Our Vision - pgi.com.pk strategic decision making and ... Auto Cover is a complete auto insurance plan for both ... Raja Gul Saeed Ahmed Khan General Manager

Our Vision

The Pakistan General Insurance Company Limited is

committed to provide quality insurance services and

improved coverage by virtue of sound professionalism

and risk management expertise, to provide better

coverage and satisfaction of their customers.

Our aim is to provide cost effective insurance cover to

our customers which is achieved by increasing the

productivity of our employees.

We follow good governance and sound professionalism

to become a well reputed and respected corporate

entity in the eyes of government and society.

We strive to maintain a customer focused approach by

ensuring that our services are delivered to the

customer in time, according to the required

specifications and within our stipulated cost.

Our Mission

Our overall objective is to produce consistent

underwriting results by structuring exceptional

programs and providing superior service and to grow

our business every year.

This objective will be accomplished by creating a

workplace where employees are challenged to

improve our work product. We will strive to make

certain that our people understand the link between

their performance and the success of the company;

that goals are established, responsibilities are given,

and measurements are installed to ensure

accountability across functions; and that we operate a

company with integrity where mutual respect and

teamwork are more than mere words.

In todays’ rapidly changing economic climate, we like

to think of ourselves as both challenged and fortunate

to be able to serve our insured in ways they have grown

to trust us in the past. Our goal at The Pakistan General

Insurance Company Limited is to do just that, as we

strive for a better and brighter future.

Our Objectives

Risk Management

“Good Risk Management fosters

vigilance in times of calm and

instills discipline in times of crisis”

Ch. Manzoor AhmedChairman

67Annual Report 2008 05Annual Report 2008

C O N T E N T S

COMPANY PROFILE

MANAGEMENT INFORMATION

BOARD COMMITTEES

KEY FINANCIAL DATA

SHAREHOLDERS’ INFORMATION

PROXY FORM

DIRECTORS’ REPORT TO THE SHAREHOLDERS

STATEMENT OF COMPLIANCE WITH BEST PRACTICES AND CORPORATE GOVERNANCE

AUDITORS’ REPORT TO THE MEMBERS

BALANCE SHEET

STATEMENT OF CHANGES IN EQUITY

PROFIT AND LOSS ACCOUNT

CASH FLOW STATEMENT

STATEMENT OF PREMIUMS

STATEMENT OF CLAIMS

STATEMENT OF EXPENSES

STATEMENT OF INVESTMENT INCOME

NOTES TO THE FINANCIAL STATEMENTS

NOTICE OF ANNUAL GENERAL MEETING

CEO’s MESSAGE

REVIEW REPORT TO THE MEMBERS ON STATEMENT OF COMPLIANCE WITH BEST PRACTICES AND CORPORATE GOVERNANCE

6

9

13

16

20

25

31

34

36

39

38

40

42

43

44

45

46

71

24

33

The Pakistan General Insurance Company Limited06 The Pakistan General Insurance Company Limited06

Company Profile

Board of Directors Re-Insurance & Co-Insurance Committee Ch. Manzoor Ahmed (Chairman) PSP Inspector General of Police (Retd.) Director General Intelligence Bureau (Retd.)

Nasir Ali (Chairman)

Ch. Zahoor Ahmed (Chief Executive)

Muhammad Maqsood Peracha

Nasir Ali (President) ACII (London)

Abdul Majid (Secretary)

Dr. Mahmod ul Haq

Ch. Athar Zahoor

Auditors

Usman Ali

M. Yousuf Adil Saleem & Co.

Ch. Mazhar Zahoor

Chartered Accountants

Rehan Beg

(A member firm of Deloitte Touché Tomatsu)

Ch. Muhammad Saleem

Kamran & Co.


Chief Executive Officer

Ch. Zahoor Ahmed

Legal Adviser

Law Inn. Mr. Javed Iqbal (Advocate)

Chief Risk Officer

Ch. Muhammad Maqsood (Advocate)

Nasir Ali

Share Registrar

Chief Financial Officer

Corplink (Private) Limited

Azhar Hafeez Ch.

Tax Consultants

Chief General Manager

Kamran & Co.

Ch. Ghulam Mustafa


Company Secretary

Bankers

Ch. Muhammad Saleem

National Bank of Pakistan Limited

Habib Bank Limited

Audit Committee

Allied Bank Limited

Rehan Beg (Chairman)

Bank of Punjab Limited

Mazhar Zahoor

United Bank Limited

Ch. Athar Zahoor (Secretary)

MCB Bank Limited

Standard Chartered Bank Limited

Investment Committee

Bank Alfalah Limited

Ch. Zahoor Ahmed (Chairman)

Soneri Bank Limited

Ch. Manzoor Ahmed

NIB Bank Limited

Javed Iqbal Khan (Secretary)

Bank of Khyber Limited

K.A.S.B Bank Limited

Claims Committee

Registered & Head Office

Major (Retd.) Munir A. Kazi (Chairman)

Cooperative House, 5 Bank Square

Ch. Ghulam Mustafa

Shahrah-e-Quaid-e-Azam

Fazal Dad Malik (Secretary)

Lahore

Underwriting Committee

Contact

Malik Muhammad Asghar (Chairman)

Tel.: +92(042) 732-4404; 722-3224

Zahid Iqbal Zia

735-2182; 732-3569

Muhammad Yousuf (Secretary)

Fax: +92(042) 723-0895; 723-0634 Email: [email protected]: www.pgi.com.pk


Company Profile

Early days to - date

PGI Philosophy

Presence around the country

The Pakistan General Insurance Company Limited came into existance in the year 1947. Since its

inception PGI has grown into a reputed name in the insurance industry. With expertise in the field of

insurance and risk management of over 60 years and on the basis of well-governed procedures

founded on the highest ethical and moral practices, PGI has instituted a good business footing in the

non-life insurance sector in Pakistan.

With an asset base of over 500 million rupees, PGI is one of the emerging quoted insurance companies

in Pakistan and has been listed on the Karachi, Lahore and Islamabad Stock Exchanges since July

1995. The organization is also on the approved list of most scheduled banks operating in the country

since its inception.

During the year 2007, The Pakistan General Insurance Company Limited took over Pak Equity

Insurance Company Limited in order to enhance its capital base while excelling in new regions and

potential markets.

Our philosophy at PGI is to provide our customers and clients with peace of mind. We are dedicated to

maintaining the highest standards of integrity and sound dealing in our relationships with all

stakeholders: customers, intermediaries, employees, shareholders and business partners. In every

action we seek to make a positive contribution towards community activities and are committed to

perform in a socially responsible manner. With technical expertise in the field of non-life insurance,

PGI offers unparallel advice and personalized services in all spheres of general insurance: fire,

marine, motor, engineering, travel and miscellaneous category.

With an aim to relentlessly cater to the needs of its customers and clients across the nation, PGI has a

wide network (with one of the biggest network of branches in the country) of its offices across the

country.

With an unrelenting drive to expand and further establish itself, PGI has enhanced its presence in

almost all areas of business. The Company's proven ability to manage associated risks, along with its

substantial risk absorption capacity, provides significant cushioning to make inroads into relatively

high-risk areas. PGI continues to maintain re-insurance agreements with highly reputable and world

renowned reinsurers including Labuan Re and Malaysia Re.

PGI has been awarded Insurer Financial Strength (IFS) Rating of 'BBB' with a stable outlook by JCR-VIS, denoting an adequate capacity to meet policyholder and contract obligations.

The rating also recognizes the Company's sound underwriting philosophy, prudent management,

effective strategic decision making and implimentation and healthy profitability, though the overall

performance is currently under pressure on account of declining investment income.

The Pakistan General Insurance Company Limited08

Company Profile

Products and Services

i) Fire & Allied Perils Insurance

i) Marine Insurance

iii) Motor Cover

iv) Miscellaneous Insurance

Reinsurance Arrangements:

This cover is property insurance for factories, offices and homes. It provides coverage against

perils like fire and lightning which can be extended to cover the following: impact damage,

storms, earthquakes, rain-flood damage, riot and strike damage, burglary and malicious

damage etc.

Covers imports and exports of consignments, loss or damage of cargo during transit by Air, Sea

and Rail/Road; it also covers dispatch of finished goods from the insured factory to anywhere

in Pakistan. This kind of coverage is provided to transport related businesses such as Ship

Agents, Freight Forwarders, Terminal Operators, Stevedores, Courier Services, etc.

Auto Cover is a complete auto insurance plan for both individuals and corporate offering:

A comprehensive cover including theft, snatching, armed hold up, accidental damage,

third party liability and terrorism.

Guaranteed settlement of Snatching / Theft / Total Loss claims within 15 days of

completion of required documents.

We also provide customized insurance solutions for our corporate clients. The covers range

from the insurance of engineering projects to electrical equipment and machinery.

We are re-insured with world renowned and highly reputed international re-insurers holding the

highest ratings in their respective businesses. These are:

i

−

−

Labuan re

Malaysian re

African re

Pak re

Best re

Trust International


Management Information Management Chief Executive Officer Ch. Zahoor Ahmed

President & Chief Risk Officer Nasir Ali. ACII (London)

Company Secretary Ch. Muhammad Saleem

Chief Financial Officer Azhar Hafeez Ch.

Chief General Manager Ch. Ghulam Mustafa

Department and Regional Heads

Head of Human Resource Department Usman Ali

Head of Internal Audit Department Abdul Rasheed

Head of Underwriting and Claims Malik Muhammad Asghar

Head of Underwriting – Marine and Miscellaneous Muhammad Iqbal

Head of Underwriting – Motor Muhammad Yousuf

Advisor to CEO Major (Retd.) Munir A. Kazi

Senior Vice President (Accounts and Finance) Javed Iqbal Khan

Vice President Re Insurance and Claims Muhammad Maqsood Piracha

Vice President Marketing and Public Relations Ch. Siddiq Sabir

Head of MIS and Information Technology Department Sajjid Bhatti

Joint President (South Zone) Raja Gul Saeed Ahmed Khan

General Manager (Lahore Zone I) Shiekh Azmat Ali

General Manager (Lahore Zone II) Ch. Habib Ullah

General Manager (Lahore Zone III) Shiekh Muhammad Anwar

General Manager (Lahore Zone IV) Muhammad Saeed Khokhar

General Manager (North) Malik Fazal Dad

General Manager (Multan Region) Syed Fahim Waris

General Manager (Bahawalpur Region) Ch. Muhammad Ali

Executive Vice President (Karachi) Haroon Ghani Memon

Senior Vice President (Hyderabad Region) Muhammad Shafi Chundrigar

Vice President (Capital City Islamabad) Raja Basit

Vice President (Quetta) Mohammad Siddique


Management Information PGI Branch Offices Network

Lahore

Registered and Head Office Ch. Gulzar Ahmed

Cooperative Bank House, 5 Bank Vice President

Square, Shahrah-e-Quaid-e-Azam,

Lahore

212-213 Abid Market, Qurtaba Chowk, Lahore

Tel

732-3569; 732-5382

Tel

636-0959; 630-1187

732-4404; 735-2182

Fax

723-0634

Lahore (Zone III)

Muhammad Anwar Shiekh

President and Chief Executive Office

General Manager (Zone III)

Gardee Trust Building

2nd

Floor, Asif Plaza, 19 Abbott Road

Thornton Road, Lahore

Lahore

Tel

722-3224; 731-0685

Tel

731-0590; 723-0892; 723-0894

Fax

723-0895

Lahore (Zone IV)

630-4646; 630-6513

Muhammad Saeed Khokhar

Principal Office

General Manager (Zone IV)

PGI House, 5-A, Bank Square

226 Mozang Market, Ewing Road,

Shahrah-e-Quaid-e-Azam, Lahore

Nila Gumbad, Lahore

Tel

731-2992; 731-2962

Tel

735-6202; 724-0965

711-3551; 711-3552

Fax

731-2997

Karachi

Haroon Ghani Memon

Lahore (Zone I)

Executive Vice President

Shiekh Azmat Ali

Room # 508, 5th

Floor Uni Plaza

General Manager (Zone I)

I. I. Chundrigar Road

1st

Floor Gulberg Center, Main Boulevard,

Karachi

Gulberg, Lahore

Tel

240-0755; 274-2491

Tel

576-3146

Islamabad

Zaheer-ul-Hassan Qadri

Raja Basit Ali

Vice President

Vice President

27 K, Gulberg II, Lahore

Room # 13, 2nd

Floor

Tel

575-9553; 575-8893

Hill View Plaza, Blue Area

Islamabad

Lahore (Zone II)

Tel

Ch. Habib Ullah

General Manager (Zone II)

Raja M. Ifrahim Satti

89 A, Temple Road

Assistant Vice President

Lahore

Flat # 283, Wasal Plaza

287-6274

Tel

636-6997; 637-2891

Plot # 1/F, Bazar # 5, Sector 1-10/1

844-3534; 636-1206

Islamabad

Tel

443-5886; 443-5007

(042)

(042)

(042)

(042)

(042)

(042)

(042)

(042)

(042)

(042)

(042)

(042)

(021)

(051)

(051)

11Annual Report 2008


Multan Quetta Syed Fahim Waris Mohammad Siddique

General Manager Assistant Vice President

Shopping Center # 3, Room No. 1, 2nd Floor

Opposite Shangrila Bakery Agha Siraj Complex, Circular Road

Shahrah-e-Quaid-e-Azam Quetta

Multan

Tel 454-3130; 458-1227 Muzaffarabad (Azad Kashmir) Tahir Masud Minhas

Faisalabad 91 Light Road

Zaffar Hanif Shiekh Muzaffarabad

Vice President Tel 43830

Opposite Iqbal Park

Dhobi Gate, New Garden Town Hyderabad

New Khan Road Runner

Muhammad Shafi Chundrigar

Kokab shopping Center

Senior Vice President

Faisalabad

Room No. 1 and 2, 3rd Floor

Tel 261-5774

Al-Falah Chambers, Tilac Incline

Fax 262-2874

Hyderabad

Tel

263-5128; 263-0545

Rahim Yar Khan

300-9002

Muhammad Iqbal

Fax

261-0140

Branch Manager

9-A , Babar Colony

Gujranwalla

Rahim Yar Khan

Muhammad Arif Butt

Tel

872-060

Vice President

Bahawalpur

58 B, Trust Plaza, GT Road

Ch. Muhammad Ali

Gujranwalla

General Manager

Tel

373-5997

1st

Floor, Al -Karim Plaza

Circular Road

Sahiwal

Bahawalpur

Ch. Iqbal Hussain

Tel

287-6535

Executive Vice President

147 Railway Road, Sahiwal

Syed Waqar Ali Rizvi

Tel

422-0825; 446-7130


Zahoor Market, Eid Gah Road

Sukkur

Bahawalpur

Raja Gul Saeed Ahmed Khan

Joint President

Peshawar

16

Mehran Markaz

Malik Fazal Dad

Sukkur

General Manager

Tel

561-3508

Room No. S/3 and 4, 2nd

Floor, Belore Palace

Peshawar

Tel

5184; 527

Fax

527-1077527- - 5405

(061)

(041)

(0685)

(062)

(091)(091)

(041)

(058810)

(022)

(022)

(055)

(040)

(071)



Abbotabad Vehari Ahsan Rasheed Mirza Ch. Muhammad Ali

Branch Manager General Manager

119 Iqbal Shopping Complex 47 B, Grain Market

The Mall Vehari

Abbotabad Tel 365-228; 365-828

Tel 336-087 Fax

361-046

Sargodha

Jhang

Ch. Zaffar Niaz

Mian Zulfiqar Ali Khan

Regional Manager

Vice President

Shaheen Plaza

Mughal Market, Yousuf Shah Road

Railway Road

Jhang

Sargodha

Tel

762-1943

Tel

372-2435

Kot Addu

Muhammad Taufeeq Piracha

Muhammad Nadeem Khan

Branch Manager

Branch Manager

99 Trust Plaza, Fatima Jinnah Road

Flat No. 4, Abbass Plaza

Sargodha

Kot Addu

Tel

372-1418

Tel

242-847

Sialkot

Chishtian

Mirza Azam Baig

Muhamamd Amin Javed

Vice President

Vice President

Aurangzeb Market, Karimpura Road

Gala Mandi

Sailkot

Chishtian

Tel

458-6223

Tel

250-3042

Mianwali

Muhammad Khan Baloch


Bank Street, Mianwali

Tel

233-130

DG Khan

Syed Fahim Waris

General Manager

10 Z, Model Town, DG Kha n

Tel

246-1101; 246-4969

Mian Javed

Branch Manager

Quaid-e-Azam Road, DG Khan

(0992)

(048)

(048)

(052)

(0459)

(064)

(0673)(0673)

(047)

(0662)

(063)


Board Committees

Audit CommitteeIn line with the best practices, the Board of Directors has established the audit committee. The Terms of Reference of the committee have been developed on the lines as laid down in the Code of Corporate Governance and approved by the Board.

These include:

i) To recommend to the Board of Directors the appointment of external auditors by the Company's shareholders and consider any questions of resignation or removal of external auditors, audit fees and provision by external auditors of any service to the Company in addition to audit of its financial statements;

ii) To review the quarterly, half-yearly and annual financial statements of the Company, prior to their approval by the Board of Directors;

iii) To facilitate the external audit and discussion with external auditors of major observations arising from interim and final audits and any matter that the auditors may wish to highlight;

iv) To review the management letter issued by external auditors and management's response thereto;

v) To ensure coordination between the internal and external auditors of the Company;vi) To review the scope and extent of internal audit and ensuring that the internal audit function

has adequate resources and is appropriately placed within the Company;vii) To consider the major findings of internal investigations and management's response thereto;viii) To ascertain that the internal control system including financial and operational controls,

accounting system and reporting structure are adequate and effective;ix) To determine compliance with relevant statutory requirements; andx) To monitor compliance with the best practices of corporate governance and identification of

significant violations thereof.

