Sustainable Growth 67th - Pakistan General Insurance Qrtr 2015.pdf · · 2015-08-29Half Yearly report For the Period Ended June 30, 2015 ... Ch. Zahoor Ahmed Chief Financial Officer

67 thHalf Yearly report

For the Period Ended June 30, 2015

Sustainable Growth

The Pakistan General Insurance Company Limited 01

IFS RatingRating Companies: Rating:

PACRA and JCR VISA-

AuditorsRehman Sarfraz Rahim Iqbal RafiqChartered Accountants

Tax Consultants

Kamran & Co.

Chartered Accountants

Share RegistrarCorplink (Private) Limited

Registered and Head Office

Cooperative Bank House, 5 Bank SquareShahrah-e-Quaid-e-Azam

Lahore

ContactsTel.: +92(42)3732-4404 +92(42)3722-3244Fax.: +92(42)3723-0895 +92(42)3723-0634Email: [email protected]: www.pgi.com.pk

Board of DirectorsCh. Manzoor Ahmed (Chairman)Ch. Zahoor Ahmed (Chief Executive Officer)Nasir Ali (ACII)

Ghulam Mustafa

Rais ud Din Dr. Mehmood Ul HaqMazhar Zahoor

Athar Zahoor

Muazzam Gul (FCA – Eng. & Wales)

Chief Executive OfficerCh. Zahoor Ahmed

Chief Financial OfficerAzhar Hafeez Ch.

Company SecretaryMazhar Zahoor

Chief Risk OfficerNasir Ali (ACII)

Audit CommitteeRais ud DinNasir Ali

Rais ud DinNasir Ali

Muazzam Gul

Investment committeeMuazzam Gul Dr. Mehmood Ul HaqCh. Zahoor Ahmed

Human Resource CommitteeAthar Zahoor

Underwriting CommitteeCh. Zahoor Ahmed Zahid Iqbal Zia

Zaheer Ahmed Khan

Claims CommitteeGhulam Mustafa Usman AliMian Muhammad Iqbal

Company Information

Re-Insurance and Co-Insurance CommitteeMuhammad Maqsood PerachaNasir AliSajid Hussain

The Pakistan General Insurance Company Limited02

Underwriting

Net premiums

Net claims expenses

Underwriting profit

Claim ratio

Investments In shares

In shortterm bank placements In properties

Investment income Rental income

Profitability / Equity

Share capital

Underwriting profits

Profit before tax

Other expenses

Jun30/2015 Jun30/2014 Increase / (Decrease)

Rupees

Rupees

Rupees

%age

127,763,857

86,988,810

40,775,047

46.87%

(59,749,399)

(33,572,912)

(26,176,487)

77.97%

36,709,516

32,796,679

3,912,837

11.93%

46.77%

38.59%

8.18%

21.18%

26,725,483 27,002,026 (276,543) -1.02%

280,000,000 226,000,000 54,000,000 23.89%

102,465,844

107,858,783

(5,392,939)

-5.00%

16,390,347

6,621,571

9,768,776

147.53%

3,467,310

2,780,400

686,910

24.71%

400,000,000

375,000,000

-

0.00%

36,709,516

32,796,679

3,912,837

11.93%

38,909,884 31,388,542 7,521,342 23.96%

(38,205,854) (31,857,216) (6,348,638) 19.93%

Directors’ Report to the Shareholders

For and on behalf of the Board

Ch. Manzoor AhmedChairman

Lahore: August 29, 2015

The Board of Directors of “The Pakistan General Insurance Company Limited” ('the Company') is pleased to present the un-audited but reviewed (limited) condensed interim financial statements for the half year ended June 30, 2015.

The operational performance of the Company during first half of 2015 is satisfactory; the comparative analysis of the half yearly results at a glance is as under –

Net premiums had increased by 46.87% from Rs. 86.989 million in 2014 to Rs. 127.764 million in 2015, primarily due to provisioning of unearned premiums. Net claims have increased by 77.97% which resulted in an increase in net claim ratio of 21.18% closing at 46.77% from 38.59% as compared to the corresponding period. The above results reflect the effective risk management, firm underwriting guidelines and philosophy, good decision making and tireless efforts of the management and field staff of the Company.

