| Commercial Union Life Assurance |
|
|
|
|
|
|
|
| Annual
Report 1999 |
|
|
|
| Contents |
|
|
| COMPANY
INFORMATION |
|
| CHAIRMAN'S
STATEMENT |
|
| REPORT
OF THE DIRECTORS |
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| BALANCE
SHEET |
|
|
| REVENUE
ACCOUNT |
|
|
| PROFIT
& LOSS ACCOUNT |
|
| CASH
FLOW STATEMENT |
|
| NOTES TO THE ACCOUNTS |
|
| CLASSIFIED SUMMARY OF THE
ASSETS |
|
| PATTERN
OF SHAREHOLDING |
|
| NOTICE OF ANNUAL GENERAL
MEETING |
|
|
|
| Company
Information |
|
|
| Chairman |
|
Christopher Charles
Pountain |
|
|
|
| Managing
Director & |
Moin M. Fudda |
|
| Chief
Executive |
|
|
|
| Director |
|
Robert Anderson |
|
|
Naseem S. Mirza |
|
|
Irtiza Husain |
|
|
Shaikh Mukhtar Ahmed |
|
|
Nasir Ali Shah Bukhari |
|
|
| Company
Secretary |
Iftekhar Alam |
|
| Auditors |
|
A.F. Ferguson & Co. |
|
| Legal
Advisors |
Orr Dignam & Co. |
|
| Registered
Office |
16/2, KSB Building |
|
|
Sir Agha Khan Road |
|
|
Lahore. |
|
|
| Share
Department |
1st Floor, Westland Trade
Centre |
|
|
Opp. Flyover |
|
|
Shaheed-e-Millat Road |
|
|
Karachi. |
|
|
|
| Chairman's
Statement |
|
|
| The
Company continued to make steady progress since commencement |
|
| of
the group life business in 1996 and individual life business in 1997. |
|
|
| The
volume of group business increased from Rs. 59.5 million in 1998 |
|
| to
Rs. 65.1 million in 1999 and the new individual life business grew |
|
| to
Rs. 31.0 million over the same period from Rs. 18.9 million. |
|
|
| Growth
in total business is also encouraging. It increased from |
|
| Rs.
86.2 million in 1998 to Rs. 117.9 million in 1999. |
|
|
| Expansion
of the Company's distribution reach will continue to be a |
|
| key
factor of business strategy going forward. The branch and sub- |
|
| office
network now consists of 18 locations, supported by a larger direct sales
force. |
|
|
| It
is anticipated that promulgation of the new insurance law will have a
positive impact on the business environment. |
|
| Statutory
protection to policy holders will further strengthen confidence in the
Insurance market. |
|
|
| Pakistan's
gross national savings rate of 1'2% of GDP is amongst the lowest in Asia. In
order to encourage greater savings we |
|
| hope
the Government will give sympathetic consideration to tax concessions on Life
Insurance premia. |
|
|
| The
Company will continue to create and develop awareness of Life insurance
amongst the general public and strive to |
|
| become
a pre-eminent Life insurer in Pakistan by surpassing the expectations of its
shareholders. |
|
|
| Karachi.
March 20, 2000 |
|
Christopher Charles
Pountain |
|
|
Chairman |
|
|
|
| REPORT
OF THE DIRECTORS |
|
|
| The
Directors have pleasure in presenting their Fifth Annual Report with the
Company's Audited Accounts for the year |
|
| ended
31st December, 1999. |
|
|
| BUSINESS
PROGRESS |
|
|
| INDIVIDUAL
LIFE |
|
| Pakistan's
economy in the year 1999 continued to suffer from the impact |
|
| of
economic sanctions imposed by international donors in the wake of |
|
| nuclear
explosions in May 1998. The economy also bore the brunt of |
|
| heavy
outlay on defence, multiplying debt servicing and growing |
|
| development
expenditure. GDP growth in the financial year was 3.1 |
|
| percent.
There were also political disconcert and uncertainties. In |
|
| October
1999, the Army assumed the reins of power. The new set-up |
|
| has
already taken measures such as removal of restrictions on foreign |
|
| exchange
remittances, reduction in interest rates etc to put the economy |
|
| on
an even keel. Hopefully the financial year 2000 will show improved |
|
| performance.