The audit committee comprises of the following members:

Rehan Beg Non-executive & Independent Director (Chairman)Mazhar Zahoor Non-executive DirectorCh. Athar Zahoor Non-executive Director & Secretary to the Committee

Human Resource CommitteeHuman Resource Committee assists the Board in fulfilling its obligations relating to human resources and related matters and to establish a plan of continuity and development of senior management for PGI.

The Terms of Reference of HR Committee are as follows:

i) To review and recommend the compensation and benefits philosophy and strategy within the Company;

ii) To review and recommend to the Board the Company's strategy respecting human resources management and planning, including recruitment, retention, training, performance management and related matters and to report the Board on the implementation of these strategies at least once a year;


iii) To review the Company's strategy for succession planning across all management levels and to ensure that comprehensive succession plans are in place for senior executive positions;

iv) To review and recommend, in consultation with the CEO, the appointment and compensation of all its employees, including incentive, benefit and retirement plans;

v) To review the amount of incentive bonus based on corporate and individual performance, for the purpose of incentives calculation; and

vi) To review and recommend the CEO's compensation, including incentive, benefit and retirement plans, to the Board for approval.

The human resource committee comprises of the following members:

The underwriting committee comprises of the following members:

Ch. Manzoor Ahmed Non-executive Director (Chairman)Dr. Mahmod – ul – Haq Non-executive DirectorRehan Beg Non-executive & Independent DirectorUsman Ali Head of HR Department & Secretary to the Committee

The underwriting committee formulates the underwriting policy of the Company;It sets out the criteria for assessing various types of insurance risks and determines the premium policy of different insurance covers; andIt regularly reviews the underwriting and premium policies of the Company with due regard to relevant factors such as its business portfolio and the market development.

Malik Muhammad Asghar Head Underwriting - Fire (Chairman)Zahid Iqbal Zia SVP Underwriting (Fire & Miscellaneous)Muhammad Yousuf VP Underwriting (Motor) & Secretary to the Committee

Underwriting Committee••

•

Claim Settlement Committee•

•

•

•

The underwriting committee formulates the underwriting policy of the Company. This committee devises and reviews the claims settling policy of the Company;It oversees the claims position of the Company and ensures that adequate claims reserves are made;It determines the circumstances under which the claims disputes shall be brought to its attention and decides how to deal with such claims disputes; andIt also oversees the implementation of the measures for combating fraudulent claims cases.

Major (Retd.) Munir A. Kazi Advisor to CEO (Chairman)Ch. Ghulam Mustafa Chief General Manager (Member)Fazal Dad Malik EVP / General Manager (Member & Secretary to the

Committee)

The claims settlement committee comprises of the following members:


Board Committees

Re-Insurance & Co-Insurance Committee:

Investment Committee

•

•

•

This committee ensures that adequate reinsurance arrangements are made for the Company's businesses;

It peruses the proposed re-insurance arrangements prior to their execution, reviews the arrangements from time to time and subject to the consent of the participating reinsures, makes appropriate adjustments to those arrangements in the light of the market development; and

It also assesses the effectiveness of the reinsurance programs for the future reference.

The re-insurance & co-insurance committee members are as follows:

The purpose of the Investment Committee is to recommend to the Board the investment policy, including the asset mix policy and the appropriate benchmark. The investment committee also reviews the effectiveness of these policies and their implementation and the Company's Risk management approach.

The Terms of Reference of the investment committee are as follows:

I) To review performance for all asset classes and total portfolio relative to the appropriate benchmark;

ii) To review management's proposed annual rate of return to be included in the Company's budget;

Nasir Ali President / Chief Risk Officer (Chairman)Maqsood Peracha VP (Re-insurance) (Member)Abdul Majid Manager (Member & Secretary to the Committee)

iii) To review the risk assumptions and asset return assumptions imbedded in the current investment policy statement and, if changes have occurred, then review the policy asset mix and the weighted benchmark standard of performance;

iv) To approve investments beyond delegated limits; andv) To ensure compliance with applicable legislation.

The investment committee comprises of the following members:

Ch. Zahoor Ahmed Chief Executive (Chairman)Ch. Manzoor Ahmed Director (Member)Javed Iqbal Khan SVP Accounts and Finance (Member & Secretary to the

Committee)


Key Financial Data

Six years at a glance

re-stated

2008 2007 2006 2005 2004 2003

Financial results

Equity

Paid-up capital 200,000

200,000

120,000

80,000

80,000

80,000

General reserves 65,000

25,000

6,000

1,000

1,000

1,000

Retained earnings 2,367

18,894

14,097

8,245

6,407

4,460

267,367

243,894

140,097

89,245

87,407

85,460

Underwriting provisions 134,535

124,258

84,534

39,780

21,025

28,740

Investments (at realizable value) 19,303

15,862

7,376

10,376

10,376

10,376

Tangible fixed assets (at book value) 136,935

151,124

159,378

105,427

66,788

70,792

Cash and cash equivalents 47,979

106,034

58,166

32,353

33,763

39,800

Short term prepayments and receivables 5,550

3,871

473

19,765

32,460

27,718

Total assets (book value) 508,998

438,364

237,259

179,161

160,239

171,426

Operating results

Gross premium 196,084

167,330

100,493

62,962

53,467

52,185

Net premium 91,864

76,222

41,300

24,906

20,067

27,894

Net claims paid 20,574

17,093

9,368

4,894

7,266

3,284

Underwriting profit 51,080

50,446

22,732

8,260

2,334

10,514

Investment (loss) / income (1,347)

2,606

800

144

37

24

Profit before tax 25,405

25,694

9,887

2,380

614

13,549

Income taxes 3,135

1,151

368

1,125

266

2,505

Profit after tax 22,270

24,543

9,519

1,225

348

11,044

Management expenses 26,832

18,677

12,937

17,889

17,514

16,421

Employees remuneration 19,394

14,870

11,186

9,737

8,812

8,750

Financial ratios / trend analysis

Profit before tax to gross premium % age 12.96% 15.36% 9.84% 3.78% 1.15% 25.96%

Profit before tax to net premium % age 27.66% 33.71% 23.94% 9.56% 3.06% 48.57%

Profit after tax to gross premium % age 11.36% 14.67% 9.47% 1.95% 0.65% 21.16%

Profit after tax to net premium % age 24.24% 32.20% 23.05% 4.92% 1.73% 39.59%

Management expenses to gross premium % age 13.68% 11.16% 12.87% 28.41% 32.76% 31.47%

Management expenses to net premium % age 29.21% 24.50% 31.32% 71.83% 87.28% 58.87%

Employee cost to management expenses % age 72.28% 79.62% 86.47% 54.43% 50.31% 53.29%

Underwriting profit to net premium % age 55.60% 66.18% 55.04% 33.16% 11.63% 37.69%

Net claims to net premium % age 22.40% 22.42% 22.68% 19.65% 36.21% 11.77%

Return on assets % age 4.38% 5.60% 4.01% 0.68% 0.22% 6.44%

Liquidity and leverage ratios

Current ratio Time 2.05

1.79

5.36

2.57

2.82

2.89

Total assets turnover Time 0.18

0.17

0.17

0.14

0.13

0.16

Fixed assets turnover Time 0.67

0.50

0.26

0.24

0.30

0.39

Total liabilities to equity Time 1.90

1.80

1.69

2.01

1.83

2.01

Return on capital employed % age 5.39% 6.25% 4.31% 1.42% 0.43% 8.80%

Return on equity - before taxes paid % age 9.50% 10.53% 7.06% 2.67% 0.70% 15.85%

Return on equity - after taxes paid % age 8.33% 10.06% 6.79% 1.37% 0.40% 12.92%

Paid-up capital to total assets % age 39.29% 45.62% 50.58% 44.65% 49.93% 46.67%

Equity to total assets % age 52.53% 55.64% 59.05% 49.81% 54.55% 49.85%

Investment yield % age -6.98% 16.43% 10.85% 1.39% 0.36% 0.23%

Liquid assets to total assets % age 73.10% 65.53% 40.63% 35.27% 49.89% 52.70%

Liquid assets to fixed assets % age 271.71% 190.07% 48.87% 69.94% 139.92% 142.15%

----------------------------------Rupees in thousands----------------------------------


Key Financial Data For the Year

re-stated

2008 2007

PROFIT AND LOSS ACCOUNT

Gross written premium 196,084

167,330

Net written premium 97,558

89,316

Net earned premium 91,864

76,222

Claims incurred 79,009

59,304 Net claims expenses 20,574

17,093

Commission income 27,475

26,317

Commission expense 20,852

16,323

Underwriting profit 51,080

50,446

Direct expenses 26,832

18,677

Investment (loss) / income (1,347)

2,606

Profit before tax 25,405

25,694

Profit after tax 22,270

24,543

TECHNICAL RESERVE COVER

Fire and property damage 52,491

52,687

Marine, aviation and transport 24,050

23,366

Motor act 11,574

8,730

Miscellaneous 21,500

16,329

Total 109,615

101,112

CORPORATE ASSETS

Investment in fixed assets 136,935

151,124

Investments in:

- equity instruments 12,043

4,136

- properties 155,193

47,127

- other 11,726

11,726

Total investments 315,897 214,113

Total investments at realizable value 311,431 214,113

(Rupees in thousands)


Rupees in `000

2008 2007 2006 2005 2004 2003

Paid up capital

200,000200,000

200,000 200,000

120,000

80,000 80,00080,000

180,000

160,000

140,000

120,000

80,000

60,000

40,000

20,000

100,000

2008 2007 2006 2005 2004 2003

600,000

508,998

438,364

237,259

179,161160,239 171,426

500,000

400,000

300,000

200,000

100,000

Total Assets (at book value)

2008 2007 2006 2005 2004 2003

Underwriting Provisions

140,000

120,000

100,000

80,000

60,000

40,000

20,000

134,535

124,258

84,534

39,780

21,02528,740

267,367

243,894

140,097

89,245

87,407

85,460

Equity

2008

2007

2006

2005

2004

2003

2008 2007 2006 2005 2004 2003

General & Capital Reserve

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000 65,000

25,000

6,000 1.000 1,000 1,000

Liquid assets to fixed assets

0 50% 100% 150% 200% 250% 300%

48.87%

69.94%

139.92%

142.15%

271.71%

190.07%

2008

2007

2006

2005

2004

2003

2008

2007

2006

2005

2004

2003

Key Financial Data


Gross Premium 196,084

167,330

100,493

62,96253,467

52,185

200,000

2008 2007 2006 2005 2004 2003

150,000

50,000

100,000

1.11

1.23

0.79

0.150.04

1.38

0.20

0.40

0.60

0.80

1.00

1.20

1.40

Earnings Per Share

2008 2007 2006 2005 2004 2003

19,303

15,862

7,376

10,376 10,376 10,376

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

Investment (at book value)

2008 2007 2006 2005 2004 2003

Rupees in `000

Paid up Capital / Total Assets

46.67%

39.29%

45.62%

50.58%

44.65%

49.93%

0

10

20

30

40

50

60

2008 2007 2006 2005 2004 2003

5,000

10,000

20,000

30,000

40,000

50,000

55,00051,080

50,446

8,260

2,334

10,514

22,732

2008

2007

2006

2005

2004

2003

Underwriting Profit

2008 2007 2006 2005 2004 2003

Profit after tax

5,000

10,000

15,000

20,000

25,000

30,000

24,543 22,270

11,0449,519

1,225348

Key Financial Data


Listing on Stock Exchanges

Listing Fees

Stock Code

Investor Service Center

Services Standards

PGI equity shares are listed on Karachi Stock Exchange (“KSE”), Lahore Stock Exchange (“LSE”) and Islamabad Stock Exchange (“ISE”).

The annual listing fee for the financial year 2007 – 2008 has been paid to all three of the stock exchanges within the prescribed time limit.

The stock code for dealing in equity shares of PGI at KSE, LSE and ISE is “PKGI”

PGI’s share department is operated by Corplink (Private) Limited Registrar Services. It also functions as an investor service center. The investor service center is managed by a well experienced team of professionals and is equipped with the necessary infrastructure in terms of computer facilities and comprehensive set of systems and procedures for conducting the registration purposes. The team is headed by Mr. Saleem Iqbal Khawaja at Registrar Office and Mr. Ch. Muhammad Saleem Company Secretary at PGI Registered Office.

PGI share department has online connectivity with Central Depository Company of Pakistan Limited (“CDC”). The share department undertakes activities pertaining to dematerialization of shares, shares transfers and transmission, issue of duplicate / revalidated dividend warrants, issue of duplicate / replaced share certificates, change of address and other related matters.

PGI has always endeavored to provide investors with prompt services. Listed below are various investors' services and the maximum time limit set for the execution.

For requests received through posts Over the counter

Transfer of shares 45 days after receipt 45 days after receipt Transmission of shares 45 days after receipt 45 days after receipt Issue of duplicate share certificates 45 days after receipt 45 days after receipt Issue of duplicate dividend warrants 5 days after receipt 5 days after receipt Issue revalidated dividend warrants 5 days after receipt 5 days after receipt Change of address 2 days after receipt 15 mins after receipt Well reputed and experienced firm of the Share Registrar Services has been entrusted with the responsibility of ensuring that services are rendered within the specified time limits.

Share Registrar Office Registered Office Co-operative House, 5 Bank Square Shahrah-e-Quaid-e-Azam Lahore

M/s. Corplink (Private) Limited Wing Arcade, 1-K, Commercial Area Model Town, Lahore


Shareholders' Information

Statutory compliance

Book Closure Date

Investors' Grievances

Legal Proceedings

General Meetings and Voting Rights

Proxies

During the year, the Company has complied with all applicable provisions except as mentioned in the auditors' report, filed all returns / forms and furnished all the relevant information as required under the Companies Ordinance, 1984 and allied laws and rules, the Securities and Exchange Commission of Pakistan (“SECP”) regulations and the listing regulations.

The register of members and share transfer books of the Company will remain close from April 24, 2009 to April 30, 2009 both days inclusive.

As on date none of the investors or shareholders have filed any letter of complaint against any service provided by the Company to its shareholder.

No case has ever been filed by shareholders against the Company for non-receipt of share / refund.

Pursuant to section 158 of the Companies Ordinance, 1984, PGI holds the general meeting of the shareholders atleast once a year. Every shareholder has a right to attend the general meeting, the notice of such meeting is sent to all the shareholders atleast twenty one days before the meeting and also advertised in one English and one Urdu newspaper having circulation in Sindh and Punjab.

Shareholders having a holding of atleast ten percent of voting rights may also apply to the Board of Directors to call for a meeting of shareholders, and if Board does not take action on such application within twenty one days, the shareholders may themselves call the meeting.

All shares issued by the Company carry equal voting rights. Generally, matters at the general meetings are decided by show of hands in the first instance. Voting by show of hands operates on the principal of “one member one vote”. If majority of shareholders raise their hands in favour of the particular resolution, it is taken as passed, unless a poll is demanded. Since, the fundamental voting principle in a Company is “one share one vote”, voting takes place by a poll, if demanded. On a poll being taken the decision arrived by a poll is final, overruling any decision taken on a show of hands.

Pursuant to Section 161 of the Companies Ordinance, 1984 and according to the MOA and AOA of the Company, every shareholder of the Company who is entitled to attend and vote at a general meeting of the Company, can appoint another person as his/her proxy to attend and vote instead of himself/herself. Every notice calling a general meeting of the Company contains a statement that shareholder entitled to attend and vote is entitled to appoint a proxy who needs not to be a member of the Company.


Shareholders' Information

Web Presencewww.pgi.com.pk.

Shareholding Pattern

The instrument appointing proxy, duly signed by the shareholder appointing that proxy should be deposited with the Company not less than forty-eight hours before the meeting.

Updated information regarding the Company can be accessed at PGI web site, The web site contains the latest financial results of the Company together with Company's profile, the corporate philosophy and major products.