The Company is conscious of the challenges which are being faced by the economy due to spiraling inflation and rising energy crises have crippled the already affected economy of the country. We are striving hard to sustain our performance under these circumstances. We also hope that the macro economic challenges will be addressed soon to enable conducive environment for the growth of industry.

The Company maintains a visible record of good corporate governance which is periodically monitored by the audit committee. We thank our business partners for their continued patronage and the Company staff for their dedicated efforts.


Auditors' Report to the Members on Review of Interim Financial Information

Introduction

We have reviewed the accompanying condensed interim balance sheet of The Pakistan General Insurance Company Limited as at 30 June 2015 and the related

i) condensed interim statement of comprehensive income (profit and loss account),ii) condensed interim statement of changes in equity,iii) condensed interim statement of cash flows,iv) condensed interim statement of premiums,v) condensed interim statement of claims,vi) condensed interim statement of expenses,vii) condensed interim statement of investment income, and

notes to the accounts for the six month period then ended (here-in-after referred to as the “interim financial information”). Management is responsible for the preparation and presentation of this interim financial information in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting. Our responsibility is to express a conclusion on this interim financial information based on our review. The figures of the condensed interim financial information for the quarter ended 30 June 2015 have not been reviewed as we are required to review only cumulative figures for the half year ended on that date.

Scope of Review

We conducted our review in accordance with International Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity.” A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with approved accounting standards as applicable in Pakistan for interim financial reporting.

Other Matters

The financial statements for the half year ended on June 30, 2014 were reviewed by another firm of Chartered Accountants as joint auditors. The review report dated August 28, 2014 expressed an unqualified conclusion.

Rahman Sarfaraz Rahim Iqbal RafiqCHARTERED ACCOUNTANTSEngagement Partner: A. Rahman MirLahore:August 29, 2015


Condensed Interim Balance SheetAs at June 30, 2015 (Un-Auidted)

Director(Ather Zahoor)

EQUITY AND LIABILITIES

Share capital and reserves

Authorized share capital

40,000,000 (Dec. 31, 2014: 40,000,000) ordinary

Issued, subscribed and paid-up share capital

General reserves

Un-appropriated profit

Surplus on revaluation of fixed assets

Underwriting provisions

Provision for outstanding claims (including IBNR)

Provision for unearned premium

Commission income unearned

Total underwriting provisions

Deferred liability

Deferred taxation

Creditors and accruals

Amounts due to other insurers / reinsurers

Accrued expenses

Taxation - provision less payments

Other creditors

Other liabilities

Unclaimed dividends

Total liabilities

Total equity and liabilities

Contingencies and commitments

The annexed notes from 1 to 17 form an integral part of this condensed interim financial information.

shares of Rs. 10 each

5 400,000,000

375,000,000

115,000,000

140,000,000

83,033,612

56,860,719

598,033,612

571,860,719

6 9,719,878

9,853,609

54,870,756

50,156,211

167,344,392

202,501,375

16,783,630

18,167,223

238,998,778

270,824,809

7 4,180,509

2,965,647

16,832,242

15,621,216

955,450

1,585,090

8 20,602,529

10,918,785

10,631,743

9,654,379

49,021,964

37,779,470

235,913 235,913

235,913 235,913

292,437,164 311,805,839

900,190,654 893,520,167

9

Un - audited Audited

June 30, 2015 Dec. 31, 2014

Note --------------Rupees--------------

400,000,000 400,000,000



Condensed Interim Balance SheetAs at June 30, 2015 (Un-Auidted)

