| NEW JUBILEE INSURANCE CO. LTD. |
|
|
|
|
|
|
|
|
|
| ANNUAL
REPORT 1997 |
|
|
|
| Board
of Directors |
|
|
| Chairman
of the Board of Directors |
|
| Towfiq
H. Chinoy |
|
|
| President
& Managing Director |
|
| (Chief
Executive) |
|
| Masood
Noorani |
|
|
| Directors: |
|
| Abdul
M. Jaffer |
|
| Akbarali
Hashwani |
|
| Khurshid
A. Minhas |
|
| Kurbanali
K. Poonawala |
|
| Mahmood
Faruque |
|
| Sadruddin
Hashwani |
|
|
| Registered
Office |
|
| 2nd
Floor, Jubilee Insurance House |
|
| I.I.
Chundrigar Road |
|
| Karachi-
Pakistan. |
|
|
|
| Notice
of Meeting |
|
|
| Notice
is hereby given that the 45th Annual General Meeting of New Jubilee Insurance
Company Limited will be |
|
| held
on Friday, 19th June, 1998 at 11:00 a.m. at Raffia Choudri Memorial Centre,
Ground Floor, Sidco Avenue |
|
| Centre,
264 - R.A. Lines, Karachi, to transact the following business: |
|
|
| ORDINARY
BUSINESS |
|
|
| 1.
To confirm the Minutes of the Annual General Meeting held on 27th June, 1997. |
|
|
|
|
| 2.
To consider and adopt the Audited Accounts together with the Directors' and
Auditors' Report for the year |
|
| ended
December 31,1997. |
|
|
| 3.
To approve the payment of cash dividend of 25% as recommended by the
Directors. |
|
|
| 4.
To appoint Auditors and fix their remuneration. |
|
|
| SPECIAL
BUSINESS: |
|
|
| 5.
Issue of Bonus Shares |
|
|
| To
consider and approve the following resolutions: |
|
|
| Resolved
that a sum of Rs. 20,194,065 out of the Company's Reserve for the issue of
Bonus Shares be |
|
| capitalised
and applied for the issue of 4,038,813 ordinary shares of Rs. 5/- each and
allotted as 'fully paid |
|
| bonus
shares to those members of the Company whose names appear in the Register of
Members of the |
|
| Company
on 19th June, 1998 in the ratio of 1 (One) bonus share for every 5 (Five)
shares held and that such |
|
| new
shares shall rank pari passu as regards future dividends and in all other
respects with the existing ordinary |
|
| shares
of the Company. |
|
|
| Further
resolved that the aggregate of the fractions of a share of Rs. 5/- each
arising on such allotment be sold |
|
| and
the net proceeds thereof be distributed prorata to the members entitled
thereto. |
|
|
| Further
resolved that for the purpose of giving effect to the above resolutions, the
Managing Director be and is |
|
| hereby
authorised to give such directions as may be necessary and to settle any
questions or difficulties that |
|
| may
arise in regard to the distribution of the bonus shares or in the payment of
the sale proceeds of the |
|
| fractions
as he may in his discretion deem fit. |
|
|
| A
statement under section 160 of the Companies Ordinance, 1984 pertaining to
the special business is being sent |
|
| to
the shareholders with this notice. |
|
|
|
| Statement
under Section 160 of the Companies Ordinance, 1984. |
|
|
| It
is proposed that a sum of Rs. 20,194,065 out of the Company's profit for the
year 1997 be capitalised by |
|
| issuing
4,038,813 fully paid bonus shares of Rs. 5/- each. These shares shall be
issued to those members |
|
| whose
names appear in the register of members onl9th June, 1998. The bonus shares
shall be issued in |
|
| proportion
of 1 (One) share for every 5 (Five) shares .held by a member. After the issue
of these bonus shares, |
|
| the
paid-up capital of the Company would increase from Rs. 100,970,330 to
Rs.121,164,395. |
|
|
| NOTES: |
|
|
| 1.