The shareholding pattern of the equity share capital of the company as on December 31, 2008 was as follows:

Share Holding Percentage

8,109,376 40.55

- -

1,000 0.01

- -

- -

-

-

-

-

71,221

0.36

11,818,403

59.09

-

-

20,000,000

Shareholders' Category

Directors, Chief Executive and Family

Associated Companies, Undertakings and Related Parties

Public Sector Copmanies and Corporations (NIT and ICP)

Banks, DFIs and NBFIs

Insurance Companies

Modaraba and Mutual Funds

Shareholders having more than 10% holdings

Other Companies

General Public

- Local

- Non Residents

100.00


Information as required under Code of Corporate Governance Categories of Shareholders as at December 31, 2008 Category Share Holding Percentage

Associated Companies, Undertakings and Related Parties

Associated Companies and Related Parties -

-

NIT and ICP

Investment Corporation of Pakistan Limited 1,000

0.01

Directors, Chief Executive Officer their Spouses and Minor Children

Ch. Manzoor Ahmed 505,000

2.53

Mr. Usman Ali 500,500 2.50

Mr. Mazhar Zahoor 608,500 3.04

Ch. Ather Zahoor 927,228

4.64

Ch. Zahoor Ahmed 898,132

4.49

Ch. Zahoor Ahmed (CDC) 172,000

0.86

Mr. Nasir Ali 1,022,800

5.11

Mr. Nasir Ali (CDC) 10,000

0.05

Ch. Muhammad Saleem 540,993

2.70

Mr. Mahmood-ul-Haq 539,500

2.70

Mr. Rehan Beg 85,000

0.43

Mrs. Qaiser Sultana W/O Ch. Manzoor Ahmed 110,000

0.55

Mrs. Rubina Mazhar W/O Mr. Mazhar Zahoor 515,750

2.58

Mrs. Parveen Akhtar W/O Ch. Zahoor Ahmed 879,973

4.40

Mrs. Mehvish Nasir W/O Mr. Nasir Ali 469,000

2.35

Mrs. Khalida Parveen W/O Ch. Muhammad Saleem 325,000

1.63

Public Sector Companies and Corporations

Azee Securities (Private) Limited (CDC) 5,500

0.03

Capital Vision Securities (Private) Limited (CDC) 500

0.00

Cliktrade Limited (CDC) 1,500

0.01

Darson Securites (Private) Limited 2,000

0.01

Durvesh Securities (Private) Limited 7,000

0.04

Excel Securities (Private) Limited 500

0.00

First National Equities Limited (CDC) 1

0.00

General Investment and Securites (Private) Limited (CDC) 10,000

0.05

Live Securities Limited (CDC) 32,000

0.16

Deputy Administrator Abondaned Properties Org (CDC) 1,220

0.01

Taurus Securites Limited (CDC) 10,000

0.05

Time Securities (Private) Limited (CDC) 1,000

0.01

Bank, Development Finance Institutions, Non Banking Finance Institutions

Banks, DFIs and NBFIs -

-

Leasing Companies

Leasing Companies -

-

Modarabas and Mutual Funds

Modarabas and Mutual Funds -

-

Insurance Companies

Insurance Companies -

-

Non Residents / Foreign Companies

Non Residents / Foreign Companies -

-

Shareholders holding more than 10% of capital

Shareholders holding more than 10% of capital -

-

General Public

General Public 11,818,403

59.09

20,000,000

100.00


CEO’s Message

On behalf of everyone at PGI, I would like to thank all of our clients for their support over the years. When wrapped up in day-to-day issues, it is sometimes difficult to step back and appreciate all of the hard work that has been necessary to get us to our 61st anniversary.

I take great satisfaction in the significant improvement of our key performance indicators, such as direct premiums, investment portfolios, high solvency margins and profitability.

The principal components of management are people and systems. Therefore, we need to foster high quality personnel to spearhead innovation and implement the most advanced systems. The quality of our people and their performance over the long term is what distinguish us from our competitors.

Our continued investment in technology has significantly increased our efficiency in the processing, storage and analysis of data, thereby enhancing our customer services and decision making capacity.

Through relevant technical training, appropriate human resource development programs; we have a well trained and highly motivated staff, working in an attractive, safe and comfortable environment.

We certainly could not have made it to this milestone without some very good people that work in our offices all over the country. As I tell our employees, PGI is not about me, it's about you. Our people take that to heart, and I hope that for those of you who do business with us, you experience motivated and helpful insurance professionals sitting across from you or on the other end of the telephone or email.

We are committed to provide our customers with top quality products and services at affordable prices and as we continue to grow, we are continuously looking for new avenues to better serve our customers across the country.

Finally, I would like to remind everyone that we get many of our best ideas at improving our Company from our valued clients. We are proud of the growth, new innovations, developments in risk management expertise and technological improvements we have experienced over the past few years.

Ch. Zahoor AhmedCEO


Directors' Report to the Shareholders

Economic Overview

Company Performance Review 2008

Segments at a Glance

Fire

Dear Fellow Shareholders,

The directors of The Pakistan General Insurance Company Limited take pleasure in presenting the annual report of your Company, together with the audited financial statements for the year ended December 31, 2008.

The year under review was a volatile period for the financial services sector globally. The economic picture during the last months of 2008 was extremely challenging due to a number of factors which were responsible for this situation; mainly led by international recession, market insulation due to the presence of an asset bubble accumulated over the years, macro-economic instability compounded with political uncertainty, surge in trade & current account deficits, weaker currency in response to forex reserve depletion, hike in interest rates and persistent rise in inflation.

After a reasonable start the year 2008 finished with a moderate closure, both in terms of our results and share price performance. Some of our business segments were minutely below par, nevertheless, the fundamental strength of our core operations remains intact and the Company has been able to maintain its operational performance, reflected by a 1.26% increase in underwriting profitability. The results however, have been adversely impacted by decline in investment income. Gross Written Premium (GWP) increased by 17.18%, from Rs. 167 million in 2007 to Rs. 196 million in 2008. The business mix has shifted to more profitable segments with share of fire, marine, motor & miscellaneous at 47%, 22%, 10% and 21% respectively. Premium growth has been achieved mainly in new businesses and focus on Company's Insurance philosophy.

Your company's net premium stands at 47% of GWP, up by 1% in 2008, mainly due to retention of good clients in fire portfolio. This impact was offset by a remarkable 20% increase in net claims, from Rs. 59 million in 2007 to Rs. 79 million in 2008. General & administrative expenses were increased by 7%, from Rs. 24 million in 2007 to Rs. 26 million in 2008. As there was significant decline in equity markets, the Company posted a loss of Rs. 4.4 million on its investment portfolio. Further the Company has also booked Rs. 5.8 million as provision for doubtful debts. Consequently the Company posted Rs. 25.4 million profit before tax in 2008 against Rs. 25.7 million profit before tax in 2007 and profit after tax of Rs. 22.2 million in 2008 against Rs. 24.5 million profit after tax in 2007. Earnings per share of the Company calculate to Rs. 1.11 in 2008 against Rs. 1.23 in 2007.

GWP grew by 5% from Rs. 86 million in 2007 to Rs. 91 million in 2008 and net premium earned increased by 11% from Rs. 35 million to Rs. 38 million. As losses increased by 20% from Rs. 17 million in 2007 to Rs. 21 million in 2008, underwriting profit increased by 8% from Rs. 20 million in 2007 to Rs. 21 million in 2008.

Marine, Aviation and TransportMarine business grew by 21% from Rs. 36 million in 2007 to Rs. 44 million in 2008. Net earned premium went up by 40%. Further the Company had to experience more losses in this segment which are increased by Rs. 5 million from Rs. 14 million in 2007 to Rs. 19 million in 2008. Underwriting profit increased by 3 million resulting in 4% increase over 2007 from Rs. 8 million in 2007 to Rs. 11 million in 2008.



Motor

Others (Miscellaneous)

Re-Insurance

Risk Management

GWP grew by 29% from Rs. 16 million in 2007 to Rs. 21 million in 2008 and net premium earned increased by 12% from Rs. 15 million to Rs. 17 million. As losses increased by 12% from Rs. 1.6 million in 2007 to Rs. 1.8 million in 2008, the underwriting results decreased by 20% from Rs. 10 million in 2007 to Rs. 8 million in 2008 in a year when all classes posted increased profitable results.

For Miscellaneous lines, which include engineering, contract and travel business, GWP increased by 40% from Rs. 29 million in 2007 to Rs. 40 million in 2008. Net Earned Premium increased by 37%, closing at Rs. 15 million. Underwriting profit increased by 16% from Rs. 9 million in 2007 to Rs. 10 million in 2008.

Your Company follows a policy of optimizing retention of risk through carefully designed reinsurance treaties with “A” rated and well reputed re-insurers lead by our leader Labuan Reinsurance Berhad. The focus of the re-insurance treaty program has been designed to protect the value at risk by ensuring timely and quality protection for individual risks and in catastrophic events.

In this challenging period of economic slowdown, declining prices and softening of local insurance markets, your Company's strategy of increasing its retention of risk will also help in achieving a positive net premium growth, thereby offsetting some of the impact of fall in premiums.

Insurance being the business of transfer of risks from client to insurer is viable only if underwriter has the ability to precisely assess the risk. Your Company's Risk Management approach is proficient in qualitative evaluation of risk, providing safety consultancy for loss reduction and suggesting measures for risk mitigation to the client. Your company is continuously striving to develop expertise in areas such risk pricing, Enterprise Risk Management, business continuity planning and consequence analysis which will help us in offering value added services to the clients.

Investments

Equity and Other InvestmentsOur investment objective is to achieve a superior total return on the investment portfolio adhering to our investment philosophy and the regulations as applicable from time to time. We are guided by value investing principles. The investment committee supervises the implementation of the investment policies laid down by the Board and guides the asset allocation strategy to ensure financial liquidity, security and diversification. Appropriate risk management practices are adopted with an objective to manage risks arising out of duration, market, credit, legal and operations.

Your Company's investment portfolio is invested with prudence while seeking a reasonable yield, in line with market conditions. The equity markets went through a roller coaster ride during the year. During the first half 2008, the markets continued their strong run of the previous year taking the major market indices to all time highs. In the second half of the financial year, concerns about synchronized global slow down and increase in inflation came to the fore. Interest rates continued their rising trend on inflationary concerns as the country slipped into the grip of a credit crunch.

Liquidity situation caused deep and continuous corrections in prices of most of the stocks. By the end of 2008, KSE–100 Index slipped to 5,865.01, down by 58.33% YoY basis and market capitalization was Rs. 1,859 billion against Rs. 4,330 billion as at the end of 2007.



Investment Properties

The book value of your Company's investments in equity instruments decreased from Rs. 12,042 million to Rs. 7,576 million, i.e., by Rs. 4.466 million during the year 2008.

Once the liquidity of credit markets is restored, the equity markets in general and our core investments portfolio have the potential to pay back. The Company will continue to place special emphasis in generating a significant portion of its investment income from sustainable sources such as interest and dividends.

Due to decline in the values of the equity investments the management of your Company decided to invest in real estate properties which will help the Company to generate consistant rental income. The investment in properties during the year has increased by 229% from Rs. 47 million in 2007 to Rs. 155 million in the year 2008.

Similarly the income from rentals also increased by 93% from Rs. 1.770 million in 2007 to Rs. 3.420 million during the year 2008.

Information Technology

Human Resource

Insurer's Financial Strength Rating

A Strategic initiative to leverage information technology for improved business performance continued yielding required results for the year 2008.

As a successful company, Human Capital is now an integral part of the organization, shifting from a hitherto support to a business partner role. Dynamic strategies are planned, developed and implemented to achieve the vision of the Company. Employee oriented incentives have been introduced to enhance retentions & motivation at all levels. For infusing fresh blood, Management Trainee Programs are introduced, thus helping new trainees to contribute to our business growth. Based on training needs analysis, courses on core and soft skills are continuously modified . Formal orientation programs for new entrants ensure quick integration into the business while good working environment continues to contribute in the productivity enhancement.

Our continued focus on equal opportunity employment goes a long way in maintaining a pool of employees with knowledge, experience and skills in their respective fields and employees remain our most valuable assets.

The JCR VIS Credit Rating Agency has assigned your Company, an “Insurer Financial Strength” (IFS) Rating of “BBB” (Triple B) and a Stable Outlook, on the basis of financial statements for the year 2007. The Insurer Financial Strength (IFS)

The management in line with its committment to implement the latest information technology and insurance software, is proud to announce the full and final implementation of the new “Computer Based Information System (CBIS)” which plays an integral role in efficient and secure underwriting, accounting and operation management. This development plays a vital role in increasing the efficiency of policy, accounting, branch and underwriting management, which helps to reduce cost and the ultimate benefit is passed onto our policy holders (clients).

A website of The Pakistan General Insurance Company Limited has also been developed which allows the user to obtain the Company related information about its history, services, list of reinsurers and financials.

denoting an adequate capacity to meet policyholder and contract obligations.


Appropriations The proposed appropriations are as under: 2008 2007 (Rupees in thousands) Transfer to general reserves 40,000 19,000 Auditors

Board of Directors

The present auditors M/s. Deloitte M. Yousuf Adil Saleem & Co., Chartered Accountants and M/s. Kamran & Co., Chartered Accountants, retire and being eligible, have offered themselves for reappointment. The external auditors hold satisfactory rating by the Institute of Chartered Accountants of Pakistan (ICAP) as required under their Quality Control Review Program. As suggested by the Audit Committee, the Board of Directors has recommended the appointment of M/s. Deloitte M. Yousuf Adil Saleem & Co., Chartered Accountants and M/s. Kamran & Co., Chartered Accountants, as auditors of the Company for the year 2009, at a fee to be mutually agreed.

The Directors of your Company were elected in the Annual General Meeting held on April 30, 2007 for a period of three years and we would like to take this opportunity of welcoming Ch. Athar Zahoor for joining the Board as non-executive director.

During the year, six (6) meetings of the Board of Directors were held and attendance by each Director is given below:

Name of Director Number of meetings attended

Name Ch. Manzoor Ahmed Ch. Zahoor Ahmed Nasir Ali Mehmud ul Haq

Rehan Beg

Ch. Mazhar Zahoor Usman Ali

Ch. Muhammad Saleem Mst. Tallat Zahoor Ch. Athar Zahoor

Designation Meetings attended

Non Executive Director and Chairman 6 Executive Director and Chief Executive 6 Executive Director and President 6 Executive DirectorExecutive Director

6

Non Executive and Independent Director

6 Non Executive Director 6

6 Executive Director 6 Non Executive Director (retired) 1 Non Executive Director (appointed) 5


No director remains absent from the meetings held in their tenure of directorship during the year.

As required under the Code of Corporate Governance, the audit committee continued to perform as per its terms of reference duly approved by the Board. The committee composition and its terms of reference are also attached with this report.

The audit committee had five (5) meetings during the year 2008.

Audit Committee



Code of Corporate Governance

Statement of corporate and financial reporting

Directors & spouses

Chief Financial Officer, Company Secretary and Other Executives

From its inception the Company has maintained a visible record of good corporate governance which is reflected merely by the growth of the Company over the years. In the phase of implementing the code of corporate governance as required by the listing regulations, the company has implemented all aspects of the code of corporate governance and the management is pleased to state that the fullest efforts have been made to comply with the provisions of the code.

1) The financial statements together with the notes forming an integral part of these statements have been prepared by the management of your Company in conformity with the Companies Ordinance, 1984 and the Insurance Ordinance, 2000 and present fairly its state of affairs, the result of its operations, cash flows and changes in equity.

2) Proper books of accounts of the Company have been maintained.3) Appropriate accounting policies have been consistently applied in preparation of these

financial statements and accounting estimates are based on reasonable and prudent judgment.4) The International Accounting Standards, as applicable in Pakistan, have been followed in

preparation of financial statements and any departure there from has been adequately disclosed.

5) The system of internal control is sound in design and has been continuously monitored by the internal audits. This is a continuing process and any weaknesses will be removed and its effective implementation shall be ensured.

6) There is no doubt upon the Company's ability to continue as a going concern.7) There has been no material departure from the best practices of corporate governance, as

detailed in the listing regulations.8) Key operating and financial data for the last six years is attached with this report.9) Outstanding taxes and duties are given in the financial statements.10) The Company policy of the valuation method as disclosed in note 3.5.22 attached to the

financial statements has been duly approved by the Board and the auditors' have made no adverse remarks in this regard.

11) The related party transactions are approved or ratified by the audit committee and the Board of Directors;

12) The trade carried out by the Directors, CEO, CFO, Company Secretary, Executives and their spouses and minor children, if any, in the shares of the Company is given below:

Mr. Nasir Ali purchased 294,800 shares.Ch. Athar Zahoor purchased 927,228 shares.Mrs. Mehvish Nasir purchased 344,000 shares.

Nil (No transactions)

13) All the major decisions relating to investments / disinvestments of funds, change in the policy of underwriting, if any, appointment, remuneration and terms & conditions of CEO are taken to the Board.

There have been no material changes and commitments affecting the financial position of your Company since December 31, 2008.

Material Changes



Pattern of Shareholding

Earnings Per Shares

Statement of Ethics and Business Practices

Insurance Ordinance, 2000

Explanation to the Auditors' Qualification

A statement showing the pattern of shareholding is attached with this report.

Earnings per share during the year have decreased by 10% from Rs. 1.23 (as re-stated) per share in 2007 to Rs. 1.11 in 2008.

The Board has adopted “Statement of Ethics and Business Practices”. Entire management and employees are aware of the statement and are obliged to observe the rules of conduct in relation to the business operations and regulations.

As required under the Insurance Ordinance and rules framed there under, the Directors confirm that:

• in their opinion and to the best of their belief the annual statutory accounts of the Company set out in the forms attached with this statement have been drawn up in accordance with the Insurance Ordinance and any rules made there under;

• the Company has at all times in the year complied with the provisions of the Ordinance and the rules made there under relating to the paid-up capital, solvency and re-insurance arrangements; and

• as at the date of the statement, the Company continues to be in compliance with the provisions of the Ordinance and rules framed there under as mentioned above.

With reference to the reservation shown by the auditors' in their report, it is pertinent enough to mention that the company has taken steps subsequent to the year end to comply with the provisions of the accounting policy adopted by the Company in this regard.

Future Outlook

Acknowledgment

The strength of the Company and the strategies pursued make us feel confident to achieve goals for 2009. By applying prudent policies and discipline in our business operations and using cost effective methods, we are confident that the targets set for the year will be achieved. We, however, cherish no illusions about the challenges ahead. Uncertainty still persists about credit markets and the national economy in general, while competition is increasing in all business segments. While challenges limit some opportunities, they create others. This may require us to track a different course. As a responsible corporate entity we will continue to conduct our business in a transparent way, working closely with the regulators to ensure compliance. Our aim is to exceed expectations of our shareholders, not only during the current year but beyond.

