PakSearch.com - Pakistan's Best Business site with Annual Reports, Laws and Articles

For business information, annual reports, laws, ordinances, regulations and articles.

EFU GENERAL INSURANCE LTD.

Annual Report 1997

Network of EFU Office

Mardan

Abbottabad

Peshawar

Islamabad

Rawalpindi

Sargodha

Gujranwala

Sialkot Faisalabad

Lahore

Multan

Quetta

Goth Machi

Rahim Yar Khan

Sukkur

Karachi

Hyderabad

Contents

Company Information

Chairman

ROSHEN ALI BHIMJEE

Managing Director & Chief Executive

SAIFUDDIN N. ZOOMKAWALA

Directors

SULTAN AHMAD

ABDUL REHMAN HAJI HABIB

JAHANGIR SIDDIQUI

WOLFRAM KARNOWSKI

RAFIQUE R. BHIMJEE

MUNEER R. BHIMJEE

HASANALI ABDULLAH

Corporate Secretary

HASANALI ABDULLAH

Legal Advisor

MOHAMMAD ALI SAYEED

Auditors

HYDER BHIMJI & CO.

Chartered Accountants

Karachi

TASEER HADI KHALID & CO.

Chartered Accountants

Karachi

Registered Office

11/4, Shahrah-e-Pehlavi, Peshawar

Main Offices

Qamar House, M.A. Jinnah Road

Karachi.

9th Floor, EFU House,

6-D Jail Road Lahore.

Liaison Office

London (U.K.)

Overseas Offices

Jeddah (Saudi Arabia)

Nicosia (Cyprus}

Management

Managing Director & President

SAIFUDDIN N. ZOOMKAWALA

Deputy Managing Directors

M. FASIHUDDIN, M.A. LL.B., F.C.I.I.

HASANALI ABDULLAH, F.C.A.

Executive Directors

ARSHAD ABDULLAH,

M.B.A.

MAHMOOD LOTIA,

A.C.I.I.

Deputy Executive Directors

MIRZA FAIZ AHMED

QAMBER HAMEED, LL.B., LL.M

Senior Executive Vice Presidents

A. RAZZAK POLANI

AFAQ AHMAD, A.C.I.I.

AKBAR AWAN

JAFFER DOSSA

JAVID NIAZ KHAN, M.A.

KIFAYAT H. MALICK, M.A., A.M.A (U.S.A.)

S. K. AHMAD, M.A.

S'HAUKAT SAEED AHMAD

SYED AHMAD A. HAQ, M.Sc.

Executive Vice Presidents

A. K. MERCHANT, LL.B., F.C.A.

A. REHMAN KHANDIA, A.C.I.J.

ANIS A. SHEIKH

KHALID ALIM, M.S. (I.A.)

MAHBOOB PARVEZ

MAQBOOL SAEED

SYED MEHDI IMAM, M.A.

Senior Vice Presidents

Vice Presidents

MARKETING EXECUTIVES'

ABDUL WAHID

SHAFAAT H. MALtCK, M.B.A.

Senior Executive Vice Presidents

AFTAB HUSSAIN ZAIDI, M.A.

SHAHARYAR JALEES, M.A.

ALTAF QAMRUDDIN GOKAL, A.C.A.

SULTAN AZIZ, M.A.

ABDUL WAHAB POLANI

DARIUS H. SIDHWA, F.C.I.I.

SYED ANSARULLAH

MRS. NARGIS MFHMOOD

GHULAM RASOOL IMTIAZ, A.C.I.I.

SYED JAWEED ENVOR

HAROON HAJI SATTAR DADA

IQBAL LODHIA

SYED WAQAR AZEEM, M.A.

MAHMOOD JAFRI

THOMAS LEO FFRNANDEZ

Executive Vice President

MOHAMMAD OSMAN RAJKOTI

ZARRAR IBN ZAHOOR BANDEY

ALAMGIR ANWAR SHFIKH

MOHD. HUSSAIN HIRJI, M.B.A., F.C.I.I.