867,499 181,398

99,084,621 11,580,454

280,000,000 280,000,000

37,500,000 37,500,000

417,452,120 329,261,852

205,470 223,896

10 50,634,733 49,105,882

102,465,844 105,093,173

88,699,279 162,984,180

16,784,184 15,877,264

3,352,953 3,112,066

10,832,879 5,375,000

22,246,720 24,832,486

92,976,817 99,817,801

449,612 449,612

235,342,444 312,448,409

69,681,647 71,468,356

5,392,206 5,361,387

19,016,190 20,557,212

11 94,090,043 97,386,955

Cash and bank deposits

Cash and other equivalents

Current and other accounts

Deposits maturing within 12 months

Deposits maturing after 12 months

Loans - unsecured; considered good

To employees

Investments

Investment properties

Current assets - others

Premiums due but unpaid - unsecured

Amount due from other insurers / reinsurers - unsecured

Accrued interest

Reinsurance recoveries against outstanding claims

Deferred commission expenses

Prepaid reinsurance premium ceded

Sundry receivables

Fixed assets

Tangible fixed assets

Owned

- land and buildings

- furniture, fixtures and office equipment

- vehicles

900,190,654 893,520,167


Total assets


June 30, 2015 Dec. 31, 2014

Note --------------Rupees--------------

Condensed Interim Profit and Loss Account /Statement of Comprehensive IncomeFor the Half Year Ended June 30, 2015 (Un-Auidted)



Aggregate Aggregate

June 30, 2015 June 30, 2014

Revenue account

Net premium revenue 63,487,232 35,836,576 7,448,553 20,991,496 127,763,857 86,988,810

Net claims (35,016,065) (20,500,988) (121,546) (4,110,800) (59,749,399) (33,572,912)

Expenses (11,245,287) (5,408,549) (733,380) (3,156,135) (20,543,351) (18,040,293)

Net commission (6,140,692) (3,091,342) (708,369) (821,188) (10,761,591) (2,578,926)

Underwriting result 11,085,188 6,835,697 5,885,258 12,903,373 36,709,516 32,796,679

Investment income 16,390,347 6,621,571

Rental income 3,467,310 2,780,400

Other income 5,214 6,815

Gain on disposal of assets - 3,000,000

Finance cost (179,238) (115,760)

General and administration expenses (17,483,265) (13,701,163)

2,200,368 (1,408,137)

Profit before tax 38,909,884 31,388,542

Provision for taxation

- current (11,655,860) (9,285,247)

- deferred (1,214,862) (191,296)

(12,870,722) (9,476,543)

Profit after tax 26,039,162 21,911,999

Other comprehensive income for the period

Incremental depreciation on revalued assets 133,731 140,770

Total comprehensive income for the period 26,172,893 22,052,769

Profit and loss appropriation account

Balance at beginning of the period 56,860,719 36,737,102


Balance at end of the period 83,033,612 58,789,871

Earnings per share - basic and dilutive - note 15 0.65 0.55


---------------------------------------------------------- Rupees -------------------------------------------------------------

Motor act Others

Fire and

property

damage

Marine,

aviation and

transport

Half Year Ended


Condensed Interim Profit and Loss Account /Statement of Comprehensive IncomeFor the Quarter Ended June 30, 2015 (Un-Auidted)


Aggregate Aggregate

June 30, 2015 June 30, 2014

Revenue account

Net premium revenue 45,453,553 21,444,941 4,589,274 17,397,987 88,885,755 45,664,311

Net claims (25,023,565) (13,102,740) 116,505 (2,627,300) (40,637,100) (23,364,065)

Expenses (5,813,049) (2,263,570) (353,416) (2,273,880) (10,703,915) (8,155,038)

Net commission (7,084,940) (2,853,778) (427,831) (1,093,017) (11,459,566) 1,578,601

Underwriting result 7,531,999 3,224,853 3,924,532 11,403,790 26,085,174 15,723,809


Rental income 1,891,395 1,347,750



Finance cost (14,660) (14,215)

General and administration expenses (6,290,443) (2,765,768)

3,668,845 5,120,090

Profit before tax 29,754,019 20,843,899

Provision for taxation

- current (11,497,474) (9,285,247)

- deferred (1,214,862) (22,573)

(12,712,336) (9,307,820)