However, despite constrained economic environment, |
|
| the
Company continued to improve its business, expanded its branch |
|
| net
work, and appointed a larger number of sales force. The Company's |
|
| new
business improved from Rs. 18.9 m in 1998 to Rs. 31.0 m in 1999 |
|
| showing
a growth of 64.0%. Renewal premia have also reflected significant
improvement. |
|
|
| EMPLOYEE
BENEFIT SERVICES |
|
|
| The
Company continued manifesting good performance on group life business. On
group health business also it made |
|
| satisfactory
progress. It has made arrangements with various hospitals throughout Pakistan
for medical examinations and |
|
| checkups
of its group health clients. Group pension business, however, was slack due
mainly to over-all economic environment. |
|
|
| PARENT
COMPANY |
|
|
| The
Company's parent Company is the CGU International Insurance plc (formerly
Commercial Union Assurance Company |
|
| plc)
which is incorporated in the United Kingdom and holds 51% shares of its
issued capital. |
|
|
| INVESTMENTS |
|
|
| The
Company continued to invest its surplus funds in Government Securities, Term
Finance Certificates, Equities and |
|
| Deposits
with leasing companies and banks. In 1999, the Company earned an income of
Rs. 27.7 m as compared to |
|
| Rs:
32.1 m earned in 1998. The decrease was due mainly to encashment of some
investments for settlement of certain heavy |
|
| group
life claims. Because of various measures taken by the new government for
betterment of economy, the stock market |
|
| has
shown a marked improvement. As a result, the market value of the Company's
share improved, it also realised a gain of |
|
| Rs.
0.4 m and a book gain of Rs. 2.4 m. |
|
|
| ISO -- 9000 |
|
|
| During
the year 1999, the Company fully maintained its systems/procedures for all
areas of its operations and also ensured |
|
| fulfilment
of needs of individual life and corporate insurance clients on the principle
of best practice. A surveillance audit |
|
| for
confirmation of maintenance of ISO 9002 certificate was conducted by
certified auditors and a clear report was issued by |
|
| them. |
|
|
| YEAR
2000 COMPLIANCE |
|
|
| The
Company successfully braved the year 2000 challenge. All contingency
arrangements were in place and the setup |
|
| worked
well without any problem. |
|
|
| AUDITORS |
|
|
| The
Auditors, Messrs. A.F. Ferguson & Co., Chartered Accountants, are due to
retire on conclusion of the Annual General |
|
| Meeting
and being eligible, have offered themselves for reappointment. |
|
|
| FUTURE
PROSPECTS |
|
|
| The
Company has plans to open more branches and sub-offices throughout Pakistan
in the year 2000 and also increase its |
|
| sales
force strength further. Some modifications of existing products is also being
considered. The Company has been |
|
| pursuing
its case with the relevant authorities for tax incentives such as allowing
individuals pension premia as an allowable |
|
| expense.
All these will have a favourable impact on Company's future growth. |
|
|
| The
impending revised insurance law will hopefully be finalized within the next
few weeks. It envisages changes to protect |
|
| rights
of the insured. It will further improve policyholders' confidence in
insurance companies, and expand insurance market. |
|
|
| HUMAN
RESOURCES AND TRAINING |
|
|
| The
Company continued to adhere to the policy of recruitment on merit and has
been providing good working environment. |
|
| Company
continues to place greater emphasis on training in all sphere of its
activity. |
|
|
| GRATITUDE |
|
|
|
| The
directors thank the Ministry of Commerce, the Securities & Exchange
Commission, the Registrar, Joint Stock Companies, |
|
| the
Controller of Insurance, the State Bank of Pakistan and the Karachi Stock
Exchange for continuous co-operation extended |
|
| to
the Company throughout the year. |
|
|
| Besides,
the directors thank all employees and field staff of the Company for their
dedication and diligence in performance |
|
| of
their duties to help the Company achieve its goals. |
|
|
| The
directors also express their gratitude to the Company's shareholders as well
as to its policyholders for their faith and |
|
| confidence
in the Company. |
|
|
| On
behalf of the Board of Directors |
|
|
|
|
|
| Karachi. March 20, 2000 |
|
Moin M. Fudda |
|
|
Managing Director &
Chief Executive |
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed Balance Sheet of Commercial Union Life Assurance
Company (Pakistan) Limited as at |
|
| December
31, 1999, and the related Revenue Account, Profit and Loss Account and 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 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, Revenue Account and Profit and Loss 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)
we have verified the cash and bank balances and the securities relating to
the Company's loans and investments by |
|
| actual
inspection or by production of certificates, from the loanees, custodians of
investment and Company's bankers; |
|
|
| (d)
no part of the assets of Life Insurance Fund has been directly or indirectly
applied in contravention of the provisions |
|
| of
the Insurance Act, 1938 relating to the application and investment of Life
Insurance Fund; |
|
|
| (e)
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, Revenue Account, Profit and Loss Account
and the Cash Flow Statement, |
|
| together
with the notes forming part thereof, give the information required by the
Insurance Act, 1938, in the manner |
|
| so
required, and respectively give a true and fair view of the Company's affairs
as at December 31, 1999 and of the |
|
| loss
and the cash flows for the year then ended; and |
|
|
| (f) in our opinion no Zakat was deductible at
source under the Zakat and Ushr Ordinance, 1980. |
|
|
| Karachi.
