| EAST WEST INSURANCE CO., LTD. |
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| ANNUAL
REPORT 1997 |
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| LATE
MR. UNUS KHAN |
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| Founder
Chairman, East West Insurance Company Ltd. |
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| Our
founder Chairman, late Mr. Unus Khan, was born on December 27, 1927 in a
respectable |
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| and
cultured family, He received his basic education in Quetta and after
graduation in Aeronautics and |
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| Meteorology
in Great Britain, he adopted the field of Civil Aviation as his profession
and remained |
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| associated
with it for over 20 years. Subsequently, he took up the field of
commerce/business in 1965 and ' |
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| a
few years thereafter proceeded to the United States of America along with his
family. |
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| In
the 70s, besides other ventures, he was also associated with the field of
insurance in the Middle |
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| East.
In order to arrange for the permanent return of his family to Pakistan, he
came back to Pakistan in |
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| 1982
and founded East West Insurance Company Ltd, in 1983. Throughout the
remaining years of his |
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| life,
he remained dedicated to the development of this Company. He organised and
strengthened the |
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| Company
on modern lines and, at the same time, encouraged the executives, field and
office personnel |
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| of
the Company to face the challenges of the market with courage, sincerity and
hard work. It was for his |
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| determined
leadership, untiring efforts, honesty and sincerity of purpose that the
Almighty Allah gifted |
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| him
with such an astounding success that the Company not only became one of the
largest Insurance |
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| Companies
of Pakistan during his life time but also even thereafter continued making
tremendous strides, |
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| always
surpassing the achievements of the preceding year. Today, by the Grace of
Allah, East West |
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| Insurance
Company has become a symbol of security for its thousands of insureds and of
livelihood for |
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| its
hundreds of hard-working personnel. |
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| Mr.
Unus Khan was a religious person endowed with piety, simplicity, sincerity,
diligence and |
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| affection.
He will always be remembered for his love and selflessness. In order to give
perpetuity to our |
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| late
Chairman, all of us have pledged to adopt his advices and practices as
guidelines for the future. Our |
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| beloved
Chairman left us to join his Creator on July 27, 1988. May Allah rest his
soul in eternal peace. |
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| Ameen! |
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| CONTENTS |
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| Board
of Directors |
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| Board
of Management |
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| Notes
of Meeting |
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| Chairman's
Report |
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| Director's
Report |
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| Fire
& Allied Perils |
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| Marine
Cargo & Hull |
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| Motor |
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| Miscellaneous |
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| Engineering |
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| Bond |
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| Livestock |
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| Crops |
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| Management
Information System |
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| Company
Offices & Branches |
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| Accounts |
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| BOARD
OF DIRECTORS |
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| Chairman: |
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| NAVED KHAN |
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| Directors: |
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| JAVED KHAN |
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| PERVEZ KHAN |
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| MAHEEN
YUNUS |
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| R. J. YUNUS |
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| S. P. YUNUS |
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| A. N. YUNUS |
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| Corporate
Secretary: |
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| SHABBIR
ALI KANCHWALA |
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| Legal
Adviser: |
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| AMANULLAH
KHAN |
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| Auditors: |
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| TAHER
MOOCHHALA & CO. |
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| Chartered
Accountants |
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| Registered
Office: |
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| 27,
REGAL PLAZA, JINNAH ROAD, |
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| QUETTA. |
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| Head
Office: |
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| 410,
QAMAR HOUSE, M. A. JINNAH ROAD, |
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| KARACHI. |
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| Bankers: |
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| BOLAN
BANK LIMITED |
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| ALLIED
BANK OF PAKISTAN LTD. |
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| HABIB
BANK LIMITED. |
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| MUSLIM
COMMERCIAL BANK LTD. |
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| NATIONAL
BANK OF PAKISTAN. |
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| UNITED
BANK LIMITED. |
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| BOARD
OF MANAGEMENT |
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| Chief
Executive: |
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| NAVED KHAN |
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| Executive
Director (Marketing): |
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| PERVEZ KHAN |
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| Executive
Director (Operation): |
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| PERVEZ KHAN |
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| Director,
Planning & Development: |
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| M.