Profit after tax 17,041,683 11,536,079

Other comprehensive income for the period

Incremental depreciation on revalued assets 66,865 70,385


Earnings per share - basic and dilutive - note 15 0.43 0.29


Fire and

property

damage

Marine,

aviation and

transport

Quarter Ended

Motor Others

------------------------------------------------------------- Rupees -------------------------------------------------------------



Statement of Changes in EquityFor the Half Year Ended June 30, 2015 (Un-Auidted)

Balance as at January 01, 2014

Total comprehensive income for the period

Balance as at June 30, 2014


Transfers to general reserves

Balance as at December 31, 2014


Balance as at June 30, 2015


375,000,000 115,000,000 36,737,102 526,737,102

- - 22,052,769 22,052,769

375,000,000 115,000,000 58,789,871 548,789,871

- - 23,070,848 23,070,848

- 25,000,000 (25,000,000) -

375,000,000 140,000,000 56,860,719 571,860,719

- - 26,172,893 26,172,893

400,000,000 115,000,000 83,033,612 598,033,612

------------------------------ Rupees------------------------------

Total

Equity

Share

Capital

Un-

appropriated

profit

General

Reserves

Issue of bonus shares 25,000,000 (25,000,000) - -

Statement of Cash FlowFor the Half Year Ended June 30, 2015 (Un-Auidted)



June 30, 2015 June 30, 2014

NoteOperating cash flows

a) Underwriting activities 12 104,891,634 109,528,332

b) Other operating activities

Income taxes paid (1,972,116) (837,087)

General and management expenses paid (32,417,395) (26,721,481)

Other operating receipts / (payments) 70,444 45,246,627

Net cash generated from/(used in) other operating activities (34,319,067) 17,688,059

Total cash flow from / (used in) all operating activities (a+b) 70,572,567 127,216,391

Investing activities

Profit / return received 14,439,308 4,596,011

Dividends received 181,301 28,472

Rentals received 3,467,310 2,780,400

Other income received 5,214 6,815

Proceeds from disposal of / (Acquisition of) investments - 45,000,000

Proceeds from disposal of assets - 55,000,000

Fixed capital expenditure (314,620) (17,105,095)

Total cash (out) / in flow from investing activities 17,778,513 90,306,603

Financing activities

(Loans issued) / repayments received - net 18,426 35,980

Repayment of lease liabilities - (98,211)

Financial charges paid (179,238) (111,421)

Total cash used in financing activities (160,812) (173,652)

Net cash inflow from all activities 88,190,268 217,349,342

Cash at the beginning of the period 329,261,852 109,622,175

Cash at the end of the period 417,452,120 326,971,517

Reconciliation to profit and loss account

Operating cash flows 70,572,567 127,216,391

Depreciation expense (6,238,861) (6,830,251)

Gain / (loss) on remeasurement of investments (276,543) (22,322)

Finance cost (179,238) (115,760)


Rental income 3,467,310 2,780,400

Dividend income 181,301 28,472



(Decrease) / Increase in assets other than cash (77,346,852) (100,868,580)

Decrease/(Increase) in liabilities other than running finance 19,368,675 (9,898,587)

Profit after taxation 26,039,162 21,911,999

Definition of cash

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

Cash and other equivalents 867,499 169,701

Current and other accounts 99,084,621 63,301,816

Deposits maturing within 12 months 280,000,000 226,000,000

Deposits maturing after 12 months 37,500,000 37,500,000

417,452,120 326,971,517


----------Rupees---------


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Statement of Investment IncomeFor the Half Year and Quarter Ended June 30, 2015 (Un-Auidted)

June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014

Income from non - trading investments

Available for sale

Dividend income 161,850 6,904 181,301 28,472

Held to maturity

Return on Defence Saving Certificates 1,280,394

891,024

1,805,394 1,341,024

Profit on bank deposits 7,024,181

2,977,793

14,705,869 5,312,280

Reversal / (Provsion) for imparment

Available for sale investments (378,200) (308,869) (276,543) (22,322)

