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asiaINSURANCE

Capital InsuranceCompany Limited

Century Insurance

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Published ByThe Insurance Association of Pakistan

1713-1715, 17th Floor

Saima Trade Tower-AI.I.Chundrigar Road

P.O. Box No. 4932

Karachi 74000

Tel: (+92-21) 32277165-68

Fax : (+92-21) 32277170E-mail : [email protected]

Web : www.iap.net.pk

Insurance Year Book 2009-2010Insurance Year Book 2009-2010

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To be a forum of active exchange on matters relating

to insurance and to promote, support and protect

the common interest of member companies carrying

on the business of insurance in Pakistan and toendeavor to increase insurance awareness and

penetration in the country.

VISION

STATEMENTOF IAP

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03

C O N T E N T S

1. The Insurance Association of Pakistan

2. Chairman's Message ---------------------------------------------------------------------------------------------------05

Message from Chairman,The Insurance Association of Pakistan, Mr. Tahir Ahmed ---------------------------06

3. Executive, Sectional & Regional Committees Activities --------------------------------------------------------07

Executive Committee ----------------------------------------------------------------------------------------------------08Accident Sectional Committee -----------------------------------------------------------------------------------------12

Fire Sectional Committee -----------------------------------------------------------------------------------------------14

Marine Sectional Committee -------------------------------------------------------------------------------------------17

Lahore Regional Committee --------------------------------------------------------------------------------------------18

Life Sectional Committee ----------------------------------------------------------------------------------------------19

4. Market Overview of Non Life Insurance Industry in Pakistan -----------------------------------------------21

Private Sector -------------------------------------------------------------------------------------------------------------22

Public Sector (National Insurance Company Limited) --------------------------------------------------------------23

5. Market Overview of Life Insurance Industry in Pakistan -----------------------------------------------------25

Private Sector -------------------------------------------------------------------------------------------------------------26

Public Sector (State Life Insurance Corporation of Pakistan) ------------------------------------------------------29

6. Synopsis-------------------------------------------------------------------------------------------------------------------35

A synopsis of the proceedings of Fair International Insurance Conference on political violence -------------36

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9. Company Profiles ------------------------------------------------------------------------------------------------------41

Non Life Insurance & Reinsurance Companies

1. ACE Insurance Limited -------------------------------------------------------------------------------------------------422. Adamjee Insurance Company Limited--------------------------------------------------------------------------------443. Agro General Insurance Company Limited --------------------------------------------------------------------------464. Alfalah Insurance Company Limited----------------------------------------------------------------------------------485. Alpha Insurance Company Limited -----------------------------------------------------------------------------------506. Asia Insurance Company Limited -------------------------------------------------------------------------------------527. Askari General Insurance Company Limited ------------------------------------------------------------------------548. Atlas Insurance Limited-------------------------------------------------------------------------------------------------569. Capital Insurance Company Limited ----------------------------------------------------------------------------------5810. Central Insurance Company Limited----------------------------------------------------------------------------------6011. Century Insurance Company Limited ---------------------------------------------------------------------------------6212. Cooperative Insurance Society of Pakistan Limited-----------------------------------------------------------------6413. Crescent Star Insurance Company Limited---------------------------------------------------------------------------6614. East West Insurance Company Limited -------------------------------------------------------------------------------6815. EFU General Insurance Limited ---------------------------------------------------------------------------------------7016. Excel Insurance Company Limited ------------------------------------------------------------------------------------7217. Habib Insurance Company Limited -----------------------------------------------------------------------------------7418. IGI Insurance Limited ---------------------------------------------------------------------------------------------------7619. New Hampshire Insurance Company ---------------------------------------------------------------------------------7820. New Jubilee Insurance Company Limited----------------------------------------------------------------------------8021. Pakistan General Insurance Company Limited ----------------------------------------------------------------------8222. PICIC Insurance Limited -----------------------------------------------------------------------------------------------8423. Premier Insurance Limited----------------------------------------------------------------------------------------------8624. Reliance Insurance Company Limited --------------------------------------------------------------------------------8825. Saudi Pak Insurance Company Limited-------------------------------------------------------------------------------9026. Security General Insurance Company Limited ----------------------------------------------------------------------9227. Shaheen Insurance Company Limited---------------------------------------------------------------------------------9428. Silver Star Insurance Company Limited ------------------------------------------------------------------------------9629. TPL Direct Insurance Limited------------------------------------------------------------------------------------------9830. UBL Insurers Limited--------------------------------------------------------------------------------------------------10031. United Insurance Company of Pakistan Limited-------------------------------------------------------------------10232. Universal Insurance Company Limited------------------------------------------------------------------------------10433. Pakistan Reinsurance Company Limited----------------------------------------------------------------------------106

Life Insurance Companies

1. Adamjee Life Assurance Company Limited------------------------------------------------------------------------1082. American Life Insurance Company Pakistan Limited-------------------------------------------------------------1123. Asia Care Health & Life Insurance Co. Ltd.------------------------------------------------------------------------1164. East West Life Assurance Company Limited-----------------------------------------------------------------------1205. EFU Life Assurance Limited------------------------------------------------------------------------------------------1246. New Jubilee Life Insurance Company Limited---------------------------------------------------------------------128

10. Members' Directory --------------------------------------------------------------------------------------------------133

11. Pictorial Presentation of IAP Events ------------------------------------------------------------------------------141

Annual General Meeting (AGM)-------------------------------------------------------------------------------------------142Annual Dinner ----------------------------------------------------------------------------------------------------------------143Extra Ordinary General Meeting (EOGM) Amendments in Mamorandum & Articles of Association of IAP --146CEOs Emergent Meeting - Fit & Proper Criteria ------------------------------------------------------------------------148CEOs Emergent Meeting - Increase in SECPs Annual Supervision Fee---------------------------------------------150

12. Notes

04

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05

CHAIRMANS

MESSAGE

CHAIRMANS

MESSAGE

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TAHIR AHMED

CHAIRMANTHE INSURANCE ASSOCIATION OF PAKISTAN

06

The good news is the timely publication of the Insurance

Year Book 2009 - 2010. This is a commendable

achievement on the part of the Insurance Association of

Pakistan. I hope this tradition will be maintained in

future as well.

Another good news is that during 2009 we admitted

Pakistan Reinsurance Company limited along with two

other life insurance companies to the fold of our

Association. The IAP now has 39 members in all. Our

efforts continue to bring the remaining two corporations

namely; National Insurance Company Limited and State

Life Insurance Corporation of Pakistan to our fold. I am

confident that the IAP will become more effective when

these two corporations also become members.

For the last few years, despite being beset with

catastrophes one after the other, the non-life insurance

industry of Pakistan has given a creditable account ofitself by meeting all claims and playing its constructive

role in the economy of the nation. Given the strained

national economy nevertheless, it is no surprise that it

could muster only a nominal premium growth of little

more than 2% to Rs.35billion in 2009 against Rs.34

billion in 2008. Life insurance did better by growing 9%

to Rs.13billion compared to Rs.12 billion in 2008.

However, it would be only fair to comment that when

seen in the backdrop of more than 10% inflation, the

insurance sector appears to be struggling in its efforts to

increase penetration in the national economy. This is achallenging situation and calls for more innovation and

out-of-box solutions by the men and women of the

insurance industry.

During the year under review, the Executive Committee

had to wrestle with a number of issues which have been

covered in some detail else where in this publication.

However, just to give you the flavor, I am taking the

liberty of mentioning some of main ones as follows:

- Amendments in the Memorandum & Articles of

Association of IAP particularly in respect of

technical committees.

- Fit & Proper Criteria for Chief Executive Officers.

- Amendment in RSD Endorsement to bring it in line

with international wordings.

- Bank Limits & enlistment of Insurance Companies

on Bank Panels

- Amendment in Motor Policy Form

- Fire Policy rewording

- Amendment proposed in Rule 35 of SECP Rules

2002

I shall be failing in my duty if I do not commend the

excellent effort of my colleagues in Executive Council

in coordinating with SECP in respect of revision of

Solvency & Investment Rules for insurance companies.

At the same time, we are a little disappointed that our

long standing request to SECP for permitting insurance

companies to carry on Takaful business is still pending.

I would also take this opportunity to inform that

considering the present dip in the value of real estate,

we made efforts to identify and purchase a suitable plotof land to construct the IAP's very own office. As time

did not permit us to complete the exercise, I would like

to call upon the incoming Executive Council to complete

this project. It is our collective vision to have our custom

built office as soon as possible.

Finally, I would like to thank to all concerned with the

publication of this important document for their hard

work and devotion.

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07

EXECUTIVE, SECTIONAL &REGIONAL COMMITTEES

ACTIVITIES

EXECUTIVE, SECTIONAL &REGIONAL COMMITTEES

ACTIVITIES

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* T h e Co m mi t t e ec o n t i n u e ddeliberations on the

proposals made bythe last ExecutiveC o m m i t t e e a n d

p r a c t i c a l

implementation of theidea that TechnicalCommittees should

be selected by theExecutive Committeerather then elected bythe General Body forsmoother and bettercoordination betweenthe Executive andSectional/RegionalCommittees.

The Memorandum and Articles of Association(MemArts) were therefore thoroughly reviewed

by the Committee to bring certain amendmentsconsidered necessary to be made in the existingMemArts .

Suggested amendments were placed for theconsideration of the General Body at the ExtraOrdinary General Meeting (EOGM) held onMay 25, 2010 which were unanimously

approved and submitted to the DGTO forapproval and also filed with SECP.

In addition to above a Sub-Committee wasformed comprising the following to chalk outa procedure for selecting the Technical/RegionalCommittees:

-Capt. Azhar Ehtesham Ahmed-Mr. Afzal-ur-Rehman-Mr. Ahmed Salahuddin

The said procedure has been developed by the

Sub-Commit tee andapproved by the ExecutiveCommittee. No soonerapproval from the DGTOis received the same will

be circulated to IAPm e m b e r s f o r t h e i r input/approval.

