| Pakistan Guarantee Insurance Company Limited |
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| Annual
Report 1999 |
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| CONTENTS |
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| Company
Information |
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| Management |
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| Offices |
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| Notice
of Annual General Meeting |
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| Directors'
Report |
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| Auditors'
Report |
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| Balance Sheet |
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| Profit
& Loss Account |
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| Cash
Flow Statement |
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| Fire
Insurance Revenue Account |
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| Marine
Insurance Revenue Account |
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| Motor
& Miscellaneous Insurance Revenue Accounts |
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| Notes
to the Accounts |
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| Classified
Summary of Assets |
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| Pattern
of Shares held by Shareholders |
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| COMPANY
INFORMATION |
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| BOARD
OF DIRECTORS |
Mr. Said Ahmed |
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Chairman |
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Mr. Shakil Raza Syed |
Managing Director & |
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Chief Executive |
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Mr. Mian Mohammad Hanif
Esq. |
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Mr. Mohammad Rashid |
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Mr. Mohammad Tayyab |
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Mr. Shafiq Ahmed Shaikh |
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Mr. Sajjad Haider |
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Mr. Azher Majid Shaikh |
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Mr. Hunaid Husain Lakhani |
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Mr. Mohammad Ali |
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Mr. Shaikh Mohammad
Munawwar |
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Mr. Saleem-ul-Hassan |
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Mr. Yousuf Jan Mohammad |
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| COMPANY
SECRETARY |
Mr. Mushtaque Ahmed |
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| AUDITORS |
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Hameed Chaudhri &
Company, |
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Chartered Accountants. |
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5th Floor, Karachi
Chambers, |
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Hasrat Mohani Road, |
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Karachi. |
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| BANKERS |
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United Bank Limited |
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National Bank of Pakistan |
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Allied Bank Limited |
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Habib Bank A.G. Zurich |
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Prime Commercial Bank |
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| REGISTERED
OFFICE |
7, Bank Square, Lahore. |
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Telephone: 7235281,
7235442 |
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: 7357748, 7358024 |
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: 7356778, 7358007 |
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Fax : (042) 7323051 |
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P.O. Box : 1028 |
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| HEAD OFFICE |
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Al-Falah Court, 3rd &
5th Floors, |
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I.I. Chundrigar Road,
Karachi. |
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Telephone : 2636111--15 |
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Fax : (92-21) 2638740 |
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P.O. Box : 5436 |
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| MANAGEMENT |
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| CHAIRMAN |
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| Mr. Said Ahmed |
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| MANAGING
DIRECTOR & |
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| CHIEF
EXECUTIVE |
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| Mr.
Shakil Raza Syed |
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| ASSISTANT
GENERAL MANAGER |
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| Mr.
Absar Azim Burney, A.M.P.I.M. |
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| Mr.
Muhammad Ashraf Bhatti |
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| (Chartered
Insurer) A.C.I.I. & M.B.A. |
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| Mr.
M. Ilyas Malik |
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| CHIEF
MANAGER |
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| Mr.
S. Mujahid Hussain Shah |
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| Mr.
Mushtaque Ahmed |
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| Mr.
Hamid Raza Khan, F.C.I.C. |
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| DEPUTY
CHIEF MANAGER |
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| Mr.
Ahmed Saeed Hashmi |
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| Mr.
Mirza Obaidullah Baig |
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| M.A.
(Soc), B.Sc., PGD (CIS) |
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| Mr.
M. Shahabuddin |
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| HEAD
OF HEALTH DIVISION |
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| Dr.
Muhammad Shafi Ahmed |
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| M.B.B.S. |
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| Dr.
Ghazala Rashid (Faisalabad Division) |
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| M.B.B.S. |
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| MANAGER |
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| Mr.
M. Fayyaz Bedaar |
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| Mr.
M. Afzel Khan |
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| Mr.
S.M. Mohsin Naqvi |
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| OFFICES |
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| KARACHI |
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| Mr.