MUBASHIRULLAH KHAN

Assistant Vice Presidents

Senior Vice Presidents

NUDRAT ALl

S. M. ARIF, B.E.

ABDUL HAFEEZ

AGHA S. U. KHAN

S. M. HAlDER, M.Sc.

ABDUL RAZZAK

KHALID SALEEM, M.A.

SALMAN RASHID

AFTAB AHMED SIDDIQUI

QAMAR SALEEM

AFTAB-. FAKHRUDDIN, B.E.

USMAN A. GHANI

Vice Presidents

ALI KAUSAR

AMJAD ZAHOOR

Vice Presidents

A. R. RIAZ

ANWAR AHMED KHAN

ABDUL HAMEED QURESHI, M.Sc.

ASLAM A. GHOLE, A.C.I.S.

AHSAN K. HAQ

BABAR A. SHEIKH

ASLAM KHALIQ, M.A.

ALl SAFDAR

FAKHRUL HAQ

ATTA-UL-HAQ KHAN

ANIS MEHMOOD

IRSHAD MEHMOOD RYAZ, A.C.I.I.

AZIZ H. USMAN

HUMAYOON SHEHZADA

JAVED AKHTAR SHEIKH, B.B.A.

JAWAHAR ALl KASSIM

KAMRAN RASHID

JAWED IQBAL BARRY

KHOZEMA T. HAlDER MOTA

K.M. IQBAL

JAVED SARFARAZ WARRAICH

M.A.U. LAKHANI

RIZWAN HUSSAIN

JEHANZEB KARAMAT

MANZOOR HUSSAIN

SHAHID RAZA

KAUSAR ALl ZUBERI

MIR BABAR ALl

SHAN-E-RAZA ZAIDI, M.A.

KAZI IKHTESAS AHMAD

MOHAMMAD ARIF BHATTI

SIDDIQUE GODtL

KHALID USMAN

MOHAMMAD IQBAL MEMON, M.A.

KHURRAM ALl KHAN, B.E.

MOHAMMAD NADEEM IRSHAD.

Assistant Vice Presidents

M. SHEHZAD HABIB

MOHAMMAD SOHAIL

MAHMOOD ALl KHAN, M.A.

MOHAMMAD SOHAIL SHAMS

FARID KHAN

MOHAMMAD ASIF

MUHAMMAD AKRAM KHOKHAR

GHULAM RAZA

MOHAMMAD BASHIR

MUHAMMAD LATIF BHATTI

MRS. GUL HASAN, M.A.

MOHAMMAD HUSSAIN

N.D. MALIK

MIAN IKRAM ELAHI

MOHAMMAD SALEEM

QASIM ALl MOHAMMAD

MOHAMMAD IRFAN KOTHAWALA

MOHAMMAD UMER, M.A.

RANA ALTAF ZAHEER KALEEM

MOHD. MOHSINULLAH, M.B.A.

MOHAMMAD YOUNUS

RASHID AKMAL, M.B.A.

MUHAMMAD SALIM MALIK

MUHAMMAD ILYAS KHAN, A.C.I.I.

ROSS MASOOD, M.B.E.

QAMER-UL-HASSAN ANSARI

NASEERUDDIN AHMFD

S.M SHAMIM

RIZWAN SIDDIQUE

NAEEM MUHAMMFD HANIF

SYED RAYAZ MEHDI, B.E.

SYED ASEEM AHMED

NAJAM IRSHAD

SYED SALAHUDDIN, A.C.I.I

SYED BAQAR HASAN, M.A.

RIZWANUL HAQ

TAYYAB HASSAN GARDEZI, M.Sc.

SYED ATHAR ABBAS

ZAFAR ALl KHOKHAR, M.A.

