance") and directives issued by the Securities
and Exchange Commission of Pakistan ("SECP"), and approved accounting standards as applicable in Pakistan. Approved
accounting standards comprise of such International Financial Reporting Standards ("IFRSs") as notified under the
provisions of the Ordinance. Wherever, the requirements of the Insurance Ordinance, 2000, the SEC (Insurance) Rules,
2002, the Ordinance or directives issued by SECP differ with the requirements of these standards, the requirements of
the Insurance Ordinance, 2000, the SEC (Insurance) Rules, 2002, the Ordinance or the requirements of the said directives
take precedence.
Amendment to IAS 1 - Presentation of Financial Statements "Capital Disclosures" introduces new disclosures about the
level of an entity's capital and how it manages capital. Adoption of this amendment has only resulted in additional
disclosures given in note 24 to the financial statements.
During the year ended December 31, 2008, IFRIC 14 “IAS 19 – The Limit on Defined Benefit Asset, Minimum Funding
Requirements and their interaction” is effective from the Company’s annual periods beginning on or after January 01,
2008. IFRIC 14 provides guidance on assessing the limit in IAS 19 "Employee Benefits" on the amount of the surplus that
can be recognized as an asset. It also explains how the pension asset or liability may be affected by a statutory or
contractual minimum funding requirement. The Company has considered the implication of interpretation on the surplus
that can be recognized as an asset.
There are other new standards and interpretations to published approved accounting standards that are mandatory for
accounting periods beginning on or after January 01, 2008 but are considered not to be relevant or do not have any
significant impact on the Company's financial statements.
Standards, amendments and interpretations to published approved accounting standards that are relevant but not
yet effective
47Annual Report 2008
3.3.3
Revised IAS 23 - Borrowing costs (effective 1 January 2009)
Amended IAS 27 - Consolidated and Separate Financial Statements (effective 1 July 2009)
IAS 29 - Financial Reporting in Hyperinflationary Economies (effective 28 April 2008)
Amendments to IAS 32 - Financial instruments (effective 1 January 2009)
Amendments to IAS 39 - Financial Instruments: Recognition and Measurement (effective 1 July 2009)
Amendment to IFRS 2 - Share-based Payment (effective 1 January 2009)
Revised IFRS 3 - Business Combinations (effective 1 July 2009)
IFRIC 13 - Customer Loyalty Programmes (effective 1 July 2008)
IFRIC 16 - Hedge of Net Investment in a Foreign Operation (effective 1 October 2008)
IFRIC 17 - Distribution of Non-Cash Assets to Owners (effective 1 July 2009)
IFRIC 18 - Transfer of Assets from Customers (effective 1 July 2009)
3.4 Basis of measurement
- revaluation of certain fixed assets at fair value
- financial instruments at fair value
3.5 The principle accounting policies adopted are set out below:
3.5.1 Significant estimates
IAS 1 “Presentation of Financial Statements” effective for annual periods beginning on or after January 01, 2009 revises
the existing IAS 1 and requires apart from changing the names of certain components of financial statements,
presentation of transactions with owners in statement of changes in equity and with non-owners in comprehensive
Income Statement. Adoption of the above standard will only effect the presentation of financial statements.
IFRS 7 "Financial Instruments: Disclosures" (effective for annual periods beginning on or after April 28, 2008) supersedes
IAS 30 "Disclosures in the Financial Statements of Company's and Similar Financial Institutions" and the disclosure
requirements of IAS 32 "Financial Instruments: Presentation". The application of the standard is not expected to have
significant impact on the Company's financial statements other than increase in disclosures.
There are other amendments resulting from annual improvement project initiated by International Accounting Standards
Board in May 2008, specifically in IAS 1 "Presentation of Financial Statements", IAS 19 "Employee Benefits", IAS 28
"Investment in Associates", IAS 36 "Impairmentof Assets" and IAS 38 "Intangible Assets" that are considered relevant to the
Company’s financial statements. The management is in the process of evaluating the impact of these changes on the
Company's financial statements.
Standards, amendments and interpretations to published approved accounting standards that are not relevant and
not yet effective
The following standards, amendments and interpretations of approved accounting standards, effective for accounting
periods beginning as mentioned there against are either not relevant to the Company's current operations or are not
expected to have significant impact on the Company's financial statements other than certain additional disclosures:
These financial statements have been prepared under the historical cost convention, modified by:
The preparation of financial statements in conformity with IFRSs require management to make judgments, estimates and
assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The
estimates and associated assumptions are based on historical experience and various other factors that are believed to
be reasonable under circumstances, results of which form the basis of making judgment about carrying value of assets
and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which estimates are revised if the revision affects only that period, or in the period of the
revision and future periods, if the revision affects both current and future periods.
Judgments made by management in the application of IFRSs that have significant effect on the financial statements and
estimates with a significant risk of material adjustment in the next years are disclosed in the ensuing paragraphs.
Notes to the Financial StatementsFor the Year ended December 31, 2008
The Pakistan General Insurance Company Limited48
Fixed assets
Investment properties
Taxation
Provision for outstanding claims including incurred but not reported (IBNR)
3.5.2 Provision for outstanding claims including incurred but not reported (IBNR)
3.5.3 Provision for unearned premium
3.5.4 Commission income unearned
3.5.5 Amount due to / from other insurers / reinsurers
3.5.6 Creditors, accruals and provisions
The Company reviews the useful lives of fixed assets on regular basis. Any change in the estimates in future years might
affect the carrying amounts of the respective items of fixed assets with corresponding effect on the depreciation charge
and impairment.
The Company reviews the useful lives of investment properties on regular basis. Any change in the estimates in future
years might affect the carrying amounts of the respective items of investment properties with corresponding effect on
the depreciation charge and impairment.
The Company takes into account the current income tax law and decisions taken by appellate authorities. Instances
where the Company's view differs from the view taken by the income tax department at the assessment stage and the
Company considers that its view on items of material nature is in accordance with the law, the amounts are shown as
contingent liabilities.
The Company recognize liability in respect of all claims incurred upto the balance sheet date which is measured by
assessing and discounted value of the expected future claim settlement payments.
The Company recognizes liability in respect of all claims incurred upto the balance sheet date which is measured at the
undiscounted value of the expected future payments. The claims are considered to be incurred at the time of the
incident giving rise to the claim except as otherwise expressly indicated in an insurance contract. The liability for claims
includes amounts in relation to unpaid reported claims, claims incurred but not reported (IBNR) and expected claims
settlement costs.
Provision for liability in respect of unpaid reported claims is made on the basis of individual case estimates. These are
accounted for based on the management's best estimate which takes into account the past trends, expected future
patterns of reporting claims actually reported subsequent to the balance sheet date.
Provision for unearned premium represents the portion of premium written relating to the unexpired period of coverage
and is recognized as a liability by the Company. The Company has opted for 1/24th method and maintained its reserves
for unexpired risk in accordance with regulation 8(4)(b) of the accounting regulations for non life insurance companies
issued by SECP.
Unearned commission income from the reinsurers represents the portion of income relating to the unexpired period of
coverage and is recognized as a liability. The Company uses 1/24th method to calculate the provision of unearned
commission income under the relevant provisions of S.R.O # 938 of SEC (insurance) Rules, 2002.
Amount due to / from other insurers / reinsurers are carried at cost less provision for impairment. Cost represents the
fair value of the consideration to be paid / received in future for the services received / rendered.
Liabilities for creditors and other amounts payable are carried at cost which is the fair value of the consideration to be
paid in the future for the goods and / or services received, whether or not billed to the Company.
Provisions are recognized in the balance sheet when the Company has a present, legal or constructive obligation as a
result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation, and a reliable estimate of the amount of obligation can be made. However, provisions are reviewed at
each balance sheet date and adjusted to reflect the current best estimate.
Notes to the Financial StatementsFor the Year ended December 31, 2008
49Annual Report 2008
Notes to the Financial StatementsFor the Year ended December 31, 2008
3.5.7 Staff retirement benefits
3.5.8 Taxation
Current
Deferred
3.5.9 Leases
3.5.10 Cash and cash equivalents
The Company operates a funded provident fund scheme for all permanent employees. Monthly contribution is made by
the Company at the rate of 10% of basic salary and the same is charged to profit and loss account.
The charge for current taxation is based on taxable income at the current rate of taxation after taking into account
applicable tax credit, rebates and exemption available if any or minimum taxation at the rate of one-half percent of the
premium whichever is higher. However, for income covered under final tax regime, taxation is based on applicable tax
rates under such regime.
Deferred tax is accounted for using liability method in respect of all temporary differences arising from differences
between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in
the computation of the taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary
differences and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available
against which the deductible temporary differences, unused tax losses and tax credits can be utilized.
Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse based on
tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited
in the income statement, except in the case of items credited or charged to equity in which case it is included in equity.
Deferred tax is provided on temporary differences arising on investments in associates stated under equity method of
accounting.
Lease are classified as finance lease whenever the terms of the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are recognized as assets of the Company at their fair value at the inception of the lease
or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in
the balance sheet as liabilities against assets subject to finance lease. Lease payments are classified as current and long
term depending upon the timing of payment. Lease payments are apportioned between finance charge and reduction of
the liabilities against assets subject to finance lease, so as to achieve a constant rate of interest on the remaining
balance of the liability. Finance charges are charged to profit and loss account, unless they are directly attributable to
qualifying assets, in which case they are capitalized in accordance with the company's general policy on the borrowing
costs.
Rentals payable under operating leases are charged to profit and loss account on the straight line basis over the term of
the relevant lease. Benefits received and receivable as an incentive to enter in to an operating lease are also spread on a
straight line basis over the lease term.
Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of cash flow statement, cash and
cash equivalents comprise cash in hand, deposits with banks, stamps in hand and finances under mark-up arrangements.
In the balance sheet, finance under mark-up arrangements are included in current liabilities.
The Pakistan General Insurance Company Limited06 The Pakistan General Insurance Company Limited50
Notes to the Financial StatementsFor the Year ended December 31, 2008
3.5.11 Investments
Recognition
- Held to maturity
- Available for sale
- Held for trading
Measurement
Held to maturity
Available for sale
Financial assets at fair value through profit or loss
Derecognition
3.5.12 Investment properties
3.5.13 Premium due but unpaid
Available for sale investments are those non-derivative investments that are designated as available for sale or are not
classified in any other category. These are primarily those investments that are intended to be held for an undefined
period of time or may be sold in response to the need for liquidity or change in interest rates, exchange rates equity
price are classified as available for sale. The Company has stated these investments, classified as available for sale, at
lower of cost or market value; the requirements of IAS-39 have not been complied with, due to exemption granted to
insurance companies by SECP through S.R.O. # 938 in December 2002.
These financial assets are acquired principally for the purpose of generating profit from short-term fluctuations in price
or are part of a portfolio for which there is a recent actual pattern of short-term profit taking and are included in
current assets. These investments are designated at fair value through profit or loss at inception. There are initially
measured at fair value and changes on re-measurement are taken to profit and loss account.
All investments are de-recognized when the rights to receive cash flows from the investments have expired or have been
transferred and the Company has transferred substantially all risks and rewards of ownership.
Investment property, which is property held to earn rentals and / or for capital appreciation, is valued using the cost
method i.e. at cost less any accumulated depreciation and any identified impairment loss.
Depreciation on buildings is charged to income on the reducing balance method so as to write off the depreciable
amount of building over its estimated useful life at the rates specified in note 12 to the financial statements.
Depreciation on additions to investment property is charged from the month in which a property is acquired or
capitalized while no depreciation is charged for the month in which the property is disposed off.
These are recognized at cost, which is the fair value of the consideration given less provision for impairment and / or
doubtful debts, if any.
All investments are initially recognized at cost, being the fair value of the consideration given and include the
transaction cost. These are classified into the following categories:
Held to maturity investments are financial assets with fixed or determinable payments and with fixed maturity that the
management has the positive intent and ability to hold to maturity. Held to maturity investments are initially measured
at cost and at subsequent reporting dates measured at amortized cost using the effective yield method.
Any premium paid or discount availed on acquisition of held to maturity investments is deferred and included in the
income for the period on a straight-line-basis over the term of the investment using the effective yield.
67Annual Report 2008 51Annual Report 2008
Notes to the Financial StatementsFor the Year ended December 31, 2008
3.5.14 Non current assets held for sale
3.5.15 Prepaid reinsurance expense
3.5.16 Fixed assets
3.5.17 Assets subject to finance lease
3.5.18 Impairment
Repair and maintenance costs are charged to income during the period in which they are incurred.
Depreciation is charged to income applying the reducing balance method over estimated useful life at the rates specified
in note 17 to the financial statements. Full month's depreciation is charged on additions, while no depreciation is
charged in the month of disposal of the assets. The useful lives and depreciation methods are reviewed on periodic
intervals to ensure that the methods and period of depreciation charged during the year are consistent with the
expected pattern of economic benefits from items of tangible fixed assets.
Subsequent costs are recognized as part of asset, only when it is probable that future economic benefits associated with
the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance
costs are charged to income during the period in which they are incurred.
Gains or losses on disposal of assets, if any, are included in profit and loss account for the year.
Surplus arising on revaluation is credited to surplus on revaluation of property, plant and equipment. The surplus on
revaluation of property, plant and equipment to the extent of incremental depreciation charged on the related assets is
transferred by the Company to its unappropriated profits.
Assets subject to finance lease in respect of additions and disposals during the year, depreciation is charged from the
month of acquisition and upto the month preceding the disposal respectively.
Non current assets and disposals groups are classified as held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through continuing use. This condition is met only when the sale is
highly probable and the assets ( or disposal group) is available for immediate sale in its present condition. Management
must be committed to sale which should be expected to qualify for recognition as a completed sale within one year from
the date of classification.
Non current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying
amount and the fair value less costs to sell.
Premium for reinsurance contracts operative on a proportional basis is recorded as a liability on attachment of the
underlying risks reinsured. The reinsurance for proportional reinsurance contracts, the reinsurance expense is recognized
in accordance with the pattern of recognition of premium income to which they relate.
Fixed assets are stated at historical cost except free hold land and building on free hold land, which are stated at re-
valued amount, less accumulated depreciation and impairment in value, if any. Cost includes borrowing cost as referred
to in accounting policy for borrowing cost.
Assets' residual values, if significant and their useful lives are reviewed and adjusted, if appropriate, at each balance
sheet date.
When parts of an item of fixed assets have different useful lives, they are recognized as a separate items of fixed assets.
Assets subject to finance lease are depreciated over their expected useful lives on the same basis as owned assets.
Assets subject to finance lease are depreciated over their expected useful lives on the same basis as owned assets.
The carrying amount of the assets is reviewed at each balance sheet date to determine whether there is any indication
of impairment of any asset or a group of assets. If such indication exists, the recoverable amount of such assets is
estimated and the impairment losses are recognized in the profit and loss account currently.
The Pakistan General Insurance Company Limited06 The Pakistan General Insurance Company Limited52
Notes to the Financial StatementsFor the Year ended December 31, 2008
For goodwill, the recoverable amount is estimated at each balance sheet date.
3.5.19 Financial instruments
3.5.20 Offsetting of financial assets and financial liabilities
3.5.21 Segment reporting
Marine insurance provides coverage against cargo risk, war risk and damages occurring in inland transit.
Motor insurance provides comprehensive car coverage and indemnity against third party loss.
3.5.22 Revenue recognition
Premium income
a) For direct business, evenly over the period of the policy.
b) For proportional reinsurance business, evenly over the period of underlying insurance policies.
Financial assets and financial liabilities are offset and the net amount is reported in the financial statements only when
there is a legally enforceable right to set off the recognized amount and the Company intends either to settle on a net
basis or to realize the assets and to settle the liabilities simultaneously.
A business segment is a distinguishable component of the Company that is engaged in providing services that are subject
to risks and returns that are different from those of other business segments. The Company accounts for segment
reporting of operating results using the classes of business as specified under the Insurance Ordinance, 2000 and the SEC
(Insurance) Rules, 2002 as the primary reporting format.
The Company has four primary business segments for reporting purposes namely fire, marine, motor and miscellaneous.
The perils covered under fire insurance include damages caused by fire, riot and strike, explosion, earthquake,
atmospheric damage, flood, electric fluctuation and impact.
Miscellaneous insurance provides cover against burglary, loss of cash in safe and cash in transit, personal accident,
money, engineering losses and other covers.
Assets, liabilities and capital expenditures that are directly attributable to segments have been assigned to them. Those
assets and liabilities which can not be allocated to a particular segment on a reasonable basis are reported as
unallocated corporate assets and liabilities.
Provisions for impairment are reviewed at each balance sheet date and adjusted to reflect the current best estimates.
Changes in the provisions are recognized as income/ expense currently.
Financial assets and financial liabilities are recognized at the time when the Company becomes a party to the
contractual provisions of the instrument and de-recognized when the Company loses control of contractual rights that
comprise the financial assets and in the case of financial liabilities when the obligation specified in the contract is
discharged, cancelled or expired. Any gain or loss on derecognition of the financial assets and financial liabilities is
included in the profit and loss account for the year.