MUNIR AFRIDI |
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| Director
Development: |
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| UMEED
ANSARI |
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| Director
Operations: |
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| KAZIM RAZA |
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| Director
Finance: |
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| SHABBIR
ALI KANCHWALA |
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| Regional
Director (East): |
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| SAJJAD
ZAFAR |
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| Regional
Director (Frontier): |
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| NOOR-UL-BASAR |
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| General
Manager (Head Office): |
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| IMRAN
ALI DODANI |
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| General
Manager (Rawalpindi): |
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| NASIHAT
ALI KHAN |
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| General
Manager (Gujranwala): |
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| FAYYAZ
KHOKHAR |
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| NOTICE
OF MEETING |
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| Notice
is hereby given that the 15th Annual General Meeting of the Shareholders of
the Company will be held |
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| at
the Company's Registered Office, Regal Plaza. M. A. Jinnah Road, Quetta at
11:00 A.M. on Monday 1st |
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| June,
1998 to transact the following business. |
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| ORDINARY
BUSINESS: |
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| 1.
To confirm the minutes of the last Annual General Meeting held on 31st May,
1997. |
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| 2.
To receive and consider the Directors' Report and approve the Audited
Accounts for the year ended |
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| 31st
December 1997 and Report of the Auditors. |
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| 3.
To consider and approve the recommendation of Directors for the issuance of
Bonus Shares @ 10% |
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| i.e.
one bonus share for every ten shares held |
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| 4.
To appoint Auditors for the year 1998 and fix their remuneration. The
retiring Auditors M/s Taher |
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| Moochhala
& Co., Chartered Accountants, Karachi being eligible offered themselves
for reappoint- |
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| ment. |
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| SPECIAL
BUSINESS: |
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| 1.
To approve the remuneration payable to the chief executive of the Company. |
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| 2.
To transact any business that may be placed before the meeting with the
permission of the Chairman. |
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| Notes : |
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| 1.
The Share Transfer Books of the Company will remain closed from 1st June,
1998 to 5th June 1998 |
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| (both
days inclusive). No application for transfer of shares will be entertained
during tiffs period. |
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| 2.
Member enable to attend the Annual General Meeting may send Proxy form duly
stamped and attested |
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| to
the Company, so as to reach the Company's office not less than 48 hours
before the meeting. |
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| 3.
Shareholders are requested to notify any change of address immediately. |
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| Statement
u/s 1611 of the Coral}antes Ordinance 1984. |
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| Approval
of the shareholders will be sought for the remuneration payable to the Chief
Executive in |
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| accordance
with their terms and conditions of service. For this purpose it is intended
to propose that |
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| the
following resolution be passed as an Ordinary Resolution namely: |
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| Resolved
that the shareholders hereby approve and authorise the holding of offices of
profit and |
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| payment
as remuneration consisting of salary and allowances to Mr. Naved Yunus, Chief
Executive |
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| not
exceeding Rupees 0.900 Million per annum exclusive of perquisites and
retirement benefits. |
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| CHAIRMAN'S
REPORT - 1998 |
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| It
is reported with profound grief that our late Chairperson Mrs. |
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| T.
U. Khan left us for her heavenly abode on 20th March, 1998. |
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| May
Allah bless her soul in eternal peace. I would like to pay |
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| our
tributes on behalf of the Board of Directors and Manage- |
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| ment
for her untiring support and guidance in good as well as |
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| bad
times during the development and progress of the company. |
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| Consequent
upon her untimely and sudden demise the Board of |
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| Directors
have reposed their unanimous confidence and have |
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| elected
me as Chairman and Chief Executive of your Company. |
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| I
feel proud and privileged to present to you the 15th Annual |
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| Report
alongwith Audited Accounts for the year ending 31st |
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| December,
1997 for perusal and approval before this Annual |
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| General
Meeting of the shareholders. |
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| ACHIEVEMENTS: |
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| The
Financial year of 1997 took a steady take-off after the |
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| general
elections in February, 1997. Considering an over- |
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| whelming
majority of the present government people predicted |
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| that
the financial activities would increase providing a satisfac- |
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| tory
environment for business as well as employment. However |
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| before
the government could implement some of its defined |
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| economic
measures, the situation turned into a state of un- |
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| certainty
followed by drastic drop in the business and financial |
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| activities.