The Share Transfer Books of the Company will be closed from 15th June, 1998
to 27th June, 1998 (both days |
|
| inclusive)
to determine the entitlement for dividend and bonus shares. No application
for transfer of shares will |
|
| be
accepted during this period. |
|
|
| 2.
A member entitled to attend and vote at the Meeting may appoint another
member as his/her proxy to attend |
|
| and
vote on his/her behalf. The proxy, in order to be effective, must be received
at the Registered Office of the |
|
| Company
not less than 48 hours before the time of the Meeting. |
|
|
| 3.
Members are requested to immediately inform the Company of any change in
their addresses. |
|
|
|
| Directors'
Report |
|
|
| The
Directors have pleasure in presenting their Report together with the Audited
Accounts of the Company for the |
|
| year
ended 31st December, 1997. |
|
|
| You
will be pleased to know that in 1998, NJI will be completing 45 years of
business. It is a matter of great |
|
| satisfaction
that over this period it has emerged as one of the most highly reputed
insurance companies of |
|
| Pakistan
with a very strong financial base. |
|
|
| General
Business Overview |
|
| The
unsatisfactory economic situation which prevailed in 1997 is well known. The
insurance sector also suffered |
|
| due
to the depressed economy. The premium revenue of the entire general insurance
sector in 1997 increased |
|
| marginally
over the previous year. In real terms, this indicates a decline as compared
to 1996. |
|
|
| NJl's
Results |
|
| By
the Grace of Allah, inspite of the depressed economic scenario, we have
achieved excellent all-round results |
|
| as
evident from the following data: |
|
|
|
1997 (Rs.) |
1996 (Rs.) |
Increase |
|
|
| Gross
Direct Premium |
|
491,513,351 |
448,323,686 |
10% |
|
| Net Premium |
|
253,094,375 |
232,975,100 |
9% |
|
| Underwriting
Profit |
|
57,924,092 |
34,236,328 |
69% |
|
| Investment
Income |
|
60,466,635 |
47,218,486 |
28% |
|
| Capital
Gains realized |
|
17,091,170 |
6,927,294 |
147% |
|
| Profit
before tax |
|
102,195,987 |
66,412,357 |
54% |
|
| Profit
after tax |
|
100,810,362 |
37,587,286 |
168% |
|
|
| Premium
Revenue |
|
| The
increase of 10% in premium is due to our diversified portfolio of business
including the health and energy |
|
| sector.
As a result, we were able to increase our premium revenue inspire of the
decline in the fire and marine |
|
| premium
experienced by the entire market. |
|
|
| Underwriting
Profit |
|
| Our
underwriting profit increased substantially. Out of the total increase of Rs.
23,687,764 an amount of |
|
| Rs.
11,033,045 is due to the improvement in underwriting profit. This is a
significant achievement and indicates |
|
| our
sound underwriting policy and the overall quality of our business portfolio.
The remaining increase of |
|
| Rs.
12,654,719 is due to the reduction in the annual provision for unexpired
risks which we have been providing at |
|
| the
rate of 50% of the net premium written during the year. However, the Income
Tax Department has disallowed |
|
| this
reserve at more than 40%, which is the minimum requirement under the
Insurance Act 1938. Our appeal |
|
| before
the Income Tax Tribunal has been decided against us. The Directors have,
therefore, decided to reduce this |
|
| reserve
to 45% in the 1997 accounts. Most insurance companies in Pakistan are
providing for this liability at the |
|
| rate
of 40%. |
|
|
| Investment
Income and Realized Capital Gains |
|
| In
line with the economic conditions prevailing in the country, the situation on
the Stock Exchange during the year |
|
| 1997
was also very depressed. Share values of even the good companies have