Financial instruments carried on the balance sheet include cash and bank deposits, loans, investments, premiums due but
unpaid, amounts due from other insurers / reinsurers, accrued investment income, reinsurance recoveries against
outstanding claims, sundry receivables, provision for outstanding claims, amounts due to other insurers/reinsurers,
accrued expenses, other creditors and accruals, short-term borrowings and unclaimed dividends. The particular
recognition methods adopted are disclosed in the individual policy statements associated with each item.
Premium income under a policy is recognized over the period of insurance from the date of issue of the policy to which it
relates to its expiry as follows:
67Annual Report 2008 53Annual Report 2008
Notes to the Financial StatementsFor the Year ended December 31, 2008
Change in accounting policy
Return on investments
Miscellaneous income
Other revenues are recognized on accrual basis.
3.5.23 Premium deficiency reserve
3.5.24 Expenses of management
3.5.25 Commission
Commission expense
- Dividend income and entitlement of bonus shares are recognized when the Company's right to receive such dividend and
bonus shares is established.
- Gain / loss on sale of available for sale investments and investments at fair value through profit and loss - held for
trading are recognized in profit and loss account.
The Company maintains a provision in respect of premium deficiency for the class of business where the unearned
premium liability is not adequate to meet the expected future liability, after reinsurance, from claims and other
supplementary expenses expected to be incurred after the balance sheet date in respect of the unexpired policies in that
class of business at the balance sheet date. The movement in the premium deficiency reserve is recorded as an expense
/ income in profit and loss account for the year.
The management considers that the unearned premium reserve for all classes of business as at the year end is adequate
to meet the expected future liability after reinsurance, from claims and other expenses, expected to be incurred after
the balance sheet date in respect of policies in those classes of business enforce at the balance sheet date. Hence, no
reserve for the same has been made in these financial statements.
Expenses of management allocated to the underwriting business represent directly attributable expenses and indirect
expenses allocated to the various classes of business on the basis of gross premium revenue. Expenses not allocable to
the underwriting business are charged as administrative expenses.
Commission due on direct, faculative and treaty business and on reinsurance cessions are recognized in accordance with
the policy of recognizing premium revenue.
Where the pattern of incidence of risk varies over the period of policy, premium is recognized as revenue in accordance
with the pattern of the incidence of risk.
Premium income includes administrative surcharge that represents documentation and other charges recovered by the
Company from policy holders in respect of policies issued, at a rate of 5% of the premium restricted to a maximum of Rs.
2,000 per policy.
During the year, the Company has changed its accounting policy in relation to recognition of administrative surcharge. As
per the new policy, administrative surcharge is deferred and charged to profit and loss account as revenue in accordance
with the pattern of recognition of the insurance premium to which it relates. Previously the balance was charged to
profit and loss account at the time the policies are accepted.
Had there been no change in accounting policy, net earned premium of the Company for the year ended December 31,
2008 and equity as at December 31, 2008 would have been lower by Rs. 7.194 million and higher by Rs. 0.518 million
respectively. Please refer to note 28.
- Income from held to maturity investments is recognized on a time proportion basis taking into account the effective
yield on the investments.
The Pakistan General Insurance Company Limited06 The Pakistan General Insurance Company Limited54
Notes to the Financial StatementsFor the Year ended December 31, 2008
Commission income
3.5.26 Claims recoveries
3.5.27 Foreign currency
Gains and losses arising on retranslation are included in net profit or loss for the period.
3.5.28 Pakistan Reinsurance Company Limited ("PRCL") Retrocession
3.5.29 Zakat
3.5.30 Related party transactions
3.5.31 Dividend
2008 2007
Note Rupees Rupees
4 ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL
20,000,000 (2007: 20,000,000) ordinary shares of Rs. 10 each
fully paid in cash 4.3 200,000,000
200,000,000
4.1
4.2 The Company has no reserved shares for issue under option and sales contracts.
2008 2007
4.3 Reconciliation of number of ordinary shares
Balance at beginning of the year 20,000,000 12,000,000
Add: shares issued under the scheme of arrangement for merger with PEI - 8,000,000
Balance at end of the year 20,000,000 20,000,000
Dividend distribution to the Company's shareholders is recognized as a liability in the period in which the dividends are
approved.
The Company has only one class of ordinary shares which carry no right to fixed income. The holder of ordinary shares
are entitled to receive dividend as declared and entitled to vote at meetings of the Company.
Number of shares
Commission income from reinsurers is recognized at the time of issuance of the underlying insurance policy by the
Company. This income is deferred and brought to account as revenue in accordance with the pattern of recognition of
the reinsurance premium to which it relates. Profit commission, if any, which the Company may be entitled to under the
terms of reinsurance, is recognized on accrual basis.
Claim recoveries receivable from the reinsurers are recognized as an asset at the same time as the claims which give rise
to the right of recovery are recognized as a liability and are measured at the amount expected to be received.
Transactions in currencies other than Pakistani Rupees are recorded at the rates of exchange prevailing on the dates of
the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies
are retranslated at the rates prevailing on the balance sheet date except where forward exchange contracts have been
entered into for repayment of liabilities, in that case, the rates contracted for are used.
PRCL retrocession business is accounted for on the basis of the statements received relating to the first three quarters of
the current year and one quarter of the previous year, with the exception of cash and bank transactions which are
accounted for currently.
Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980) is accounted for when the dividends
are approved.
Transactions with related parties are priced on arm’s length basis. Prices for these transactions are determined on the
basis of comparable uncontrolled price method, which sets the price by reference to comparable goods and services sold
in an economically comparable market to a buyer unrelated to the seller.
67Annual Report 2008 55Annual Report 2008
Notes to the Financial StatementsFor the Year ended December 31, 2008
2008 2007
5 SURPLUS ON REVALUATION OF FIXED ASSETS Note Rupees Rupees
Balance at beginning of the year 33,117,583 21,441,066
Add: surplus realized on business combination 5.1 - 12,500,000
33,117,583 33,941,066
Less:
- impairment loss charged during the year 5.1 (15,486,310)
-
- transferred to unappropriated profit in respect of incremental
depreciation 5.2 (782,290)
(823,483)
Balance at end of the year 16,848,983
33,117,583
5.1
Surplus on revaluation of freehold land acquired through business combination -
12,500,000
Impairment loss charged to surplus on revaluation of freehold land (8,528,757) -
Impairment loss charged to surplus on revaluation of freehold land (4,582,472) -
Impairment loss charged to surplus on revaluation of building on freehold land (2,375,081) -
(15,486,310)
12,500,000
5.2
2008 2007
6 DEFERRED TAXATION Rupees Rupees
Deferred tax liability on taxable temporary differences:
Tax depreciation allowance 24,688,800
2,297,742
Finance lease 1,246,043
1,396,125
Surplus on revaluation of fixed assets 4,643,853
6,036,973
Provision for doubtful receivables -
315,228
Deferred tax asset on deductible temporary differences
Provision for doubtful receivables (2,042,922) -
Loss on remeasurement of available for sale investments (1,563,182) -
Available tax losses (15,766,050) (1,093,960)
11,206,542 8,952,108
The latest revaluation of freehold land, building on freehold land and investment properties was carried out by M/s.
Muhammad Siddique Associates (Surveyors, Loss Adjusters and Valuation Consultants) on December 31, 2008 . The basis
used for revaluation are as follows:
Freehold land The value of free hold land is ascertained according to the local market value.
Incremental depreciation represents the difference between the depreciation on investment properties and fixed assets
charged during the year and the equivalent depreciation based on its historical costs. See note 12 and 17 to the financial
statements for detail of revaluation.
Building on free hold land Present day construction rates for different types of building structures depreciated to
account for the age and condition of the building.
This revaluation resulted in following:
Fixed assets
Investment properties
The Pakistan General Insurance Company Limited06 The Pakistan General Insurance Company Limited56
Notes to the Financial StatementsFor the Year ended December 31, 2008
2008 2007
7 OTHER CREDITORS Note Rupees Rupees
Central excise duty 9,605,943 6,483,759
Federal insurance fee 3,917,603 2,116,490
Withholding tax payable 22,700
16,675
Employee's contribution to Provident fund 7.1 356,648
394,932
Others 715,000
-
14,617,894
9,011,856
7.1
8 LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE
Present value of minimum lease payments 1,133,961
2,755,501
Less: current portion 992,952
1,694,762
8.2 141,009
1,060,739
8.1
8.2 The reconciliation between minimum lease payments and its present value is as under:
Minimum lease payments
Not later than one year 1,061,212
1,914,869
Later than one year but not later than five years 144,117
1,132,011
1,205,329
3,046,880
Less: finance cost allocated to future periods 71,368
291,379
1,133,961
2,755,501
Less: current portion 992,952
1,694,762
141,009
1,060,739
Present value of minimum lease payments
Not later than one year 992,952 1,694,762
Later than one year but not later than five years 141,009 1,060,739
1,133,961 2,755,501
This represents the amount deducted from the salaries of employees against their contribution to provident fund. As per
accounting policy for staff retirement benefits (see note 3.5.7 to the financial statements), the Company is required to
operate a funded provident fund scheme for all permanent employees and made monthly contribution at the rate of 10%
of basic salary and the same is charged to profit and loss account, but the Company has not made provision for staff
retirement benefits.