Investment related expenses (10,196) (18,099) (25,674) (37,883)

Net investment income 8,078,029 3,548,753 16,390,347 6,621,571


Quarter ended Half year ended

-----------Rupees----------------------Rupees-----------



1 Status and nature of operations

2 Statement of compliance

3

4 Accounting policies


June 30, 2015 Dec. 31, 2014

5 Issued, subscribed and paid-up share capital

20,000,000 (31/Dec/14: 20,000,000) fully paid ordinary shares of Rs. 10 each 200,000,000 200,000,000

20,000,000 (31/Dec/14: 17,500,000) fully paid bonus shares of Rs. 10 each 200,000,000 175,000,000

400,000,000 375,000,000

6 Surplus on revaluation of fixed assets

Balance at beginning of the period / year 9,853,609 10,135,149

Less: Incremental depreciation transferred to un-appropriated profit 133,731 281,540

Balance at end of the period / year 9,719,878 9,853,609

7 Deferred taxation

Taxable temporary difference

Tax depreciation allowance 6,657,068 5,345,416

Deductuble temporary difference

Provision for doubtful receivables (2,108,163) (2,108,163)

Loss on remeasurement of available for sale investments (368,396) (271,606)

4,180,509 2,965,647

The preparation of condensed interim financial information in conformity with approved accounting

standards requires management to make judgments, estimates and assumptions that affect the

application of accounting policies and reported amounts of assets and liabilities, income and expenses.

Actual results may differ from these estimates. In preparing condensed interim financial information, the

significant judgments made by management in applying the Company’s accounting policies and the key

sources of estimation uncertainty were the same as those that applied to the financial statements as at

and for the year ended December 31, 2014.

--------------Rupees--------------

The Pakistan General Insurance Company Limited "the Company" was incorporated as a public limited

company on July 26, 1947 under the Companies Act, 1913 (now Companies Ordinance, 1984) and was

listed on all three stock exchanges in Pakistan on July 25, 1995. The Company is engaged in providing

General Insurance Services in spheres of Fire and property damage, Marine, aviation and transport, Motor

act and others in Pakistan. The registered office of the Company is situated at Cooperative Bank House, 5

Bank Square, Lahore, Pakistan.

This condensed interim financial information is presented in Pak Rupees which is Company's functional and

presentational currency.

The accounting policies and the methods of computation adopted in preparation of this condensed

interim financial information are the same as those applied in preparation of financial statements for the

year ended December 31, 2014.

This condensed interim financial information of the Company for the six months period ended June 30,

2015 has been prepared in accordance with the requirements of the International Accounting Standard

34 - Interim Financial Reporting and provisions of and directives issued under the Companies Ordinance,

1984, the Insurance Ordinance, 2000 and SEC (Insurance) Rules 2002. In case where requirements differ,

the provisions of or directives issued under the Companies Ordinance, 1984, Insurance Ordinance, 2000

and SEC (Insurance) Rules, 2002 have been followed.

Accounting estimates and judgements

Selected Notes to the Condensed Interim Financial Statements For the Half Year and Quarter Ended June 30, 2015 (Un-auidted)

This condensed interim financial information does not include all the information and disclosures requiredin the complete set of annual financial statements, and should be read in conjunction with the Company’sannual financial statements for the year ended December 31, 2014.



June 30, 2015 Dec. 31, 2014

8 Taxation - provision less payments

Balance at beginning of the period / year 10,918,785 5,785,366

Add: Charge for the period / year 11,655,860 8,285,063

Less: Prior period taxation charge - 357,000

Less: Paid / deducted during the period / year (1,972,116) (3,508,644)

Balance at end of the period / year 20,602,529 10,918,785

9 Contingencies and commitments

Contingencies 8,221,000 8,221,000

10 Investments

Held-to-maturity 23,909,250 22,103,856 Available for sale

- Marketable securities 27,778,042 27,778,042 - Less: Fair value adjustments (1,052,559) (776,016)