suffered considerable erosion, |
|
| although
the earnings per share and price-earnings ratios appear to be very
attractive. |
|
|
| Inspite
of this situation, we have achieved a very handsome increase of 28% in our
income from shares, bonds, |
|
| treasury
bills, money market funds and rental income. |
|
|
| Considering
the market trend, we also sold some shares, resulting in an overall capital
gain of over Rs. 17 million. |
|
| As
a matter of prudence, we have also written off an amount of Rs. 6,604,832 on
account of depreciation in the |
|
| value
of certain shares held in our portfolio on 31st December, 1997; although the
total market value of our |
|
| portfolio
of shares on 31-12-97 was Rs. 240 million as compared with the book value of
Rs. 117 million. |
|
|
| Taxation |
|
| The
judicial appeals regarding various issues in dispute with the tax department
were decided in 1997. These |
|
| decisions
have resulted in a reversal of tax liability of Rs. 29,978,217 of prior
years, which has been set-off against |
|
| our
tax liability of Rs. 31,363,842 for the accounting year 1997; and hence, the
very nominal difference between |
|
| the
before-tax and after-tax profits. |
|
|
| Health
Insurance Business |
|
| NJI
is the pioneer of this class of business in Pakistan. With considerable hard
work and patience the Group |
|
| Health
Insurance product introduced by us in 1990 has achieved recognition and we
have the privilege of offering |
|
| this
insurance benefit to approximately 200 blue chip corporations and progressive
employers. |
|
|
| Allocation
from Profits |
|
| The
amount available for appropriation including the undistributed balance of the
previous year is Rs. 102,215,647. |
|
| We
recommend that this amount be appropriated in the following manner: |
|
|
|
|
|
Rupees |
|
|
| Payment
of cash dividend at 25% |
|
25,242,582 |
|
| Issue
of Bonus Shares at 20% |
|
20,194,065 |
|
| Transfer
to General Reserve |
|
35,000,000 |
|
| Carry
forward to next year's account |
|
21,779,000 |
|
|
---------- |
|
|
|
102,215,647 |
|
|
========== |
|
|
| Prospects
for the Current Year |
|
| The
economic crises continues, and the prospects for the rest of the year are
quite uncertain. We hope the |
|
| situation
will improve in the remainder of the year. Whilst the long-term growth and
prosperity of NJI is linked with |
|
| that
of the country, we are confident that with our strong financial base and
dedicated team of officers and staff, we |
|
| will
Insha Allah successfully meet the challenges of the current year. |
|
|
| Board
of Directors |
|
| We
record with sorrow the death of Mr. Amir S. Chinoy on 22nd January, 1998. He
had earlier resigned from the |
|
| Board
on 27th August, 1997. He served as a Director for 38 years and made a
valuable contribution throughout |
|
| this
period. |
|
|
| Mr.
Akbarali Hashwahl resigned from the position of the Chairman of the Board
with effect from 27th August, 1997 |
|
| after
serving in this capacity for 17 years, but continues as a Director of the
Company. The Directors co-opted |
|
| Mr.
Towfiq Chinoy to fill the vacancy caused by the resignation of Mr. Amir
Chinoy, and also elected him as the |
|
| Chairman
of the Board. |
|
|
| Mr.
William B. Robinson, a Director of the Company since 1989 also resigned from
the Board with effect from |
|
| 5th
May, 1998. The Directors record their appreciation for the valuable services
rendered by Mr. Akbarali |
|
| Hashwahl
in his capacity as Chairman and Mr. William B. Robinson as a Director of the
Company. |
|
|
| Pattern
of Shareholdings |
|
| The
pattern of shareholdings is shown on page 28 of this Report. |
|