We would like to thank our customers, business partners and employees whose loyalty and dedication makes PGI a great Company that it is. We also take this opportunity to thank Securities & Exchange Commission of Pakistan, our brokers and reinsurers, including Pakistan Re-insurance Company Limited and the Bankers of the Company for support given to PGI during the year. Lastly, we would like to place on record our appreciation for the devotion, loyalty and continued hard work of the work force and the employees. For and on behalf of the Board

Ch. Zahoor AhmedChief Executive Officer

Lahore: April 3, 2009


Statement of Compliance with Best Practices and Corporate Governance

This statement is being presented to comply with the Code of Corporate Governance as contained in the Listing Regulations of respective stock exchanges and SRO 68(1)/2003 issued by the Securities and Exchange Commission of Pakistan for the purpose of establishing a framework of good governance, whereby a listed company is managed in compliance with the best practices of corporate governance.

The Company has applied the principles contained in the Code in the following manner:

1. The Company encourages representation of independent non-executive directors and directors representing minority interests on its Board of Directors. At present the Board includes four non-executive directors (out of which one represents independent director), including the Chairman, out of nine directors.

2. The directors of the Company have confirmed that none of them is serving as a director in more than ten listed companies, including this Company.

3. All the directors have given declaration that they are aware of their duties and powers under the relevant laws and the Company's Memorandum and Articles of Association and the listing regulations of the stock exchanges of Pakistan.

4. All the directors of the Company are registered as taxpayers and none of them has defaulted in payment of any loan to a banking company, a Development Financial Institution or a Non-Banking Financial Institution. None of the director is a member of a stock exchange.

5. No casual vacancy occurred in the Board during the financial year 2008.

6. The Company has prepared a 'Statement of Ethics and Business Practices' (Code of Conduct), which has been signed by all directors and employees of the Company.

7. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of the Company.

8. A complete record of particulars of significant policies along with the dates on which they were approved or amended has been maintained.

9. All the powers of the Board have been duly exercised and decisions on material transactions, including the appointment and determination of remuneration and terms and conditions of employment of the CEO and other executive directors, have been taken by the Board.

10. All the meetings of the Board were presided over by the Chairman. The Board met at least once in every quarter during the year. Written notices of the Board meetings, along with agenda and working papers, were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated.

11. The Board has established a system of sound internal control which is effectively implemented at all levels within the Company.

12. The Board has arranged an orientation course for its directors during the year to apprise them of their duties and responsibilities and to keep them informed of the enforcement of new laws, rules and regulations and amendments thereof.


Statement of Compliance with Best Practices and Corporate Governance

13. All material information as required under the relevant rules, has been provided to the stock exchanges and to the Securities and Exchange Commission of Pakistan within the prescribed time limit.

14. The Board has approved the appointment of Company Secretary, including his remuneration and terms and conditions of employment as determined by the CEO.

15. The directors' report for this year has been prepared in compliance with the requirements of the Code and fully describes the salient matters required to be disclosed.

16. The financial statements of the Company were duly endorsed by CEO and CFO before approval of the Board.

17. The directors, CEO and executives do not hold any interest in the shares of the Company other than that disclosed in the pattern of shareholding.

18. The Company has complied with all the corporate and financial reporting requirements of the Code.

19. The Board has formed Underwriting, Claims Settlement and Re-insurance & Co-insurance Committees.

20. The Board has formed an Audit Committee. It comprises of three members all of whom are non-executive directors including the chairman of the committee.

21. The meetings of the audit committee were held at least once every quarter prior to approval of interim and final results of the Company as required by the Code. The terms of reference of the committee have been formed and advised to the committee for compliance.

22. The Board has set-up an effective internal audit function manned by suitably qualified and experienced personnel who are conversant with the policies and procedures of the Company and are involved in the Internal Audit function on a full time basis.

23. The statutory auditors of the Company have confirmed that they have been given a satisfactory rating under the quality control review programme of the Institute of Chartered Accountants of Pakistan, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the Company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the Institute of Chartered Accountants of Pakistan.

24. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard.

25. We confirm that all other material principles contained in the Code have been complied with.

Ch. Zahoor AhmedChief Executive

Lahore: April 3, 2009


Review Report To The Members

On Statement Of Compliance With The Best Practices Of Code Of Corporate Governance

We have reviewed the Statement of Compliance with the best practices contained in the Code of Corporate Governance prepared by the Board of Directors of THE PAKISTAN GENERAL INSURANCE COMPANY LIMITED (“the Company”) to comply with the relevant Listing Regulations of Karachi, Lahore and Islamabad Stock Exchanges in Pakistan where the Company is listed.

The responsibility for compliance with the Code of Corporate Governance is that of the Board of Directors of the Company. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether the Statement of Compliance reflects the status of the Company's compliance with the provisions of the Code of Corporate Governance and report if it does not. A review is limited primarily to enquiries of the Company personnel and review of various documents prepared by the Company to comply with the Code.

As part of our audit of financial statements we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We have not carried out any special review of the internal control system to enable us to express an opinion as to whether the Board's statement on internal controls covers all controls and the effectiveness of such internal controls.

Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does not appropriately reflect the Company's compliance in all material respects, with the best practices contained in the Code of Corporate Governance as applicable to the Company for the year ended December 31, 2008.

KAMRAN & CO. M. YOUSUF ADIL SALEEM & CO.(Chartered Accountants) (Chartered Accountants)

Lahore. April 3, 2009 Lahore. April 3, 2009


We have audited the annexed financial statements comprising of:

(i) Balance sheet;

(ii) Profit and loss account;

(iii) Statement of changes in equity;

(iv) Cash flow statement;

(v) Statement of premiums;

(vi) Statement of claims;

(vii) Statement of expenses and

(viii) Statement of investment income

of THE PAKISTAN GENERAL INSURANCE COMPANY LIMITED (“the Company”) as at December 31,

2008 together with notes forming part thereof, for the year then ended.

It is the responsibility of the Company's management to establish and maintain a system of internal

control, and prepare and present the financial statements in conformity with the International

Financial Reporting Standards as applicable in Pakistan and the requirements of the Insurance

Ordinance, 2000 (XXXIX of 2000) and the Companies Ordinance, 1984 (XLVII of 1984). Our

responsibility is to express an opinion on these statements based on our audit.

The financial statements of the Company as at December 31, 2007 were audited solely by M/s Kamran

& Co., Chartered Accountants whose auditors' report dated March 08, 2008, expressed unqualified

opinion on the financial statements.

Except as stated in paragraph (a) below, we conducted our audit in accordance with the International

Standards on Auditing as applicable in Pakistan. Those standards require that we plan and perform the

audit to obtain reasonable assurance about whether the financial statements are free of material

misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and

disclosures in the financial statements. An audit also includes assessing the accounting policies and

significant estimates made by management, as well as, evaluating the overall financial statements

presentation. We believe that our audit provides a reasonable basis for our opinion and, after due

verification, we report that-

(a) As per accounting policy for staff retirement benefits the Company is required to establish

and operate a funded provident fund scheme and made monthly contributions at the rate of 10% of

basic salary. In contradiction with the said accounting policy, the Company has not made provision for

staff retirement benefits (please refer to note 7.1 to the financial statements). In absence of detailed

working in this respect, we were unable to determine the amount of provision required on account of

employee retirement benefits;

Auditors’ Report To The Members


In our opinion-

(b) proper books of accounts have been kept by the Company as required by the Insurance

Ordinance, 2000 and the Companies Ordinance, 1984;

(c) the financial statements together with the notes thereon have been drawn up in

conformity with the Insurance Ordinance, 2000 and the Companies Ordinance, 1984, and

accurately reflect the books and records of the Company and are further in accordance

with the accounting policies consistently applied, except for the change in accounting

policy as stated in note 3.5.22 to the financial statements with which we concur;

(d) The financial statements together with the notes thereon except for the effects of the

matter stated in paragraph (a) above, as might have been determined to be necessary

had we been provided with the required information, present fairly in all material

respects the state of the Company's affairs as at December 31, 2008 and of the profit, its

cash flow and statement of changes in equity for the year then ended, in accordance with

International Financial Reporting Standards as applicable in Pakistan, and the

information required to be disclosed by the Insurance Ordinance, 2000 and the

Companies Ordinance, 1984; and

(e) No Zakat was deductible at source under Zakat and Ushr Ordinance, 1980 (XVIII of 1980).

KAMRAN & CO. M. YOUSUF ADIL SALEEM & CO.(Chartered Accountants) (Chartered Accountants)

Lahore. April 3, 2009 Lahore. April 3, 2009

Auditors’ Report to the Members


508,998,390 438,364,035

AS AT DECEMBER 31, 2008

Balance Sheet

restated

2008 2007

EQUITY AND LIABILITIES Note Rupees Rupees

Share capital and reserves

Authorized share capital

30,000,000 (2007: 30,000,000) ordinary shares of Rs. 10 each 300,000,000

300,000,000

Issued, subscribed and paid-up share capital 4 200,000,000

200,000,000

Un-appropriated profit 2,367,429

18,893,998

General reserves 65,000,000

25,000,000

267,367,429

243,893,998

Surplus on revaluation of fixed assets 5 16,848,983

33,117,583

Underwriting provisions

Provision for outstanding claims (including IBNR) 8,585,317

12,136,933

Provision for unearned premium 109,614,056

101,112,495

Commission income unearned 16,335,867

11,008,202

134,535,240

124,257,630

Deferred liability

Deferred taxation 6 11,206,542

8,952,108

Creditors and accruals

Amounts due to other insurers / reinsurers 20,909,068 15,696,944 Accrued expenses 1,004,273

678,415

Other creditors 7 14,617,894

9,011,856

Current portion of liabilities against assets subject to finance lease 8 992,952

1,694,762

37,524,187

27,081,977

Other liabilities

Liabilities against assets subject to finance lease 8 141,009

1,060,739

Advance received against sale of land 9 41,375,000

41,516,009 1,060,739

TOTAL LIABILITIES 224,781,978 161,352,454

TOTAL EQUITY AND LIABILITIES

CONTINGENCIES AND COMMITMENTS 10

CH. ZAHOOR AHMEDCH. MANZOOR AHMED NASIR ALI CH. MUHAMMAD SALEEM

CHIEF EXECUTIVECHAIRMAN DIRECTOR DIRECTOR

The annexed notes from 1 to 34 form an integral part of these financial statements.


AS AT DECEMBER 31, 2008

Balance Sheet

restated

2008 2007

ASSETS Note Rupees Rupees

Cash and bank deposits

Cash and other equivalents 80,635

6,462,779

Current and other accounts 1,390,437

69,062,853

Deposits maturing within 12 months 31,508,000

30,508,000

Deposits maturing after 12 months 15,000,000

-

47,979,072

106,033,632

Loans - unsecured; considered good

To employees 98,648

123,962

Investments 11 19,302,964

15,862,123

Investment properties 12 155,193,290

47,127,052

Current assets - others

Premiums due but unpaid - net - unsecured 13 51,019,037

29,943,398

5,818,755

5,740,979

15,074,049

12,066,829

Accrued investment income 4,023,023

1,915,642

Reinsurance recoveries against outstanding claims 5,383,256 9,612,497

Taxation - payments less provision 14 656,383 985,686 Deferred commission expense 12,429,204 7,558,446 Prepaid reinsurance premium ceded 50,191,580

47,384,433

Sundry receivables 15 4,894,288

2,884,878

149,489,575

118,092,788

Non current assets held for sale 16 42,000,000

-

Fixed assets

Tangible fixed assets

Owned

- land and buildings 68,453,932

123,034,409

- furniture, fixtures and office equipment 5,482,221

5,900,383

- vehicles 16,304,603

15,445,257

90,240,756 144,380,049Assets subject to finance lease

- vehicles 4,694,085 6,744,429

17 94,934,841 151,124,478

TOTAL ASSETS


Premium and claim reserves retained by cedants

Amounts due from other insurers / reinsurers - unsecured

508,998,390 438,364,035




restated

2008 2007

Note

Revenue Account

Net premium revenue 38,409,451

21,855,605

17,082,412

14,520,161

(3,785)

91,863,844

76,221,677

Net claims (10,200,399)

(5,183,424)

(2,867,346)

(2,295,403)

(27,894)

(20,574,466)

(17,092,611)

Expenses (13,672,792)

(6,646,124)

(3,110,745)

(3,402,279)

-

20 (26,831,940)

(18,676,953)

Net commission 6,942,362

1,200,360

(3,031,021)

1,510,875

-

6,622,576

9,993,820

Underwriting result 21,478,622

11,226,417

8,073,300

10,333,354

(31,679)

51,080,014

50,445,933

Investment (loss) / income (1,346,842)

2,605,606

Rental income 3,420,000

1,770,000

Other income 11,259

762,163

Loss on impairment of goodwill 18 -

(3,260,044)

Finance cost 19 (1,213,417)

(1,708,745)

General and administration expenses 21 (26,546,120)

(24,920,953)

(25,675,120)

(24,751,973)

Profit before tax 25,404,894

25,693,960

Provision for taxation 22 (3,134,985) (1,151,055)

Profit after tax 22,269,909

24,542,905

Profit and loss appropriation account

Balance at beginning of the year 18,893,998

12,084,197

Profit after tax for the year 22,269,909

24,542,905

Transfer to general reserves (40,000,000)

(19,000,000)

Incremental depreciation on revalued assets 1,203,522

1,266,896

Balance at end of the year 2,367,429 18,893,998

Earnings per share - basic and diluted 27 1.11 1.23


Aggregate

-------------- Rupees ------------------------------------------------ Rupees ------------------------------------

Fire and

property

damage

Marine,

aviation and

transport

Motor act Miscellaneous Treaty

For the year ended December 31, 2008Profit And Loss Account




Statement of Changes of EquityFor the year Ended December 31, 2008

restated

120,000,000

6,000,000

14,097,275

140,097,275

-

-

(2,013,078)

(2,013,078)

Balance as at December 31, 2006 - as restated 120,000,000

6,000,000

12,084,197

138,084,197

80,000,000

-

-

80,000,000

Profit for the year - as restated -

-

24,542,905

24,542,905

Transferred to general reserves -

19,000,000

(19,000,000)

-

-

-

1,266,896

1,266,896

Balance as at December 31, 2007 200,000,000

25,000,000

18,893,998

243,893,998

Profit for the year -

-

22,269,909

22,269,909

Transferred to general reserves - 40,000,000 (40,000,000) -

- - 1,203,522 1,203,522

Balance as at December 31, 2008 200,000,000 65,000,000 2,367,429 267,367,429


Shares issued to shareholders of Pak Equity

Insurance Company Limited ("PEI") under scheme

of arrangement for merger

Transferred to un-appropriated profit on account

of incremental depreciation arising on surplus on

revaluation of tangible fixed assets (net of

deferred tax)

Transferred to un-appropriated profit on account

of incremental depreciation arising on surplus on

revaluation of tangible fixed assets (net of

deferred tax)

Change in accounting policy for revenue in respect

of administrative surcharge (net of income tax Rs.