The major set back was observed when the Executive |
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| and
Judicial crises in October-November, 1997 almost created |
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| a
situation of deadlock. This situation was further aggravated |
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| with
the financial and economic crisis of Far East resulting in |
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| the
devaluation of rupee in October, 1997 followed by crash |
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| of
Karachi Stock Exchange as a reaction to Hong Kong and |
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| New
York Stock Exchanges. |
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| Despite
these impediments it gives me great satisfaction to |
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| report
that your company has almost achieved its dedicated |
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| targets
during the Underwriting year 1997 producing a net |
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| premium
of Rs. 348,509,906/=. However your company has |
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| been
seriously effected due to reduction in the Unit prices of |
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| National
Investment Trust. As a result the company has faced |
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| a
major short fall in the investment income and it is difficult to |
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| recoupe
the same through underwriting profits. However through |
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| prudent
underwriting practices its major impact has been |
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| reduced
resulting in a net profit of Rs. 10,472,824/= for the |
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| year 1997. |
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| REINSURANCE: |
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| Reinsurance
plays a significant role for an insurance company. |
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| It
is considered to be the back bone of an insurer. It is normally |
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| a
difficult task to place business with reinsurers of high repute |
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| and
financial soundness. You should be glad to know that EWI |
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| in
its reinsurance program is being supported by the world |
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| renowned
reinsurers of Triple 'A' rating for placement of treaty |
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| as
well as facultative business. In addition we have a large |
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| number
of international brokers on our panel who sup, port us in |
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| placement
of our business especially at the time of underwriting |
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| large
projects. |
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| GOALS: |
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| EWI
has always played a constructive and positive role in the |
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| economic
development of the country. We have provided the |
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| opportunities
of employment to a number of deserving country- |
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| men
who look forward with a bright and prosperous future for |
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| them
as well as their immediate families. |
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| Our
branch network spreads from Karachi in South to Gilgit |
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| and
Skardu in the North providing opportunities in the rural |
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| areas
for better. employment as well as exposure to the national |
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| and
international markets. |
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| The
effective network of our company also brings service and |
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| security
at the doorsteps of our perspective and valued clients. |
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| We
are one of the largest underwriters of livestock insurance |
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| with
a team of veterinary doctors on our panel who render |
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| advice
to small and mid sized clients even in small towns and |
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| villages.
The claim settlement is also prompt and our doctors |
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| rush
at the effected farms immediately with a view to provide |
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| quick
settlement as well as advice to curtail further spreading |
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| of
the diseases in adjoining areas. |
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|
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| FINANCIAL
HIGHLIGHTS: |
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| Following
chart provides the financial highlights for 1997 in comparison with
preceeding five years. |
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|
|
1997 |
1996 |
1995 |
1994 |
1993 |
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|
|
|
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| Net Premium |
|
348,509,906 |
329,795,108 |
329,768,708 |
296,438,757 |
370,124,126 |
|
|
| Investments
& |
|
|
|
| PLS Deposits |
133,067,393 |
124,007,233 |
142,892,478 |
107,295,777 |
119,157,638 |
|
|
|
|
|
|
|
| Fixed
Assets |
|
35,809,173 |
39,342,746 |
37,637,972 |
37,705,152 |
38,976,006 |
|
|
| Consolidated
Assets |
|
398,313,441 |
391,234,941 |
366,998,077 |
348,690,368 |
369,242,895 |
|
|
| Paid
up Capital |
|
73,915,580 |
67,195,990 |
61,087,270 |
61,087,270 |
55,533,880 |
|
|
| General
Reserve |
|
34,100,000 |
33,500.00 |
31,500,000 |
29,500,000 |
28,500,000 |
|
|
| Exceptional
Losses Reserve |
8,600,000 |
8,100,000 |
7,300,000 |
7,000,000 |
6,200,000 |
|
|
| Shareholders'
Equity |
|
124,027,556 |
115,539,034 |
106,043,304 |
97,605,393 |
95,875,376 |
|
|
| Net
Profit (before tax) |
|
10,488,522 |
13,995,730 |
12,937,911 |
8,789,836 |
16,072,303 |
|
|
| Dividend |
|
1.00 |
1.00 |
1.00 |
- |
2.00 |
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| Break
up value per |
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|
|
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| common
share |
|
16.77 |
17.29 |
17.36 |
16.00 |
17.30 |
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| Our
Crop Insurance scheme is already in the pipeline with the |
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| government.
