Transcript
Page 1: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

SPI Insurance Company Limited

ANNUAL REPORT 2017

GROWTH EMPOWERMENT

Rated “ A ” by PACRA

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Deliver ResultsToday. Invest forTomorrow.

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Page 3: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful
Page 4: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

3Annual Report 2017

SPI Insurance Company Limited

Inside SPI Insurance Company Limited

Annual Report

More information online:www.spiinsurance.com.pk

OVERVIEW

Vision 02

Mission

About Us

Corporate Social Responsibilities

FINANCIAL HIGHLIGHTS

SPI IFS Rating 08

Six Years At a Glance

BUSINESS REVIEW & GOVERNANCE

Board of Directors 12

Committees

Key Management Personnel

Banks

ISO Certification

Services We Offer

Chairman’s Message

Directors’ Report to the Members

Directors’ Report to the Members (Urdu)

Review Report to the Members on the statement of Compliance with the Code of Corporate Governance

Statement of Compliance With the Code of Corporate Governance

Statement Under Section 46(6)

FINANCIAL STATEMENTS

Auditor’s Report to the Members 44

Statement of Financial Position

Profit and Loss Account

Statement of Comprehensive Income

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

WINDOW TAKAFUL OPERATIONS

Auditor’s Report to the Members 98

Shariah Audit Report

Shariah Advisor's Report to the Board of Directors

Statement of Financial Position

Profit and Loss Account

Statement of Comprehensive Income

Statement of Changes in Funds

Statement of Cash Flows

Notes to the Financial Statements

Our Network

Pattern of Shareholding

Investor’s Awareness

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Core Values

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We wish to become a dynamic Insurance/ Takaful service provider, maintaining credibility and reputation while growing revenues over the coming years and improving Insurance/Takaful products by utilizing latest technologies. SPI Insurance Company Limited is focusing to build up a team of professionals by imparting exhaustive training, education and career orientation for the benefit of the insurance industry. We shall endeavor our utmost to render the best possible services to our clients.

Our vision is to be the quality Insurance/ Takaful service provider, recognized and appraised by performance and product development to cater the changing needs of customers and continuous growth of human resources.

Vision

Mission

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5Annual Report 2017

SPI Insurance Company Limited is a general Insurance Company providing insurance coverage to various renowned companies and financial institutions of Pakistan. SPI Insurance started its operations from April 14, 2005 and since then it has managed to emerge as one of the successful company of the insurance industry. Fortunately to its credit, it is jointly supported by the strong UIG Group and Silk Bank Limited.

Ownership & Paid Up Capital

The company commenced its operations with a paid up capital of Rs. 250 million which has been raised to Rs. 500 million with an authorized capital of Rs. 1,000 million, thus providing a strong base for operations and substantial capacity for accommodating large industrial risks.

Window Takaful Operations

The Company has been allowed to work as Window Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful Rules, 2012 to carry on Islamic General Insurance in Pakistan .

Professional Strength

The company is manned by duly qualified and experienced professionals of all discipline of insurance having substantial knowledge of underwriting various products and claims management.

Claim Management

Claims are the end product of the insurance. At SPI Insurance, we believe in the philosophy that every claim is a service to the client and therefore must be handled in the most professional and judicious manner. We therefore give great emphasis to expeditious claim handling including assistance to the client in the risk

management, loss mitigation, fast settlements and early payments. For this purpose the Company’s claim department is led by a veteran who is assisted by a very efficient technical team of professionals. Believing in the quality of service the company employs the leading loss adjusters of the country who have foreign affiliation and years of experience to their credit.

Major Shareholders:

• United International Group

• SILKBANK Ltd.

• Saudi Pak Leasing Co. Ltd.

Branches

With 50 Online branches across Pakistan, SPI Insurance enjoys unique position when it comes to client service. A suitable number of strategically located branches are desirable for an insurance company which plans to expand its operations nationwide in order to provide services to the clients situated at remote and far reaching places. With the above credentials we are confident that our company has desired financial strength and expertise to provide coverage to clients various insurance requirements and hope that they will consider us to be the potential insurers of their valuables assets.

Technology is one of the key

Success factors in the business today. It serves as the backbone for all operational functions. The Company has established itself as a technology oriented financial institution. The company has adopted top level technologies like Oracle and IBM Servers and invested generously towards the infrastructure which is providing Online real time branch connectivity which serves as means for data warehousing, catering of basic transaction and meeting the clients’ needs.

SPI Insurance Company Limited

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SPI Insurance Company Limited

Page 8: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

SPI Insurance Company LimitedIFS Rating

Wakala Fee135.28

Premium Written701.00

Underwriting Results40.47

Investments56.60

Equity523.31

Net Claims198.93

Profit for the Year12.96

Net Premium561.91

Earnings Per Share0.95

Rating by: PACRA

Outlook : StableFinancial highlights as of December 31, 2017 (Rupees in millions)

Operator's Fund Financial highlights as of December 31, 2017 (Rupees in millions)

Gross Contribution Written308.61

Net Claims58.11

Net Contribution Revenue68.57

Participants' Takaful Fund Financial highlights as of December 31, 2017 (Rupees in millions)

A

7Annual Report 2017

SPI Insurance Company Limited

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Six years at a glance

FINANCIAL DATA:Paid up capitalEquityUnderwriting ProvisionsInvestment at costTotal Assets (book value)Fixed Assets (WDV)Cash and bank depositsAssets - Others

OPERATING DATA:Gross PremiumNet PremiumNet Claims expensesManagement expensesUnderwriting Profit / (Loss)Investment Income / (Loss)Profit / (Loss) before TaxProvision for TaxProfit / (Loss) after TaxEarnings per share

FINANCIAL RATIOS:Profit before tax / Gross Premium (%)Profit before tax / Net Premium (%)Profit after tax / Gross Premium (%)Profit after tax / Net Premium (%)Management Expenses to Gross Premium (%)Management Expenses to Net Premium (%)Underwriting Profit / Net Premium (%)Net Claims / Net Premium (%)Return on Assets (%)

LIQUIDITY / LEVERAGE RATIOS:Current Ratio (Times)Total Assets Turnover (Times)Fixed Assets Turnover (Times)Total Liability / Equity (Times)Return on Capital Employed (%)Paid up Capital / Total Assets (%)Equity / Total Assets (%)

RETURN TO MEMBERS:Return on Equity -PBT (%)Return on Equity -PAT (%)Earnings per Share (Rs.)Breakup Value per Share (Rs.)

OPERATING DATA:

Gross Contribution WrittenWakala FeesNet ContributionNet ClaimsManagement ExpensesNet Profit / (Loss):Participants' Takaful FundOwners Fund

(RUPEES IN MILLIONS)

2017

6.9%8.6%6.3%7.9%

49.2%61.4%7.2%

35.4%3.7%

1.30 1.68 0.15 1.25 9.3%

42.4%44.4%

9.3%8.4% 0.95

10.47

308.61 135.28 68.57 58.11

112.04

24.57 12.96

2016 2015 2014

325.00 328.53 290.14

67.13 656.89

47.49 113.12 429.15

509.78 404.13 122.80 223.83 110.25

12.37 72.34 32.00 40.35

1.24

14.2%17.9%

7.9%10.0%43.9%55.4%27.3%30.4%6.1%

1.59 1.29 0.09 1.00

22.0%49.5%50.0%

22.0%12.3% 1.24

10.11

1.18

0.47

0.03

-

0.03

(0.71)

2013

325.00 289.37 272.08

80.50 587.63

51.13 70.15

385.85

390.74 286.82 104.91 152.94

75.30 11.11 40.28

7.65 32.64

1.00

10.3%14.0%

8.4%11.4%39.1%53.3%26.3%36.6%5.6%

1.37 1.50 0.13 1.03

13.9%55.3%49.2%

13.9%11.3% 1.00 8.90

-

-

-

-

2012

325.00 257.49 245.78

93.66 529.82

56.61 70.41

309.15

317.86 183.61

36.88 134.71

49.30 10.21 23.88

(51.08) 74.96

2.31

7.5%13.0%23.6%40.8%42.4%73.4%26.9%20.1%14.1%

1.20 1.67 0.18 1.06 9.3%

61.3%48.6%

9.3%29.1% 2.31 7.92

-

-

-

-

-

-

-

-

500.00 523.31 456.70 288.79

1,177.99 102.00 45.35

741.85

410.00 432.26 424.03 211.01

1,036.00 103.09 62.36 659.54

678.08 529.29 215.10 279.34 51.03 12.71 64.71 27.92 36.79 0.83

9.5%12.2%5.4%7.0%

41.2%52.8%9.6%

40.6%3.6%

1.22 1.53 0.15 1.40

15.0%39.6%41.7%

15.0%8.5% 0.83

10.54

328.96 150.44 107.31 95.87

144.74

13.04 6.50

325.00 397.22 304.40 142.54 846.92

93.67 87.04 523.66

599.62 488.37 144.75 267.28 150.05 10.17 98.95 26.85 72.10 1.76

16.5%20.3%12.0%14.8%44.6%54.7%30.7%29.6%8.5%

1.38 1.41

0.16 1.78 24.9%38.4%46.9%

24.9%18.2%

1.76 9.69

214.10 85.64 34.56 34.32 86.93

(0.43) 2.99

701.00 561.91 198.93 344.98 40.47 14.26 48.46 4.30 44.15 0.95

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9Annual Report 2017

SPI Insurance Company Limited

Page 11: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Board of Directors

Mr. Mohammad AsgharDirector

Mian M. A. ShahidChief Executive Officer

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Mr. Aziz ullah MemonChairman

Page 12: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Mr. Khurram KhanDirector

Mr. Uzman Naveed Ch.Director

Mr. Abdul MajeedDirector

Mr. M. Saleem sheikhDirector

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SPI Insurance Company Limited

Page 13: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Board of Directors and Committees

ChairmanMr. Aziz Ullah Memon

Managing Director & Chief ExecutiveMian M. A. Shahid

DirectorsMr. Mohammad AsgharMr. Abdul MajeedMr. Uzman Naveed ChaudharyMr. Muhammad Saleem SheikhMr. Khurram Khan

Underwriting CommitteeMr. Muhammad Akram Shahid (Chairman)Mr. Abdul Majeed (Member)Mr. Naeem Tariq (Member)Mr. Imtiaz Ali (Secretary)

Claim Settlement Committee:Mr. Uzman Naveed Chaudhry (Chairman)Mr. Muhammad Akram Shahid (Member)Mr. Naeem Tariq (Member/Secretary)

Reinsurance & Co-insurance Committee:Mr. Muhammad Akram Shahid (Chairman)Mr. Abdul Majeed (Member)Mr. Faisal Akbar (Member/Secretary)

Risk Management & Compliance Committee:Mr. Uzman Naveed Chaudhry (Chairman)Mr. Azizullah Memon (Member)Mr. Naeem Tariq (Member)Mr. Faisal Akbar (Secretary)

Ethics, Human Resource & Remuneration Committee:Mr. Muhammad Saleem Sheikh (Chairman)Mr. Muhammad Akram Shahid (Member)Mr. Mohammad Asghar (Member)Mr. Shahid Malik (Secretary)

Chief Financial OfficerMr. Naeem Tariq

Company Secretary Mr. Noshad Ahmed

Chief Internal AuditorMian Mohsin Aslam

Nominations CommitteeMr. Azizullah Memon (Chairman)Mr. Muhammad Akram Shahid (Member)Mr. Muhammad Saleem Sheikh (Member)Mr. Noshad Ahmed (Secretary)

Investment CommitteeMr. Muhammad Akram Shahid (Chairman)

Mr. Azizullah Memon (Member)Mr. Naeem Tariq (Member/ Secretary)

Mr. Mohammad Asghar (Member)

Audit CommitteeMr. Mohammad Asghar (Chairman)Mr. Muhammad Saleem Sheikh (Member)

Mian Mohsin Aslam (Secretary)Mr. Khurram Khan (Member)

AuditorsM/s RSM Avais Hyder Liaquat NaumanChartered Accountants

Tax ConsultantM/s Muhammad Bilal & CompanyChartered Accountants

Legal AdvisorsM/s Kilam LawM/sMandviwala & Zafar

Registered OfficeSuite # 204-A, Second Floor,Madina City Mall, Abdullah Haroon Road,Karachi.Phone # (021) 35221805Fax # (021) 35221806

Head OfficeUIG House,6 - D, Upper Mall, Lahore.Phone # (042) 35776561-62-67-68, 35756563Fax # (042) 35776560E-mail: [email protected]: www.spiinsurance.com.pk

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Key Management Personnel

Conventional

Managing Director & Chief Executive Officer

Deputy Managing Director

Advisor

General Manager Re-Insurance

General Manager Health Business

Chief Manager Underwriting

Chief Manager Claims / Motor

Chief Manager Accounts

Manager Claims / Non Motor

Assistant General Manager I.T

Assistant General Manager Administration

Manager Travel

Takaful

Shahriah Advisor

Chief Operating Officer & Head of WTO

Head of Underwriting

Manager Accounts

Mian M. A. Shahid

Mr. Shaheryar Akbar Raja

Maj. Gen. (R) Asif Duraiz Akhter

Mr. Faisal Akbar (FCA)

Mr. Nasir Abbas Khan

Mr. Imtiaz Ali

Mr. Khalid Nazeer Bajwa

Mr. Saleem Akhter (FCMA)

Mr. Naveed ul Haq Nomani

Mr. Saquib Obaid ur Rehman

Mr. Shahid Malik

Mr. Iqbal Hashmi

Mufti Muhammad Umar Ashraf

Mr. Faisal Rashid

Mr. Muzammil Bashir (ACII)

Mr. Muhammad Ali

13Annual Report 2017

SPI Insurance Company Limited

Page 15: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Banks

Al-Barka Bank (Pakistan) Limited

Allied Bank Limited

Apna Microfinance Bank Limited

Bank Al-Falah Limited

Bank Al-Habib Limited

Bank Islami Pakistan Limited

Burj Bank Limited

Faysal Bank Limited

Finca Microfinance Bank Limted

Habib Bank Limited

JS Bank Limited

Meezan Bank Limited

National Bank of Pakistan

MCB Bank Limited

SILKBANK Limited

Sindh Bank Limited

Soneri Bank Limited

State Bank of Pakistan

Tameer Microfinance Bank Limited

The Bank Of Punjab

United Bank Limited

Zarai Taraqiati Bank Limited

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Page 16: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Fire Insurance

Fire is not friendly with anyone, but our Fire policy is. The basic cover and the most essential for any business concern safeguards insurer’s interest against fire, which can be extended to include additional perils like Riot & Strike Damages, Malicious Damages, Earthquake Fire & Shock, Explosion, Impact Damage, Aircraft Damage, Atmospheric Disturbance and Burglary & House Breaking .

Fire takaful

Businesses are prone to unforeseen losses. These losses can lead a flourishing business into a disaster due to the loss of property, stock, machinery, tools and facilities, ultimately wiping out the capital and causing consequential losses. Monetary relief is essential in re-building / restoring the damaged property. Fire Takaful cover plays a vital role in safeguarding the financial interest of an enterprise.

FIRE

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Page 17: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

This type of insurance relates to cargo handling while in transit in different modes of transportation. The Marine Cargo insurance is classified into three classes – Institute Cargo Clause A, B & C, offered to the client depending on their needs.

Marine takaful

Marine Takaful service protects all goods whilst in transit, depending upon the needs of the clients. Three broad types of cover are available, i.e. institute Cargo Clauses “A”, “B” and “C”. the cover takes care of risks associated with different modes of transportation:

Coverage may be provided for individual shipments or under an ongoing contract known as an “open policy”. An open policy is a contract prepared in general terms covering specified goods on terms agreed and can be issued to cover goods shipped anywhere in the world on a declaration basis.

Marine Insurance

MARINE

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Motor

A motor vehicle, being automobile, is exposed to several risks. We at SPI Insurance, offer comprehensive motor insurance for vehicles of all types i.e. private, commercial and motorcycle.

Motor takaful

Motor Takaful provides maximum coverage against theft, accidental damage, hassle free Takaful processing. The cover includes losses due to external accident means, fire, explosion, self-ignition or lighting or frost, burglary, house-breaking theft, malicious acts, riots and strikes. Terrorism i.e. property damage, bodily injury and death are additional features of the cover.

MOTOR

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Page 19: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

This specialized insurance policy indemnifies an insured for any liability arising due to violation of duties out of negligence by the insured. Architects, Engineers, Consultants, Doctors, Surveyors, Health, Live Stocks, Crop, Travel, etc can benefit from this cover.

Miscellaneous takaful

This policy covers the participants against accidental injury which includes death and disablement. There are following range from one participant holder to his/her entire family.

• Personal Accident Takaful• Bankers’Blanket

• Workmen’s Compensation Takaful

Miscellaneous

MISCELLANEOUS

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Page 20: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Aziz ullah MemonChairman

Leadership and Pursuation

Message Of Chairman

Senior leadership at the helm of affairs play an important role in forming strategy for any corporate entity and provide guidance to employees to understand the same and follow the guidelines properly in order to achieve their targets.

Checks and balances are to be deviced for the staff to adhere to the prescribed norms. At the same time, keep the staff focused on meeting goals and making progress. Resultantly they should be rewarded sufficiently in order to maintain continuity and career building.

Simultaneously the field staff should be encouraged to bring problems and just no complaints. Problems should be sorted out immediately to enable them to bring solutions next time. However the management has to make the work places more congenial so that staff bring positive results and promote an atmosphere of trust and confidence.

At SPI, Our management is striving to motivate their employees to accomplish their goals and enhance the creditability of the organization.

Sustainable productivity also brings consolation to the stakeholders to believe and rely upon the management’s efficiency and out put delivered to the company.

May Allah Bless us all.

19Annual Report 2017

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Directors’ Report to the Members

On behalf of the Board of Directors, I am pleased to present the audited Financial Statements of SPI Insurance Company Limited and its Window Takaful Operations along with the Auditors’ Report for the year ended December 31, 2017.

Financial Highlights

The Company’s performance during the year 2017 was satisfactory. The premium written increased by 3.38% to Rs.700.99 million as on December 31, 2017 from Rs.678.08 million on December, 31 2016. The net premium also registered a rise of 6.16% to Rs.561.90 million as on December 31, 2017 as against Rs.529.28 million in the preceding year. The net claims decreased by 7.52% to Rs.198.92 million as on December 31, 2017 from Rs.215.09 million on December, 31 2016. Commission expenses posted at Rs.86.60 million as against Rs.62.65 million in last year. The management expenses showed a growth of 22.05% as compared to last year. The investment and other income stood at Rs.17.48 million as against Rs.23.36 million in the year 2016 showing decrease of 24.84%. Underwriting results showed a decline of 20.68% as compared to last year.

Accordingly, pretax profit posted at Rs.48.45 million as compared to profit of Rs. 64.71 million earned by Company for the last year ended December 31, 2016 showing decrease of 25.12%. There is a slight increase in the earning per share of 14.46% which was Rs.0.95 as compared to Rs.0.83 in the corresponding year 2016.

The written contribution under Window Takaful Operations for the period ended December 31, 2017 was Rs.308.60 millions against Rs.328.95 million in the preceding year while net contribution revenue was Rs.68.56 million as compared to Rs.107.31 million in last year. Wakala fee registered a decrease of 10.08% to Rs.135.27 million as on December 31, 2017 as against Rs.150.43 million in the preceding year. The net claims expenses were Rs.58.11 million as on December 31, 2017 as against Rs.95.87 million on December, 31 2016. Commission expenses posted at Rs.61.41 million as against Rs.49.10 million in last year. Management & direct expenses showed a reduction of 28.85% as compared to last year. Surplus in Participants Takaful fund registered at Rs.24.56 million as on December 31, 2017 as against Rs.13.47 million in the preceding year. Gain arising from operators fund was Rs.12.95 million as against Rs.6.50 million in the year 2016.

SPI Insurance Company Limited

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Page 22: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Significant increase is shown in operating results during the year 2017

December31, 2017

December 31, 2016

Inc / (Dec)in %

(Rupees in thousands)

Conventional Insurance

Premium Written

Net Premium revenue

Net Claims

Net Commission

Management & other expenses

Underwriting results

Investment and other Income

Profit before tax

Window Takaful Operations

Contributions written (6.19)

(36.10)

(10.08)

(39.38)

25.08

(28.85)

57.65

82.29

82.29

99.28

Net Contributions revenue

Wakala fee

Net Claims

Net Commission

Management & other expenses

Investment and other Income

Benefits paid/Payable to Participants

Surplus/ (Deficit) in PTF

Surplus/ (Deficit) in OPF

Consolidated Results

Profit before Tax (25.12)

20.02

14.46

Profit after Tax

E.P.S.

700,999

561,907

198,925

86,606

260,980

40,473

17,482

48,457

308,606

68,569

135,276

58,114

61,414

73,451

1200

24,569

24,569

12,958

48,546

44,152

0.95

678,082

529,289

215,099

62,658

213,823

51,027

23,261

64,710

328,956

107,314

150,439

95,871

49,100

97,509

2,833

13,478

13,478

6,502

64,710

36,789

0.83

Directors’ Report to the Members

3.38

6.16

(7.52)

38.22

22.05

(20.68)

(24.84)

(25.12)

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Directors’ Report to the Members

Credit Rating

The Pakistan Credit Rating Agency Limited (PACRA) has upgraded the Insurer Financial Strength (IFS) of our company to “A” rating with (stable outlook) vide letter No. PPL FY-18-493 dated October 02, 2017.

ISO 9001:2015 Certication

Due to overall performance during the year 2017 ISOQAR Limited has approved ISO 9001:2015 in compliance with their requirement and has issued the said certicate of registration.

Statement on Corporate and Financial Reporting Framework

(a) The nancial statements, prepared by the management of the insurer, present fairly its state of affairs, the result of its operations, cash ows and changes in equity;

(b) Proper books of account of the insurer have been maintained;(c) Appropriate accounting policies have been applied in preparation of

nancial statements in accordance with the insurance rules, 2017 including the new Insurance accounting 2017 and accounting estimates are based on reasonable and prudent judgment;

(d) International Accounting Standards, International Financial Reporting Standards or any other regulation or laws(including but not limited to the Shariah guidelines/principles) as applicable in Pakistan, have been followed in preparation of nancial statements and any departure there from has been adequately disclosed;

(e) The system of internal control is sound in design and has been effectively implemented and monitored;

(f ) There are no signicant doubts about the insurer's ability to continue as a going concern;(g) There has been no material departure from the best practices of corporate governance;

Statement under section 46(6) of the Insurance Ordinance, 2000

The incharge of the management of the business was Mr. Muhammad Akram Shahid, Director & Chief Executive and the report on the affairs of business during the year 2017 signed by Mr. Muhammad Akram Shahid and approved by the Board of Directors is part of the Annual Report 2017 under the title of “Directors’ Report to the members” and a. in our opinion the annual statutory accounts of the SPI Insurance

Company Limited set out in the forms attached to the statement have been drawn up in accordance with Ordinance and any rules made thereunder.

b. SPI Insurance Company Limited has at all times in the year complied with the provisions of the Ordinance and the rules made thereunder relating to paid-up capital, solvency and re-insurance arrangements; and

c. as at the date of statement, the SPI Insurance Company Limited continues to be in compliance with the provisions of the Ordinance and the rules made thereunder relating to paid-up capital, solvency and re-insurance arrangements.

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Directors’ Report to the Members

Board Meetings

During the year 2017, seven (7) meetings of the Board of Directors were held, with attendance record as under:

Name of Director Category

Number of

Meeting Held

Number of Meetings attend

Mr. Azizullah Memon Non-executive 7 7

Mr. Muhammad Akram Shahid Executive 7 7

Mr. Mohammad Asghar Independent 7 7

Mr. Muhammad Saleem Sheikh Non-executive 7 7

Mr. Uzman Naveed Chaudhary Non-executive 7 7

Mr.Khurram Khan Non-executive 7 5

Mr. Abdul Majeed Executive 7 7

Pattern of Shareholding

Auditors

A statement of pattern of shareholding as on December 31, 2017 is annexed with this report.

The present auditors M/s. RSM Avais Hyder Liaquat Nauman, Chartered Accountants, retired and being eligible, have offered themselves for re-appointment as statutory auditor for the year 2018. On the suggestion of the Audit Committee, the Board recommends the appointment of M/s. RSM Avais Hyder Liaquat Nauman, Chartered Accountants, as statutory auditors of the Company for the year ending December 31, 2018 till the next AGM.

Paid-up-Capital and reserves

SPI Insurance raised its paid up capital through right shares issue @ 12.1951% for Rupees 50 million among the existing shareholders during the year 2017 thus raising the capital to the extent of Rs.500 million.

Capitalization of accumulated prots

The Company distributed bonus shares among the existing shareholders during the year 2017, B-3 @ 8.6957% for Rupees 40 million on November 21, 2017.

23Annual Report 2017

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Directors’ Report to the Members

Appreciation and Acknowledgement

Mr. Muhammad Akram ShahidDirector/Chief Executive

Karachi: March 29, 2018

I would like to express my sincere gratitude to The Securities and Exchange Commission of Pakistan, State Bank of Pakistan, our Reinsurers and Bankers for their continued guidance and assistance. I would also like to take this opportunity to extend our thanks to valued customers and the shareholders for reposing their confidence. We also appreciate the efforts of the management and employees for their hard work and dedication towards the consistent growth of the Company.

For and on behalf of the Board of Directors

Overall-performance of the company during 2017 has shown stability against the preceding year. Resultantly PACRA has upgraded the IFS to A rating. Management based on numbers is quite optimistic to enhance the performance by inducting better professionals & marketing staff. Thus the estimated profit before tax will be 15% higher than the previous year.

Future Outlook

24

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25Annual Report 2017

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26

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27Annual Report 2017

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2017

328,956

107,314

150,439

95,871

49,100

97,509

2,833

13,478

13,478

6,502

312016

31

3.38

6.16

(7.52)

38.22

22.05

(20.68)

(24.84)

(25.12)

700,999

561,907

198,925

86,606

260,980

40,473

17,482

48,457

678,082

529,289

215,099

62,658

213,823

51,027

23,261

64,710

(6.19)

(36.10)

(10.08)

(39.38)

25.08

(28.85)

57.65

82.29

82.29

99.28

(25.12)

20.02

14.46

308,606

68,569

135,276

58,114

61,414

73,451

1200

24,569

24,569

12,958

48,546

44,152

0.95

64,710

36,789

0.83

SPI Insurance Company Limited

28

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29Annual Report 2017

22.05

28.85

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No. of Shareholders Shareholdings Total Shares held

8

2

2

1

1

1

15

1

769

1,300,001

3,500,001

8,100,001

12,000,001

768

1,300,000

3,500,000

8,100,000

12,000,000

21,472,488

4,305

2,357,771

6,626,963

8,001,550

11,536,923

21,472,488

50,000,000

Shareholding form to Shares

-do- " "

-do- " "

-do- " "

-do- " "

-do- " "

Categories of Shareholders

List "C"

Directors, CEO & their spouse and minor children Basic holding Percentage

Mr. Azizullah Memon Chairman 500

500

609

768

500

500

8,001,550

1,282,050

0.0010

0.0010

0.0012

0.0015

0.0010

0.0010

16.0031

2.5641

Mr. Muhammad Saleem Shaikh Director

Mr. Kharrum Khan Director

Mr. Uzman Naveed Chaudhary Director

Mr. Abdul Majeed Director

Mr. Mohammad Asghar Director

Mr. Muhammad Akram Shahid Director & CEO

Spouse

Mrs. Shagufta Parveen Shahid

List "B"

Other Corporate Shareholders

UIG Global Services Limited 3,199,555

21,472,488

1,075,721

6.3991

42.9450

2.1514

United Track System (Pvt.) Limited.

Tawasul Risk Management Services (Pvt) Ltd.

Individuals

Mr. Jamil Ahmed Khan

Mr. Farrukh S. Ansari

160

768

0.0003

0.0015

List "A"

Associated Companies, undertaking & Related Parties

Silk Bank Limited 11,536,923

3,427,408

50,000,000

23.0738

6.8548

100.00

Saudi Pak Leasing Company Ltd.

TOTAL

* Shareholders holding 10% or more voting interest.

Pattern of Holding of the Shares Held by the shareholders as at December 31, 2017

*

*

*

SPI Insurance Company Limited

30

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Review Report to the Memberson the statement of Compliance with the Code of Corporate Governance

REVIEW REPORT TO THE MEMBERS ON THE STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE

We have reviewed the enclosed Statement of Compliance with the best practices contained, in the Code of Corporate Governance for Insurers, 2016 (the Code) prepared by the Board of Directors (the Board) of SPI Insurance Company Limited (the Company) for the year ended December 31, 2017 to comply with the requirements of the Code of Corporate Governance applicable to non-listed Insurance Companies issued under S.R.O 1045 (I)2016 dated November 9, 2016 by Securities and Exchange Commission of Pakistan.

The responsibility for compliance with the Code 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 and report if it does not and to highlight any non-compliance with the requirements of the Code. A review is limited primarily to inquiries of the Company's personnel and review of various documents prepared by the Company to comply with the Code.

As a 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 are not required to consider whether the Board of Directors' statement on internal control covers all risks and controls or to form an opinion on the effectiveness of such internal controls, the Company's corporate governance procedures and risks.