1,083,965) Note 3.5.22

------------------------------------- Rupees -------------------------------------

Balance as at December 31, 2006 - as previously

reported

Share

capital

General

reserves

Un-appropriated

profit Total




Cash Flow StatementFor the year Ended December 31, 2008

2008 2007

Rupees Rupees

Operating cash flows

a) Underwriting activities

Premiums received 174,808,429

151,927,580

Reinsurance premiums paid (98,525,883)

(78,013,679)

Claims paid (83,238,871)

(7,226,989)

Reinsurance and other recoveries received / (paid) 60,534,883

(24,477,648)

Commissions paid (32,345,730)

(18,250,939)

Commissions received 39,425,213

23,778,504

Net cash flow from underwriting activities 60,658,041

47,736,829

b) Other operating activities

Income tax paid (551,248)

(3,895,590)

General management expenses paid (37,896,978)

(17,531,566)

Loan repayments received 25,314

2,352

Other operating payments (2,711,982)

(19,968,669)

Other operating receipts 5,606,038

18,708,712

Net cash flow from other operating activities (35,528,856)

(22,684,761)

Total cash flow from all operating activities (a+b) 25,129,185 25,052,068

Investment activities

Profit / return received 976,585

2,605,606

Dividend received 35,425

- Rental income 3,420,000

1,770,000

Miscellaneous income 4,968

12,163

Acquisition of PEI - net of cash -

(67,040,498)

Payment for investments (7,907,074)

(8,485,723)

Proceeds from disposal of investments 41,375,000

-

Fixed capital expenditure (118,778,626)

(8,046,898)

Proceeds from disposal of fixed assets 240,000

25,000,000

Total cash out flow from investing activities (80,633,722)

(54,185,350)

Financing Activities

Share capital received -

80,000,000

Financial charges paid (928,483)

(1,708,745)

Repayment of finance lease liabilities (1,621,540)

(1,289,790)

Total cash (out) / in flow from financing activities (2,550,023)

77,001,465

Net cash (out) / in flow from all activities (58,054,560) 47,868,183

Cash at beginning of the year 106,033,632 58,165,449

Cash at end of the year 47,979,072 106,033,632

41

restated

2008 2007

RECONCILIATION TO PROFIT AND LOSS ACCOUNT Rupees Rupees

Operating cash flows 25,129,185

25,052,068

Depreciation expense (9,603,238)

(8,703,922)

Loss on impairment of goodwill -

(3,260,044)

Loss on remeasurement of investments (4,466,233)

-

Provision for doubtful debts (5,836,920)

(900,650)

Finance cost (928,483)

(1,708,745)

Investment income 3,083,966

2,605,606

Rental income 3,420,000

1,770,000

Dividend income 35,425

-

Other income 11,259 762,163

Decrease in assets other than cash 35,101,012 59,816,961 Decrease in liabilities (23,676,064) (50,890,532)

Profit after taxation as per profit and loss account 22,269,909

24,542,905

DEFINITION OF CASH

Cash for the purposes of the statement of cash flows consists of:

Cash and other equivalents 80,635

6,462,779

Current and other accounts 1,390,437

69,062,853

Deposits maturing within 12 months 31,508,000

30,508,000

Deposits maturing after 12 months 15,000,000

-

47,979,072

106,033,632


Cash Flow StatementFor the year Ended December 31, 2008




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riti

ng e

xpen

ses

Clas

sPa

id o

rDe

ferr

ed

Net

man

agem

ent

paya

ble

Ope

ning

Clos

ing

expe

nses

expe

nses

2008

2007

Dire

ct

Fire

and

pro

pert

y da

mag

e13

,107

,786

3,49

2,22

0

6,61

3,16

0

9,98

6,84

6

13,6

72,7

92

23

,659

,638

16,9

29,2

08

6,73

0,43

0

4,26

6,81

3

Mar

ine,

avi

atio

n an

d tr

ansp

ort

6,37

1,48

4

1,72

0,77

3

3,70

5,50

6

4,38

6,75

1

6,64

6,12

4

11,0

32,8

75

5,

587,

111

5,44

5,76

4

2,38

1,47

2

Mot

or a

ct2,

982,

199

1,

265,

891

1,

217,

069

3,

031,

021

3,

110,

745

6,

141,

766

-

6,14

1,76

6

2,64

1,39

7

Misc

ella

neou

s3,

261,

685

1,

079,

562

89

3,46

9

3,44

7,77

8

3,40

2,27

9

6,85

0,05

7

4,

958,

653

1,89

1,40

4

(656

,806

)

Tota

l25

,723

,154

7,55

8,44

6

12,4

29,2

04

20

,852

,396

26,8

31,9

40

47

,684

,336

27,4

74,9

72

20,2

09,3

64

8,

632,

876

Trea

ty

Non

prop

ortio

nal

-

-

-

-

-

-

-

-

50

,256

Gran

d to

tal

25,7

23,1

54

7,

558,

446

12

,429

,204

20,8

52,3

96

26

,831

,940

47,6

84,3

36

27

,474

,972

20,2

09,3

64

8,

683,

132

The

anne

xed

note

s fr

om 1

to

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rm a

n in

tegr

al p

art

of t

hese

fina

ncia

l sta

tem

ents

.

For

the

Year

end

ed D

ecem

ber

31,

2008

Stat

emen

t of

Exp

ense

s

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

- Rup

ees

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

Unde

rwri

ting

expe

nses

Com

mis

sion

from

rein

sure

rs


Statement of Investment IncomeFor the Year ended December 31, 2008

2008 2007

Note Rupees Rupees

Income from non - trading investments

Available for sale

Dividend income 35,425

-

Loss on revaluation of available for sale investments - quoted 11.1 (4,466,233)

-

Less: investment related expenses (3,415)

-

Held to maturity

Return on deposits and other securities 3,087,381

2,605,606

Net investment (loss) / income (1,346,842)

2,605,606





1 STATUS AND NATURE OF BUSINESS

1.1

1.2

2 BASIS OF PRESENTATION

3

3.1 Statement of compliance

3.2 Initial application of a standard or an interpretation

3.3 Standards, amendments and interpretations to published approved accounting standards effective in current year

3.3.1

3.3.2

Notes to the Financial StatementsFor The Year Ended December 31, 2008

The Pakistan General Insurance Company Limited ("the Company") was incorporated in Pakistan as a public limited

company on July 26, 1947 under the Companies Act, 1913 (repealed by Companies Ordinance, 1984) and is quoted on

Karachi Stock Exchange (Guarantee) Limited, Lahore Stock Exchange (Guarantee) Limited and Islamabad Stock Exchange

(Guarantee) Limited on July 25, 1995. The Company is engaged in providing general insurance services in spheres of Fire

and property damage, Marine, aviation and transport, Motor act and Miscellaneous. The registered office of the Company

is situated at Cooperative Bank House, 5-Bank Square, Lahore.

These financial statements are presented in Pak Rupees, which is the Company's functional and presentation currency.

These financial statements have been prepared in accordance with the format prescribed under Securities and Exchange

Commission (Insurance) Rules, 2002 ["the SEC (Insurance) Rules, 2002"].

The following standards, amendments and interpretations to published approved accounting standards are mandatory for

the Company's accounting periods beginning on or after January 01, 2009:

IFRS 8 "Operating Segments" (effective for annual periods beginning on or after January 01, 2009) introduces the

“management approach” to segment reporting. IFRS 8 will require a change in the presentation and disclosure of

segment information based on the internal reports that are regularly reviewed by the Company’s “chief operating

decision maker” in order to assess each segment’s performance and to allocate resources to them. Currently the

Company presents segment information in respect of its business and geographical segments. This standard will have no

effect on the Company’s reported total profit or loss or equity.

SIGNIFICANT ACCOUNTING POLICIES

These financial statements have been prepared in accordance with the requirements of the Insurance Ordinance 2000,

the SEC (Insurance) Rules, 2002, the Companies Ordinance, 1984 ("the Ordinance") and directives issued by the Securities

and Exchange Commission of Pakistan ("SECP"), and approved accounting standards as applicable in Pakistan. Approved

accounting standards comprise of such International Financial Reporting Standards ("IFRSs") as notified under the

provisions of the Ordinance. Wherever, the requirements of the Insurance Ordinance, 2000, the SEC (Insurance) Rules,

2002, the Ordinance or directives issued by SECP differ with the requirements of these standards, the requirements of

the Insurance Ordinance, 2000, the SEC (Insurance) Rules, 2002, the Ordinance or the requirements of the said directives

take precedence.

Amendment to IAS 1 - Presentation of Financial Statements "Capital Disclosures" introduces new disclosures about the

level of an entity's capital and how it manages capital. Adoption of this amendment has only resulted in additional

disclosures given in note 24 to the financial statements.

During the year ended December 31, 2008, IFRIC 14 “IAS 19 – The Limit on Defined Benefit Asset, Minimum Funding

Requirements and their interaction” is effective from the Company’s annual periods beginning on or after January 01,

2008. IFRIC 14 provides guidance on assessing the limit in IAS 19 "Employee Benefits" on the amount of the surplus that

can be recognized as an asset. It also explains how the pension asset or liability may be affected by a statutory or

contractual minimum funding requirement. The Company has considered the implication of interpretation on the surplus

that can be recognized as an asset.

There are other new standards and interpretations to published approved accounting standards that are mandatory for

accounting periods beginning on or after January 01, 2008 but are considered not to be relevant or do not have any

significant impact on the Company's financial statements.

Standards, amendments and interpretations to published approved accounting standards that are relevant but not

yet effective


3.3.3

Revised IAS 23 - Borrowing costs (effective 1 January 2009)

Amended IAS 27 - Consolidated and Separate Financial Statements (effective 1 July 2009)

IAS 29 - Financial Reporting in Hyperinflationary Economies (effective 28 April 2008)

Amendments to IAS 32 - Financial instruments (effective 1 January 2009)

Amendments to IAS 39 - Financial Instruments: Recognition and Measurement (effective 1 July 2009)

Amendment to IFRS 2 - Share-based Payment (effective 1 January 2009)

Revised IFRS 3 - Business Combinations (effective 1 July 2009)

IFRIC 13 - Customer Loyalty Programmes (effective 1 July 2008)

IFRIC 16 - Hedge of Net Investment in a Foreign Operation (effective 1 October 2008)

IFRIC 17 - Distribution of Non-Cash Assets to Owners (effective 1 July 2009)

IFRIC 18 - Transfer of Assets from Customers (effective 1 July 2009)

3.4 Basis of measurement

- revaluation of certain fixed assets at fair value

- financial instruments at fair value

3.5 The principle accounting policies adopted are set out below:

3.5.1 Significant estimates

IAS 1 “Presentation of Financial Statements” effective for annual periods beginning on or after January 01, 2009 revises

the existing IAS 1 and requires apart from changing the names of certain components of financial statements,

presentation of transactions with owners in statement of changes in equity and with non-owners in comprehensive

Income Statement. Adoption of the above standard will only effect the presentation of financial statements.

IFRS 7 "Financial Instruments: Disclosures" (effective for annual periods beginning on or after April 28, 2008) supersedes

IAS 30 "Disclosures in the Financial Statements of Company's and Similar Financial Institutions" and the disclosure

requirements of IAS 32 "Financial Instruments: Presentation". The application of the standard is not expected to have

significant impact on the Company's financial statements other than increase in disclosures.

There are other amendments resulting from annual improvement project initiated by International Accounting Standards

Board in May 2008, specifically in IAS 1 "Presentation of Financial Statements", IAS 19 "Employee Benefits", IAS 28

"Investment in Associates", IAS 36 "Impairmentof Assets" and IAS 38 "Intangible Assets" that are considered relevant to the

Company’s financial statements. The management is in the process of evaluating the impact of these changes on the

Company's financial statements.

Standards, amendments and interpretations to published approved accounting standards that are not relevant and

not yet effective

The following standards, amendments and interpretations of approved accounting standards, effective for accounting

periods beginning as mentioned there against are either not relevant to the Company's current operations or are not

expected to have significant impact on the Company's financial statements other than certain additional disclosures:

These financial statements have been prepared under the historical cost convention, modified by:

The preparation of financial statements in conformity with IFRSs require management to make judgments, estimates and

assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The

estimates and associated assumptions are based on historical experience and various other factors that are believed to

be reasonable under circumstances, results of which form the basis of making judgment about carrying value of assets

and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are

recognized in the period in which estimates are revised if the revision affects only that period, or in the period of the

revision and future periods, if the revision affects both current and future periods.

Judgments made by management in the application of IFRSs that have significant effect on the financial statements and

estimates with a significant risk of material adjustment in the next years are disclosed in the ensuing paragraphs.

Notes to the Financial StatementsFor the Year ended December 31, 2008


Fixed assets

Investment properties

Taxation

Provision for outstanding claims including incurred but not reported (IBNR)

3.5.2 Provision for outstanding claims including incurred but not reported (IBNR)

3.5.3 Provision for unearned premium

3.5.4 Commission income unearned

3.5.5 Amount due to / from other insurers / reinsurers

3.5.6 Creditors, accruals and provisions

The Company reviews the useful lives of fixed assets on regular basis. Any change in the estimates in future years might

affect the carrying amounts of the respective items of fixed assets with corresponding effect on the depreciation charge

and impairment.

The Company reviews the useful lives of investment properties on regular basis. Any change in the estimates in future

years might affect the carrying amounts of the respective items of investment properties with corresponding effect on

the depreciation charge and impairment.

The Company takes into account the current income tax law and decisions taken by appellate authorities. Instances

where the Company's view differs from the view taken by the income tax department at the assessment stage and the

Company considers that its view on items of material nature is in accordance with the law, the amounts are shown as

contingent liabilities.

The Company recognize liability in respect of all claims incurred upto the balance sheet date which is measured by

assessing and discounted value of the expected future claim settlement payments.

The Company recognizes liability in respect of all claims incurred upto the balance sheet date which is measured at the

undiscounted value of the expected future payments. The claims are considered to be incurred at the time of the

incident giving rise to the claim except as otherwise expressly indicated in an insurance contract. The liability for claims

includes amounts in relation to unpaid reported claims, claims incurred but not reported (IBNR) and expected claims

settlement costs.

Provision for liability in respect of unpaid reported claims is made on the basis of individual case estimates. These are

accounted for based on the management's best estimate which takes into account the past trends, expected future

patterns of reporting claims actually reported subsequent to the balance sheet date.

Provision for unearned premium represents the portion of premium written relating to the unexpired period of coverage

and is recognized as a liability by the Company. The Company has opted for 1/24th method and maintained its reserves

for unexpired risk in accordance with regulation 8(4)(b) of the accounting regulations for non life insurance companies

issued by SECP.

Unearned commission income from the reinsurers represents the portion of income relating to the unexpired period of

coverage and is recognized as a liability. The Company uses 1/24th method to calculate the provision of unearned

commission income under the relevant provisions of S.R.O # 938 of SEC (insurance) Rules, 2002.

Amount due to / from other insurers / reinsurers are carried at cost less provision for impairment. Cost represents the

fair value of the consideration to be paid / received in future for the services received / rendered.

Liabilities for creditors and other amounts payable are carried at cost which is the fair value of the consideration to be

paid in the future for the goods and / or services received, whether or not billed to the Company.

Provisions are recognized in the balance sheet when the Company has a present, legal or constructive obligation as a

result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle

the obligation, and a reliable estimate of the amount of obligation can be made. However, provisions are reviewed at

each balance sheet date and adjusted to reflect the current best estimate.




3.5.7 Staff retirement benefits

3.5.8 Taxation

Current

Deferred

3.5.9 Leases

3.5.10 Cash and cash equivalents

The Company operates a funded provident fund scheme for all permanent employees. Monthly contribution is made by

the Company at the rate of 10% of basic salary and the same is charged to profit and loss account.

The charge for current taxation is based on taxable income at the current rate of taxation after taking into account

applicable tax credit, rebates and exemption available if any or minimum taxation at the rate of one-half percent of the

premium whichever is higher. However, for income covered under final tax regime, taxation is based on applicable tax

rates under such regime.

Deferred tax is accounted for using liability method in respect of all temporary differences arising from differences

between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in

the computation of the taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary

differences and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available

against which the deductible temporary differences, unused tax losses and tax credits can be utilized.

Deferred tax is calculated at the rates that are expected to apply to the period when the differences reverse based on

tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited

in the income statement, except in the case of items credited or charged to equity in which case it is included in equity.

Deferred tax is provided on temporary differences arising on investments in associates stated under equity method of

accounting.

Lease are classified as finance lease whenever the terms of the lease transfer substantially all the risks and rewards of

ownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are recognized as assets of the Company at their fair value at the inception of the lease

or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in

the balance sheet as liabilities against assets subject to finance lease. Lease payments are classified as current and long

term depending upon the timing of payment. Lease payments are apportioned between finance charge and reduction of

the liabilities against assets subject to finance lease, so as to achieve a constant rate of interest on the remaining

balance of the liability. Finance charges are charged to profit and loss account, unless they are directly attributable to

qualifying assets, in which case they are capitalized in accordance with the company's general policy on the borrowing

costs.

Rentals payable under operating leases are charged to profit and loss account on the straight line basis over the term of

the relevant lease. Benefits received and receivable as an incentive to enter in to an operating lease are also spread on a

straight line basis over the lease term.

Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of cash flow statement, cash and

cash equivalents comprise cash in hand, deposits with banks, stamps in hand and finances under mark-up arrangements.

In the balance sheet, finance under mark-up arrangements are included in current liabilities.



3.5.11 Investments

Recognition

- Held to maturity

- Available for sale

- Held for trading

Measurement

Held to maturity

Available for sale

Financial assets at fair value through profit or loss

Derecognition

3.5.12 Investment properties

3.5.13 Premium due but unpaid

Available for sale investments are those non-derivative investments that are designated as available for sale or are not

classified in any other category. These are primarily those investments that are intended to be held for an undefined

period of time or may be sold in response to the need for liquidity or change in interest rates, exchange rates equity

price are classified as available for sale. The Company has stated these investments, classified as available for sale, at

lower of cost or market value; the requirements of IAS-39 have not been complied with, due to exemption granted to

insurance companies by SECP through S.R.O. # 938 in December 2002.

These financial assets are acquired principally for the purpose of generating profit from short-term fluctuations in price

or are part of a portfolio for which there is a recent actual pattern of short-term profit taking and are included in

current assets. These investments are designated at fair value through profit or loss at inception. There are initially

measured at fair value and changes on re-measurement are taken to profit and loss account.

All investments are de-recognized when the rights to receive cash flows from the investments have expired or have been

transferred and the Company has transferred substantially all risks and rewards of ownership.

Investment property, which is property held to earn rentals and / or for capital appreciation, is valued using the cost

method i.e. at cost less any accumulated depreciation and any identified impairment loss.

Depreciation on buildings is charged to income on the reducing balance method so as to write off the depreciable

amount of building over its estimated useful life at the rates specified in note 12 to the financial statements.

Depreciation on additions to investment property is charged from the month in which a property is acquired or

capitalized while no depreciation is charged for the month in which the property is disposed off.

These are recognized at cost, which is the fair value of the consideration given less provision for impairment and / or

doubtful debts, if any.

All investments are initially recognized at cost, being the fair value of the consideration given and include the

transaction cost. These are classified into the following categories:

Held to maturity investments are financial assets with fixed or determinable payments and with fixed maturity that the

management has the positive intent and ability to hold to maturity. Held to maturity investments are initially measured

at cost and at subsequent reporting dates measured at amortized cost using the effective yield method.

Any premium paid or discount availed on acquisition of held to maturity investments is deferred and included in the

income for the period on a straight-line-basis over the term of the investment using the effective yield.



3.5.14 Non current assets held for sale

3.5.15 Prepaid reinsurance expense

3.5.16 Fixed assets

3.5.17 Assets subject to finance lease

3.5.18 Impairment

Repair and maintenance costs are charged to income during the period in which they are incurred.

