quarterly r eport - spi insurance company limited · manager claims / non motor mr. naveed ul haq...

www.spiinsurance.com.pk

Head Office:UIG House, 6-D, Upper Mall, Lahore. T: (92-42) 35776561-62, 67, 68F: (92-42) 35776560E: [email protected]

for the Period Ended March 31, 2014

Quarterly Report

I N S U R A N C EDeceber 31,

2014

TOWARDS RENEWED GROWTH

I N S U R A N C E

SPI Insurance Company Limited(Formerly Saudi Pak Insurance Company Limited)

Concept, Design & Printed by: Al-Imran www.alimranprinters.com

2 Company Information

5 Directors’ Review Report to the Members

6Condensed Interim Balance Sheet

8 Condensed Interim Profit and Loss Account

9 Condensed Interim Statement of Comprehensive Income

10 Condensed Interim Statement of Cash Flows

12 Condensed Interim Statement of Changes in Equity

13 Condensed Interim Statement of Premiums

14 Condensed Interim Statement of Claims

15 Condensed Interim Statement of Expenses

16 Condensed Interim Statement of Investment Income

17 Condensed Interim Notes to the Financial Statements

Contents

inside?

2

Company Information

Chairman

Mr. Aziz Ullah Memon

Managing Director & Chief Executive Officer

Mian M. A. Shahid

Directors

Ms. Parveen Akhter Malik

Mr. Abdul Majeed

Mr. Jameel A. Khan

Syed Ali Azfar Naqvi

Mr. Muhammad Moazzam Khan

Chief Financial Officer

Mr. Naeem Tariq

Company Secretary

Mr. Noshad Ahmed

Legal Advisors

M/s Mandviwalla & Zafar

M/s Zeeshan Abdullah

M/s M. A. Hamdani Law Associates

Human Resources Committee

Ms. Parveen Akhter Malik (Chairperson)

Mr. Jameel A. Khan (Member)

Mian M. A. Shahid (Member)

Risk Management Committee

Mian M. A. Shahid (Member)

Ms. Parveen Akhter Malik (Member)

Syed Ali Azfar Naqvi (Member)

Audit Committee

Mr. Jameel A. Khan (Chairman)

Mr. Abdul Majeed (Member)

Chief Internal Auditor

Mian Mohsin Aslam

Auditors

M/s Ilyas Saeed & Co

Chartered Accountants

Tax Consultant

M/s Muhammad Bilal & Company

Chartered Accountants

Registered Office

Suite # 204-A, Second Floor,

Madina City Mall, Abdullah Haroon Road,

Karachi.

Phone # (021) 37010190

Fax # (021) 37010191

Head Office

UIG House,

6 - D, Upper Mall

Lahore.

Phone # (042) 35776561-62-67-68, 35756563

Fax # (042) 35776560

E-mail: [email protected]

Website: www.spiinsurance.com.pk

Quarterly Report for the period ended March 31, 2014

3

Managing Director & Chief Executive Officer Mian M. A. Shahid

Deputy Managing Director Mr. Shaheryar Akbar Raja

Advisors Mr. Naseer Ahmed

(Former Member Revenue CBR)

(Former Additional Secretary Military Finance)

(Former Additional Secretary Finance)

General Manager Admin Mr. Jamil Ahmed

General Manager Health Mr. Muneer Khan

Chief Manager Underwriting Mr. Imtiaz Ali

Chief Manager Claims Mr. Khalid Nazeer Bajwa

Chief Manager Re-Insurance Mr. Faisal Akber (FCA)

Manager Accounts Mr. Saleem Akhter (FCMA)

Manager I.T Mr. Munir Ahmed

Manager Claims / Non Motor Mr. Naveed ul Haq Nomani

Key Management Personnel

4

Company Information

Allied Bank Limited

Apna Microfinance Bank Limited

Bank Al-Falah Limited

Bank Al-Habib Limited

Faysal Bank Limited

Habib Bank Limited

HSBC Bank Limited

KASB Bank Limited

National Bank of Pakistan

NIB Bank Limited

SILKBANK Limited

Sindh Bank Limited

Soneri Bank Limited

State Bank of Pakistan

Standard Chartered Bank Limited

Tameer Microfinance Bank Limited

The Bank of Punjab Limited

United Bank Limited

Bankers


5

Directors’ Review Report to the Members

Dear Fellow Members!