March 20, 2000 |
|
A. F. Ferguson & Co |
|
|
Chartered Accountants |
|
|
|
| Balance
Sheet as at December 31, 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
|
Rupees |
Rupees |
|
|
| SHARE
CAPITAL |
|
|
| Authorised |
|
| 50,000,000
(1998: 50,000,000) ordinary |
|
| shares
of Rs. 10 each |
|
500,000,000 |
500,000,000 |
|
|
========== |
========== |
|
| Issued,
Subscribed and paid-up |
|
| 30,000,000
(1998: 30,000,000) ordinary |
|
| shares
of Rs. 10 each fully paid in cash |
|
3 |
300,000,000 |
300,000,000 |
|
|
| Accumulated
loss |
|
(162,567,980) |
(91,591,622) |
|
|
----------- |
----------- |
|
|
137,432,020 |
208,408,378 |
|
| Balance
of life insurance fund |
|
66,369,027 |
39,929,612 |
|
|
| LIABILITIES
AND PROVISIONS |
|
|
| Estimated
liability in respect of outstanding |
|
| claims,
whether due or intimated |
|
21,545,941 |
8,295,620 |
|
| Amounts
due to other persons or bodies |
|
| carrying
on insurance business |
|
11,431,381 |
1,713,967 |
|
| Sundry
creditors (including outstanding and |
|
| accruing
expenses and taxes) |
|
4 |
40,094,704 |
24,224,571 |
|
|
----------- |
----------- |
|
|
73,072,026 |
34,234,158 |
|
|
| COMMITMENTS |
|
5 |
-- |
-- |
|
|
----------- |
----------- |
|
|
276,873,073 |
282,572,148 |
|
|
========== |
========== |
|
|
| LOANS - on personal security |
|
178,750 |
529,850 |
|
| INVESTMENTS |
|
|
|
| Deposit
with State Bank of Pakistan |
|
|
|
| 10
years Federal Investment Bond |
|
24,400,000 |
24,400,000 |
|
| Pakistan
Government Securities |
|
|
|
| 10
years Defence Saving Certificates |
|
22,500,000 |
12,500,000 |
|
| 3
years Special Saving Certificates |
|
61,500,000 |
64,500,000 |
|
| 5
years Term Finance Certificates |
|
|
|
| ICI
Pakistan Limited |
|
3,977,375 |
7,186,320 |
|
| Sui
Southern Gas Company Limited |
|
2,600,000 |
5,212,500 |
|
| Packages
Limited |
|
843,075 |
1,690,314 |
|
| Dewan
Salman Fibres Limited |
|
2,605,729 |
-- |
|
| Certificates
of Investment |
|
30,500,000 |
54,000,000 |
|
| Investment
in associated company under musharika |
|
|
|
| arrangement |
|
2,500,000 |
2,500,000 |
|
| Ordinary
shares and stocks of companies incorporated |
|
| in Pakistan |
|
6 |
9,287,609 |
10,284,510 |
|
|
|
---------- |
---------- |
|
|
|
160,713,788 |
182,273,644 |
|
| PRELIMINARY
AND DEFERRED EXPENSES |
7 |
1,999,192 |
3,998,384 |
|
| FURNITURE,
FIXTURES, OFFICE EQUIPMENTS, |
|
|
|
| COMPUTERS
AND VEHICLES |
|
8 |
48,191,644 |
48,501,728 |
|
| CAPITAL
WORK-IN-PROGRESS |
|
|
3,423,751 |
-- |
|
| CURRENT
ASSETS |
|
|
|
|
|
|
|
|
| Agents'
balances |
|
|
-- |
435,817 |
|
| Outstanding
premiums |
|
|
9,044,415 |
5,311,190 |
|
| Interest,
return on deposits and rent accrued but not due |
|
13,295,318 |
13,981,233 |
|
| Sundry
debtors, advances, deposits and prepayments |
9 |
22,923,096 |
13,129,462 |
|
| Cash |
|
|
|
| At
banks on saving accounts |
|
7,661,103 |
6,929,226 |
|
| At
banks on current accounts |
|
8,910,805 |
7,074,532 |
|
| Cash
and stamps in hand |
|
531,211 |
407,082 |
|
|
---------- |
---------- |
|
|
62,365,948 |
47,268,542 |
|
|
---------- |
---------- |
|
|
276,873,073 |
282,572,148 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
| We
certify that: |
|
| 1.