The Company has entered into lease agreements with various leasing companies to acquire vehicles. The rentals under
these lease arrangements are payable on monthly basis. The present value of minimum lease payments has been
discounted at an implicit interest rate ranging from 15.00% to 20.00% (2007: 15.00% to 20.00%) per annum.
The Company has an option to purchase the assets after expiry of the lease term and has the intention to exercise the
option. Taxes, repairs, replacements and insurance costs are borne by the Company. There are no financial restrictions
in lease agreements.
The liability is secured by demand promissory note, post dated cheques and personal guarantees of the directors of the
Company.
57Annual Report 2008
Notes to the Financial StatementsFor the Year ended December 31, 2008
9 ADVANCE RECEIVED AGAINST SALE OF LAND
10 CONTINGENCIES AND COMMITMENTS
10.1
10.2
10.3
10.4
2008 2007
11 INVESTMENTS Note Rupees Rupees
Available for sale investments - quoted 11.1 7,576,564
4,135,723
Held to maturity 11.2 11,726,400
11,726,400
19,302,964
15,862,123
11.1 Available for sale investments - quoted
2008 2007 2008 2007
Company's name Rupees Rupees
Commercial banks
Bank Al-Falah Limited 6,500
1,500
10
232,600
76,350
Bank of Khyber Limited 10,000
8,000
10
135,080
113,600
Bank of Punjab Limited 4,000
1,000
10
166,340
92,000
KASB Bank Limited 10,000
10,000
10
198,000
198,000
NIB Bank Limited 32,800
14,800
10
516,624
352,680
Saudi Pak Commercial Bank Limited 5,000 5,000 10 128,500 128,500
Allied Bank Limited 5,000 - 10 289,400 -
Askari Commercial Bank Limited 6,000 - 10 167,880 -
Habib Bank Limited 8,000 - 10 1,107,600 -
MCB Bank Limited 5,000 - 10 1,178,750 -
A Court case for a piece of land measuring 25 Kanals and 10 Marlas located at Alama Iqbal Town, Lahore with an
approximate market value of Rs. 142.800 million (book value of Rs. 42.000 million) has been decided in the favor of the
Company against which the Fard has been issued. During the year the Company has entered into agreement for sale with
various parties against the consideration of Rs. 114.750 million to be paid in three installments each amounting to Rs.
22.000 million, Rs. 19.375 million, and Rs. 73.375 million falling due on October 31, 2008, December 28, 2008 and June
15, 2009 respectively. In accordance with the term of the agreement if the final payment is not received on due date
i.e. June 15, 2009 the agreement for sale of the land measuring 25 Kanals and 10 Marlas will stand null and void.
There are certain cases before different courts pending for adjudication. These cases are alleged to be not of substance
and are likely to be decided in favor of the Company, hence the management has not provided any contingent liability in
respect thereof.
The Company is defendant in a lawsuit of fire insurance claim amounting to Rs. 59.518 million. The Company has filed a
counter claim of Rs. 500.000 million against Maqbool Textile Mills Limited. The management of the Company and the
legal counsel believe that the Company has a good chance of prevailing, but the ultimate outcome of the lawsuits cannot
presently be determined. Furthermore a petition against the Company under the relevant provisions of the Ordinance is
pending adjudication in the Court.
While finalizing the assessments for the assessment years 2000 - 2001 and 2002 - 2003 with regard to PEI the
Commissioner Income Tax (Appeals) has made certain disallowances of expenses amounting to Rs. 1.152 million and Rs.
0.622 million respectively. Appeals are filed with the Honorable Income Tax Appellate Tribunal. The management of the
Company is of the opinion that these additions are contrary to the provisions of law as well as facts of the case and are
likely to be decided in favor of the Company.
The Honorable Income Tax Appellate Tribunal set aside orders for the assessment years 1998 - 1999 to 2000 - 2001. The
Company has also filed an appeal with Income Tax Appellate Tribunal for the assessment year 2001 - 2002 pending
adjudication. The reassessment proceedings has not yet been started.
Face value per
share Number of shares
The Pakistan General Insurance Company Limited06 The Pakistan General Insurance Company Limited58
Notes to the Financial StatementsFor the Year ended December 31, 2008
2008 2007 2008 2007
Company's name Rupees Rupees
Cement
DG Khan Cement Limited 2,200 2,200 10 203,500 203,500
Fauji Cement Limited 14,000 4,000 10 130,400 61,400
Lucky Cement Limited 2,000
2,000
10
237,100
237,100
Dadabhoy Cement Limited 1,500
1,500
10
16,650
16,650
Petroleum and power
Shell Pakistan Limited 4,000
500
10
1,295,085
209,000
PSO Limited 2,000
-
10
534,000
-
Pakistan Oil Fields Limited 2,000
-
10
487,000
-
Hub Power Co. Limited 6,000
2,500
10
151,735
76,625
SNGPL Limited 5,150
5,150
10
334,493
334,493
Motors and tractors
Al Gazi Tractors Limited 3,800
800
10
865,100
209,600
Millat Tractors Limited 2,000
-
10
267,100
-
Indus Motors Limited 6,000
1,000
10
1,088,500
372,000
Communications
PTCL 10,000
4,000
10
377,000
188,000
Tobbaco
PTC Limited 5,000
-
10
311,350
-
Fertilizers and sugar
Fauji Fertilizers Limited 1,200
1,200
10
139,200
139,200
Highnoon Laboratories Limited 2,500
2,500
10
204,375
204,375
Noon Sugar Limited 7,000
3,000
10
180,150
104,550
Textiles
Nishat Mills Limited 770 770 10 99,330 99,330 Dewan Salman Limited 1,300 1,300 10 13,585 13,585 Qaum Spinning Mills Limited 10,000
10,000
10
100,000
100,000
Fatima Enterprises Textile Limited 5,000
5,000
10
50,000
50,000
Ibrahim Fibres Limited 3,900
3,900
10
198,510
198,510
Modaraba and leasing
Schön Modaraba Limited 5,850
5,850
10
58,500
58,500
Modaraba Al-Mali 35,000
-
10
70,000
-
Standard Chartered Leasing 500
500
10
5,925
5,925
Miscellaneous
Unilever (Pakistan) Limited 100
-
10
211,185
-
Shabir Tiles Limited 4,150
4,150
10
170,150
170,150
Biafo Industries Limited 1,000
1,000
10
48,100
48,100
Tri-star Shipping Lines 7,400
7,400
10
74,000
74,000
12,042,797
4,135,723
Less: provision for diminution in the value of investments 4,466,233
-
7,576,564
4,135,723
11.1.1
11.2 Held to maturity
Government Compensation Bonds 516,400 516,400
Defence Saving Certificates 11,030,300 11,030,300
Other Government Securities 179,700 179,700
11,726,400 11,726,400
Face value per
share Number of shares
SECP through S.R.O. # 938 in December 2002 granted exemption to insurance companies from compliance with the
requirements of IAS-39. However, under prudence concept, provision for diminution in the value of investments is
recognized as expense in the profit and loss account.