The Board of Directors of SPI Insurance Company Limited is pleased to present the review report of the Company together with the un-audited financial statements for the First quarter ended March 31, 2014.

March 31, March 31,2014 2013(Rupees in thousands)

The overall business figures are:Premium Written 140,381 89,994Net Premium 113,386 79,316Net Claims 40,076 30,346Investment and other Income 3,341 3,071Net Commission 15,536 1,875Expenses of Management 24,456 20,165

Financial results are as follows:Underwriting Result 36,903 26,929Profit / (Loss) before tax 27,124 19,329Less: Provision for taxation 10,627 7,022Profit / (Loss) after tax 16,497 12,306E.P.S 0.51 0.38

The Company Results

The company performed well during the period under review. The gross premium stands at Rs. 140.381 million during 1st quarter as against Rs. 89.994 million for the same period of previous year which is an increase of 55.99%. The net premium increased to Rs. 113.386 million as against Rs. 79.316 million for the same period during last year. The underwriting profit stands at Rs. 36.903 million as against Rs. 26.929 million for the corresponding period of last year.

The investment and other income for the 1st quarter 2014 is Rs. 3.314 million, as against Rs. 3.071 million for the corresponding period of last year. The cash and bank deposit for 2014 stood at Rs. 75.664 million and investment at Rs. 84.914 million respectively as against Rs. 78.475 million and R.s 95.752 million for the period 2013.

The profit before tax is posted at Rs. 27.124 million as against Rs. 19.329 million for the same period of last year. After provision for tax, the profit after tax stands at Rs. 16.497 million as against Rs. 12.306 million for the corresponding period last year.

Future Outlook

Future economic environment will remain challenging; however the Management remains confident that SPIICL will continue to grow despite current conditions amidst of investments made in infrastructure, human resources and improvement in credit rating. The Management will strive to further improve the risk management measures and diversify risk to achieve its financial targets.

Acknowledgement

We appreciate and extend our gratitude to our valued customers. We are also grateful to Securities and Exchange Commission of Pakistan and State Bank of Pakistan for their professional guidance. We would like to thank our Bankers and Reinsurers for the continued support. Our sincere appreciation is due to the management, employees and development staff for their dedication and hard work towards the growth of the Company.

We also appreciate the services rendered by the outgoing director Sheikh Aftab Ahmad during the tenure of his directorship. The board welcomes Mr. Muhammad Moazzam Khan as the newly appointed director.

For and on behalf of the Board of Directors

Mian M.A Shahid

Karachi: April 29, 2014 Managing Director & Chief Executive Officer

6

Unaudited AuditedMarch 31, December 31,

Note 2014 2013Rupees Rupees

Share capital and reserves

Authorized share capital 8 500,000,000 500,000,000

Paid-up share capital 8 325,000,000 325,000,000 Accumulated loss (19,128,809) (35,626,047)Total equity 305,871,191 289,373,953

Underwriting provisions

Provision for outstanding claims (including IBNR) 87,068,357 97,832,237 Provision for unearned premium 182,073,527 170,441,068 Additional provision for unexpired risks - 3,586,787 Commission income unearned - 216,804 Total underwriting provisions 269,141,884 272,076,896

Deferred Liabilities

Staff retirement gratuity 5,448,497 4,786,235

Creditors and accruals

Premium received in advance 585,359 615,370 Amounts due to other insurers/reinsurers 4,366,495 5,919,798 Accrued expenses 9 7,313,173 6,769,789 Other creditors and accruals 10 5,539,016 8,084,944

17,804,043 21,389,901 TOTAL LIABILITIES 292,394,424 298,253,032

TOTAL EQUITY AND LIABILITIES 598,265,615 587,626,985

CONTINGENCIES AND COMMITMENTS 11 - -

The annexed notes form an integral part of these condensed interim financial statements.