The investments in stocks and shares shown in the Balance Sheet have been
valued at the market value. The market values have been |
|
| ascertained
from the published quotations as on December 31, 1999. |
|
|
| 2.
The .value of all,. the assets in Pakistan have been reviewed as at December
31, 1999 and in our belief the assets set forth in the |
|
| Balance
Sheet are shown in the aggregate amounts not exceeding their realisable
market value under the several headings given |
|
| therein. |
|
|
| 3.
No part of the assets of Life Insurance Fund has been directly or indirectly
applied in contravention of the provisions of the Insurance |
|
| Act,
1938 relating to the application and investment of Life Insurance Fund. |
|
|
|
Christopher Charles Pountain |
|
Irtiza Husain |
|
Moin M. Fudda |
|
|
Chairman |
|
Director |
|
Managing Director & |
|
|
Chief Executive |
|
|
|
|
|
| Revenue
Account for the year ended December 31, 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
|
Rupees |
Rupees |
|
|
| Claims
under policies (including provision for |
|
| claims
due or intimated), less reinsurances |
|
| By death |
|
1,642,653 |
3,624,938 |
|
| By maturity |
|
-- |
-- |
|
| Under
group insurance |
|
50,467,480 |
26,766,282 |
|
|
| Surrenders,
less reinsurances |
|
249,645 |
-- |
|
| Bonuses
in reduction of premiums, less reinsurances |
|
2,463,555 |
-- |
|
|
|
----------- |
----------- |
|
|
54,823,333 |
30,391,220 |
|
| Expenses
of management |
|
| 1.
(a) Commission to insurance agents |
|
| (less
that on reinsurance) |
|
26,018,522 |
11,621,677 |
|
| (b)
Allowances and commission |
|
| (other
than commission included |
|
| in
sub-item (a) preceding) |
|
-- |
-- |
|
| 2.
Salaries and other benefits (other than to agents and |
|
| those
contained in item No. 1) |
|
44,063,499 |
30,383;971 |
|
| 3.
Travelling expenses |
|
1,731,763 |
3,314,960 |
|
| 4..
Directors' fees |
|
-- |
-- |
|
| 5.
Auditors' remuneration |
|
10 |
429,040 |
452,762 |
|
| 6.
Medical fees |
|
1,108,237 |
867,902 |
|
| 7.
Law charges |
|
147,177 |
40,000 |
|
| 8.
Advertisements |
|
1,237,508 |
1,561,875 |
|
| 9.
Printing and stationery |
|
5,533,244 |
4,850,890 |
|
| 10.
Other expenses of management |
|
| Policy
stamps |
|
1,413,306 |
860,180 |
|
| Staff welfare |
|
4,090,998 |
3,435,630 |
|
| Postage,
telegram and telephone |
|
6,043,083 |
5,108,362 |
|
| Electricity
and gas |
|
1,844,023 |
917,373 |
|
| Entertainment |
|
920,264 |
1,283,885 |
|
| Vehicle
running expenses |
|
5,301,074 |
3,965,724 |
|
| Repair
& Maintenance |
|
4,046,552 |
2,702,372 |
|
| Professional
charges |
|
1,170,623 |
819,891 |
|
| Training
expenses |
|
598,889 |
528,340 |
|
| Computer
expenses |
|
184,866 |
8,173,564 |
|
| Insurance
expenses |
|
1,815,297 |
1,156,806 |
|
| Bank
charges & brokerage |
|
240,681 |
436,039 |
|
| Miscellaneous
expenses |
|
2,279,835 |
2,455,491 |
|
|
----------- |
----------- |
|
|
29,949,491 |
31,843,657 |
|
|
----------- |
----------- |
|
| carried
forward |
|
165,041,814 |
115,328,914 |
|
|
| Balance
of life fund at the beginning of the year |
|
39,929,612 |
14,170,655 |
|
|
|
| Premiums,
less reinsurances |
|
|
| (i)
First year premium where the maximum premiums |
|
| paying
period is: |
|
| Ten years |
|
348,638 |
586,228 |
|
| Eleven years |
|
50,600 |
-- |
|
| Twelve
years or over ( including throughout life) |
|
30,612,412 |
18,363,060 |
|
|
| (ii)
Renewal premiums |
|
21,835,599 |
7,784,209 |
|
| (iii)
Group premiums |
|
65,088,301 |
59,487,848 |
|
| Interest,
return on deposit, dividend and rent |
11 |
27,651,589 |
32,130,370 |
|
| Loss
transferred to profit and loss account |
|
74,718,048 |
47,895,803 |
|
|
----------- |
----------- |
|
| carried
forward |
|
260,234,799 |
180,418,173 |
|
|
|
| brought
forward |
|
165,041,814 |
115,328,914 |
|
|
| 11.
