DIRECTOR'S REPORT TO THE SHAREHOLDERS

The Directors are pleased in presenting the un-audited accounts, duly reviewed by the auditors of the Company, for the half-year ended June 30, 2003.

Despite the uncertainties persisting in the neighbouring countries the economy is moving in the right direction and foreign exchange reserves are growing, as government economic policy has remained consistent. The high financial liquidity in the market, the lowering of return on Government securities and bank rates and generally better performance of listed companies has driven stock market indices to an all time high.

Gross premium written for the half-year ended June 30, 2003 was Rs. 204 million against Rs. 162 million for the corresponding period last year showing an increase of 26% as a result of both the addition of new customers and increased premium from the existing customers. The share of Fire, Marine and Motor & Miscellaneous classes of business of 39%, 23% and 38% respectively has improved with a better product mix of the risk profile. The growth achieved in these segments was 27%, 36% and 20% respectively for Fire, Marine and Motor & Micsellaneous, which is also encouraging since the growth in Fire and Marine was higher than the growth in Motor & Miscellaneous business. Net prmium earned and Commission at Rs. 100 million increased by Rs. 15 million or 18% against Rs. 85 million for the corresponding period last year. Taking into account the generally sliding rates of insurance premium, this increasing was considered encouraging by your Directors.

Net Claims at Rs. 24.9 million increased by Rs. 9.4 million or 61% against Rs. 15.5 million for the corresponding year. Claims increased in all departments and these can be attributed to higher retention and increased number of claims because of the general practice of no loading of premium on policies against a claim. Management expenses increased from Rs 17 million to Rs. 19.5 million (or 15%) and were in line with growth.

Underwriting (UW) business contributed a profit of Rs. 58 million against Rs. 54 million for the corresponding period last year with the Second Quarter profit being Rs. 22.5 million against Rs. 4.1 million for the corresponding period last year.

Investment income for the half-year was at Rs. 107 million, increased by Rs. 28 million over the same period last year as a result of lower diminution in value of investments and higher dividend income. Mark up/finance charges at Rs. 2.5 million were also less than the same period last year at Rs. 4.0 million, because of decline in rate of mark up on loan. The Company made a provision of 7.1 million for diminution in the value of investments against Rs. 22.2 million for the corresponding period last year and general and administrative expenses increased from Rs. 7.3 million to Rs. 10.5 million, which were in line with the budget and growth of the business.

Operations for the half-year under review resulted in a profit before tax (PBT) of Rs. 153 million against Rs. 122 million for the corresponding period last year, an increase of 25%. Profit after tax was Rs. 130 million against Rs. 102 million for the corresponding period last year and the is hopeful that this trent in growth would continue in the rest of the year.

Earning per share (basic) amounted to Rs. 10.62 against Rs. 28 for the same period last year, showing an increase of Rs. 2.34 per share and shareholders' equity increased from Rs. 524 million as at December 31, 2002 to Rs. 665 million as at June 30, 2003. The Company made investments valuing Rs. 57 million in shares and TFCs, during the half year under review and the market value of the quoted investment Portfolio rose to rs. 3.2 billion as at June 30, 2003 against Rs. 2.4 billion as at December 30, 2002 as a result of both the additional investments as well as unprecedented increase in the KSE 100 index. Total assets of the Company as at June 20, 2003 were at Rs 992 million against Rs. 895 million as at December 30, 2002, showing a growth of Rs. 97 million.

The Company's branch network now consists of six branches in the major cities of the Country as the management endeavours to provide better services to a larger customer base and to enhance market share. The campaign for brand awareness of "IGI" has been continued successfully and a positive change in the market perception of the Company has been noticed.

The management and staff of IGI are committed to achieve better results and hope to end up the year with excellent growth over the last year.

Karachi: June 30, 2003