The Code requires the Company to place before the Audit Committee, and upon recommendation of the Audit Committee, place before the Board of Directors for their review and approval of its related party transactions distinguishing between transactions carried out on terms equivalent to those that prevail in arm's length transactions and transactions which are not executed at arm's length price and recording proper justification for using such alternate pricing mechanism. We are only required and have ensured compliance of this requirement to the extent of the approval of the related party transactions by the Board of Directors upon recommendation of the Audit Committee. We have not carried out any procedures to determine whether the related party transactions were undertaken at arm's length price or not.

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 as applicable to the Company for the year ended December 31, 2017.

Other MatterThe Statement of Compliance with the Code of Corporate Governance for the year ended December 31, 2016 was reviewed by another firm of Chartered Accountants who expressed an unqualified conclusion in its report dated April 01, 2017.

RSM AVAIS HYDER LIAQUAT NAUMANChartered AccountantsDate: March 29, 2018Place: Lahore

31Annual Report 2017

SPI Insurance Company Limited

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Statement of Compliance

STATEMENT OF COMPLIANCE WITH THE CODE OFCORPORATE GOVERNANCE FOR INSURERS, 2016

Name of Insurer SPI Insurance Company LimitedYear ended December 31, 2017

This statement is being presented in compliance with the Code of Corporate Governance for Insurers, 2016 for the purpose of establishing a framework of good governance, whereby an insurer is managed in compliance with the best practices of corporate governance.

The insurer has applied the principles contained in the Code in the following manner:

1. The insurer encourages representation of independent non-executive directors and directors representing minority interests on its Board of Directors. At present the Board includes: Category Names Executive Directors Mr. Muhammad Akram Shahid Mr. Abdul Majeed

Independent Director Mr. Mohammad Asghar

Non-Executive Directors Mr. Azizullah Memom Mr. Muhammad Saleem Sheikh Mr. Uzman Naveed Chaudhary Mr. Khurram Khan

All independent directors meet the criteria of independence as laid down under the Code of Corporate Governance for Insurers, 2016.

2. The directors have confirmed that none of them is serving as a director in more than seven listed companies, including this insurer (excluding the listed subsidiaries of holding companies in which each one of them is a director).

3. All the resident directors of the insurer are registered as taxpayers and none of them has defaulted in payment of any loan to a banking company. A DFI or an NSFI or, being a member of stock exchange, has been declared as a defaulter by a stock exchange.

4. During the period Mr. Jameel A. Khan resigned from board of Directors (28-03-2017) and Mr. Khurram Khan Joined the board of Directors (01-04-2017) on specified time.

5. The insurer has prepared a Code of Conduct, which has been disseminated among all the directors and employees of the insurer.

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Statement of ComplianceWith the Code of Corporate Governance For Insurers, 2017

6. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of the insurer. A complete record of particulars of significant policies along with the dates on which they were approved or amended has been maintained.

7. All powers of the Board have been duly exercised and decisions on material transactions, including appointment and determination of remuneration and terms and conditions of employment of the Chief Executive Officer, other executive directors and the key officers, have been taken by the Board.

8. The meetings of the Board were presided over by the Chairman and, in his/ her absence, by a director elected by the Board for this purpose and the Board met at least once in every quarter. Written notices of the Board meetings, along with agenda and working papers were circulated at least seven (7) days before the meeting. The minutes of the meeting were appropriately recorded and circulated.

9. The Board has established a system of sound internal control, which is effectively implemented at all levels within the insurer. The insurer has adopted and complied with all the necessary aspect of internal controls given in the Code. 10. The Board of Directors have complied with requirement of code.

11. The Board has approved appointment of Chief Financial Officer, Company Secretary and Head of Internal Audit, including their remuneration and terms and conditions of employment.

12. The Directors' Report for this year has been prepared in compliance with the requirements of the Code of Corporate Governance for Insurers, 2016 and fully describes the salient matters required to be disclosed.

13. The financial statements of the insurer were duly endorsed by Chief Executive Officer and Chief Financial Officer before approval of the Board.

14. The directors, Chief Executive Officer and other executives do not hold any interest in the shares of the insurer other than disclosed in the pattern of shareholding.

15. The insurer has complied with all the corporate and financial reporting requirements of the Code of Corporate Governance for Insurers, 2016.

16. The Board has formed the following Management Committees:

Underwriting Committee:Name of the Member CategoryMr. Muhammad Akram Shahid Executive DirectorMr. Abdul Majeed Executive DirectorMr. Naeem Tariq MemberMr. Imtiaz Ali Committee Secretary

33Annual Report 2017

SPI Insurance Company Limited

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Statement of ComplianceWith the Code of Corporate Governance For Insurers, 2017

Claim Settlement Committee:Name of the Member CategoryMr. Uzman Naveed Chaudhry Non - Executive DirectorMr. Muhammad Akram Shahid Executive DirectorMr. Naeem Tariq Committee Secretary

Reinsurance & Co-insurance Committee:Name of the Member CategoryMr. Muhammad Akram Shahid Executive DirectorMr. Abdul Majeed Executive DirectorMr. Faisal Akbar Committee Secretary

Risk Management & Compliance Committee:Name of the Member CategoryMr. Uzman Naveed Chaudhry Non - Executive DirectorMr. Azizullah Memon Non - Executive Director Mr. Naeem Tariq MemberMr. Faisal Akbar Committee Secretary 17. The Board has formed the following Board Committees:

Ethics, Human Resource & Remuneration Committee:Name of the Member CategoryMr. Muhammad Saleem Sheikh Non - Executive DirectorMr. Muhammad Akram Shahid Executive Director Mr. Mohammad Asghar Independent DirectorMr. Shahid Malik Committee Secretary

Nominations Committee:Name of the Member CategoryMr. Azizullah Memon Non - Executive DirectorMr. Muhammad Akram Shahid Executive Director Mr. Muhammad Saleem Sheikh Non - Executive DirectorMr. Noshad Ahmed Committee Secretary

Investment Committee:Name of the Member CategoryMr. Azizullah Memon Non - Executive DirectorMr. Muhammad Akram Shahid Executive DirectorMr. Naeem Tariq Committee Secretary

18. The Board has formed an Audit Committee. It comprises of three members, of whom one is independent directors and two are non-executive directors. The chairman of the Committee is an independent director. The composition of the Audit Committee is as follows:

34

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Statement of ComplianceWith the Code of Corporate Governance For Insurers, 2017

Audit Committee:Name of the Member CategoryMr. Mohammad Asghar IndependentMr. Khurram Khan Non - ExecutiveMr. Muhammad Saleem Sheikh Non - ExecutiveMian Mohsin Aslam Committee Secretary

19. The meetings of the Committees, except Ethics, Human Resource and Remuneration Committee, were held at once every quarter prior to approval of interim and final results of the insurer and as required by the Code of Corporate Governance for Insurers, 2016. The terms of references of the Committees have been formed and advised to the Committees for compliance.

20. The Board has set up an effective internal audit function who are considered suitably qualified and experienced for the purpose and are conversant with the policies and procedures of the insurer and they are involved in the internal audit function on a regular basis.

21. The Chief Executive Officer, Chief Financial Officer, Compliance Officer and the Head Internal Audit possess such qualification and experience as is required under the Code of Corporate Governance for Insurers, 2016. The Appointed Actuary of the insurer also meets the conditions as laid down in the said Code. Moreover, the persons heading the underwriting, claim, reinsurance, risk management and grievance functions/departments possess qualification and experience of direct relevance to their respective functions, as required under section 12 of the Insurance Ordinance, 2000 (Ordinance No. XXXIX of'2000):

Name of the Person Designation

Mr. Muhammad Akram Shahid Chief Executive OfficerMr. Naeem Tariq Chief Financial OfficerMr. Faisal Akbar Compliance Officer, Head of Re-InsuranceM/s Akhter & Hassan Co. ActuaryMr. Noshad Ahmed Company SecretaryMian Mohsin Aslam Head Internal AuditMr. Imtiaz Ali Head of Underwriting & Risk ManagementMr. Khalid Nazir Bajwa Head of Claims & Grievance Department

22. The statutory auditors of the insurer have been appointed from the panel auditors approved by the Commission in terms of section 48 the Insurance Ordinance, 2000 (Ordinance No, XXXIX of 2000). The statutory auditors 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 insurer and that the firm and all partners are in compliance with the International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by Institute of Chartered Accountants of Pakistan.

35Annual Report 2017

SPI Insurance Company Limited

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Statement of ComplianceWith the Code of Corporate Governance For Insurers, 2017

23. The statutory auditors or the persons associated with them have not been appointed to provide other services and the auditors have confirmed that they have observed IFAC guidelines in this regard.

24. The Appointed Actuary of the insurer has confirmed that he/she or his/her spouse and minor children do not hold shares of the insurer.

25. The Board ensures that the Appointed Actuary complies with the requirements set out for him/her in the Code of Corporate Governance for Insurers, 2016.

26. The Board ensures that the investment policy of the insurer has been drawn up in accordance with the provisions of the Code of Corporate Governance for Insurers, 2016.

27. The Board ensures that the risk management system of the insurer is in place as per the requirements of the Code of Corporate Governance for Insurers, 2016.

28. The insurer has set up a risk management function /department, which carries out its tasks as covered under the Code of Corporate Governance for Insurers, 2016.

29. The Board ensures that as part of the risk management system, the insurer gets itself rated from The Pakistan credit rating agency, which is being used by its risk management function/department and the respective Committee as a risk monitoring tool. The rating assigned by the said rating agency October 02, 2017 is “A” with stable outlook.

30. The Board has set up a grievance department/function, which fully complies with requirements of the Code of Corporate Governance for Insurers, 2016.

31. The insurer has not obtained any exemption(s) from the Securities and Exchange Commission of Pakistan in respect of the Code of Corporate Governance for Insurers, 2016.

32. We confirm that all other material principles contained in the Code of Corporate Governance for Insurers, 2016 have been complied with.

By Order of the Board

Mr. Muhammad Akram Shahid(Director & Chief Executive)Date:March 29, 2018

36

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FINANCIAL STATEMENTS

For the year ended December 31, 2017

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Auditors’ Report to the Members

We have audited the annexed financial statements comprising of:(i) statement of financial position;(ii) profit and loss account;(iii) statement of comprehensive income;(iv) statement of changes in equity;(v) statement of cash flows;

of SPI Insurance Company Limited (“the Company”) as at December 31, 2017 together with the notes forming part thereof, for the year then ended.

It is the responsibility of the Company's Board of Directors/ management to establish and maintain a system of internal control, and prepare and present the financial statements in conformity with the approved accounting standards as applicable in Pakistan and the requirements of the Insurance Ordinance, 2000 (XXXIX of 2000) and the repealed Companies Ordinance, 1984 (XLVII of 1984). Our responsibility is to express an opinion on these statements based on our audit.

We conducted our audit in accordance with the Auditing Standards 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 used 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.

In our opinion:

a) proper books of account have been kept by the Company as required by the Insurance Ordinance, 2000 and the repealed Companies Ordinance, 1984;

b) the financial statements together with the notes thereon have been drawn up in conformity with the Insurance Ordinance, 2000 and the repealed Companies Ordinance, 1984, and accurately reflect the books and records of the Company and are further in accordance with accounting policies consistently applied except for the changes as stated in note 2.7 with which we concur;

c) the financial statements together with the notes thereon present fairly, in all material respects, the state of the Company's affairs as at December 31, 2017 and of the profit, its comprehensive income, its cash flows and changes in equity for the year then ended in accordance with approved accounting standards as applicable in Pakistan, and give the information required to be disclosed by the Insurance Ordinance, 2000 and the repealed Companies Ordinance, 1984; and

38

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Auditors’ Report to the Members

d) no zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980).

Other Matter

The financial statements for the year ended December 31, 2016 were audited by another firm of Chartered Accountants who had expressed an unmodified opinion in its report dated April 01, 2017.

RSM AVAIS HYDER LIAQUAT NAUMAN Chartered Accountants Engagement Partner: Syed Ali Adnan Tirmizey

Date: March 29, 2018Place: Lahore

39Annual Report 2017

SPI Insurance Company Limited

Page 41: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Chief Executive Officer DirectorDirectorChairman

AssetsProperty and equipmentIntangible assetsInvestments

Equity securitiesGovernment securitiesTerm deposits

56

789

1011122223131415

16

2221

231718

1910

20

97,531,017 104,558

410,000,000 (292,965) 22,554,227 432,261,262

139,295,248 270,947,285 4,166,529 9,621,899 13,454,943 15,758,643 2,172,988 25,412,481 73,396,726 49,507,160 603,733,902 1,035,995,164

-

97,361,381 83,646

50,132,740 161,031,338 21,030,000 129,366,194 153,465,041 334,389,587

69,522,145 35,293,968 18,727,263 63,737,669 43,843,153 1,177,984,125

500,000,000 (417,985) 23,731,192 523,313,207

178,748,845 268,881,204

- 9,072,966 12,264,906

11,564,273 44,879,504 29,312,124 59,911,320 40,035,776 654,670,918

1,177,984,125

-

246,760 135,814,426 20,230,000 131,647,223 120,880,689 258,327,374 70,274,311 40,737,250 25,846,224 74,399,902 59,955,430 1,035,995,164

The annexed notes 1 to 40 form an integral part of these financial statements.

Statement of Financial Position as at December 31, 2017

Total assets in Window Takaful Operations - Operator's FundLoans and other receivablesInsurance / Reinsurance receivablesReinsurance recoveries against outstanding claimsDeferred commission expenseDeferred taxationPrepaymentsCash and BankTotal Assets

Equity and LiabilitiesCapital and reservesOrdinary share capitalFair value reserveUn-appropriated profitTotal EquityLiabilitiesUnderwriting Provisions

Outstanding claims (including IBNR)Unearned premium reservesPremium deficiency reservesUnearned reinsurance commission

Retirement benefit obligationsBorrowingsInsurance / Reinsurance payablesOther creditors and accrualsTotal liabilities in Window Takaful OperationsTaxation - provision less paymentTotal LiabilitiesTotal Equity and Liabilities

Contingencies and Commitments

Note 2017 2016Rupees Rupees

Restated(Refer note 2.7)

40

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for the year ended December 31, 2017 Profit and Loss Account

Net insurance premium

Net insurance claims

Premium deficiency

Net commission expenses

Insurance claims expenses

Management expenses

UNDERWRITING RESULT

Investment income

Other income

Finance cost

Profit from the year from window takaful operations

Profit before tax

Tax expense

Profit after tax

Earning (after tax) per share

The annexed notes 1 to 40 form an integral part of these financial statements.

Other expenses

Results of operating activities

561,907,617

(198,926,403)

4,166,529

(86,606,218)

(281,366,092)

(240,067,802)

40,473,723

529,289,682

(215,099,122)

(1,513,915)

(62,658,507)

(279,271,544)

(198,991,610)

51,026,528

21

22

23

24

14,265,129

3,217,750

(20,912,564)

37,044,038

(1,546,957)

12,958,696

48,455,777

12,712,440

10,648,785

(14,831,245)

59,556,508

(1,349,327)

6,502,647

64,709,828

25

26

27

28

10

(4,304,009)

44,151,768

0.95

(27,921,477)

36,788,351 Restated

0.83

29

30

Note 2017 2016Rupees Rupees

Restated(Refer note 2.7)

Chief Executive Officer DirectorDirectorChairman

41Annual Report 2017

SPI Insurance Company Limited

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36,788,351

(1,369,692)

Statement of Comprehensive Income for the year ended December 31, 2017

The annexed notes 1 to 40 form an integral part of these financial statements.

Profit after taxOther comprehensive income / (Loss) - net of taxItems that will not be reclassified to profit or lossActuarial (loss)

Other comprehensive (loss) for the yearOther comprehensive (loss) from Window Takaful Operations

Items that may be reclassified subsequently to profit or loss: Unrealised losses on available for sale investmentsRealized fair value reserve on sale of available for sale investments

Total comprehensive income for the year

(66,340) (260,081)

(1,696,113) (673,899)

34,418,339

44,151,768

(1,220,484)

(125,020)-

(1,345,504) (1,754,319)

41,051,945

Note 2017 2016Rupees Rupees

Restated(Refer note 2.7)

10

Chief Executive Officer DirectorDirectorChairman

42

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Chief Executive Officer Chairman Director Director

for the year ended December 31, 2017 Statement of Changes In Equity

- - - - - - - - - - - - - - - - - - R u p e e s - - - - - - - - - - - - - -

CAPITAL AND RESERVES

TOTALUN-APPROPRIATED

PROFITSHARE

CAPITAL

RESERVE FOR ISSUANCE OF BONUS

SHARES

FAIR VALUERESERVE

The annexed notes 1 to 40 form an integral part of these financial statements.

325,000,000

-

325,000,000

-

- - -

- - 85,000,000

410,000,000 (292,965)

(125,020) -

-

-

- -

-

-

-

- - -

-

-

-

-

-

50,000,000

40,000,000 (40,000,000)

40,000,000

500,000,000 (417,985)

-

85,000,000

(85,000,000)

-

33,456

33,456

(326,421)

72,216,653

592,814

72,809,467

34,744,760

(85,000,000)

-

22,554,227

41,176,965

(40,000,000)

23,731,192

397,216,653

626,270

397,842,923

34,418,339

432,261,262

41,051,945

50,000,000

523,313,207

Balance as at January 01, 2016 (previously stated)

Effect of change in accounting policy (Refer note 2.7)

Total comprehensive income for the year

Transfer to reserve for issue of bonus shares

Issue of bonus shares

Balance as at December 31, 2016 (Restated)

Total comprehensive income for the year

Issuance of ordinary shares

Transfer to reserve for issue of bonus shares

Issue of bonus shares

Balance as at December 31, 2017

Balance as at January 01, 2016 (Restated)

43Annual Report 2017

SPI Insurance Company Limited

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Statement of Cash Flowsfor the year ended December 31, 2017

2017 2016Rupees Rupees

Restated(Refer note 2.7)

OPERATING ACTIVITIESa) Underwriting activities

Premiums received 679,330,583 (148,831,030) (176,121,422) 17,400,782 (101,122,337) 17,000,911

287,657,487

667,272,472 Reinsurance premiums paid (121,833,234)Claims paid (183,211,973)Reinsurance and other recoveries received (39,697,294)Commission paid (83,270,641)Commission received 14,800,757 Other underwriting payments (102,153,600)Net cash generated from underwriting activities 151,906,487

b) Other operating activities

Income tax paid (6,133,368)(215,587,225)(52,410,432)

5,758,257179,202

(268,193,566) 19,463,921

(5,915,121)General management expenses paid (81,166,050)Other operating payments (10,961,859)Other operating receipts 793,160 Loan (disbursed) / refunded (359,683)Net cash flow from other operating activities (97,609,553)Total cash generated from all operating activities 54,296,934

INVESTING ACTIVITIES

Profit / return received 13,919,943(96,257,912)(13,829,559)

785,200 (95,382,328)

12,123,899 Payments for investments - Net (43,913,292)Fixed capital expenditure (29,340,595)Proceeds from disposal of fixed assets 1,001,860 Total cash used in investing activities (60,128,128)

FINANCING ACTIVITIES

Proceeds from issue of sharesReceipts / (Payments) on finance leases

- 2,467,120

Total cash generated from / (used in) financing activities 2,467,120 Net cash (outflow) / inflow from all activities (3,364,074)Cash and cash equivalents at beginning of the year 83,549,504 Cash and cash equivalents at end of the year 80,185,430

50,000,000(10,423,870)

39,576,130 (36,342,277)

80,185,430 43,843,153

-

44

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Reconciliation to Profit and Loss Account

Operating cash flowsDepreciation / amortization expensesProvision for doubtful debtsGain / (loss) on Disposal of Fixed AssetsIncrease in assets other than cashIncrease in liabilities Investment and other incomeLease chargesProfit for the year from Window Takaful operationsProvision for gratuityProvision for taxation

Profit after taxation

Cash for the purpose of cash flows comprises of:Cash and BankDeposits maturing within 12 months

19,463,921(19,982,574)(3,936,985)

518,167114,361,568(79,278,213)

14,265,129(1,447,517)12,958,696(8,466,415)(4,304,009)

44,151,768

43,843,153

43,843,153-

54,296,934 (19,809,123) (5,917,961)

48,853 122,675,742

(105,426,400) 18,859,772 (1,342,342)

6,502,647 (5,178,294)

(27,921,477)

36,788,351

59,955,430 20,230,000 80,185,430

The annexed notes 1 to 40 form an integral part of these financial statements.

Statement of Cash Flowsfor the year ended December 31, 2017

2017 2016Rupees Rupees

Restated(Refer note 2.7)

Chief Executive Officer DirectorDirectorChairman

45Annual Report 2017

SPI Insurance Company Limited

Page 47: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

1

2

2.1

2.2

LEGAL STATUS AND NATURE OF BUSINESS

SPI Insurance Company Limited (the Company) is an unquoted public limited company incorporated in Islamabad, Pakistan on February 15, 2005 under the repealed Companies Ordinance, 1984. The Company is engaged in non-life insurance business mainly comprising of fire, marine, motor, crop & livestock and miscellaneous. The Company commenced its commercial operations on April 13, 2005. The registered office of the Company is situated at suite # 204-A, Second Floor, Madina City Mall, Abdullah Haroon Road, Karachi and principal office of the Company is situated at UIG House 6-D, 1st Floor, Upper Mall, Lahore, Pakistan.

The Company has been allowed to work as Window Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful Rules, 2012 to carry on Islamic General Insurance in Pakistan. It has not transacted any business outside Pakistan.

BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE

The Companies Act 2017 (the Act) has been promulgated, however, Securities and Exchange Commission of Pakistan vide its circular No. 23 of 2017 dated October 04, 2017 communicated that the Commission has decided that the companies whose financial year closes on or before December 31, 2017 shall prepare their financial statements in accordance with the provisions of the repealed Companies Ordinance, 1984. Accordingly, these financial statements are prepared in accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board and Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan (ICAP) as are notified under the repealed Companies Ordinance, 1984, provisions of and directives issued under the repealed Companies Ordinance, 1984, the Insurance Ordinance, 2000, the Insurance Rules, 2017, the Insurance Accounting Regulations, 2017 and the Takaful Rules, 2012. In case requirements differ, the provisions or directives of the repealed Companies Ordinance, 1984, Insurance Ordinance, 2000, the Insurance Rules, 2017, the Insurance Accounting Regulations, 2017 and the Takaful Rules, 2012 shall prevail.

Basis of measurement

These financial statements have been prepared under the historical cost convention except that certain financial instruments are carried at fair value and obligations under staff retirement benefits are stated at present value.

Use of estimates and judgements

The preparation of financial statements in conformity with the requirements of approved accounting standards as applicable in Pakistan requires management to make certain judgments, accounting estimates and assumptions. It also requires the management to exercise its judgment in the process of applying the Company's accounting policies to reported amount of assets and liabilities as well as income and expenses. Actual results may differ from these estimates and associated assumptions are continually evaluated and are based on historical experience, statutory requirements and other factors considered reasonable in the circumstances. Revision to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected. The estimates and assumptions that are expected to have a significant effect on the assets and liabilities and income and expenses have been disclosed in note 4 to these financial statements.

Functional and presentation currency

These financial statements are presented in Pakistan Rupees, which is also the Company's functional and presentation currency. All financial information presented in Pakistan rupees are rounded off to nearest rupees unless otherwise stated.

2.3

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2.5

Notes to the Financial Statementsfor the year ended December 31, 2017

Standards, interpretations and amendments effective in current year

The following standards, amendments to standards and interpretations have become effective and are mandatory for financial statements of the Company for the periods beginning on or after January 01, 2017 and therefore, have been applied in preparing these financial statements.

• IFRS 12 – Disclosure of Interests in Other Entities

The amendment states that an entity need not provide summarized financial information for interests in subsidiaries, associates or joint ventures that are classified (or included in a disposal group that is classified) as held for sale.

The amendments clarify that this is the only concession from the disclosure requirements for such interests.

• IAS 7 – Statement of Cash Flows

The amendments require an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both cash and non-cash changes.

The amendments apply prospectively. Entities are not required to present comparative information for earlier periods when they first apply the amendments.

• IAS 12 – Income Taxes

The amendments in recognition of deferred tax assets for unrealized losses clarify the following aspects:- Unrealized losses on debt instruments measured at fair value and measured at cost for tax purposes give rise

to a deductible temporary difference regardless of whether the debt instrument's holder expects to recover the carrying amount of the debt instrument by sale or by use.

- The carrying amount of an asset does not limit the estimation of probable future taxable profits.- Estimates for future taxable profits exclude tax deductions resulting from the reversal of deductible

temporary differences.- An entity assesses a deferred tax asset in combination with other deferred tax assets. Where tax law restricts

the utilization of tax losses, an entity would assess a deferred tax asset in combination with other deferred tax assets of the same type.

The application of amendments has no significant impact on the disclosures or amounts recognized in the Company’s financial statements.

Standards, interpretations and amendments not effective at year end

The following standards, amendments to standards and interpretations have been published and are mandatory for the Company’s accounting periods beginning on or after their respective effective dates.

• IFRS 2– Share-Based Payment

Amendments to classification and measurement of Share-based payment transactions, applicable for annual reporting periods beginning on or after January 01, 2018, contains the following clarifications and amendments:

- Accounting for cash-settled share-based payment transactions that include a performance condition

Until now, IFRS 2 contained no guidance on how vesting conditions affect the fair value of liabilities for cash-settled share-based payments. IASB has now added guidance that introduces accounting requirements for cash-settled share-based payments that follows the same approach as used for equity-settled share-based payments.

2.4

47Annual Report 2017

SPI Insurance Company Limited

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Notes to the Financial Statementsfor the year ended December 31, 2017

- Classication of share-based payment transactions with net settlement features

IASB has introduced an exception into IFRS 2 so that a share-based payment where the entity settles the share-based payment arrangement net is classified as equity-settled in its entirety provided the share-based payment would have been classified as equity-settled had it not included the net settlement feature.

- Accounting for modications of share-based payment

Until now, IFRS 2 did not specifically address situations where a cash-settled share-based payment changes to an equity-settled share-based payment because of modifications of the terms and conditions. The IASB has introduced the following clarifications:

- On such modifications, the original liability recognized in respect of the cash-settled share-based payment is derecognized and the equity-settled share-based payment is recognized at the modification date fair value to the extent services have been rendered up to the modification date.

- Any difference between the carrying amount of the liability as at the modification date and the amount recognized in equity at the same date would be recognized in profit and loss immediately.

• Annual Improvements to IFRS Standards 2015–2017 cycle, applicable for annual reporting periods beginning on or after January 01, 2019

In December 2017, the IASB published Annual Improvements to IFRS Standards 2015–2017 Cycle, containing the following amendments to IFRS':

- IFRS 3 – Business Combinations and IFRS 11 – Joint Arrangements

The amendments to IFRS 3 clarify that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business. The amendments to IFRS 11 clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business.

- IAS 12 – Income Taxes

The amendments clarify that all income tax consequences of dividends (i.e. distribution of profits) should be recognized in profit or loss, regardless of how the tax arises.

- IAS 23 – Borrowing Costs

The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalization rate on general borrowings.

• IFRS 4 – Insurance Contracts

The standard has been amended by applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts'. The amendment states that an entity choosing to apply the overlay approach retrospectively to qualifying financial assets does so when it first applies IFRS 9. An entity choosing to apply the deferral approach does so for annual reporting periods beginning on or after January 01, 2018.

• IFRS 9 – Financial Instruments

IFRS 9 contains accounting requirements for financial instruments in the areas of classification and measurement, impairments, hedge accounting and de-recognition.

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Notes to the Financial Statementsfor the year ended December 31, 2017

All recognized financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement are required to be subsequently measured at amortized cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortized cost at the end of subsequent accounting periods. Debt instruments that are held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets, and that have contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, are measured at Fair Value Through Other Comprehensive Income. All other debt investments and equity investments are measured at their fair value at the end of subsequent accounting periods.

In relation to the impairment of financial assets, standard requires an expected credit loss model, as opposed to an incurred credit loss model under IAS 39.

The new general hedge accounting requirements retain the three types of hedge accounting mechanisms currently available in IAS 39. Under IFRS 9, greater flexibility has been introduced to the types of transactions eligible for hedge accounting, specifically broadening the types of instruments that qualify for hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting. In addition, the effectiveness test has been replaced with the principle of an ‘economic relationship’. Retrospective assessment of hedge effectiveness is also no longer required. Enhanced disclosure requirements about an entity’s risk management activities have also been introduced.

The standard is effective for annual reporting periods beginning on or after July 01, 2018, as notified by the SECP vide SRO 1007(I)/2017 dated October 04, 2017.

Further, IASB has issued amendments relating to Prepayment Features with Negative Compensation (Amendments to IFRS 9) to address the concerns about how IFRS 9 classifies particular pre-payable financial assets. The amendments are to be applied retrospectively for fiscal years beginning on or after January 01, 2019; early application is permitted.

The management of the Company is reviewing the changes to evaluate the impact of application of standard on the financial statements.

• IFRS 15 Revenue from Contracts with Customers

IFRS 15 originally issued on May 28, 2014, provides a single, principles based five-step model (Identify the contract with the customer, identifying performance obligations, determine the transaction price, allocate the transaction price to the performance obligations in the contracts and recognize revenue when (or as) the entity satisfies a performance obligation) to be applied to all contracts with customers. On April 12, 2016, clarifications to IFRS 15 'Revenue from Contracts with Customers' were issued which address three of the five topics identified (identifying performance obligations, principal versus agent considerations, and licensing) and provide some transition relief for modified contracts and completed contracts.

