Balance Sheet: Share Capital and Reserves

Balance Sheet
As at 31 December 2008
Note 2008 2007

(Rupees in '000)
Share capital and reserves
Authorised share capital 1,000,000 1,000,000
[100,000,000 ordinary shares of Rs.10 each
(31 December 2007: 100,000,000
ordinary shares of Rs. 10 each]
Paid-up share capital 5 659,148 549,290

Retained earnings (151,066) 658,434
Reserves 6 1,553,232 1,203,939
2,061,314 2,411,663
Underwriting provisions
Provision for outstanding claims
(including IBNR) 1,190,064 1,428,812
Provision for unearned premium 1,345,366 1,190,119
Commission income unearned 48,446 53,263
Total underwriting provisions 2,583,876 2,672,194
Deferred liabilities
Staff retirement benefits 2,501 3,066
Creditors and accruals

Premiums received in advance 18,933 18,478
Amounts due to other insurers /
reinsurers 146,696 270,643
Accrued expenses 28,874 23,520
Other creditors and accruals 8 332,280 255,100
526,783 567,741
Other liabilities
Deposits and other payables 9 234,137 262,856
Unclaimed dividend 16,561 15,186
250,698 278,042
42
TOTAL LIABILITIES 3,363,858 3,521,043
TOTAL EQUITY AND LIABILITIES 5,425,172 5,932,706
CONTINGENCIES 10
The annexed notes from 1 to 42 form an integral part of these financial statements.
Twofiq H. Chinoy Akbarali Hashwani

Chairman Director
Balance Sheet
As at 31 December 2008
Note 2008 2007

(Rupees in '000)
Cash and bank deposits 11
Cash and other equivalents 2,834 2,251
Current and other accounts 428,915 690,850
Deposits maturing within 12 months 1,238,406 987,524
1,670,155 1,680,625
Loans to employees
Secured and unsecured (considered good) 12 364 433
Investments 13 1,430,217 1,955,892
Investment properties 14 123,822 76,197
Deferred taxation 15 35,974 62,570
Current assets- others

Premiums due but unpaid (unsecured) 16 714,385 703,209
Amounts due from other insurers /
NEW JUBILEE INSURANCE COMPANY LIMITED

reinsurers 17 181,303 45,672
Reinsurance recoveries due but unpaid 20,035 17,691
Salvage recoveries accrued 27,617 15,468
Premium and claim reserves retained
by cedants – 1,080
Accrued investment income 26,626 13,956
Reinsurance recoveries against
outstanding claims 18 365,729 501,680
Taxation-- payments less provision 7 14,551 32,381
Deferred commission expense 136,978 121,983
Prepayments 19 513,058 454,521
Sundry receivables 20 66,398 68,116
2,066,680 1,975,757
Fixed assets 21
Tangible and intangible
Furniture, fixtures and office equipment 76,254 57,774
Motor vehicles 18,483 121,178
43
Computer softwares 3,223 2,280
97,960 181,232
ANNUAL REPORT 2008
TOTAL ASSETS 5,425,172 5,932,706
Akbarali Pesnani Tahir Ahmed

Director Managing Director
(Chief Executive)
Profit & Loss Account
for the year ended 31 December 2008
Note Fire & Marine Motor Liability Accident & Others Treaty 2008 2007
property aviation & health Aggregate Aggregate
transport
(Rupees in '000)
Revenue account
Net premium revenue 494,427 396,408 688,345 18,457 362,306 226,567 (67) 2,186,443 1,818,775
Less:
Net claims 255,952 168,010 458,092 17,929 249,343 182,919 216 1,332,461 1,413,733
Expenses 23 114,494 91,795 159,398 4,274 83,898 52,465 -- 506,324 405,432
Net commission 85,178 75,113 68,467 (2,094) 9,661 3,245 (27) 239,543 206,643
Underwriting result 38,803 61,490 2,388 (1,652) 19,404 (12,062) (256) 108,115 (207,033)
Investment income 181,707 599,208

Rental income 24 83,200 70,864
Return on bank deposits 101,123 110,242
Other income 25 10,773 2,811
General and administration expenses 26 (19,553) (7,869)
Share of profit of an associate 13.1.2 6,624 6,818
Impairment in value of available for
sale securities 13.4 (651,142) –
(Loss) / profit before tax (179,153) 575,041
Taxation -- net 27 (88,096) 13,415
(Loss) / profit after tax (267,249) 588,456
Profit and loss appropriation account:
Balance at commencement of the year 658,434 938,002
(Loss) / profit after tax for the year (267,249) 588,456