Various forms of this insurance are being dis- |
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| cussed
at the level of government. However we are fully geared |
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| up
with marketing staff operating in small towns and villages |
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| to
support this scheme as and when implemented. |
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| Insurance
in Pakistan has not been introduced at the level of |
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| masses
in our country as compared to the developed countries |
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| Most
of the people go for mandatory insurance which is |
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| primarily
imposed by the government. Public at large is not |
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|
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| versed
with the voluntary form of insurance. We feel that our |
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| public
requires motivation and dissemination about the benefits |
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| of
this security. This job could be easily performed by ourselves |
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| through
country-wide Seminars and Workshops even at the |
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| level
of small villages and towns. If we succeed in this noble |
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| cause
we would be providing service to the nation besides |
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|
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| generating
substantial amount of revenue for the government. |
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| The
insurance market in Pakistan is highly competitive. The |
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|
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| number of
insurance companies is also extremely large and |
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|
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| under
the liberalized policy of government, more licenses |
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|
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| are
being given to new companies for operating as an insurers. |
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| Whereas
the overall premium of the industry has a nominal |
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|
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| increase
annually which hardly justifies the inflation. This |
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| situation
puts tremendous pressure on ourselves as we |
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|
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| could
just compete in the market through our extra ordinary |
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|
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| service
to our clients. |
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|
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| The
technological advancement also demands the requirement |
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|
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| of
qualified staff in order to evaluate and underwrite the risk. |
|
|
| EWI
emphasizes on the recruitment of highly qualified staff |
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| and
always maintained the services of specialists in the filed of |
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| Engineering,
Livestock and Agriculture. We periodically send |
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| our
experts for international seminars and conferences abroad |
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| in
order to keep them abreast with the modern underwriting |
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| technologies. |
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| The
financial management of the Investment portfolio is also |
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| very
important. The timely and proper investment enhances the |
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| profitability
of the company. EWI financial experts always |
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| advise
the management for sound investments in order to |
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| improve
the overall financial base of the company and without |
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| exposing
the reserves to undue risks. |
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| Our
risk management is also conservative but with prudent |
|
| approach
to maintain the exposure of the company within its |
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| financial
limitations. How ever being a service oriented industry |
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| our
entire efforts are to achieve high standards and excellence |
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| of
service for our clients and in this regard we do not compro- |
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| mise
even at the cost of our financial stability and reserves. |
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| The
bottom line is thus the provision of satisfactory service to |
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| our
clients. |
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|
| GRATITUDE: |
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| I
take this opportunity to pay my deep gratitude, respect and love |
|
|
| to
the departed soul of the founder Chairman of EWI, MR. |
|
|
| UNUS
KHAN, (may Allah rest his soul in eternal peace), whose |
|
|
| guidance,
courage and determination remain with us to make |
|
|
| EWI
a strong financial institution and a symbol of security for |
|
|
| our
society. |
|
|
|
|
|
|
|
|
|
| I
also like to pay my enormous appreciation for the hardworking |
|
|
| team
of Executives, Regional Directors, General Managers, |
|
|
| Regional
Managers, Branch Managers and field staff alongwith |
|
|
| equally
hardworking office staff of Head Office, Principle |
|
|
| Office,
Regional Offices and Branch Offices for a great job done |
|
|
| in
1996. It is beyond any doubt that without the sincere and |
|
|
| devoted
efforts of EWI team, the achievements of the company |
|
|
| couldn't
have been possible. |
|
|
|
|
| I
also like to extend my thanks and appreciation to the Ministry |
|
| of
Commerce, Government of Pakistan and Department of |
|
| Insurance,
for their continued guidance prodded to the com- |
|
| pany.
I also take this opportunity to put on record my apprecia- |
|
| tion
on behalf of Board of Directors and Management for |
|
| continued
cooperation extended by: |
|
|
| - Government of Baluchistan |
|
| - Controller of Insurance |
|
| - Pakistan Insurance Corporation |
|
| - Insurance Association of
Pakistan |
|
| -
All Commercial Banks |
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| - All Foreign Banks |
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| - Bolan Bank Limited |
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| - The Bank of Punjab |
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| - Federal Bank for Co-operatives |
|
| - Water and Power
Development Authority |
|
| - Pakistan Industrial
Credit and Investment |
|
| Corporation |
|
|
| - National Highway Authority |
|
| - National Development
Finance Corporation |
|
| - Regional Development
Finance Corporation |
|
| - Small Business Finance
Corporation |
|
| - The First Women Bank Limited |
|
| - All our valued
clients whose patronage is so |
|
| precious
to us at EWI. |
|
|
|
|
| My
special thanks to the shareholders of our Company who have |
|
| put
their enormous confidence in the professional management |
|
| team
of our Company to honor and cherish the long term |
|
| commitments
of financial strength, soundness and integrity of |
|
| this
institution. |
|
|
| I
also like to place on record my special thanks to the World |
|
| Renowned
Reinsurers and Brokers who support EWI in various |
|
| portfolios,
for their confidence reposed on the company, and for |
|
| their
guidance to steer the company in a right direction. I must |
|
| admit
that without their support and corporation the company |
|
| would
not been the leading insurance house of the country. |
|
|
| Finally,
I also like to congratulate the management of our sister |
|
| organization,
BOLAN BANK LIMITED, for being the larg- |
|
| est
bank in terms of branch network, among new commercial |
|
| banks,
with 50 branches operating all across Pakistan. My |
|
| congratulation
to our another sister concern, METROPOLl- |
|
| TAN
LIFE ASSURANCE COMPANY OF PAKISTAN |
|
| LTD.