Guidance is provided on topics such as the point in which revenue is recognized, accounting for variable consideration, costs of fulfilling and obtaining a contract and various related matters. New disclosures about revenue are also introduced.

The standard along with clarifications are effective for annual reporting periods beginning on or after July 01, 2018, as notified by SECP vide SRO 1007(I)/2017 dated October 04, 2017. The Management is in the process of evaluating the impact of application of the standard and clarifications on the Company’s financial statements.

• IAS 19 - Employee Benefits

Amendments, applicable for annual reporting periods beginning on or after January 01, 2019, relate to plan amendment, curtailment or settlement detailed as below:

49Annual Report 2017

SPI Insurance Company Limited

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Notes to the Financial Statementsfor the year ended December 31, 2017

- If a plan amendment, curtailment or settlement occurs, it is now mandatory that the current service cost and the net interest for the period after the remeasurement are determined using the assumptions used for the remeasurement.

- In addition, amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling.

• IAS 28 – Investments in Associates and Joint Ventures

Amendments resulting from Annual Improvements 2014–2016 Cycle (clarifying certain fair value measurements), applicable for periods beginning on or after January 01, 2018, clarified that the election to measure at fair value through profit or loss an investment in an associate or a joint venture that is held by an entity that is a venture capital organization, or other qualifying entity, is available for each investment in an associate or joint venture on an investment-by-investment basis, upon initial recognition.

Further, amendments applicable for periods beginning on or after January 01, 2019 have been added to clarify that an entity applies IFRS 9 including its impairment requirements, to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied.

• IAS 40 – Investment Property

The amendments in Transfers of Investment Property, applicable for periods beginning on or after January 01, 2018, state that an entity shall transfer a property to, or from, investment property when, and only when, there is evidence of a change in use. A change of use occurs if property meets, or ceases to meet, the definition of investment property. A change in management’s intentions for the use of a property by itself does not constitute evidence of a change in use.

• IFRIC 22 – Foreign Currency Transactions and Advance Consideration

IFRIC 22 claries the accounting for transactions that include the receipt or payment of advance consideration in a foreign currency.

The Interpretation covers foreign currency transactions when an entity recognizes a non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration before the entity recognizes the related asset, expense or income. It does not apply when an entity measures the related asset, expense or income on initial recognition at fair value or at the fair value of the consideration received or paid at a date other than the date of initial recognition of the non-monetary asset or non-monetary liability. Also, the Interpretation need not be applied to income taxes, insurance contracts or reinsurance contracts.

IFRIC 22 is effective for annual reporting periods beginning on or after January 01, 2018. Earlier application is permitted.

• IFRIC 23 – Uncertainty over Income Tax Treatments

IFRIC 23 clarifies the accounting for uncertainties in income taxes.

The interpretation is to be applied to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under IAS 12.

IFRIC 23 is effective for annual reporting periods beginning on or after January 01, 2019. Earlier application is permitted.

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Notes to the Financial Statementsfor the year ended December 31, 2017

2.6

2.7

2.7.1

2.7.2

• Standards issued by IASB but not applicable in Pakistan

Following new standards have been issued by IASB which are yet to be notified by the SECP for purpose of applicability in Pakistan:

- IFRS 1 – First-time adoption of International Financial Reporting Standards - IFRS 14 – Regulatory Deferral Accounts- IFRS 16 – Leases- IFRS 17 – Insurance Contracts

Standards, amendments to standards and interpretations becoming effective in future period but not relevant

There are certain new standards, amendments to standards and interpretations that are effective from different future periods but are considered not to be relevant to the Company’s operations, therefore, not disclosed in these financial statements.

Changes in accounting policies

Adoption of new Insurance Rules, 2017 and Insurance Accounting Regulations, 2017

During the year, SECP issued the Insurance Rules, 2017 including the new Insurance Accounting Regulations, 2017 and format for the preparation of the financial statements. The new Insurance Rules are effective for the current year's financial statements. The significant changes resulting from such new rules affecting these financial statements are as follows.

The Company has changed its accounting policy in relation to the available-for-sale investments to comply with the requirements of IAS 39 "Financial Instruments - Recognition and Measurement". These investments are now carried at fair value. Surplus / (deficit) on revaluation from one reporting date to another is taken to other comprehensive income in the statement of comprehensive income. On derecognition or impairment in available-for-sale investments, the cumulative gain or loss previously reported in other compressive income is transferred to profit and loss for the year within statement of comprehensive income. Previously the investments were carried at lower of cost and market value. This change in the accounting policy has been applied retrospectively and comparative information has been restated in accordance with the requirements of IAS 8 " Accounting Policies, Change in Accounting Estimates and Errors". The impact of change in accounting policy are summarised below:

Statement of financial position andStatement of changes in equityInvestments - Equity securitiesUnappropriated profitFair value reserve

Profit and loss accountInvestment income

Statement Of comprehensive Income - Other comprehensive incomeUnrealised gains / (losses) on available for sale investmentsRealized fair value reserve on sale of available for sale investments

18,009,628 42,809,467

33,456

17,530,99772,216,653

- 20,213,300

-

12,864,650

2016 2015

--------------------------Rupees--------------------------

As previouslystated

As restated

As previouslystated

As restated

-

-

22,554,227

(292,965)

12,712,440

(260,081)

(66,340)

51Annual Report 2017

SPI Insurance Company Limited

Page 53: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

2.7.3

3

3.1

3.2

3.3

Certain changes have been made to the presentation of the financial statements which include the following:

- Changes in the sequence of assets/liabilities in the statement of financial position.- Changes in the sequence of income/expenses in profit and loss account and statement of comprehensive income.- Discontinuation of separate statements of premiums, claims, commission and investment income, which are now presented (on aggregate basis) into the notes of financial statements (21, 22, 23 and 25).- Underwriting results in relation to various classes of business which were previously presented on the face of the profit and loss account are now presented in separate note 33.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Property and equipment

These are stated at cost less accumulated depreciation and impairment losses, if any.

Depreciation on all fixed assets is charged to profit and loss account on the reducing balance method so as to write-off depreciable amount of an asset over its useful life at the rates stated in note 5.1. Depreciation on additions to fixed assets is charged from the month in which an asset is available for use, while no depreciation is charged for the month in which the asset is disposed off.

The assets' residual values and useful lives are reviewed, at each financial year end, and adjusted if impact on depreciation is significant.

Subsequent costs are included in an asset's carrying amount or recognized as a separate asset as appropriate, 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 are charged to the profit and loss account as and when incurred.The gain or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amount of the asset is recognized as income or expense.

Intangibles

These are recorded initially at cost and subsequently carried at cost less accumulated amortization and accumulated impairment losses, if any.

Intangible assets having finite useful lives are stated at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets are amortized using the reducing balance method from the month, when these assets are put to use, over their estimated useful life.

Amortization on addition and deletion of intangible assets during the year is charged to profit and loss account in proportion to the period of use.

The useful life and amortization method are reviewed and adjusted, if appropriate, at the reporting date. Software development costs are only capitalized to the extent that future economic benefits are expected to be derived by the Company.

Insurance contracts

Insurance contracts are those contracts where the Company (the insurer) has accepted significant insurance risk from another party (the policy holders) by agreeing to compensate the policyholders if a specified uncertain future event (the insured event) adversely affects the policyholders.

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Notes to the Financial Statementsfor the year ended December 31, 2017

3.3.1

3.3.2

Once a contract has been classified as an insurance contract, it remains an insurance contract for the remainder of its lifetime, even if the insurance risk reduces significantly during this period, unless all rights and liabilities are extinguished or expired.

Insurance contracts are classified into following main categories, depending on the nature and duration of risk and whether or not the terms and conditions are fixed.

- Fire and property damage- Marine, aviation and transport- Motor- Crop and livestock- Miscellaneous

These contracts are normally one year insurance contracts except marine and some contracts of fire and property and miscellaneous class. Normally all marine insurance contracts are of three months period. Some engineering insurance contracts are of more than one year period.

Fire and property insurance contracts mainly compensate the Company’s customers for damage suffered to their properties or for the value of property lost. Customers who undertake commercial activities on their premises could also receive compensation for the loss of earnings caused by the inability to use the insured properties in their business activities.

Marine Insurance covers the loss or damage of vessels, cargo, terminals and any transport of property by which cargo is transferred, acquired or held between the points of origin and final destination.

Motor insurance provides protection against losses incurred as a result of theft, traffic accidents and against third party liability that could be incurred in an accident.

Crop insurance provides financial protection against natural disasters, fire and lightening and insect / pets attack on standing crop and livestock insurance provides financial protection against mortality, theft and disability of the insured animals including the risk of calving.

Other various types of insurance are classified in miscellaneous category which includes mainly personal accident, worker compensation, travel, products of financial institutions etc.

The Company does not issue any insurance contracts with discretionary participation features (DPF) or any investment contracts.

Premium

Premium written under a policy is recognized as income over the period of insurance from the date of issuance of the policy to which it relates to its expiry. Where the pattern of incidence of risk varies over the period of the 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 the rate of 5% of the premium written subject to a maximum of Rs. 2,000/- per policy.

Claims expense

General insurance claims include all claims occurring during the year, whether reported or not, related internal and external claims handling costs that are directly related to the processing and settlement of claims, a reduction for the value of salvage and other recoveries and any adjustments to claims outstanding from previous years.

53Annual Report 2017

SPI Insurance Company Limited

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Notes to the Financial Statementsfor the year ended December 31, 2017

3.4

3.5

3.6

The Company recognizes liability in respect of all claims incurred up to the reporting date which is measured at the undiscounted value of the expected future payments. The claims are considered to be incurred at the time of incident giving rise to the claims except as otherwise expressly indicated in an insurance contract. The liability for claims include amounts relating to unpaid reported claims, Claims Incurred But Not Reported (IBNR) and expected claims settlement costs.

Provision for liability in respect of claims reported but not settled at the year end is made on the basis of individual case estimates. The case estimates are based on the assessed amounts of individual losses and where loss assessments have not been carried out, the estimates are established in light of currently available information, past experience of similar claims and in some cases in relation to the sums insured. Case estimates are reviewed periodically to ensure that the recognized outstanding claim amounts are adequate to cover expected future payments including expected claims settlement costs and are updated as and when new information becomes available.

IBNR is determined and recognized in accordance with valuation carried out by an appointed actuary.

Deferred Commission expense /Acquisition cost

Commission and other incremental acquisition costs incurred in obtaining and recording policies of insurance and reinsurance are deferred and calculated by applying 1/24 method and recognized as assets where they can be reliably measured and it is probable that they will give rise to premium revenue that will be recognised in subsequent reporting periods. Incremental acquisition costs of a policy are costs of selling, underwriting and initialling an insurance policy which has been issued, i.e., the costs are identified at the level of an individual policy and not at the level of a portfolio of policies.

Deferred acquisition costs (if any) are amortized systematically over the reporting periods over which the related premium revenue is recognised.

An acquisition cost which is not incremental is recognised as expense during the period in which the related premium revenue is recognised.

Unearned premium reserve

The portion of premium written relating to the unexpired period of coverage is recognized as unearned premium by the Company. This liability is calculated by applying 1/24 method as specified in the Insurance Accounting Regulations, 2017.

Premium deficiency reserve

The Company is required as per Insurance Accounting Regulations, 2017 to maintain 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 year end in respect of the unexpired policies in that class of business at the year end. The movement in the premium deficiency reserve is recorded as an expense/ income in profit and loss account for the year.

For this purpose, loss ratios for each class are estimated based on historical claim development. Judgments is used in assessing the extent to which past trends may not apply in future or the effects of one-off claims. Further, actuarial valuation has been carried out to determine the amount of premium deficiency reserve in respect of Accident and Health insurance as required by SRO 16 (I) / 2012 issued by Securities and Exchange Commission of Pakistan on 9 January, 2012. If these ratios are adverse, premium deficiency is determined. The loss ratios estimated on these basis for the unexpired portion are as follows:

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Notes to the Financial Statementsfor the year ended December 31, 2017

3.7

3.8

- Fire and property damage- Marine, aviation and transport- Motor- Crop and livestock- Miscellaneous

The Company determines adequacy of liability of premium deficiency by carrying out analysis of its loss ratio of expired periods. For this purpose average loss ratio of last 3 years inclusive of claim settlement cost but excluding major exceptional claims are taken into consideration to determine ultimate loss ratio to be applied on unearned premium. The liability of premium deficiency in relation to accident and health insurance is calculated in accordance with the advice of the actuary.

Reinsurance contracts held

Insurance contracts entered into by the Company with reinsurers for compensation of losses suffered on insurance contracts issued are reinsurance contracts. These reinsurance contracts include both facultative and treaty arrangement contracts.

The Company enters into reinsurance contracts in the normal course of business in order to limit the potential for losses arising from certain exposures. Outward reinsurance premiums are accounted for in the same period as the related premiums for the direct or accepted reinsurance business being reinsured.

Reinsurance liabilities represent balance due to reinsurance companies. Amounts payable are estimated in a manner consistent with the related reinsurance contracts. Reinsurance assets represent balances due from reinsurance companies. Amounts recoverable from reinsurance companies are estimated in a manner consistent with the provisions for outstanding claims or settled claims associated with the reinsurance policies and are in accordance with the related reinsurance contract.

Reinsurance assets are not offset against related insurance liabilities. Income or expenses from reinsurance contracts are not offset against expenses or income from related insurance assets.

Reinsurance assets or liabilities are derecognized when the contractual rights are extinguished or expired.

The Company assesses its reinsurance assets for impairment at the year end. If there is objective evidence that reinsurance assets are impaired, the Company reduces the carrying amount of the reinsurance assets to its recoverable amount and recognizes impairment loss in the profit and loss account.

Claims recoveries from the reinsurer 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. Claims expenses are reported net of reinsurance in the profit and loss account.

Receivable and payables related to insurance contracts

Receivables under insurance contracts are recognized when due, at the fair value of the consideration receivable less provision for doubtful debts, if any. If there is objective evidence that the receivable is impaired, the Company reduces the carrying amount of the receivable accordingly and recognizes that impairment loss in the profit and loss account.

Liabilities for other insurance contracts are carried at cost which is the fair value of consideration to be paid in the future for services.

31%33%42%13%44%

201730%35%36%13%26%

2016

55Annual Report 2017

SPI Insurance Company Limited

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Notes to the Financial Statementsfor the year ended December 31, 2017

3.9

3.10

3.11.

3.11.1

3.11.2

Segment reporting

A business segment is a distinguishable component of the Company that is 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 Insurance Rules, 2017. The reported operating segments are also consistent with the internal reporting provided to Board of Directors which are responsible for allocating resources and assessing performance of the operating segments. The performance of segments is evaluated on the basis of underwriting results of each segment.

The Company has five primary business segments for reporting purposes namely fire, marine, motor, crop and livestock and miscellaneous.

The fire and property damage insurance segment provides insurance covers against damages caused by fire, riot and strike, explosion, earthquake, atmospheric damage, flood and electric fluctuation and engineering losses.

Marine insurance segment provides coverage against cargo risk, war risk and damages occurring in inland transit.

Motor insurance provides comprehensive vehicle coverage and indemnity against third party losses.

Crop and livestock insurance provides financial protection against natural disasters, fire and lightening, insect / pets attack on standing crop and mortality, theft and disability of the insured animals including the risk of calving.

Miscellaneous insurance provides cover against loss of cash in safe and cash in transit, personal accident, money, and other coverage.

Financing, investment and income taxes are managed on an overall basis and are therefore, not allocated to any segment. The accounting policies of operating segment are the same as those described in the summary of significant accounting policies.

Assets, liabilities and capital expenditures that are directly attributable to segments have been assigned to them while the carrying amount of certain assets pertaining to two or more segments have been allocated to segments on the premium written basis. Those assets and liabilities which can not be allocated to a particular segment on the above basis are reported as unallocated corporate assets and liabilities.

Cash and cash equivalents

Cash and cash equivalents are carried in the statement of financial position at cost. For the purposes of cash flow statement, cash and cash equivalents comprise cash in hand, deposits with banks and stamps in hand.

Revenue recognition

Premiums

The revenue recognition policy for premium is given under note 3.3.1 to the financial statements.

Commission income

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. Commission from reinsurers is arrived at after taking the impact of opening and closing unearned commission. Profit commission, if any, which the Company may be entitled to under the terms of reinsurance is recognized on accrual basis.

56

Page 58: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

3.13

Notes to the Financial Statementsfor the year ended December 31, 2017

3.12.1

3.12.2

3.12

3.11.3 Investment income

Income from held to maturity investments is recognized on a time proportion basis taking into account the effective yield method on the investments.

Dividend income and element of bonus are recognized when the right to receive the same is established, i.e., at the time of the closure of share transfer books of the Company declaring the dividend and / or bonus.

Investments

Recognition

All investments are initially recognized at cost, being the fair value of the consideration given and include transaction costs, except for held for trading in which case transaction costs are charged to the profit and loss account. These are recognized and classified as follows:

- Investment at fair value through profit and loss (held for trading) - Held to maturity - Available for sale

MeasurementInvestment at fair value through profit and loss (held for trading)

Investments which are acquired principally for the purposes of generating profit from short term fluctuation in market price or are part of the portfolio in which there is recent actual pattern of short term profit taking are classified as held for trading.

Subsequent to initial recognition, these investments are re-measured at fair value. Gains or losses on these investments are recognized in the profit and loss account.

Held to maturity Investments with fixed maturity, where management has both the intent and the ability to hold to maturity, are classified as held to maturity and are initially measured at cost.

At subsequent reporting date, these are measured at amortized cost less provision for impairment, if any. Any premium paid or discount availed on acquisition of held to maturity investment is deferred and amortized over the term of the investment using the effective yield method.

Available for sale 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. It also includes investments in associated undertakings where the Company does not have significant influence. The Company follows trade date accounting for ‘regular way purchase and sales' of investments.

Subsequent to initial recognition at cost, these investments are carried at fair value. Surplus / (deficit) on revaluation from one reporting date to another is taken to other comprehensive income in the statement of comprehensive income. On derecognition or impairment in available-for-sale investments, the cumulative gain or loss previously reported in other comprehensive income is transferred to profit and loss for the year within statement of comprehensive income.

Financial Instruments

Financial assets and financial liabilities within the scope of IAS - 39 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

57Annual Report 2017

SPI Insurance Company Limited

Page 59: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

3.14

3.15

3.16

3.17

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 derecognizing of the financial assets and financial liabilities is included in the profit and loss account for the year.

Financial instruments carried on the statement of financial position includes cash and bank deposits, investments, due from insurance contract holders, due from insurers / reinsurers, premium and claim reserves detained by cedents, accrued investment income, reinsurance recoveries against outstanding claims, sundry receivables, provision for outstanding claims, Insurance / reinsurance payables, accrued expenses, other creditors and accruals, liabilities against assets subject to finance lease.

Investment in window takaful operations

Investment in window takaful operations has been measured and disclosed in accordance with the provisions of Takaful Rules 2012 and Circular No. 25 of 2015, dated July 09, 2015 on " Financial Reporting of Window Takaful Operations by Non-Life Insurers" which require the assets, liabilities and profit and loss of the Operator Fund of the General Takaful operations of the Company to be presented as a single line item in the balance sheet and profit and loss account of the Company respectively.

Net assets in window takaful operations are recorded after adjusting the portion of profit/ (loss) and other comprehensive income/ (loss) from Operators Fund (OPF) of takaful operations.

Profit/ (loss) share from takaful operations in profit and loss account is recorded as 100 percent share of profit/ (loss) from Operators' Fund (OPF) in takaful operations. Similarly share of other comprehensive income/ (loss) from takaful operations is recorded in other comprehensive income of the Company based on 100 percent share of other comprehensive income/ (loss) from OPF.

Qarz-e-Hasna funded by Operators' Fund (OPF) of takaful operations to Participants' Takaful Fund (PTF) of takaful operations is recorded as apportionment of profit in the financial statements of the Company.

Foreign currency transactions and translation

Foreign currency transactions are translated into Pak Rupees at the exchange rates prevailing on the date of transaction. Monetary assets and liabilities in foreign currencies are translated into Pak Rupees at the exchange rates prevailing at the reporting date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using exchange rates at the date when the fair value was determined. Exchange gains or losses are included in income currently.

Offsetting of financial assets and liabilities

Financial assets and financial liabilities are only offset and the net amount is reported in the statement of financial position when there is a legally enforceable right to set off the recognized amount and the Company intends to either settle on a net basis, or to realize the asset and settle the liability simultaneously.

Provisions

Provisions are recognized 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 can be made. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.

58

Page 60: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

3.18

Notes to the Financial Statementsfor the year ended December 31, 2017

3.18.1

3.18.2

3.19

3.20

Taxation

Income tax expense comprises current and deferred tax. Income tax expense is recognized in the profit and loss account, except to the extent that it relates to items recognized directly in other comprehensive income or below equity, in which case it is recognized in other comprehensive income or below equity.

Current

Provision of current tax is based on the taxable income for the year determined in accordance with the prevailing law for taxation of income. The charge for current tax is calculated using prevailing tax rates or tax rates expected to apply to the profit for the year, if enacted. The charge for current tax also include adjustments, where considered necessary, relating to prior year arising from assessments made during the current year.

Deferred

Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences at the reporting date between the tax bases and carrying amounts of assets and liabilities for financial reporting purposes. 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 assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on the tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax is charged or credited in the profit and loss account, except in the case of items credited or charged to equity in which case it is included in equity.

Staff retirement benefits

Defined benefit plan

The Company operated an approved defined gratuity scheme for all its permanent employees who attain the minimum qualification period for entitlement to gratuity. Contributions to the fund are made based on actuarial recommendations and in line with the provisions of the Income Tax Ordinance, 2001. The most recent actuarial valuation was carried out for the year ended December 31, 2017 using the Projected Unit Credit Method. Actuarial gains or losses are recognized in other comprehensive income when they occur. Amounts recorded in profit and loss are limited to current and past service costs, gains or losses on settlements and net interest income/(expense).

Defined contribution plan

The Company operates a recognised provident fund for all its permanent employees. Equal monthly contributions are made to the fund both by the Company and the employees at the rate of 8.33% of the basic salary. All permanent employees are eligible to opt for provident fund. Obligation for contributions to defined contribution plan is recognised as an expense in the profit and loss account as and when incurred.

Leases

Assets held under finance lease are stated at lower of present value of minimum lease payments under the lease agreements and their fair value. Aggregate amount of obligations relating to assets subject to finance lease are accounted for at net present value of liabilities.Assets acquired are depreciated over their expected useful life on reducing balance method on the basis of number of months, at the rates mentioned in the relevant note.

59Annual Report 2017

SPI Insurance Company Limited

Page 61: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

3.21

3.22

3.23

3.24

4

Impairment of assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

The carrying amount of non-financial assets is reviewed at each reporting 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. The recoverable amount of an asset is greater of its value in use and its fair value less costs to sell. An impairment loss is recognized if the carrying amount of an asset exceeds its estimated recoverable amount.

All impairment losses are recognized in the profit and loss account. Provisions for impairment are reviewed at each reporting date and adjusted to reflect the current best estimates. Changes in the provisions are recognized as income or expense.

Dividend distribution

Dividend distributions and appropriations are recorded in the period in which the distributions and appropriations are approved.

Management and other expense

Expenses of management are allocated to various classes of business in proportion to the respective premium written for the year. Expenses not allocable to the underwriting business are charged as other expenses.

Related Party Transactions

Party is said to be related if they are able to influence the operating and financial decisions of the Operator and vice versa. The Operator in the normal course of business carries out transactions with related parties. Transactions with related parties are priced at comparable uncontrolled market price and are carried out at arm’s length prices.

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTTS

In the process of applying the Company’s accounting policies, as described in note 3, the management has made the following estimates and judgments which are significant to the financial statements: -

- determining the residual values and useful lives of fixed assets 3.1- provisions for obligations / claim expense 3.3.2- recognition of outstanding claims incurred but not reported 3.3.2- calculation of premium deficiency reserves 3.6- segmental reporting 3.9- classification of investments 3.12- recognition of taxation and deferred tax 3.18- accounting for staff employment benefits 3.19- impairment 3.21- allocation of management expenses 3.23

60

Page 62: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

5 5.1

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61Annual Report 2017

SPI Insurance Company Limited

Page 63: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

7 INVESTMENT IN EQUITY SECURITIES

Equity Investments

Advance against issuance of shares

Equity Investments

132,740

50,000,000

50,132,740

246,760

-

246,760

7.1

Number of certificates Face Value Value of Certificates

Shares Cost

2017

Cost

2016

Fair Value Fair ValueShares

Rupees RupeesNumber Number

-

32,000

16,065

31,000

79,065

-

-

226,625

313,100

539,725

-

-

246,760

246,760

2,000

32,000

16,065

31,000

81,065

11,000

-

226,625

313,100

550,725

14,940

-

-

117,800

132,740

Available for sale

Related parties

Listed shares

Apna Microfinance

Bank Limited

Others

Listed shares

Callmate Telips

Telecom Limited*

Saudi Pak Leasing

Company Limited**

Kohinoor Industries

Limited

* Trading in shares has been suspended.

** These shares are deposited into CDC account and blocked on the instructions of Securities and Exchange

Commission of Pakistan (SECP) in accordance with Circular No. 9 of 2006 issued by the SECP, which requires

promoters / majority shareholders of the company to deposit their shares into CDC blocked account.

7.2 Advance against issuance of shares

This represents amount advanced to Apna Micronance Bank Limited (a related party) against issue of shares.

8 INVESTMENT IN GOVERNMENT SECURITIES

Held to maturity

2017 2016 20172017 20162016

24

3

27

21

1

22

115,500,000

44,000,000

159,500,000

84,500,000

51,000,000

135,500,000

117,341,185

43,690,153

161,031,338

85,494,103

50,320,323

135,814,426

Pakistan investment bonds (note 8.1)

Treasury bill (note 8.2)

------------------------- R u p e e s -------------------------

Note 2017 2016Rupees Rupees

7.1

7.2

62

Page 64: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

8.1

13,030,000

8,000,000

21,030,000

9.1

9.2

12,430,000

7,800,000

20,230,000

Assets

Property and equipment

Investments - Equity securities

Investments - Term deposits

Loans and other receivables

Deferred commission expense

Prepayments

Cash and Bank

Total assets

Total liabilities

Prot for the year from Window Takaful Operations

Other comprehensive (loss) from Window Takaful Operations

Total comprehensive income for the year

These represent PIBs held with different banks having maturity of periods ranging from 5 to 10

years (2016: 5 to 10 years). These carry return at the rate ranging between 6.60% to 13.50%

(2016: 6.60% to 13.50%) per annum. These include bonds having face value of Rs. 52.2 million

(2016: Rs. 43.7 million) held with State Bank of Pakistan as per requirements of Section 29 of

the Insurance Ordinance, 2000, however, the statutory authority did not account for the PIBs

of Rs. 8.5 million though deposited by the Company before the year end to fulfil its obligation.

8.2 These represent treasury bills held with different banks having maturity of periods of 6 months

(2016: 6 months). These carry return at the rate ranging between 5.94% to 6.02% (2016: 6.60%

to 13.50%) per annum.

9 INVESTMENT IN TERM DEPOSITS

Held to maturity

Deposits maturing within 12 months

Related party

Others

9.1 These represent term deposits held with Silk Bank Limited and Apna Microfinance Bank Limited

carrying return at the rate ranging between 6.5% to 11% (2016: 6.5% to 11%) per annum.

The above deposits are due to mature upto September 2018 (2016: June 2017).9.2 These represent term deposits held with different banks carrying return at the rate ranging

between 5.6% to 7.5% (2016: 5.75% to 7.5%) per annum. The above deposits are due to mature

upto September 2018 (2016: June 2017).

10 WINDOW TAKAFUL OPERATIONS - OPERATOR'S FUND

4,565,362

48,403,947

8,200,000

40,044,118

26,372,987

267,076

1,512,704

129,366,194

59,911,320

12,958,696

(1,754,319)

11,204,377

5,463,382

46,694,317

8,030,000

37,565,377

31,094,124

387,035

2,412,988

131,647,223

73,396,726

6,502,647

(673,899)

5,828,748

Note 2017Rupees

2016Rupees

2017Rupees

2016Rupees

63Annual Report 2017

SPI Insurance Company Limited

Page 65: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

11 LOANS AND OTHER RECEIVABLES - Considered good

11.1

11.2

Advances to related parties

Accrued investment income

Security deposit

Receivable from Window Takaful Operations

Loans to employees

Other receivable

11.1

11.2 This includes investment income accrued from the following related parties:

12.1

This represents advance given to 'M/s Tawasul Health Care TPA (Private) Limited' against

management services.