Rent of other offices occupied by the Company |
|
9,367,220 |
7,195,908 |
|
| 12.
Bad debts |
|
-- |
-- |
|
| 13.
Depreciation expense |
|
15,742,282 |
12,813,280 |
|
| 14.
Agency development and recruitment |
|
1,715,264 |
3,151,267 |
|
|
| Preliminary
and deferred expenses amortized |
|
1,999,192 |
1,999,192 |
|
|
| Balance
of life fund at the end of the year as |
|
| shown
in the balance sheet |
|
66,369,027 |
39,929,612 |
|
|
----------- |
----------- |
|
|
260,234,799 |
180,418,173 |
|
|
========== |
========== |
|
|
|
|
| brought
forward |
|
260,234,799 |
180,418,173 |
|
|
----------- |
----------- |
|
|
260,234,799 |
180,418,173 |
|
|
========== |
========== |
|
|
|
|
| We
certify that to the best of our knowledge and belief and according to the
information and explanations |
|
| given
to us, and so far as appears from our examination of the Company's books of
account, all expenses of |
|
| management
wherever incurred, whether directly or indirectly in respect of life
insurance business transacted |
|
| by
the Company in Pakistan, have been fully debited in the above Revenue Account
as expenses. |
|
|
| We
further certify that to the best of our knowledge and belief, the Company has
not paid to any person any |
|
| commission
in any form, outside Pakistan, in respect of life insurance business
transacted by it in Pakistan, |
|
| and
that the Company has not received, outside Pakistan, from any person any
commission in any form in |
|
| respect
of life insurance business. |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
| It
is hereby certified that all expenses of management whether directly or
indirectly in respect of Life Insurance |
|
| business
transacted by the Company in Pakistan have been fully debited in the above
Revenue Account. |
|
|
| Karachi.
March 20, 2000 |
|
A. F. Ferguson Co. |
|
Christopher Charles Pountain |
|
Irtiza Husain |
|
Moin M. Fudda |
|
|
Chartered Accountant |
|
Chairman |
|
Director |
|
Managing Director & |
|
|
Chief Executive |
|
|
|
| Profit
and Loss Account for the year ended December 31, 1999 |
|
|
|
1999 |
1998 |
|
|
Rupees |
Rupees |
|
|
| Loss
brought forward from previous year |
|
|
91,591,622 |
36,106,396 |
|
| Taxes
on the insurer's profit (not applicable to any |
|
| particular
fund or account) |
|
-- |
-- |
|
|
|
|
| Expenses
of management (not applicable to any |
|
|
|
| particular
fund or account) |
|
-- |
-- |
|
|
| Loss
on realization of investments (not charged to |
|
| reserves
or any particular fund or account) |
|
-- |
2,155,184 |
|
|
| Depreciation
of investments (not charged to reserves |
|
| or
any particular fund or account) |
|
-- |
5,840,636 |
|
|
| Loss
transferred from revenue account for the year |
|
74,718,048 |
47,895,803 |
|
| Other
expenditure |
|
-- |
-- |
|
|
---------- |
---------- |
|
|
166,309,670 |
91,998,019 |
|
|
========== |
========== |
|
|
| Interest,
dividends and rents (not applicable to any |
|
| particular
fund or account) |
|
-- |
-- |
|
|
| Less:
Income-tax thereon |
|
-- |
-- |
|
|
| Profit
on realization of investments (not credited to |
|
| reserves
or any particular fund or account) |
|
410,279 |
-- |
|
|
| Appreciation
of investments (not credited to reserves |
|
| or
any particular fund or account) |
|
2,406,660 |
-- |
|
|
| Profit transferred from
revenue account |
|
-- |
-- |
|
|
| Transfer fees |
|
-- |
-- |
|
|
| Other
income |
|
| Profit
on sale of fixed assets |