Transfer to general reserve (350,000) (500,000)
Issuance of bonus shares for the year 2007 : Rs.2 (20%) per share of Rs.10 each
[2006: Rs.1.25 (25%) per share of Rs. 5 each] (109,858) (109,858)
Final cash dividend for the year 2007: Rs.1.50 (15%) per share of Rs.10 each
[2006: Rs. 2.00 (40%) per share of Rs. 5 each] (82,393) (175,773)
Interim cash dividend for the year 2008: Nil [2007: Rs. 1.50 (15%) per share of Rs. 10 each] – (82,393)
(809,500) (279,568)
44
Balance of unappropriated (loss) / profit at end of the year (151,066) 658,434
(Loss) / earnings per share of Rs. 10/= each -- basic & diluted 39 Rupees (4.05) 8.93
Twofiq H. Chinoy Akbarali Hashwani Akbarali Pesnani Tahir Ahmed

Chairman Director Director Managing Director
(Chief Executive)
Statement of Changes in Equity
for the year ended 31 Decembe 2008
Share capital Reserves Total Total

Issued, Capital reserves Revenue reserves Company's reserves
subscribed Reserve for General Retained Total share of capital
and paid-up exceptional reserve earnings contributed to
losses statutory funds
by an associated
company
(Rupees in '000)
Balance as at 1 January
2007 439,432 9,384 700,000 938,002 1,638,002 (7,245) 1,640,141 2,079,573
Changes in equity for the

year ended 31 December 2007
Company's share of capital

contributed to statutory funds
by an associated company – – – – – 1,800 1,800 1,800
Total recognised income ––

profit for the year – – – 588,456 588,456 – 588,456 588,456
Appropriations:
– Final cash dividend – – – (175,773) (175,773) (175,773) (175,773)

– Interim cash dividend – – – (82,393) (82,393) – (82,393) (82,393)
– Issuance of bonus shares 109,858 – – (109,858) (109,858) – (109,858) –
– Transfer to general reserve – – 500,000 (500,000) – – – –
109,858 – 500,000 (868,024) (368,024) – (368,024) (258,166)
Balance as at 31 December
2007 549,290 9,384 1,200,000 658,434 1,858,434 (5,445) 1,862,373 2,411,663
Changes in equity for the

year ended 31 December 2008
Company's share of capital

contributed to statutory funds
by an associated company – – – – – (707) (707) (707)
Total recognised loss –

loss for the year – – – (267,249) (267,249) – (267,249) (267,249)
Appropriations:
– Final cash dividend – – – (82,393) (82,393) – (82,393) (82,393)
45
– Issuance of bonus shares 109,858 – – (109,858) (109,858) – (109,858) –
– Transfer to general reserve – – 350,000 (350,000) – – – –
ANNUAL REPORT 2008

109,858 – 350,000 (542,251) (192,251) – (192,251) (82,393)
Balance as at 31 December
2008 659,148 9,384 1,550,000 (151,066) 1,398,934 (6,152) 1,402,166 2,061,314

(Chief Executive)
Statement of Cash Flows
2008 2007
(Rupees in '000)
Operating cash flows
(a) Underwriting activities

Premiums received 3,515,743 3,200,568
Reinsurance premiums paid (1,361,670) (1,435,380)
Claims paid (2,092,693) (1,292,042)
Reinsurance and other recoveries received 508,393 224,712
Commissions paid (319,369) (267,434)
Commissions received 108,175 116,083
Other underwriting payments (management expenses) (480,085) (396,059)
Net cash (outflow) / inflow from underwriting activities (121,506) 150,448
(b) Other operating activities

Income tax paid (43,670) (141,364)
General and administration expenses paid (13,752) (7,869)
Other operating payments (232,525) (212,683)
Other operating receipts 308,519 269,958
Loans advanced (824) (1,733)
Loans repayment received 873 1,549
Net cash inflow / (outflow) from other operating activities 18,621 (92,142)
Total cash (outflow) / inflow from all operating activities (102,885) 58,306
Investment activities
Profit / return received 103,644 132,351
Dividends received 69,747 89,979
Rentals received – net of expenses 19,120 211,688
Payments for investments / investment property (1,659,363) (1,910,055)
Proceeds from disposal of investments 1,586,394 1,735,848
Fixed capital expenditure (37,086) (82,125)
Proceeds from disposal of fixed assets 90,978 10,992
46
Total cash inflow from investing activities 173,434 188,678
Financing activities
Dividends paid (81,019) (252,920)
Total cash (outflow) from financing activities (81,019) (252,920)
Net cash (outflow) from all activities (10,470) (5,936)
Cash at beginning of the year 1,680,625 1,686,561