Provision for impairment

Balance at beginning of the year

Charge for the year

Less: Reversal for the year

Silk Bank Limited

Apna Microfinance Bank Limited

311,046

5,309,529

9,423,126

14,091,425

1,349,790

122,980,125

153,465,041

454,529

27,370

481,899

149,431,822

(11,951,976)

137,479,846

214,351,066

(17,441,325)

196,909,741

334,389,587

12.1

12.1

432,668

4,964,343

8,107,728

23,319,065

1,528,992

82,527,893

120,880,689

414,621

35,079

449,700

127,763,191

(8,014,991)

119,748,200

156,635,966

(18,056,792)

138,579,174

258,327,374

Due from insurance contract holders

Less: provision for impairment of receivables

from insurance contract holders

Due from insurers / reinsurers

Less: provision for impairment of due

from other insurance / reinsurance

12 INSURANCE / REINSURANCE RECEIVABLES - Unsecured And Considered Good

8,014,991

3,936,985

-

11,951,976

9,146,964

3,144,040

(4,276,013)

8,014,991

18,056,792

-

(615,467)

17,441,325

17,001,980

2,773,921

(1,719,109)

18,056,792

20172017 20162016

Insurance contract holders Insurers / reinsurers

----------------------------Rupees----------------------------

Note 2017 2016Rupees Rupees

64

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Notes to the Financial Statementsfor the year ended December 31, 2017

13 DEFERRED TAXATION

8,817,990

3,679,472

12,754,119

(140,191)

(4,791,268)

(1,592,859)

18,727,263

Deferred debits arising in respect of

Provision for doubtful receivables

Retirement benefit obligations

Minimum tax adjustments

Deferred credits arising in respect of

Accelerated depreciation

Liabilities against assets subject to finance lease

Unrealized gains

Cash and Cash Equivalent

- Cash in hand

- Policy & Revenue stamps and Bond papers

61,932,303

1,197,818

607,548

63,737,669

77,030

155,600

35,660,268

7,950,255

43,843,153

3,209,055

2,613,232

29,837,981

35,660,268

21

15.1

15.2

8,082,253

4,171,032

16,691,548

-

(3,098,609)

-

25,846,224

69,267,535

1,197,818

3,934,549

74,399,902

620,591

661,185

46,246,544

12,427,110

59,955,430

2,976,433

99,900

43,170,211

46,246,544

Prepaid reinsurance premium ceded

Prepaid rent

Prepaid miscellaneous expenses

14 PREPAYMENTS

15 CASH AND BANK

Cash at bank

- Current account

- Savings account

15.1 This includes balances with the following:

Silk Bank Limited - related party

Apna Microfinance Bank Limited - related party

Others

Note 2017 2016Rupees Rupees

65Annual Report 2017

SPI Insurance Company Limited

Page 67: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

This includes balances with the following:

Silk Bank Limited - related party

Apna Microfinance Bank Limited - related party

Others

15.2

160,631

3,367,479

4,422,145

7,950,255

5.00%

6.00%

4.5% to 6%

231,282

9,352,385

2,843,443

12,427,110

4.65%

5.50%

4.50%

100,000,000 100,000,000 1,000,000,000 1,000,000,000 Ordinary shares of Rs. 10/- each

Ordinary shares of Rs. 10/- each, fully paid up in cashfully paid right shares

fully paid bonus shares

Authorized Capital

Issued, subscribed and paid-up share capital

Reconciliation of issued, subscribed and paid-up share capital at beginning and at end of

the year is as under:

16.1

16.2

16.3

16 SHARE CAPITAL

25,000,000

12,500,000

12,500,000

50,000,000

25,000,000

8,500,000

7,500,000

41,000,000

250,000,000

125,000,000

125,000,000

500,000,000

250,000,000

85,000,000

75,000,000

410,000,000

At beginning of the year

Bonus shares issued during the year

Right shares issued during the year

At end of the year

41,000,000

4,000,000

5,000,000

50,000,000

32,500,000

8,500,000

-

41,000,000

410,000,000

40,000,000

50,000,000

500,000,000

325,000,000

85,000,000

-

410,000,000

Silk Bank Limited - associate company

UTS (Private) Limited - associated companyDirectors, CEO, their spouses and minor childrenSaudi Pak Leasing Company Limited

UIG Global Services Limited

Tawasul Risk Management Services (Private) LimitedGeneral shareholders

11,536,923

21,471,416

9,288,049

3,427,408

3,199,555

1,075,721

928

50,000,000

9,460,277

17,014,546

7,438,078

3,153,215

2,943,590

989,663

631

41,000,000

Detail of holdings is as follows:16.4

2017Rupees

2016Rupees

2017 2016Rate (per annum)

2017Rupees

2016Rupees

2017 2016(Number of Shares)

2017Rupees

2016Rupees

2017 2016(Number of Shares)

2017Rupees

2016Rupees

2017 2016(Number of Shares)

2017Rupees

2016Rupees

2017Rupees

2016Rupees

2017Rupees

2016Rupees

2017Rupees

2016Rupees

2017Rupees

2016Rupees

2017Rupees

2016Rupees

115,369,230

214,714,160

92,880,490

34,274,080

31,995,550

10,757,210

9,280

500,000,000

94,602,770

170,145,460

74,380,780

31,532,150

29,435,900

9,896,630

6,310

410,000,000

2017Rupees

2016Rupees

2017Rupees

2016Rupees

66

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Notes to the Financial Statementsfor the year ended December 31, 2017

12,264,906 13,454,943 Staff retirement gratuity

Staff retirement gratuity-payable to the fund

Reconciliation of payable / (receivable) to defined benefit plan

Movement in payable / (receivable) to defined benefit plan

Opening balance

Charge to profit and loss account

Contributions

Remeasurement: Actuarial losses recognized in OCI

Closing balance

Charge to profit and loss account

Current service cost

Interest cost

Expected return on plan assets

Settlement loss on obligation

17.1

17.1.1

17.1.2

17.1.3

17 RETIREMENT BENEFIT OBLIGATIONS

SPI Insurance Company Limited Employees’ Gratuity Scheme was a funded defined benefit

scheme. The Company had decided to cease its gratuity fund obligations and settle the liability

as at May 31, 2017. Accordingly, liability computed by the actuary as at reporting date is nil.

The number of employees covered were 213.

The latest actuarial valuation of the defined benefit plan was conducted at December 31, 2017

using the projected unit credit method. Details of the defined benefit plan are:

- Discount rate N/A 9.50%

- Expected rate of increase in the salary of employees N/A 7.50%

12,264,906

-

12,264,906

13,454,943

8,466,415

(11,400,000)

1,743,548

12,264,906

1,836,817

879,477

(393,340)

6,143,461

8,466,415

17.1.4

17.1.5

17.1.3

20,392,473

(6,937,530)

13,454,943

11,906,955

5,178,294

(5,000,000)

1,369,694

13,454,943

4,032,779

1,694,678

(549,163)

-

5,178,294

Present value of defined benefit obligations

Fair value of plan assets

Note 2017 2016Rupees Rupees

67Annual Report 2017

SPI Insurance Company Limited

Page 69: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

20,392,473

1,836,817

879,477

(277,000)

(232,131)

(18,510,480)

6,143,461

2,032,289

12,264,906

15,162,919

4,032,779

1,694,678

(807,500)

(745,469)

-

-

1,055,066

20,392,473

17.1.4

17.1.5

17.1.6

17.1.8

Actual return on plan assetsExpected return on plan assetsActuarial (loss)/gain on assets

Historical information

Present value of defined benefit obligation

Fair value of plan assets

Expected adjustments

Actuarial (gain) / loss on obligation

Actuarial gain / (loss) on assets

Movement in fair value of plan assetsOpening balanceExpected return on plan assetsContribution to the fundBenefit paid during the yearBenefit payable during the yearFinal settlementActuarial (loss)/gain Closing balance

6,937,530 393,340 11,400,000 (277,000) (232,131)

(18,510,480) 288,741

-

393,340 288,741

682,081

3,255,964 549,163 5,000,000 (807,500) (745,469)

-(314,628)

6,937,530

549,163 (314,628)

234,535

Movement in present value of defined benefit obligation

Opening balance

Current service cost

Interest cost

Benefit paid during the year

Benefit payable during the year

Final settlement

Settlement loss on obligation

Actuarial loss

Closing balance

2017 20162016

Fair Value Percentage Fair Value Percentage

17.1.7 Composition of fair value of plan assets

Rupees % Rupees %

Cash and bank balances N/A N/A

Term Deposits N/A N/A

N/A

437,530

6,500,000

6,937,530 N/A

6%

94%

100%

20132014201520162017

12,264,906

-

12,264,906

2,032,289

288,741

20,392,473

(6,937,530)

13,454,943

1,055,066

(314,628)

15,162,919

(3,255,964)

11,906,955

3,459,523

50,410

8,708,443

(653,783)

8,054,660

1,183,674

2,171

5,155,630

(369,395)

4,786,235

222,031

(133,777)

2017 2016Rupees Rupees

68

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Notes to the Financial Statementsfor the year ended December 31, 2017

N/A

N/A

N/A

N/A

19,454,682

21,410,847

21,475,370

19,388,420

17.1.9

18.1 Liabilities against assets subject to finance lease

Minimum lease payments

Liabilities against assets subject to finance lease Current portion Non-current portion

7,037,584 4,526,689

11,564,273 18.1

8,350,800 7,407,843 15,758,643

Sensitivity analysis on significant actuarial assumptions: Actuarial Liability

Discount rate + 1%

Discount rate -1%

Long term salary increases +1%

Long term salary increases -1%

The Company intends to exercise its option to acquire leased vehicles upon completion of lease period.

The average rate of interest implicit in the lease ranges from 8.89% to 10.67% (2016: 10.25% to 12.5%)

per annum. These are secured against security deposits equal to the residual value and title of ownership

of leased vehicles. These rentals are payable in equal monthly instalments and there is no financial

restriction in the lease agreements.

18 BORROWINGS - SECURED

2017 2016

Financial charges for the future periods

Financial charges for the future periods

Principal outstanding

Principal outstanding

Minimum lease payments

7,790,041

4,750,44012,540,481

752,457

223,751976,208

7,037,584

4,526,68911,564,273

9,539,211

7,885,34217,424,553

1,188,411

477,4991,665,910

8,350,800

740,784315,758,643

Not later than one year

Later than one year and not later than five years

-------------------------------------------------------------Rupees-------------------------------------------------------------

Note 2017 2016Rupees Rupees

69Annual Report 2017

SPI Insurance Company Limited

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Notes to the Financial Statementsfor the year ended December 31, 2017

2017Rupees

2016Rupees

20.1 The Company has filed suit titled as 'SPI Insurance Company Limited vs Sialkot International Airport Limited'. M/s Sialkot International Airport Limited has also filed a suit titled 'Sialkot International Airport Limited vs SPI Insurance Company Limited'. Both cases are pending adjudication before the civil judges at Lahore. Both titled suits are in the preliminary stage. The legal advisor of the Company is hopeful that no losses to SPI insurance Company Limited are likely to arise from either of the two cases.

Agents commission payable

Federal excise duty / Sales tax

Federal Insurance Fee

Accrued expenses

Other tax payables

Others

5,297,676

4,902,071

642,874

11,567,047

239,083

6,663,373

29,312,124

7,707,233

2,737,984

458,546

10,565,125

338,894

3,604,699

25,412,481

678,082,409

240,047,499

(270,947,285)

647,182,623

112,568,528

74,591,948

(69,267,535)

117,892,941

529,289,682

19 OTHER CREDITORS AND ACCRUALS

There in no unknown contingency or commitment other than disclosed above as at

December 31, 2017 (2016: Nil).

20 CONTINGENCIES AND COMMITMENTS

20.2

Direct and facultative business underwritten inside PakistanWritten Gross Premium

Add: Unearned premium reserve - OpeningLess: Unearned premium reserve - Closing Premium earned

Less: Reinsurance premium cededAdd: Prepaid reinsurance premium - OpeningLess: Prepaid reinsurance premium - Closing Reinsurance expense

21 NET INSURANCE PREMIUM

700,999,214

270,947,285

(268,881,204)

703,065,295

133,822,446

69,267,535

(61,932,303)

141,157,678

561,907,617

70

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Notes to the Financial Statementsfor the year ended December 31, 2017

Direct and facultative business underwritten inside Pakistan

Claims Paid

Add: Outstanding claims including IBNR - ClosingLess: Outstanding claims including IBNR - Opening Claims expense

Less: Reinsurance and other recoveries received

Add: Reinsurance and other recoveries in respect

of outstanding claims - Closing

Less: Reinsurance and other recoveries in respect

of outstanding claims - Opening

Reinsurance and other recoveries revenue

Claim Development22.1

176,121,422

178,748,845

(139,295,248)

215,575,019

17,400,782

69,522,145

(70,274,311)

16,648,616

198,926,403

22.1

183,211,973

139,295,248

(53,975,167)

268,532,054

13,668,548

70,274,311

(30,509,927)

53,432,932

215,099,122

The following table shows the development of claims over a period of time. The disclosure goes

back to the period when the earliest material claim arose for which there is still uncertainty about

the amount and timing of the claims payments.

Accident year 20172013 2015

83,782,272

124,512,676

164,093,728

173,691,691

-

173,691,691

(168,853,075)

4,838,616

351,052,264

542,122,998

574,339,151

611,820,716

350,320,558

350,320,558

(322,798,205)

27,522,353

88,686,157

145,381,785

148,780,990

-

-

148,780,990

(144,051,349)

4,729,641

203,419,722

212,669,375

-

-

-

212,669,375

(152,161,717)

60,507,658

183,296,712

-

-

-

-

183,296,712

(102,146,135)

81,150,577

----------------------------Rupees----------------------------

2014 2016

Estimate of ultimate claims costs:

At the end of accident year

One year later

Two year later

Three year later

Four year later

Current estimate of cumulative claims

Cumulative payments to date

Liability recognised in the statement

of financial position

Note 2017 2016Rupees Rupees

22 NET INSURANCE CLAIMS

71Annual Report 2017

SPI Insurance Company Limited

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Notes to the Financial Statementsfor the year ended December 31, 2017

Direct and facultative business underwritten inside Pakistan

Commission paid or payable

Add: Deferred commission expense - Opening

Less: Deferred commission expense - Closing

Net Commission

Less: Commission received or recoverable

Add: Unearned Reinsurance commission - Opening

Less: Unearned Reinsurance commission - Closing

Commission from reinsurers

23

24

NET COMMISSION EXPENSE

MANAGEMENT EXPENSES

83,270,641

33,024,884

(40,737,250)

75,558,275

14,800,757

7,720,910

(9,621,899)

12,899,768

62,658,507

98,712,780

40,737,250

(35,293,968)

104,156,062

17,000,911

9,621,899

(9,072,966)

17,549,844

86,606,218

145,312,965

3,098,505

3,710,940

2,650,180

2,173,998

19,961,662

20,912

20,556,507

1,088,818

5,984,498

4,184,505

7,419,883

1,729,372

609,499

5,012,950

1,158,413

3,936,985

11,457,210

240,067,802

24.1

5.1

6

120,278,043

2,539,206

3,813,201

799,270

2,469,033

19,782,984

26,139

14,732,121

504,427

5,357,091

3,541,025

6,750,815

1,458,671

431,789

5,320,917

852,367

5,917,961

4,416,550

198,991,610

Employee benefit cost

Directors fee

Travelling expenses

Advertisements & sales promotion

Printing and stationery

Depreciation

Amortisation

Rent, rates and taxes

Legal and professional charges

Electricity, gas and water

Entertainment

Vehicle running expenses

Office repair and maintenance

Bank charges

Postages, telegrams and telephone

Annual supervision fee SECP

Bad and doubtful debts

Miscellaneous

Note 2017 2016Rupees Rupees

72

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26 OTHER INCOME

842,686

-

1,109,065

518,167

747,832

3,217,750

Income from financial assets

Return on bank balances

Income from assets other than financial assets

Liabilities written back

Service charges income

Gain on sale of fixed assets

Miscellaneous

Notes to the Financial Statementsfor the year ended December 31, 2017

Salaries, allowances and other benefits

Charge for post employment benefit

Gratuity

Provident fund

Employee benefit cost24.1

135,253,423

8,466,415

1,593,127

145,312,965

115,099,749

5,178,294

-

120,278,043

10,250,932

1,672,878

11,923,810

821,390 821,390

12,745,200 (32,760) 12,712,440

514,899

5,995,122

3,239,094

48,853

850,817

10,648,785

1,407,203

980,000

168,531

-

10,832,722

-

1,442,789

14,831,245

27 OTHER EXPENSES

2,267,375

1,221,750

167,124

50,000

10,421,943

5,733,918

1,050,454

20,912,564

Legal and professional charges

Auditors' remuneration

Subscription

Donations

Tracker monitoring fee

Computer software charges

Others

27.1

25 INVESTMENT INCOME

A

Income from government securities - Held to maturity

- Return on government securities

Income from term deposits - Held to maturity

- Return on term deposits

13,110,169

1,177,446

14,287,615

14,287,615 (22,486) 14,265,129

--

Net realised gains/(losses) on investments - Available for sale

Realised gains on:

- Equity securities (Restated - refer note 2.7)

Total investment income

Less: Investment related expenses

BA + B

Note 2017 2016Rupees Rupees

73Annual Report 2017

SPI Insurance Company Limited

Page 75: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

Auditors' remuneration

Audit fee

Fee for half yearly review

Special certificates and sundry advisory services

Out-of-pocket expenses

27.1

Mark-up on finance leases

Exchange loss

For the year

Current

Deferred

For the prior year

Current

840,000

210,000

47,250

124,500

1,221,750

1,447,517

99,440

1,546,957

20,923,933

7,642,025

28,565,958

(24,261,949)

4,304,009

30%

0%

13.18%

43.18%

44,151,768

46,590,232

0.95

650,000

180,000

50,000

100,000

980,000

1,342,342

6,985

1,349,327

30,209,518

(2,290,018)

27,919,500

1,977

27,921,477

31%

33.64%

-17.96%

46.68%

36,788,351

41,000,000

Restated

0.83

28

29

30

FINANCE COST

TAXATION

EARNING PER SHARE

Relationship between tax expense and accounting profit

Applicable tax rates

Effect of income charged at different rates

Effect of tax on amounts deductible for tax purposes

Average effective tax rate

29.1

Basic earnings per share are calculated by dividing the net profit for the year by the weighted average

number of shares as at the year end as follows:

Profit ( after tax) for the year - Rupees

Weighted average number of ordinary shares

Earnings (after tax) per share - Rupees

No figure of diluted earnings per share has been presented as the Company has not issued any

instrument which would have an impact on earnings per share when exercised.

Note 2017 2016Rupees Rupees

74

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Num

ber

of p

erso

ns

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- -

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- Ru

pees

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- -

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- -

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7

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13,

636,

362

454

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1

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17

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1

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368

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00

6

180

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2

5,91

0,28

7

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3,9

92,8

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7

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2,7

18,6

63

2

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-

-

4

3,28

5,81

6

35

180

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33,7

00,6

31

857

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4,7

56,2

89

1

0,36

1,54

8

3,

114,

958

3,37

0,10

6

-

7

93,8

00

5

7,13

5,17

6

4

4

Exec

utiv

es

2017

2016

2017

2016

2017

2016

Dire

ctor

sC

hief

Exe

cutiv

e

Uni

ted

Trac

k Sy

stem

s (P

rivat

e) L

imite

d - a

ssoc

iate

d co

mpa

ny

Apn

a M

icro

finan

ce B

ank

Lim

ited

- ass

ocia

ted

com

pany

Mot

or tr

acki

ng d

evic

e ch

arge

sBa

nk C

harg

esPr

ofit o

n te

rm d

epos

it re

ceip

tsPr

ofit o

n ba

nk d

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its

Adv

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aga

inst

issu

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of s

hare

s

Purc

hase

of s

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s

8,6

98,8

84

7

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190,

799

222,

216

12,

175,

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20

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32,9

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11,0

00

Rela

ted

part

ies

com

prise

of

chie

f ex

ecut

ive

office

r, di

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ors,

maj

or s

hare

hold

ers,

key

man

agem

ent

pers

onne

l, as

soci

ated

com

pani

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nitie

s w

ith c

omm

on

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ctor

s an

d po

st e

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bene

fit p

lans

. The

tra

nsac

tions

with

rel

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ties

are

carr

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out

at c

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s an

d co

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and

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pens

atio

n to

ke

y m

anag

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t per

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el i

s on

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ploy

men

t ter

ms.

Tran

sact

ions

with

key

man

agem

ent

pers

onne

l an

d tr

ansa

ctio

ns u

nder

pos

t em

ploy

men

t be

nefit

pla

ns a

re d

isclo

sed

in n

ote

31 a

nd 2

4.1,

res

pect

ivel

y. Tr

ansa

ctio

ns w

ith r

elat

ed p

artie

s o

ther

than

thos

e w

hich

hav

e be

en s

peci

fical

ly d

isclo

sed

else

whe

re in

thes

e fin

anci

al s

tate

men

ts a

re fo

llow

s:

Nat

ure

of r

elat

ions

hip

Type

of t

rans

actio

n20

16Ru

pees

2017

Rupe

es

31 32

Notes to the Financial Statementsfor the year ended December 31, 2017

75Annual Report 2017

SPI Insurance Company Limited

Page 77: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

20,3

73,8

89

40,5

80,6

94

(4

1,40

7,37

0)

19

,547

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2,9

22,3

60

13,5

49,6

04

(1

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3

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21,9

56

974,

839

22,

944

11,8

30,0

00

231,

282

3,1

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57

414,

621 -

Silk

Ban

k Li

mite

d -

asso

ciat

ed c

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ny

Taw

asul

Hea

lth C

are

TPA

(Pv

t.) L

imite

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asso

ciat

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ny

Insu

ranc

e pr

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m

Bal

ance

at b

egin

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of t

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d G

ross

insu

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e pr

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ritte

n R

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ved

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ce a

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of t

he p

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nce

clai

m e

xpen

se O

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ng c

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ng o

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per

iod

Gro

ss c

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exp

ense

for

the

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d C

laim

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d du

ring

the

perio

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utst

andi

ng c

laim

s at

end

of t

he p

erio

d O

ther

tra

nsac

tions

dur

ing

the

year

Ban

k ch

arge

s P

rofit

on

term

dep

osit

rece

ipts

P

rofit

on

bank

dep

osits

O

ther

bal

ance

s w

ith a

ssoc

iate

d co

mpa

ny

Ter

m d

epos

its

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fit a

nd lo

ss s

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ts

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rent

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stm

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ncom

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19,

547,

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0,99

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(18

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082,

669

3

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1

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3

(14

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7

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50,4

91

718

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914

1

2,43

0,00

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1

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31

3,

572,

568

454,

529

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164,

763

Type

of t

rans

actio

n20

16Ru

pees

2017

Rupe

esN

atur

e of

rel

atio

nshi

p

76

Page 78: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

77Annual Report 2017

SPI Insurance Company Limited

Gro

ss w

ritt

en p

rem

ium

Gro

ss d

irect

pre

miu

m

F

acul

tativ

e in

war

d pr

emiu

m

A

dmin

istra

tive

surc

harg

eIn

sura

nce

prem

ium

ear

ned

Insu

ranc

e pr

emiu

m c

eded

to r

eins

urer

sN

et in

sura

nce

prem

ium

Com

miss

ion

inco

me

Net

und

erw

ritin

g in

com

eIn

sura

nce

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ms

Insu

ranc

e cl

aim

s re

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red

from

rei

nsur

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Net

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ims

Com

miss

ion

expe

nse

Man

agem

ent e

xpen

ses

Prem

ium

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cien

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xpen

seN

et in

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nce

clai

ms

and

expe

nses

Und

erw

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g re

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Net

inve

stm

ent i

ncom

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ther

inco

me

Oth

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ses

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cost

Profi

t fro

m W

indo

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ul O

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Profi

t be

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Segm

ent a

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sU

nallo

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sets

Segm

ent a

sset

s- ta

kafu

l (O

PF)

Una

lloca

ted

asse

ts -

taka

ful (

OPF

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Segm

ent l

iabi

litie

sU

nallo

cate

d lia

bilit

ies

Segm

ent l

iabi

litie

s- ta

kafu

l (O

PF)

Una

lloca

ted

liabi

litie

s - t

akaf

ul (O

PF)

220

,174

,638

193,

641,

891

22,2

76,2

47

4,2

56,5

00

19

1,81

5,13

7

(30,

739,

431)

16

1,07

5,70

6

5

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166,

916,

193

(5

2,04

2,81

6)

3

,991

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(48,

051,

517)

(1

9,73

8,55

9)

(75,

402,

141)

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(

143,

192,

217)

2

3,72

3,97

6

135,

914,

805

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-

15

3,05

5,41

2 - - -

130

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125,

796,

221

-

5

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132,

009,

205

(5,6

03,4

86)

12

6,40

5,71

9

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126

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(19,

222,

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(1

9,22

2,00

3)

(15,

558,

577)

(4

4,82

9,66

9)

-

(79,

610,

249)

46

,795

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69,5

28,8

22 - -

54,8

23,9

14 - - -

1

04,9

83,1

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1

03,0

13,7

66

509

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1,4

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66

1

22,2

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(

25,9

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96,

268,

439

3

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99

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(92

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33

(86,

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341)

(11,

184,

637)

(35,

953,

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(133

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(34

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106,

758,

322

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18

3,87

8,65

8

105

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7

6,52

1,88

6

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7

192

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(57,

778,

130)

1

34,6

70,2

54

8,

087,

177

1

42,7

57,4

31

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3,41

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5,68

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4

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729,

539)

(

44,6

65,8

83)

(6

2,97

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2)

-

(

145,

367,

454)

(

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3)

158,

612,

450 - -

136,

590,

435

-

- -

6

1,05

9,94

8

54

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5,35

8

2,22

6,41

6

64

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(21,

069,

305)

43,4

87,4

99

525,

483

4

4,01

2,98

2

(8

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1,31

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(7

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(13,

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(20,

910,

904)

4,

166,

529

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7

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23,6

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-

19,2

41,7

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15

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561,

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17,5

49,8

44

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4

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(53

8,98

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473,

725

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3

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(

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12,5

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6,95

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958,

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4

8,45

5,77

7

501,

138,

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7,47

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1,

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129,

366,

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59

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SEG

MEN

T IN

FOR

MAT

ION

33

2017

Fire

and

pr

oper

ty

dam

age

Mar

ine,

av

iatio

n an

d tr

ansp

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Mot

orC

rop

and

Live

stoc

kM

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Tota

l

--------

--------

--------

--------

--------

--------

--------

--------

--------

-----Ru

pees-

--------

--------

--------

--------

--------

--------

--------

--------

--------

----

Page 79: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

2016

Fire

and

pr

oper

ty

dam

age

Mar

ine,

av

iatio

n an

d tr

ansp

ort

Mot

orC

rop

and

Live

stoc

kM

isce

llane

ous

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l

------

------

------

------

------

------

------

------

------

------

------

------

-----R

upee

s-----

------

------

------

------

------

------

------

------

------

------

------

------

Notes to the Financial Statementsfor the year ended December 31, 2017

Gro

ss w

ritte

n pr

emiu

m

G

ross

dire

ct p

rem

ium

Fac

ulta

tive

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rativ

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172

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6

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84

145,

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726,

166)

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642,

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(112

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5)

136,

982,

064 -

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119,

242,

154 - - -

136,

782,

975

1

30,9

41,6

88

-

5,84

1,28

7

125

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9,88

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115

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115,

368,

529

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026,

882)

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(1

7,02

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3,28

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(

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54,5

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913,

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534,

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48,

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831 - - -

126

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1

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2

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74,6

76

117

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0,69

7,35

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1

06,8

39,8

52

2

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1

09,3

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40

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192,

801)

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7,65

4,72

8)

(5,8

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039,

242)

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584,

720)

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112

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119

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191,

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796,

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161,

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94,8

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37,5

00

99,2

61,2

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1

15,7

55,0

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50,

610,

783

48,

119,

287

392

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2,0

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03

49,

368,

705

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806,

226)

33,5

62,4

79

520,

594

34,0

83,0

73

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630,

775)

1

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015,

851)

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522,

196)

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852,

356)

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513,

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904,

318)

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21,2

45)

29,

907,

304 -

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19,

258,

148 -

-

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6

78,0

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09

5

90,9

49,6

14

71,

494,

671

15,

638,

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6

47,1

82,6

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17,8

92,9

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5

29,2

89,6

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12,

899,

768

542,

189,

450

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68,5

32,0

54)

53,

432,

932

(215

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(75,

558,

275)

(1

98,9

91,6

11)

(1,

513,

915)

(

491,

162,

923)

51,

026,

528

12,

712,

440

10,

648,

785

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831,

245)

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349,

327)

6,

502,

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64,7

09,8

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4

38,6

06,4

70

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5,74

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299,

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,902

78

Page 80: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

At the beginning of previous year

Additions

Disposals (sale and redemptions)

Amortization

Fair value net losses (excluding net realised gains)

At beginning of current year

Additions

Disposals (sale and redemptions)

Amortization

Fair value net losses (excluding net realised gains)

At end of current year

18,009,628

313,100

(18,009,628)

-

(66,340)

246,760

11,000

-

-

(125,020)

132,740

90,846,897

184,540,000

(119,040,000)

(302,471)

-

156,044,426

180,000,000

(155,000,000)

1,016,912

-

182,061,338

108,856,525

184,853,100

(137,049,628)

(302,471)

(66,340)

156,291,186

180,011,000

(155,000,000)

1,016,912

(125,020)

182,194,078

Available for sale Total

--------------------Rupees--------------------

34 MOVEMENT IN INVESTMENTSHeld to maturity

35 MANAGEMENT OF INSURANCE RISK AND FINANCIAL RISK

35.1 Insurance riskThe Company accepts the insurance risk through its insurance contracts where it assumes the risk

of loss from persons or organizations that are directly subject to the underlying loss. The Company

is exposed to the uncertainty surrounding the timing, frequency and severity of claims under these

contracts.The Company manages its risk via its underwriting and reinsurance strategy within an overall risk

management framework. Exposures are managed by having documented underwriting limit and

criteria. Reinsurance is purchased to mitigate the risk of potential loss to the Company. Reinsurance

policies are written with approved reinsurers either on a proportional, excess of loss treaty or

facultative basis.