26,725,483 27,002,026

50,634,733 49,105,882

11 Fixed assets

Book value at beginning of the period / year 97,386,955 73,765,468

Additions during the period / year - note 11.1 314,620 30,127,625

Depreciation charge for the period / year (3,611,532) (6,506,138)

Carrying amount at end of the period / year 94,090,043 97,386,955

11.1 Additions during the period / year

Land and buildings - 21,506,875

Furniture and fixtures 22,370 1,553,700

Office equipment 292,250 335,850

Vehicles - 6,731,200

314,620 30,127,625

Un - audited Un - audited

June 30, 2015 June 30, 2014

12 Underwriting activities

Premiums received 253,540,169 232,306,308

Reinsurance premiums paid (79,807,410) (75,912,964)

Claims paid (104,924,627) (79,651,620)

Reinsurance and other recoveries received 45,642,920 41,514,972

Commissions paid (24,897,858) (22,764,546)

Commissions received 15,338,440 14,036,182

Net cash from underwriting activities 104,891,634 109,528,332

--------------Rupees--------------

There have been no changes in the contingencies and commitments as disclosed in the annual financial

statements of the Company for the year ended December 31, 2014.

--------------Rupees--------------

Selected Notes to the Condensed Interim Financial Statements For the Half Year and Quarter Ended March 30, 2015 (Un-auidted)


13 Transactions with related parties

Un - audited Un - audited

June 30, 2015 June 30, 2014

Remuneration paid to executives, directors and chief executive officer 1,768,651 1,724,996

Contribution paid to provident fund 48,975 35,871

All transaction with related parties have been carried out on commercial term and conditions.

14 Segment reporting

15 Earnings per share

15.1

June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014

Profit after tax for the period Rs. 17,041,683 11,536,079 26,039,162 21,911,999

Weighted average number of

outstanding shares No. 40,000,000

40,000,000

40,000,000 40,000,000

Basic earning per share Rs. 0.43 0.29 0.65 0.55

15.2

16 Date of authorization of issue

17 General

Functional and presentation currency

Re-classification and re-arrangements

Six months period

No figure for diluted earnings per share has been presented as the company has not issued any

instrument which would have an impact on earnings per share when exercised.

Three months period ended

Basic earning per share are calculated by dividing the net profit for the period by weighted average

number of shares as at the period end as follows:

Class of business wise revenue and results have been disclosed in the statement of premium and profit and

loss account, respectively, prepared in accordance with the requirement of Insurance Ordinance, 2000

and the SEC (Insurance) Rules, 2002.

This condensed interim financial information has been approved by the Board of Directors of the

Company and authorized for issue on August 29, 2015.

The corresponding figures are rearranged wherever necessary for the purpose of comparison and are

rounded off to nearest rupee. Appropriate disclosure is given in relevant note in case of material

rearrangements.

This condensed interim financial information is presented in Pak Rupees, which is the Company's

functional and presentation currency. All financial information presented in Pak Rupees has been rounded

off to nearest Pak Rupee, unless otherwise stated.

--------------Rupees--------------

The related parties comprise holding company, subsidiaries and associated undertakings, other related

group companies, directors of the Company, key management personnel and post employment benefit

plans.

Selected Notes to the Condensed Interim Financial Statements For the Half Year and Quarter Ended June 30, 2015 (Un-auidted)


Restated Restated

Financial and insurance risk management

The Company’s financial insurance risk management objectives and policies are consistent with those disclosed in the annual financial statements as at and for the year ended December 31, 2014.

www.pgi.com.pk

THE PAKISTAN GENERAL INSURANCE COMPANY LIMITED

Co-operative Bank House, 5-Bank Square Shahrah-e-Quaid-e-Azam,

GPO Box No. 1364, Lahore.Tel: +92-42-37324404, 37223224, 37352182

Fax: +92-42-37230895, 37230634Email: [email protected]

Documents

Sustainable Growth 67th - Pakistan General Insurance Qrtr 2015.pdf · · 2015-08-29Half Yearly report For the Period Ended June 30, 2015 ... Ch. Zahoor Ahmed Chief Financial Officer