Condensed Interim Balance Sheet (Un-Audited)As At March 31, 2014

Mian M.A. ShahidChief Executive Officer

Aziz Ullah MemonChairman


7

Unaudited AuditedMarch 31, December 31,

Note 2014 2013Rupees Rupees

Cash & bank deposits

Cash and other equivalents 1,185,356 1,040,291 Current and other accounts 52,948,989 48,076,933 Deposits maturing within 12 months 21,530,000 21,030,000

75,664,345 70,147,224

LOANS TO EMPLOYEES 1,583,347 1,706,871 Investments 12 84,914,176 80,502,374Deferred Tax Asset 37,730,649 47,224,318

CURRENT ASSETS - OTHERSPremium due but unpaid 13 93,078,008 77,657,130 Amount due from other insurers/reinsurers 14 90,139,209 79,027,957 Prepaid reinsurance premium ceded 20,088,370 23,126,937 Accrued investment income 2,409,476 3,978,805 Reinsurance recoveries against outstanding claims 64,195,292 69,203,749 Taxation-payment less provision 2,768,009 3,256,341 Deferred commission expense 14,134,073 19,069,352 Prepayments 10,743,417 7,648,995 Sundry receivables 50,664,230 53,948,364

348,220,084 336,917,630 FIXED ASSETS

Tangible

Office improvements 9,123,901 9,354,561 Furniture and fixtures 2,848,663 2,896,286 Office equipment 4,480,326 4,569,773 Computer equipment 2,248,122 1,941,827 Motor vehicles 31,257,858 32,161,907

49,958,870 50,924,354

Intangible Computer software 194,143 204,214 TOTAL ASSETS 598,265,615 587,626,985

Condensed Interim Balance Sheet (Un-Audited)As At March 31, 2014

Jameel A. KhanDirector

Syed Ali Azfar NaqviDirector

8

Condensed Interim Profit And Loss Account (Un-Audited)For The Quarter Ended March 31, 2014

For the quarter ended March 31, 2014

NoteFire and Property Damage

Marine, Aviation and

TransportMotor Miscellaneous

Quarter ended March 31, 2014

Aggregate

Quarter ended March 31, 2013

Aggregate

……………………………………………...Rupees…………………………………………..

Revenue account

Net premium revenue 29,331,706 9,929,480 38,285,654 35,839,220 113,386,060 79,315,809

Net claims (6,594,700) (724,092) (17,953,914) (14,803,614) (40,076,320) (30,346,270)

Premium deficiency reversal 3,586,787 - - - 3,586,787 -

Management expenses (3,865,009) (2,124,530) (7,625,618) (10,841,287) (24,456,444) (20,165,117)

Net commission (7,066,217) (2,358,863) (3,884,182) (2,227,043) (15,536,305) (1,875,441)

Underwriting results 15,392,566 4,721,995 8,821,941 7,967,276 36,903,778 26,928,981

Investment income 3,302,730 3,053,057

Other income 11,963 17,685

General & administration expenses (13,093,703) (10,670,968)

Profit/ (loss) before tax 27,124,768 19,328,755

Less : Taxation 16

Current (1,133,861) (396,579)

Deferred (9,493,669) (6,626,262)

(10,627,529) (7,022,841)

Profit/ (loss) after Tax 16,497,238 12,305,914

Profit and loss appropriation account

Balance at commencement of period (35,626,047) (67,510,963)

Profit after tax for the period 16,497,238 12,305,914

Profit available for appropriation (19,128,809) (55,205,049)

Balance un-appropriated profit at end of period (19,128,809) (55,205,049)

Basic earning per share 0.51 0.38







9

Condensed Interim Statement Of Comprehensive Income (Un-Audited)For The Quarter Ended March 31, 2014

Quarter ended March 31, March 31,

2014 2013

…................Rupees….......……

Profit/ (loss) for the period 16,497,238 12,305,914

Other comprehensive income - -

Total comprehensive profit / (loss) for the period 16,497,238 12,305,914






10

Condensed Interim Statement of Cash Flows (Un-Audited)For The Quarter Ended March 31, 2014