* The Committee'sattention was drawntowards enlistment anddelistment of insurancecompanies by the bankson their panels. In fact theInsurance Ordinance 2000clearly states that banks orany other f inancia linstitution cannot issuenegative lists, the State

Bank of Pakistan had already issued circular tobanks for compliance of Section 86 of the saidOrdinance, which apparently went unheeded

by the Banks.

Therefore attention of the State Bank of Pakistan(SBP) was drawn vide IAP's letter of 10th

November, 2009 that some of the Banks/DFIswere still issuing the lists of the insurers of theirchoice based on their own criteria. SBP wasalso reported that the insurance companies duly

authorized by SECP to conduct the non-lifeinsurance business were de-listed by certaininstitutions without giving any reasons.

The SBP was requested to intervene for thew i t h d r a w a l o f t h e p r a c t i c e o f enlistment/delistment of the insurancecompanies by the Banks/DFIs in order to providea level playing field to all the insurancecompanies which fulfill the objective criteriaof financial strength as per the requirements of

the SECP.

SUMMARY OF THE ACTIVITIES OF EXECUTIVE COMMITTEE

DURING THE YEAR 2009-2010

08

Sitting from Left to Right:Mr. Taher G. Sachak, Capt. Azhar Ehtesham Ahmed (Vice-Chairman IAP)

Mr. Tahir Ahmed (Chairman IAP), Mr. Hasanali Abdullah & Mr. A. Razak AhmedStanding from Left to Right:

Mr. N.A. Usmani (Secretary General IAP), Mr. Shabbir Gulamali,Mr. Ahmed Salahuddin, Mr. Naim Anwar, Mr. Mumtaz Ali (Risk Surveyor) &

Mr. Afzal-ur-Rehman

MEMBERS OF THE EXECUTIVE COMMITTEE

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09

In response to IAP's above letter SBP informedto IAP that it had taken up the matter withPakistan Banks' Association (PBA) with theview to follow the law in letter and spirit. SBPalso advised IAP to contact PBA directly forearly resolution of the issue. Copy of SBP andAssociation's letter were sent to PBA. and soughttime for the meeting. The PBA, however,

remained silent on the issue.

Since there was no response from PBA, theEC engaged a firm of lawyers M/s. Rizvi, Isa,Afridi & Angell. The lawyers wrote to SBP on4th May, 2010 subsequently SBP has responded

positively suggesting that the matter may beamicably resolved by involving all stakeholdersnamely SECP, IAP, PBA and SBP.

The matter is being followed actively and allsteps are being taken for its resolution to thesatisfaction of Members.

* The Taxation Sub-Committee finalized theproposals for Federal Budget 2010-11 on variousmatters concerning the insurance industry andwere sent to SECP and FPCCI with a requestto support for consideration by Federal Boardof Revenue (FBR).

Subsequent to the presentation of Finance Bill2010, Government of Pakistan and FBR's

attention was drawn to an anomaly on taxabilityof Capital Gains on securities held for morethan twelve months by insurance companies,.We thank the Government of Pakistan and theFederal Board of Revenue for very kindlyremoving the anomaly and keeping us at parwith other assesses.

* Withholding Tax on reinsurance premiumremitted abroad; subsequent to the passing ofOrder of the High Court of Sindh in favor of

the petitioners, the Income Tax Department

has filed appeal before the Honorable SupremeCourt of Pakistan. The concerned companieshave appointed M/s. Sirajul Haque & Co. todefend the cases in Supreme Court on their

behalf.

* Three companies namely; Pakistan ReinsuranceCompany Ltd, Asia Care Health & Life

Insurance Company Ltd, and Adamjee LifeAssurance Company Ltd. were admitted to themembership of (IAP).

* Previously the Accounting Formats were inaccordance with the Insurance AccountingRegulations 2002, the ICAP InsuranceCommittee decided to align the formats withthose of `IFRS and the whole exercise ofredrafting the formats was done by the ICAP.The Institute then forwarded the draft to IAPfor review and comments. The IAP's TaxationSub-Committee deliberated and discussed the

proposal at Committee level and also with theICAP Committee and SECP.

Thereafter, the Executive Committee consideredsome of the issues pertaining to new formatsof Financial Statements i.e. regarding, disclosurein Para 37(c) & 39(c) of IFRS-4, deferment ofapplicability of IAS 39, IBNR, ClaimsDevelopment Table for outstanding claims andrevision of regulatory returns to bring these in

line with the new formats.

* Further to SECP's Circular # 22/2009 dated30th June, 2009 regarding implementation ofIFRS-4 the Commission in the light ofcomments from IAP members framedcomprehensive guidelines (for life and non-lifeinsurance) as well as the necessary disclosuresrequired to be made in the 'Notes to the FinancialStatements'. The guidelines were issued videSECP's Circular # 4/2010 dated 23rd January,

2010.

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10

* In October 2009, the SECP (Insurance Division)forwarded an initial note on Fit and ProperCriteria to the Association. The said notecontained 'background and justifications' and

proposed cr iter ia for qual if icat ions andexperience of Chief Executive or PrincipalOfficer of an insurance company. The ExecutiveCommittee deliberated upon the contents of the

note and submitted a reply vide IAP's letterdated 5th November, 2009 was and suggestedto SECP to make it applicable to all new /incoming CEOs/POs.

The Committee deliberated the matter furtherat its meeting on 17th November, 2009 andforwarded i ts suggest ions regardingqualifications and experience of CEOs/POsvide IAP's letter dated 25th November, 2009reiterating to apply the criteria to the new/incoming CEOs/POs. SECP's vide its letterdated 24th December, 2009 advised that one ofthe recommendations of IAP regardingreplacing the Master qualification withBachelors had been agreed and SECP may allowa period of one year for implementation ofcriteria so that the existing CEOs can completetheir terms of office and/or retire in orderlymanner.

An Emergent meeting of CEOs of all insurancecompanies was held on 5th January, 2010 at

Karachi, and subsequently IAP's view pointwas communicated to SECP on 6th January,2010.Thereafter SECP sent revised draft ofCriteria on 17th March, 2010 which wasdiscussed by the Executive Committee andalso at a meeting of CEOs on 7th April, 2010.IAP's views were then co mmun icated toSECP on 22nd April, 2010, which were notaccepted by SECP.. The matter was againdeliberated by the Executive Committee andMembers' inputs were obtained.. Thereafter,

a letter dated 26th May, 2010 was sent to the

SECP communicating the criteria proposed byIAP.

* T he SE CP v ide i ts no ti fi ca tion SRO145/(1)/2010 dated 1st March, 2010 soughtcomments from all stakeholders regarding

proposed amendments in Solvency requirementsof insurance companies under the SECP

Insurance Rules 2002 to frame guidelines oninvestments by insurance companies. Thenotification was circulated by the Associationto all member companies for seeking theircomments. Subsequently the Taxation Sub-Committee reviewed the draft in the light of

both; suggestions made earlier to SECP in 2007and members' feedback. Ta x a t i o n S u b -Committee's suggestions were forwarded toSECP vide letter dated 29th March, 2010 mostof which were accepted by SECP at the meetingcalled by the Executive Director, Insurance,SECP with the Association's representatives.

* In early November 2009 SECP informed theAssociation that the Commission intends toincrease the Annual Supervision Fee to meetthe increased cost of Insurance Division ofSECP the following scale was recommended

by the SECP :

1.5 rupees per thousand of gross direct premiumwritten in Pakistan during the calendar year

2010: and

2 rupees per thousand of gross direct premiumwritten in Pakistan during the calendar year2011:

Subject to a maximum of rupees fifty million.

The Executive Committee deliberated the matterin its meeting for the month of November anddecided to request SECP for an increase in

phased manner as under:

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11

1.20 rupees per thousand of gross directpremium written in Pakistan during the calendaryear 2010.

1.35 rupees per thousand of gross directpremium written in Pakistan during the calendaryear 2011: and

1.50 rupees per thousand of gross directpremium written in Pakistan during the calendaryear 2012.

subject to a minimum of rupees fifty thousandand maximum of rupees twenty five million.

In response the SECP vide its letter dated 4thDecember, 2009 informed that since theCommission desires to develop its capacity tooperate as a financially self-sustainableorganization and as also the fee has remainedthe same as prescribed under the repealedInsurance Act of 1938, whereas premiumincome of the companies as well as therequirements had increased manifold andtherefore IAP's proposal was not acceptable

by the Commission and a limit of minimumsupervision fee of rupees two hundred thousandwas included, an Emergent Meeting of CEOsof member companies was called on 14thDecember 2009. The General Body of theAssociation accepted the proposal of SECP

with request to maintain minimum supervisionfee of rupees fifty thousand as against rupeestwo hundred thousand which was communicated

by IAP on 14th December, 2009. SECP issueda formal circular # 37/2009 dated 21stDecember, 2009 on the subject.

* Association's attention was drawn that in someinstances basis of underwriting and claimssettlement under the Standard Munich Re's

Machinery Breakdown Policy were not carriedout in accordance with the policy terms. Thematter was considered both by the EngineeringSub-Committee and the Executive Committeeand after detailed discussion a comprehensivenote on the subjec t was prepared andcirculated to for members' guidance.

* The IAP has always desired to have its ownoffice premises. The prevailing real estate ratesare attractive to buy a piece of land preferablyin DHA, Karachi. Some efforts have been madein this direction and the search for a suitable

plot is continuing. Executive Committee hasearmarked Rs. 15 million for the purchase of

plot initially. The construction work may becarried out in phases depending upon theavailability of surplus funds. .

* On the request of the Chairman, LII, Mr.Mohammed Ishaque Khan, the ExecutiveCommittee met the Council of Lahore InsuranceInstitute immediately after the ExecutiveCommittee meeting held on 22nd December,2009 at Central Park, State Life InsuranceEmployees Cooperative Housing Society,Lahore.