67Annual Report 2008 59Annual Report 2008
Notes to the Financial StatementsFor the Year ended December 31, 2008
12IN
VEST
MEN
T PR
OPE
RTIE
S
12.1
Reco
ncili
atio
n of
car
ryin
g va
lues
at
Dec
embe
r 31
, 20
08
BOO
K VA
LUE
As
at
As
at
As
at
As
at
As
at
Janu
ary
1,
2008
Dec
embe
r 31
,
2008
Janu
ary
1,
2008
Dec
embe
r 31
,
2008
Dec
embe
r 31
,
2008
% a
ge
Ow
n as
sets
Free
hold
land
- co
st25
,196
,875
-
-
25,1
96,8
75
-
-
-
-
25,1
96,8
75-
- re
valu
atio
n5,
555,
347
(4,5
82,4
72)
-
972,
875
-
-
-
-
972,
875
-
30,7
52,2
22-
-
26,1
69,7
50
-
-
-
-
26,1
69,7
50
(4,5
82,4
72)
Build
ings
- co
st15
,053
,670
116,
816,
000
-
131,
869,
670
1,98
7,65
4
-
1,62
6,76
8
3,61
4,42
2
128,
255,
248
5
- re
valu
atio
n4,
946,
330
(2,3
75,0
81)
-
2,57
1,24
9
1,63
7,51
6
-
165,
441
1,80
2,95
7
768,
292
5
20,0
00,0
0011
6,81
6,00
0
134,
440,
919
3,62
5,17
0
-
1,79
2,20
9
5,41
7,37
9
129,
023,
540
(2,3
75,0
81)
-
50,7
52,2
2211
6,81
6,00
0
-
160,
610,
669
3,62
5,17
0
-
1,79
2,20
9
5,41
7,37
9
155,
193,
290
(6,9
57,5
53)
12.2
Reco
ncili
atio
n of
car
ryin
g va
lues
at
Dec
embe
r 31
, 20
07
BOO
K VA
LUE
As
at
As
at
As
at
As
at
As
at
Janu
ary
1,
2007
Dec
embe
r 31
,
2007
Janu
ary
1,
2007
Dec
embe
r 31
,
2007
Dec
embe
r 31
,
2007
% a
ge
Ow
n as
sets
Free
hold
land
- co
st-
-
25,1
96,8
75
25,1
96,8
75
-
-
-
-
25,1
96,8
75-
- re
valu
atio
n-
-5,
555,
347
5,55
5,34
7-
--
-5,
555,
347
-
--
30,7
52,2
2230
,752
,222
--
--
30,7
52,2
22
Build
ings
- co
st-
-15
,053
,670
15,0
53,6
70-
1,98
7,65
4-
1,98
7,65
413
,066
,016
5
- re
valu
atio
n-
-4,
946,
330
4,94
6,33
0-
1,63
7,51
6-
1,63
7,51
63,
308,
814
5
--
20,0
00,0
0020
,000
,000
-3,
625,
170
-3,
625,
170
16,3
74,8
30
--
50,7
52,2
2250
,752
,222
-3,
625,
170
-3,
625,
170
47,1
27,0
52
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
Rup
ees
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
COST
/ F
AIR
VA
LUE
ACC
UM
ULA
TED
DEP
RECI
ATIO
N
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
-- R
upee
s --
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
Add
itio
ns /
(dis
posa
ls)
/
(im
pair
men
t)
Tran
sfer
s in
/
(out
)
Adj
ustm
ents
for
the
year
Char
ge f
or t
he
year
Ann
ual r
ate
of
depr
ecia
tion
COST
/ F
AIR
VA
LUE
ACC
UM
ULA
TED
DEP
RECI
ATIO
NA
nnua
l rat
e
of
depr
ecia
tion
Add
itio
ns /
(dis
posa
ls)
/
(im
pair
men
t)
Tran
sfer
s in
/
(out
)
Adj
ustm
ents
for
the
year
Char
ge f
or t
he
year
The Pakistan General Insurance Company Limited06 The Pakistan General Insurance Company Limited60
Notes to the Financial StatementsFor the Year ended December 31, 2008
2008 2007
13 PREMIUMS DUE BUT UNPAID - NET - UNSECURED Rupees Rupees
- considered good 51,019,037 29,943,398
- considered doubtful 4,504,808 -
55,523,845 29,943,398
Less: provision for doubtful receivables made during the year 4,504,808
-
51,019,037
29,943,398
restated
2008 2007
14 TAXATION - PAYMENTS LESS PROVISION Note Rupees Rupees
Balance at beginning of the year 985,686
(3,850,865)
Add: paid / deducted / adjusted during the year 130,016
4,312,595
1,115,702
461,730
Less:
- provision recognized on merger with PEI -
178,901
- charge for the year 459,319
354,675
- prior year impact of change in accounting policy -
(1,057,532)
459,319
(523,956)
Balance at end of the year 656,383
985,686
14.1
2008 2007
15 SUNDRY RECEIVABLES Note Rupees Rupees
Advances to agents and employees
- considered good 4,151,176
2,435,266
- considered doubtful 1,332,112
900,650 5,483,288
3,335,916
Less: provision for doubtful receivables 15.1 1,332,112
900,650
4,151,176
2,435,266
Security deposits 743,112
449,612
4,894,288
2,884,878
15.1 Provision for doubtful receivables
Balance at beginning of the year 900,650
-
Add: provision made during the year 1,332,112
900,650
2,232,762
900,650
Less: balances written off during the year 900,650
-
Balance at end of the year 1,332,112
900,650
16 NON CURRENT ASSETS HELD FOR SALE
The income tax assessments of the Company have been finalized up to and including the tax year 2007. However, the
Company has filed appeals in respect of certain assessment years. Please refer to note 10.3 for contingencies related to
taxation.
Land measuring 25 Kanals and 10 Marlas located at Alama Iqbal Town, Lahore having net book value and fair value
amounting to Rs. 42.000 million and Rs. 142.800 million respectively is presented as held for sale. The completion of the
transaction is expected before the end of next financial year. The fair value of the land is determined by an independent
valuer. In accordance with the accounting policy of the Company, these assets are measured at lower of carrying amount
and fair value less costs to sell. Please refer to note 9 to the financial statements.
67Annual Report 2008 61Annual Report 2008
Notes to the Financial StatementsFor the Year ended December 31, 2008
17FI
XED
ASSE
TS
17.1
Tang
ible
fix
ed a
sset
s -
reco
ncili
atio
n of
car
ryin
g va
lues
at
Dece
mbe
r 31
, 20
08
BOO
K VA
LUE
As a
t As
at
As a
t As
at
As a
t
Janu
ary
1,
2008
Dece
mbe
r 31
,
2008
Janu
ary
1,
2008
Dece
mbe
r 31
,
2008
Dece
mbe
r 31
,
2008
% a
ge
Ow
n as
sets
Free
hold
land
- co
st40
,023
,853
-
(40,
023,
853)
-
-
-
-
-
-
-
- re
valu
atio
n1,
976,
147
-
(1,9
76,1
47)
-
-
-
-
-
-
-
42,0
00,0
00
-
(42,
000,
000)
-
-
-
-
-
-
Build
ings
- co
st64
,470
,964
-
-
64,4
70,9
64
4,
198,
776
-
3,01
3,60
9
7,
212,
385
57,2
58,5
795
- re
valu
atio
n29
,995
,905
(8,5
28,7
57)
-
21,4
67,1
48
9,
233,
684
-
1,03
8,11
1
10
,271
,795
11
,195
,353
5
94,4
66,8
69
-
-
85
,938
,112
13,4
32,4
60
-
4,
051,
720
17,4
84,1
80
68
,453
,932
(8,5
28,7
57)
Furn
itur
e an
d fix
ture
s11
,441
,860
235,
324
-
11,6
77,1
84
7,42
1,26
6
-
665,
366
8,08
6,63
2
3,59
0,55
210
Off
ice
equi
pmen
t4,
446,
252
210,
534
-
4,65
6,78
6
2,57
4,93
6
-
197,
806
2,77
2,74
2
1,88
4,04
410
Arm
s an
d am
unit
ion
28,2
29
-
-
28,2
29
19,7
56
-
848
20,6
04
7,62
510
Mot
or v
ehic
les
49,1
63,9
01
1,93
8,00
0
4,49
0,00
0
54,7
99,8
41
33,7
77,4
59
2,77
7,82
0
2,55
1,24
3
38,5
48,1
71
16,2
51,6
7015
(792
,060
)
(558
,351
)
Bicy
cles
142,
056
-
-
142,
056
83,2
41
-
5,88
2
89,1
23
52,9
3310
Tota
l ow
n as
sets
201,
689,
167
2,38
3,85
8
4,49
0,00
0
157,
242,
208
57,3
09,1
18
2,77
7,82
0
7,47
2,86
5
67,0
01,4
52
90,2
40,7
56
(9,3
20,8
17)
(42,
000,
000)
(558
,351
)
ASSE
TS S
UBJ
ECT
TO F
INAN
CE L
EASE
Mot
or v
ehic
les
11,3
61,0
75-
(4,4
90,0
00)
6,87
1,07
54,
616,
646
(2,7
77,8
20)
338,
164
2,17
6,99
04,
694,
085
15
Tota
l lea
sed
asse
ts11
,361
,075
-(4
,490
,000
)6,
871,
075
4,61
6,64
6(2
,777
,820
)33
8,16
42,
176,
990
4,69
4,08
5
GRA
ND
TOTA
L21
3,05
0,24
22,
383,
858
4,49
0,00
016
4,11
3,28
361
,925
,764
2,77
7,82
07,
811,
029
69,1
78,4
4294
,934
,841
(9,3
20,8
17)
(46,
490,