March 31, March 31,2014 2013

Rupees Rupees

Operating cash flows:

a) Underwriting activities:

Premiums received 122,807,001 95,666,468

Reinsurance premiums paid (13,877,723) (14,823,979)

Claims paid (57,601,985) (44,738,272)

Commission paid (10,817,831) (9,415,428)

Reinsurance and other recoveries received 658,990 14,140,423

Other underwriting payments (19,808,537) (17,664,695)

Commission received - 378,737

Net cash flow from underwriting activities 21,359,915 23,543,254

b) Other operating activities:

Income tax paid (645,529) (716,718)

General and management expenses paid (13,093,703) (10,670,968)

Other operating receipts / (payments) 189,712 (2,108,662)

Other operating receipts (2,002,544) (2,121,864)

Loans and advances paid 123,524 (247,179)

Net cash outflow from other operating activities (15,428,540) (15,865,391)

Total cash flow from operating activities 5,931,375 7,677,863

Investment activities:

Profit/ return received 4,872,058 2,825,860

Payments for investments (4,411,802) (2,092,648)

Fixed capital expenditure (874,510) (344,061)

Total cash flow from investing activities (414,254) 389,151

Net cash inflow / (outflow) from all activities 5,517,121 8,067,014

Cash and cash equivalents at beginning of the period 70,147,224 70,408,307

Cash and cash equivalents at end of the period 75,664,345 78,475,321


11

Condensed Interim Statement of Cash Flows (Un-Audited)For The Quarter Ended March 31, 2014

March 31, March 31,2014 2013

Rupees Rupees

Reconciliation to Profit and Loss Account

Operating cash flows 5,931,375 7,677,863

Depreciation / amortisation expense (1,850,065) (2,048,163)

Investment and other income 3,302,730 3,053,057

Provision for doubtful debts (2,123,616) (4,125,000)

(Decrease) / increase in assets other than cash 16,005,736 (8,627,199)

Decrease / (Increase) in liabilities other than running finance 5,858,608 23,398,197

Reversal/ (Provision) for taxation (10,627,529) (7,022,841)

Profit / (loss) after Taxation 16,497,238 12,305,914

Definition of cash

Cash comprises of cash in hand, policy stamps and bank balances which are readily convertible to cash in hand and which are used in the cash management function on a day to day basis.

Cash for the purpose of statement of cash flows consists of :

Cash and cash equivalents

Cash and other equivalents 1,185,356 882,767

Current and saving accounts 52,948,989 37,536,915

Deposits maturing within 3 months 21,530,000 39,966,000

Cash with State Bank of Pakistan - 89,639

75,664,345 78,475,321






12

Condensed Interim Statement Of Changes In Equity (Un-AuditedFor The Quarter Ended March 31, 2014

Description Share CapitalAccumulated

LossTotal

……………………………..Rupees…………………………….

Balance as at January 01, 2013 325,000,000 (67,510,963) 257,489,037

Net profit / (loss) for the period - 12,305,914 12,305,914

Balance as at March 31, 2013 325,000,000 (55,205,049) 269,794,951

Balance as at January 01, 2014 325,000,000 (35,626,047) 289,373,953

Net profit / (loss) for the period - 16,497,238 16,497,238

Balance as at March 31, 2014 325,000,000 (19,128,809) 305,871,191







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16

Condensed Interim Statement Of Investment Income (Un-Audited)For The Quarter Ended March 31, 2014

Quarter ended

March 31, March 31,2014 2013

Rupees RupeesIncome from held for trading investments

Gain on sale of trading 97,866 -

Income from non-trading investments

Held-to-maturityReturn on government securities 2,574,778 1,870,511 Return on TDRs 649,692 1,187,349

3,224,470 3,057,860

Investment related expenses (19,606) (4,803)Net investment income 3,302,730 3,053,057







17

Condensed Interim Notes to the Financial StatementsFor The Quarter Ended March 31, 2014

1 STATUS AND NATURE OF BUSINESS

SPI Insurance Company Limited (Formerly Saudi Pak Insurance Company Limited) (the Company) is an unqouted public limited Company incorporated in Islamabad, Pakistan on February 15, 2005 under the Companies Ordinance, 1984. The Company is engaged in the non-life insurance business comprising fire, marine, motor 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, Upper Mall, Lahore, Pakistan.

