| Eastern Federal Union Insurance Company
Limited |
|
|
|
|
|
|
| Annual
Report 1998 |
|
|
|
| MEMORIAM |
|
|
|
| MR.
ROSHEN ALl BHIMJEE left this world on Thursday December 10, 1998 at the |
|
| age
of 81. The number of persons to mourn his sad demise are more than one could |
|
| imagine.
He was a person who would smoothly fit into the company of people of all |
|
| ages,
most of all children. His friends included. people from all walks of life and
each |
|
| of
them earned his or her share of encouragement from him. |
|
|
|
| Mr.
Bhimjee took over the reins of then Eastern Federal Union Insurance Co. Ltd
in |
|
| 1961
The Company was in feeble state. But soon with perseverance and dedication |
|
| he
fashioned it into an awesomely imposing insurance giant second to none in the |
|
| professional
field. We can rightly term Mr. Bhimjee the true architect of EFU. |
|
|
|
| EFU
was the household name in the field of Life Insurance before nationalisation
and |
|
| it
rightly claimed that every second insured person was insured with EFU. |
|
| Mr.
Bhimjee was also the pioneer in introducing and developing 'group life |
|
| insurance'
in the country, the armed forces being the first beneficiaries of the scheme. |
|
| The
company had attained the distinction in 1972 of being operationally the
largest |
|
| insurance
company when came the sudden jolt of nationalisation of life insurance. |
|
| However,
the spirit of Mr. Bhimjee remained undaunted. He blazed his trail across |
|
| the
oceans and founded insurance companies in United Kingdom, the United Arab |
|
| Emirates
and in Saudi Arabia. |
|
|
|
| Mr.
Bhimjee was a man of immeasurable will power and determination. When he set |
|
| a
goal before himself nothing could stop him from achieving it. His motto was |
|
| perseverance,
patience and perseverance. This was indeed the secret of EFU's |
|
| success.
But above all was the kindness and compassion inherent in his personality |
|
| and
in the language he spoke - a language which the deaf could hear and blind
could |
|
| read.
He fostered a family culture at EFU and in his death we have lost a
patriarch. |
|
| But
the family with its filial bonds will go on. |
|
|
|
| May
Allah the munificent and merciful grant to the departed soul eternal bliss
and |
|
| may
Allah give courage to his family, to EFU family, to his friends and
acquaintances |
|
| and
their families to bear the loss with fortitude. Amen |
|
|
|
|
|
|
| CONTENTS |
|
|
|
| Company
Information |
|
| Management |
|
|
| Notice
of Meeting |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Revenue
Account |
|
| Balance Sheet |
|
| Statement of Changes in
Financial Position |
|
| Notes
to the Account |
|
| Form AA |
|
| Pattern
of Shareholding |
|
| Offices |
|
|
|
|
|
| COMPANY
INFORMATION |
|
|
| Chairman |
|
|
| SAIFUDDIN
N. ZOOMKAWALA |
|
|
|
|
| Managing
Director & Chief Executive |
|
| TAHER
G. SACHAK |
|
|
| Directors |
|
| ASHRAF
W. TABANI |
|
| JAHANGIR
SIDDIQUI |
|
| RAFIQUE
R. BHIMJEE |
|
| MUNEER
R. BHIMJEE |
|
| HASANALI
ABDULLAH |
|
|
| Corporate
Secretary |
|
| SYED
MEHDI IMAM |
|
|
| Chief
Consulting Actuary & Advisor |
|
| MICHAEL
J de H. BELL, F.I.A. |
|
|
| Consulting
Actuary |
|
| OMER
MORSHED, F.I.A., F.C.A. |
|
|
| Medical
Director |
|
| DR.