Cash at end of the year 1,670,155 1,680,625
Statement of Cash Flows
2008 2007
(Rupees in '000)
Reconciliation to profit and loss account
Operating cash flows (102,885) 58,306

Depreciation / amortisation expense (26,474) (17,991)
Profit on disposal of fixed assets 2,112 1,817
Profit on disposal of investments 98,571 493,330
Dividend income 69,775 88,010
Rental income 83,200 70,864
Other investment (loss) / income (531,134) 134,930
Increase in assets other than cash 52,286 772,068
Decrease / (increase) in liabilities other than running finance 87,300 (1,012,878)
(Loss) / profit after taxation (267,249) 588,456
Definition of cash
Cash comprises of cash in hand, policy stamps, bond papers, cheques in hand, bank balances and

other deposits which are readily convertible to cash in hand and which are used in the cash
management function on a day–to–day basis.
Cash for the purposes of the Statement of Cash Flows consists of:
Cash and bank deposits
Cash and other equivalents

– Cash 216 760
– Policy stamps and bond papers in hand 2,618 1,491
2,834 2,251
Current and other accounts
– Current accounts 138,841 75,179
– PLS savings accounts 290,074 615,671
428,915 690,850
Deposits maturing within 12 months (encashable on demand)
47
– Term deposits 1,238,406 987,524
1,670,155 1,680,625
ANNUAL REPORT 2008

(Chief Executive)
Statement of Premiums
Business underwritten inside Pakistan
2008 2007
Premiums Unearned premium reserve Premiums Reinsurance Prepaid reinsurance premium Reinsurance Net premium Net premium
Class written Opening Closing earned ceded Opening Closing expenses revenue revenue
(note 22)
(Rupees in '000)
Direct and facultative
1. Fire and property damage 1,041,149 369,564 430,771 979,942 498,562 179,322 192,369 485,515 494,427 422,655
2. Marine, aviation and transport 497,344 49,936 38,033 509,247 100,105 17,417 4,683 112,839 396,408 382,206
3. Motor 690,705 288,282 277,639 701,348 14,553 5,153 6,703 13,003 688,345 581,390
4. Liability 196,207 28,711 26,968 197,950 170,321 26,480 17,308 179,493 18,457 13,727
5. Accident and health 401,440 150,188 189,322 362,306 – – – – 362,306 294,819
6. Miscellaneous 699,619 303,438 382,633 620,424 454,183 218,836 279,162 393,857 226,567 123,938
Total 3,526,464 1,190,119 1,345,366 3,371,217 1,237,724 447,208 500,225 1,184,707 2,186,510 1,818,735
Treaty
7. Proportional / non–proportional (67) – – (67) – – – – (67) 40
Grand total 3,526,397 1,190,119 1,345,366 3,371,150 1,237,724 447,208 500,225 1,184,707 2,186,443 1,818,775
48

(Chief Executive)
Statement of Claims
2008 2007
Claims Outstanding claims Claims Reinsurance Reinsurance and other Reinsurance Net claims Net claims
Class paid Opening Closing expenses and other recoveries in respect of and other expense expense
recoveries outstanding claims recoveries
received Opening Closing revenue
(Rupees in '000)
1. Fire and property damage 816,744 522,845 332,847 626,746 398,999 124,627 96,422 370,794 255,952 529,302
2. Marine, aviation and transport 265,763 294,615 187,758 158,906 123,246 172,279 39,929 (9,104) 168,010 123,904
3. Motor 506,486 279,366 244,234 471,354 2,223 16,460 27,499 13,262 458,092 438,876
4. Liability 24,122 3,328 3,159 23,953 6,046 2,192 2,170 6,024 17,929 1,360
5. Accident and health 243,454 32,802 38,691 249,343 – – – – 249,343 197,957
6. Miscellaneous 235,908 295,856 383,375 323,427 114,772 201,590 227,326 140,508 182,919 119,371
Total 2,092,477 1,428,812 1,190,064 1,853,729 645,286 517,148 393,346 521,484 1,332,245 1,410,770

Treaty
7. Proportional / non–proportional 216 – – 216 – – – – 216 2,963
Grand Total 2,092,693 1,428,812 1,190,064 1,853,945 645,286 517,148 393,346 521,484 1,332,461 1,413,733
49
ANNUAL REPORT 2008