2 STATEMENT OF COMPLIANCE

These condensed interim financial statements have been prepared in accordance with the requirements of International Accounting Standard 34 - Interim Financial Reporting and the requirements of the Companies Ordinance, 1984, the Insurance Ordinance, 2000 and the SEC (Insurance) Rules, 2002 and the directives issued by SECP. Wherever the requirements of the Companies Ordinance, 1984, the Insurance Ordinance, 2000 and the SEC (Insurance) Rules, 2002 or directives issued by the Securities and Exchange Commission of Pakistan differ with the requirements of these standards, the requirements of the Companies Ordinance, 1984, the Insurance Ordinance, 2000 and the SEC (Insurance) Rules, 2002 or the requirements of the said directives take precedence.

3 BASIS OF PREPARATION

The accounting policies and the methods of computation of preparation of these condensed interim financial statements are the same as those applied in the preparation of the financial statements for the year ended December 31, 2013.

4 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 staff retirement benefits are stated at present value.

These financial informations have been presented in Pakistan rupee, which is also the Company’s functional currency.

5 SIGNIFICANT ESTIMATES AND JUDGEMENTS

The preparation of the condensed interim financial statement requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

The significant judgments made by management and the key sources of estimating uncertainty in preparation of these condensed interim financial statements were same as those applied to the annual financial statements for the year ended December 31, 2013.

6 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies adopted in the preparation of the condensed interim financial statements are the same as those applied in the preparation of the financial statements of the Company for the year ended December 31, 2013.

7 FINANCIAL RISK AND CAPITAL MANAGEMENT

The Company’s financial risk management and capital management objectives and policies are consistent with that disclosed in the annual financial statements for the year ended December 31, 2013.

18

March 31, December 31, March 31, December 31,2014 2013 2014 2013(Number of Shares) (Rupees)

8 AUTHORIZED SHARE CAPITAL

50,000,000 50,000,000 Ordinary shares of Rs. 10/- each 500,000,000 500,000,000

8.1 PAID-UP SHARE CAPITAL

Issued, subscribed and paid up capital:

25,000,000 25,000,000 Ordinary shares of Rs. 10/- each

fully paid in cash

250,000,000 250,000,000

7,500,000 7,500,000 Ordinary shares of Rs. 10/- each

issued as fully paid right shares

75,000,000 75,000,000

32,500,000 32,500,000 325,000,000 325,000,000

9 ACCRUED EXPENSES

Audit fee payable 800,000 800,000 Salaries wages and benefits payable 6,189,735 5,502,556 Utilities payable 323,438 467,233

7,313,173 6,769,789

10 OTHER CREDITORS AND ACCRUALS

Commission 832,912 2,271,622 Rent 18,000 1,627,200 Government levies payable 3,780,251 3,166,562 Liabilities against cancelled policies 81,614 81,614 Withholding Tax 302,492 298,650 Others 523,747 639,296

5,539,016 8,084,944

11 CONTINGENCIES AND COMMITMENTS

There have been no changes in the contingencies and commitments as disclosed in the annual financial statements of the company for the year ended December 31, 2013.



19

March 31, December 31,2014 2013

(Rupees)

12 INVESTMENTS

The investments comprise the following:

Held to maturity

Pakistan Investment Bonds 12.1 84,914,176 80,502,374

Available for sale

Ordinary shares of listed companies 12.2 226,625 226,625

Provision for diminution in value of investments (226,625) (226,625)

- -

84,914,176 80,502,374

12.1 These bonds are held in favour of State Bank of Pakistan in accordance with the requirement of Section 29 of the Insurance Ordinance, 2000. These bonds have a face value of Rs. 84.0 million (Rs. 33.7 million with SBP and Rs. 50.3 million with NBP) and carry mark-up ranging from 8.9% to 12% (2013: 8.9% to 12%) per annum and would mature up to July 2022.

