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Pakistan Guarantee Insurance Company Limited
Annual Report 1999
CONTENTS
Company Information
Management
Offices
Notice of Annual General Meeting
Directors' Report
Auditors' Report
Balance Sheet
Profit & Loss Account
Cash Flow Statement
Fire Insurance Revenue Account
Marine Insurance Revenue Account
Motor & Miscellaneous Insurance Revenue Accounts
Notes to the Accounts
Classified Summary of Assets
Pattern of Shares held by Shareholders
COMPANY INFORMATION
BOARD OF DIRECTORS Mr. Said Ahmed Chairman
Mr. Shakil Raza Syed Managing Director &
Chief Executive
Mr. Mian Mohammad Hanif Esq.
Mr. Mohammad Rashid
Mr. Mohammad Tayyab
Mr. Shafiq Ahmed Shaikh
Mr. Sajjad Haider
Mr. Azher Majid Shaikh
Mr. Hunaid Husain Lakhani
Mr. Mohammad Ali
Mr. Shaikh Mohammad Munawwar
Mr. Saleem-ul-Hassan
Mr. Yousuf Jan Mohammad
COMPANY SECRETARY Mr. Mushtaque Ahmed
AUDITORS Hameed Chaudhri & Company,
Chartered Accountants.
5th Floor, Karachi Chambers,
Hasrat Mohani Road,
Karachi.
BANKERS United Bank Limited
National Bank of Pakistan
Allied Bank Limited
Habib Bank A.G. Zurich
Prime Commercial Bank
REGISTERED OFFICE 7, Bank Square, Lahore.
Telephone: 7235281, 7235442
                   : 7357748, 7358024
                   : 7356778, 7358007
Fax             : (042) 7323051
P.O. Box    : 1028
HEAD OFFICE Al-Falah Court, 3rd & 5th Floors,
I.I. Chundrigar Road, Karachi.
Telephone : 2636111--15
Fax              : (92-21) 2638740
P.O. Box     : 5436
MANAGEMENT
CHAIRMAN
Mr. Said Ahmed
MANAGING DIRECTOR &
CHIEF EXECUTIVE
Mr. Shakil Raza Syed
ASSISTANT GENERAL MANAGER
Mr. Absar Azim Burney, A.M.P.I.M.
Mr. Muhammad Ashraf Bhatti
(Chartered Insurer) A.C.I.I. & M.B.A.
Mr. M. Ilyas Malik
CHIEF MANAGER
Mr. S. Mujahid Hussain Shah
Mr. Mushtaque Ahmed
Mr. Hamid Raza Khan, F.C.I.C.
DEPUTY CHIEF MANAGER
Mr. Ahmed Saeed Hashmi
Mr. Mirza Obaidullah Baig
M.A. (Soc), B.Sc., PGD (CIS)
Mr. M. Shahabuddin
HEAD OF HEALTH DIVISION
Dr. Muhammad Shafi Ahmed
M.B.B.S.
Dr. Ghazala Rashid (Faisalabad Division)
M.B.B.S.
MANAGER
Mr. M. Fayyaz Bedaar
Mr. M. Afzel Khan
Mr. S.M. Mohsin Naqvi
OFFICES
KARACHI
Mr. S. Mujahid Hussain Shah
Chief Manager (Marketing)
3rd Floor, AI-Falah Court,
I.I. Chundrigar Road,
Karachi.
Phone: 2636111-15, Direct Ph.: 2631090
Fax: (92-21) 2638740
ZONAL OFFICE, LAHORE
Mr. Mohammad Ashraf Bhatti
(Chartered Insurer) A.C.I.I. & M.B.A.
Assistant General Manager
7, Bank Square,
Lahore.
Phone: 7356778, 7358007
             7235281, 7235442
             7357748, 7358024
Fax: (042) 7323051
P.O. Box: 1028
FAISALABAD
Mr. M. Ilyas Malik
Assistant General Manager
23, Chartered Bank Building,
Railway Road,
Faisalabad.