000)
(3,3
36,1
71)
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
Rup
ees
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
COST
/ F
AIR
VALU
EAC
CUM
ULA
TED
DEPR
ECIA
TIO
NLand and buildings Vehicles
Furniture,
fixtures and
office equipmentAn
nual
rat
e
of
depr
ecia
tion
Addi
tion
s /
(dis
posa
ls)
/
(im
pair
men
t)
Tran
sfer
s in
/
(out
)
Adju
stm
ents
for
the
year
Char
ge f
or t
he
year
The Pakistan General Insurance Company Limited06 The Pakistan General Insurance Company Limited62
Notes to the Financial StatementsFor the Year ended December 31, 2008
17.2
Tang
ible
fix
ed a
sset
s -
reco
ncili
atio
n of
car
ryin
g va
lues
at
Dec
embe
r 31
, 20
07
BOO
K VA
LUE
As
at
As
at
As
at
As
at
As
at
Janu
ary
1,
2007
Dec
embe
r 31
,
2007
Janu
ary
1,
2007
Dec
embe
r 31
,
2007
Dec
embe
r 31
,
2007
% a
ge
Ow
n as
sets
Free
hold
land
- co
st54
,796
,677
-
27,0
00,0
00
40,0
23,8
53
-
-
-
-
40,0
23,8
53-
(16,
575,
949)
(25,
196,
875)
-
-
-
- re
valu
atio
n2,
705,
545
-
12,5
00,0
00
1,97
6,14
7
-
-
-
-
1,97
6,14
7-
(7,6
74,0
51)
(5,5
55,3
47)
-
-
-
57,5
02,2
22
-
39,5
00,0
00
42,0
00,0
00
-
-
-
-
42,0
00,0
00
(24,
250,
000)
(30,
752,
222)
-
-
Build
ings
- co
st58
,372
,269
-
21,1
52,3
65
64,4
70,9
64
2,60
4,84
4
-
3,58
1,58
6
4,19
8,77
6
60,2
72,1
885
-
(15,
053,
670)
(1,9
87,6
54)
5
- re
valu
atio
n34
,942
,235
-
-
29,9
95,9
05
9,60
4,30
4
-
1,26
6,89
6
9,23
3,68
4
20,7
62,2
215
-
(4,9
46,3
30)
(1,6
37,5
16)
5
93,3
14,5
04
-
21,1
52,3
65
94,4
66,8
69
12,2
09,1
48
-
4,84
8,48
2
13,4
32,4
60
81,0
34,4
09
-
(20,
000,
000)
(3,6
25,1
70)
Furn
itur
e an
d fi
xtur
es7,
858,
574
-
3,58
3,28
6
11,4
41,8
60
5,40
6,99
3
1,62
2,02
0
392,
253
7,42
1,26
6
4,02
0,59
410
Off
ice
equi
pmen
t3,
779,
973
238,
388
427,
891
4,44
6,25
2
2,10
7,63
8
276,
983
190,
315
2,57
4,93
6
1,87
1,31
610
Arm
s an
d am
unit
ion
28,2
29
-
-
28,2
29
18,8
14
-
94
2
19,7
56
8,
473
10
Mot
or v
ehic
les
35,7
70,3
68
7,
798,
533
5,59
5,00
0
49
,163
,901
27,1
13,4
47
4,58
7,99
0
2,
076,
022
33,7
77,4
59
15,3
86,4
4215
Bicy
cles
103,
037
9,97
7
29,0
42
14
2,05
6
57
,389
20,1
37
5,
715
83
,241
58,8
1510
Tota
l ow
n as
sets
198,
356,
907
8,04
6,89
8
70,2
87,5
84
201,
689,
167
46,9
13,4
29
6,50
7,13
0
7,
513,
729
57
,309
,118
144,
380,
049
(24,
250,
000)
(50,
752,
222)
-
(3,6
25,1
70)
A
SSET
S SU
BJEC
T TO
FIN
AN
CE L
EASE
Mot
or v
ehic
les
11,3
61,0
75
-
-
11,3
61,0
75
3,42
6,45
3
-
1,19
0,19
3
4,61
6,64
6
6,74
4,42
915
Tota
l lea
sed
asse
ts11
,361
,075
--
11,3
61,0
753,
426,
453
-1,
190,
193
4,61
6,64
66,
744,
429
GRA
ND
TO
TAL
209,
717,
982
8,04
6,89
870
,287
,584
213,
050,
242
50,3
39,8
826,
507,
130
8,70
3,92
261
,925
,764
151,
124,
478
(24,
250,
000)
(50,
752,
222)
(3,6
25,1
70)
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
Rup
ees
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
Vehicles
Furniture, fixtures
and office
equipment
Land and buildings
COST
/ F
AIR
VA
LUE
ACC
UM
ULA
TED
DEP
RECI
ATIO
NA
nnua
l rat
e
of
depr
ecia
tion
Add
itio
ns /
(dis
posa
ls)
/
(im
pair
men
t)
Tran
sfer
s in
/
(out
)
Adj
ustm
ents
for
the
year
Char
ge f
or t
he
year
67Annual Report 2008 63Annual Report 2008
Notes to the Financial StatementsFor the Year ended December 31, 2008
17.3
Had
the
re b
een
no r
eval
uati
on,
the
cost
, ac
cum
ulat
ed d
epre
ciat
ion,
and
boo
k va
lue
of r
eval
ued
fixe
d as
sets
as
at y
ear
end
wou
ld h
ave
been
as
follo
ws:
Cos
t
Acc
umul
ated
depr
ecia
tion
B
ook
Valu
e C
ost
A
ccum
ulat
ed
depr
ecia
tion
B
ook
Valu
e
Free
hold
land
-
-
-
40
,023
,853
-
40,0
23,8
53
Build
ings
64,4
70,9
64
7,21
2,38
5
57,2
58,5
79
64,4
70,9
64
4,19
8,77
660
,272
,189
64,4
70,9
64
7,
212,
385
57,2
58,5
79
104,
494,
817
4,19
8,77
610
0,29
6,04
2
17.4
Deta
il of
fix
ed a
sset
s di
spos
ed o
ff d
urin
g th
e ye
ar a
re a
s fo
llow
s:
Ori
gina
l
cost
Accu
mul
ated
depr
ecia
tion
Book
val
ueSa
le p
roce
eds
Mod
e of
disp
osal
Mot
or v
ehic
les
Diah
tsu
Char
ade
300,
000
277,
821
22,1
79
50,0
00Ne
goti
atio
nM
r. M
ehm
ood
Ahm
ed,
Laho
re
Hond
a Ci
vic
492,
060
280,
530
211,
530
190,
000
Nego
tiat
ion
Mr.
Muh
amm
ad A
zam
, La
hore
792,
060
558,
351
233,
709
24
0,00
0
17.5
Depr
ecia
tion
is c
ompo
sed
of a
s fo
llow
s:
2008
2007
Gen
eral
and
adm
inis
trat
ion
expe
nses
Note
Rupe
esRu
pees
Tang
ible
fix
ed a
sset
s17
7,81
1,02
95,
078,
752
Inve
stm
ent
prop
erti
es12
1,79
2,20
93,
625,
170
9,60
3,23
88,
703,
922
Dece
mbe
r 31
, 20
08De
cem
ber
31,
2007
---
----
----
----
----
----
----
----
----
- Ru
pees
---
----
----
----
----
----
----
----
----
-
---
----
----
----
----
----
----
----
----
----
----
----
----
----
Rup
ees
---
----
----
----
----
----
----
----
----
----
----
----
----
----
Part
icul
ars
of b
uyer
s
The Pakistan General Insurance Company Limited06 The Pakistan General Insurance Company Limited64
Notes to the Financial StatementsFor the Year ended December 31, 2008
2008 2007
18 INTANGIBLE ASSETS Note Rupees Rupees
Business combination and goodwill
Detail of net assets acquired and goodwill are as follows:
Fair value of shares issued -
80,000,000
Fair value of net assets acquired -
(76,739,956)
Goodwill -
3,260,044
Less: loss on impairment of goodwill -
3,260,044
Carrying amount of goodwill after impairment loss -
-
19 FINANCE COST
Mark-up on:
- liabilities against assets subject to finance lease 221,268
1,166,295
- reinsurance reserves 849,273
366,979
1,070,541
1,533,274
Bank charges 142,876
175,471
1,213,417
1,708,745
restated
2008 2007
20 MANAGEMENT EXPENSES Rupees Rupees
Salaries, wages and benefits 12,476,011 9,545,900 Entertainment 1,377,934 1,211,706 Rent, rates and taxes 2,071,389
1,885,780
Electricity, gas and water 777,106
634,156 Traveling and conveyance 921,883
1,088,708
Computer expenses 340,569
285,032
Communication 2,766,849
2,207,899
Service charges 4,383
154,378
Registration, subscription and association 258,896
762,744
Provision for doubtful receivables 13 & 15 5,836,920
900,650
26,831,940
18,676,953
2008 2007
21 GENERAL AND ADMINISTRATION EXPENSES Rupees Rupees
Salaries and allowances 6,917,630
5,323,840
Motor vehicle expenses 5,979,635
5,851,962
Tours and traveling 434,783
454,147
Books and periodicals 15,819
66,833
Printing and stationery 489,262
638,461
Depreciation on tangible fixed assets 17.5 9,603,238
8,703,922
Office cleaning and maintenance 1,379,463
1,254,016
Auditor's remuneration 21.1 492,777
229,554
Advertisement 55,000 276,945
Legal and professional 1,071,101 1,685,898
Sundry expenses 107,412 435,375
26,546,120 24,920,953
In the absence of market value at the effective date, the fair value of the shares issued was based on share value
as approved by the Honorable Lahore High Court in its order dated May 28, 2007.