TAJUDDIN A. MANJI, F.R.C.P., M.R.C.P. |
|
|
| Legal Advisor |
|
| MUHAMMAD
ALI SAYEED, M.A.B.L. |
|
|
| Auditor |
|
| HYDER
BHIMJI & CO. |
|
| Chartered
Accountants |
|
| Karachi. |
|
|
| Registered
Office |
|
| 70-W,
AI-Malik Centre |
|
| Blue
Area - F-7/G-7 |
|
| Islamabad |
|
|
| Main Offices |
|
| 37K,
Block-6, P.E.C.H. Society |
|
| Karachi. |
|
|
| EFU
House, 6-D, Main Gulberg, Jail Road |
|
| Lahore |
|
|
|
| MANAGEMENT |
|
|
|
| Managing
Director & Chief Executive |
|
| TAHER
G. SACHAK |
|
|
| Executive
Director |
|
| S.
MUNEER HUSAIN RIZVI |
|
|
| National
Sales Director |
|
| NASEEM
A. CHAUDHARI |
|
|
| General
Managers |
|
| S.A.R. ZAIDI |
|
| S.M:
BAQAR NAQVI |
|
|
| Senior
Managers |
|
| HASAN RIAZ |
|
| LINDSAY
D'MELLO |
|
| S.
SHAHID ABBAS |
|
| T.H. SAYYED |
|
|
| Managers |
|
| ADEEL
H. JAFRI |
|
| MOHAMMAD
KASHIF NAQVI |
|
| MOHAMMAD
MUNAWAR KHALIL |
|
| MOHAMMAD
ZUBAIR |
|
| ZAHEER
ASLAM |
|
|
| Deputy
Managers |
|
| EVELYN
D'ABROGENA |
|
| FAZAL
MEHMOOD |
|
| SAIMA
NAQVI |
|
|
| Advisors |
|
| S.A. NAQVI |
|
| ZAHURUL
HAQ BUTT |
|
|
|
|
|
| NOTICE
OF MEETING |
|
|
| Notice
is hereby given that the 7th Annual General Meeting of the Shareholders of E
F U Life Assurance |
|
| Ltd.
will be held at the Registered Office of the Company on 4th Floor, 70-W
AI-Malik Centre, |
|
| Blue
Area, F-7/G-7 lslamabad on Tuesday June 22, 1999 at 10:00 a.m. to transact
the following business: |
|
|
| A
-- ORDINARY BUSINESS: |
|
| 1.
To confirm the minutes of the 6th Annual General Meeting held on June 24,
1998. |
|
| 2.
To receive and consider the Audited Accounts for the year ended. December 3
i, 1998. |
|
| 3.
To appoint Auditors for the year 1999 and fix their remuneration. |
|
| 4.
To elect five Shareholders Directors in accordance with the provisions of the
Companies |
|
| Ordinance,
1984. The retiring Shareholders Directors are Messrs Ashtar W. Tabani, |
|
| Jahangir
Siddiqui, Rafique R. Bhimjee, Muneer R. Bhimjee and Taher G. Sachak. |
|
|
|
|
| B
-- SPECIAL BUSINESS: |
|
| 5.
To approve the remuneration of Managing Director (Chief Executive) |
|
| 6.
To transact any other business with the permission of the Chair. |
|
|
|
|
|
|
By Order of the Board |
|
|
|
|
|
|
|
SYED MEHDI IMAM |
|
| April 10, 1999 |
|
|
Corporate Secretary |
|
|
| NOTES |
|
|
| I.
A member entitled to attend and vote at the General Meeting is entitled to
appoint another member as |
|
| a proxy and vote in respect of him. Forms
of proxy must be deposited at the Company's Registered |
|
| Office not later than 48 hours before the
time appointed for the meeting. |
|
|
| 2.
The Share Transfer Books of the Company will be closed from June 12, 1999 to
June 22, 1999 (both |
|
| days inclusive). |
|
|
| 3.
Nominations/Consent for the office of the Directors must be received at least
14 clear days before the |
|
| meeting at the Registered Office of the
Company. |
|
| 4. Members are requested to communicate to
the Company of any change in their addresses. |
|
|
| 5.
The Board of Directors has fixed the number of Directors at seven (including
two to be elected by |
|
| policyholders). |
|
|
| STATEMENT
UNDER SECTION 160 OF THE COMPANIES ORDINANCE 1984: |
|
|
| The
following Ordinary resolution is proposed for approval of remuneration of
Managing Director |
|
| (Chief
Executive): |
|
|
| "Resolved
that the Company approves and authorises payment of Rs. 2.5 million annually
to Mr. Taher G. |
|
| Sachak
Managing Director (Chief Executive) of the Company and also authorises
Chairman to determine |
|
| increases.