The Chairman, LII briefed the ExecutiveCommittee about the educational activities ofthe Institute and also informed that a plot of

two kanal has been donated to LII by the StateLife Insurance Employees Cooperative HousingSociety, Lahore to build an Insurance College.He informed that now LII was planning toconstruct befitting building on this plot. TheExecutive Committee appreciated the effortsmade by the Lahore Insurance Institute andoffered their full support for this noble cause.

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* The matter pertainingto payments of theftclaims in motor

b u s i n e s s w a sd e l i b e r a t e dthoroughly by theAccident SectionalC o m m i t t e e . T h e

Commi t t ee a l soe x a m i n e d t h ewordings of MotorP o l i c y F o r m

pertaining to the word"Theft". It was feltthat if theft committed

by the driver orsomebody known tothe vehicle which was

put in his possessionwith the consent of itsowner, it will be acriminal misappropriation or criminal breachof trust. In such theft cases, claims should not

be payable and there should be anexclusion,whereas the policy wording did not

prevent claim payments to insured in suchsituations. To clarify this issue appropriateamendment was suggested in relevant PolicyForms, Section-I Loss or Damage of the policy.

Therefore proposal Circular No. A-2 dated

January 18, 2010 was issued which wasendorsed by the Majority of members hencethe proposed wording was adopted.

* The Committee kept on reviewing on regularbasis the data entries made by the membercompanies on IAP Claims Management Systemregarding snatched/s to len vehic les .

To update the member companies on theimportant reports generated by the system,

graphical presentations were prepared and sent

to members for the periodfrom 1st January, 2009 to30th December, 2009.

To get full advantage andutility of the software,members were requestedto keep up timely entry of

data pertaining to allreported claims.

* The Committee inview to analyze the lossesdue to rains during the year2009 particularly of 19thJuly,2009 rain in Karachi,which broke 30 yearsrecord, devised a formatfor collection of statisticsf r o m t h e m e m b e r companies.

The statistics were collected and compiled, itwas noted that the reported losses were not so

big and claims experience did not indicatealarming situation. Therefore the Committeefelt that there was no need to suggest deductiblesat this stage. It was decided that the data would

be collected on the same pattern every year.

* The matter pertaining to IAP Guidelines / Rules

remained under active consideration of theCommittee. A Sub-Committee was formed torecommend changes in the Guidelines, whichare expected to be finalized soon by theAccident Committee.

* The statements of Motor Claims experienceStatistics for the years 2007 and 2008 andcombined from 2006 to 2008 were reviewedand finalized by the Committee. The membercompanies were informed that the statistical

data was available for the perusal of authorized

SUMMARY OF THE ACTIVITIES OF ACCIDENT SECTIONAL

COMMITTEE DURING THE YEAR 2009-2010

12

Sitting from Left to Right:Mr. Faisal Mustafa Siddiqui, Mr. Imran Ahmed (Chairman)Ms. Yasmin Sadiq (Vice-Chairperson) & Mr. Azfar Arshad

Standing from Left to Right:Mr. N.A. Usmani (Secretary General IAP), Mr. Zeeshan Raza,

Mr. Altaf Ahmed Siddiqi,

Mr. M. Numan Shaikh (Superintendent Accident) & Mr. Khalid Rafiq

MEMBERS OF THE ACCIDENT SECTIONAL COMMITTEE

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13

representatives of members at the Association'soffices at Karachi and Lahore.

* A Summary of snatched / stolen vehicles withTracking Devices for the period from 1stJanuary, 2008 to 31st December, 2008 wascirculated to member companies showing the

record of Tracking Companies & performanceof their tracking devices. Statistics for the periodfrom 1st January, 2009 to 31st December, 2009was under scrutiny of the Committee and will

be circulated to member companies shortly.

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* At the request of Captain SulemanMahtab of NationalDisaster ManagementAuthority (NDMA)a meeting was heldon November 25,2 0 0 9 w i t h t h e

E x e c u t i v e / F i r eCommittee membersregarding NationalFire Safety Policy.

During the meetingC a p t . S u l e m a nMahtab explained themain objective of

National Fire SafetyPolicy and Dataassemblage whichwas in process ofdevelopment by theGovernment of Pakistan. He informed that

NDMA had conducted extensive study ofexisting legislations, codes and standards

pertaining to the Emergency Services inPakistan, resource mapping of EmergencyServices in major cities in order to find out the

practical solutions to increase the effectiveness,coordination, standardization and efficiency ofexisting Fire / Emergency Services throughout

Pakistan. In addition to that NDMA was alsoin process of developing National, Provincialand District Emergency Operation Centers,Standard Operating Procedures (SOPs) and a

National Database for resources of EmergencyServices.

Mr. Mahtab was of the view that IAP can playan important role towards the development of

National Fire Safety Policy and its effectiveand efficient implementation throughout

Pakistan and requested to nominate Association'sRepresentatives for National Advisory Group

on Pakistan's National FireSafety Policy.

The Executive Committeetherefore, nominated Mr.Mahmood Lotia as theAssociation's nominee for

National Advisory Group

on Pakistan's National FireSafety Policy and Mr.M o h a m m a dSafdar,Chairman, FireSectional Committee washis alternate.

Capt. Suleman Mahtab ofN a t i o n a l D i s a s t e rManagement Authorityhad sent the draft on

National Fire SafetyPol icy through thecourtesy of Mr. Mahmood

Lotia. The Fire Sectional Committee has madecomments on draft of National Fire SafetyPolicy sent by Capt. Suleman Mahtab.TheCommittee appreciated the work done by Capt.Suleman in drafting the first National Fire SafetyPolicy.

* The Fire Sectional Committee continueddeliberation on IAP Guidelines / Rules. In this

connection some underwriters from the leadingmember companies of the industry having goodknowledge of fire underwriting were taken fordeliberating the matter. A Sub-Committee wasformed comprising the following members:

Mr. Kamaran Arshad InamSyed Murtaza Ali ShahMr. Muhammad ZeeshanMr. Haider AliMr. Muhammad Adnan Junaid

Mr. Tariq MushtaqSyed Iqbal Hussain

14

SUMMARY OF THE ACTIVITIES OF FIRE SECTIONAL

COMMITTEE DURING THE YEAR 2009 - 2010

Sitting from Left to Right:Mrs. Shaheen H. Sumar (Vice-Chairperson),

Mr. Mohammad Safdar (Chairman)Mr. Mohammad Saleem & Syed Iqbal Hussain

Standing from Left to Right:Mr. Kamran Arshad Inam, Mr. Muhammad Salim Iqbal,

Mr. Mumtaz Ali (Risk Surveyor),Mr. Muhammad Ashraf (Superintendent Fire & Marine) &Mr. N.A. Usmani (Secretary General IAP)

MEMBERS OF THE FIRE SECTIONAL COMMITTEE

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The members of the Sub-Committee are of theview that the existing fire Rules, Regulationsand rating part be segregated in the sectionsnamely A,B & C. The matter is still receivingthe attention of the Sub-Committee.

* The Fire Sectional Committee worked out theformation of Engineering Sub-Committee on

advice of Executive Committee and nominatedthe following members to deal with Engineeringissues:

Mr. Kamran Arshad InamMr. Sheikh AhsanullahMr. Aamir Nayab AhmedMr. Muhammad Salim Iqbal

* On advice of Executive Committee the FireSectional Committee reviewed Condition # 6of Fire Policy. It was noted that the standardFire Policy wording used in our market wassubject to Condition # 6 which did notspecifically exclude the terrorism risk whereasthe Condition # 6 of RSD did not properlydefine the terrorism risk and there was conflictin wording. Therefore, it was felt that Condition# 6 of the Fire Policy be reworded.

Circular # F-5 dated December 09, 2009 wasissued by Fire Sectional Committee to membersfor seeking their consent on proposed

amendment in Condition # 6 of RSD/RFDEndorsements. By Circular F/TC-1 datedDecember 31, 2009 members were informedthat the proposal contained in Circular # 5 datedDecember 09, 2009 was approved and cameinto force with effect from January 01, 2010.

Copies of amended versions of RSD & RFDEndorsements were sent to each membercompany alongwith the Circular.

* The Committee continued its efforts to developunified wording for Fire Policy. The Committee

was of the view that it is very old documentand member companies have been using it overthe years therefore contents of the fire policywere considered carefully. .

The Committee noted that at present theConditions and Exclusions have been statedtogether in the current Fire Policy. It was,

therefore, agreed that Conditions and Exclusionsbe described under separate heads to makethings more clear for insured.

The Committee deliberated on preamble,General Exclusions and Conditions in depthand necessary amendments were made in thedocument. .

* The Fire Sectional Committee paid its undividedattention on collection of statistics and the matterwas considered by the Committee at its allmonthly meetings held throughout the tenure.Member companies were reminded time to timeto forward their statistical returns to theAssociation in time so that maximum data could

be available for consideration of the Committee.

The statistics submitted by member companiesfor the year 2008 was finalized and placed onIAP's Website. A copy of finalized statisticswas sent to all Principal Representatives fortheir information and record. Statistics submitted

by the member companies for the year 2009are under consideration of the Committee.

* By Circular # FPR-1 dated December 09, 2009members were informed that the Associationdoes not monitor or advise any ratingmechanisms, therefore, the Fire SectionalCommittee cannot deliberate on matter

pertaining to sanction of hydrant discounts andsimilar other discount applications. Howeverthe Committee would only confirm the status

towards suitability of hydrant system and otherfire fighting arrangements together with

15

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necessary guidelines to members and it wouldbe entirely at the discretion of the membercompanies if they offer any incentives theydeem fit.

* The concept of Pre-Engineered Buildings (PEB)was considered by the Fire Sectional Committeeearlier and it was decided that PEBs be classified

as Class II Construction. In order to find outthe basis to prove that the decision of the FireCommittee was technically sound the matterwas considered by the Engineering Sub-Committee who discussed all the technicalaspects relating to PEB structures and thedecision of Fire Sectional Committee wasendorsed by Engineering Sub-Committee.