(Chief Executive)
Statement of Expenses
Other 2008 2007

Commission Deferred commission Net management Underwriting Commission Net Net
paid or commission expenses expenses from underwriting underwriting
payable Opening Closing expenses (Note 23) reinsurers* expense expense
a b c d=a+b-c e f=d+e g h=f-g
(Rupees in '000)
Class
1. Fire and property damage 142,636 42,165 60,582 124,219 114,494 238,713 39,041 199,672 172,775
2. Marine, aviation and transport 75,481 7,525 6,287 76,719 91,795 168,514 1,606 166,908 152,326
3. Motor 63,120 32,103 25,925 69,298 159,398 228,696 831 227,865 185,562
4. Liability 5,388 2,111 2,235 5,264 4,274 9,538 7,358 2,180 (5,763)
5. Accident and health 11,313 3,892 5,544 9,661 83,898 93,559 – 93,559 73,585
6. Miscellaneous 69,620 34,187 36,405 67,402 52,465 119,867 64,157 55,710 33,165
Total 367,558 121,983 136,978 352,563 506,324 858,887 112,993 745,894 611,650
Treaty
7. Proportional / non–proportional (27) – – (27) – (27) – (27) 425
Grand total 367,531 121,983 136,978 352,536 506,324 858,860 112,993 745,867 612,075
* Commission from reinsurers is arrived at after taking the impact of opening and closing unearned commission.
50

(Chief Executive)
Statement of Investment Income
2008 2007
(Rupees in '000)
Income from non-trading investments
Held to maturity
Return on Government Securities 14,150 14,150
Return on other fixed income securities and deposits

– Term finance certificates 6,365 6,403
Amortisation of premium relative to par (2,901) (2,685)

17,614 17,868
Available for sale
Dividend income
– Associates * 1,592 3,445
– Others 68,183 84,565
69,775 88,010

87,389 105,878
Gain on sale of non–trading investments 99,671 499,039
Investments related expenses (5,353) (5,709)
Investments income 181,707 599,208
* This represents dividend income of associated undertakings other than the associate where the Company
has significant influence.
51
ANNUAL REPORT 2008

(Chief Executive)
Notes to the Financial Statements
1. STATUS AND NATURE OF BUSINESS
New Jubilee Insurance Company Limited (the Company) is a public limited company incorporated in
Pakistan on 16 May 1953. The Company is listed on the Karachi and Lahore stock exchanges and
is engaged in general insurance business. The registered office of the Company is situated at 2nd
Floor, Jubilee Insurance House, I. I. Chundrigar Road, Karachi.
2. BASIS OF PREPARATION
These financial statements have been prepared on the format of financial statements issued by the
Securities and Exchange Commission of Pakistan (SECP) through Securities and Exchange
Commission (Insurance) Rules, 2002 [SEC (Insurance) Rules, 2002], vide S.R.O. 938 dated 12
December 2002.
2.1 Statement of compliance
These financial statements have been prepared in accordance with approved accounting standards
as applicable in Pakistan. Approved accounting standards comprise of such International Financial
Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified
under the Companies Ordinance, 1984, provisions of and directives issued under the Companies
Ordinance,1984, the Insurance Ordinance, 2000 and SEC (Insurance) Rules, 2002. In case
requirements differ, the provisions or directives of the Companies Ordinance, 1984, Insurance
Ordinance, 2000 and SEC (Insurance) Rules, 2002 shall prevail.
2.2 Basis of measurement
These financial statements have been prepared under the historical cost convention.
2.3 Functional and presentation currency
These financial statements are presented in Pakistani Rupees, which is the Company's functional
currency.
2.4 Use of estimates and judgements
The preparation of financial statements in conformity with the requirements of approved accounting
standards as applicable in Pakistan requires management to make judgments / estimates and
associated assumptions that affect the application of policies and reported amounts of assets,
52
liabilities, income and expenses. The judgments / estimates and associated assumptions are based
on historical experience, current trends and various other factors that are believed to be reasonable
under the circumstances, the result of which form the basis of making the estimates about carrying
values 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 ongoing basis. Revisions to accounting estimates are recognised in the period in which
the estimate is 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.
Significant areas where assumptions and estimates were exercised in application of accounting
policies relate to:
Classification of investment
In classifying investments as "held-for-trading" the Company has determined securities which are
acquired with the intention to trade by taking advantage of short term market / interest rate
movements.
For the year ended 31 December 2008
In classifying investments as "held-to-maturity" the Company has determined financial assets with fixed or
determinable payments and fixed maturity. In making this judgment, the Company evaluates its intention and
ability to hold such investments to maturity.
The investments which are not classified as held for trading or held to maturity are classified as available for
sale.
Income tax
In making the estimates for income taxes currently payable by the Company, the management looks, at the
current income tax laws and the decisions of appellate authorities on certain issues in the past. In making the
provision for deferred taxes, estimates of the Company's future taxable profits are taken into account.
Fixed assets, investment properties, depreciation and amortisation
The Company carries its investment properties at their respective cost. The fair values are determined by
independent valuation experts and such valuations are carried out after every two years to determine the
recoverable amount.
In making estimates of the depreciation / amortisation method, the management uses method which reflects
the pattern in which economic benefits are expected to be consumed by the Company. The method applied