67Annual Report 2008 65Annual Report 2008
Notes to the Financial StatementsFor the Year ended December 31, 2008
2008 2007
21.1 Auditor's remuneration Rupees Rupees
Audit fee 200,000
100,000
Taxation 30,000
30,000
Review of Code Of Corporate Governance 50,000
30,000
Fee for interim review 160,000
60,000
Out of pocket expenses 52,777
9,554
492,777
229,554
restated
2008 2007
22 PROVISION FOR TAXATION Rupees Rupees
Income tax
- current (459,319)
(381,108)
Deferred
- current (2,675,666)
(1,863,907)
- prior -
1,093,960
(3,134,985)
(1,151,055)
23 Tax charge reconciliation
Numerical reconciliation between the average effective tax rate and the applicable tax rate is as follows:
restated
2008 2007
%age %age
Applicable tax rate 35.00
35.00
Tax effect of amounts that are:
- charges to tax at other rates 22.66
31.47
- change in prior years' tax -
(0.95)
22.66
30.52
Average effective tax rate charged to profit and loss account 12.34 4.48
24 CAPITAL DISCLOSURE
The Company's objective when managing capital is to safeguard the Company's ability to continue as a going
concern so that it can continue to provide returns for shareholders and benefits for other stakeholders; and to
maintain a strong capital base to support the sustained development of its businesses.
The Company manages its capital structure which comprises capital and reserves by monitoring return on net
assets and makes adjustments to it in the light of changes in economic conditions. In order to maintain or adjust
the capital structure, the Company may adjust the amount of dividend paid to shareholders, appropriation of
amounts to reserves or/and issue new shares.
The Pakistan General Insurance Company Limited06 The Pakistan General Insurance Company Limited66
25 REMUNERATION OF CHIEF EXECUTIVE AND DIRECTORS
2008 2007 2008 2007
Managerial pay 400,000
280,000
1,040,000
1,000,000
Bonus -
-
-
40,000
House rent 160,000
112,000
416,000
397,200
Medical -
10,771
-
57,000
Utilities 40,000
28,000
104,000
96,000
Others 326,960
110,000
427,636
416,464
926,960
540,771
1,987,636
2,006,664
Number of persons 1 1 4 4
26 TRANSACTIONS WITH RELATED PARTIES
2008 2007
Rupees Rupees
Remuneration paid to directors and chief executive of the Company 2,914,596 2,547,435
Building purchased 116,816,000 -
All transactions with related parties have been carried out on commercial terms and conditions.
27 EARNINGS PER SHARE - BASIC AND DILUTED
The calculation of the basic earnings per share is based on the following data :
Earnings
Profit after taxation attributable to ordinary shares 22,269,909
24,542,905
2008 2007
Weighted average number of ordinary shares outstanding 20,000,000
20,000,000
Earnings per share (Rupees) 1.11
1.23
27.1 No figure for diluted earning per share has been presented as the Company has not issued any instruments which
would have an impact on earnings per share when exercised.
------------------------------- Rupees -------------------------------
Number of shares
In addition to above the chief executive and the directors are provided with free use of Company's maintained car.
The chief executive and director are also provided with free use of residential telephone.
The related parties comprise holding company, subsidiaries and associated undertakings, other related group
companies, directors of the company, key management personnel and post employment benefit plans.
The remuneration of directors is disclosed in note 25.
No employee falls under the definition of "Executive" as per the Fourth Schedule to the Companies Ordinance,
1984 .
The aggregate amount charged in the financial statements for the year for remuneration, including certain
benefits to the chief executive, directors and other executives of the Company is as follows:
DirectorsChief Executive
restated
67Annual Report 2008 67Annual Report 2008
Notes to the Financial StatementsFor the Year ended December 31, 2008
28 CHANGE IN ACCOUNTING POLICY
28.1 Net impact of change in accounting policy Note Rupees
Increase in taxation - provision less payments (1,110,398)
Increase in provision for unearned premium - closing 3,338,424
28.2 2,228,026
28.2 Year ended December 31, 2007
Increase in management expenses (5,045,239)
Increase in premium earned 5,286,620
Increase in income tax expense (26,433) Increase in profit for the year ended December 31, 2007 214,948
Period prior to December 31, 2006
2,013,078
2,228,026
28.3 Impact of prior period restatement on earnings per share
Earnings per share for the year ended December 31, 2007 as previously reported 1.24
Impact of prior period restatement on earnings per share (0.01)
Earnings per share for the year ended December 31, 2007 (restated) 1.23
Decrease in profit for the year ended December 31, 2006 (increase
in administrative surcharge amounting to Rs. 3,097,043 less
decrease in tax amounting to Rs. 1,083,965 )
Pursuant to the requirements of S.R.O # 938 of the SEC (Insurance) Rules, 2002 by SECP regarding administrative
surcharge, during the year, Company has changed its accounting policy in relation to recognition of administrative
surcharge. As per the new policy, administrative surcharge is deferred and charged to profit and loss account as
revenue in accordance with the pattern of recognition of the insurance premium to which it relates. Previously the
balance was charged to profit and loss account at the time the policies are accepted. The effect of this change in
accounting policy has been made retrospectively.
The Pakistan General Insurance Company Limited68
Notes to the Financial StatementsFor the Year ended December 31, 2008
29SE
GM
ENT
REP
ORT
ING
The
Com
pany
has
fou
r pr
imar
y bu
sine
ss s
egm
ents
for
rep
orti
ng p
urpo
ses
nam
ely
fire
and
pro
pert
y da
mag
e, m
arin
e, a
viat
ion
and
tran
spor
t, m
otor
act
and
mis
cella
neou
s.
rest
ated
2008
2007
2008
2007
2008
2007
2008
2007
2008
2007
Oth
er in
form
atio
n
Segm
ent
asse
ts19
8,74
0,24
6
142,
856,
731
95,0
49,6
83
68,3
22,7
84
47,5
24,8
40
34,1
61,3
93
90,7
29,2
43
65,2
17,2
04
432,
044,
012
310,
558,
112
Una
lloca
ted
corp
orat
e
asse
ts76
,954
,378
127,
805,
923
Cons
olid
ated
tot
al
asse
ts50
8,99
8,39
0
438,
364,
035
Segm
ent
liabi
litie
s77
,725
,213
68,3
35,2
18
37,1
72,9
28
32,6
82,0
61
18,5
86,4
63
16,3
41,0
30
35,4
83,2
50
31,1
96,5
14
168,
967,
854
148,
554,
823
Una
lloca
ted
corp
orat
e
liabi
litie
s55
,814
,124
12,7
97,6
31
Cons
olid
ated
tot
al
liabi
litie
s22
4,78
1,97
8
161,
352,
454
Capi
tal e
xpen
ditu
re54
,831
,935
3,70
1,57
326
,223
,969
1,77
0,31
813
,111
,984
885,
159
25,0
31,9
701,
689,
848
119,
199,
858
8,04
6,89
8
Dep
reci
atio
n4,
417,
489
4,00
3,80
42,
112,
712
1,91
4,86
31,
056,
356
957,
431
2,01
6,68
11,
827,
824
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.