* The Fire Sectional Committee observed thatafter amending Special Condition # 6 of Riotand Strike Endorsement (RSD) and Riot FireEndorsement (RFD) it had become imperativeto amend Special Condition # 1 (TerrorismExclusion) in Standard Explosion Endorsement.

Proposal Circular # F-1 dated January 26, 2010was issued to obtain the consent of the all themember companies on proposed amendmentsin Special Condition # 1, Standard ExplosionClause. By Circular # F/TC-1 dated February15, 2010 was issued informing members that

proposals contained in Circular # F-1 datedJanuary 26, 2010 had been approved by the

required majority of members and was broughtit into force with immediate effect.

* During the period (July 2009 - June 2010) IAP'sRisk Surveyor carried out following riskinspection and issued comprehensive reportsin this regard:

Textiles 09Automobile Industries 04Sugar Mills 02Pharmaceutical 02Packages/PET Industries 03Miscellaneous 18Total 38

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* Previously statistics

were collected fromt h e m e m b e r companies but it wasobserved by theC o m m i t t e e t h a tmembers were facinga lot of difficulties in

providing statistics tot h e A s s o c i a t i o n

because of lengthyand complicatedstatistical formats.The Committee had,therefore, decided to

d i s c o n t i n u e t h epractice of collectionof statistics from the

member companies.However a format forcompilation of figures from members' balancesheet was dev ise d by the Comm itt ee.Accordingly the stats was compiled and placedon Association website.

* Previously the Committee's attention was drawnto sub rules (1) & (2) of Rule 35 of SECP(Insurance) Rules 2002 pertaining to premium

payments. The matter was discussed by the

Committee and a question was raised thatwhether an insurer can repudiate the liability ifa cover note had been issued and premium hadnot been paid or guaranteed. The Committeehad sought legal opinion in the matter andreferred it to the Executive Committee forseeking guidance.

In view of ambiguity inthe said Rule the matterwas considered by the

Executive Committee andit was felt that this matterinvolves discussions on amarket level and should

be handled at IAP levelso that the whole market'sopinion was reflected.Accordingly the matterwas deliberated by t h eExecutive Committee atits various meetings andthere was unanimity ofviews that it would be

p r u d e n t t h a t s om emodification be suggested

in the Rule in consultationwith SECP. Therefore, a

Sub-Committee was constituted by theExecutive Committee comprising of followingmembers who worked with the assistance ofrenowned lawyers M/s. Orr, Dignam & C o ,Advocates.

Capt. Azhar Ehtesham Ahmed (Coordinator)Mr. Mujib Khan

Mr. Fakhir Rahman

Mr. Mahmood LotiaMr. Muhammad Ali Zeb

The Executive Committee deliberated upon thedraft wording suggested by the working groupat its various meetings and final version of thedraft was forwarded to SECP for itsconsiderat ion and necessary act ion.

SUMMARY OF THE ACTIVITIES OF MARINE SECTIONAL

COMMITTEE DURING THE YEAR 2009 - 2010

17

Sitting from Left to Right:Mrs. Amna Sarfaraz, Mr. Brendan Thomas D'Lima (Chairman)

Mr. Muhammad Sohail Nazir (Vice-Chairman) & Syed Matin AhmedStanding from Left to Right:

Syed Akbar Raza Naqvi, Mr. N.A. Usmani (Secretary General IAP)Mr. Irtiza Abbas Kazmi,

Mr. Muhammad Ashraf (Superintendent Fire & Marine) & Mr. Wasim Abbas

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* The Regional Officeof The InsuranceA s s o c i a t i o n o f Pakistan , completed3 8 y e a r s o f establishment on 31stDecember, 2009, .

During the year,va r ious ma t t e r sincluding inspectionof risks, received theattention of LahoreRegional Committeewere considered anddealt with in theirmeetings.

The Lahore RegionalCommittee managedto inspect a total number of97 risks of thetextile mills in the region of Punjab & N.W.F.P.

There was complete co-ordination and liaisonbetween the Lahore Regional Committee, theSectional Committees and the Secretariat ofIAP, Karachi. .

The Chartered Insurance Institute Examinationswere held in October, 2009 and April, 2010under the supervision LRC. .

The following educational/leisure programswere successfully conducted by the LahoreInsurance Institute (LII) in collaboration withLahore Regional Committee of IAP:-

* On 7th August, 2009, officers of a number of

companies v i s i t edKhawaja Spinning Mills,Gujranwala on 7thAugust, 2009. On 26th

November, 2009 a largegroup of underwriters ofdifferent InsuranceCompanies v is i ted

Packages Ltd., andobserved the variousmanufacturing processes.Seminar/Workshop onTime Management heldon 23rd October, 2009at Hotel Crown Plaza,Lahore.

* A C r i c k e tT o u r n a m e n t w a sorganized and final was

held on 21st March, 2010 which was keenlycontested by teams from 16 insurance companiesoperating in Lahore region. It was a first evercricket Bonanza.

* An informative Memory Building Workshopwas organized on 17th February, 2010 in theAuditorium of Hailey College of Banking &Finance. This Workshop was conducted by arenowned specialist trainer, Dr. MuhammadArif Siddiqui.

* Visits to Pak Electron, Ferozepur Road, Lahoreon 16th March, 2010, High Noon Laboratory,Multan Road, on 20th January, 2010 andKohinoor Energy, Raidwind Road, werearranged which were very informative forinsurance people.

SUMMARY OF THE ACTIVITIES OF

LAHORE REGIONAL COMMITTEE DURING THE YEAR 2009 - 2010

18

Sitting from Left to Right:Mr. Satwat Mahmood Butt, Mr. Liaquat Ali Khan (Vice-Chairman LRC)

Mr. Fazal-ur-Rehman Malik (Chairman LRC) & Mr. M.K. BaigStanding from Left to Right:

Mr. Muhammad Khurshid (Asstt. Secretary LRO IAP),Mr. S. Dawood Ali Shah (Secretary LRO IAP), Mr. Tahseen A. Khan (Observer),

Mr. Zeeshan Bakht & Mr. Usman Ali (Alternate of Mr. Nasir Ali)

MEMBERS OF THE LAHORE REGIONAL COMMITTEE

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* Th e Co mmi t t ee

devised a format forc o l l e c t i n g k e yinformation of LifeInsurance Companieswhich was forwardedt o a l l m e m b e r companies with arequest to providedata for the year2009.

* Th e Co mmi t t eed i s c u s s e d a n dsuggested that the

f o l l o w i n g b eincluded in the

proposals to SECP:

Submission of Statement of Assets & Liabilitieswas required by SECP to be submitted within6 weeks of accounts closing whereas in theCompanies Ordinance this requirement was 4months. For extension in time to file returns,every company has to seek prior permissionfrom SECP each time. The Committee suggestedto pursue SECP to align the said laws.

Tax credit was available to customers on mutual

fund investments. With respect to life insurance,such tax incentives would help channel savingstowards this industry. Moreover, if the tax creditis granted to the insurance sector it wouldincrease insurance penetration, the size of theoverall pie and generate funds for the insurancecompanies to mobilize the economy and playa much larger role in creating a savings culturein the country.

The above proposals were submitted to SECPalong with other proposals pertaining to the

insurance industry.

* Impact of IFRS-4 &IFRS-1 on the reporting

f o r m a t s f o r l i f ecompanies was reviewed

by the Committee. It wasnoted that guidelines inthis regard have been

provided by the SECP.Since life companieswere better equipped interms of technicalresources as well as moredetailed/regular internalreporting, no major

hurdles were expected inimplementation of these

standards.

* Association was informed that in middle ofFebruary, 2010, Large Tax Payers Unit (LTU)of FBR, Karachi had issued notices to certainLife Insurance Companies who had shownamounts in their Annual Reports on account of

payment to policyholders on maturity ofinvestment-linked or unit-linked policies.Taxdepartment drew companies' attention that by

virtue of Section 151(1) (d) of the Income Tax

Ordinance, 2001, the companies were requiredto withhold tax on the investment gain portionof the payment made to the policyholders onmaturity @ 10% as specified in Division I ofPart III of the First Schedule. The departmenthad, therefore, advised the companies to explaintheir position in this regard with supportingdocumentary evidence.

The Committee carefully examined Section

151(1) (d) and felt that it does not apply to suchpayments to policyholders and was also not

SUMMARY OF THE ACTIVITIES OF

LIFE SECTIONAL COMMITTEE DURING THE YEAR 2009 - 2010

19

Sitting from Left to Right:Mr. Hashim Sadiq Ali, Mr. Mohammad Ali Ahmed (Vice-Chairman),

Mr. Maheen Yunus (Chairman) & Mr. Manzoor AhmedStanding from Left to Right:

Mr. N.A. Usmani (Secretary General IAP) &Mr. M. Numan Shaikh (Superintendent Accident)

MEMBERS OF THE LIFE SECTIONAL COMMITTEE

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applicable to payments on maturity to the

assured as insurance policy was a contractbetween the company and assured. The Section151 pertains to "Profit on Debt" and perhapsLTU was referring to the interest being given

by banks, i.e. instrument linked product.Therefore, this section clearly does not applyin the manner as pointed out by the t axdepartment.

A joint meeting of members of Life SectionalCommittee, CFOs of Life Companies and

representatives of SLIC was also held with ,Taxation Sub-Committee on 16th March 2010,

wherein it was felt that payments topolicyholders were made by the companies onmaturity of policies on the basis of termsmentioned therein, which was legally a contractand not an instrument. Therefore, Section 151(1)(d) does not apply to Life Insurance Companiesand that Section 151 clearly refers to Profit onDebt.