A concentration of risk may also arise from a single insurance contract issued to particular

demographic type of policyholder, within a geographical location or to types of commercial

business. The Company minimizes its exposure to significant losses by obtaining reinsurance from a

number of reinsurers who are dispersed over several geographical regions.

The Company's activities expose it to a variety of financial risks, credit risks, liquidity risk and market risk

(including interest/ mark-up rate risk and price risk). The Company's overall risk management programme

focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the

financial performance. Overall risks arising from the Company's financial assets and liabilities are limited. The

Company consistently manages its exposure to financial risk without any material change from previous

period in the manner described in notes below. The Board of Directors has overall responsibility for the

establishment and oversight of Company's risk management framework. The Board is also responsible for

developing the Company's risk management policies.

Further the Company adopts strict claim review policies including active management and prompt

pursuing of the claims, regular detailed review of claim handling procedures and frequent

investigation of possible false claims to reduce the insurance risk.

Notes to the Financial Statementsfor the year ended December 31, 2017

79Annual Report 2017

SPI Insurance Company Limited

Page 81: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

a)

b)

To optimize benefits from the principle of average and law of large numbers, geographical spread

of risk is of extreme importance. There are a number of parameters which are significant in

assessing the accumulation of risks with reference to the geographical location, the most important

of which is risk survey. Risk surveys are carried out on a regular basis for the evaluation of physical

hazards associated with the commercial / industrial / residential occupation of the insurers. Details

regarding the fire separation/segregation with respect to the manufacturing processes, storage,

utilities, etc. are extracted from the layout plan of the insured facility. Such details are formed part

of the reports which are made available to the underwriters/reinsurance personnel for their

evaluation. Reference is made to the standard construction specifications as laid down by IAP

(Insurance Association of Pakistan). For instance, the presence of Perfect Party Walls, Double Fire

Proof Iron Doors, physical separation between the buildings within an insured's premises. It is

basically the property contained within an area which is separated by another property by

sufficient distance to confine insured damage from uncontrolled fire and explosion under the most

adverse conditions to that one area. Address look-up and geocoding is the essential field of the

policy data interphase of IT systems. It provides instant location which is dependent on data

collection provided under the policy schedule. All critical underwriting information is punched into

the IT system/application through which a number of MIS reports can be generated to assess the

concentration of risk.

Keeping in view the maximum exposure in respect of key zone aggregates, number of proportional

and non proportional reinsurance arrangements are in place to protect the net account in case of a

major catastrophic event. Apart from the adequate event limit which is a multiple of the treaty

capacity or the primary recovery from the proportional treaty, any loss over and above the said

limit would be recovered from the non-proportional treaty which is very much in line with the risk

management philosophy of the Company.

Geographical concentration of insurance risk

Reinsurance arrangements

Sources of uncertainty in estimation of future claim payments

In compliance of the regulatory requirement, the reinsurance agreements are duly submitted with

Securities and Exchange Commission of Pakistan (SECP) on annual basis.

The Concentration of risk by type of contracts could not be summarized because most of the

reinsurance arrangements are on non-proportional basis.

Claims on general insurance contracts are payable on a claim occurrence basis. The Company is

liable for all insured events that occur during the term of the insurance contract.

An estimated amount of the claim is recorded immediately on intimation to the Company. The

estimation of the amount is based on the amount notified by the policy holder, management or

preliminary assessment by the independent surveyor appointed for this purpose. The initial

estimates include expected settlement cost of the claims. Incurred But Not Reported (IBNR)

claims have been estimated using Chain Ladder (CL) methodology. The Chain Ladder (CL) Method

involves determination of development factors or link ratios for each period. These are then

subsequently combined to determine Cumulative Development Factor (CDF) which represents

the extent of future development of claims to reach their ultimate level.

80

Page 82: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

c)

d)

The principal assumption underlying the liability estimation of IBNR and premium deficiency

reserve is that the Company's future claim development will follow similar historical pattern for

occurrence and reporting. The management uses qualitative judgment to assess the extent to

which past occurrence and reporting pattern will not apply in future. The judgment includes

external factors e.g. treatment of one-off occurrence claims, changes in market factors, economic

conditions, etc.

There are several variable factors which affect the amount and timing of recognized claim liabilities.

However, the management considers that uncertainty about the amount and timing of claim

payments is generally resolved within a year. The Company takes all reasonable measures to

mitigate the factors affecting the amount and timing of claim settlements. However, uncertainty

prevails with estimated claim liabilities. It is likely that final settlement of these liabilities may be

different from recognised amounts.

Process used to decide on assumptions

Sensitivity analysis

The risk associated with the insurance contracts are complex and subject to a number of variables

which complicate quantitative sensitivity analysis. The Company makes various assumptions and

techniques based on past claims development experience. This includes indications such as average

claims cost, ultimate claims numbers and expected loss ratios. The Company considers that the

liability for insurance claims recognized in the balance sheet is adequate. However, actual

experience will differ from the expected outcome.

As the Company enters into short term insurance contracts, it does not assume any significant

impact of change in market conditions on unexpired risks. However, some results of sensitivity

testing are set out below, showing the impact on profit before tax net of reinsurance.

10% increase in (loss)

Fire

Marine

Motor

Health

Miscellaneous

10% decrease in loss

Fire

Marine

Motor

Health

Miscellaneous

(2,603,338)

(488,589)

(3,315,555)

(1,326,318)

(5,992,121)

(13,725,921)

2,603,338

488,589

3,315,555

1,326,318

5,992,121

13,725,921

(2,329,130)

(829,094)

(7,220,584)

(1,174,855)

(3,288,176)

(14,841,839)

2,329,130

829,094

7,220,584

1,174,855

3,288,176

14,841,839

(3,772,954)

(708,100)

(4,805,152)

(1,922,200)

(8,684,234)

(19,892,640)

3,772,954

708,100

4,805,152

1,922,200

8,684,234

19,892,640

(3,375,551)

(1,201,585)

(10,464,615)

(1,702,688)

(4,765,473)

(21,509,912)

3,375,551

1,201,585

10,464,615

1,702,688

4,765,473

21,509,912

2017 2016---------------------------Rupees---------------------------

Shareholders' equity2017 2016Pre tax profit/(loss)

81Annual Report 2017

SPI Insurance Company Limited

Page 83: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

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64,

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7,9

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84 - - -

7,0

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84

70,

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- - - - 1

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85

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26,6

89 - - -

4,5

26,6

89

85,

494,

103 - - - -

85,

494,

103

7,4

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43 - - -

7,4

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182

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- - - 7

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11,

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11,

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156

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- - - 7

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94,6

81

15,

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15,

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50,

132,

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153,

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334,

389,

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69,5

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5,89

2,89

8 6

43,4

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178,

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448,

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,312

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,473

246

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12

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0,68

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8,32

7,37

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,311 -

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139,

295,

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2,98

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,412

,481

166

,880

,717

- - - - -

- - - - -

- - - - - -

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50,

132,

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153,

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334,

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69,5

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156

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82

Page 84: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

Credit risk

Bank deposits

Loans and other receivables

Investments

Insurance / Reinsurance receivables

Reinsurance recoveries against outstanding claims

35.3

The carrying amount of financial assets represents the maximum credit exposure, as specified below:

Increase / (decrease) in basis points

Effect on profit before tax

Effect on equity

As at December 31, 2017

Cash flow sensitivity - financial liabilities

Cash flow sensitivity - financial assets

As at December 31, 2016

Cash flow sensitivity - financial liabilities

Cash flow sensitivity - financial assets

(115,643)

115,643

(1,900,116)

1,900,116

(157,586)

157,586

(1,639,947)

1,639,947

100

(100)

100

(100)

100

(100)

100

(100)

(80,950)

80,950

(1,330,081)

1,330,081

(108,734)

108,734

(1,131,563)

1,131,563

Credit risk is the risk that arises with the possibility that one party to a financial instrument will fail

to discharge its obligation and cause the other party to incur a financial loss. The Company

attempts to control credit risk by monitoring credit exposures by undertaking transactions with a

large number of counterparties in various industries and by continually assessing the credit

worthiness of counterparties.

For cash flow sensitivity analysis of financial instruments a hypothetical change of 100 basis points in interest rates at the reporting date would have increased / (decreased) profit for the year by the amounts shown below.

Concentration of credit risk occurs when a number of counterparties have a similar type of

business activities. As a result, any change in economic, political or other conditions would effect

their ability to meet contractual obligations in similar manner. The Company's credit risk exposure

is not significantly different from that reflected in the financial statements. The management

monitors and limits the Company's exposure to credit risk through monitoring of client's exposure

and conservative estimates of provisions for doubtful assets, if any. The management is of the view

that it is not exposed to significant concentration of credit risk as its financial assets are adequately

diversified in entities of sound financial standing, covering various industrial sectors.

43,610,523

153,465,041

71,162,740

334,389,587

69,522,145

672,150,036

2017Rupees

2016Rupees

58,673,654

120,880,689

20,476,760

258,327,374

70,274,311

528,632,788

83Annual Report 2017

SPI Insurance Company Limited

Page 85: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Ratings Ratings AgencyShort Term Long Term

2017 2016 Rupees

2017 2016 Rupees

Allied Bank Limited

Apna Microfinance Bank Limited

Bank Al-Falah Limited

Bank Al-Habib Limited

Bank Islami Pakistan Limited

Faysal Bank Limited

Finca Microfinance Bank Limited

First Women Bank Limited

Habib Bank Limited

JS Bank Limited

MCB Bank Limited

Meezan Bank Limited

National Bank of Pakistan

Silk Bank Limited

Sindh Bank Limited

Soneri Bank Limited

Telenor Microfinance Bank Limited

The Bank Of Punjab

United Bank Limited

Zarai Taraqiati Bank Limited

Upto 1 year

1-2 years

2-3 years

Over 3 years

The age analysis of Insurance / Reinsurance receivables is as follows:

A1+

A3

A1+

A1+

A1

A1+

A1

A2

A1+

A1+

A1+

A1+

A1+

A-2

A1+

A1+

A1

A1+

A1+

A1+

AA+

BBB

AA+

AA+

A+

AA

A

A-

AAA

AA-

AAA

AA

AAA

A-

AA

AA-

A+

AA

AAA

AAA

PACRA

PACRA

PACRA

PACRA

PACRA

PACRA

JCR-VIS

PACRA

JCR-VIS

PACRA

PACRA

JCR-VIS

PACRA

JCR-VIS

JCR-VIS

PACRA

PACRA

PACRA

JCR-VIS

JCR-VIS

1,857,971

5,980,711

2,858,846

1,891,952

938,900

2,770,523

9,663

227,264

8,515,468

155,164

3,096,050

28,728

628,710

3,369,686

511,809

180,136

772,828

507,763

135,983

9,172,368

43,610,523

136,651,754

40,218,001

128,126,531

29,393,301

334,389,587

3,485,047

9,452,285

3,264,325

1,962,663

1,208,556

3,317,423

47,663

374,620

11,789,642

25,265

5,734,762

26,064

1,995,909

3,407,716

186,281

189,396

1,855,922

(1,841,239)

216,666

11,974,689

58,673,654

191,371,111

39,148,458

72,408,007

26,071,783

328,999,359

The Company did not hold any collateral against the above during the year. General provision is made for

receivables according to the Company's policy. The impairment provision is written off when the Company

expects that it cannot recover the balance due. During the year receivables of Rs. 3,936,985/- (2016: Rs.

5.91 million) were further provided for and the provision of Rs. 615,467 /- (2016: Rs. 5.99 million) were

reversed due to recoveries. The remaining past due balances were not impaired as they relate to a number

of policy holders and other insurers/reinsurers for whom there is no recent history of default.

The credit quality of the Company's bank balances can be assessed with reference to external credit ratings

are as follows:

Notes to the Financial Statementsfor the year ended December 31, 2017

84

Page 86: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

Sector wise analysis of premium due but unpaid

BanksLeasing companiesTextilesCement ChemicalsGlass and ceramicsHospitalHotelPetrol/CNG pumps PharmaceuticalsSugar factoriesOil MillsShowroomsSports goodsMiscellaneous

Financial liabilities

Outstanding claims (including IBNR)Insurance / Reinsurance payablesOther creditors and accrualsBorrowings

Financial liabilities

Outstanding claims (including IBNR)Insurance / Reinsurance payablesOther creditors and accrualsBorrowings

56,847,254 228,735

9,427,520 131,402 687,509 117,898 328,997 55,813

658,930 1,911,859

420,543 2,226,087 4,280,306 4,252,442

67,856,527 149,431,822

48,559,909 3,684,461 7,598,019

6,894 1,307,655

117,898 643,585 59,844

1,095,868 61,284

233,242 711,507

3,993,883 4,477,242

55,211,900 127,763,191

35.4 Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they

fall due. Prudent liquidity risk management implies maintaining sufficient cash and marketable

securities. The Company finances its operations entirely through equity.

The following are the contractual maturities of financial liabilities, including estimated interest payments on

an undiscounted cash flow basis: -

178,748,845 44,879,504 29,312,124 11,564,273

264,504,746

139,295,248 2,172,988

25,412,481 15,758,643

182,639,360

-----

-----

178,748,845 44,879,504 29,312,124 11,564,273

264,504,746

139,295,248 2,172,988

25,412,481 15,758,643

182,639,360

178,748,845 44,879,504 29,312,124 11,564,273

264,504,746

139,295,248 2,172,988

25,412,481 15,758,643

182,639,360

up to one year

2017

---------------------------Rupees---------------------------

More than one year

Carrying amount

Contractual cash flows

up to one year

2016

---------------------------Rupees---------------------------

More than one year

Carrying amount

Contractual cash flows

2017 2016Rupees Rupees

85Annual Report 2017

SPI Insurance Company Limited

Page 87: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

35.5 Capital managementThe Company's objectives when managing capital are to safeguard the Company's ability to

continue as the going concern in order to provide returns for share holders and benefit for other

stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to

maintain or adjust the capital structure, the Company may adjust the amount of dividend to

shareholders out of future profit, issue new shares and obtain new financing facilities. Further the

Company meets the minimum paid-up capital requirements as required by Securities and Exchange

Commission of Pakistan.

PROVIDENT FUND DISCLOSURES

CORRESPONDING FIGURES

36

37

The following information is based on latest unaudited financial statements of the Fund as of December 31,

2017:

The investments out of provident fund have been made in accordance with the provisions of Section 227 of

the repealed Companies Ordinance, 1984 and the rules formulated for this purpose.

Corresponding figures have been re-classified and re-arranged, wherever necessary, to conform with the

current classification. Material reclassifications have been detailed as below:

4,266,144

3,208,410

3,208,410

75.21%

3,208,410

1,057,734

4,266,144

2017

RupeesUn-audited

Size of the fund - total assets

Cost of investments out of Provident Fund

Fair value of investments out of Provident Fund

Percentage of investments out of Provident Fund

The breakup of fair value of investment is:

Savings accounts with banks

Others

2,503,706

4,964,343

1,528,992

687,261

10,565,125

Rupees

Prepayments

Accrued investment income

Loans to employees

Loans and other receivables

Accrued expenses

Loans and

other

receivables

Loans and other receivables

Loans and other receivables

Loans and other receivables

Other Creditors and Accruals

Other creditors and accruals

Particulars Note From To

11, 14

& 19

19

Other

creditors

and accruals

86

Page 88: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

38 NUMBER OF EMPLOYEES

Number of employees at the year end 264 273

Avereg number of employees for the year 269 270

39 DATE OF AUTHORIZATION FOR ISSUE

40 GENERAL

- Figures have been rounded up to the nearest rupee.

These financial statements were authorized for issue in Board of Directors meeting held on March 29,

2018.

Separate set of statements representing assets, liabilities, revenues and expenses of Window Takaful

Operations has been annexed to these financial statement as per the requirement of Takaful Rules, 2012.

2017 2016

Chief Executive Officer DirectorDirectorChairman

87Annual Report 2017

SPI Insurance Company Limited

Page 89: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

SPI INSURANCE COMPANY LIMITED- WINDOW TAKAFUL OPERATIONS

FINANCIAL STATEMENTS

For the year ended December 31, 2017

Page 90: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Auditors’ Report to the Members

We have audited the annexed financial statements comprising of:(i) statement of financial position;(ii) profit and loss account;(iii) statement of comprehensive income;(iv) statement of changes in funds;(v) statement of cash flows;

of SPI Insurance Company Limited - Window Takaful Operations (“the Operator”) as at December 31, 2017 together

with the notes forming part thereof, for the year then ended.It is the responsibility of the Operator's Board of Directors/ management to establish and maintain a system of internal

control, and prepare and present the financial statements in conformity with the approved accounting standards as

applicable in Pakistan and the requirements of the Insurance Ordinance, 2000 (XXXIX of 2000) and the repealed

Companies Ordinance, 1984 (XLVII of 1984). Our responsibility is to express an opinion on these statements based on

our audit.We conducted our audit in accordance with the Auditing Standards 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 used 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.

In our opinion:

a) proper books of account have been kept by the Operator as required by the Insurance Ordinance, 2000 and the

repealed Companies Ordinance, 1984;

b) the financial statements together with the notes thereon have been drawn up in conformity with the Insurance

Ordinance, 2000 and the repealed Companies Ordinance, 1984, and accurately reflect the books and records of

the Operator and are further in accordance with accounting policies consistently applied except for the changes

as stated in note 2.7 with which we concur;

c) the financial statements together with the notes thereon present fairly, in all material respects, the state of the

Operator's affairs as at December 31, 2017 and of the profit, its comprehensive income, its cash flows and

changes in funds for the year then ended in accordance with approved accounting standards as applicable in

Pakistan, and give the information required to be disclosed by the Insurance Ordinance, 2000 and the repealed

Companies Ordinance, 1984; and

d) no zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980).

Auditors’ Report to the Members(Window Takaful Operations)

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Auditors’ Report to the Members

Other MatterThe financial statements for the year ended December 31, 2016 were audited by another firm of Chartered

Accountants who had expressed an unmodified opinion in its report dated April 01, 2017.

RSM AVAIS HYDER LIAQUAT NAUMAN Chartered Accountants Engagement Partner: Syed Ali Adnan TirmizeyDate: March 29, 2018Place: Lahore

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Shariah Audit Report

We were engaged by the Board of Directors of SPI Insurance Company Limited (the Company) to report on the management's assessment of compliance of the Window Takaful Operations (Takaful Operations) of the Company, as set out in the annexed statement prepared by the management for the year ended December 31, 2017, with the Takaful Rules, 2012, in the form of an independent reasonable assurance conclusion about whether the annexed statement presents fairly the status of compliance of the Operations with the Takaful Rules, 2012, in all material respects.

Applicable Criteria

The criteria against which the subject matter information (the Statement) is assessed comprise of the provisions of Takaful Rules 2012.

Responsibilities of the Management

The Board of Directors / management of the Company are responsible for designing, implementing and maintaining internal controls relevant to the preparation of the annexed statement that is free from material misstatement, whether due to fraud or error. It also includes ensuring the overall compliance of the Takaful Operations with the Takaful Rules, 2012.

The Board of Directors / management of the Company are also responsible for preventing and detecting fraud and for identifying and ensuring that the Takaful Operations comply with laws and regulations applicable to its activities. They are also responsible for ensuring that the management, where appropriate, those charged with governance, and personnel involved with the Takaful Operations' compliance with the Takaful Rules, 2012 are properly trained, systems are properly updated and that any changes in reporting encompass all significant business units.

Our Independence and Quality Control

We have complied with the independence and other ethical requirements of the Code of Ethics for Chartered Accountants issued by the Institute of Chartered Accountants of Pakistan, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

The firm applies International Standard on Quality Control 1 "Quality Control for Firms That Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements" and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Our responsibilities

Our responsibility is to examine the annexed statement and to report thereon in the form of an independent reasonable assurance conclusion based on the evidence obtained. We conducted our engagement in accordance with International Standard on Assurance Engagements (ISAE) 3000, 'Assurance Engagements Other Than Audits or Reviews of Historical Financial Information' issued by the International Auditing and Assurance Standards Board. That standard requires that we plan and perform our procedures to obtain reasonable assurance about whether the annexed statement presents fairly the status of compliance of the Takaful Operations with the Takaful Rules, 2012, in all material respects.

The procedures selected depend on our judgment, including the assessment of the risks of material non-compliances with the Takaful Rules, 2012, whether due to fraud or error. In making those risk assessments, we have considered internal control relevant to the Takaful Operations compliance with the Takaful Rules, 2012, in order to design assurance procedures that are appropriate in the circumstances, but not for the purposes of expressing a

Independent Reasonable Assurance Report to the Board of Directors on theStatement of Management’s Assessments of Compliance With the Shariah Principles

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Shariah Audit Report

conclusion as to the effectiveness of the Company's internal control over the Takaful Operations' compliance with the Takaful Rules, 2012. Reasonable assurance is less than absolute assurance.

A system of internal control, because of its nature, may not prevent or detect all instances of non-compliance with Takaful Rules, 2012, and consequently cannot provide absolute assurance that the objective of compliance with Takaful Rules, 2012, will be met. Also, projection of any evaluation of effectiveness to future periods is subject to the risk that the controls may become inadequate or fail.

The procedures performed included:

- Evaluating the systems, procedures and practices in place with respect to the Takaful operations against the Takaful Rules, 2012 and Shariah advisor's guidelines;

- Evaluating the governance arrangements including the reporting of events and status to those charged with relevant responsibilities, such as the Audit Committee/ Shariah Advisor and the Board of Directors;

- Test for a sample of transactions relating to Takaful operations to ensure that these are carried out in accordance with the laid down procedures and practices including the regulations relating to Takaful operations as laid down in Takaful Rules, 2012; and

- Review the statement of management's assessment of compliance of the Takaful transactions during the year ended December 31, 2017 with the Takaful Rules, 2012.

Conclusion

Our conclusion has been formed on the basis of, and is subject to, the matters outlined in this report. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion. In our opinion, the annexed statement, for the year ended December 31, 2017, presents fairly the status of compliance of the Takaful Operations with the Takaful Rules, 2012, in all material respects.

Other Matter

The Statement of Management's Assessment of Compliance with Shariah Principles for the year ended December 31, 2016 was reviewed by another firm of Chartered Accountants who expressed an unqualified conclusion in its report dated April 01, 2017.

RSM AVAIS HYDER LIAQUAT NAUMANChartered Accountants

Date: March 29, 2018 Place: Lahore

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Statement of Compliance with the Shariah Principlesfor the year ended December 31, 2017

The financial arrangements, contracts and transactions, entered into by Window Takaful Operations of SPI Insurance Company Limited (the Company) for the year ended December 31, 2017 are in compliance with the Takaful Rules, 2012.

Further, we confirmed that:

· The Company has developed and implemented all the policies and procedures in accordance with the Takaful Rules, 2012 and rulings of the Shariah Advisor along with a comprehensive mechanism to ensure compliance with such rulings and Takaful Rules, 2012 in their overall operations. Further, the governance arrangements including the reporting of events and status to those charged with relevant responsibilities, such as the Audit Committee / Shariah Advisor and the Board of Directors have been implemented;

· The Company has imparted trainings / orientations and ensured availability of all manuals / agreements approved by Shariah Advisor/ Board of Directors to maintain the adequate level of awareness, capacity and sensitization of the staff and management;

· All the products and policies have been approved by Shariah Advisor and the financial arrangements including investments made, policies, contracts and transactions entered into by Window Takaful Operations are in accordance with the polices approved by Shariah Advisor; and

· The assets and liabilities of Window Takaful Operations (Participants' Takaful Fund and Operator's fund) are segregated from its other assets and liabilities, at all times in accordance with the provisions of the Takaful Rules, 2012.

This has been duly confirmed by the Shariah Advisor of the Company.

By Order of the Board of Directors

Mr. Muhammad Akram Shahid(Director & Chief Executive)

Date: March 29, 2018

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Shariah Advisor’s Report to the Board of Directorsfor the year ended December 31, 2017

� ���� � � �� ��� �� �� � �� �، و�.� � وا�� ا �  و� ا � وا�ة وا�م � ��ا���ء وا� ٖ�ا� هللا رب ا� � ٖ �� ِ

Being a Shari'ah Advisor of SPI Insurance Company Limited Window Takaful Operations (hereafter referred to as “SPI WTO”) it is my responsibility to ensure that the participant membership documents, underwriting procedures, Re-Takaful Arrangements, and financial activities related to the Participants and stakeholders should be compliant as per Shari'ah rulings.

On the other hand it is the responsibility of SPI WTO's management to follow the Takaful rules and guidelines set by the Shari'ah Advisor and to take prior approval of Shari'ah Advisor for all policies and services being offered by the “SPI WTO”.

In my opinion, and the best of my understanding based on Shariah compliance review, explanations provided by “SPI WTO” and audit report of the External auditors, below are the findings:

I. Financial transactions, underwriting and investments undertaken by the “SPI WTO” for the year ended 31 December 2017, were in accordance with Takaful Rules 2012 and guidelines issued by Shariah Advisor.

ii. Appropriate accounting policies and basis of measurement have been consistently applied in preparation of the financial statements of “Participant Takaful Fund (Waqf Fund)” and “Operator Fund”.

iii. Conducting Training and Development is an imperative for understanding the principles of Takaful and its practical outline. For this purpose “SPI WTO” fulfilled its responsibility and arranged Takaful training sessions according to given course outline from SECP.I personally felt that participants gained significantly from these sessions. I hope “SPI WTO” will continue this practice in the future.

iv. Any cases which were required to be consulted in accordance with the Shariah and Takaful Rules have been discussed and duly resolved.

I concluded my report with the words that Allah Almighty grant “SPI Window Takaful Operations” remarkable success and help the entire team at every step and keep away from every hindrance and difficulty.“And Allah Knows Best”

_________________________Mufti Muhammad Umar.Shariah Advisor Window Takaful Operations SPI Insurance Company Limited.Date : March 29, 2018.

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SPI Insurance Company LimitedWindow Takaful Operations

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Statement of Financial PositionAs at December 31, 2017

Note

2017 2016 -------------------------------Rupees------------- ------------------

Participants' Takaful Fund

Operator's Fund Consolidated Consolidated

Restated(Refer note 2.7)

Assets

The annexed notes 1 to 34 form an integral part of these financial statements.

16,667,396

- 1,100,000

- 226,239,040

4,443,800 -

71,992,907 15,453,730

335,896,873

5

6789

18191011

12

13

18171914

15

16

Property and equipmentInvestments Equity securities Term depositsLoans and other receivablesTakaful / Retakaful receivablesRetakaful recoveries against outstanding claimsDeferred commission expensePrepaymentsCash and bankTotal Assets

Equity and LiabilitiesWaqf/ Participants’Takaful FundWaqf moneyUnappropriated surplus

Operator's FundStatutory reserveFair value reserveUnappropriated profit

Total EquityLiabilitiesUnderwriting Provisions Outstanding claims (including IBNR) Unearned contribution Unearned re-takaful commissionRetirement benefit obligationsTakaful / Retakaful payables - unsecuredOther creditors and accrualsTotal Liabilities

Total Equity and Liabilities

Contingencies and Commitments

500,000 37,612,778 38,112,778

- - - -

38,112,778

62,619,074 81,375,925 16,028,937

- 89,933,437 47,826,722

297,784,095

335,896,873

4,565,362

48,403,947 8,200,000

40,044,118 - -

26,372,987 267,076

1,512,704 129,366,194

---

50,000,000 293,643

19,161,231 69,454,874 69,454,874

- - - - -

59,911,320 59,911,320

129,366,194

21,232,758

48,403,947 9,300,000

40,044,118 226,239,040

4,443,800 26,372,987 72,259,983 16,966,434

465,263,067

500,000 37,612,77838,112,778

50,000,000 293,643

19,161,231 69,454,874

107,567,652

62,619,074 81,375,925 16,028,937

- 89,933,437

107,738,042 357,695,415

465,263,067

9,763,381

46,694,317 9,130,000

40,108,202 180,911,023 13,971,100 31,094,124 62,747,004 38,387,818

432,806,969

500,000 13,043,596 13,543,596

50,000,000 2,047,962 6,202,535

58,250,497 71,794,093

76,720,654 92,628,473 12,497,440 3,628,566

69,598,056 105,939,687 361,012,876

432,806,969

Chief Executive Officer DirectorDirectorChairman

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Profit and loss accountfor the year ended December 31, 2017

Participants' Takaful Fund Revenue AccountNet takaful contributionNet takaful claimsNet rebate on re-takafulDirect expensesTakaful claims Underwriting resultsInvestment income 22

2223

24

23

171819

19

20

21

Other incomeSurplus for the yearOperator's Revenue AccountWakala feeCommission expenseManagement expenses

Investment IncomeOther incomeOther expensesProfit for the year

216,309

(61,414,857)(63,539,842)

3,527,217 46,778

(937,455)

68,569,003 (58,114,499)

23,757,522 (9,911,228)

(44,268,205) 24,300,798

52,075

24,569,182

135,276,855

10,322,156

12,958,696

107,314,904 (95,871,641) 7,980,132 (6,105,773) (93,997,282) 13,317,622

45,910 114,546 13,478,078

150,439,503 (49,100,550) (97,131,765) 4,207,188 2,591,396

81,542 (377,479) 6,502,647

The annexed notes 1 to 34 form an integral part of these financial statements.