12.2 The market value of available for sale - equity securities as at March 31, 2014 is Rs. 48,195 (December 31, 2013: Rs. 45,303).

13 PREMIUM DUE BUT UNPAID

Unsecured

-Considered good 93,078,008 77,657,130

-Considered doubtful 5,042,727 4,206,777 98,120,735 81,863,907

Provision for doubtful balances 13.1 (5,042,727) (4,206,777) 93,078,008 77,657,130

13.1 Provision for doubtful balances

Opening provision (4,206,777) (2,563,267)

Charge for the period / year (835,950) (1,643,510)

Closing provision (5,042,727) (4,206,777)


20


(Rupees)14 AMOUNTS DUE FROM OTHER INSURERS/ REINSURERS

Unsecured

-Considered good 90,139,209 79,027,957

-Considered doubtful 12,346,924 11,059,258

102,486,133 90,087,215

Provision for doubtful balances 14.1 (12,346,924) (11,059,258) 90,139,209 79,027,957

14.1 Provision for doubtful balances

Opening provision (11,059,258) (11,892,492)

Charge for the period / year (1,287,666) 833,234

Closing provision (12,346,924) (11,059,258)

15 TRANSACTIONS WITH RELATED PARTIES

The related parties comprise of Saudi Pak Industrial & Agricultural Investment Company Limited, Silk Bank Limited, Saudi Pak Leasing Company Limited, and United Track Systems (Pvt.) Limited on the basis of related group companies, entities under common control, entities with common directors, major shareholders, directors, key management personnel and employee retirement benefit fund. Amount due to/from and other significant transactions, other than those disclosed elsewhere in these financial statements, are as follows:

Transactions and balances with parent and associated companies

Insurance premium

Balance at beginning of the period 7,750,140 1,545,517 Gross insurance premium written 8,960,092 39,150,650 (including administrative surcharge,government levies and policies stamps) Received / adjusted during the period (7,291,584) (32,946,027)Balance at end of the period 9,418,648 7,750,140

Insurance claim expense

Outstanding claims at beginning of the period 2,897,868 5,097,579 Gross claims expense for the period 480,921 5,464,533 Claim paid during the period (1,742,057) (7,664,244)Outstanding claims at end of the period 1,636,732 2,897,868

Other transactions for the period with parent and other associated companies

Rental expense 582,750 1,998,000 Bank charges 86,950 119,453 Tracker charges 431,232 2,233,472



21


(Rupees)

Profit on term deposit receipts 649,692 2,650,699

Profit on bank deposits 9,867 54,654

Other balances with associated companies

Term deposits 21,530,000 21,030,000

Profit & Loss Sharing Accounts 354,584 502,819

Current account 5,190,915 3,315,752

Accrued investment income 597,690 53,578

Transaction during The period with other related parties(Key management personnel)

Contribution defined benefit plans - -

Remuneration of key management personnel 6,109,550 24,393,050

Balances with other related parties(Key management personnel)

(Payable) / receivable from defined benefit plan (5,448,497) (4,786,235)

Loan to key management personnel 438,919 477,272

16 TAXATION

Provision in respect of taxation, for the period under review, is estimated only and final liability will be determined on the basis of annual results.

17 DATE OF AUTHORIZATION FOR ISSUE

These interim condensed financial statements have been authorized for issue on April 29, 2014 in accordance with a resolution of board of directors of the company.

18 CORRESPONDING FIGURES

Corresponding figures have been reclassified and re-arranged, wherever necessary to confirm with the current classification. However, there are no material classification to report.






www.spiinsurance.com.pk

Head Office:UIG House, 6-D, Upper Mall, Lahore. T: (92-42) 35776561-62, 67, 68F: (92-42) 35776560E: [email protected]

for the Period Ended March 31, 2014

Quarterly Report

I N S U R A N C EDeceber 31,

2014

TOWARDS RENEWED GROWTH

I N S U R A N C E

SPI Insurance Company Limited(Formerly Saudi Pak Insurance Company Limited)

Concept, Design & Printed by: Al-Imran www.alimranprinters.com

quarterly r eport - spi insurance company limited · manager claims / non motor mr. naveed ul haq...

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