20

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MARKET OVERVIEWOF

NON LIFE

INSURANCE INDUSTRYIN

PAKISTAN

MARKET OVERVIEWOF

NON LIFE

INSURANCE INDUSTRYIN

PAKISTAN

21

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Equity

Issued, Subscribed & Paid up Capital 10,962.17 11,145.42 7,711.11 5,505.20

Reserves and Retained Earnings 44,927.36 41,504.40 50,699.27 20,683.1155,889.53 52,649.82 58,410.38 26,188.31

Surplus on revaluat ion of f ixed asset s 767.22 951.62

Adv.Agst issue of right shares - - 859.92 -Underwriting Provisions

Provisions for Outstanding Claims(including IBNR) 14,201.65 14,727.11 16,681.94 9,800.50

Provision for Unearned Premium - Net 14,951.49 14,403.07 13,985.50 11,665.15

Commission Income Unearned 951.12 1,010.41 1,028.00 745.28Addit ional Provision for Unexpired Risk 61.90 - 78.38 15.68

Total 30,166.16 30,140.59 32,633.74 22,226.61

Deferred Liabilities 360.96 186.28 111.26 94.93

Liability against Finance Lease - 20.52 251.57 6.20

Creditors and Accruals 7,429.13 5,135.78 5,803.93 4,036.27Surplus of Fix Assets/Short Term Finance 188.91 876.74 678.04 708.37

Other Liabilties 2,026.20 2,802.73 2,344.77 1,449.01

Total Equity and Liabilities 96,828.11 92,764.08 100,233.69 54,709.70

Cash and Bank Deposits 9,417.32 9,455.61 8,291.33 7,229.79Loans - Secured Considered Good 253.96 50.82 17 7.8 6 48 .52

Investment 52,206.14 49,457.48 59,094.15 25,309.91Investment Properties 866.28 698.57 458.61 438.02

Deferred Tax 145.49 190.96 221.85 71.35

Reinsurance Recoveries AgainstOutstanding Claims 7,844.70 7,800.41 9,256.95 4,352.93

Deferred Commission Expense 1,515.42 1,510.50 1 ,50 8.3 5 1,254 .05

Other Assets 19,323.53 18,681.66 16,872.90 12,675.03

Capital Work 22.01 117.01 25.83 16.80Fixed Assets 4,893.15 4,706.58 4,232.58 3,257.74

Leased Assets 340.11 94.48 93.28 125.29Negative Goodwill - - - (69.73)

Total Assets 96,828.11 92,764.08 100,233.69 54,709.70

Asset At Market Value - - - 52,245.33

22

NON LIFE INSURANCE PRIVATE SECTOR

Note: The amounts on y-axis represent Rs. in millions.

Balance Sheetas at 31st December

Rs. in million

2009 2008 2007 2006Profit and Loss Accountfor the year ended 31st December

Revenue Account

Net Premium Revenue 22,242.93 22,897.81 20,296.14 17,894.38

Premium Deficiency reversal/(expense) (47.57) (19.81) (50.50) 7.14

Less: Net Claims 13,236.65 (14,276.55) (14,347.79) (11,088.36)

Less: Expenses 4,846.66 (4,679.61) (4,105.05) (3,358.29)

Less: Net Commission 1,443.37 (1,639.66) (1,185.93) (1,199.50)

Underwriting Balance 2,668.68 2,282.18 606.87 2,255.37

Investment Income 3,055.94 (4,020.07) 34,417.19 13,272.49

Rental Income 196.52 193.71 155.58 122.88

Other Income 708.83 687.89 524.34 403.97

General and administration expenses (2,461.60) (3,813.02) (1,909.50) (1,595.16)

Profit Before Tax 4,168.37 (4,669.30) 33,794.48 14,459.55

Taxation 696.60 486.52 - (652.31)

Profit After Tax 3,471.77 (5,155.82) 33,568.68 13,807.24

APPROPRIATIONS

Balance unappropriated profit at

end of previous year 11,120.66 37,001.81 15,138.89 4,775.04

Profit after tax for the year 3,471.77 (5,155.82) 33,568.73 0.40

Dividend 32.38 1,538.95 1,341.21 954.55

Reserve for Bonus share 66.70 1,478.58 1,303.35 831.49

General Reserve (6,058.24) 17,767.81 9,019.91 1,673.16

Other 7.48 0.02 0 0

Sub Total 5,951.68 20,785.36 11,664.48 3,459.20

Balance Unappropriated profit at end of year 20,544.11 11,060.63 37,043.15 15,123.08

Rs. in million

2009 2008 2007 2006

BALANCE SHEET RATIO

Net Working Capital (Rs.) 12,928.57 13,272.06 9,081.12 8,971.97Current Ratio 1.55 - 1.36 1.59Total Assets/Net Worth 1.73 - 1.72 2.09Break up Value 50.98 - 75.75 47.57

UNDERWRITING RATIOSClaims incurred to net premium (61.05) (62.35) (70.69) (61.97)

Net Profit to net premium 12.45 (22.52) 165.39 77.16Management expenses to net premium (22.23) (20.44) (20.23) (18.77)Commission to net premium (6.63) (7.16) (5.84) (6.70)Earning per share of Rs.10/= each 2.46 (4.63) 43.53 25.08Cash Dividend 32.38 - - 954.55Stock Dividend 38.97 1,478.58 1,385.75 831.49

150000

100000

50000

-

Balance Sheet Growth

2006 20092007 2008

40000

30000

20000

10000

0

Equity Growth

20092007 2008

160001400012000100008000600040002000

0

Claims Incurred

2006 20092007 2008

25000

2000015000

10000

5000

0

Net Premium Underwitten

2006 20092007 2008

70000600005000040000300002000010000

0

Investments

2006 20092007 2008

10000

8000

6000

4000

2000

0

Cash and Bank Balances

2006 20092007 2008

400003500030000250002000015000100005000

0-5000

-10000

Net Profit after tax

2006 20092007 2008

Dividend & other Appropriation

20092007 2008

2006

2006

250002000015000100005000

0-5000

-10000

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EquityAuthorised Share Capital 6,000.00 6,000.00 6,000.00 6,000.00

Issued, Subscribed and Paid up Capital 2,000.00 2,000.00 2,000.00 2,000.00Reserves and ret ained earnings 13,728.79 12,104.69 11,554.42 9 ,818.29

15,728.79 14,104.69 13,554.42 11,818.29Underwriting ProvisionsProvision for outstanding claims(including IBNR) 5,041.47 3,178.89 3,299.03 3,275.00Provision for unearned premium - net 3,109.99 2,731.71 2,112.23 1,347.00Additional provision for unexpired risk - - -Commission Income Unearned 34.79 34.20 36.64 28.17Total 8,186.25 5,944.80 5,447.89 4,650.17

Deferred Liabilities 511.99 344.26 302.53 272.46

Creditors And Accruals 2,256.07 1,780.33 1,994.20 1,184.29

Other Liabilities 125.49 78.55 255.39 249.33

Total Equity And Liablities 26,808.59 22,252.63 21,554.44 18,174.54

Cash And Bank Deposits 3,486.58 4,807.04 5,961.76 5,136.32. .

Loans - Secured Considered Good 26.77 25.30 33.35 32.29

Investments 10,955.61 10,979.51 10,319.70 9,164.93

Investment Properties 4,471.84 647.35 528.54 555.51

Deferred Tax 238.77 486.76 64.24 50.35

Reinsurance RecoveriesAgainst Outstanding Cliams 3,253.27 1,660.10 1,922.29 1,963.22

Deferred Commission Expense - - - -

Other Assets 4,035.59 3,564.20 2,629.70 1,168.25

Fixed Assets 340.17 82.38 94.85 103.67

TOTAL ASSETS 26,808.59 22,252.63 21,554.44 18,174.54

Assets at Market Value

23



Rs. in million

2009 2008 2007 2006Profit and Loss Accountfor the year ended 31st December

Revenue AccountNet Premium Revenue 3,004.99 2,903.52 2,433.16 2,116.63Premium deficiency reversal/(expense)

Net Claims 986.65 1,028.25 235.86 380.24

Expenses 452.19 350.35 300.84 280.54

Net Commission / (Income) (63.94) (58.45) (54.57) (55.46)Underwriting Balance 1,630.09 1,583.38 1,951.04 1,511.32

Investment (Loss) / Income 2,011.41 (389.17) 1,446.00 928.09

Rental Income 156.57 140.91 108.51 91.16

Other Income 18.81 0.79 10.98 17.30Exchange Gain 126.11 472.97 - -General and administration expenses (357.40) (295.27) (213.71) (168.25)

Profit Before Tax 3,585.59 1,513.62 3,302.81 2,379.61

Provision for taxation (1,052.85) (463.34) (1,066.68) (836.15)

Profit After Tax 2,532.75 1,050.28 2,236.14 1,543.46

APPROPRIATIONSBalance unappropriated profit at end of previous year 1,704.70 2,254.42 1,618.29 1,674.82Profit after tax of the year 2,532.75 1,050.28 2,236.14 1,543.46Dividend (500.00) (500.00) (500.00) (500.00)Reserve for exceptional losses (600.00) (500.00) (600.00) (600.00)

General Reserve (500.00) (600.00) (500.00) (500.00)(1,600.00) (1,600.00) (1,600.00) (1,600.00)

Balance Unappropriated profit at end of year 2,637.45 1,704.70 2,254.42 1,618.28

Rs. in million

2009 2008 2007 2006

Earning per share 12.66 5.25 11.18 7.72Cash Dividend (500.00) (500.00) (500.00) (500.00)Stock Dividend - - - -

Underwriting RatiosClaims incurred to net premium 32.83 35.41 9.69 17.96Net Profit to net premium 84.28 36.17 91.90 72.92Management expenses to net premium 15.05 12.07 12.36 13.25Commission to net premium (2.13) (2.01) (2.24) (2.62)