Note 2017 2016Rupees Rupees

Restated(Refer note 2.7)

Chief Executive Officer DirectorDirectorChairman

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SPI Insurance Company LimitedWindow Takaful Operations

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Statement of comprehensive incomefor the year ended December 31, 2017

2017 2016Rupees Rupees

Restated(Refer note 2.7)

PARTICIPANTS' TAKAFUL FUNDSurplus for the yearOther comprehensive income for the yearTotal comprehensive income for the year

OPERATOR'S FUNDProfit for the yearOther comprehensive income: Items that will not be reclassified to profit or loss: Actuarial (loss) Items that may be reclassified subsequently to profit or loss: Unrealised gains on available for sale investments Realized fair value reserve on sale of available for sale investments

Other comprehensive loss for the yearTotal comprehensive income for the year

13,478,078 -

13,478,078

6,502,647

(2,574,222)

1,236,935 663,388

(673,899) 5,828,748

24,569,182 -

24,569,182

12,958,696

-

293,643 (2,047,962)

(1,754,319) 11,204,377

Chief Executive Officer DirectorDirectorChairman

The annexed notes 1 to 34 form an integral part of these financial statements.

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Statement of changes in Fund for the year ended December 31, 2017

Fair value reserve

Description

Balance as at January 01, 2016

Total comprehensive income for the year

Balance as at December 31, 2016

Total comprehensive income for the year

Balance as at December 31, 2017

Description

Balance as at January 01, 2016 (previously stated)

Effect of change in accounting policy (Refer note 2.7)

Balance as at January 01, 2016 (Restated)

Total comprehensive income for the year

Balance as at December 31, 2016 (Restated)

Total comprehensive income for the year

Balance as at December 31, 2017

The annexed notes 1 to 34 form an integral part of these financial statements.

Participants' Takaful Fund

Operator’s Fund

Waqf money

Statutory reserve

Unappropriated surplus/(deficit) Total

----------------------- Rupees -----------------------

----------------------- Rupees -----------------------

65,518

13,478,078

13,543,596

24,569,182

38,112,778

52,274,110

147,639

52,421,749

5,828,748

58,250,497

11,204,377

69,454,874

(434,482)

13,478,078

13,043,596

24,569,182

37,612,778

2,274,110

-

2,274,110

3,928,425

6,202,535

12,958,696

19,161,231

500,000

-

500,000

-

500,000

-

147,639

147,639

1,900,323

2,047,962

(1,754,319)

293,643

50,000,000

50,000,000

-

50,000,000

-

50,000,000

Unappropriatedprofit Total

Chief Executive Officer DirectorDirectorChairman

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SPI Insurance Company LimitedWindow Takaful Operations

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Statement of Cash Flows for the year ended December 31, 2017

Operating cash flows:

a) Operating activities:

Contribution received

Wakala fees received

Retakaful contribution paid

Claims paid

Retakaful and other recoveries received / (paid)

Commission paid

Retakaful rebate received

Direct Expenses

Net cash flow from underwriting activities

b) Other operating activities:

General and management expenses paid

Other operating receipts/(payments)

Net cash flow from other operating activities

Net cash flow from all operating activities

Investment activities:

Investment income received

Sale/(purchase) of investment

Fixed capital expenditure

Net cash flow from investing activities

Net cash inflow from all activities

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

Reconciliation of profit and loss account

Net cash flow from operating activities

Depreciation

Provision for Gratuity

Increase/(Decrease) in assets other than cash

(Increase)/Decrease in liabilities

Gain & other investment income

Profit for the period

Attributed to:

Participants' takaful fund

Operator's fund

Participants' takaful fund

Operator'sfund Consolidated Consolidated

185,637,459

150,439,503

(58,551,085)

(64,349,294)

(58,341,551)

(43,048,884)

19,851,317

(3,894,944)

127,742,521

(96,247,325)

(6,990,265)

(103,237,590)

24,504,931

2,637,306

5,742,439

(7,865,971)

513,774

25,018,705

22,499,113

47,517,818

24,504,931

(2,708,405)

(3,180,558)

142,839,698

(144,112,248)

2,637,306

19,980,725

13,478,078

6,502,647

19,980,725

186,955,610

134,911,407

(105,310,796)

(84,816,538)

(36,460,726)

(51,435,036)

27,289,019

(3,670,567)

67,462,373

(66,568,950)

(4,140,535)

(70,709,485)

(3,247,112)

2,905,118

(2,959,775)

(18,119,615)

(18,174,272)

(21,421,384)

38,387,818

16,966,435

(3,247,112)

(6,650,238)

3,628,566

41,464,296

(311,105)

2,643,471

37,527,878

24,569,182

12,958,696

37,527,878

-

134,911,407

-

-

-

(51,435,036)

-

-

83,476,371

(66,568,950)

(17,631,358)

(84,200,308)

(723,937)

2,853,043

(2,959,775)

(69,615)

(176,347)

(900,284)

2,412,988

1,512,704

(723,937)

(967,635)

3,628,566

71,970,192

(63,539,886)

2,591,396

12,958,696

-

12,958,696

12,958,696

186,955,610

-

(105,310,796)

(84,816,538)

(36,460,726)

-

27,289,019

(3,670,567)

(16,013,998)

-

13,490,823

13,490,823

(2,523,175)

52,075

-

(18,050,000)

(17,997,925)

(20,521,100)

35,974,830

15,453,730

(2,523,175)

(5,682,603)

-

(30,505,896)

63,228,781

52,075

24,569,182

24,569,182

-

24,569,182

Restated(Refer note 2.7)

The annexed notes 1 to 34 form an integral part of these financial statements.

Chief Executive Officer DirectorDirectorChairman

2017 2016 -------------------------------Rupees------------- ------------------

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Notes to the Financial Statementsfor the year ended December 31, 2017

LEGAL STATUS AND NATURE OF BUSINESS

SPI Insurance Company Limited (the Company) is an unquoted public limited company incorporated in Islamabad, Pakistan on February 15, 2005 under the repealed Companies Ordinance, 1984. The Company is engaged in non-life insurance business mainly comprising of fire, marine, motor, health and miscellaneous. The Company commenced its commercial operations on April 13, 2005. The registered office of the Company is situated at suite # 204-A, Second Floor, Madina City Mall, Abdullah Haroon Road, Karachi and principal office of the Company is situated at UIG House 6-D, 1st Floor, Upper Mall, Lahore, Pakistan.The Company has been allowed to work as Window Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful Rules, 2012 to carry on Islamic General Insurance in Pakistan . It has not transacted any business outside Pakistan.For the purpose of carrying on the takaful business, the company has formed a waqf for participants' equity fund. The Waqf namely SPI Insurance Company Limited (Window Takaful Operations)-Waqf Fund (hereafter referred to as participant takaful fund (PTF)) on October 29, 2014 under a trust deed executed by the Company with a ceded money of Rs.500,000/- . Waqf deed also governs the relationship of Operators and policy holders for management of takaful operations, investment policy holder's funds and investment of Operators' funds approved by Shariah advisor of the company.

BASIS OF PREPARATION AND STATEMENT OF COMPLIANCE

During the period, the Companies Act 2017 (the Act) has been promulgated, however, Securities and Exchange Commission of Pakistan vide its circular No. 23 of 2017 dated October 04, 2017 communicated that the Commission has decided that the companies whose financial year closes on or before December 31, 2017 shall prepare their financial statements in accordance with the provisions of the repealed Companies Ordinance, 1984. Accordingly, these financial statements are prepared in accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the Companies Ordinance,1984, provisions of and directives issued under the Companies Ordinance, 1984, the Insurance Ordinance, 2000, the Insurance Rules, 2017, the Insurance Accounting Regulations, 2017 and the Takaful Rules, 2012. In case requirements differ, the provisions or directives of the repealed Companies Ordinance, 1984, Insurance Ordinance, 2000, Insurance Rules, 2017, Takaful rules 2012 shall prevail. Securities and Exchange Commission of Pakistan is in process of issuing accounting guidelines for window takaful operators for better presentation of financial information in financial statements. These financial statements have been prepared by using best estimates and judgments of the management of the Operator.

Basis of measurement

These financial statements have been prepared under the historical cost convention except that certain financial instruments are carried at fair value and obligations under staff retirement benefits are stated at present value.

Use of estimates and judgementsThe preparation of financial statements in conformity with the requirements of approved accounting standards as applicable in Pakistan requires management to make certain judgments, accounting estimates and assumptions. It also requires the management to exercise its judgment in the process of applying the Operator's accounting policies to reported amount of assets and liabilities as well as income and expenses. Actual results may differ from these estimates and associated assumptions are continually evaluated and are based on historical experience, statutory requirements and other factors considered reasonable in the circumstances. Revision to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected. The estimates and assumptions that are expected to have a significant effect on the assets and liabilities and income and expenses have been disclosed in note 4 to these financial statements.

Functional and presentation currency

These financial statements are presented in Pakistan Rupees, which is also the Operator's functional and presentation currency. All financial information presented in Pakistan rupees are rounded off to nearest rupees unless otherwise stated.

1

2

2.1

2.2

2.3

101Annual Report 2017

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Notes to the Financial Statementsfor the year ended December 31, 2017

2.5

Standards, interpretations and amendments effective in 2017

The following standards, amendments to standards and interpretations have become effective and are mandatory for financial statements of the Company for the periods beginning on or after January 01, 2017 and therefore, have been applied in preparing these financial statements.

• IFRS 12 – Disclosure of Interests in Other Entities

The amendment states that an entity need not provide summarized financial information for interests in subsidiaries, associates or joint ventures that are classified (or included in a disposal group that is classified) as held for sale.The amendments clarify that this is the only concession from the disclosure requirements for such interests.

• IAS 7 – Statement of Cash Flows

The amendments require an entity to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both cash and non-cash changes.The amendments apply prospectively. Entities are not required to present comparative information for earlier periods when they first apply the amendments.

• IAS 12 – Income Taxes

The amendments in recognition of deferred tax assets for unrealized losses clarify the following aspects: - Unrealized losses on debt instruments measured at fair value and measured at cost for tax purposes give rise

to a deductible temporary difference regardless of whether the debt instrument's holder expects to recover the carrying amount of the debt instrument by sale or by use.

- The carrying amount of an asset does not limit the estimation of probable future taxable profits. Estimates for future taxable profits exclude tax deductions resulting from the reversal of deductible

temporary differences. - An entity assesses a deferred tax asset in combination with other deferred tax assets. Where tax law restricts

the utilization of tax losses, an entity would assess a deferred tax asset in combination with other deferred tax assets of the same type.

The application of amendments has no significant impact on the disclosures or amounts recognized in the Company’s financial statements.

Standards, interpretations and amendments not effective at year end

The following standards, amendments to standards and interpretations have been published and are mandatory for the Company’s accounting periods beginning on or after their respective effective dates.

•IFRS 2– Share-based Payment

Amendments to classification and measurement of Share-based Payment transactions, applicable for annual reporting periods beginning on or after January 01, 2018, contains the following clarifications and amendments:- Accounting for cash-settled share-based payment transactions that include a performance conditionUntil now, IFRS 2 contained no guidance on how vesting conditions affect the fair value of liabilities for cash-settled share-based payments. IASB has now added guidance that introduces accounting requirements for cash-settled share-based payments that follows the same approach as used for equity-settled share-based payments.- Classification of share-based payment transactions with net settlement featuresIASB has introduced an exception into IFRS 2 so that a share-based payment where the entity settles the share-based payment arrangement net is classified as equity-settled in its entirety provided the share-based payment would have been classified as equity-settled had it not included the net settlement feature.- Accounting for modifications of share-based payment transactions from cash-settled to equity-settledUntil now, IFRS 2 did not specifically address situations where a cash-settled share-based payment changes to an equity-settled share-based payment because of modifications of the terms and conditions. The IASB has introduced the following clarifications:

2.4

102

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Notes to the Financial Statementsfor the year ended December 31, 2017

•Annual Improvements to IFRS Standards 2015–2017 Cycle, applicable for annual reporting periods beginning on or after January 01, 2019

In December 2017, the IASB published Annual Improvements to IFRS Standards 2015–2017 Cycle, containing the following amendments to IFRSs:

- IFRS 3 – Business Combinations and IFRS 11 – Joint Arrangements

The amendments to IFRS 3 clarify that when an entity obtains control of a business that is a joint operation, it remeasures previously held interests in that business. The amendments to IFRS 11 clarify that when an entity obtains joint control of a business that is a joint operation, the entity does not remeasure previously held interests in that business.

- IAS 12 – Income Taxes

The amendments clarify that all income tax consequences of dividends (i.e. distribution of profits) should be recognized in profit or loss, regardless of how the tax arises.

- IAS 23 – Borrowing Cost

The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when calculating the capitalization rate on general borrowing.

•IFRS 4 – Insurance Contracts

The standard has been amended by applying IFRS 9 'Financial Instruments' with IFRS 4 'Insurance Contracts'. The amendment states that an entity choosing to apply the overlay approach retrospectively to qualifying financial assets does so when it first applies IFRS 9. An entity choosing to apply the deferral approach does so for annual reporting periods beginning on or after January 01, 2018.

•IFRS 9 – Financial Instruments

IFRS 9 contains accounting requirements for financial instruments in the areas of classification and measurement, impairments, hedge accounting, de-recognition.All recognized financial assets that are within the scope of IAS 39 Financial Instruments: Recognition and Measurement are required to be subsequently measured at amortized cost or fair value. Specifically, debt investments that are held within a business model whose objective is to collect the contractual cash flows, and that have contractual cash flows that are solely payments of principal and interest on the principal outstanding are generally measured at amortized cost at the end of subsequent accounting periods. Debt instruments that are held within a business model whose objective is achieved both by collecting contractual cash flows and selling financial assets, and that have contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding, are measured at Fair Value Through Other Comprehensive Income. All other debt investments and equity investments are measured at their fair value at the end of subsequent accounting periods.

In relation to the impairment of financial assets, standard requires an expected credit loss model, as opposed to an incurred credit loss model under IAS 39.

The new general hedge accounting requirements retain the three types of hedge accounting mechanisms currently available in IAS 39. Under IFRS 9, greater flexibility has been introduced to the types of transactions eligible for hedge accounting, specifically broadening the types of instruments that qualify for hedging instruments and the types of risk components of non-financial items that are eligible for hedge accounting. In addition, the effectiveness test has been replaced with the principle of an ‘economic relationship’. Retrospective assessment of hedge effectiveness is also no longer required. Enhanced disclosure requirements about an entity’s risk management activities have also been introduced.

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Notes to the Financial Statementsfor the year ended December 31, 2017

The standard is effective for annual reporting periods beginning on or after July 01, 2018, as notified by the SECP vide SRO 1007(I)/2017 dated October 04, 2017.

Further, IASB has issued amendments relating to Prepayment Features with Negative Compensation (Amendments to IFRS 9) to address the concerns about how IFRS 9 classifies particular pre-payable financial assets. The amendments are to be applied retrospectively for fiscal years beginning on or after January 01, 2019; early application is permitted.The management of the Company is reviewing the changes to evaluate the impact of application of standard on the financial statements.

•IFRS 15 Revenue from Contracts with Customers

IFRS 15 originally issued on May 28, 2014, provides a single, principles based five-step model (Identify the contract with the customer, identifying performance obligations, determine the transaction price, allocate the transaction price to the performance obligations in the contracts and recognize revenue when (or as) the entity satisfies a performance obligation) to be applied to all contracts with customers. On April 12, 2016, clarifications to IFRS 15 'Revenue from Contracts with Customers' were issued which address three of the five topics identified (identifying performance obligations, principal versus agent considerations, and licensing) and provide some transition relief for modified contracts and completed contracts.Guidance is provided on topics such as the point in which revenue is recognized, accounting for variable consideration, costs of fulfilling and obtaining a contract and various related matters. New disclosures about revenue are also introduced.The standard along with clarifications are effective for annual reporting periods beginning on or after July 01, 2018, as notified by SECP vide SRO 1007(I)/2017 dated October 04, 2017. The Management is in the process of evaluating the impact of application of the standard and clarifications on the Company’s financial statements.

•IAS 19 – Employee Benefits

Amendments, applicable for annual reporting periods beginning on or after January 01, 2019, relate to plan amendment, curtailment or settlement detailed as below: - If a plan amendment, curtailment or settlement occurs, it is now mandatory that the current service cost and the

net interest for the period after the remeasurement are determined using the assumptions used for the remeasurement.

- In addition, amendments have been included to clarify the effect of a plan amendment, curtailment or settlement on the requirements regarding the asset ceiling.

•IAS 28 – Investments in Associates and Joint Ventures

Amendments resulting from Annual Improvements 2014–2016 Cycle (clarifying certain fair value measurements), applicable for periods beginning on or after January 01, 2018, clarified that the election to measure at fair value through profit or loss an investment in an associate or a joint venture that is held by an entity that is a venture capital organization, or other qualifying entity, is available for each investment in an associate or joint venture on an investment-by-investment basis, upon initial recognition.Further, amendments applicable for periods beginning on or after January 01, 2019 have been added to clarify that an entity applies IFRS 9 including its impairment requirements, to long-term interests in an associate or joint venture that form part of the net investment in the associate or joint venture but to which the equity method is not applied.

•IAS 40 – Investment Property

The amendments in Transfers of Investment Property, applicable for periods beginning on or after January 01, 2018, state that an entity shall transfer a property to, or from, investment property when, and only when, there is evidence of a change in use. A change of use occurs if property meets, or ceases to meet, the definition of investment property. A change in management’s intentions for the use of a property by itself does not constitute evidence of a change in use.

•IFRIC 22 – Foreign Currency Transactions and Advance Consideration

IFRIC 22 clarifies the accounting for transactions that include the receipt or payment of advance consideration in a foreign currency.104

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Notes to the Financial Statementsfor the year ended December 31, 2017

2.7

2.6

The Interpretation covers foreign currency transactions when an entity recognizes a non-monetary asset or non-monetary liability arising from the payment or receipt of advance consideration before the entity recognizes the related asset, expense or income. It does not apply when an entity measures the related asset, expense or income on initial recognition at fair value or at the fair value of the consideration received or paid at a date other than the date of initial recognition of the non-monetary asset or non-monetary liability. Also, the Interpretation need not be applied to income taxes, insurance contracts or reinsurance contracts.IFRIC 22 is effective for annual reporting periods beginning on or after January 01, 2018. Earlier application is permitted.

•Standards issued by IASB but not applicable in Pakistan

Following new standards have been issued by IASB which are yet to be notified by the SECP for purpose of applicability in Pakistan:

- IFRS 1 – First-time adoption of International Financial Reporting Standards - IFRS 14 – Regulatory Deferral Accounts - IFRS 16 – Leases - IFRS 17 – Insurance Contracts

Standards, amendments to standards and interpretations becoming effective in future period but not relevant

There are certain new standards, amendments to standards and interpretations that are effective from different future periods but are considered not to be relevant to the Operator’s operations, therefore, not disclosed in these financial statements.

Changes in accounting policies

2.7.1 Adoption of new Insurance Rules, 2017 and Insurance Accounting Regulations, 2017During the period SECP, has issued the Insurance Rules, 2017 including the new Insurance Accounting Regulations, 2017 and format for the preparation of the financial statements. The new Insurance Rules are effective for the current period financial statements. The significant changes resulting from such new rules affecting these financial statements are as follows:

2.7.2 The Operator has changed its accounting policy in relation to the available-for-sale investments to comply with the requirements of IAS 39 "Financial Instruments - Recognition and Measurement". These investments are now carried at fair value. Surplus / (deficit) on revaluation from one reporting date to another is taken to other comprehensive income in the statement of comprehensive income. On derecognition or impairment in available-for-sale investments, the cumulative gain or loss previously reported in other compressive income is transferred to profit and loss for the year within statement of comprehensive income. Previously the investments were carried at lower of cost and market value. This change in the accounting policy has been applied retrospectively and comparative information has been restated in accordance with the requirements of IAS 8 " Accounting Policies, Change in Accounting Estimates and Errors". The impact of change in accounting policy are summarised below:

2016

-------------------------Rupees-------------------------

As restatedAs previously stated

2015RupeesAs previously

stated

Operator's FundStatement of financial posiiton andStatement of changes in equityInvestments - Equity securitiesFair value reserveStatement Of comprehensive Income - Other comprehensive incomeUnrealised gains / (losses) on available for sale investmentsRealized fair value reserve on sale of available for sale investments

50,536,433 147,639

50,388,794 -

46,694,317 2,047,962

44,646,355 -

1,236,935

663,388

105Annual Report 2017

SPI Insurance Company LimitedWindow Takaful Operations

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Notes to the Financial Statementsfor the year ended December 31, 2017

3

3.1

3.2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Property and equipment

These are stated at cost less accumulated depreciation and impairment losses, if any. Depreciation on all fixed assets is charged to profit and loss account on the reducing balance method so as to write-off depreciable amount of an asset over its useful life at the rates stated in note 5. Depreciation on additions to fixed assets is charged from the month in which an asset is available for use, while no depreciation is charged for the month in which the asset is disposed off.The assets' residual values and useful lives are reviewed, at each financial year end, and adjusted if impact on depreciation is significant.Subsequent costs are included in an asset's carrying amount or recognized as a separate asset as appropriate, 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 are charged to the profit and loss account as and when incurred.The gain or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amount of the asset is recognized as an income or expense.

Takaful contracts

The Takaful contracts are based on the principles of Wakala. The takaful contracts so agreed usually inspire concept of tabarru (to donate for benefit of others) and mutual sharing of losses with the overall objective of eliminating the element of uncertainty. Contracts under which the Participant Takaful Fund (PTF) accepts significant takaful risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the takaful event) adversely affects the policyholder are classified as takaful contracts. Takaful risk is significant if a takaful event could cause the PTF to pay significant benefits due to the happening of the takaful event compared to its non happening. Once a contract has been classified as a takaful contract, it remains a takaful contract for the remainder of its lifetime, even if the takaful risk reduces significantly during this period, unless all rights and obligations are extinguished or expired. The PTF underwrites non-life takaful contracts that can be categorized into Fire and Property, Marine, Aviation and Transport, Motor, Health and Miscellaneous contracts. Contracts may be concluded for a fixed term of one year, for less than one year and in some cases for more than one year. However, most of the contracts are for twelve months duration. Takaful contracts entered into by the PTF under which the contract holder is another takaful operator / insurer of a facultative nature are included within the individual category of takaful contracts, other than those which fall under the Treaty.

Fire takaful provides coverage against damages caused by fire, riot and strike, explosion, earthquake, atmospheric damage, flood, electric fluctuation and other related parties.Marine, aviation and transport takaful provides coverage against cargo risk, terminals and damages occurred in between the points of origin and final destination and other related perils. Motor takaful provides comprehensive car coverage, indemnity against third party loss and other related covers.

2.7.3 Certain changes have been made to the presentation of the financial statements which include the following:

- Changes in the sequence of assets/liabilities in the statement of financial position.- Changes in the sequence of income/expenses in profit and loss account and statement of comprehensive

income.- Discontinuation of separate statements of contributions, claims, rebate on re-takaful and investment

income, which are now presented (on aggregate basis) into the notes of financial statements (17, 18, 19 and 22).- Underwriting results in relation to various classes of business which were previously presented on the

face of the profit and loss account are now presented in separate note 27.

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Notes to the Financial Statementsfor the year ended December 31, 2017

3.3

3.4

3.5

Health takaful provides basic hospital care and major medical care including maternity care and outpatient care. Miscellaneous takaful provides cover against Engineering, Health, Cash in safe, Cash in transit, ATM withdrawals snatching, Fidelity Guarantee Takaful, Personal Accident Takaful, Workmen’s Compensation Takaful, Terrorism Takaful, Third party liability Takaful, Plate Glass Takaful, Home Takaful, Travel Takaful and Hajj Umrah Takaful.

3.2.1 Contribution

Contributions including administrative surcharge received / receivable (if any) under a takaful contract are recognized as written at the time of issuance of contract. Contributions are stated gross of commission payable to intermediaries and exclusive of taxes and duties levied on contributions. Due from takaful contract holders represents the amount due from participants on account of takaful contracts. These are recognized at cost, which is the fair value of the consideration to be received less provision for impairment, if any.

3.2.2 Claims expense

General takaful claims include all claims occurring during the year, whether reported or not, related internal and external claims handling costs that are directly related to the processing and settlement of claims, a reduction for the value of salvage and other recoveries, and any adjustments to claims outstanding from previous years.The Operator recognizes liability in respect of all claims incurred up to the reporting date which is measured at the undiscounted value of the expected future payments. The claims are considered to be incurred at the time of incident giving rise to the claims except as otherwise expressly indicated in a takaful contract. The liability for claims include amounts relating to unpaid reported claims, claims incurred but not reported (IBNR) and expected claims settlement costs.Provisions for liability in respect of claims reported but not settled are made on the basis of individual case estimates. Provisions for IBNR is made at the reporting date. In accordance with Circular no. 9 of 2016, the Operator has changed its method of estimation of IBNR. The Operator now takes actuarial advise for the determination of IBNR claims.

Deferred Commission expense

Commission expenses and other acquisition costs are charged to the profit and loss account at the time the contracts are accepted. Rebate from retakaful is spread over the tenure of the contracts ceded on the basis of expired period of the contract and the total period, both measured using 1/24 method. The unearned portion of rebate from retakaful is set aside as a reserve. Such reserve is calculated as a portion of the gross contribution of each contract, determined according to the ratio of the unexpired period of the contract and the total period, both measured using the 1/24 method.

Unearned contribution reserve

The unearned portion of contribution written net of Wakala is set aside as a reserve and is recognized as a liability. Such reserve is calculated according to the ratio of the unexpired period of the contract and the total period, both measured by applying 1/24 method.

Contribution deficiency reserve

The Operator is required as per Insurance Accounting Regulations, 2017 to maintain a provision in respect of contribution deficiency for the class of business where the unearned contribution liability is not adequate to meet the expected future liability, after retakaful from claims and other supplementary expenses expected to be incurred after reporting date in respect of the unexpired contracts in that class of business at the reporting date. The movement in the contribution deficiency reserve is recorded as an expense/ income in profit and loss account for the year.

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3.8

3.6

3.7

For this purpose, loss ratios for each class are estimated based on historical claim development. Judgment is used in assessing the extent to which past trends may not apply in future or the effects of one-off claims. Further, actuarial valuation has been carried out to determine the amount of contribution deficiency reserve in respect of Accident and Health insurance as required by SRO 16 (I) / 2012 issued by Securities and Exchange Commission of Pakistan on 9 January, 2012.The Operator determines adequacy of liability of contribution deficiency by carrying out analysis of its loss ratio of expired periods. For this purpose average loss ratio of last 3 years inclusive of claim settlement cost but excluding major exceptional claims are taken into consideration to determine ultimate loss ratio to be applied on unearned contribution. The liability of contribution deficiency in relation to accident and health insurance is calculated in accordance with the advice of the actuary.

Retakaful contracts held

The Operator enters in to retakaful contracts in the normal course of business in order to limit the potential for losses arising from certain exposures. Outward retakaful contributions are accounted for in the same period as the related contribution for the direct or accepted retakaful business.Retakaful liabilities represent balance due to re-takaful companies. Amounts payable are estimated in a manner consistent with the related re-takaful contract. Retakaful assets represent balances due from retakaful companies. Amounts recoverable from retakaful companies are estimated in a manner consistent with the provisions for outstanding claims or settled claims associated with the re-takaful policies and are in accordance with the related retakaful contract.Retakaful assets are not offset against related takaful liabilities. Income or expenses from retakaful contract are not offset against expenses or income from related takaful assets.Retakaful assets or liabilities are derecognized when the contractual rights are extinguished or expire.The Operator assesses its retakaful assets for impairment on reporting date. If there is objective evidence that retakaful assets are impaired, the Operator reduces the carrying amount of the retakaful assets to its recoverable amount and recognizes that impairment loss in the profit and loss account.Claims recoveries recoverable from the retakaful parties 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.

Receivable and payables related to takaful contracts

Receivables under takaful contracts are recognized when due, at the fair value of the consideration receivable less provision for doubtful debts, if any. If there is objective evidence that the receivable is impaired, the Operator reduces the carrying amount of the receivable accordingly and recognizes that impairment loss in the profit and loss account.Liabilities for other takaful/ retakaful are carried at cost which is the fair value of consideration to be paid in the future for services.

Segment reporting

A business segment is a distinguishable component of the Operator that is subject to risks and returns that are different from those of other business segments. The Operator accounts for segment reporting of operating results using the classes of business as specified under the Insurance Ordinance, 2000 and Insurance Rules, 2017. The reported operating segments are also consistent with the internal reporting provided to Board of Directors which are responsible for allocating resources and assessing performance of the operating segments. The performance of segments is evaluated on the basis of underwriting results of each segment.

The Operator has five primary business segments for reporting purposes namely fire, marine, motor, health and miscellaneous.

Assets, liabilities and capital expenditures that are directly attributable to segments have been assigned to them while the carrying amount of certain assets pertaining to two or more segments have been allocated to segments on the basis of contribution written. Those assets and liabilities which can not be allocated to a particular segment on the above basis are reported as unallocated corporate assets and liabilities.