Depreciation is charged to income applying the reducing balance method over estimated useful life at the rates specified

in note 17 to the financial statements. Full month's depreciation is charged on additions, while no depreciation is

charged in the month of disposal of the assets. The useful lives and depreciation methods are reviewed on periodic

intervals to ensure that the methods and period of depreciation charged during the year are consistent with the

expected pattern of economic benefits from items of tangible fixed assets.

Subsequent costs are recognized as part of asset, only when it is probable that future economic benefits associated with

the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance

costs are charged to income during the period in which they are incurred.

Gains or losses on disposal of assets, if any, are included in profit and loss account for the year.

Surplus arising on revaluation is credited to surplus on revaluation of property, plant and equipment. The surplus on

revaluation of property, plant and equipment to the extent of incremental depreciation charged on the related assets is

transferred by the Company to its unappropriated profits.

Assets subject to finance lease in respect of additions and disposals during the year, depreciation is charged from the

month of acquisition and upto the month preceding the disposal respectively.

Non current assets and disposals groups are classified as held for sale if their carrying amount will be recovered

principally through a sale transaction rather than through continuing use. This condition is met only when the sale is

highly probable and the assets ( or disposal group) is available for immediate sale in its present condition. Management

must be committed to sale which should be expected to qualify for recognition as a completed sale within one year from

the date of classification.

Non current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying

amount and the fair value less costs to sell.

Premium for reinsurance contracts operative on a proportional basis is recorded as a liability on attachment of the

underlying risks reinsured. The reinsurance for proportional reinsurance contracts, the reinsurance expense is recognized

in accordance with the pattern of recognition of premium income to which they relate.

Fixed assets are stated at historical cost except free hold land and building on free hold land, which are stated at re-

valued amount, less accumulated depreciation and impairment in value, if any. Cost includes borrowing cost as referred

to in accounting policy for borrowing cost.

Assets' residual values, if significant and their useful lives are reviewed and adjusted, if appropriate, at each balance

sheet date.

When parts of an item of fixed assets have different useful lives, they are recognized as a separate items of fixed assets.

Assets subject to finance lease are depreciated over their expected useful lives on the same basis as owned assets.

Assets subject to finance lease are depreciated over their expected useful lives on the same basis as owned assets.

The carrying amount of the assets is reviewed at each balance sheet date to determine whether there is any indication

of impairment of any asset or a group of assets. If such indication exists, the recoverable amount of such assets is

estimated and the impairment losses are recognized in the profit and loss account currently.



For goodwill, the recoverable amount is estimated at each balance sheet date.

3.5.19 Financial instruments

3.5.20 Offsetting of financial assets and financial liabilities

3.5.21 Segment reporting

Marine insurance provides coverage against cargo risk, war risk and damages occurring in inland transit.

Motor insurance provides comprehensive car coverage and indemnity against third party loss.

3.5.22 Revenue recognition

Premium income

a) For direct business, evenly over the period of the policy.

b) For proportional reinsurance business, evenly over the period of underlying insurance policies.

Financial assets and financial liabilities are offset and the net amount is reported in the financial statements only when

there is a legally enforceable right to set off the recognized amount and the Company intends either to settle on a net

basis or to realize the assets and to settle the liabilities simultaneously.

A business segment is a distinguishable component of the Company that is engaged in providing services that are subject

to risks and returns that are different from those of other business segments. The Company accounts for segment

reporting of operating results using the classes of business as specified under the Insurance Ordinance, 2000 and the SEC

(Insurance) Rules, 2002 as the primary reporting format.

The Company has four primary business segments for reporting purposes namely fire, marine, motor and miscellaneous.

The perils covered under fire insurance include damages caused by fire, riot and strike, explosion, earthquake,

atmospheric damage, flood, electric fluctuation and impact.

Miscellaneous insurance provides cover against burglary, loss of cash in safe and cash in transit, personal accident,

money, engineering losses and other covers.

Assets, liabilities and capital expenditures that are directly attributable to segments have been assigned to them. Those

assets and liabilities which can not be allocated to a particular segment on a reasonable basis are reported as

unallocated corporate assets and liabilities.

Provisions for impairment are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

Changes in the provisions are recognized as income/ expense currently.

Financial assets and financial liabilities are recognized at the time when the Company becomes a party to the

contractual provisions of the instrument and de-recognized when the Company loses control of contractual rights that

comprise the financial assets and in the case of financial liabilities when the obligation specified in the contract is

discharged, cancelled or expired. Any gain or loss on derecognition of the financial assets and financial liabilities is

included in the profit and loss account for the year.

Financial instruments carried on the balance sheet include cash and bank deposits, loans, investments, premiums due but

unpaid, amounts due from other insurers / reinsurers, accrued investment income, reinsurance recoveries against

outstanding claims, sundry receivables, provision for outstanding claims, amounts due to other insurers/reinsurers,

accrued expenses, other creditors and accruals, short-term borrowings and unclaimed dividends. The particular

recognition methods adopted are disclosed in the individual policy statements associated with each item.

Premium income under a policy is recognized over the period of insurance from the date of issue of the policy to which it

relates to its expiry as follows:



Change in accounting policy

Return on investments

Miscellaneous income

Other revenues are recognized on accrual basis.

3.5.23 Premium deficiency reserve

3.5.24 Expenses of management

3.5.25 Commission

Commission expense

- Dividend income and entitlement of bonus shares are recognized when the Company's right to receive such dividend and

bonus shares is established.

- Gain / loss on sale of available for sale investments and investments at fair value through profit and loss - held for

trading are recognized in profit and loss account.

The Company maintains a provision in respect of premium deficiency for the class of business where the unearned

premium liability is not adequate to meet the expected future liability, after reinsurance, from claims and other

supplementary expenses expected to be incurred after the balance sheet date in respect of the unexpired policies in that

class of business at the balance sheet date. The movement in the premium deficiency reserve is recorded as an expense

/ income in profit and loss account for the year.

The management considers that the unearned premium reserve for all classes of business as at the year end is adequate

to meet the expected future liability after reinsurance, from claims and other expenses, expected to be incurred after

the balance sheet date in respect of policies in those classes of business enforce at the balance sheet date. Hence, no

reserve for the same has been made in these financial statements.

Expenses of management allocated to the underwriting business represent directly attributable expenses and indirect

expenses allocated to the various classes of business on the basis of gross premium revenue. Expenses not allocable to

the underwriting business are charged as administrative expenses.

Commission due on direct, faculative and treaty business and on reinsurance cessions are recognized in accordance with

the policy of recognizing premium revenue.

Where the pattern of incidence of risk varies over the period of policy, premium is recognized as revenue in accordance

with the pattern of the incidence of risk.

Premium income includes administrative surcharge that represents documentation and other charges recovered by the

Company from policy holders in respect of policies issued, at a rate of 5% of the premium restricted to a maximum of Rs.

2,000 per policy.

During the year, the Company has changed its accounting policy in relation to recognition of administrative surcharge. As

per the new policy, administrative surcharge is deferred and charged to profit and loss account as revenue in accordance

with the pattern of recognition of the insurance premium to which it relates. Previously the balance was charged to

profit and loss account at the time the policies are accepted.

Had there been no change in accounting policy, net earned premium of the Company for the year ended December 31,

2008 and equity as at December 31, 2008 would have been lower by Rs. 7.194 million and higher by Rs. 0.518 million

respectively. Please refer to note 28.

- Income from held to maturity investments is recognized on a time proportion basis taking into account the effective

yield on the investments.



Commission income

3.5.26 Claims recoveries

3.5.27 Foreign currency

Gains and losses arising on retranslation are included in net profit or loss for the period.

3.5.28 Pakistan Reinsurance Company Limited ("PRCL") Retrocession

3.5.29 Zakat

3.5.30 Related party transactions

3.5.31 Dividend

2008 2007

Note Rupees Rupees

4 ISSUED, SUBSCRIBED AND PAID-UP SHARE CAPITAL

20,000,000 (2007: 20,000,000) ordinary shares of Rs. 10 each

fully paid in cash 4.3 200,000,000

200,000,000

4.1

4.2 The Company has no reserved shares for issue under option and sales contracts.

2008 2007

4.3 Reconciliation of number of ordinary shares

Balance at beginning of the year 20,000,000 12,000,000

Add: shares issued under the scheme of arrangement for merger with PEI - 8,000,000

Balance at end of the year 20,000,000 20,000,000

Dividend distribution to the Company's shareholders is recognized as a liability in the period in which the dividends are

approved.

The Company has only one class of ordinary shares which carry no right to fixed income. The holder of ordinary shares

are entitled to receive dividend as declared and entitled to vote at meetings of the Company.

Number of shares

Commission income from reinsurers is recognized at the time of issuance of the underlying insurance policy by the

Company. This income is deferred and brought to account as revenue in accordance with the pattern of recognition of

the reinsurance premium to which it relates. Profit commission, if any, which the Company may be entitled to under the

terms of reinsurance, is recognized on accrual basis.

Claim recoveries receivable from the reinsurers are recognized as an asset at the same time as the claims which give rise

to the right of recovery are recognized as a liability and are measured at the amount expected to be received.

Transactions in currencies other than Pakistani Rupees are recorded at the rates of exchange prevailing on the dates of

the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies

are retranslated at the rates prevailing on the balance sheet date except where forward exchange contracts have been

entered into for repayment of liabilities, in that case, the rates contracted for are used.

PRCL retrocession business is accounted for on the basis of the statements received relating to the first three quarters of

the current year and one quarter of the previous year, with the exception of cash and bank transactions which are

accounted for currently.

Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980) is accounted for when the dividends

are approved.

Transactions with related parties are priced on arm’s length basis. Prices for these transactions are determined on the

basis of comparable uncontrolled price method, which sets the price by reference to comparable goods and services sold

in an economically comparable market to a buyer unrelated to the seller.



2008 2007

5 SURPLUS ON REVALUATION OF FIXED ASSETS Note Rupees Rupees

Balance at beginning of the year 33,117,583 21,441,066

Add: surplus realized on business combination 5.1 - 12,500,000

33,117,583 33,941,066

Less:

- impairment loss charged during the year 5.1 (15,486,310)

-

- transferred to unappropriated profit in respect of incremental

depreciation 5.2 (782,290)

(823,483)

Balance at end of the year 16,848,983

33,117,583

5.1

Surplus on revaluation of freehold land acquired through business combination -

12,500,000

Impairment loss charged to surplus on revaluation of freehold land (8,528,757) -

Impairment loss charged to surplus on revaluation of freehold land (4,582,472) -

Impairment loss charged to surplus on revaluation of building on freehold land (2,375,081) -

(15,486,310)

12,500,000

5.2

2008 2007

6 DEFERRED TAXATION Rupees Rupees

Deferred tax liability on taxable temporary differences:

Tax depreciation allowance 24,688,800

2,297,742

Finance lease 1,246,043

1,396,125

Surplus on revaluation of fixed assets 4,643,853

6,036,973

Provision for doubtful receivables -

315,228

Deferred tax asset on deductible temporary differences

Provision for doubtful receivables (2,042,922) -

Loss on remeasurement of available for sale investments (1,563,182) -

Available tax losses (15,766,050) (1,093,960)

11,206,542 8,952,108

The latest revaluation of freehold land, building on freehold land and investment properties was carried out by M/s.

Muhammad Siddique Associates (Surveyors, Loss Adjusters and Valuation Consultants) on December 31, 2008 . The basis

used for revaluation are as follows:

Freehold land The value of free hold land is ascertained according to the local market value.

Incremental depreciation represents the difference between the depreciation on investment properties and fixed assets

charged during the year and the equivalent depreciation based on its historical costs. See note 12 and 17 to the financial

statements for detail of revaluation.

Building on free hold land Present day construction rates for different types of building structures depreciated to

account for the age and condition of the building.

This revaluation resulted in following:

Fixed assets

Investment properties



2008 2007

7 OTHER CREDITORS Note Rupees Rupees

Central excise duty 9,605,943 6,483,759

Federal insurance fee 3,917,603 2,116,490

Withholding tax payable 22,700

16,675

Employee's contribution to Provident fund 7.1 356,648

394,932

Others 715,000

-

14,617,894

9,011,856

7.1

8 LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE

Present value of minimum lease payments 1,133,961

2,755,501

Less: current portion 992,952

1,694,762

8.2 141,009

1,060,739

8.1

8.2 The reconciliation between minimum lease payments and its present value is as under:

Minimum lease payments

Not later than one year 1,061,212

1,914,869

Later than one year but not later than five years 144,117

1,132,011

1,205,329

3,046,880

Less: finance cost allocated to future periods 71,368

291,379

1,133,961

2,755,501

Less: current portion 992,952

1,694,762

141,009

1,060,739

Present value of minimum lease payments

Not later than one year 992,952 1,694,762

Later than one year but not later than five years 141,009 1,060,739

1,133,961 2,755,501

This represents the amount deducted from the salaries of employees against their contribution to provident fund. As per

accounting policy for staff retirement benefits (see note 3.5.7 to the financial statements), the Company is required to

operate a funded provident fund scheme for all permanent employees and made monthly contribution at the rate of 10%

of basic salary and the same is charged to profit and loss account, but the Company has not made provision for staff

retirement benefits.

The Company has entered into lease agreements with various leasing companies to acquire vehicles. The rentals under

these lease arrangements are payable on monthly basis. The present value of minimum lease payments has been

discounted at an implicit interest rate ranging from 15.00% to 20.00% (2007: 15.00% to 20.00%) per annum.

The Company has an option to purchase the assets after expiry of the lease term and has the intention to exercise the

option. Taxes, repairs, replacements and insurance costs are borne by the Company. There are no financial restrictions

in lease agreements.

The liability is secured by demand promissory note, post dated cheques and personal guarantees of the directors of the

Company.



9 ADVANCE RECEIVED AGAINST SALE OF LAND

10 CONTINGENCIES AND COMMITMENTS

10.1

10.2

10.3

10.4

2008 2007

11 INVESTMENTS Note Rupees Rupees

Available for sale investments - quoted 11.1 7,576,564

4,135,723

Held to maturity 11.2 11,726,400

11,726,400

19,302,964

15,862,123

11.1 Available for sale investments - quoted

2008 2007 2008 2007

Company's name Rupees Rupees

Commercial banks

Bank Al-Falah Limited 6,500

1,500

10

232,600

76,350

Bank of Khyber Limited 10,000

8,000

10

135,080

113,600

Bank of Punjab Limited 4,000

1,000

10

166,340

92,000

KASB Bank Limited 10,000

10,000

10

198,000

198,000

NIB Bank Limited 32,800

14,800

10

516,624

352,680

Saudi Pak Commercial Bank Limited 5,000 5,000 10 128,500 128,500

Allied Bank Limited 5,000 - 10 289,400 -

Askari Commercial Bank Limited 6,000 - 10 167,880 -

Habib Bank Limited 8,000 - 10 1,107,600 -

MCB Bank Limited 5,000 - 10 1,178,750 -

A Court case for a piece of land measuring 25 Kanals and 10 Marlas located at Alama Iqbal Town, Lahore with an

approximate market value of Rs. 142.800 million (book value of Rs. 42.000 million) has been decided in the favor of the

Company against which the Fard has been issued. During the year the Company has entered into agreement for sale with

various parties against the consideration of Rs. 114.750 million to be paid in three installments each amounting to Rs.

22.000 million, Rs. 19.375 million, and Rs. 73.375 million falling due on October 31, 2008, December 28, 2008 and June

15, 2009 respectively. In accordance with the term of the agreement if the final payment is not received on due date

i.e. June 15, 2009 the agreement for sale of the land measuring 25 Kanals and 10 Marlas will stand null and void.

There are certain cases before different courts pending for adjudication. These cases are alleged to be not of substance

and are likely to be decided in favor of the Company, hence the management has not provided any contingent liability in

respect thereof.

The Company is defendant in a lawsuit of fire insurance claim amounting to Rs. 59.518 million. The Company has filed a

counter claim of Rs. 500.000 million against Maqbool Textile Mills Limited. The management of the Company and the

legal counsel believe that the Company has a good chance of prevailing, but the ultimate outcome of the lawsuits cannot

presently be determined. Furthermore a petition against the Company under the relevant provisions of the Ordinance is

pending adjudication in the Court.

While finalizing the assessments for the assessment years 2000 - 2001 and 2002 - 2003 with regard to PEI the

Commissioner Income Tax (Appeals) has made certain disallowances of expenses amounting to Rs. 1.152 million and Rs.

0.622 million respectively. Appeals are filed with the Honorable Income Tax Appellate Tribunal. The management of the

Company is of the opinion that these additions are contrary to the provisions of law as well as facts of the case and are

likely to be decided in favor of the Company.

The Honorable Income Tax Appellate Tribunal set aside orders for the assessment years 1998 - 1999 to 2000 - 2001. The

Company has also filed an appeal with Income Tax Appellate Tribunal for the assessment year 2001 - 2002 pending

adjudication. The reassessment proceedings has not yet been started.