30000

2500020000

15000

10000

5000

0


2006 20092007 2008

20000

15000

10000

5000

0

Equity Growth

20092007 2008

1200

1000800

600

400

200

0

Net Claims

2006 20092007 2008

3500

30002500200015001000500

0

Net Premium Revenue

2006 20092007 2008

115001100010500100009500900085008000

Investments

2006 20092007 2008

7000600050004000300020001000

0

Cash and Bank Deposits

2006 20092007 2008

3000

2500

2000

1500

1000

500

0


2006 20092007 2008

Dividend & other Appropriation

20092007 2008

2006

2006

1620160015801560154015201500148014601440

NON LIFE INSURANCE PUBLIC SECTORNATIONAL INSURANCE COMPANY LIMITED

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25

Market Overviewof

Life Insurance Industryin

Pakistan

Market Overviewof

Life Insurance Industryin

Pakistan

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26

LIFE INSURANCE PRIVATE SECTOR


Share Capital and Reserves

Authorised Share Capital 4,400.00 4,400.00 3,000.00 3,000.00 2,250.00

Issued, subscribed and paid up Share Capital 3,366.74 3,366.74 2,290.72 1,979.12 1,452.12

Reserves & Retained Earnings 520.79 520.79 175.33 481.91 (92.38)

Net Shareholders' Equity 3,887.53 3,887.53 2,466.05 2,461.03 1,359.74

Balance of statutory fund 0.00 21,037.21 2,671.24 0.00 37.75 380.48 24,126.68 16,278.06 17,805.25 11,016.36

Deferred Liabilities 9.72 0.00 0.00 0.00 0.00 0.00 9.72 6.59 4.73 46.72

Creditors and Accruals 223.72 1,394.29 1,258.07 0.00 2.62 176.47 3,055.17 2,073.68 1,635.90 1,260.00

Other Liability 0.00 0.00 0.00 0.00 0.00 0.00 0.00 17.50 17.15 0.00

TOTAL LIABILITIES 233.44 22,431.50 3,929.31 0.00 40.37 556.94 27,191.57 18,375.84 19,463.03 12,323.08

TOTAL EQUITY & LIABILITIES 4,120.97 22,431.50 3,929.31 0.00 40.37 556.94 31,079.10 20,841.88 21,924.06 13,682.82

Cash and Bank Deposits 214.82 3,079.44 354.56 0.00 0.56 71.37 3,720.75 4,944.03 3,507.89 2,638.86

Loans 64.92 7.01 68.62 0.00 0.00 0.10 140.65 79.82 76.39 68.72

Investments (Net) 2,408.11 18,694.51 3,154.57 0.00 40.33 330.98 24,628.50 13,894.71 17,199.04 10,146.83

Investment in properties 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Deferred Taxtation 13.56 0.00 0.00 0.00 0.00 0.00 13.56 6.00 0.00 0.00

Other Assets 838.53 647.40 293.67 0.00 (1.32) 150.47 1,928.77 1,395.42 688.19 465.14

Tangible assets 540.26 3.14 57.87 0.00 0.80 4.02 606.09 501.10 439.77 361.24

Intangible assets 40.78 0.00 0.00 0.00 0.00 0.00 40.78 20.72 12.78 2.03

TOTAL ASSETS 4,120.97 22,431.50 3,929.31 0.00 40.37 556.94 31,079.10 20,841.88 21,924.06 13,682.82

ASSETS AT MARKET VALUE 0.00 0.00 0.00

BALANCE SHEET RATIOS

Net Working Capital - - - - - - - - - -

Current Ratio - - - - - - - - -

Total Assets / Net Worth - - - - - - - - - -

Break -up Value - - - - - - - - - -

ShareholdersFund

IndividualUnit

LinkedFund

IndividualLife

ConventionalGroup

LifeGroup

PensionAccident& Health

Aggregate

2009

Aggregate

2008

Aggregate

2007

Aggregate

2006

Rs. in millionStatutory Fund

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27


Revenue Accountfor the year ended 31st December

Net Premium Income 8,842.88 2,809.12 0.00 11.74 740.28 12,404.02 11,090.57 8,100.97 5,887.30

Net Investment Income 4,259.45 350.73 0.00 5.70 42.72 4,658.60 (3,785.79) 3,885.43 875.30

Other Income 3.75 18.83 0.00 0.00 9.22 31.80 18.95 36.68 31.37

Total Net Income 13,106.08 3,178.68 0.00 17.44 792.22 17,094.42 7,323.73 12,057.76 6,793.97

Net Claims 1,718.38 1,026.64 0.00 2.25 460.11 3,207.38 3,309.01 2,217.18 1,695.91

Net Management Expenses 3,532.18 1,477.59 0.00 1.51 204.77 5,216.05 4,422.65 2,906.68 1,899.13

Total claims and expenditures 5,250.56 2,504.25 0.00 3.76 664.88 8,423.45 7,731.66 5,158.54 3,595.04

Excess of Income over Claims and Expenditure 7,855.52 674.43 0.00 13.68 127.34 8,670.97 (407.92) 6,899.22 3,198.93

Add : Policyholder Liabilities at Beginning of Year 13,347.40 1,968.14 0.00 27.33 195.29 15,538.16 16,654.74 10,575.20 7,861.41

Less : Policyholder Liabilities at End of the Period 20,536.01 2,342.61 0.00 38.75 335.60 23,252.97 13,499.59 (16,654.73) (10,575.19)

Surplus/(Deficit) 666.91 299.96 0.00 2.26 (12.96) 956.17 708.66 819.69 485.50

Movement in policy holder liabilities 7,188.62 374.47 0.00 11.42 140.30 7,714.81 (1,116.59) 6,079.52 2,713.79

Transfers to or from Shareholders' Fund (485.71) (408.94) 0.00 (3.65) (47.86) (946.16) (519.55) (709.96) (302.44)

Capital contributed from share holders fund 0.00 56.98 0.00 0.00 65.76 122.74 (599.62) 599.61 0.00

Balance of Statutory Fund at Beginning of Year 13,671.21 2,345.14 0.00 27.71 233.99 16,278.05 17,805.17 11,016.35 8,119.85

Balance of Statutory Fund at End of the Period 21,041.02 2,667.62 0.00 37.75 379.22 24,125.61 16,278.07 17,805.21 11,016.35

Represented by:

Capital contributed by Shareholders' fund 527.04 309.39 0.00 0.00 68.32 904.75 13,763.48 1 ,624.79 1 ,072.15

Policyholders' liabilities 20,536.01 2,342.61 0.00 38.75 335.60 23,252.97 1,899.03 16,654.75 10,575.20

Retianed earnings on other than participating business (22.03) 15.62 0.00 (1.00) (24.70) (32.11) 615.56 (474.33) (631.00)

Balance of Statuory Fund 21,041.02 2,667.62 0.00 37.75 379.22 24,125.61 16,278.07 17,805.21 11,016.35

REVENUE ACCOUNT RATIOS

Claims incurred to net premium 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Net profit to net premium 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Management expenses to net premium 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

IndividualUnit

LinkedFund

IndividualLife

ConventionalGroup

LifeGroup

PensionAccident& Health

Aggregate

2009

Aggregate

2008

Aggregate

2007

Aggregate

2006


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28


Profit and Loss Accountfor the year ended 31st December

Net Investment income not attributable to statutory funds 257.42 117.38 78.27 73.74

Gain / (Loss) on sale of investments (281.40) 719.92 809.54 73.69

Total Investment Income 23.98 602.54 887.81 147.43

Other revenue 17.35 122.68 148.19 22.46

Total Investment Income and other revenues (6.63) 725.22 1,036.00 169.89

Less Expenses not attributable to statutory funds (135.86) 43.38 (28.09) (14.11)

Profit / (Loss) before appropiation of surplus to shareholders fund (142.49) 768.60 107.91 155.78

Add: Surplus appropiated to Shareholders fund from ledger A/C D 890.86 526.06 708.01 334.47

Profit/(Loss) before tax 748.37 (242.54) 1,715.92 490.25

Extra Ordinary Items - Deferred Tax 14.31 1.19 0.00 (0.80)Profit/(Loss) before tax and after extraordinay items 0.00 241.35 1,715.92 489.45

Taxation (13.22) 191.84 (267.74) (114.41)

Profit/(Loss) after tax 749.46 (433.19) 1,448.18 375.04

APPROPRIATIONS

Balance at commencement of the year 674.49 2,461.02 869.71 (402.02)

Profit after tax for the year 749.46 (433.19) 1,448.18 375.04

Transfer to General Reserve 0.00 0.00 20.00 (60.00)

Share Deposit Money Received 0.00 61.60 (200.00) (90.00)

Proposed Dividend (337.50) (216.56) (76.25) (73.35)

Right Share issued 0.00 0.00 327.00 0.00Capital (contributed)/during the year 138.81 39.10 (603.10) (32.04)

Capital withdran during the year (64.85) 632.27 5.47 0.00

Balance upappropriated profit at the end of the year 1,160.41 2,466.04 1,791.01 (282.37)

PROFIT AND LOSS ACCOUNT RATIOS

Earning per share 8.72 2.00 0.00 0.00

Cash Dividend 5.50 0.00 0.00 0.00

Stock Dividend 0.00 0.00 0.00 15.00

Rs. in millionAggregate

2009

Aggregate

2008

Aggregate

2007

Aggregate

2006


40000

30000

20000

10000

0


2005 20082006 2007

30000

2500020000

15000

10000

5000

0

Equity Growth

2005 20082006 2007

3500

30002500200015001000

5000

Claim Incurred

2005 20082006 2007

14000

12000100008000600040002000

0

Net Premium Underwritten

2005 20082006 2007

30000

25000

20000

15000

10000

5000

0

Investments

2005 20082006 2007

6000

5000

4000

3000

2000

1000

0


2005 20082006 2007

2000

1500

1000

500

0

-500

-1000


2005 20082006 2007

Dividend and other appropriations

2005 20082006 2007

10.90.80.70.60.50.40.30.20.1

0

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Issued, subscribed and paid up Share Capital 1,100.00 1,100.00 1,100.00 900.00 900.00

Reserves & Retained Earnings 318.77 318.77 96.22 230.52 282.74


Balance of statutory fund 194,924.80 4,371.95 148.53 199,445.29 177,459.13 156,737.30 137,959.78