|
| Conclusion |
|
| We
thank our clients for their patronage and the confidence they have placed in
the Company, the Controller of |
|
| Insurance
and his Department for their co-operation. We also thank the executives,
officers and staff of the |
|
| Company
for their dedication and hard work without which these good results could not
have been achieved. |
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed Balance Sheet of New Jubilee Insurance Company
Limited as at |
|
| December
31, 1997, the Fire, Marine and Miscellaneous Business Revenue Accounts,
Profit and Loss Account, |
|
| Profit
and Loss Appropriation Account and Cash Flow Statement, together with the
notes forming part thereof, for |
|
| the
year ended on that date 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 purposes 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 Business Revenue
Accounts, Profit and Loss |
|
| Account
and 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; |
|
|
| (ii)
the expenditure incurred during the year was for the purpose of the Company's
business; |
|
|
| (iii)
business conducted, investments made and expenditure incurred during the year
were in accordance with |
|
| the
objects of the Company; |
|
|
| (c)
we have verified the cash and bank balances and the securities relating to
the Company's loans and |
|
| investments
by actual inspection or by the production of certificates from the Ioanee,
custodians of investments |
|
| and
Company's bankers; |
|
|
| (d)
in our opinion and to the best of our information and according to the
explanations given to us and as shown by |
|
| the
books of the Company, the annexed Balance Sheet, the Fire, Marine and
Miscellaneous Business |
|
| Revenue
Accounts, Profit and Loss Account and Profit and Loss Appropriation Account
together with notes |
|
| forming
part thereof give the information required by the Insurance Act, 1938, in the
manner so required, and |
|
| the
Balance Sheet, Profit and Loss Account and Cash Flow Statement respectively
give a true and fair view of |
|
| the
Company's affairs as at December 31, 1997, and its profit and cash flows for
the year then ended; |
|
|
| (e)
n our opinion zakat deductible at source under the Zakat and Ushr Ordinance,
1980 was deducted by the |
|
| Company
and deposited in the Central Zakat Fund established under Section 7 of that
Ordinance. |
|
|
|
A.F. Ferguson & Co. |
|
| Karachi:
May 5, 1998 |
|
Chartered Accountants |
|
|
|
| Balance
Sheet as at December 31, 1997 |
|
|
|
|
1997 |
1996 |
|
|
|
Rupees |
Rupees |
|
| Share
Capital |
|
|
|
| Authorised |
|
|
|
| 30,000,000
ordinary shares of Rs 5 each |
|
150,000,000 |
150,000,000 |
|
|
|
========== |
========== |
|
| Issued
and subscribed |
|
|
|
| 420,000
ordinary shares of Rs 5 each |
|
|
| fully
paid in cash |
|
|
2,100,000 |
2,100,000 |
|
| 19,774,066
(1996: 17,140,057) ordinary shares |
|
|
| of
Rs 5 each issued as fully paid |
|
|
|
| bonus
shares |
|
|
|
98,870,330 |
85,700,285 |
|
|
|
---------- |
---------- |
|
|
|
100,970,330 |
87,800,285 |
|
|
|
|
| Reserve
for issue of bonus shares |
|
|
20,194,065 |
13,170,045 |
|
| Exceptional
losses reserves - note I (b) |
|
---------- |
---------- |
|
| Fire
insurance |
|
|
4,555,800 |
4,555,800 |
|
| Marine
insurance |
|
|
2,838,600 |
2,838,600 |
|
| Miscellaneous
insurance |
|
|
1,989,400 |
1,989,400 |
|
|
|
---------- |
---------- |
|
|
|
9,383,800 |
9,383,800 |
|
|
|
|
| Revenue
reserves |
|
|
---------- |
---------- |
|
| General
reserve |
|
|
130,000,000 |
95,000,000 |
|
| Unappropriated
profit |
|
|
21,779,000 |
1,405,285 |
|
|
|
---------- |
---------- |
|
|
|
151,779,000 |
96,405,285 |
|
| Balances