He would be entitled to free furnished accommodation and other privileges and
benefits in accordance |
|
| with
the terms and conditions of service and rules of the Company". |
|
|
|
| REPORT
OF THE DIRECTORS TO MEMBERS |
|
|
|
| The
Directors of your Company are pleased to present to you the Seventh Annual
Report of |
|
| the
Company for the year ended December 31, 1998. |
|
|
| Towards
the end of the year the Company lost its founder Chairman and guiding force, |
|
| Mr.
Roshen Ali Bhimjee, known as the father of insurance in Pakistan. The Board
of |
|
| Directors
will feel this great loss but determines to continue along the same path and
with the |
|
| same
management philosophy left behind by Mr. Bhimjee. |
|
|
| 1998
was a very difficult year for the country; especially the period following
the nuclear |
|
| explosion
which saw foreign currency accounts frozen and the value of the rupee
fluctuate |
|
| wildly.
This situation had an adverse impact on life insurance sales. Your company,
however, |
|
| continued
to consolidate it's position in both the Group and Individual life markets,
and |
|
| emerged
as a clear leader amongst the private sector life insurance companies. |
|
|
| The
Group Life business of the Company registered a growth of 26 % in terms of
written |
|
| premium
over the previous year. Premiums written amounted to Rs. 145 million of which |
|
| Rs.
140 million were booked, representing 700 policies and over 300,000 insured
lives. |
|
| Group
Life claims incurred during 1998 amounted to Rs. 82.7 million. |
|
|
| Individual
life business registered an increase of 43.6 % during the year, with new
annual |
|
| premiums
written during 1998 amounting to Rs. 77 million as against Rs. 53.6 million
in |
|
| 1997.
The field force rose to 700 persons and branches to 25 by the end of the
year. Renewal |
|
| premiums
continued to build up with stable persistency. Your Company has sound
investment |
|
| strategies
for Policyholders' Fund and therefore the Unit Price of the Fund continued to |
|
| appreciate
throughout the year. |
|
|
| Your
Company continues to carry out an annual actuarial valuation and set up full
actuarial |
|
| reserves
at the end of the each year. As the business matures, reserves are increasing
steadily |
|
| being
Rs. 206.8 million as at December 31, 1998 as compared to Rs. 122.1 million at
the end |
|
| of
1997. The Company's profitability continued to improve and a surplus of Rs.
5.8 million |
|
| was
generated before tax compared to Rs. 1.4 million for 1997. The Company has
provided |
|
| Rs.
2.2 million for taxation being the Turn-over tax under section 80-D of the
Income Tax |
|
| Ordinance
1979 for 1998 and prior years. This is being contested by your Company. The |
|
| Company
has appealed in the High Court of Sindh at Karachi against the order of the
Income |
|
| Tax
Appellate Tribunal. |
|
|
| The
administrative infrastructure of the Company continued to be strengthened
with the |
|
| continued
enhancement of the life insurance administration software, which was also
tested as |
|
| being
Year 2000 compliant. Your Company continues to apply the high quality service |
|
| requirements
which come from being ISO-9002 certified and completed a satisfactory audit |
|
| of
its quality management procedures in early 1999. |
|
|
| The
earning was Rs. 0.36 per Shares. |
|
|
| Your
Company offers the most comprehensive individual life product range and
continues to |
|
| constantly
keep it under review to ensure that it stays at the leading edge of the