Deferred Liabilities - 1,258.95 10.45 - 1,269.40 1,117.67 1,028.98 1,034.77

Creditors and Accruals - 15,246.50 305.38 0.06 15,551.93 13,344.61 10,924.66 9,271.36

TOTAL LIABILITIES - 211,430.25 4,687.78 148.59 216,266.61 191,921.41 168,690.94 148,265.91

TOTAL EQUITY AND LIABILITIES 1,418.77 211,430.25 4,687.78 148.59 217,685.38 193,117.63 169,821.46 149,448.65

Cash and Bank Deposits 282.71 12,630.77 2,024.31 6.69 14,944.49 18,176.50 11,718.60 14,332.44

Loans 328.89 15,665.25 407.41 - 16,401.55 13.601.82 11,446.19 9,295.72

Investments (Net) 510.59 174,618.59 2,014.51 130.16 177,273.84 151,424.13 137,342.38 118,024.91

Investment in properties - - - - - 2,437.23 2,331.22 2,337.74

Deferred Taxtation

Other Assets 296.58 8,362.59 236.43 11.73 8,907.33 7,353.47 6,913.69 5,397.10

Tangible assets - 153.05 5.12 - 158.17 124.48 60.38 60.74

Intangible assets

TOTAL ASSETS 1,418.77 211,430.25 4,687.78 148.59 217,685.38 193,117.63 169,821.46 149,448.65

ASSETS AT MARKET VALUE


Net Working Capital - - - - - - - -

Current Ratio - - - - - - - -

Total Assets / Net Worth - - - - - - - -

Break -up Value - - - - - - - -

ShareholdersFund

PakistanLife

Fund

OverseasLife

Fund

PensionFund

Aggregate

2009

Aggregate

2008

Aggregate

2007

Aggregate

2006


LIFE INSURANCE PUBLIC SECTORSTATE LIFE INSURANCE CORPORATION OF PAKISTAN

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Net Premium Income 27,303.13 1,040.84 22.94 28,366.91 22,695.27 18,716.70 15,991.57

Net Investment Income 20,659.78 490.08 13.93 21,163.80 18,696.91 17,103.56 14,678.55

Net Rental Income 274.15 - - 274.15 341.92 316.44 163.73

Total Net Income 48,237.07 1,530.92 36.87 49,804.86 41,734.11 36,136.69 30,833.85

Net Claims 15,334.93 373.78 14.87 15,723.59 12,778.77 10,782.85 8,912.10

Net Management Expenses 11,280.86 349.40 0.18 11,630.43 7,998.49 6,264.84 6,479.57

Total claims and expenditures 26,615.79 723.18 15.05 27,354.02 20,777.25 17,047.70 15,391.67

Excess of Income over Claims and Expenditure 21,621.28 807.74 21.82 22,450.84 20,956.86 19,089.00 15,442.18

Add : Policyholder Liabilities at Beginning of Year 171,033.80 3,559.38 126.71 174,719.90 155,416.83 136,719.88 122,007.60

Less : Policyholder Liabilities at End of the Period 192,535.87 4,357.52 145.61 197,038.99 (174,719.90) (155,416.83) (136,719.87)

Surplus/(Deficit) 119.22 9.61 2.92 131.75 1,653.79 392.04 729.91

Total Taxes (75.01) (75.01) 117.36 (54.53) (28.92)

Surplus (Deficit) After Tax 44.20 9.61 2.92 56.73 1,771.16 337.51 700.99

Movement in policy holder liabilities 21,502.06 798.14 18.89 22,319.09 19,303.06 18,696.96 14,712.26

Transfers to or from Shareholders' Fund (384.50) (5.17) - (389.67) (352.39) (256.94) (228.66)

Balance of Statutory Fund at Beginning of Year 173,763.04 3,569.38 126.71 177,459.13 156,737.30 137,959.77 122,775.18

Balance of Statutory Fund at End of the Period 194,924.80 4,371.95 148.53 199,445.29 177,459.13 156,737.30 137,959.77

Represented by:

Capital contributed by Shareholders' fund

Policyholders' liabilities 192,535.87 4,357.52 145.61 197,038.99 174,719.90 155,416.83 136,719.87Retianed earnings on other than participating business 2,388.94 14.44 2.92 2,406.30 2,739.23 1,320.47 1,239.90

Balance of Statuory Fund 194,924.80 4,371.95 148.53 199,445.29 177,459.13 156,737.30 137,959.77


Claims incurred to net premium - - - - - - -

Net profit to net premium - - - - - - -

Management expenses to net premium - - - - - - -

Commission to net premium - - - - - - -

Sholder'sFund

PakistanLife

Fund

OverseasLife

Fund

PensionFund

Aggregate

2009

Aggregate

2008

Aggregate

2007

Aggregate

2006



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Gain / (Loss) on sale of investments


Other revenue

Total Investment Income and other revenues 109.16 95.77 85.25 81.48

Less Expenses not attributable to statutory funds (2.42) (1.95) (1.70) (1.36)

Profit / (Loss) before appropiation of surplus to shareholders fund 106.74 93.82 83.55 80.12


Profit/(Loss) before tax 496.41 446.22 340.49 308.78

Extra Ordinary Items - Deferred Tax

Profit/(Loss) before tax and after extraordinay items 496.41 446.22 340.49 308.78

Taxation (177.65) (150.00) (109.97) (26.04)

Profit/(Loss) after tax 318.77 296.22 230.52 282.74

APPROPRIATIONS

Balance at commencement of the year 296.22 230.52 282.74 134.44

Profit after tax for the year 318.77 296.22 230.52 282.74Transfer to General ReserveTransfer to Bonus sharesProposed Paid Dividend 296.22 230.52 282.74 134.44

Balance upappropriated profit at the end of the year 318.77 296.22 230.52 282.74


Earning per share 28.98 26.93 25.61 31.41Cash Dividend - - - -Stock Divic=dend - - - -


2009

Aggregate

2008

Aggregate

2007

Aggregate

2006


250000

200000

150000

100000

50000

0


1600140012001000800600400200

0

Equity Growth

1800016000

1400012000100008000600040002000

0

Claims Incurred

30000

2500020000

15000

10000

5000

0


200000180000160000140000120000100000

80000600004000020000

0

Investments

20000

15000

10000

5000

0


350300250200150100

500

Net Profi t after tax Dividend and other appropr iations

2004 20072005 2006 2004 20072005 2006 2004 20072005 2006 2004 20072005 2006

2004 20072005 2006 2004 20072005 2006 2004 20072005 2006 2004 20072005 2006


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Issued, subscribed and paid up Share Capital 1,100.00 1,100.00 900.00 900.00 900.00

Reserves & Retained Earnings 96.22 96.22 230.52 282.74 134.00


Balance of statutory fund 173,763.04 3,569.38 126.71 177,459.13 156,737.30 137,959.78 122,776.00

Deferred Liabilities - 1,109.39 8.28 1,117.67 1,028.98 1,034.77 92.00

Creditors and Accruals - 13,126.19 218.39 0.04 13,344.61 10,924.66 9,271.36 8,115.00

TOTAL LIABILITIES - 187,998.61 3,796.05 126.75 191,921.41 168,690.94 148,265.91 130,983.00

TOTAL EQUITY AND LIABILITIES 1,196.22 187,998.61 3,796.05 126.75 193,117.63 169,821.46 149,448.65 132,017.00

Cash and Bank Deposits 279.08 15,827.38 2,068.02 2.02 18,176.50 11,718.60 14,332.44 14,315.00

Loans 298.38 12,966.48 336.96 - 13,601.82 11,446.19 9,295.72 7,796.00

Investments (Net) 425.22 149,668.62 1,214.94 115.35 151,424.13 137,342.38 118,024.91 101,774.00

Investment in properties - 2,437.23 - - 2,437.23 2,331.22 2,337.74 2,309.00

Deferred Taxtation

Other Assets 193.54 6,976.89 173.66 9.38 7,353.47 6,913.69 5,397.10 5,760.00

Tangible assets - 122.02 2.46 - 124.48 60.38 60.74 62.00

Intangible assets

TOTAL ASSETS 1,196.22 187,998.61 3,796.05 126.75 193,117.63 169,821.46 149,448.65 132,017.00

ASSETS AT MARKET VALUE


Net Working Capital - - - - - - - -

Current Ratio - - - - - - - -

Total Assets / Net Worth - - - - - - - -

Break -up Value - - - - - - - -

ShareholdersFund

PakistanLife

Fund

OverseasLife

Fund

PensionFund

Aggregate

2008

Aggregate

2007

Aggregate

2006

Aggregate

2005



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Net Premium Income 21,867.07 817.20 11.00 22,695.27 18,716.70 15,991.57 13,819.00

Net Investment Income 17,807.70 876.06 13.15 18,696.91 17,103.56 14,678.55 12,878.00

Net Rental Income 341.92 341.92 316.44 163.73 153.00

Total Net Income 40,016.70 1,693.26 24.15 41,734.11 36,136.69 30,833.85 26,850.00

Net Claims 12,534.12 231.02 13.63 12,778.77 10,782.85 8,912.10 7,654.00

Net Management Expenses 7,718.99 279.39 0.12 7,998.49 6,264.84 6,479.57 5,017.00

Total claims and expenditures 20,253.11 510.40 13.74 20,777.25 17,047.70 15,391.67 12,671.00

Excess of Income over Claims and Expenditure 19,763.59 1,182.86 10.41 20,956.86 19,089.00 15,442.18 14,179.00

Add : Policyholder Liabilities at Beginning of Year 152,929.40 2,371.13 116.30 155,416.83 136,719.88 122,007.60 108,056.00

Less : Policyholder Liabilities at End of the Period (171,033.80) (3,559.38) (126.71) (174,719.90) (155,416.83) (136,719.87) (122,007.00)