Notes to the Financial Statementsfor the year ended December 31, 2017

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Notes to the Financial Statementsfor the year ended December 31, 2017

3.11

3.9

3.10

Cash and cash equivalents

Cash and cash equivalents are carried in the statement of financial position at cost. For the purposes of cash flow statement, cash and cash equivalents comprise cash in hand, deposits with banks and stamps in hand.

Revenue recognition

3.10.1 Participant Takaful Fund (PTF)Contribution income under a policy is recognized over the period of takaful net off Wakala fee. Administrative surcharge recovered from retakaful companies is recognized as part of contribution in the case of co-takaful policies (Leader Follower Case) on proportionate basis.Rebate from retakaful operators is recognized at the time of issuance of the underlying takaful policy by the Operator's. This income is deferred and brought to account as revenue in accordance with the pattern of recognition of the retakaful contribution to which it relates.

3.10.2 Operators Fund (OF)The operator manages the general takaful operations for the participants and charges 40% to 50% on gross contribution for all classes as Wakala fee against the services. It is recognized upfront on the issue of Takaful Policy.

3.10.3 PTF/OF The Profit on Islamic investment products is recognized on accrual basis.Dividend income is recognized when the right to receive the dividend is established. Gain / loss on sale of available for sale investments are included in profit and loss account in the period of sale.

Investments

3.11.1 RecognitionAll investments are initially recognized at cost, being the fair value of the consideration given and include transaction costs, except for held for trading in which case transaction costs are charged to the profit and loss account. These are recognized and classified as follows:

- Investment at fair value through profit and loss (held for trading) - Held to maturity - Available for sale

3.11.2 MeasurementInvestment at fair value through profit and loss (held for trading) Investments which are acquired principally for the purpose of generating profit from short term fluctuation in market price or are part of the portfolio in which there is recent actual pattern of short term profit taking are classified as held for trading.Subsequent to initial recognition, these investments are re-measured at fair value. Gains or losses on these investments are recognized in the profit and loss account.

Held to maturity Investments with fixed maturity, where management has both the intent and the ability to hold to maturity, are

classified as held to maturity and are initially measured at cost. At subsequent reporting date, these are measured at amortized cost less provision for impairment, if any. Any

premium paid or discount availed on acquisition of held to maturity investment is deferred and amortized over the term of the investment using the effective yield method.

Available for sale 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. It also includes investments in

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SPI Insurance Company LimitedWindow Takaful Operations

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Notes to the Financial Statementsfor the year ended December 31, 2017

3.14

3.15

3.16

3.13

3.12

associated undertakings where the Operator does not have significant influence. The Operator follows trade date accounting for ‘regular way purchase and sales' of investments.

Subsequent to initial recognition at cost, these investments are carried at fair value. Surplus / (deficit) on revaluation from one reporting date to another is taken to other comprehensive income in the statement of comprehensive income. On derecognition or impairment in available-for-sale investments, the cumulative gain or loss previously reported in other comprehensive income is transferred to profit and loss for the year within statement of comprehensive income.

Financial Instruments

Financial assets and financial liabilities within the scope of IAS - 39 are recognized at the time when the Operator becomes a party to the contractual provisions of the instrument and de-recognized when the Operator 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 derecognizing of the financial assets and financial liabilities is included in the profit and loss account for the year.Financial instruments carried on the statement of financial position includes cash and bank deposits, investments, contribution due but unpaid, amount due from other takaful / retakaful, contribution and claim reserves detained by cedents, accrued investment income, re-takaful recoveries against outstanding claims, sundry receivables, provision for outstanding claims, amounts due to other takaful / retakaful, accrued expenses and other creditors and accruals.

Foreign currency transactions and translation

Foreign currency transactions are translated into Pak Rupees at the exchange rates prevailing on the date of transaction. Monetary assets and liabilities in foreign currencies are translated into Pak Rupees at the exchange rates prevailing at the reporting date. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using exchange rates at the date when the fair value was determined. Exchange gains or losses are included in income currently.

Offsetting of financial assets and liabilities

Financial assets and financial liabilities are only offset and the net amount reported in the statement of financial position when there is a legally enforceable right to set off the recognized amount and the Operator intends to either settle on a net basis, or to realize the asset and settle the liability simultaneously.

Provisions

Provisions are recognized when the Operator 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 can be made. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.

Staff retirement benefits

Defined benefit plan

The Operator operated an approved defined gratuity scheme for all its permanent employees who attain the minimum qualification period for entitlement to gratuity. Contributions to the fund are made based on actuarial recommendations and in line with the provisions of the Income Tax Ordinance, 2001. The most recent actuarial valuation was carried out for the year ended December 31, 2017 using the Projected Unit Credit Method. Actuarial gains or losses are recognized in other comprehensive income when they occur. Amounts recorded in profit and loss are limited to current and past service costs, gains or losses on settlements and net interest income/(expense).

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Notes to the Financial Statementsfor the year ended December 31, 2017

4

3.17

3.18

3.19

3.20

3.21

Defined contribution plan

The Operator operates a recognised provident fund for all its permanent employees. Equal monthly contributions are made to the fund both by the Operator and the employees at the rate of 8.33% of the basic salary. All permanent employees are eligible to opt for provident fund. Obligation for contributions to defined contribution plan is recognised as an expense in the profit and loss account as and when incurred.

Impairment of assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. The carrying amount of non-financial assets is reviewed at each reporting 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. The recoverable amount of an asset is greater of its value in use and its fair value less costs to sell. An impairment loss is recognized if the carrying amount of an asset exceeds its estimated recoverable amount.All impairment losses are recognized in the profit and loss account. Provisions for impairment are reviewed at each reporting date and adjusted to reflect the current best estimates. Changes in the provisions are recognized as income or expense.

Management and other expense

Expenses allocated to the "Participants' Takaful Fund" represents directly attributable expenses. Expenses not directly allocable to "Participants' Takaful Fund" are charged to Operators' Fund.

Takaful Surplus

Takaful surplus attributable to the participants is calculated after charging all direct cost and setting aside various reserves and charity. Allocation to participants, if applicable, is made after deducting the claims paid to them during the year. Further, surplus will be distributed to participants after payment of qarz-e-hasna to operator.

Qarz-E-Hasna

Qarz-e-Hasna is provided by Operators Fund to Participants' takaful fund in case of deficit in Participants' takaful fund.

Related Party Transactions

Party is said to be related if they are able to influence the operating and financial decisions of the Operator and vice versa. The Operator in the normal course of business carries out transactions with related parties. Transactions with related parties are priced at comparable uncontrolled market price and are carried out at arm’s length prices.

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

In the process of applying the Operator’s accounting policies, as described in note the management has made the following estimates and judgments which are significant to financial statements: -- determining the residual values and useful lives of fixed assets 3.1- provisions for obligations 3.2.2- recognition of outstanding claims incurred but not reported 3.2.2- calculation of premium deficiency reserves 3.5- segmental reporting 3.8- classification of investments 3.11- accounting for staff employment benefits 3.16- impairment 3.17- allocation of management expenses 3.18

111Annual Report 2017

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Notes to the Financial Statementsfor the year ended December 31, 2017

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545

108

,314

160

,517

22,

393 -

512

,157

193

,424

158

,961

179

,126

450

,394

26,

499

1,7

00,0

01

2,7

08,4

05

314

,812

258

,506

287

,440

610

,911

48,

892

1,7

00,0

01

3,2

20,5

62

1,7

74,1

45

943

,894

1,0

94,7

74

1,5

00,4

11

150

,158

4,2

99,9

99

9,7

63,3

81

10%

15%

15%

30%

15%

30%

Offi

ce Im

prov

emen

ts

Fur

nitu

re a

nd F

ixtu

res

Offi

ce E

quip

men

t

Com

pute

r eq

uipm

ent

Mot

or V

ehic

les

Tra

ckin

g D

evic

es

2,0

88,9

57

1,2

02,4

00

1,3

82,2

14

2,1

11,3

22

199

,050

6,0

00,0

00

12,

983,

943

-

-

4,7

00

64,

915 -

18,

050,

000

18,

119,

615

2,0

88,9

57

1,2

02,4

00

1,3

86,9

14

2,1

76,2

37

199

,050

24,

050,

000

31,

103,

558

314

,812

258

,506

287

,440

610

,911

48,

892

1,7

00,0

01

3,2

20,5

62

177

,414

142

,723

165

,274

459

,701

22,

523

5,6

82,6

03

6,6

50,2

38

492

,226

401

,229

452

,714

1,0

70,6

12

71,

415

7,3

82,6

04

9,8

70,8

00

1,5

96,7

31

801

,171

934

,200

1,1

05,6

25

127

,635

16,

667,

396

21,

232,

758

10%

15%

15%

30%

15%

30%

As

at

1 Ja

nuar

y

Cos

tPR

OPE

RTY

AN

D E

QU

IPM

ENT

5D

epre

ciat

ion

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

-Rup

ees-

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

2017

2016

Add

ition

s /

(dis

posa

ls)

As

at

31 D

ecem

ber

As

at

1 Ja

nuar

yFo

r th

e ye

ar /

(dis

posa

ls)

As

at

31 D

ecem

ber

Wri

tten

dow

n va

lue

as a

t 31

Dec

embe

r

Dep

reci

atio

nR

ate

%

112

Page 113: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

Number Rupees

Units

2017 2016

Cost Fair value Units Cost Fair value

Number Rupees

2,881,713

60,275

286,844

-

3,228,832

Operator's Fund

Available for sale

Open Ended - Mutual Funds

NBP - NAFA Islamic Income Fund

UBL - Al Ameen Funds Plan-I

Meezan Islamic Income Fund

Meezan Capital Preservation Plan-II

INVESTMENT IN EQUITY SECURITIES

INVESTMENT IN TERM DEPOSITS

LOANS AND OTHER RECEIVABLES - Considered Good

Held to maturity

Deposits maturing within 12 months

Participants' takaful fund

Term Deposit

Operator's fund

Term Deposit

Participants' takaful fund

Security deposit

Advance wakala fee

Advance tax

Operator's fund

Wakala fee receivable

Commission receivable

Security deposit

Loan to employees

Advance tax

Other receivable

6

7

8

2,742,033

-

160,684

204,777

3,107,494

1,100,000

8,030,000

9,130,000

80,000

2,183,061

279,764

2,542,825

-

11,443,385

1,551,365

58,081

446,983

24,065,563

37,565,377

40,108,202

27,344,735

6,027,536

14,738,033

-

48,110,304

26,003,525

-

8,236,662

10,406,168

44,646,355

28,065,867

5,353,362

14,984,718

-

48,403,947

1,100,000

8,200,000

9,300,000

-

-

-

-

16,572,396

-

1,417,704

14,500

233,841

21,805,677

40,044,118

40,044,118

7.1

7.2

26,723,583

-

8,452,005

11,518,729

46,694,317

Note 2017Rupees

2016Rupees

7.1

7.2

This represents term deposit held with Silk Bank Limited (a related party). This TDR is Islamic in nature, so profit percentage is not pre-decided and is due to mature by May 2018 (2016: June 2017).

This represents term deposit held with Meezan Bank Limited. This TDR is Islamic in nature, so profit percentage is not pre-decided and is due to mature by May 2018 (2016: June 2017).

113Annual Report 2017

SPI Insurance Company LimitedWindow Takaful Operations

Page 114: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

TAKAFUL / RETAKAFUL RECEIVABLES - Unsecured and Considered Good

PREPAYMENTS

CASH AND BANK

This represents balance held with Silk Bank Limited - a related party.

This represents balances with the following:

Silk Bank Limited - related party

Other banks

This represents balance held with bank which carries mark-up at a rate of 2.40% (2016: 2.41%) per annum.

Participants' takaful fund

Due from takaful contract holders

Due from other takaful / retakaful

Participants' takaful fund

Prepaid retakaful contribution ceded

Operator's fund

Prepaid rent

Participants' takaful fund

Cash and Cash Equivalent

Policy & Revenue stamps, Bond papers

Cash at bank

Current account

Savings account

Operator's fund

Cash and Cash Equivalent

Cash in hand

Cash at bank

Savings account

9

10

11

11.1

11.2

11.3

12

48,847,219

132,063,804

180,911,023

62,359,969

387,035

62,747,004

35,586,751

190,652,289

226,239,040

71,992,907

267,076

72,259,983

803,140

1,515,363

33,656,327

35,974,830

238,985

2,174,003

2,412,988

38,387,818

121,323

33,535,004

33,656,327

4.00%

2.40% to 5.55%

580,256

1,271,355

13,602,119

15,453,730

193,937

1,318,767

1,512,704

16,966,434

38,461

13,563,658

13,602,119

3.75%

2.26% to 5.55%

11.1

11.2

11.3

17

Note 2017 2016Rupees Rupees

2017 2016Rupees Rupees

2017 2016Rate (per annum)

WAQF MONEY

The amount of Rs. 500,000/- has been set as part for Waqf Fund/ Participants' Takaful Fund as waqf money according to the Waqf Deed prepared for the purpose of creation of Waqf Fund/ Participants' Takaful Fund.

114

Page 115: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

Note 2017Rupees

2016Rupees

RETIREMENT BENEFIT OBLIGATIONS

Staff retirement gratuity

Discount rate

Expected rate of increase in the salary of employees

Movement in present value of defined benefit obligation

Opening balance

Current service cost

Interest cost

Settlement loss on obligation

Actuarial loss

Movement in payable to defined benefit plan

Opening balance

Charge to profit and loss account

Remeasurement: Actuarial losses recognized in OCI

Closing balance

Charge to profit and loss account

Current service cost

Interest cost

Settlement loss on obligation

Charge to other comprehensive income

Actuarial loss on defined benefit obligation

14

14.1

14.3

14.4

14.5

14.6

14.2

13 STATUTORY RESERVEAmount of Rs. 50 million is deposited as statutory reserves to comply with provisions of para 4 of Circular No. 8 of 2014 read with section 11(c) of Takaful Rules, 2012 issued by the Securities and Exchange Commission of Pakistan which states that "Every insurer who is interested to commence Window Takaful business shall transfer an amount of not less than Rs. 50 million to be deposited in a separate bank account for Window Takaful business duly maintained in a scheduled bank".

SPI Insurance Company Limited - Window Takaful Operations Employees’ Gratuity Scheme was a funded defined benefit scheme. The Operator had decided to cease its gratuity fund obligations and settle the liability as at May 31, 2017. Accordingly, liability computed by the actuary as at reporting date is nil. The number of employees covered were 103. The latest actuarial valuation of the defined benefit plan was conducted at December 31, 2017 using the projected unit credit method. Details of the defined benefit plan are:

The actuarial valuations are carried out annually and contributions are made accordingly. Following were the significant assumptions used for valuation of the scheme:-

3,628,566

9.50%

7.50%

448,008

535,987

70,347

2,574,224

3,628,566

448,008

606,334

2,574,224

3,628,566

535,987

70,347

-

606,334

2,574,224

2,574,224

-

N/A

N/A

3,628,566

1,039,438

188,959

(4,856,963)

-

-

3,628,566

(3,628,566)

-

-

1,039,438

188,959

(4,856,963)

(3,628,566)

-

-

%age

Rupees

115Annual Report 2017

SPI Insurance Company LimitedWindow Takaful Operations

Page 116: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

Note 2017Rupees

2016Rupees

OTHER CREDITORS AND ACCRUALS

CONTINGENCIES AND COMMITMENTS

There is no known contingency or commitment as at December 31, 2017 (2016: Nil).

NET TAKAFUL CONTRIBUTION

NET TAKAFUL CLAIMS

15

16

17

18

Participants' takaful fund

Federal Excise Duty / Sales Tax

Federal Takaful Fee

Payable to related parties

Wakala fee payable

Others

Operator's fund

Agents commission payable

Accrued expenses

Other tax payables

SPI Insurance Company Limited

Advance wakala fee

Direct and facultative business underwritten inside Pakistan

Written Gross Contribution

Add: Unearned contribution reserve - Opening

Less: Unearned contribution reserve - Closing

Contribution earned

Less: Re-takaful contribution ceded

Add: Prepaid re-takaful contribution - Opening

Less: Prepaid re-takaful contribution - Closing

Re-takaful expense

24,519,992

524,110

-

-

11,114,569

36,158,671

35,795,808

7,076,788

1,406,294

23,319,065

2,183,061

69,781,016

105,939,687

178,517,447

81,513,870

(92,628,473)

167,402,844

106,439,095

16,008,814

(62,359,969)

60,087,940

107,314,904

64,349,294

76,720,654

(19,238,156)

121,831,792

11,989,051

13,971,100

-

25,960,151

95,871,641

28,692,501

333,175

1,425,000

16,572,396

803,650

47,826,722

41,054,492

3,618,955

1,146,448

14,091,425

-

59,911,320

107,738,042

173,329,694

92,628,473

(81,375,925)

184,582,242

125,646,177

62,359,969

(71,992,907)

116,013,239

68,569,003

84,816,538

62,619,074

(76,720,654)

70,714,958

22,127,759

4,443,800

(13,971,100)

12,600,459

58,114,499

Direct and facultative business underwritten inside Pakistan

Claims Paid

Add: Outstanding claims including IBNR - Closing

Less: Outstanding claims including IBNR - Opening

Claims expense

Less: Re-takaful and other recoveries received

Add: Re-takaful and other recoveries in respect of outstanding claims-Closing

Less: Re-takaful and other recoveries in respect of outstanding claims-Opening

Re-takaful and other recoveries revenue

18.1

116

Page 117: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

2017---------------------------Rupees---------------------------

20162015

Claim Development

Accident year

Estimate of ultimate claims costs:

At the end of accident year

One year later

Two year later

Current estimate of cumulative claims

Cumulative payments to date

Liability recognised in the statement of financial position

86,489,272

96,848,132

-

96,848,132

(73,436,352)

23,411,780

79,910,252

-

-

79,910,252

(47,743,700)

32,166,552

34,324,338

20,485,611

38,929,536

38,929,536

(31,888,794)

7,040,742

18.1

NET REBATE ON RE-TAKAFUL

DIRECT EXPENSES

19

20

Direct and facultative business underwritten inside Pakistan

Commission paid or payable

Add: Deferred commission expense - Opening

Less: Deferred commission expense - Closing

Net Commission

Less: Rebate on re-takaful

Add: Unearned re-takaful rebate - Opening

Less: Unearned re-takaful rebate - Closing

Rebate on re-takaful

Service charges

Depreciation-Tracker devices

Printing and stationery

Vehicle tracker expense

Bank charges

Inspection fee

Miscellaneous expenses

56,976,382

23,218,292

(31,094,124)

49,100,550

19,851,317

626,255

(12,497,440)

7,980,132

41,120,418

1,485,914

1,700,001

2,407,869

-

67,470

272,870

171,649

6,105,773

56,693,720

31,094,124

(26,372,987)

61,414,857

27,289,019

12,497,440

(16,028,937)

23,757,522

37,657,335

1,486,139

5,682,603

1,999,833

35,674

134,145

223,962

348,872

9,911,228

2017 2016Rupees Rupees

117Annual Report 2017

SPI Insurance Company LimitedWindow Takaful Operations

Page 118: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

MANAGEMENT EXPENSES

INVESTMENT INCOME

21

22

Employee benefit cost

Travelling expenses

Advertisements & sales promotion

Depreciation

Rent, rates and taxes

Legal and professional charges - business related

Electricity, gas and water

Vehicle running expenses

Office repairs and maintenance

Supervision fee

Bank charges

Postages, telegrams and telephone

Miscellaneous

Employee benefit cost

Salaries, allowances and other benefits

Charge for post employment benefit

Gratuity

Provident fund

Participants' takaful fund

Held to maturity

Income from term deposits

Operator's fund

Available for sale

Dividend income

Held to maturity

Income from term deposits

Net realised gains / (losses) on investments - Available for sale

Realised gains on:

Equity securities

Total investment income

80,977,058

604,972

1,300,000

1,008,404

7,466,010

157,124

2,215,068

195,739

2,137,335

2,131

10,657

247,482

809,785

97,131,765

80,370,722

606,336

-

80,977,058

52,219,607

140,338

1,235,500

967,635

4,411,171

706,375

852,352

72,330

1,498,654

350,089

26,316

824,845

234,630

63,539,842

55,757,506

(3,628,566)

90,667

52,219,607

45,910

45,910

531,684

222,369

1,837,343

2,591,396

2,637,306

52,075

52,075

47,121

353,297

3,126,799

3,527,217

3,579,292

21.1

21.1

22.1

22.2

Note 2017 2016Rupees Rupees

118

Page 119: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

OTHER INCOME23

23.2

23.1

24

25

Income from financial assets

Participants' takaful fund

Return on bank balances

Operator's fund

Return on bank balances

OTHER EXPENSES

Auditors' remuneration

Subscription

Computer software charges

Auditors' remuneration

Audit fee

Half yearly review

Out of pocket

COMPENSATION OF SHARIAH ADVISOR, HEAD OF TAKAFUL AND EXECUTIVES

Managerial remuneration

Utilities

Number of persons

114,546

81,542

196,088

320,000

39,189

18,290

377,479

300,000

20,000

-

320,000

48,594,235

6,038,792

54,633,027

37

216,309

46,778

263,087

510,000

27,455

400,000

937,455

420,000

50,000

40,000

510,000

25,737,666

1,452,432

27,190,098

15

24.1

24.1

Note 2017 2016Rupees Rupees

RELATED PARTY TRANSACTIONS26

Related parties comprise of chief executive officer, directors, major shareholders, key management personnel, associated companies, enities with common directors and post employment benefit plans. The transactions with related parties are carried out at commercial terms and conditions and compensation to key management personnel is on employment terms. Transactions with key management personnel and transactions under post employment benefit plans are disclosed in note 25 and 21.1, respectively. Transactions with related parties other than those which have been specifically disclosed elsewhere in these financial statements are follows:

Nature of relationship Type of transaction2017

Rupees2016

Rupees

Transactions and balances with Silk Bank Limited- associated company

Takaful contributionBalance at beginning of the periodGross contribution writtenReceived / adjusted during the periodBalance at end of the periodTakaful claim expenseOutstanding claims at beginning of the periodGross claim expense for the periodClaim paid during the periodOutstanding claims at end of the periodBank chargesProfit on bank deposits

9,008 2,606,764

(2,596,491) 19,281

2,240,000 264,042

(2,286,534) 217,508 2,117 56,011

- 1,106,347

(1,097,339) 9,008

- 2,282,900 (42,900) 2,240,000

7,642 45,910

United Track Systems (Pvt.) Limited- associated company Tracker devices 18,050,000 6,000,000

119Annual Report 2017

SPI Insurance Company LimitedWindow Takaful Operations

Page 120: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

27 SEGMENT INFORMATION

2017Fire andpropertydamage

Marine, aviation andtransport

Motor Health Miscellaneous Total

---------------------------------- Rupees ----------------------------------

Gross written contribution

Gross direct contribution

Facultative inward contribution

Administrative surcharge

Takaful contribution earned

Takaful contribution ceded to retakaful

Net takaful contribution

Rebate income

Net underwriting income

Takaful claims

Takaful claims recovered from retakaful

Net claims

Direct expenses

Net takaful claims and expenses

Underwriting results

Net investment income

Other income

Surplus for the year - PTF

Wakala fee

Commission expense

Management expenses

Investment Income

Other income

Other expenses

Prot for the year - OPF

Segment assets - OPF

Unallocated assets - OPF

Segment assets - PTF

Unallocated assets - PTF

Segment liabilities - OPF

Unallocated liabilities - OPF

Segment liabilities - PTF

Unallocated liabilities - PTF

6,626,727

3,094,235

3,505,976

26,516

5,191,751

(4,550,513)

641,238

1,165,578

1,806,816

336,039

283,224

619,263

(212,824)

406,439

1,400,377

3,007,775

(1,684,821)

411,481

7,872,016

-

6,063,419

83,478,217

14,467,163

68,976,806

34,248

30,053,415

(2,092,863)

27,960,552

470,896

28,431,448

(18,306,655)

-

(18,306,655)

(2,680,992)

(20,987,647)

49,419,095

35,465,916

(8,500,643)

8,270,617

79,143,952

-

71,417,299

99,612,267

76,325,871

23,057,430

228,966

73,210,551

(12,081,935)

61,128,616

1,923,021

63,051,637

(33,510,597)

2,114,722

(35,625,319)

(3,199,154)

(38,824,473)

101,876,110

44,586,563

(20,143,554)

6,188,849

101,215,750

-

80,941,581

18,246,226

17,415,246

723,214

107,766

11,037,159

(16,870,885)

(5,833,726)

3,306,329

(2,527,397)

1,320,430

1,893,125

3,213,555

(585,997)

2,627,558

(5,154,955)

8,299,135

(4,089,391)

69,884

14,408,836

-

10,347,094

100,643,112

98,921,364

-

1,721,748

65,089,366

(80,417,043)

(15,327,677)

16,891,698

1,564,021

(20,554,175)

12,538,832

(8,015,343)

(3,232,261)

(11,247,604)

12,811,625

43,917,466

(26,996,448)

11,432,156

116,064,129

-

81,187,980

308,606,549

210,223,879

96,263,426

2,119,244

184,582,242

(116,013,239)

68,569,003

23,757,522

92,326,525

(70,714,958)

12,600,459

(58,114,499)

(9,911,228)

(68,025,727)

24,300,798

52,075

216,309

24,569,182

135,276,855

(61,414,857)

(63,539,842)

3,527,217

46,778

(937,455)

12,958,696

26,372,987

102,993,207

129,366,194

318,704,683

17,192,190

335,896,873

-

59,911,320

59,911,320

249,957,373

47,826,722

297,784,095

120

Page 121: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

2016Fire andpropertydamage

Marine, aviation andtransport

Motor Health Miscellaneous Total

---------------------------------- Rupees ----------------------------------

Gross written contribution

Gross direct contribution

Facultative inward contribution

Administrative surcharge

Takaful contribution earned

Takaful contribution ceded to retakaful

Net takaful contribution

Rebate income

Net underwriting income

Takaful claims

Takaful claims recovered from retakaful

Net claims

Direct expenses

Net takaful claims and expenses

Underwriting results

Net investment income

Other income

Surplus for the year - PTF

Wakala fee

Commission expense

Management expenses

Investment Income

Other income

Other expenses

Prot for the year - OPF

Segment assets - OPF

Unallocated assets - OPF

Segment assets - PTF

Unallocated assets - PTF

Segment liabilities - OPF

Unallocated liabilities - OPF

Segment liabilities - PTF

Unallocated liabilities - PTF

9,770,936

7,811,574

1,870,869

85,353

3,159,122

(3,552,633)

(393,511)

862,971

469,460

(4,149,454)

1,362,807

(2,786,647)

(358,830)

(3,145,477)

(2,676,017)

5,078,915

17,406

822,481

9,940,502

-

9,262,130

19,364,454

17,119,588

2,201,971

42,895

18,261,322

-

18,261,322

-

18,261,322

(23,717,666)

-

(23,717,666)

(181,952)

(23,899,618)

(5,638,296)

8,258,368

(4,229,764)

845,063

11,464,540

-

21,737,649

147,128,824

109,785,135

37,137,905

205,784

70,119,697

(3,738,031)

66,381,666

368,058

66,749,724

(50,801,993)

3,714,000

(47,087,993)

(2,730,859)

(49,818,852)

16,930,872

66,995,831

(16,560,854)

13,121,862

99,975,801

-

94,731,233

28,066,483

26,022,115

1,727,570

316,798

16,796,272

(13,994,438)

2,801,834

1,545,418

4,347,252

(6,901,730)

1,017,982

(5,883,748)

(520,942)

(6,404,690)

(2,057,438)

12,508,112

(5,752,511)

588,225

20,863,314

-

16,999,188

124,626,253

112,035,068

10,379,978

2,211,207

59,066,430

(38,802,838)

20,263,592

5,203,685

25,467,277

(36,260,949)

19,865,362

(16,395,587)

(2,313,189)

(18,708,776)

6,758,501

57,598,277

(22,574,827)

15,716,493

146,092,059

-

88,208,075

328,956,950

272,773,480

53,318,293

2,862,037

167,402,844

(60,087,940)

107,314,904

7,980,132

115,295,036

(121,831,792)

2,5960,151

(95,871,641)

(6,105,772)

(101,977,413)

13,317,623

45,909

114,546

13,478,078

150,439,503

(49,100,550)

(97,131,765)

2,591,396

81,542

(377,479)

6,502,647

31,094,124

100,553,099

131,647,223

288,336,216

12,823,530

301,159,746

-

73,396,726

73,396,726

230,938,275

56,677,875

287,616,150

121Annual Report 2017

SPI Insurance Company LimitedWindow Takaful Operations

Page 122: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

29

Total

---------------------------Rupees---------------------------

Available forsale

Held tomaturity

At the beginning of previous year

Additions

Disposals ( Sale and redemptions)

Fair value net losses ( excluding net realised gains)

At beginning of current year

Additions

Disposals ( Sale and redemptions)

Fair value net losses ( excluding net realised gains)

At end of current year

MOVEMENT IN INVESTMENTS

50,536,433

26,658,716

(31,737,767)

1,236,935

46,694,317

97,523,225

(96,107,238)

293,643

48,403,947

51,538,109

34,787,040

(31,737,767)

1,236,935

55,824,317

97,693,225

(96,107,238)

293,643

57,703,947

1,001,676

8,128,324

9,130,000

170,000

9,300,000

28

MANAGEMENT OF TAKAFUL RISK AND FINANCIAL RISK

The Operator's activities expose it to a variety of financial risks, credit risks, liquidity risk and market risk (including interest/ mark-up rate risk and price risk). The Operator's overall risk management programmed focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance. Overall risks arising from the Operator's financial assets and liabilities are limited. The Operator's consistently manages its exposure to financial risk without any material change from previous period in the manner described in notes below. The Board of Directors has overall responsibility for the establishment and oversight of Operator's risk management framework. The Board is also responsible for developing the Operator's risk management policies.