SALEEMULLAH TAHIR

ZAKARIA SULEMAN

Notice of Meeting

Notice is hereby given that the 65th Annual General Meeting of the Shareholders of

E F U General Insurance Ltd. will be held at the Registered Office of the Company at

11/4 Shahrah-e-Pehlavi, Peshawar on Thursday June 25, 1998 at 11:00 a.m. to transact the

following business:

ORDINARY BUSINESS:

1. To confirm the minutes of the 64th Annual General Meeting held on June 27, 1997.

2. To receive and consider the Audited Accounts for the year ended December 31, 1997

3. To consider and if thought fit to approve the payment of Dividend for the year ended

December 31, 1997.

4. To appoint Auditors for the year 1998 and fix their remuneration.

SPECIAL BUSINESS:

5. To consider and if thought fit to pass the following resolutions with or without modification(s)

as Ordinary Resolution:

RESOLVED that a sum of Rs. 20,000,000 out of the Company s Reserve for the issue of

Bonus Shares be capitalised and applied to the issue of 2,000,000 Ordinary Shares of

Rs. 10/- each and allotted as fully paid up Bonus Shares to the Members who are

registered in the Books of the Company on June 19, 1998 in the proportion of one new

share for every five existing Ordinary SBares held and that such new shares shall rank pari

passu with the existing Ordinary Shares of the Company.

That in the event of any Member holding shares which are not an exact multiple of five, the

Directors are hereby authorised to consolidate and sell in the stock market such fractional

entitlement and to pay the net sale proceeds when realised to the Members entitled to the same.

That for the purpose of giving effect to the foregoing, the Directors be and are hereby

authorised to give such directions as may be necessary and as they deem fit to settle any

questions or any difficulties that may. arise in the distribution of the said new shares or in

the payment of the sale proceeds of the fractions."

6. To transact any other business with the permission of the Chair.

NOTES:

1. A member entitled to attend and vote at the General Meeting is entitled to appoint another

member as a fox to attend and vote in respect of him. Forms o7 proxy must be deposited at the

Company's Registered Office not later than 48 hours before the time appointed for the meeting.

2. The Share Transfer Books of the Company will. be closed from June 20, 1998 to

June 30, 1998 (both days inclusive).

3. Members are requested to communicate to the Company of any change in their addresses.

STATEMENT UNDER SECTION 160 OF THE COMPANIES ORDINANCE 1984:

Your Directors have recommended the issue of Bonus Shares in the proportion of one new share for

every five existing Ordinary Shares held on June 19, 1998. The Directors are interested in this business

to the extent of their entitlement to Bonus Shares as Shareholders.

Report Of The Directors To Members

The Directors of your Company are pleased to present to you the

Sixty- fifth Audited Accounts of the Company for the year ended

December 31, 1997.

The year 1997 registered growth of 15% by underwriting Gross

Premium of Rs. 1.6 billion compared to Rs. 1.4 billion last year

and the Net Premium also rose by 15 % to Rs. 909 M compared

to Rs. 792 M in 1996.. This growth was achieved with very

hard and extraneous efforts of the field force and management

team. This achievement in present economic conditions in the

country was impressive.

The deteriorating law and order condition throughout the country

impacted the growth and profitability of the Company. Your

company continued to make all possible' efforts to control and

minimise the loss ratios by improving its underwriting policies

but the claims on account of thefts, dacoities and infidelity

continue to adversely affect Motor and Miscellaneous Departments'

results,

You would be glad to know that the construction of the first

building (EFU House, Lahore of your Company was completed

during the year. The building is a unique piece of architecture

and categorises amongst the best buildings of the country.

The return from the building has started coming, which during

1997 has accrued for few months on a portion of the building.

The rental income in 1998 would form major part of return on

investments. This 13 stroreyed (inclusive of parking) building

has been equipped with lifts, Electrical Sub-station, stand by

Generator, Air-conditioning System, Cooling towers and Glass

manufactured by internationally reputed companies.

Despite all possible efforts the expenses continue to increase

unabated due to prevalent inflationary trends. Your company

has started taking strict steps to control costs through economy

drive at all levels. Further more stringent budgetary, monitoring

and cost control follow up systems have been put in place.