Phone: 634451
Fax: (041) 634452
MULTAN
Mr. Qamar Raza Zaidi
Regional Manager
United Square,
S.P. Chowk,
91-A, Musarat Road,
Multan Cantt.
Phone: 547308
LARKANA
Mr. Ahmed Ali Solangi
Area Manager
Opp. Larkana Medical Centre,
Station Road,
Larkana.
Phone: 457144
NOTICE OF ANNUAL GENERAL MEETING
NOTICE is hereby given that the 35th Annual General Meeting of the Company will be held at the
Registered Office of the Company situated at 7, Bank Square, Lahore on Friday, 30th June, 2000 at
12:30 P.M. to transact the following business:-
1. To confirm the Minutes of the 34th Annual General Meeting held on 30th June, 1999.
2. To receive, consider and adopt the Audited Accounts for the year ended 31st December, 1999
together with Directors and Auditors Report thereon.
3. To appoint Auditors for the year ending December 31, 2000 and to fix their remuneration. The
present Auditors M/s. Hameed Chaudhri & Company, Chartered Accountants stand retire and offer
themselves for re-appointment.
4. To transact any other business with the permission of the Chairman.
By Order of the Board
Mushtaque Ahmed
Karachi: 8th June, 2000. (Company Secretary)
NOTES:
a) The Share Transfer Books of the Company will remain closed from June 24, 2000 to June 30,
2000 (both days inclusive).
b) A member entitled to vote at the meeting may appoint another member as his / her proxy to
attend the meeting and vote on his / her behalf. Proxies in order to be effective, must be received
by the Company at least 48 hours before the meeting.
c) Shareholders are requested to notify any change in their address immediately.
DIRECTORS REPORT TO THE SHAREHOLDERS
On behalf of the Board of Directors of your Company
and myself it gives me great pleasure to welcome
you to 35th Annual General Meeting and to present
to you Annual Report on the performance of your
Company together with the audited accounts for
the year ended 31st December, 1999.
The economic trends during the year1999 continued
to remain under pressure. G.D.P. growth showed
declining trend and hovered around 3%.
Manufacturing and agriculture sectors also recorded
reduced growth. Trading indicators were no better.
These trends had their toll on the Insurance Industry
in particular on the medium and small insurance
companies. The law and order situation particularly
in Sindh and Karachi hardly showed any tangible
improvement with the result that incidents of vehicle
snatching continued to remain at a high level. These
adverse factors had their effect on the operations
of Pakistan Guarantee Insurance Co. Ltd. Although
the underwriting operations of the Company showed
a lower trend we were able to reduce the loss
appreciably i.e. from Rs. 8,906,588/- in 1998 to
Rs. 3,445,657/- in the year under review. The decline
in losses is primarily due to better underwriting
strategy and a more selective business approach.
The operating results in the current year and last
year and appropriations also are summarized below:
1999 1998
Profit/(Loss) for the year ended
31st December, 1999 (3,445,657) (8,906,588)
Add: Balance Profit/(Loss)
brought forward from
previous year (10,081,785) (279,390)
Sum available for
appropriation (13,527,442) (9,185,978)
Add/(Less):
Provision of Taxation 93,084 (895,807)
Unappropriated Profit/
(Loss) carried forward (13,434,358) (10,081,785)
UNDERWRITING RESULTS
The Company's earning of gross premium
amounted to Rs. 31,102,361/- during the year under
review as compared to Rs. 37,651,214/- during the
year 1998. The decline is primarily due to the
economic scenario in the country described in the
introductory remarks in this report. Net premium
income amounted to Rs. 17,368,174/- at the end
of the year as against Rs. 21,713,761/- in the
previous year resulting in a decline of 20%. We
would like to emphasis here that the new
management acquired control of the Company
towards the middle of the year and had thus about
six months within which to reflect the impact of
their policy strategies. The basic priority of the new
management was to go for quality business rather
than a quantitative approach. The new management
has also introduced two new underwriting products,
namely students' insurance and medical health
schemes. These have had considerable and
extensive acceptance. The effects of these trends
will hopefully be reflected in future operational results.