S. Mujahid Hussain Shah |
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| Chief
Manager (Marketing) |
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| 3rd
Floor, AI-Falah Court, |
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| I.I.
Chundrigar Road, |
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| Karachi. |
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| Phone:
2636111-15, Direct Ph.: 2631090 |
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| Fax:
(92-21) 2638740 |
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| ZONAL
OFFICE, LAHORE |
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| Mr.
Mohammad Ashraf Bhatti |
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| (Chartered
Insurer) A.C.I.I. & M.B.A. |
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| Assistant
General Manager |
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| 7, Bank Square, |
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| Lahore. |
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| Phone:
7356778, 7358007 |
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| 7235281, 7235442 |
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| 7357748, 7358024 |
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| Fax:
(042) 7323051 |
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| P.O. Box: 1028 |
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| FAISALABAD |
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| Mr.
M. Ilyas Malik |
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| Assistant
General Manager |
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| 23,
Chartered Bank Building, |
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| Railway Road, |
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| Faisalabad. |
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| Phone: 634451 |
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| Fax:
(041) 634452 |
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| MULTAN |
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| Mr.
Qamar Raza Zaidi |
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| Regional
Manager |
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| United Square, |
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| S.P. Chowk, |
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| 91-A,
Musarat Road, |
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| Multan Cantt. |
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| Phone: 547308 |
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| LARKANA |
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| Mr.
Ahmed Ali Solangi |
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| Area Manager |
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| Opp.
Larkana Medical Centre, |
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| Station Road, |
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| Larkana. |
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| Phone: 457144 |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| NOTICE
is hereby given that the 35th Annual General Meeting of the Company will be
held at the |
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| Registered
Office of the Company situated at 7, Bank Square, Lahore on Friday, 30th
June, 2000 at |
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| 12:30
P.M. to transact the following business:- |
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| 1.
To confirm the Minutes of the 34th Annual General Meeting held on 30th June,
1999. |
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| 2.
To receive, consider and adopt the Audited Accounts for the year ended 31st
December, 1999 |
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| together
with Directors and Auditors Report thereon. |
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| 3.
To appoint Auditors for the year ending December 31, 2000 and to fix their
remuneration. The |
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| present
Auditors M/s. Hameed Chaudhri & Company, Chartered Accountants stand
retire and offer |
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| themselves
for re-appointment. |
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| 4.
To transact any other business with the permission of the Chairman. |
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By Order of the Board |
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|
Mushtaque Ahmed |
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| Karachi:
8th June, 2000. |
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(Company Secretary) |
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| NOTES: |
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| a)
The Share Transfer Books of the Company will remain closed from June 24, 2000
to June 30, |
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| 2000
(both days inclusive). |
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| b)
A member entitled to vote at the meeting may appoint another member as his /
her proxy to |
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| attend
the meeting and vote on his / her behalf. Proxies in order to be effective,
must be received |
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| by
the Company at least 48 hours before the meeting. |
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| c)
Shareholders are requested to notify any change in their address immediately. |
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| DIRECTORS
REPORT TO THE SHAREHOLDERS |
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| On
behalf of the Board of Directors of your Company |
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| and
myself it gives me great pleasure to welcome |
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| you
to 35th Annual General Meeting and to present |
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| to
you Annual Report on the performance of your |
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| Company
together with the audited accounts for |
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| the
year ended 31st December, 1999. |
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| The
economic trends during the year1999 continued |
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| to
remain under pressure. G.D.P. growth showed |
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| declining
trend and hovered around 3%. |
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| Manufacturing
and agriculture sectors also recorded |
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| reduced
growth. Trading indicators were no better. |
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| These
trends had their toll on the Insurance Industry |
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| in
particular on the medium and small insurance |
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| companies.
The law and order situation particularly |
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| in
Sindh and Karachi hardly showed any tangible |
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| improvement
with the result that incidents of vehicle |
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| snatching
continued to remain at a high level. These |
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| adverse
factors had their effect on the operations |
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|
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| of
Pakistan Guarantee Insurance Co. Ltd. Although |
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| the
underwriting operations of the Company showed |
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| a
lower trend we were able to reduce the loss |
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| appreciably
i.e. from Rs. 8,906,588/- in 1998 to |
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| Rs.