67Annual Report 2008 69Annual Report 2008
Notes to the Financial StatementsFor the Year ended December 31, 2008
30 FINANCIAL INSTRUMENTS
(a) Interest rate risk management
Financial assets
Maturity up to one year
Cash and other equivalents 31,508,000
1,471,072
32,979,072
30,508,000
75,525,632
106,033,632
Loan to employees -
98,648
98,648
-
123,962
123,962
Investments -
7,576,564
7,576,564
-
4,135,723
4,135,723
Premiums due but unpaid -
51,019,037
51,019,037
-
29,943,398
29,943,398
Amount due from other insurers / reinsurers -
5,818,755
5,818,755
-
5,740,979
5,740,979
Premium and claim reserves retained by cedants 15,074,049
-
15,074,049
12,066,829
-
12,066,829
Accrued investment income -
809,198
809,198
-
-
-
-
-
5,383,256
5,383,256
9,612,497
9,612,497
Sundry receivables -
4,894,288
4,894,288
2,884,878
2,884,878-
Maturity after one year -
Cash and other equivalents 15,000,000
-
15,000,000
-
-
-
Investments 11,726,400
-
11,726,400
11,726,400
-
11,726,400
Accrued investment income -
3,213,825
3,213,825
-
1,915,642
1,915,642
73,308,449
80,284,643
153,593,092
54,301,229
129,882,711
184,183,940
Financial liabilities
Maturity up to one year
- 8,585,317 8,585,317 - 12,136,933 12,136,933
Amount due to other insurers / reinsurers - 20,909,068 20,909,068 - 15,696,944 15,696,944
Accrued expenses -
1,004,273
1,004,273
-
678,415
678,415
Other creditors -
1,071,648
1,071,648
-
394,932
394,932
Liabilities against assets subject to lease 992,952
-
992,952
1,694,762
-
1,694,762
Maturity after one year
Liabilities against assets subject to lease 141,009 - 141,009 1,060,739 - 1,060,739
1,133,961 31,570,306 32,704,267 2,755,501 28,907,224 31,662,725
Total balance sheet sensitivity gap 72,174,488 48,714,337 120,888,825 51,545,728 100,975,487 152,521,215
Cumulative mark-up risk sensitivity gap 72,174,488 51,545,728
Reinsurance recoveries against outstanding claims
December 31, 2008 December 31, 2007
Interest / markup
bearing
Non Interest /
markup bearing Total
Interest / markup
bearing
Non Interest /
markup bearing
Provision for outstanding claims (including IBNR)
……………………………………………………………………………………………………………… Rupees ………………………………………………………………………………………………………………
Interest rate risk arises from the possibility that changes in interest rates will effect the value of financial instruments. Changes in interest rates can adversely affect the
rates charged on interest bearing liabilities. This can result in an increase in interest expense relative to financial borrowings or vice versa. The Company manages its risk
by maintaining a fair balance between interest rates, financial assets and financial liabilities. The effective interest rates for the monetary financial assets and liabilities
are mentioned in respective notes to the financial statements.
Total
December 31, 2008 December 31, 2007
Interest / markup
bearing
Non Interest /
markup bearing Total
Interest / markup
bearing
Non Interest /
markup bearing Total
……………………………………………………………………………………………………………… Rupees ………………………………………………………………………………………………………………
The Pakistan General Insurance Company Limited70
Notes to the Financial StatementsFor the Year ended December 31, 2008
(b) Liquidity risk
(c) Credit risk and concentration of credit risk
(d) Reinsurance risk
31 FAIR VALUE OF FINANCIAL INSTRUMENTS
32 DATE OF AUTHORIZATION FOR ISSUE
April 03, 2009.
33 RE-CLASSIFICATIONS AND RE-ARRANGEMENTS
From To Reason Rupees
Better presentation 12,066,829
Advance tax - taxation net Taxation - payments less provision Better presentation 282,829
Other income Rental income Better presentation 1,770,000
Salaries - management expenses Salaries - general expenses Better presentation 3,517,074
Repairs and maintenance Salaries - general expenses Better presentation 410,025
Repairs and maintenance Office cleaning and maintenance Better presentation 455,515
Sundry expenses Salaries - general expenses Better presentation 130,746
Better presentation 9,554
34 GENERAL
Figures have been rounded off to the nearest rupee except as stated otherwise.
Liquidity risk reflects the Company's inability in raising funds to meet commitments. The management closely monitors
the Company's liquidity and cash flow position. The Company aims at maintaining flexibility in funding by keeping
committed credit lines available. The maturity profile is monitored to ensure adequately liquidity is maintained.
The carrying value of all the financial instruments reported in the financial statements approximate their fair value
except for investments available for sale included in note 11. Fair value is determined on the basis of objective
evidence at each reporting date.
Credit risk represents the accounting loss that would be recognized at the reporting date if counter parties fail to
perform as contracted. Out of the total financial assets of Rs. 153.593 million (2007: Rs. 184.184) million, the financial
assets which are subject to credit risk amounted to Rs. 89.865 (2007: Rs. 64.508) million. The company manages credit
risk to client's credit exposure, review and conservative estimates of provisions for doubtful receivables, if any, and
through the prudent use of collateral policy. The management is of the view that is not exposed to significant
conservation of credit risk as its financial assets are adequately diversified on organization of sound financial standing
covering various industrial sector and segments.
Reinsurance ceded does not relief the Company from its obligation to policy holders and as a result the Company
remains liable for the portion of outstanding claims reinsured to the extent that reinsurer fails to meet the obligation
under the reinsurance agreement.
In common with other insurance companies, in order to minimize the financial exposure arising from large claims, the
Company in the normal course of business, enters into agreement with other parties for reinsurance purposes.
To minimize its exposure to significant losses from reinsurer insolvencies, the Company obtains reinsurance from a
number of reinsurers, who are dispersed over several geographical regions.
These financial statements have been approved by the Board of Directors of the Company and authorized for issue on
Corresponding figures have been re-classified and re-arranged, wherever necessary, to reflect more appropriate
presentation of events and transactions for the purpose of comparison. Significant re-classification and re-arrangements
are as follows:
Amounts due to other insurers /
reinsurers
Premium and claim reserves
retained by cedants
Legal and professional - general
and administration expenses
Auditors remuneration- general and
administration expenses
CH. ZAHOOR AHMEDCH. MANZOOR AHMED NASIR ALI CH. MUHAMMAD SALEEM
CHIEF EXECUTIVECHAIRMAN DIRECTOR DIRECTOR
67Annual Report 2008 71Annual Report 2008
Notice of Annual General Meeting
Ordinary Business
NOTES
stNotice is hereby given that the 61 Annual General Meeting of The Pakistan General Insurance Company Limited will be held at Registered Office of the Company at Cooperative Bank House,
th5-Bank Square, Shahrah-e-Quaid-e-Azam, Lahore on Thursday, 30 April 2009 at 11:00 a. m. to transact the following business:
st1. To confirm the minutes of last Annual General Meeting held on 31 March, 2008.
2. To receive, consider and adopt the Audited Financial Statements of the Company for the year st
ended 31 December 2008 together with the Directors' Report to the shareholders and Auditors' Report thereon.
3. To appoint auditors and to fix their remuneration for the year 2009. The board of directors has recommended the joint appointment of auditors. The retiring auditors M/s M. Yousuf Adil Saleem & Co. Chartered Accountants and M/s Kamran & Co. Chartered Accountants, who being eligible, offer themselves for re-appointment.
4. To transact any other business of the Company with the permission of the Chair.
By order of the Board
(Ch. Muhammad Saleem)Lahore Company Secretary April 03, 2009
th th1. The share transfer books of the Company will remain closed from 24 April to 30 April (both days inclusive).
2. A member entitled to attend and vote at this meeting is entitled to appoint another member as his/her proxy to attend and vote for him /her. Proxies in order to be effective must be received at the registered office of the Company, at Cooperative Bank House, 5-Bank Square, Shahra-e-Quaid-e-Azam, not less than 48 hours before the time of holding the meeting. Proxy form is attached.
3. CDC shareholders entitled to attend and vote at this meeting must bring his / her original CNIC or passport along with the participant's ID numbers and account numbers to prove his/ her identity. In case of Proxy, the attested copy of CNIC or passport of the CDC shareholder must be enclosed.
4. Shareholders are advised to immediately notify the change in their addresses, if any, to our registrar M/s Corplink (Pvt.) Limited, Wings Arcade, 1-K, Commercial, Model Town, Lahore.
Proxy Form
________________________________
_________
________________________________
________________________________
as my proxy to vote for me and on my behalf at the 61st Annual General Meeting of the
Company to be held on Thursday, April 30th 2009 and at any adjournment thereof.
Signature
Five RupeeRevenueStamp
NOTES:
No person shall be appointed a proxy who is not a member of the Company and qualified to vote save that in case of a Corporate body being a Member of the Company may appoint as its representative any person whether a member of the Company or
note. An Attorney of a member need not himself be a member.
No person shall act as a proxy unless the instrument appoint a proxy and every power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power or authority shall be deposited at the registered office of the Company, not less than 48 hours before the time for holding the meeting at which the person named in such instrument proposes to vote and in default the instrument of proxy shall
not be treated as valid.
Member of The Pakistan General Insurance Company Limited hereby appoint
or failing him
The signature on the instrument of proxy must conform to the specimen signature recordedwith the Company
AFIX CORRECTPOSTAGE
The Company Secretary
The Pakistan General Insurance Co. Ltd.Co-operative Bank House, 5-Bank Square Shahrah-e-Quaid-e-Azam,Post Office Box 1364, Lahore.Phones: 7324404, 7352182, 7325382