The Underwriting Profit for the year 1997 was Rs. 46.8 M as

compared to Rs. 12.7 M last year. The strain during the year on

account of Reserve for Un-expired Risks was Rs. 46.6 M which

rose to Rs. 363.6 M by Decem her 1997.

The Department wise performance was as follows:-

FIRE DEPARTMENT

The Net Premium of this department was Rs. 181.5 M as against

Rs. 149.8 M last year. The Claims ratio was 24.8 % compared to

22.9 % in 1996. The Underwriting Profit improved by 53 % at

Rs. 46.7 M compared to Rs. 30.5 M in 1996.

MARINE DEPARTMENT

The Net Premium of this department was Rs. 186 M almost the

same as last year. The Claims ratio was 54.1% compared to

52.7 % in 1996. There was underwriting Profit of Rs. 1.7 M as

against Profit of Rs. 0.7 M last year.

MISCELLANEOUS DEPARTMENT

The Net Premium of this department increased to Rs. 541.6 M

as against Rs. 456.8 M in 1996. The Claims ratio was 58.3 %

as against 60.7 % in 1996. There was Underwriting Loss of

Rs. 1.6 M compared to Loss of Rs. 18.5 M in 1996.

Other comments

After providing Rs.25.5 M for taxation, the profit for the year

under report amounted to Rs. 48.1 M which your Directors

propose to appropriate as under:

Rupees

Profit after tax

48 149 974

Add: Unappropriated profit

brought forward

120 941

-----------

Profit available for appropriation

48 270 915

Less: Proposed Dividend @ 25 %

25 000 000

Transferred to Proposed issue

of Bonus Shares

20 000 000

Transferred to General Reserve

3 000 000

----------

Profit appropriated

48 000 000

----------

Unappropriated Profit carried forward

270 915

=========

Dividend

Your Directors have pleasure in recommending dividend of

Rs. 2.50 per share (25%) and issuance of one bonus share for every

five shares held by the Shareholders of the Company whose names

appear in the Share Register of the Company at the close of business

on June 19, 1998.

Investment

The equity investment portfolio of your company continues to grow.

During the year your company realised Capital Gains to the tune of

Rs. 53.4 M. Even after reaching Capital Gains of Rs. 53.4 M there

was un-realised appreciation of Rs. 71 M (i.e. 43.8 %) as on December

31, 1997 compared to Rs. 65 M as on December 31, 1996. The Equity

Portfolio rose to Rs. 162 M as on December 31, 1997.

You are aware that appeals relating to the rate of tax on Dividend

Income had been filed with the Supreme Court of Pakistan and

the hearings were held in April of 1997. The Board is pleased

to inform that the appeals have been decided in favour of your

company and the Supreme Court of Pakistan has held that the

tax on Dividend Income in case of insurance companies is the

same as is applicable for other Public limited companies. In

view of the sufficient reserves and the opinion of the tax consultants,

your company had not made any additional provision for taxation

when the department had changed its opinion and started charging

the same rate of tax on dividend income as applicable to business

income. The Finance Act 1996 had granted exemption on

Capital Gains from Sale of Shares, which has not been extended

in respect of this year so far. Representations have been made

to the Ministry of Finance and Central Board of Revenue by the

Insurance Association of Pakistan and the Stock Exchanges to

treat the insurance Industry at par with others on the matter of

taxation/exemption of Capital Gains.

Further you would be pleased to note that the appeals for past

many years which were pending before the Income Tax Appellate

Tribunal have all been decided. As consequence of the decision

of the Supreme Court and the Income Tax Appellate Tribunal,

refunds have arisen to the extent of Rs. 96 M.

Messrs. Hyder Bhimji & Co. and Messrs. Taseer Hadi Khalid

& Co. Chartered Accountants, retire and being willing to

continue are recommended for reappointment as Joint. Auditors

of the Company for the ensuing year.

It is a matter of deep gratification for your Directors to place

on record their appreciation of the efforts made by officers,

field force and staff who had contributed to the growth of the

Company and the continued success of its operations.