market. A new |
|
| single-premium
product was launched with effect from 1 March 1999 along with certain new |
|
| additional
benefits for the regular premium products. |
|
|
| The
Company continues to receive valuable guidance from Mr. Michael J. de H.Bell,
an |
|
| actuary
of international fame who acts as an advisor to the Board. We wish to record
our |
|
| grateful
appreciation for the expert guidance provided by him to your Company. We
further |
|
| wish
to recognize and place on record our appreciation of the contribution made by
our |
|
| Consulting
Actuary Mr. Omer Morshed for his invaluable advice on actuarial,
administrative |
|
| and
marketing policies of the Company. |
|
|
| We
would also like to record our appreciation and gratitude to Munchener
Ruckversicherungs |
|
| Gesellschaft
(Munich Re) of Germany who are your Company's main reinsurers, and who, |
|
| apart
from providing reinsurance cover, continue to provide useful technical
support to the |
|
| Company
with regard for improvements in the design of existing products and
development of |
|
| new
products. Munich Re is the largest reinsurance company in the World with
assets |
|
| exceeding
Rs. 1,912 billion. |
|
|
| Our
thanks are also due to EFU General Insurance Ltd. for their continuous
support and |
|
| guidance
which has enabled the Company to establish a strong presence in the market
within |
|
| a
short span of time. |
|
|
| The
term of the present Board of Directors expires on June 22, 1999 and election
for the next |
|
| term
will be held at the Seventh Annual General Meeting of the Company to be held
on June |
|
| 22,
1999. The Board of Directors has fixed the strength of the Board for the next
term at |
|
| seven
(inclusive of two Directors to be elected by Policyholders). |
|
|
| Messrs.
Hyder Bhimji & Co., Chartered Accountants, retire and being willing to
continue are |
|
| recommended
for reappointment as Auditors of the Company for the year 1999. |
|
|
| The
Directors wish to record their appreciation for the tremendous contribution
made by the |
|
| able
and eminent officers staff and field force of the Company towards its
development and |
|
| growth.
Their continuous commitment to high ethical standards, client service and
hard work |
|
| has
helped your Company emerge as a clear market leader amongst private sector
life |
|
| insurers. |
|
|
| Finally
we would like to thank our clients for the confidence expressed in us and
also to the |
|
| Department
of Insurance, Government of Pakistan for the co-operation extended to us |
|
| throughout
the year. |
|
|
| JAHANGIR
SIDDIQUI |
TAHER G. SACHAK |
|
SAIFUDDIN N. ZOOMKAWALA |
|
| Director |
|
Managing Director |
|
Chairman |
|
|
& Chief Executive |
|
| Karachi
April 10, 1999 |
|
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
|
| We
have audited the annexed Balance Sheet of E F U LIFE ASSURANCE LIMITED as at |
|
| December
31, 1998, and the related Revenue Account and Appropriation Account and the
Statement of |
|
| Changes
in Financial Position (Cash Flow Statement) together with the notes forming
part thereof, for the |
|
| year
then ended 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 purpose 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 and the Revenue Account together with the notes thereon,
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)
the business conducted, investments made and expenditure incurred during the
year were |
|
| in
accordance with the objects of the Company; |
|
|
|
|
| (c)
