Rupees in Million

Rs. 164.8 M                                                  Rs. 196.6M

FIRE DEPARTMENT

The Gross Premium written by Fire Department at Rs. 96 million increased by 8% over Rs. 89 million of the last year. Net Premium and Commission at Rs. 34 million decreased by 26% against Rs. 46 million of 2000, because of the lower gross premium income from some of the companies due to the change of their accounting year and because of the premium reserve reduced from 40% to 20%. Net losses at Rs. 4.8 million increased by 10% compared to the last year. Contribution to profitability, by this department, at Rs. 22 million also decreased by 25% against Rs. 29 million in the previous year.

MARINE DEPARTMENT

The Gross Premium written by Marine Department at Rs. 65 million increased by 21% over Rs. 54 million of the last year. Net Premium and Commission at Rs. 46 million increased by 18% against Rs. 38 million of the last year. Net losses at Rs. 6 million remained at the level of the last year. Contribution to profitability, by this department, at Rs. 31 million increased substantially by 23% against Rs. 26 million of the last year.

MOTOR AND MISCELLANEOUS DEPARTMENT

The Gross Premium written by Motor and Miscellaneous Department at Rs. 86 million increased by 2% over Rs. 84 million of 2000. Net Premium and Commission at Rs. 63 million increased by 4% against Rs. 61 million of 2000. Net losses at Rs. 32 million increased substantially by 48% against Rs. 22 million of 2000. The competition has adversely affected the margins in this department. Contribution to profitability, by this department, at Rs. 20 million, although decreased by 11% against Rs. 22 million of the last year, but it was satisfactory in view of the prevailing market condition.

INSURER FINANCIAL STRENGTH (IFS) RATING

During the year, The Pakistan Credit Rating Agency (PACRA) completed the rating assignment for the year 2000. The said agency has changed the nomenclature of rating to better reflect the methodology of insurance rating, which takes into account the overall financial strength of the insurer rather than its ability to pay insurance claims only. This change is in line with their international partners - FITCH. The said rating agency has awarded "AA" (Double A) rating of Insurer Financial Strength (IFS). Your Company continues to maintain the highest rating amongst the local general insurance companies, which is a matter of great satisfaction both for the clients and the Company.

The Insurer Financial Strength (IFS) Rating of "AA" (Double A) denotes as under:
"Insurers are viewed as possessing VERY STRONG capacity to meet policyholder and contract obligations. Risk factors are modest, and the impact of any adverse business and economic factors is expected to be very small."

INCOME FROM INVESTMENTS

Income from dividends on investments, profit on balances with banks and TFCs, at Rs. 123 million against Rs. 88 million of the last year was substantially better by 42%. The dividend income at Rs. 106 million increased by 35% against Rs. 78 million of the last year. Profit from deposits at Rs. 17 million increased by 112% against Rs. 8 million of the last year. The investment activity has continued to be the main stream of profits of the Company.

LONG TERM INVESTMENTS

The Company has continued strengthening its portfolio investments and made further investments in shares of blue chip companies and Term Finance Certificates (TFCs) amounting to Rs. 54 million. Market value of quoted investments as at December 31, 2001, was Rs. 1,668 million as against Rs. 1,506 million for the last year. The management has made full provision for diminution in the value of its investments as was done last year, taking full care of risks in the investment portfolio. The diminution in the value of its investments for the year 2001 amounted to Rs. 32 million against Rs. 86 million of the last year.

SHORT TERM INVESTMENTS

The short-term investments in shares of listed companies amounted to Rs. 9 million at cost against Rs. 6 million in the year 2000. There was a loss of Rs. 0.086 million on sale against a profit of Rs. 1.0 million in the last year. Moreover, the diminution in the value of such investments at Rs. 2.395 million against Rs. 0.4 million for the last year, was substantially higher, because of the bearish trend in the stock market. It is only recently that the stock market has made substantial gains, which will be reflected in the first quarterly results.

INSURANCE ORDINANCE 2000

The Insurance Ordinance 2000 was promulgated on 19th August 2000. This replaces the previous Insurance Act of 1938. Insurance rules have been notified to elicit comments from the public. It is hoped that the rules shall be promulgated soon.

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