of Accounts - note 1 (c) |
|
|
---------- |
---------- |
|
| Fire
insurance account |
|
|
19,758,888 |
24,032,194 |
|
| Marine
insurance account |
|
|
18,630,277 |
24,844,685 |
|
| Miscellaneous
insurance account (including motor insurance |
|
| Rs
41,451,173; 1996: Rs 42,584,629) |
|
75,503,304 |
67,610,671 |
|
|
|
---------- |
---------- |
|
|
|
113,892,469 |
116,487,550 |
|
|
|
|
| Provision
for doubtful balances |
|
|
27,650,000 |
15,000,000 |
|
| Liabilities
and provisions |
|
|
|
| Estimated
liability in respect of outstanding claims |
---------- |
---------- |
|
| whether
due or intimated |
|
|
70,830,465 |
61,678,864 |
|
| Amounts
due to other persons or bodies carrying on |
|
| insurance
business |
|
|
39,260,240 |
35,529,044 |
|
| Sundry
creditors (including outstanding and accrued expenses) |
104,896,397 |
106,356,403 |
|
| Premiums,
rents in advance and deposits |
|
8,137,229 |
12,419,714 |
|
| Outstanding
dividends |
|
|
21,636,827 |
18,316,930 |
|
| Proposed
final dividend |
|
|
25,242,582 |
17,560,057 |
|
|
|
---------- |
---------- |
|
|
|
|
270,003,740 |
251,861,012 |
|
|
|
|
---------- |
---------- |
|
|
|
|
693,873,404 |
590,107,977 |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
|
|
|
1997 |
1996 |
|
| Loans |
|
|
|
Rupees |
Rupees |
|
|
|
|
| On
mortgage of property within Pakistan |
|
2,000,000 |
2,000,000 |
|
| On shares |
|
|
|
- |
5,000,000 |
|
|
|
---------- |
---------- |
|
|
|
2,000,000 |
7,000,000 |
|
| Investments
- notes 1 (g) and 3 |
|
|
|
| Deposits
with State Bank of Pakistan - at cost |
|
---------- |
---------- |
|
| Rs
130,700 11 3/4% Pakistan Loan 2002 |
130,700 |
130,700 |
|
| Rs
177,500 11 1/2% Pakistan Loan 2000 |
|
175,241 |
175,241 |
|
| Rs
53,000 Federal Investment Bonds of Government of Pakistan |
53,000 |
53,000 |
|
|
|
---------- |
---------- |
|
|
|
358,941 |
358,941 |
|
|
|
|
|
| Short-term
Federal Bonds - at cost |
|
50,000,000 |
57,500,000 |
|
| Federal
Investment Bonds of Government of Pakistan - at cost |
- |
4,975,000 |
|
| Debentures
of companies incorporated in Pakistan - at cost |
- |
49,266 |
|
| Shares
of companies incorporated in Pakistan, ordinary shares - |
|
| at
book value (market value |
|
|
|
| Rs.
240,245,490; 1996: Rs. 201,376,015) |
|
116,742,121 |
113,486,275 |
|
| Term
Finance Certificates |
|
53,694,635 |
58,934,574 |
|
| Certificates
of Investment |
|
20,000,000 |
43,000,000 |
|
| House
property and leasehold land in |
|
|
|
| Pakistan
- note 1 (g) |
|
9,098,839 |
9,166,709 |
|
|
|
---------- |
---------- |
|
|
|
249,894,536 |
287,470,765 |
|
|
|
|
|
| Furniture,
office equipment and vehicles - |
|
|
|
| at
cost less depreciation |
|
21,521,825 |
19,514,762 |
|
|
|
|
| Current
Assets |
|
|
---------- |
---------- |
|
| Agents'
balances and outstanding premiums |
|
157,080,520 |
133,381,401 |
|
| Interest,
return on deposits, dividends and rents |
|
|
| Outstanding |
|
7,843,360 |
5,326,028 |
|
| Accruing
but not due |
|
3,673,555 |
5,778,767 |
|
| Amounts
due from other persons or bodies carrying |
|
|
| on
insurance business |
|
34,204,009 |
27,954,845 |
|
| Advances,
deposits and prepayments |
|
4,283,147 |
2,214,201 |
|
| Taxation
- provision less payments |
|
38,763,997 |
21,819,841 |
|
| Cash
and bank balances |
|
|
|
| At
banks on deposit accounts |
|
73,941,833 |
13,210,000 |
|
| At
banks under portfolio management scheme |
|
- |
5,000,000 |
|
| At
banks on current accounts, in transit and in hand |
100,666,622 |
61,437,367 |
|
|
|
---------- |
---------- |
|
|
|
420,457,043 |
276,122,450 |
|
|
|
---------- |
---------- |
|
|
|
|
693,873,404 |
590,107,977 |
|
|
|
|
========== |
========== |
|
|
| We
certify that: |
|
|
| 1.