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 Balance Sheet, the Revenue Account and
Appropriation |
|
| Account
together with the notes thereto give the information required by the
Insurance Act 1938~ in |
|
| tile
manner so required and the Balance Sheet, the Revenue Account give,
respectively, a true and |
|
| fait'
view of the state of the Company's affairs as at December 31, 1998 and of the
profit for tile year |
|
| then ended. |
|
|
|
| (d)
we have verified the cash and bank balances and investments by actual
inspection or by the |
|
| production
of certificates; |
|
|
| (e)
as per Section 40B (2) of the Insurance Act, 1938 as amended, we certify that
all expenses of |
|
| management in respect of Life Insurance
business transacted by the Company in Pakistan have been |
|
| fully debited to the Revenue Account as
expenses; |
|
|
| (f)
as per Regulation 11 Part 1 in Third Schedule of the Insurance Act 1938 as
amended we certify that |
|
| the Company has not paid to any person any
commission in any form outside Pakistan in respect of |
|
| Life Insurance business transacted by the
Company in Pakistan and that the Company has not |
|
| received outside Pakistan from any person
any commission in any form in respect of any business |
|
| abroad; and |
|
|
| (g)
no part of the Assets of the Life Assurance Fund has been directly or
indirectly applied in |
|
| contravention
of the Insurance Act, 1938, relating to application and investment of Life
Assurance |
|
| Fund; and |
|
|
|
| (h)
in 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. |
|
|
|
HYDER BHIMJI & CO. |
|
| Karachi
April 10, 1999 |
|
CHARTERED ACCOUNTANTS |
|
|
|
|
| REVENUE
ACCOUNT FOR THE YEAR ENDED 31,
DECEMBER 1998 |
|
|
|
|
1998 |
1997 |
|
|
|
Rupees |
Rupees |
|
|
| Claims
less reinsurances |
|
|
48,423,169 |
37,121,657 |
|
| Commission
to Insurance Agents |
|
36,902,816 |
24,507,189 |
|
| Expenses
of Management |
|
|
|
|
| Salaries
& Benefits |
|
|
50,028,182 |
38,743,929 |
|
| Travelling
Expenses |
|
|
3,274,886 |
1,671,070 |
|
| Audit Fee |
|
|
30,000 |
20,000 |
|
| Medical fee |
|
|
2,240,624 |
1,226,411 |
|
| Advertisement
& Publicity |
|
|
1,506,616 |
1,462,337 |
|
| Printing
& Stationery |
|
|
4,471 ,878 |
4,264,756 |
|
| Insurance
Expenses |
|
|
839,293 |
856~684 |
|
|
|
|
|
|
| Other
Expenses of Management |
|
| Policy Stamps |
|
805,160 |
593,351 |
|
| Telephone
& Fax Expenses |
|
4,550,956 |
4,058,922 |
|
| Postage
and telegram |
|
1,087,719 |
840,913 |
|
| Electricity
& gas |
|
3,409,842 |
2,300,205 |
|
| Rent
rates & taxes |
|
5,681,975 |
4,762,692 |
|
| Repair
& maintenance |
|
1,724,682 |
1,168,516 |
|
| Computer
maintenance |
|
477,267 |
280,049 |
|
| Training
expenses |
|
1,056,570 |
1,301,464 |
|
| Entertainment |
|
633,814 |
682,375 |
|
| Bank Charges |
|
618,074 |
405,866 |
|
| Directors' Fee |
|
8,500 |
6,000 |
|
| Professional
Charges |
|
1,182,711 |
1,456,623 |
|
| Miscellaneous
Expenses |
|
2,779,105 |
1,686,102 |
|
|
|
--------------- |
--------------- |
|
|
|
24,016,375 |
19,543,078 |
|
|
| Depreciation |
|
|
5,372,024 |
4,066,307 |
|
| Preliminary
& Deferred Expenses written off |
|
1, 145,012 |
1, 145,010 |
|
| Provision
for Taxation |
|
2,200,000 |
- |
|
| Balance
of Life Fund at the end of the year |
|
|
|
| as
shown in the Balance Sheet |
|
206,805,482 |
1,221,621,000 |
|
| Surplus
for the year carried to Appropriation Account |
3,609,721. |
1,420,835 |
|
|
|
--------------- |
--------------- |
|
|
|
390,866,078 |
258,211,263 |
|
|
========== |
========== |
|