We would also like to express our sincere thanks to our

esteemed clients, Department of Insurance, Pakistan Insurance

Corporation and all our Re-insurers particularly Munchener

Ruckversicherungs- Gesellschaft, Hannover Ruckversicherungs

AG, Assicurazi9ni Generali S.p.A., Arab Insurance Group

(B.S.C) for the wholehearted co-operation extended to us

throughout the year.

Summarised Accounts

(Rupees 000}

1997

1996

Gross Premium

1 617 133

1 403 659

=========

Net Premium

908 938

792 319

Net Claims

( - )

461 207

( - )

409 608

Expenses & Commission

( - )

403 947

( - )

360 249

Un-expired Risks (net)

( - )

46 648

( - )

57 490

Investment & Other Income

76 5 t 4

90 415

Profit before Tax

73 650

55 387

Provision for Taxation

( - )

25 500

( - )

2 500

Profit brought forward from previous year

121

234

Proposed Dividend

( - )

25 000

( - )

40 000

Transferred to Proposed issue of Bonus Shares

( - )

20 000

Transferred to General Reserve

( - )

3 000

( - )

13 000

-----------

Un-appropriated Profit

271

121

=========

BALANCE SHEET- Liabilities

Share Capital

100 000

General Reserve

90 000

87 000

Reserve for Proposed issue of Bonus Shares

20 000

Other Reserves

14 162

Un-appropriated Profit

271

121

Reserve for Un-expired Risks

363 575

316 928

Liabilities & Provisions

486 653

494 168

-----------

1 074 661

1 012 379

BALANCE SHEET - Assets

=========

Loans

898

949

Investments

164 219

153 065

Leasehold Land and Buildings

317 936

267 437

Current Assets

314 075

323 842

Cash & Bank Balances

198 031

185 769

Administrative Fixed Assets

79 502

81 317

-----------

1 074 661

1 012 379

=========

Gross and Net premium increased by 15%

Reserve for Unexpired Risks increased by Rs. 47 M to Rs. 364 M

General Reserve increased to Rs. 90 M

Investments in Real Estate increased by Rs. 51 M to Rs. 318 M

Investments in Shares increased to Rs. 162 M

Total Assets increased to Rs. 1 075 M

Auditors' Report To The Members

We have audited the annexed Balance Sheet of E F U GENERAL

INSURANCE LIMITED as at 31 December, 1997, the Fire, Marine

and Miscellaneous Insurance Revenue Accounts, the Profit and Loss

Account, the Profit and Loss Appropriation Account and the Statement

of Changes in Financial Position together with the notes forming

part thereof for the year then ended, in which are incorporated the

certified returns from the branches including Jeddah, Cyprus and

Export Processing Zone branches, and we state that we have

obtained all the information and explanations which to the best of

our knowledge and belief were necessary for the purpose of our

audit and, after due verification thereof, we report that:

(a) in our opinion, proper books of account have been kept by

the Company as required by the Companies Ordinance,

1984;

(b) in our opinion:

i) the Balance Sheet, the Fire, Marine and Miscellaneous

Insurance Revenue Accounts, the Profit and Loss Account

and the Profit and Loss Appropriation Account together

with notes thereto have been drawn up in conformity

with the provisions of the Insurance Act, 1938 and are in

agreement with the books of account and are further in

accordance with the accounting policies consistently applied

except for the change noted in note 2 (h) with which we

concur;

ii} the expenditure incurred during the year was for the

purpose of the Company's business;

iii) the business conducted, investments made and expenditure

incurred during the year were in accordance with the

objects of the Company;

to the explanations given to us and as shown by the books

of the Company, the Balance Sheet, the Fire, Marine and

Miscellaneous Insurance Revenue Accounts, the Profit and

Loss Account and the Profit and Loss Appropriation Account

together with the notes thereto give the information required

by the Insurance Act, 1938, in the manner so required and

the Balance Sheet, the Profit & Loss Account and the Statement