Face value per

share Number of shares



2008 2007 2008 2007

Company's name Rupees Rupees

Cement

DG Khan Cement Limited 2,200 2,200 10 203,500 203,500

Fauji Cement Limited 14,000 4,000 10 130,400 61,400

Lucky Cement Limited 2,000

2,000

10

237,100

237,100

Dadabhoy Cement Limited 1,500

1,500

10

16,650

16,650

Petroleum and power

Shell Pakistan Limited 4,000

500

10

1,295,085

209,000

PSO Limited 2,000

-

10

534,000

-

Pakistan Oil Fields Limited 2,000

-

10

487,000

-

Hub Power Co. Limited 6,000

2,500

10

151,735

76,625

SNGPL Limited 5,150

5,150

10

334,493

334,493

Motors and tractors

Al Gazi Tractors Limited 3,800

800

10

865,100

209,600

Millat Tractors Limited 2,000

-

10

267,100

-

Indus Motors Limited 6,000

1,000

10

1,088,500

372,000

Communications

PTCL 10,000

4,000

10

377,000

188,000

Tobbaco

PTC Limited 5,000

-

10

311,350

-

Fertilizers and sugar

Fauji Fertilizers Limited 1,200

1,200

10

139,200

139,200

Highnoon Laboratories Limited 2,500

2,500

10

204,375

204,375

Noon Sugar Limited 7,000

3,000

10

180,150

104,550

Textiles

Nishat Mills Limited 770 770 10 99,330 99,330 Dewan Salman Limited 1,300 1,300 10 13,585 13,585 Qaum Spinning Mills Limited 10,000

10,000

10

100,000

100,000

Fatima Enterprises Textile Limited 5,000

5,000

10

50,000

50,000

Ibrahim Fibres Limited 3,900

3,900

10

198,510

198,510

Modaraba and leasing

Schön Modaraba Limited 5,850

5,850

10

58,500

58,500

Modaraba Al-Mali 35,000

-

10

70,000

-

Standard Chartered Leasing 500

500

10

5,925

5,925

Miscellaneous

Unilever (Pakistan) Limited 100

-

10

211,185

-

Shabir Tiles Limited 4,150

4,150

10

170,150

170,150

Biafo Industries Limited 1,000

1,000

10

48,100

48,100

Tri-star Shipping Lines 7,400

7,400

10

74,000

74,000

12,042,797

4,135,723

Less: provision for diminution in the value of investments 4,466,233

-

7,576,564

4,135,723

11.1.1

11.2 Held to maturity

Government Compensation Bonds 516,400 516,400

Defence Saving Certificates 11,030,300 11,030,300

Other Government Securities 179,700 179,700

11,726,400 11,726,400

Face value per

share Number of shares

SECP through S.R.O. # 938 in December 2002 granted exemption to insurance companies from compliance with the

requirements of IAS-39. However, under prudence concept, provision for diminution in the value of investments is

recognized as expense in the profit and loss account.



12IN

VEST

MEN

T PR

OPE

RTIE

S

12.1

Reco

ncili

atio

n of

car

ryin

g va

lues

at

Dec

embe

r 31

, 20

08

BOO

K VA

LUE

As

at

As

at

As

at

As

at

As

at

Janu

ary

1,

2008

Dec

embe

r 31

,

2008

Janu

ary

1,

2008

Dec

embe

r 31

,

2008

Dec

embe

r 31

,

2008

% a

ge

Ow

n as

sets

Free

hold

land

- co

st25

,196

,875

-

-

25,1

96,8

75

-

-

-

-

25,1

96,8

75-

- re

valu

atio

n5,

555,

347

(4,5

82,4

72)

-

972,

875

-

-

-

-

972,

875

-

30,7

52,2

22-

-

26,1

69,7

50

-

-

-

-

26,1

69,7

50

(4,5

82,4

72)

Build

ings

- co

st15

,053

,670

116,

816,

000

-

131,

869,

670

1,98

7,65

4

-

1,62

6,76

8

3,61

4,42

2

128,

255,

248

5

- re

valu

atio

n4,

946,

330

(2,3

75,0

81)

-

2,57

1,24

9

1,63

7,51

6

-

165,

441

1,80

2,95

7

768,

292

5

20,0

00,0

0011

6,81

6,00

0

134,

440,

919

3,62

5,17

0

-

1,79

2,20

9

5,41

7,37

9

129,

023,

540

(2,3

75,0

81)

-

50,7

52,2

2211

6,81

6,00

0

-

160,

610,

669

3,62

5,17

0

-

1,79

2,20

9

5,41

7,37

9

155,

193,

290

(6,9

57,5

53)

12.2

Reco

ncili

atio

n of

car

ryin

g va

lues

at

Dec

embe

r 31

, 20

07

BOO

K VA

LUE

As

at

As

at

As

at

As

at

As

at

Janu

ary

1,

2007

Dec

embe

r 31

,

2007

Janu

ary

1,

2007

Dec

embe

r 31

,

2007

Dec

embe

r 31

,

2007

% a

ge

Ow

n as

sets

Free

hold

land

- co

st-

-

25,1

96,8

75

25,1

96,8

75

-

-

-

-

25,1

96,8

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- re

valu

atio

n-

-5,

555,

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5,55

5,34

7-

--

-5,

555,

347

-

--

30,7

52,2

2230

,752

,222

--

--

30,7

52,2

22

Build

ings

- co

st-

-15

,053

,670

15,0

53,6

70-

1,98

7,65

4-

1,98

7,65

413

,066

,016

5

- re

valu

atio

n-

-4,

946,

330

4,94

6,33

0-

1,63

7,51

6-

1,63

7,51

63,

308,

814

5

--

20,0

00,0

0020

,000

,000

-3,

625,

170

-3,

625,

170

16,3

74,8

30

--

50,7

52,2

2250

,752

,222

-3,

625,

170

-3,

625,

170

47,1

27,0

52

----

----

----

----

----

----

----

----

----

----

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----

----

----

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----

Rup

ees

----

----

----

----

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----

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/ F

AIR

VA

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ACC

UM

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TED

DEP

RECI

ATIO

N

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

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----

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-- R

upee

s --

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

Add

itio

ns /

(dis

posa

ls)

/

(im

pair

men

t)

Tran

sfer

s in

/

(out

)

Adj

ustm

ents

for

the

year

Char

ge f

or t

he

year

Ann

ual r

ate

of

depr

ecia

tion

COST

/ F

AIR

VA

LUE

ACC

UM

ULA

TED

DEP

RECI

ATIO

NA

nnua

l rat

e

of

depr

ecia

tion

Add

itio

ns /

(dis

posa

ls)

/

(im

pair

men

t)

Tran

sfer

s in

/

(out

)

Adj

ustm

ents

for

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year

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he

year



2008 2007

13 PREMIUMS DUE BUT UNPAID - NET - UNSECURED Rupees Rupees

- considered good 51,019,037 29,943,398

- considered doubtful 4,504,808 -

55,523,845 29,943,398

Less: provision for doubtful receivables made during the year 4,504,808

-

51,019,037

29,943,398

restated

2008 2007

14 TAXATION - PAYMENTS LESS PROVISION Note Rupees Rupees

Balance at beginning of the year 985,686

(3,850,865)

Add: paid / deducted / adjusted during the year 130,016

4,312,595

1,115,702

461,730

Less:

- provision recognized on merger with PEI -

178,901

- charge for the year 459,319

354,675

- prior year impact of change in accounting policy -

(1,057,532)

459,319

(523,956)

Balance at end of the year 656,383

985,686

14.1

2008 2007

15 SUNDRY RECEIVABLES Note Rupees Rupees

Advances to agents and employees

- considered good 4,151,176

2,435,266

- considered doubtful 1,332,112

900,650 5,483,288

3,335,916

Less: provision for doubtful receivables 15.1 1,332,112

900,650

4,151,176

2,435,266

Security deposits 743,112

449,612

4,894,288

2,884,878

15.1 Provision for doubtful receivables

Balance at beginning of the year 900,650

-

Add: provision made during the year 1,332,112

900,650

2,232,762

900,650

Less: balances written off during the year 900,650

-

Balance at end of the year 1,332,112

900,650

16 NON CURRENT ASSETS HELD FOR SALE

The income tax assessments of the Company have been finalized up to and including the tax year 2007. However, the

Company has filed appeals in respect of certain assessment years. Please refer to note 10.3 for contingencies related to

taxation.

Land measuring 25 Kanals and 10 Marlas located at Alama Iqbal Town, Lahore having net book value and fair value

amounting to Rs. 42.000 million and Rs. 142.800 million respectively is presented as held for sale. The completion of the

transaction is expected before the end of next financial year. The fair value of the land is determined by an independent

valuer. In accordance with the accounting policy of the Company, these assets are measured at lower of carrying amount

and fair value less costs to sell. Please refer to note 9 to the financial statements.



17FI

XED

ASSE

TS

17.1

Tang

ible

fix

ed a

sset

s -

reco

ncili

atio

n of

car

ryin

g va

lues

at

Dece

mbe

r 31

, 20

08

BOO

K VA

LUE

As a

t As

at

As a

t As

at

As a

t

Janu

ary

1,

2008

Dece

mbe

r 31

,

2008

Janu

ary

1,

2008

Dece

mbe

r 31

,

2008

Dece

mbe

r 31

,

2008

% a

ge

Ow

n as

sets

Free

hold

land

- co

st40

,023

,853

-

(40,

023,

853)

-

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atio

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976,

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(1,9

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(42,

000,

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-

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Build

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198,

776

-

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9

7,

212,

385

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795

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atio

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(8,5

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-

21,4

67,1

48

9,

233,

684

-

1,03

8,11

1

10

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11

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,353

5

94,4

66,8

69

-

-

85

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13,4

32,4

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4,

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720

17,4

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80

68

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(8,5

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d fix

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235,

324

-

11,6

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366

8,08

6,63

2

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0,55

210

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446,

252

210,

534

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4,65

6,78

6

2,57

4,93

6

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197,

806

2,77

2,74

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1,88

4,04

410

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2,77

7,82

0

2,55

1,24

3

38,5

48,1

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16,2

51,6

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(792

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)

(558

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)

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cles

142,

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-

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142,

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83,2

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201,

689,

167

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157,

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0

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67,0

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(9,3

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(558

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)

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Mot

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6,87

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616,

646

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338,

164

2,17

6,99

04,

694,

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15

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871,

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4,61

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176,

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4,69

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5

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69,1

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4294

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(9,3

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(46,

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(3,3

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----

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----

----

----

----

----

----

----

----

----

COST

/ F

AIR

VALU

EAC

CUM

ULA

TED

DEPR

ECIA

TIO

NLand and buildings Vehicles

Furniture,

fixtures and

office equipmentAn

nual

rat

e

of

depr

ecia

tion

Addi

tion

s /

(dis

posa

ls)

/

(im

pair

men

t)

Tran

sfer

s in

/

(out

)

Adju

stm

ents

for

the

year

Char

ge f

or t

he

year



17.2

Tang

ible

fix

ed a

sset

s -

reco

ncili

atio

n of

car

ryin

g va

lues

at

Dec

embe

r 31

, 20

07

BOO

K VA

LUE

As

at

As

at

As

at

As

at

As

at

Janu

ary

1,

2007

Dec

embe

r 31

,

2007

Janu

ary

1,

2007

Dec

embe

r 31

,

2007

Dec

embe

r 31

,

2007

% a

ge

Ow

n as

sets

Free

hold

land

- co

st54

,796

,677

-

27,0

00,0

00

40,0

23,8

53

-

-

-

-

40,0

23,8

53-

(16,

575,

949)

(25,

196,

875)

-

-

-

- re

valu

atio

n2,

705,

545

-

12,5

00,0

00

1,97

6,14

7

-

-

-

-

1,97

6,14

7-

(7,6

74,0

51)

(5,5

55,3

47)

-

-

-

57,5

02,2

22

-

39,5

00,0

00

42,0

00,0

00

-

-

-

-

42,0

00,0

00

(24,

250,

000)

(30,

752,

222)

-

-

Build

ings

- co

st58

,372

,269

-

21,1

52,3

65

64,4

70,9

64

2,60

4,84

4

-

3,58

1,58

6

4,19

8,77

6

60,2

72,1

885

-

(15,

053,

670)

(1,9

87,6

54)

5

- re

valu

atio

n34

,942

,235

-

-

29,9

95,9

05

9,60

4,30

4

-

1,26

6,89

6

9,23

3,68

4

20,7

62,2

215

-

(4,9

46,3

30)

(1,6

37,5

16)

5

93,3

14,5

04

-

21,1

52,3

65

94,4

66,8

69

12,2

09,1

48

-

4,84

8,48

2

13,4

32,4

60

81,0

34,4

09

-

(20,

000,

000)

(3,6

25,1

70)

Furn

itur

e an

d fi

xtur

es7,

858,

574

-

3,58

3,28

6

11,4

41,8

60

5,40

6,99

3

1,62

2,02

0

392,

253

7,42

1,26

6

4,02

0,59

410

Off

ice

equi

pmen

t3,

779,

973

238,

388

427,

891

4,44

6,25

2

2,10

7,63

8

276,

983

190,

315

2,57

4,93

6

1,87

1,31

610

Arm

s an

d am

unit

ion

28,2

29

-

-

28,2

29

18,8

14

-

94

2

19,7

56

8,

473

10

Mot

or v

ehic

les

35,7

70,3

68

7,

798,

533

5,59

5,00

0

49

,163

,901

27,1

13,4

47

4,58

7,99

0

2,

076,

022

33,7

77,4

59

15,3

86,4

4215

Bicy

cles

103,

037

9,97

7

29,0

42

14

2,05

6

57

,389

20,1

37

5,

715

83

,241

58,8

1510

Tota

l ow

n as

sets

198,

356,

907

8,04

6,89

8

70,2

87,5

84

201,

689,

167

46,9

13,4

29

6,50

7,13

0

7,

513,

729

57

,309

,118

144,

380,

049

(24,

250,

000)

(50,

752,

222)

-

(3,6

25,1

70)

A

SSET

S SU

BJEC

T TO

FIN

AN

CE L

EASE

Mot

or v

ehic

les

11,3

61,0

75

-

-

11,3

61,0

75

3,42

6,45

3

-

1,19

0,19

3

4,61

6,64

6

6,74

4,42

915

Tota

l lea

sed

asse

ts11

,361

,075

--

11,3

61,0

753,

426,

453

-1,

190,

193

4,61

6,64

66,

744,

429

GRA

ND

TO

TAL

209,

717,

982

8,04

6,89

870

,287

,584

213,

050,

242

50,3

39,8

826,

507,

130

8,70

3,92

261

,925

,764

151,

124,

478

(24,

250,

000)

(50,

752,

222)

(3,6

25,1

70)

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

Rup

ees

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

Vehicles

Furniture, fixtures

and office

equipment

Land and buildings

COST

/ F

AIR

VA

LUE

ACC

UM

ULA

TED

DEP

RECI

ATIO

NA

nnua

l rat

e

of

depr

ecia

tion

Add

itio

ns /

(dis

posa

ls)

/

(im

pair

men

t)

Tran

sfer

s in

/

(out

)

Adj

ustm

ents

for

the

year

Char

ge f

or t

he

year



17.3

Had

the

re b

een

no r

eval

uati

on,

the

cost

, ac

cum

ulat

ed d

epre

ciat

ion,

and

boo

k va

lue

of r

eval

ued

fixe

d as

sets

as

at y

ear

end

wou

ld h

ave

been

as

follo

ws:

Cos

t

Acc

umul

ated

depr

ecia

tion

B

ook

Valu

e C

ost

A

ccum

ulat

ed

depr

ecia

tion

B

ook

Valu

e

Free

hold

land

-

-

-

40

,023

,853

-

40,0

23,8

53

Build

ings

64,4

70,9

64

7,21

2,38

5

57,2

58,5

79

64,4

70,9

64

4,19

8,77

660

,272

,189

64,4

70,9

64

7,

212,

385

57,2

58,5

79

104,

494,

817

4,19

8,77

610

0,29

6,04

2

17.4

Deta

il of

fix

ed a

sset

s di

spos

ed o

ff d

urin

g th

e ye

ar a

re a

s fo

llow

s:

Ori

gina

l

cost

Accu

mul

ated

depr

ecia

tion

Book

val

ueSa

le p

roce

eds

Mod

e of

disp

osal

Mot

or v

ehic

les

Diah

tsu

Char

ade

300,

000

277,

821

22,1

79

50,0

00Ne

goti

atio

nM

r. M

ehm

ood

Ahm

ed,

Laho

re

Hond

a Ci

vic

492,

060

280,

530

211,

530

190,

000

Nego

tiat

ion

Mr.

Muh

amm

ad A

zam

, La

hore

792,

060

558,

351

233,

709

24

0,00

0

17.5

Depr

ecia

tion

is c

ompo

sed

of a

s fo

llow

s:

2008

2007

Gen

eral

and

adm

inis

trat

ion

expe

nses

Note

Rupe

esRu

pees

Tang

ible

fix

ed a

sset

s17

7,81

1,02

95,

078,

752

Inve

stm

ent

prop

erti

es12

1,79

2,20

93,

625,

170

9,60

3,23

88,

703,

922

Dece

mbe

r 31

, 20

08De

cem

ber

31,

2007

---

----

----

----

----

----

----

----

----

- Ru

pees

---

----

----

----

----

----

----

----

----

-

---

----

----

----

----

----

----

----

----

----

----

----

----

----

Rup

ees

---

----

----

----

----

----

----

----

----

----

----

----

----

----

Part

icul

ars

of b

uyer

s



2008 2007

18 INTANGIBLE ASSETS Note Rupees Rupees

Business combination and goodwill

Detail of net assets acquired and goodwill are as follows:

Fair value of shares issued -

80,000,000

Fair value of net assets acquired -

(76,739,956)

Goodwill -

3,260,044

Less: loss on impairment of goodwill -

3,260,044

Carrying amount of goodwill after impairment loss -

-

19 FINANCE COST

Mark-up on:

- liabilities against assets subject to finance lease 221,268

1,166,295

- reinsurance reserves 849,273

366,979

1,070,541

1,533,274

Bank charges 142,876

175,471

1,213,417

1,708,745

restated

2008 2007

20 MANAGEMENT EXPENSES Rupees Rupees

Salaries, wages and benefits 12,476,011 9,545,900 Entertainment 1,377,934 1,211,706 Rent, rates and taxes 2,071,389

1,885,780

Electricity, gas and water 777,106

634,156 Traveling and conveyance 921,883

1,088,708

Computer expenses 340,569

285,032

Communication 2,766,849

2,207,899

Service charges 4,383

154,378

Registration, subscription and association 258,896

762,744

Provision for doubtful receivables 13 & 15 5,836,920

900,650

26,831,940

18,676,953

2008 2007

21 GENERAL AND ADMINISTRATION EXPENSES Rupees Rupees

Salaries and allowances 6,917,630

5,323,840

Motor vehicle expenses 5,979,635

5,851,962

Tours and traveling 434,783

454,147

Books and periodicals 15,819

66,833

Printing and stationery 489,262

638,461

Depreciation on tangible fixed assets 17.5 9,603,238

8,703,922

Office cleaning and maintenance 1,379,463

1,254,016

Auditor's remuneration 21.1 492,777

229,554

Advertisement 55,000 276,945

Legal and professional 1,071,101 1,685,898

Sundry expenses 107,412 435,375

26,546,120 24,920,953

In the absence of market value at the effective date, the fair value of the shares issued was based on share value

as approved by the Honorable Lahore High Court in its order dated May 28, 2007.