| Balance
of Life Fund at the beginning of the year |
122,162,000 |
78,180,000 |
|
| Premium
less reinsurances |
|
| (i)
First year premium where the maximum premium |
|
| paying
period is: |
|
| Five years |
|
12,032 |
256,855 |
|
| Eight years |
|
3,51 l |
26,594 |
|
| Ten years |
|
1,560,716 |
851,675 |
|
| Eleven years |
|
99,954 |
124,345 |
|
| Twelve
years or over ( including through out life ) |
78,470,926 |
45,285,745 |
|
|
|
--------------- |
--------------- |
|
|
|
80,147,139 |
46,545,214 |
|
|
|
|
|
| (ii)
Renewal premium - second year premium |
|
33,764,298 |
23,327,923 |
|
| Third
year premium and over |
|
39,952,191 |
19,578,606 |
|
|
|
|
|
| (iii)
Single premium |
|
3,066,819 |
2,160,234 |
|
|
| (iv)
Group premium |
|
83,430,966 |
67,465,703 |
|
|
|
--------------- |
--------------- |
|
|
|
240,361,413 |
159,077,680 |
|
|
| Interest,
Returns and Dividend |
|
25,093,025 |
14,979,848 |
|
| Less:
income Tax deducted at source |
|
198,844 |
250,250 |
|
|
|
--------------- |
--------------- |
|
|
|
24,894,181 |
14,729,598 |
|
|
| Profit
on sale of Investments |
|
2,318,825 |
5,565,942 |
|
| Profit
on sale of Assets |
|
1,063,860 |
623,589 |
|
| Difference
in Exchange |
|
65,799 |
34,454 |
|
|
--------------- |
--------------- |
|
|
|
390,866,078 |
258,211,263 |
|
|
========== |
========== |
|
|
|
|
|
|
|
| APPROPRIATION
ACCOUNT FOR THE YEAR ENDED 31,
DECEMBER 1998 |
|
|
|
|
1998 |
1997 |
|
|
Rupees |
Rupees |
|
|
|
|
| Loss
brought forward from previous year |
|
(31,949,133) |
(33,369,968) |
|
| Surplus
for the year transferred from Revenue Account |
3,609,721 |
1 ,420,835 |
|
|
|
--------------- |
--------------- |
|
|
|
(28,339,412) |
'(31,949,133) |
|
|
|
========== |
========== |
|
| Accumulated
Loss carried to Balance Sheet |
|
(28,339,412) |
(31,949,133) |
|
|
|
--------------- |
--------------- |
|
|
|
(28,339,412) |
(31,949,133) |
|
|
|
========== |
========== |
|
| NOTE:
The annexed notes form an integral part of these accounts |
|
|
|
|
HYDER BHIMJI & CO. |
JAHANGIR SIDDIQUI |
TAHER G. SACHAK |
|
SAIFUDD1N N. ZOOMKAWALA |
| Karachi
April 10, 1999 |
Chartered Accountants |
Director |
|
Managing Director &
Chief Executive |
Chairman |
|
|
|
|
| BALANCE
SHEET AS AT 31 DECEMBER 1998 |
|
|
|
| CAPITAL
& LIABILITIES |
|
|
|
|
|
|
|
|
1998 |
1997 |
|
|
|
Note |
Rupees |
Rupees |
|
|
| Share Capital |
|
|
|
|
| Authorised |
|
|
|
|
| 20,000,000
Ordinary Shares of Rs. 10/each |
|
200,000,000 |
200,000,000 |
|
|
|
========== |
========== |
|
|
| Issued
subscribed and paid-up |
|
|
|
| 10,000,000
Ordinary Shares of Rs. 10 each |
|
|
|
| fully
paid in cash |
|
|
100,000,000 |
100,000,000 |
|
|
|
|
|
| Reserve
for Depreciation on Investments |
|
50,695 |
50,695 |
|
|
| Accumulated
Loss |
|
(28,339,412) |
(31,949,133) |
|
|
| Balance
of Life Fund |
|
2 (b) |
206,805,482 |
122,162,000 |
|
|
|
|
|
|
|
|
| Other
Liabilities |
|
|
|
| Estimated
Liability in respect of outstanding |
|
|
|
| claims
whether intimated or not |
|
8,504,787 |
6,286,529 |
|
|
|
|
|
| Amounts
due to other persons or bodies |
|
|
|
| carrying
on Insurance business |
|
27, 144,841 |
21,545,530 |
|
|
|
|
|
| Sundry
Creditors (including outstanding |
|
|
|
| and
accrued expenses) |
|
|
40,591,689 |
33,498,942 |
|
|
|
|
|
| Provision
for Taxation |
|
|
2,200,000 |
- |
|
|
|
|
|
--------------- |
--------------- |
|
|
|
|
|
78,441,317 |
61,331,001 |
|
|
|
--------------- |
--------------- |
|
|
|
356,958,082 |
251,594,563 |
|
|
|
========== |
========== |
|
| ASSETS |
|
|
|
|
| Investments
- at cost |
|
|