3,445,657/- in the year under review. The decline |
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| in
losses is primarily due to better underwriting |
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| strategy
and a more selective business approach. |
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| The
operating results in the current year and last |
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| year
and appropriations also are summarized below: |
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1999 |
1998 |
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| Profit/(Loss)
for the year ended |
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| 31st
December, 1999 |
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(3,445,657) |
(8,906,588) |
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| Add:
Balance Profit/(Loss) |
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| brought
forward from |
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| previous year |
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(10,081,785) |
(279,390) |
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| Sum
available for |
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| appropriation |
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(13,527,442) |
(9,185,978) |
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| Add/(Less): |
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| Provision
of Taxation |
|
93,084 |
(895,807) |
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| Unappropriated
Profit/ |
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| (Loss)
carried forward |
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(13,434,358) |
(10,081,785) |
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| UNDERWRITING
RESULTS |
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| The
Company's earning of gross premium |
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| amounted
to Rs. 31,102,361/- during the year under |
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| review
as compared to Rs. 37,651,214/- during the |
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| year
1998. The decline is primarily due to the |
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| economic
scenario in the country described in the |
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| introductory
remarks in this report. Net premium |
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| income
amounted to Rs. 17,368,174/- at the end |
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| of
the year as against Rs. 21,713,761/- in the |
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| previous
year resulting in a decline of 20%. We |
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| would
like to emphasis here that the new |
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| management
acquired control of the Company |
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| towards
the middle of the year and had thus about |
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| six
months within which to reflect the impact of |
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| their
policy strategies. The basic priority of the new |
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| management
was to go for quality business rather |
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| than
a quantitative approach. The new management |
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| has
also introduced two new underwriting products, |
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| namely
students' insurance and medical health |
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| schemes.
These have had considerable and |
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| extensive
acceptance. The effects of these trends |
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| will
hopefully be reflected in future operational results. |
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| The
details of the various accounts are set out below:- |
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|
1999 |
|
1998 |
|
|
|
| Gross Premium |
|
31,102,361 |
(17%) |
37,651,214 |
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| Net Premium |
|
17,368,174 |
(20%) |
21,713,761 |
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|
|
|
|
|
|
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| Fire
Revenue Account |
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| Net Premium |
|
5,029,889 |
(50%) |
10,157,303 |
|
| Profit/(Loss) |
|
2,298,635 |
|
(1,080,637) |
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|
| Marine
Revenue |
|
| Account |
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| Net
Premium |
|
3,027,303 |
(49%) |
5,974,097 |
|
| Profit |
|
1,951,960 |
|
170,310 |
|
|
| Miscellaneous
Revenue |
|
| Account |
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| Net Premium |
|
9,310,982 |
(67%) |
5,582,361 |
|
| Profit/(Loss) |
|
(2,908,865) |
|
(6,446,658) |
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|
| CLAIMS
PAYMENT |
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| The
claims payment on Company's own account |
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| amounted
to Rs. 6,955,692/- for the year 1999 as |
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| against
Rs. 9,299,329/- during the previous year |
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| registering
a decrease of 25%. The largest |
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| contributory
factor on this account has been heavy |
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| claims
on account of motor cars including motor |
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| bike
thefts as has already been mentioned above. |
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| MANAGEMENT
EXPENSES |
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| The
Company's Management expenses amounted |
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| to
Rs. 17,216,502/- during the year under review |
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|