Surplus/(Deficit) 1,659.19 (5.39) - 1,653.79 392.04 729.91 228.00

Total Taxes 108.92 8.44 - 117.36 (54.53) (28.92) 36.00

Surplus (Deficit) After Tax 1,768.10 3.05 - 1,771.16 337.51 700.99 192.00

Movement in policy holder liabilities 18,104.40 1,188.25 10.42 19,303.06 18,696.96 14,712.26 13,951.00

Transfers to or from Shareholders' Fund (348.13) (4.26) - (352.39) (256.94) (228.66) (176.00)

Balance of Statutory Fund at Beginning of Year 154,238.66 2,382.34 116.30 156,737.30 137,959.77 122,775.18 108,808.00

Balance of Statutory Fund at End of the Period 173,763.04 3,569.38 126.71 1 77,459.13 156,737.30 137,959.77 122,775.00

Represented by:

Capital contributed by Shareholders' fund

Policyholders' liabilities 171,033.80 3,559.38 126.71 174,719.90 155,416.83 136,719.87 122,008.00Retianed earnings on other than participating business 2,729.23 10.00 - 2,739.23 1,320.47 1,239.90 767.00

Balance of Statuory Fund 173,763.04 3,569.38 126.71 177,459.13 156,737.30 137,959.77 122,775.00


Claims incurred to net premium - - - - - 55.72 55.00

Net profit to net premium - - - - - 1.39 1.39

Management expenses to net premium - - - - - 40.50 36.00

Commission to net premium - - - - - - -

Sholder'sFund

PakistanLife

Fund

OverseasLife

Fund

PensionFund

Aggregate

2008

Aggregate

2007

Aggregate

2006

Aggregate

2005



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Gain / (Loss) on sale of investments


Other revenue

Total Investment Income and other revenues 95.77 85.25 81.48 74.00

Less Expenses not attributable to statutory funds (1.95) (1.70) (1.36) (2.00)

Profit / (Loss) before appropiation of surplus to shareholders fund 93.82 83.55 80.12 72.00


Profit/(Loss) before tax 446.22 340.49 308.78 248.00

Extra Ordinary Items - Deferred Tax

Profit/(Loss) before tax and after extraordinay items 446.22 340.49 308.78 148.00

Taxation (150.00) (109.97) (26.04) (114.00)

Profit/(Loss) after tax 296.22 230.52 282.74 134.00

APPROPRIATIONS

Balance at commencement of the year 230.52 282.74 134.44 113.00

Profit after tax for the year 296.22 230.52 282.74 134.00Transfer to General ReserveTransfer to Bonus sharesProposed Paid Dividend 230.52 282.74 134.00 113.00

Balance upappropriated profit at the end of the year 296.22 230.52 282.74 134.00


Earning per share 26.93 25.61 31.41 14.94Cash Dividend - - - -Stock Divic=dend - - - -


2008

Aggregate

2007

Aggregate

2006

Aggregate

2005


250000

200000

150000

100000

50000

0


1250

12001150110010501000950900

Equity Growth

14000

12000100008000600040002000

0

Claims Incurred

25000

2000015000

10000

5000

0


16000014000012000010000080000600004000020000

0

Investments

20000

15000

10000

5000

0


350300250200150100

500

Net Profi t after tax Dividend and other appropr iations

2004 20072005 2006 2004 20072005 2006 2004 20072005 2006 2004 20072005 2006

2004 20072005 2006 2004 20072005 2006 2004 20072005 2006 2004 20072005 2006


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A SYNOPSIS OF THE

PROCEEDINGS OF FAIR

INTERNATIONAL INSURANCE

CONFERENCE ON POLITICAL VIOLENCEBy

Dr. Mumtaz A. Hashmi

A SYNOPSIS OF THE

PROCEEDINGS OF FAIR

INTERNATIONAL INSURANCE

CONFERENCE ON POLITICAL VIOLENCEBy


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Prologue

At a time, when Pakistan has been going through a very difficult time for it being the fore-runner in thewar against terrorism, indeed the decision to hold an international conference on Political Violence wasa bold avant-garde initiative by the council of Pakistan Insurance Institute (PII). Federation of Afro AsianInsurers and Reinsurers (FAIR) supported the event by encouraging the foreign delegates to make theevent purposeful by their presence in good number. Conference success could be gauged from the full-house show right from the welcome dinner through the conference till the ceremonial vote of thanks on

the afternoon of the closing day of the conference.

While there was a lot to learn for the eager attendees, the kick start of the formal conference sessions withthe thundering folk drum-beats of Punjab and the cultural show after the gala dinner, was over whelminglyenjoyed by all the delegates, specially the foreign visitors.

Enthusiastic ownership and dedicated indulgence of Tahir Ahmed, Chairman, Insurance Association ofPakistan, and encouragement and support of Saifuddin Zoomkawala, Chairman, PII together with resilienceand untiring efforts of Farzana Siddiq, Executive Director, PII for conceptualizing, organizing and managingan unprecedented mega event in the history of Pakistan's insurance industry, deserved a thumping applause.

The conference commenced with recitation form Holy Quran, followed by National Anthem and an

absorbing documentary depicting the real image of the vibrant Pakistan (much appreciated by the foreignvisitors).

Following, welcome address by Saifuddin Zoomkawala, Chairman, PII, Salman A. Shaikh, Chairman,Securities and Exchange Commission of Pakistan (SECP) as a guest of honor, in his key note speechhighlighted insurance related recent legal reforms, and emphasized on the availability of solutions to coverloss or damage due to terrorism.

Highly interactive discussions between the delegates and the panel of speakers of each session, followedthe respective sessions. Though few presenters did suggest solutions in respect of terrorism risk via creationof a mandatory risk-pool, having active participation from the industry and patronage / facilitation (includingfinancial support) from Pakistan's Government, however the conference ended without making any formalrecommendations.

In the following paras, the writer, being one of the delegates, has endeavored to summarize hisunderstanding of each presentation.

Morning Session - 12 April 2010

Executive Director (Insurance), SECP - Nasreen Rashid (Ms) was the chairperson of the session.

Andrew Bauckham, Chaucer Syndicates, Lloyds of London delivered the first presentation of theconference on the topic 'Political Violence Insurance - Underwriting Considerations in a Dynamic PakistanIndustry.' A comprehensive thesis like speech started with a brief on Chaucer's history of underwritingPolitical Violence, its current improved underwriting performance and sizeable increase in its capacity to

634, Bauckham shared Chaucer's future plan to reach 1bn capacity by 2012, with no compromise inits underwriting philosophy and standards.

A SYNOPSIS OF THE PROCEEDINGS

OF FAIR INTERNATIONAL INSURANCE CONFERENCE

ON POLITICAL VIOLENCE HELD IN APRIL 2010


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He talked about recent developments in London market, and for high valued assets in Pakistan, indicatedavailability of capacity upto US $ 250m.

After highlighting the coverage available, Bauckham moved on to demonstrate Chaucer's commitmentto Pakistan (one third of its Political Violence account from Asia, originates from Pakistan)

Dilated on reinsurance implications and future issues for political violence insurers.

With regard to Pakistan, Bauckham, as an underwriter, at the end of his talk, gave a detailed SWOTanalysis, focusing on textile industry (mainstay of the Pakistan's economy).

John Richard Thorpe, AON Benfield Asia Pte Ltd spoke on 'Terrorism Pools - Drawbacks & Benefits'.Thorpe commenced his talk with a brief introduction of self and his role and involvement in the formationof the national pool schemes in respect of Earthquake risk in Taiwan and Indonesia.

Explained the word 'Terrorism' and presented a history of Terrorism associated incidents worldwide.

According to Thorpe, 9/11 was the turning point, where after the insurers withdrew terrorism cover frommost of the policies, and majority of terrorism pools formed thereafter, were created through cooperation

between local insurers associations and the respective governments.

Dwelling on Pakistan, highlighted sectarian and religious violence being the main causal factors forenhanced terrorism, and gave historical background with an analysis of the incidents.

While elaborating on the terrorism coverage available in Pakistan, Thorpe made a case for the need toconsider a market pool solution for Pakistan. Having the basic requirements i.e. market demand for the

cover and insurers support for such a scheme, fulfilled, Thorpe was of the view that Pakistan market shouldimmediately move towards establishing the terrorism pool.

Siegfried M. Busch, Swiss Reinsurance Company Limited shared his thoughts on 'The Pakistani TerrorPool - A reinsurer's view'. Discussing terrorism in the context of its insurability, Busch advocated the caseof private and public partnership for formation of a pool to cover terrorism, and cited existence of such

pools in other countries.

Focusing on creation of a terror pool in Pakistan, the requirements of and expectations from public andprivate sectors were dwelt-on, and to successfully manage such a pool, various aspects of the proposedmodel were analyzed by the speaker. According to Busch, consistent viability of the pool would dependon affordable pricing and maximum possible participation of the risks.

In Busch's considered concluding remarks, insuring terrorism by private sector would not be easy on itsown, however public and private sectors together could make it possible.

Jagath Alwis, Ceylinco Insurance plc's presentation titled 'Sri Lanka - Case Study on Terrorism InsurancePools'. Alwis commenced his talk with sharing of socio-economic facts about Sri Lanka, and then portrayed

painful picture of over 30 years of human miseries and battered economy of Sri Lanka, inflicted by theterrorist activities.

While informing about creation of fund to cover SRCC by Sri Lankan Government as a consequence tothe reinsurers' refusal to continue the cover in 1985 after bad hit from losses due to 1983 communal riots,Alwis talked about modus operandi to manage the fund. Surge in the violence/damage/destruction throughout

Sri Lanka in late eighties by the leftist - rebels, the coverage under the said fund, on the industry's request,was extended to provide limited cover against terrorism & sabotage.

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Towards the end of his presentation Alwis shared the impact of the favorable claims experience, whichled to gradual accumulation of funds, exceeding US $ 75m. For the future, due to the successful elimination

of terrorists' leadership, terrorism premium rate effective 17 April 2010 had reportedly been reduced by75%, and for t

year book 2009-10.pdf

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