Takaful risk

The operator accepts the takaful risk through its takaful contracts where it assumes the risk of loss from persons or organizations that are directly subject to the underlying loss. The operator is exposed to the uncertainty surrounding the timing, frequency and severity of claims under these contracts.The operator manages its risk via its underwriting and retakaful strategy within an overall risk management framework. Exposures are managed by having documented underwriting limit and criteria. Retakaful is purchased to mitigate the risk of potential loss to the operator. Retakaful policies are written with approved retakaful operators either on a proportional, excess of loss treaty or facultative basis.A concentration of risk may also arise from a single takaful contract issued to particular demographic type of policyholder, within a geographical location or to types of commercial business. The operator minimizes its exposure to significant losses by obtaining retakaful from a number of retakaful operators who are dispersed over several geographical regions. Further the operator adopts strict claim review policies including active management and prompt pursuing of the claims, regular detailed review of claim handling procedures and frequent investigation of possible false claims to reduce the takaful risk.

Geographical concentration of contribution risk

To optimize benefits from the principle of average and law of large numbers, geographical spread of risk is of extreme importance. There are a number of parameters which are significant in assessing the accumulation of risks with reference to the geographical location, the most important of which is risk survey. Risk surveys are carried out on a regular basis for the evaluation of physical hazards associated with the commercial / industrial/ residential occupation of the insurers. Details regarding the fire separation/segregation with respect to the manufacturing processes, storage, utilities, etc. are extracted from the layout plan of the insured facility. Such details are formed part of the reports which are made available to the underwriters/retakaful personnel for their

29.1

a)

122

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Notes to the Financial Statementsfor the year ended December 31, 2017

evaluation. Reference is made to the standard construction specifications as laid down by IAP (Insurance Association of Pakistan). For instance, the presence of Perfect Party Walls, Double Fire Proof Iron Doors, physical separation between the buildings within an insured's premises. It is basically the property contained within an area which is separated by another property by sufficient distance to confine insured damage from uncontrolled fire and explosion under the most adverse conditions to that one area. Address look-up and geocoding is the essential field of the policy data interphase of IT systems. It provides instant location which is dependent on data collection provided under the policy schedule. All critical underwriting information is punched into the IT system/application through which a number of MIS reports can be generated to assess the concentration of risk.

Retakaful arrangements

Keeping in view the maximum exposure in respect of key zone aggregates, number of proportional and non proportional retakaful arrangement are in place to protect the net account in case of a major catastrophic event. Apart from the adequate event limit which is a multiple of the treaty capacity or the primary recovery from the proportional treaty, any loss over and above the said limit would be recovered from the non-proportional treaty which is very much in line with the risk management philosophy of the Operator.In compliance of the regulatory requirement, the retakaful agreements are duly submitted with Securities and Exchange Commission of Pakistan (SECP) on an annual basis.The concentration of risk by type of contracts could not be summarized because most of the retakaful arrangements are on non-proportional basis.

Sources of uncertainty in estimation of future claim payments

Claims on general takaful contracts are payable on a claim occurrence basis. The Operator is liable for all insured events that occur during the term of the takaful contract.An estimated amount of the claim is recorded immediately on intimation to the Operator. The estimation of the amount is based on the amount notified by the policy holder, management or preliminary assessment by the independent surveyor appointed for this purpose. The initial estimates include expected settlement cost of the claims. Incurred But Not Reported (IBNR) claims have been estimated using Chain Ladder (CL) methodology. The Chain Ladder (CL) Method involves determination of development factors or link ratios for each period. These are then subsequently combined to determine Cumulative Development Factor (CDF) which represents the extent of future development of claims to reach their ultimate level.There are several variable factors which affect the amount and timing of recognized claim liabilities. However, the management considers that uncertainty about the amount and timing of claim payments is generally resolved within a year. The Operator takes all reasonable measures to mitigate the factors affecting the amount and timing of claim settlements. However, uncertainty prevails with estimated claim liabilities. It is likely that final settlement of these liabilities may be different from recognised amounts.

Process used to decide on assumptions

The principal assumption underlying the liability estimation of IBNR and contribution deficiency reserve is that the Operator's future claim development will follow similar historical pattern for occurrence and reporting. The management uses qualitative judgment to assess the extent to which past occurrence and reporting pattern will not apply in future. The judgment includes external factors e.g. treatment of one-off occurrence claims, changes in market factors, economic conditions, etc.

Sensitivity analysis

The risk associated with the takaful contracts are complex and subject to a number of variable which complicate quantitative sensitivity analysis. The Operator makes various assumptions and techniques based on past claims development experience. This includes indications such as average claims cost, ultimate claims numbers and expected loss ratios. The Operator considers that the liability for takaful claims recognized in the statement of financial position is adequate. However, actual experience will differ from the expected outcome.As the Operator enters into short term takaful contracts, it does not assume any significant impact of change in market conditions on unexpired risks. However, some results of sensitivity testing are set out below, showing the impact on profit before tax net of retakaful.

b)

c)

d)

e)

123Annual Report 2017

SPI Insurance Company LimitedWindow Takaful Operations

Page 124: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

Shareholders’ equityPre tax profit / (loss)201720162017 2016

--------------------------- Rupees ---------------------------

(1,131,296)

(405,979)

(3,249,071)

(1,636,519)

(192,279)

(6,615,144)

1,131,296

405,979

3,249,071

1,636,519

192,279

6,615,144

(1,639,559)

(588,375)

(4,708,799)

(2,371,767)

(278,665)

(9,587,165)

1,639,559

588,375

4,708,799

2,371,767

278,665

9,587,165

(561,074)

224,949

(2,493,772)

(1,281,466)

43,348

(4,068,015)

561,074

(224,949)

2,493,772

1,281,466

(43,348)

4,068,015

(801,534)

321,356

(3,562,532)

(1,830,666)

61,926

(5,811,450)

801,534

(321,356)

3,562,532

1,830,666

(61,926)

5,811,450

10% increase in loss

Fire

Marine

Motor

Health

Miscellaneous

10% decrease in loss

Fire

Marine

Motor

Health

Miscellaneous

124

Page 125: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

125Annual Report 2017

SPI Insurance Company LimitedWindow Takaful Operations

Notes to the Financial Statementsfor the year ended December 31, 2017

Mat

urity

up t

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Mat

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Mat

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48,

403,

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40,0

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45,5

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321

,176

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62,6

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74

89,9

33,4

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107,

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260

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46,

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317

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0,91

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313

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2,5

57,4

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284

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76,7

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98,0

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105,

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48,

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62,6

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46,

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88

284

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76,7

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54

69,5

98,0

56

105,

939,

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252

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9,3

00,0

00 - - -

14,

920,

886

24,

220,

886 - - -

-

9,1

30,0

00 - - -

35,

830,

330

44,

960,

330 - - - -

- - - - - - - - - - - - - - - - - - - -

- - - - - - - - - - - - - - - - - - - -

9,3

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00 - - -

14,

920,

886

24,

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886 - - - -

9,1

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35,8

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44,9

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30 - - - -

FIN

AN

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L A

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Taka

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FIN

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Out

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and

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31, 2

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FIN

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Taka

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FIN

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Out

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(incl

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NR

)Ta

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Dec

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6Fo

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the

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by

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show

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.

57,

703,

947

40,0

44,1

1822

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9,04

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443,

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16,

966,

434

345

,397

,339

62,6

19,0

74

89,9

33,4

37

107,

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260

,290

,553

55,

824,

317

40,1

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0,91

1,02

313

,971

,100

38,

387,

818

329

,202

,460

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54

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29.2

Page 126: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

Effect on equityEffect on profit before tax

Increase / (decrease)

in basis points

As at December 31, 2017

Cash flow sensitivity - financial liabilities

Cash flow sensitivity - financial assets

As at December 31, 2016

Cash flow sensitivity - financial liabilities

Cash flow sensitivity - financial assets

Al Baraka Bank Limited

Habib Bank Limited

Meezan Bank Limited

Silk Bank Limited

The Sindh Bank Limited

The Bank of Punjab

A-1

A1+

A1+

A2

A-1

A1+

A

AAA

AA

A-

A

AA

PACRA

JCR-VIS

JCR-VIS

JCR-VIS

PACRA

PACRA

-

-

(242,209)

242,209

-

-

(449,603)

449,603

1,640,403

4,635,943

29,245,872

1,636,686

186,789

-

37,345,693

-

-

(169,546)

169,546

-

-

(310,226)

310,226

384,162

5,793,119

7,937,033

1,309,816

171,606

596,505

16,192,241

100

(100)

100

(100)

100

(100)

100

(100) Credit riskCredit risk is the risk that arises with the possibility that one party to a financial instrument will fail to discharge its obligation and cause the other party to incur a financial loss. The Operator attempts to control credit risk by monitoring credit exposures by undertaking transactions with a large number of counterparties in various industries and by continually assessing the credit worthiness of counterparties.Concentration of credit risk occurs when a number of counterparties have a similar type of business activities. As a result, any change in economic, political or other conditions would effect their ability to meet contractual obligations in similar manner. The Operator's credit risk exposure is not significantly different from that reflected in the financial statements. The management monitors and limits the Operator's exposure to credit risk through monitoring of client's exposure and conservative estimates of provisions for doubtful assets, if any. The management is of the view that it is not exposed to significant concentration of credit risk as its financial assets are adequately diversified in entities of sound financial standing, covering various industrial sectors. The carrying amount of financial assets represents the maximum credit exposure, as specified below:

The Operator did not hold any collateral against the above during the year. Past due balances were not impaired as they relate to a number of policy holders and other takaful/retakaful for whom there is no recent history of default.The credit quality of the Operator's bank balances can be assessed with reference to external credit ratings are as follows:

29.3

Bank deposits

Loans and other receivables

Investments

Takaful / Retakaful receivables

Retakaful recoveries against outstanding claims

37,345,693

40,108,202

55,824,317

180,911,023

13,971,100

328,160,335

16,192,241

40,044,118

57,703,947

226,239,040

4,443,800

344,623,146

2017Rupees

2016Rupees

2017Rupees Long term

RatingsShort term

2016Rupees

Ratings Agency

126

Page 127: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

2017 2016Rupees Rupees

138,811,405

42,099,618

-

180,911,023

10,421,246

608,661

45,003

600

47,217

2,146,618

8,740,340

1,769,040

218,000

425,701

173,826

420,660

1,508,312

563,115

1,549,591

10,910

-

-

20,198,379

48,847,219

-

-

-

-

-

-

-

-

205,247,867

16,422,054

4,569,119

226,239,040

-

494,648

225,563

-

-

13,898,233

-

-

227,108

166,663

-

3,990,629

1,102

-

20,992

-

365,652

30,384

16,165,777

35,586,751

62,619,074

89,933,437

107,738,042

260,290,553

76,720,654

69,598,056

105,939,687

252,258,397

62,619,074

89,933,437

107,738,042

260,290,553

76,720,654

69,598,056

105,939,687

252,258,397

62,619,074

89,933,437

107,738,042

260,290,553

76,720,654

69,598,056

105,939,687

252,258,397

Upto 1 year

1-2 years

2-3 years

Sector wise analysis of contribution due but unpaid :

Auto mobiles

Chemical

Petrol / CNG pumps

Computer and accessories

Crop

Electronics

Motor vehicles

Oil

Rice mill

Steel

Sugar mill

Textile

Live stock

Gin and press factories

Office premises

Plastic industry

Telecommunication

Pharmaceutical

Miscellaneous

Financial liabilities

Outstanding claims (including IBNR)

Takaful / Retakaful payables - unsecured

Other creditors and accruals

Financial liabilities

Outstanding claims (including IBNR)

Takaful / Retakaful payables - unsecured

Other creditors and accruals

Liquidity riskLiquidity risk is the risk that the Operator will not be able to meet its financial obligations as they fall due. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities. The Operator finances its operations entirely through equity.The following are the contractual maturities of financial liabilities, including estimated interest payments on an undiscounted cash flow basis: -

29.4

up to one year

2017

2016

- - - - - - - - - - - - Rupees - - - - - - - - - - - -

Carrying amount

More than one year

Contractual cash flows

The age analysis of Takaful / Retakaful receivables is as follows :

127Annual Report 2017

SPI Insurance Company LimitedWindow Takaful Operations

Page 128: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Notes to the Financial Statementsfor the year ended December 31, 2017

30

31

Capital management

The Operator's objectives when managing capital are to safeguard the Operator's ability to continue as the going concern in order to provide returns for share holders and benefit for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Operator may adjust the amount of dividend to shareholders out of future profit, issue new shares and obtain new financing facilities. Further the Operator meets the minimum paid-up capital requirements as required by Securities and Exchange Commission of Pakistan.

Fair value of financial instruments

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arms length transaction.The carrying amount of the financial assets and liabilities reflected in the financial statements approximate their fair values.

PROVIDENT FUND DISCLOSURES

The following information is based on latest unaudited financial statements of the Fund as of December 31, 2017:

The investments out of provident fund have been made in accordance with the provisions of Section 227 of the Companies Ordinance, 1984 (Repealed) and the rules formulated for this purpose.

CORRESPONDING FIGURES

Corresponding figures have been re-classified and re-arranged, wherever necessary, to conform with the current classification. However, there are no material re-classification to report.

29.5

29.6

29.6.1

2017Un-audited 174,828

116,552

116,552

66.67%

116,552

58,276

174,828

Size of the fund - total assets

Cost of investments out of Provident Fund

Fair value of investments out of Provident Fund

Percentage of investments out of Provident Fund

The breakup of fair value of investment is:

Savings accounts with banks

Others

ToNote RupeesFromParticulars

Takaful / Retakaful payables - unsecured

15 20,506,349Other creditors and accruals

Takaful / Retakaful payables - unsecured

128

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32

33

34

103112

7388

NUMBER OF EMPLOYEES

Number of employees at the end of the yearAverage number of employees for the year

DATE OF AUTHORIZATION FOR ISSUE

These financial statements were authorized for issue in Board of Directors meeting held on March 29, 2018.

GENERAL

Corresponding figures have been reclassified/rearranged, where necessary for better presentation. There have been no significant reclassification/restatements in the financial statements.

Figures have been rounded up to the nearest rupee.

2017 2016

Notes to the Financial Statementsfor the year ended December 31, 2017

Chief Executive Officer DirectorDirectorChairman

129Annual Report 2017

SPI Insurance Company LimitedWindow Takaful Operations

Page 130: ANNUAL REPORT 2017 - SPI Insurance Karachi, …...Takaful Operator through License No.3 on November 20, 2014 by Securities and Exchange Commission of Pakistan under Window Takaful

Our Network

Mr. Naveed MahboobRegional ManagerSPI Insurance Company Ltd.2nd Floor, Fatima Zia Plaza, Opposite Chinar CNG,Mandian, Abbottabad.Ph # 099-2382220Cell # 0333-5603381Email: [email protected]

Mr. Tariq MehmoodManager DevelopmentSPI Insurance Company Ltd.1st Floor, Doctor Plaza, Main Satayana Road,Faisalabad.Ph # 041-8555685-87, Fax # 041-8555690Cell # 0300-8651343Email:[email protected]

SPI Insurance Company Ltd.Room # 14 ~ 15, 2nd Floor, Taj Plaza,Kotwali Road, Faisalabad.Ph # 041-2644581, 2632840Fax # 041-2615928

Mr. Qaiser Saleem Ch.Deputy General ManagerSPI Insurance Company Ltd.Opposite General Bus Stand,Near PSO Petrol Pump,, G.T.Road, Gujranwala.Ph # 055-3842948, Fax # 055-3731948Cell # 0321-6435363Email:[email protected]

Mr. Asim Habib KhanDeputy General ManagerSPI Insurance Company Ltd.Shehroz Plaza, Near Sultan Public School,G. T. Road, Gujrat.Ph # 053-3514094, Fax # 053-3514095Cell # 0300-8621212Email:[email protected]

Mr. Anwar-ud-Din MemonAssistant General ManagerSPI Insurance Company Ltd.Mezzanine Floor, Mohsin Plaza,Upper KASB Bank, Risala Road, Hyderabad.Ph # 022-2780770, 2780603, Fax # 022-2780765Cell # 0300-3036177Email:[email protected]

Mr. Arsalan PashaJoint DirectorSPI Insurance Company Ltd.House # 31, Street # 41, F-7/1, Near Bhittai Road,Islamabad.Ph # 051-2609114-15Cell # 0343-9890000Email:[email protected]

Syed Asad AbbasJoint DirectorSPI Insurance Company Ltd.Office # 106, 1st Floor, Dossal Plaza,47-Jinnah Avenue, Blue Area, Islamabad.Ph # 051-2342331-32, Fax # 051-2342333Cell # 0321-5555945Email:[email protected]

Mr. Adnan AfzalVice President/Branch ManagerSPI Insurance Company Ltd.1st Floor, Office # 108, Dosal Arcade, 47 Blue Area, Islamabad.Tel: 051-2342234-35, Fax # 051-2342236Dir Tel: 051-2342010 Cell # 0300-8341997Email:[email protected]

Mr. Hassan Bin DaudCountry Head (Travel Insurance)SPI Insurance Company Ltd.Building # 1032-E, 2nd Floor, Kashmir Commercial Complex, Fazal-e-Haq Road,Blue Area, Islamabad.Ph # 051-2604617-20, Fax:2604621Cell # 0300-5000182

Mr. Shahzad Zafar JunjuaManager DevelopmentSPI Insurance Company Ltd.Flat # 13, Soldier Plaza, Civil Lines, Jhelum.Ph # 0544-626171Cell # 0300-9519109Email:[email protected]

SPI Insurance Company Ltd. (Central Office)2nd Floor, State Life Building No. 2-A,Wallance Road, Karachi.Ph # 021-32418430-33Fax # 021-32401943

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131Annual Report 2017

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SPI Insurance Company Ltd.3rd Floor, 303-Europa Centre # 2,Hasrat Mohani Road, Saddar Karachi.Ph # 021-32218975, 32636179Fax # 021-32218974

Mr. Ishtiaque AhmedAssistant General ManagerSPI Insurance Company Ltd.Special Project Division316 Burhani Chambers, Abdullah Haroon Road, Karachi.Ph # 021-32727691, Cell # 0321-2443433Email: [email protected]

Mr. Muhammad Farooq QasimExecutive Director (Special Projects Division)SPI Insurance Company Ltd.4th Floor, SNC Center, 12-D East,Fazal-e-Haq Road, Blue Area, Islamabad.Ph # 051-8442111, Fax # 051-8443341Dir # 051-8443340, Cell # 0322-5519999Email:[email protected]

Mr. Muhammad ShahbazBranch ManagerSPI Insurance Company Ltd.Room # 215, 2nd Floor, Shahzadi Rafaqat Market,83-Brandreth Road, Lahore.Ph # 042-37381566, 37381577, Fax # 37672619Cell # 0321-4620006Email:[email protected]

Sheikh Rehmat AliAssistant General ManagerSPI Insurance Company Ltd.1st Floor, Plaza # 51-T, Phase II Commercial,D.H.A. Lahore Cantt.Ph # 35707726, Cell # 0322-4141431Email:[email protected]

Mr. Zeeshan AnsariJoint DirectorSPI Insurance Company Ltd.98 CMA Colony, Abid Majeed Road,Near GO GO Restaurant, Lahore.Ph # 36685023-4, Fax # 36685021Cell # 0300-8425300Email:[email protected]

Mr. Muhammad AliBranch HeadSPI Insurance Company Ltd.Eden Centre, 3rd Floor, Office # 303,Jail Road, Lahore.Ph # 042-37500621-23, Dir # 37500620Cell # 0321-4359753Email:[email protected]

Mr. Shakeel AhmedDeputy General ManagerSPI Insurance Company Ltd.Office # 5, 55/D, 3rd Floor, Noor Mansion,Shadman Market # 1, Near JS Bank, Lahore.Ph # 042-37429274, 35468593 Fax # 37429238Cell # 0300-4283811Email:[email protected]

Mr. Suhaib Hassan KhanSenior Vice PresidentSPI Insurance Company Ltd.129-E/1, 2nd Floor, Tahawar Plaza,Main Boulevard, Gulberg-III, Lahore. Ph # 042-35784795, 35872267-68Cell # 0300-4415053Email:[email protected]

Mr. Abdul QayyumZonal ManagerSPI Insurance Company Ltd.2nd Floor, Ghous Bakery,120-Temple Road, Lahore.Ph # 042-37320540, Fax # 042-37320554Cell # 0300-4463574, 0321-9008800Email:[email protected]

SPI Insurance Company Ltd.2nd Floor, Carpet Chamber,10-Abbot Road, Lahore.Ph # 042-36297082-4, Fax # 042-36297081

Mr. Nabil Waqar AhmedSr. Business Development ManagerSPI Insurance Company Ltd.Office # 108, First Floor, 65-D1, Al Hafeez Heights,Near Hijaz Hospital, Sir Syed Road, Gulberg-3, Lahore.Ph # 042-35759293-94, Fax # 042-35759295Cell # 0321-4701104Email:[email protected]

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Our Network

SPI Insurance Company Ltd.Room # 14, 3rd Floor, Bilal Centre,Nicholson Road, Lahore.Ph # 042-36305441, Fax # 042-36284102

Syed Muhammad Hassan Haider NaqviBranch HeadSPI Insurance Company Ltd.2nd Floor, Shehpar Plaza, Temple Road, Lahore.Ph # 042-36364420 Fax # 042-36364421Cell # 0336-6665509 / 0302-8485566Email:[email protected]:[email protected]

SPI Insurance Company Ltd.Venus Plaza, 2nd Floor, 7-Egerton Road, Lahore.Ph # 042-36372223-4, Fax # 042-36372224Email:[email protected]

SPI Insurance Company Ltd.4th Floor, State Life Building No. 2-A,Wallance Road, Off, I. I. Chundrigar Road, Karachi.Ph # 021-32425892, 32425893, Fax # 021-32425894

Mr. Mumtaz HussainGeneral ManagerSPI Insurance Company Ltd.2nd Floor, Nizam Chamber,7-Shahrah-e-Fatima Jinnah, Lahore.Ph # 042-36371420, 36361471, 36315091Fax # 36363453,Email:[email protected]

Mr. Ali RiazBranch ManagerSPI Insurance Company Ltd.2nd Floor, Khursheed Plaza,10 Abbot Road, Lahore.Ph # 042-36278917, 36296987Cell # 0300-5353513Email:[email protected]

SPI Insurance Company Ltd.1st Floor, London Tower, Shadman Colony,Opp. High Court, Multan Cantt.Ph # 061-4580002-3, Fax # 061-4580004

Mr. Saqib MaqsoodZonal ManagerSPI Insurance Company Ltd.Office # 7, 1st Floor, Muhammad Arcade,Near Khana-e-Farang Iran, Chungi # 09, Multan.Ph # 061-6210014-15, Fax # 061-6210019Cell:0311-2200715Email:[email protected]

Mr. Shahid Majeed KhanZonal ManagerSPI Insurance Company Ltd.Al-Rahi Square, Sector C-1,Mirpur Azad Kashmir.Ph # 05827-452152, Fax # 05827-452153Cell # 0323-9614777Email:[email protected]

Mr. Fazal Ellahi AwanBusiness Development Manager/Branch HeadSPI Insurance Company Ltd.(Special Projects Division)Office # 4, 3rd Floor, Saeed Tower,Opp. Custom House, University Road, Peshawar.Ph # 091-5844296-97, Fax # 091-5844295Cell # 0300-5845474Email:[email protected]

Mr. Hamzullah Khan / Mr. Muhammad AltafGeneral ManagerSPI Insurance Company Ltd.Room No. FF-3, 1st Floor, Kher Muhammad Plaza,Opp. State Bank of Pakistan, Sadar Road,Peshawar Cantt.Ph # 091-5274600, Cell # 0333-9106155/0300-9039102Email:[email protected]:[email protected]

SPI Insurance Company Ltd.Pak Chambers, 2nd Floor,5-Temple Road, Lahore.Ph # 042-37322036, Fax # 042-37322035

Mr. Muhammad Azeem ButtGeneral ManagerSPI Insurance Company Ltd.1st Floor, Al-Bilal Plaza, Chandni Chowk,Murree Road, RawalpindiPh # 051-4851362-64, Fax # 051-4927384, Cell # 0345-5191912Email:[email protected]

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133Annual Report 2017

SPI Insurance Company Limited

Ms. Gul AfshanManagerSPI Insurance Company Ltd. (Zonal Office)Century Tower,2nd Floor,Opp. State Life Building # 6The Mall, Rawalpindi Cantt.Ph # 051-5518054, 5564774, Fax # 051-5568054Dir # 051-8314294Email:[email protected]

Mr. Amer Majeed KhanSenior General ManagerSPI Insurance Company Ltd.Sr. GM Office, 1st Floor, Saeed Centre,Iqbal Town, Defence Road, Sialkot.Ph # 052-3572891-96, Fax # 052-3572895Cell # 0300-8611501, 0323-9111110Email:[email protected]

Mr. Nadeem Suhail QureshiSenior General ManagerSPI Insurance Company Ltd.Near OK Sports, Abbot Road, Sialkot.Ph # 052-4263371-74, Fax # 052-4602288Cell # 0300/0321-8617856Email:[email protected]

Mr. Kamran Hafeez SheikhManager DevelopmentSPI Insurance Company Ltd.GM (OPS) Office, Suit # 13, 2nd Floor, Jawad Centre, Defence Road, Sialkot.Ph # 052-3573681-3, Fax # 052-3573684Cell # 0321/0300-8613842Email:[email protected]

Mr. Noshad AhmedCompany SecretarySPI Insurance Company Ltd. (Registered Office)Suit # 204-A, Second Floor, Madina City Mall,Abdullah Haroon Road, Karachi.Ph # 021-37010190, Fax # 021-37010191Cell # 0345-3435455Email:[email protected]

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Our NetworkWindow Takaful Operations

Mr. Shahid AslamBranch ManagerSPI Insurance Company Ltd.Window Takaful OperationsOffice # 404, 4th Floor,Faisal Complex,Opp.Pizza Hut,Bilal Road, Faisalabad.Ph # 041-2602534-36, Cell # 0333-6594287Email:[email protected]

Mr. Azhar-ul-IslamUnit HeadSPI Insurance Company Ltd.Window Takaful OperationsAppartment # 11, 3rd Floor, Bhutta Centre,Nigar Chowk, G. T. Road, GujranwalaPh # 055-4294153-54Cell # 0321-6130613/ 0312-8130813Email :[email protected]

SPI Insurance Company Ltd.Window Takaful OperationsChamber # 1 & 2, Mezzanine Floor, City View Plaza,Unit # 7, Latifabad, Hyderabad.Ph #022-3821251 -52

Mr. Adnan AkhtarRegional Manager/AGMSPI Insurance Company Ltd.Window Takaful OperationsOffice # 6, 3rd Floor, Al-Hameed Plaza,G-11 Markaz, Islamabad.Ph # 051-2364661-2, Fax # 051-2364663Cell # 0300/0322-5156567Email :[email protected]

Mr. Faisal RashidHead (WTO)SPI Insurance Company Ltd.Window Takaful OperationsOffice # 101, 1st Floor, Al Qadir Heights,1-Babar Block, New Garden Town, Lahore.Ph # 042-35853815-16, Fax # 042-35853818Dir # 042-35853812, Cell # 0321-4770226Email:[email protected]

Mr. Sana-ul-HaqAVP/Branch ManagerSPI Insurance Company Ltd.Window Takaful Operations129-E/1, 2nd Floor, Tahawar Plaza,Main Boulevard, Gulberg-III, Lahore.Ph # 042-35784792, Cell # 0300/321-8877605Email:[email protected]

Malik Muhammad SohailBranch HeadSPI Insurance Company Ltd.Window Takaful OperationsUpper Story Shop # 8-9, Ali Arcade, Chungi # 07,Kutchery Road, Multan. Cell # 0300-2937601Ph # 061-4583386, Fax # 061-4505629Email :[email protected]

Mr. Gul Dad ShahBranch HeadSPI Insurance Company Ltd.Window Takaful OperationsOffice # TF 28-29, 3rd Floor, Deans Trade Centre,Peshawar Cantt.Ph # 091-5603400, Fax # 091-5603435Cell # 0333-9132201, 0311-9699778Email:[email protected]

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15Annual Report 2017

SPI Insurance Company Limited

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Investor’s Awareness

With reference to SRO 924(1) / 2015 dated September 9th, 2015 issued by the Securities and Exchange Commission of Pakistan (SECP), the following informational message has been added for investor‘s awareness:

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SPI INSURANCE COMPANY LIMITEDSuite # 204-A, Madina City Mall, Abdullah Haroon Road, Karachi.

SPI

at the 13th Anuual General Meeting of the Comapny to be held on Monday, April 30, 2018 at 02.30 p.mat the Centeral Office, 2nd Floor, State Life Building 2-A, Wallace Road, Karachi, and at any adjournment thereof

8

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2018

2018 302:30

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T: (92-42) 35776561-62, 67, 68F: (92-42) 35776560E: [email protected]

Head Office:UIG House, 6-D, Upper Mall, Lahore.


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