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| as
against Rs. 21,636,845/- during the previous |
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|
|
| year
registering a decline of 21%. The decline is |
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|
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| primarily
due to the action taken by your Company |
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|
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| to
a right sizing of the staff resulting in retrenchment |
|
|
| of
staff and closure of 15 non-productive branches |
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|
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| and
sub-branches out of 19 branches. The cost |
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|
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| of
this exercise amounted to Rs. 1,526,721/- The |
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|
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| results
of this exercise will be further reflected in |
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|
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| the
management expenses in the next year and |
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|
|
| years after. |
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| INVESTMENT
AND TERM DEPOSITS |
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| The
Company's investments and term deposits with |
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| banks
and financial institutions are shown below:- |
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|
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|
1999 |
1998 |
1997 |
1996 |
|
|
|
|
| TDR |
|
1,494,052 |
3,586,257 |
5,888,224 |
8,689,343 |
|
| Investments |
|
2,037,700 |
4,486,601 |
5,078,190 |
6,057,835 |
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|
------------------ |
------------------ |
------------------ |
------------------ |
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|
3,531,752 |
8,072,858 |
10,966,414 |
14,747,178 |
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|
========== |
========== |
========== |
========== |
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| The
deposits of the Company declined principally |
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|
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| due
to the timely servicing of the heavy motor and |
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|
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| other
claims of previous years which were |
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|
|
| outstanding
and lower premium income. |
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|
|
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| The
decline in investment portfolio is due primarily |
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|
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| to
sale of Orient Rice Mills' shares of the value |
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|
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| of
Rs. 2 Million under a Buy Back Arrangement |
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|
|
| as
also partly to a few disinvestments to finance |
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|
|
| expenses
of right sizing of staff mentioned above |
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|
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| as
also to some operative expenses. |
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| PROSPECTS |
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| Political
changes in October, 1999 and some |
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|
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| economic
and commercial initiatives taken by the |
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|
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| new
Govt. have generated some hopes but the |
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|
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| country's
economy still remains in recession. |
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|
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| However,
the policies announced by the new Govt. |
|
|
| hold
hopes of a turn around in the economy. |
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|
|
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| The
new management of the Company has taken |
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| several
measures for the reconstruction of the |
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| Company's
operations which are steadily having |
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| a
palliative effect on the Company's business. With |
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| the
improvement in the country's economic scenario |
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| and
the initiatives taken by the new management |
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| a
better future is hopefully expected in near future. |
|
|
| The
proposal referred to in the last Annual Report |
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| in
regard to the issue of right shares continues to |
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| receive
the serious attention of the new |
|
| management.
No headway could be made in this |
|
| regard
due to the prevailing economic recession |
|
| and
the volatility of the country's Stock Exchange. |
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| Consequently
the investment climate in the country |
|
| was
abysmally at its lowest ebb. These factors |
|
| compelled
the management to delay the issue of |
|
| right
shares. However, the Board continues to focus |
|
| its
attention to this operation as the minimum share |
|
| capital
has to be raised to the level of Rs. 50 million |
|
| by
the year 2002. The Company is now considering |
|
| achieving
this objective by staggering the right share |
|
| operation