The details of the various accounts are set out below:-
1999 1998
Gross Premium 31,102,361 (17%) 37,651,214
Net Premium 17,368,174 (20%) 21,713,761
Fire Revenue Account
Net Premium 5,029,889 (50%) 10,157,303
Profit/(Loss) 2,298,635 (1,080,637)
Marine Revenue
Account
Net Premium  3,027,303 (49%) 5,974,097
Profit 1,951,960 170,310
Miscellaneous Revenue
Account
Net Premium 9,310,982 (67%) 5,582,361
Profit/(Loss) (2,908,865) (6,446,658)
CLAIMS PAYMENT
The claims payment on Company's own account
amounted to Rs. 6,955,692/- for the year 1999 as
against Rs. 9,299,329/- during the previous year
registering a decrease of 25%. The largest
contributory factor on this account has been heavy
claims on account of motor cars including motor
bike thefts as has already been mentioned above.
MANAGEMENT EXPENSES
The Company's Management expenses amounted
to Rs. 17,216,502/- during the year under review
as against Rs. 21,636,845/- during the previous
year registering a decline of 21%. The decline is
primarily due to the action taken by your Company
to a right sizing of the staff resulting in retrenchment
of staff and closure of 15 non-productive branches
and sub-branches out of 19 branches. The cost
of this exercise amounted to Rs. 1,526,721/- The
results of this exercise will be further reflected in
the management expenses in the next year and
years after.
INVESTMENT AND TERM DEPOSITS
The Company's investments and term deposits with
banks and financial institutions are shown below:-
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
------------------ ------------------ ------------------ ------------------
3,531,752 8,072,858 10,966,414 14,747,178
========== ========== ========== ==========
The deposits of the Company declined principally
due to the timely servicing of the heavy motor and
other claims of previous years which were
outstanding and lower premium income.
The decline in investment portfolio is due primarily
to sale of Orient Rice Mills' shares of the value
of Rs. 2 Million under a Buy Back Arrangement
as also partly to a few disinvestments to finance
expenses of right sizing of staff mentioned above
as also to some operative expenses.
PROSPECTS
Political changes in October, 1999 and some
economic and commercial initiatives taken by the
new Govt. have generated some hopes but the
country's economy still remains in recession.
However, the policies announced by the new Govt.
hold hopes of a turn around in the economy.
The new management of the Company has taken
several measures for the reconstruction of the
Company's operations which are steadily having
a palliative effect on the Company's business. With
the improvement in the country's economic scenario
and the initiatives taken by the new management
a better future is hopefully expected in near future.
The proposal referred to in the last Annual Report
in regard to the issue of right shares continues to
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.
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.
BOARD OF DIRECTORS
As a result of elections of Directors held on 30th
June, 1999 a new Board was constituted. The
names of new Directors are:-
1) Mr. Said Ahmed
2) Mian Muhammad Hanif Esq.
3) Mr. Muhammad Rashid
4) Mr. Muhammad Tayyab
5) Mr. Shafiq Ahmed Shaikh
6) Mr. Sajjad Haider
7) Mr. Azher Majid Shaikh
8) Mr. Hunaid Hussain Lakhani
9) Mr. Muhammad Ali (PIC)
10) Mr. Shaikh Muhammad Munawwar
11) Mr. Saleem-ul-Hassan
12) Mr. Yousuf Janmohammad
13) Mr. Shakil Raza Syed
The Board extends its warm welcome to the new
Directors as well as thanks to the retiring Directors
for their valuable contribution.
ACKNOWLEDGMENT
We wish to express our thanks to the Controller
of Insurance, Pakistan Insurance Corporation,
Insurance Association of Pakistan, the State Bank
of Pakistan, the Bankers, Development Finance
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.
We also look forward to welcoming new customers
to our ever-widening client-base.
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.
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;
(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
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