The investments shown in the Balance Sheet have been valued as indicated
therein at cost or at book value, and the market values of the |
|
| investments
have been ascertained, wherever applicable, from published quotations as on
December 31, 1997. |
|
|
| 2.
The values of all the assets have been reviewed as at December 31, 1997 and
in our belief, such assets set forth in the Balance Sheet are |
|
| shown
in the aggregate at amounts not exceeding their realisable or market value
under the several headings given therein. |
|
|
|
| Profit
and Loss Account for the Year ended December 31, 1997 |
|
|
|
|
|
1997 |
1996 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| Provision
for taxation |
|
|
|
| - current |
|
18,804,677 |
14,312,000 |
|
| -
prior years written back |
|
(14,938,152) |
- |
|
|
|
---------- |
---------- |
|
|
|
3,866,525 |
14,312,000 |
|
|
|
|
| Expenses
of management (not applicable to any |
|
|
| particular
fund or account) |
|
|
3,248,271 |
3,328,058 |
|
|
|
|
|
|
| Provision
for doubtful balances |
|
|
12,650,000 |
10,000,000 |
|
| Bonus
to staff - note I (e) |
|
|
4,652,516 |
4,147,150 |
|
| Charitable
donations |
|
|
|
685,730 |
324,350 |
|
| Contribution
to staff gratuity fund - note 1 (d) |
500,000 |
400,000 |
|
| Provision
for retirement benefits |
|
|
1,000,000 |
400,000 |
|
| Depreciation
on investments |
|
|
6,672,702 |
79,847 |
|
| Depreciation
on furniture, office equipment and vehicles |
4,438,934 |
4,246,978 |
|
| Zakat
deducted at source |
|
|
173,852 |
264,248 |
|
| Balance
for the year carried down to appropriation account |
100,810,362 |
37,587,286 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
138,698,892 |
75,089,917 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
|
|
|
1997 |
1996 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| Interest/return
on deposits, dividends and rents |
|
| (not
applicable to any particular fund or account) |
60,466,635 |
47,218,486 |
|
| Less:
Income-tax thereon |
|
(12,559,165) |
(14,513,071) |
|
| Add:
prior years written back |
|
15,040,065 |
- |
|
|
|
---------- |
---------- |
|
|
|
|
|
62,947,535 |
32,705,415 |
|
| Profit on sale of investments - net |
17,091,170 |
|
|
6,927,294 |
|
| Profit
on disposal of furniture, office equipment |
|
| and
vehicles - net |
|
|
512,051 |
845,571 |
|
|
|
|
| Exchange
gain |
|
|
224,044 |
375,309 |
|
| Profit
transferred from: |
|
---------- |
---------- |
|
| Fire
revenue account |
|
|
20,520,983 |
12,991,466 |
|
| Marine
revenue account |
|
|
21,432,271 |
8,734,523 |
|
| Miscellaneous
revenue account (including profit on motor |
|
| insurance
business Rs 3,578,977; 1996: Rs 1,180,032) |
15,970,838 |
12,510,339 |
|
|
|
---------- |
---------- |
|
|
|
57,924,092 |
34,236,328 |
|
|
|
---------- |
---------- |
|
|
|
|
138,698,892 |
75,089,917 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
|
|
|
|
| Profit
and Loss Appropriation Account for the Year ended December 31, 1997 |
|
|
|
|
| Transfer
to general reserve |
|
|
35,000,000 |
6,000,000 |
|
| Transfer
to reserve for issue of bonus shares |
|
20,194,065 |
13,170,045 |
|
| Proposed
final dividend @ 25% (1996: @ 20%) |
|
25,242,582 |
17,560,057 |
|
| Balance
carried forward |
|
|
21,779,000 |
1,405,285 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
102,215,647 |
38,135,387 |
|
|
|
========== |
========== |
|
|
| Balance
brought forward from previous year |
|
1,405,285 |
548,101 |
|
| Balance
for the year brought down from profit and loss account |
100,810,362 |
37,587,286 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
102,215,647 |
38,135,387 |
|
|
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