in stages. |
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|
| BOARD
OF DIRECTORS |
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| As
a result of elections of Directors held on 30th |
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| June,
1999 a new Board was constituted. The |
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| names
of new Directors are:- |
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|
| 1)
Mr. Said Ahmed |
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| 2)
Mian Muhammad Hanif Esq. |
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| 3)
Mr. Muhammad Rashid |
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| 4)
Mr. Muhammad Tayyab |
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| 5)
Mr. Shafiq Ahmed Shaikh |
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| 6)
Mr. Sajjad Haider |
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| 7)
Mr. Azher Majid Shaikh |
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| 8)
Mr. Hunaid Hussain Lakhani |
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| 9)
Mr. Muhammad Ali (PIC) |
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| 10)
Mr. Shaikh Muhammad Munawwar |
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| 11)
Mr. Saleem-ul-Hassan |
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| 12)
Mr. Yousuf Janmohammad |
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| 13)
Mr. Shakil Raza Syed |
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|
| The
Board extends its warm welcome to the new |
|
| Directors
as well as thanks to the retiring Directors |
|
| for
their valuable contribution. |
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|
| ACKNOWLEDGMENT |
|
| We
wish to express our thanks to the Controller |
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| of
Insurance, Pakistan Insurance Corporation, |
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| Insurance
Association of Pakistan, the State Bank |
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| of
Pakistan, the Bankers, Development Finance |
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| Institutions
and our Reinsurers in particular for the |
|
| valuable
co-operation and support extended by them. |
|
|
| We
also extend our profound thanks to our valued |
|
| clients
who continue to entrust their business to |
|
| us
and sincerely trust that the confidence reposed |
|
| by
them in the Company will not only encourage |
|
| the
Company to maintain these relations but also |
|
| to
expand and strengthen them in the years to come. |
|
|
| We
also express our grateful thanks to our |
|
| shareholders
for reposing confidence in the |
|
| Company
and it will be our endeavour to ensure |
|
| that
their interests remain protected. |
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|
| We
also look forward to welcoming new customers |
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| to
our ever-widening client-base. |
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|
| We
thank all our staff for their loyal and conscien- |
|
| tious
co-operation which is an important factor |
|
| contributing
to the success of the Company. |
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|
|
|
For and on behalf of the Board |
|
|
|
|
|
|
|
(SAID AHMED) |
|
| Faisalabad:
7th June, 2000 |
|
Chairman |
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of Pakistan Guarantee Insurance
Company Limited as |
|
| at
31st December, 1999 and related Fire, Marine and Miscellaneous Insurance
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 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; |
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|
|
|
|
| (b)
in our opinion: |
|
|
|
| (i)
the Balance Sheet, Revenue Accounts, Profit and Loss Account and Profit and
Loss Appropriation |
|
| Account
have been drawn up in conformity with the law 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 Company's
business; and |
|
|
|
|
| (iii)
the business conducted, investments made and the expenditure incurred during
the year were |
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| in
accordance with the objects of the Company; |
|
|
|
| (iv)
in our opinion, no Zakat was deductible at source, under Zakat and Ushr
Ordinance, 1980. |
|
|
| (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 annexed Balance Sheet, Revenue
Accounts, |
|
| Profit
and Loss Account, Profit and Loss Appropriation Account and the Cash Flow
Statement, |
|
| together
with notes forming part thereof, give the information required by the law in
the manner |
|
| so
required and respectively give a true and fair view of the state of the
Company's affairs as at |
|
| 31st
December, 1999 and of the loss and Cash Flow for the year then ended; and |
|
|
|
|
|
| (d)
we have verified cash and bank balances and the securities relating to
Company's investments |
|
| by
actual inspection or production of certificates or other documents. |
|
|
|
|
|
| (e)
as per section 40C (2) of the Insurance Act 1938, we certify that all
expenses of management |
|
| wherever
incurred whether directly or indirectly in respect of Fire, Marine and
Miscellaneous business |
|
| transacted
in Pakistan have been fully debited in the respective revenue accounts as
expenses; |
|
|
| (f)
as per regulation 11, Part 1 of the Third Schedule of the Insurance Act 1938,
the Company has |
|
| not
paid to any person any commission in any form outside Pakistan in respect of
insurance |
|
| business
transacted by the Company in Pakistan and the Company has not received
outside Pakistan |
|
| from
any person any commission in respect of any business reinsured abroad. |
|
|
|
|
|
HAMEED CHAUDHRI & CO. |
|
| Karachi:
8th June, 2000 |
|
CHARTERED ACCOUNTANTS |
|
|
|
| BALANCE
SHEET AS AT 31ST DECEMBER, 1999 |
|
|
|
|
Note |
1999 |
1998 |
|
|
|
|
RUPEES |
RUPEES |
|
| SHARE
CAPITAL AUTHORIZED |
|
|
| Authorised |
|
|
|
| 5,000,000
Ordinary Shares |
|
|
| of Rs. 10/- each |
|
|
50,000,000 |
50,000,000 |
|
|
|
========== |
========== |
|
| ISSUED,
SUBSCRIBED & PAID UP |
|
|
| 2,516,456
Ordinary Shares |
|
|
|
|
| of Rs. 10/- each |
|
|
3 |
25,164,560 |
25,164,560 |
|
| RES |