2008 2007

21.1 Auditor's remuneration Rupees Rupees

Audit fee 200,000

100,000

Taxation 30,000

30,000

Review of Code Of Corporate Governance 50,000

30,000

Fee for interim review 160,000

60,000

Out of pocket expenses 52,777

9,554

492,777

229,554

restated

2008 2007

22 PROVISION FOR TAXATION Rupees Rupees

Income tax

- current (459,319)

(381,108)

Deferred

- current (2,675,666)

(1,863,907)

- prior -

1,093,960

(3,134,985)

(1,151,055)

23 Tax charge reconciliation

Numerical reconciliation between the average effective tax rate and the applicable tax rate is as follows:

restated

2008 2007

%age %age

Applicable tax rate 35.00

35.00

Tax effect of amounts that are:

- charges to tax at other rates 22.66

31.47

- change in prior years' tax -

(0.95)

22.66

30.52

Average effective tax rate charged to profit and loss account 12.34 4.48

24 CAPITAL DISCLOSURE

The Company's objective when managing capital is to safeguard the Company's ability to continue as a going

concern so that it can continue to provide returns for shareholders and benefits for other stakeholders; and to

maintain a strong capital base to support the sustained development of its businesses.

The Company manages its capital structure which comprises capital and reserves by monitoring return on net

assets and makes adjustments to it in the light of changes in economic conditions. In order to maintain or adjust

the capital structure, the Company may adjust the amount of dividend paid to shareholders, appropriation of

amounts to reserves or/and issue new shares.


25 REMUNERATION OF CHIEF EXECUTIVE AND DIRECTORS

2008 2007 2008 2007

Managerial pay 400,000

280,000

1,040,000

1,000,000

Bonus -

-

-

40,000

House rent 160,000

112,000

416,000

397,200

Medical -

10,771

-

57,000

Utilities 40,000

28,000

104,000

96,000

Others 326,960

110,000

427,636

416,464

926,960

540,771

1,987,636

2,006,664

Number of persons 1 1 4 4

26 TRANSACTIONS WITH RELATED PARTIES

2008 2007

Rupees Rupees

Remuneration paid to directors and chief executive of the Company 2,914,596 2,547,435

Building purchased 116,816,000 -

All transactions with related parties have been carried out on commercial terms and conditions.

27 EARNINGS PER SHARE - BASIC AND DILUTED

The calculation of the basic earnings per share is based on the following data :

Earnings

Profit after taxation attributable to ordinary shares 22,269,909

24,542,905

2008 2007

Weighted average number of ordinary shares outstanding 20,000,000

20,000,000

Earnings per share (Rupees) 1.11

1.23

27.1 No figure for diluted earning per share has been presented as the Company has not issued any instruments which

would have an impact on earnings per share when exercised.

------------------------------- Rupees -------------------------------

Number of shares

In addition to above the chief executive and the directors are provided with free use of Company's maintained car.

The chief executive and director are also provided with free use of residential telephone.

The related parties comprise holding company, subsidiaries and associated undertakings, other related group

companies, directors of the company, key management personnel and post employment benefit plans.

The remuneration of directors is disclosed in note 25.

No employee falls under the definition of "Executive" as per the Fourth Schedule to the Companies Ordinance,

1984 .

The aggregate amount charged in the financial statements for the year for remuneration, including certain

benefits to the chief executive, directors and other executives of the Company is as follows:

DirectorsChief Executive

restated



28 CHANGE IN ACCOUNTING POLICY

28.1 Net impact of change in accounting policy Note Rupees

Increase in taxation - provision less payments (1,110,398)

Increase in provision for unearned premium - closing 3,338,424

28.2 2,228,026

28.2 Year ended December 31, 2007

Increase in management expenses (5,045,239)

Increase in premium earned 5,286,620

Increase in income tax expense (26,433) Increase in profit for the year ended December 31, 2007 214,948

Period prior to December 31, 2006

2,013,078

2,228,026

28.3 Impact of prior period restatement on earnings per share

Earnings per share for the year ended December 31, 2007 as previously reported 1.24

Impact of prior period restatement on earnings per share (0.01)

Earnings per share for the year ended December 31, 2007 (restated) 1.23

Decrease in profit for the year ended December 31, 2006 (increase

in administrative surcharge amounting to Rs. 3,097,043 less

decrease in tax amounting to Rs. 1,083,965 )

Pursuant to the requirements of S.R.O # 938 of the SEC (Insurance) Rules, 2002 by SECP regarding administrative

surcharge, during the year, Company has changed its accounting policy in relation to recognition of administrative

surcharge. As per the new policy, administrative surcharge is deferred and charged to profit and loss account as

revenue in accordance with the pattern of recognition of the insurance premium to which it relates. Previously the

balance was charged to profit and loss account at the time the policies are accepted. The effect of this change in

accounting policy has been made retrospectively.



29SE

GM

ENT

REP

ORT

ING

The

Com

pany

has

fou

r pr

imar

y bu

sine

ss s

egm

ents

for

rep

orti

ng p

urpo

ses

nam

ely

fire

and

pro

pert

y da

mag

e, m

arin

e, a

viat

ion

and

tran

spor

t, m

otor

act

and

mis

cella

neou

s.

rest

ated

2008

2007

2008

2007

2008

2007

2008

2007

2008

2007

Oth

er in

form

atio

n

Segm

ent

asse

ts19

8,74

0,24

6

142,

856,

731

95,0

49,6

83

68,3

22,7

84

47,5

24,8

40

34,1

61,3

93

90,7

29,2

43

65,2

17,2

04

432,

044,

012

310,

558,

112

Una

lloca

ted

corp

orat

e

asse

ts76

,954

,378

127,

805,

923

Cons

olid

ated

tot

al

asse

ts50

8,99

8,39

0

438,

364,

035

Segm

ent

liabi

litie

s77

,725

,213

68,3

35,2

18

37,1

72,9

28

32,6

82,0

61

18,5

86,4

63

16,3

41,0

30

35,4

83,2

50

31,1

96,5

14

168,

967,

854

148,

554,

823

Una

lloca

ted

corp

orat

e

liabi

litie

s55

,814

,124

12,7

97,6

31

Cons

olid

ated

tot

al

liabi

litie

s22

4,78

1,97

8

161,

352,

454

Capi

tal e

xpen

ditu

re54

,831

,935

3,70

1,57

326

,223

,969

1,77

0,31

813

,111

,984

885,

159

25,0

31,9

701,

689,

848

119,

199,

858

8,04

6,89

8

Dep

reci

atio

n4,

417,

489

4,00

3,80

42,

112,

712

1,91

4,86

31,

056,

356

957,

431

2,01

6,68

11,

827,

824

9,60

3,23

88,

703,

922

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

- Ru

pees

---

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

--

Mis

cella

neou

s F

ire

and

prop

erty

dam

age

Mar

ine,

avi

atio

n an

d

tran

spor

t M

otor

act

T

otal

Asse

tsan

dlia

bilit

ies,

whe

reve

rpo

ssib

le,

have

been

assi

gned

toth

efo

llow

ing

segm

ents

base

don

spec

ific

iden

tifi

cati

onor

allo

cate

don

the

basi

sof

gros

spr

emiu

mea

rned

by

the

segm

ents

.



30 FINANCIAL INSTRUMENTS

(a) Interest rate risk management

Financial assets

Maturity up to one year

Cash and other equivalents 31,508,000

1,471,072

32,979,072

30,508,000

75,525,632

106,033,632

Loan to employees -

98,648

98,648

-

123,962

123,962

Investments -

7,576,564

7,576,564

-

4,135,723

4,135,723

Premiums due but unpaid -

51,019,037

51,019,037

-

29,943,398

29,943,398

Amount due from other insurers / reinsurers -

5,818,755

5,818,755

-

5,740,979

5,740,979

Premium and claim reserves retained by cedants 15,074,049

-

15,074,049

12,066,829

-

12,066,829

Accrued investment income -

809,198

809,198

-

-

-

-

-

5,383,256

5,383,256

9,612,497

9,612,497

Sundry receivables -

4,894,288

4,894,288

2,884,878

2,884,878-

Maturity after one year -

Cash and other equivalents 15,000,000

-

15,000,000

-

-

-

Investments 11,726,400

-

11,726,400

11,726,400

-

11,726,400

Accrued investment income -

3,213,825

3,213,825

-

1,915,642

1,915,642

73,308,449

80,284,643

153,593,092

54,301,229

129,882,711

184,183,940

Financial liabilities

Maturity up to one year

- 8,585,317 8,585,317 - 12,136,933 12,136,933

Amount due to other insurers / reinsurers - 20,909,068 20,909,068 - 15,696,944 15,696,944

Accrued expenses -

1,004,273

1,004,273

-

678,415

678,415

Other creditors -

1,071,648

1,071,648

-

394,932

394,932

Liabilities against assets subject to lease 992,952

-

992,952

1,694,762

-

1,694,762

Maturity after one year

Liabilities against assets subject to lease 141,009 - 141,009 1,060,739 - 1,060,739

1,133,961 31,570,306 32,704,267 2,755,501 28,907,224 31,662,725

Total balance sheet sensitivity gap 72,174,488 48,714,337 120,888,825 51,545,728 100,975,487 152,521,215

Cumulative mark-up risk sensitivity gap 72,174,488 51,545,728

Reinsurance recoveries against outstanding claims

December 31, 2008 December 31, 2007

Interest / markup

bearing

Non Interest /

markup bearing Total

Interest / markup

bearing

Non Interest /

markup bearing

Provision for outstanding claims (including IBNR)

……………………………………………………………………………………………………………… Rupees ………………………………………………………………………………………………………………

Interest rate risk arises from the possibility that changes in interest rates will effect the value of financial instruments. Changes in interest rates can adversely affect the

rates charged on interest bearing liabilities. This can result in an increase in interest expense relative to financial borrowings or vice versa. The Company manages its risk

by maintaining a fair balance between interest rates, financial assets and financial liabilities. The effective interest rates for the monetary financial assets and liabilities

are mentioned in respective notes to the financial statements.

Total

December 31, 2008 December 31, 2007

Interest / markup

bearing

Non Interest /


Interest / markup

bearing

Non Interest /


……………………………………………………………………………………………………………… Rupees ………………………………………………………………………………………………………………



(b) Liquidity risk

(c) Credit risk and concentration of credit risk

(d) Reinsurance risk

31 FAIR VALUE OF FINANCIAL INSTRUMENTS

32 DATE OF AUTHORIZATION FOR ISSUE

April 03, 2009.

33 RE-CLASSIFICATIONS AND RE-ARRANGEMENTS

From To Reason Rupees

Better presentation 12,066,829

Advance tax - taxation net Taxation - payments less provision Better presentation 282,829

Other income Rental income Better presentation 1,770,000

Salaries - management expenses Salaries - general expenses Better presentation 3,517,074

Repairs and maintenance Salaries - general expenses Better presentation 410,025

Repairs and maintenance Office cleaning and maintenance Better presentation 455,515

Sundry expenses Salaries - general expenses Better presentation 130,746

Better presentation 9,554

34 GENERAL

Figures have been rounded off to the nearest rupee except as stated otherwise.

Liquidity risk reflects the Company's inability in raising funds to meet commitments. The management closely monitors

the Company's liquidity and cash flow position. The Company aims at maintaining flexibility in funding by keeping

committed credit lines available. The maturity profile is monitored to ensure adequately liquidity is maintained.

The carrying value of all the financial instruments reported in the financial statements approximate their fair value

except for investments available for sale included in note 11. Fair value is determined on the basis of objective

evidence at each reporting date.

Credit risk represents the accounting loss that would be recognized at the reporting date if counter parties fail to

perform as contracted. Out of the total financial assets of Rs. 153.593 million (2007: Rs. 184.184) million, the financial

assets which are subject to credit risk amounted to Rs. 89.865 (2007: Rs. 64.508) million. The company manages credit

risk to client's credit exposure, review and conservative estimates of provisions for doubtful receivables, if any, and

through the prudent use of collateral policy. The management is of the view that is not exposed to significant

conservation of credit risk as its financial assets are adequately diversified on organization of sound financial standing

covering various industrial sector and segments.

Reinsurance ceded does not relief the Company from its obligation to policy holders and as a result the Company

remains liable for the portion of outstanding claims reinsured to the extent that reinsurer fails to meet the obligation

under the reinsurance agreement.

In common with other insurance companies, in order to minimize the financial exposure arising from large claims, the

Company in the normal course of business, enters into agreement with other parties for reinsurance purposes.

To minimize its exposure to significant losses from reinsurer insolvencies, the Company obtains reinsurance from a

number of reinsurers, who are dispersed over several geographical regions.

These financial statements have been approved by the Board of Directors of the Company and authorized for issue on

Corresponding figures have been re-classified and re-arranged, wherever necessary, to reflect more appropriate

presentation of events and transactions for the purpose of comparison. Significant re-classification and re-arrangements

are as follows:

Amounts due to other insurers /

reinsurers

Premium and claim reserves

retained by cedants

Legal and professional - general

and administration expenses

Auditors remuneration- general and

administration expenses




Notice of Annual General Meeting

Ordinary Business

NOTES

stNotice is hereby given that the 61 Annual General Meeting of The Pakistan General Insurance Company Limited will be held at Registered Office of the Company at Cooperative Bank House,

th5-Bank Square, Shahrah-e-Quaid-e-Azam, Lahore on Thursday, 30 April 2009 at 11:00 a. m. to transact the following business:

st1. To confirm the minutes of last Annual General Meeting held on 31 March, 2008.

2. To receive, consider and adopt the Audited Financial Statements of the Company for the year st

ended 31 December 2008 together with the Directors' Report to the shareholders and Auditors' Report thereon.

3. To appoint auditors and to fix their remuneration for the year 2009. The board of directors has recommended the joint appointment of auditors. The retiring auditors M/s M. Yousuf Adil Saleem & Co. Chartered Accountants and M/s Kamran & Co. Chartered Accountants, who being eligible, offer themselves for re-appointment.

4. To transact any other business of the Company with the permission of the Chair.

By order of the Board

(Ch. Muhammad Saleem)Lahore Company Secretary April 03, 2009

th th1. The share transfer books of the Company will remain closed from 24 April to 30 April (both days inclusive).

2. A member entitled to attend and vote at this meeting is entitled to appoint another member as his/her proxy to attend and vote for him /her. Proxies in order to be effective must be received at the registered office of the Company, at Cooperative Bank House, 5-Bank Square, Shahra-e-Quaid-e-Azam, not less than 48 hours before the time of holding the meeting. Proxy form is attached.

3. CDC shareholders entitled to attend and vote at this meeting must bring his / her original CNIC or passport along with the participant's ID numbers and account numbers to prove his/ her identity. In case of Proxy, the attested copy of CNIC or passport of the CDC shareholder must be enclosed.

4. Shareholders are advised to immediately notify the change in their addresses, if any, to our registrar M/s Corplink (Pvt.) Limited, Wings Arcade, 1-K, Commercial, Model Town, Lahore.

Proxy Form

________________________________

_________

________________________________

________________________________

as my proxy to vote for me and on my behalf at the 61st Annual General Meeting of the

Company to be held on Thursday, April 30th 2009 and at any adjournment thereof.

Signature

Five RupeeRevenueStamp

NOTES:

No person shall be appointed a proxy who is not a member of the Company and qualified to vote save that in case of a Corporate body being a Member of the Company may appoint as its representative any person whether a member of the Company or

note. An Attorney of a member need not himself be a member.

No person shall act as a proxy unless the instrument appoint a proxy and every power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power or authority shall be deposited at the registered office of the Company, not less than 48 hours before the time for holding the meeting at which the person named in such instrument proposes to vote and in default the instrument of proxy shall

not be treated as valid.

Member of The Pakistan General Insurance Company Limited hereby appoint

or failing him

The signature on the instrument of proxy must conform to the specimen signature recordedwith the Company

AFIX CORRECTPOSTAGE

The Company Secretary

The Pakistan General Insurance Co. Ltd.Co-operative Bank House, 5-Bank Square Shahrah-e-Quaid-e-Azam,Post Office Box 1364, Lahore.Phones: 7324404, 7352182, 7325382

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