for remarkable growth in their premium earnings and |
|
| high
persistancy. I pray almighty Allah for prosperous future |
|
| of
all the organizations of the group and our country as a whole. |
|
|
|
| DIRECTORS'
REPORT |
|
|
| Your
Directors are pleased to present their report together with Accounts and
Auditors Report for |
|
| the
year ending 31st December 1997. |
|
|
| The
working results of the company for the year 1997 are as under: |
|
|
| Net
Profit for the year |
|
|
|
Rs. |
10,488,522 |
|
| Add:
Balance brought forward from |
|
|
|
|
|
|
|
|
|
|
| previous
years |
|
|
|
Rs. |
23,454 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
Rs. |
10,511,976 |
|
|
|
|
|
|
|
| Deduct:
Provision for Taxation |
|
|
Rs. |
2,000,000 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
|
|
| Profit
Available for appropriation |
|
|
Rs. |
8,51 1,976 |
|
| Appropriations: |
|
|
|
| Reserve
to proposed issue of Bonus Shares (1:10) |
Rs. |
7,391,558 |
|
| Transferred
to General reserves |
|
|
Rs. |
600,000 |
|
| Transferred
to Exceptional loss reserve |
|
Rs. |
500,000 |
|
|
|
|
|
---------- |
---------- |
|
| Balance
carried forward |
Rs. |
20,418 |
|
|
|
========== |
========== |
|
|
| The
General reserve now cumulates to Rs. 34.1 million, Reserve for exceptional
losses amounts to |
|
| Rs.
8.6 million and reserve for unexpired risk amounts to Rs. 139.4 million. |
|
|
| For
and on behalf of the Board of Directors |
|
|
| FIRE
AND ALLIED PERILS |
|
| The
purpose of Fire Insurance is to indemnify an insured |
|
| in
the event of described properties being destroyed or |
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| damaged
by the peril of fire. Without such insurance |
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| many
fire losses could bring disaster for the families as |
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| well
as business. Fire insurance has taken many years to |
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| accomplish
a worldwide uniformity in the contract agree- |
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| ment
and endorsements. The standard fire contract is |
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| named
perils. This means that it covers only the listed |
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| perils
described in the policy such as Fire, Lightening, |
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| Riots
and Strikes, Malicious damage, Atmospheric Dis- |
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| turbance,
Earth quake Aircraft damages etc. |
|
|
| The
insurance contract of fire promises to indemnify the |
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| insured
for losses arising from the contingencies of an |
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| unfriendly
fire and therefore the element of accident is an |
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| essential
requirement for claims. Hence a friendly fire as |
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| in
the case of boilers, foundries etc. is not covered under |
|
| the
policy unless it spreads beyond the confines and |
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| control
of the insured. |
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|
| Fire
Insurance provides a major source of revenue to the |
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| insurance
companies which normally goes over 30% of |
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| the
gross premium. This figure could substantially in- |
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| crease
if the general .trend in our society is changed. It |
|
| may
be pertinent to mention that in our country most of |
|
| the
people go for the social requirements of insurance |
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| which
are being primarily imposed by the government, |
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| banks
and/or financial institutions. Public, at large, are |
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| not
versed with the voluntary insurance because of low |
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| rate
of literacy. However under the present law and order |
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| situation
specially in the Metropolitan Cities people are |
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| now
approaching the insurance companies for protection
' |
|
| under
the increased rate of crimes. |
|
|
| East
West Insurance Co., Ltd. has written a net premium |
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| of
Rs. 42.2 million in fire portfolio for the year 1997. |
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| Major
retention to our net account is because of our |
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| underwriting
policy wherein we concentrate on small and |
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| mid
sized clients especially in the rural areas. Our branch |
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| network
has been spread from Karachi in the south to |
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| Gilgit,
and Skardu in the North. It is worth mentioning |
|
| that
because of such an adequate branch network the |
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| number
of policy holders of our company in fire portfolio |
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| far
exceeds any other insurance company o |