is reviewed at each financial year end and if there is a change in the expected pattern of consumption of the
future economic benefits embodied in the assets, the method would be changed to reflect the change in
pattern. Such change is accounted for as change in accounting estimates in accordance with International
Accounting Standard - 8, "Accounting Policies, Changes in Accounting Estimates and Errors".
The assets residual values, useful lives and methods are reviewed, and adjusted if appropriate, at each
financial year end.
Outstanding claims including incurred but not reported (IBNR)
In making the estimates of the provision for outstanding claims including IBNR, the Company took advice from
actuary for the determination of provision for IBNR claims at the year end. The actuary has recommended the
month wise factor of each class based on the historic claims lag triangle method to determine provisions in
respect of IBNR claims. Accordingly, provision has been made based on IBNR factors recommended by the
actuary. Claims received upto reporting date are assessed and recorded accordingly. Subsequently these are
reviewed and reassessed wherever necessary.
53
Estimates of reinsurance recoveries against outstanding claims and salvage recoveries are made based on
expected recovery
Premium deficiency reserves ANNUAL REPORT 2008
The Company reviews premium deficiency reserve for each class of business at each reporting date. Liability,
if any, is determined on the basis of method as prescribed by the Insurance Ordinance 2000.
Defined benefits plan
Liability is determined on the basis of actuarial advice using the Projected Unit Credit Method.
Impairment
Available for sale
The Company determines that available-for-sale equity investments are impaired when there has been a
significant or prolonged decline in the fair value below its cost. This determination of what is significant or
prolonged requires judgment. In making this judgment, the Company evaluates among other factors, the
normal volatility in share price. In addition, impairment may be appropriate when there is evidence of
deterioration in the financial health of the investee, industry and sector performance, changes in technology
and operational and financing cash flows.
Associate
The Company determined that a significant or prolonged decline in the fair value of its investments in
associate below their cost is an objective evidence of impairment. The impairment loss is recognized when
the carrying value exceeds higher of fair value less cost to sell or value in use.
Provision against premiums due but unpaid
The Company reviews its premium portfolio to assess amount of premium due but unpaid and provision
required there-against. While assessing this requirement various factors including the delinquency in the
account, financial position of the insured are considered.
3. STANDARDS, INTERPRETATIONS AND AMENDMENTS TO PUBLISHED APPROVED

ACCOUNTING STANDARDS THAT ARE NOT YET EFFECTIVE
3.1 The following standards, interpretations and amendments of approved accounting standards are
effective for accounting periods beginning on or after 1 January 2009:
– Revised IAS 1 - Presentation of financial statements (effective for annual periods beginning on
or after 1 January 2009) introduces the term total comprehensive income, which represents changes
in equity during a period other than those changes resulting from transactions with owners in their
capacity as owners. Total comprehensive income may be presented in either a single statement of
comprehensive income (effectively combining both the income statement and all non-owner changes
in equity in a single statement), or in an income statement and a separate statement of
comprehensive income. The change will be effected after discussions with regulators.
– Revised IAS 23 - Borrowing costs (effective for annual periods beginning on or after 1 January
2009) removes the option to expense borrowing costs and requires that an entity capitalize
borrowing costs directly attributable to the acquisition, construction or production of a qualifying
asset as part of the cost of that asset. The application of the standard is not likely to have an effect
on the Company's financial statements.
– IAS 29 – Financial Reporting in Hyperinflationary Economies (effective for annual periods

beginning on or after 28 April 2008). The Company does not have any operations in Hyperinflationary
54
Economies and therefore the application of the standard is not likely to have an effect on the
Company's financial statements.
– Amendments to IAS 32 Financial instruments: Presentation and IAS 1 Presentation of Financial

Statements (effective for annual periods beginning on or after 1 January 2009) – Puttable Financial
Instruments and Obligations Arising on Liquidation requires puttable instruments, and instruments
that impose on the entity an obligation to deliver to another party a pro rata share of the net assets
of the entity only on liquidation, to be classified as equity if certain conditions are met. The
amendments, which require retrospective application, are not expected to have any impact on the
Company’s financial statements.
– Amendment to IFRS 2 Share-based Payment – Vesting Conditions and Cancellations (effective

for annual periods beginning on or after 1 January 2009) clarifies the definition of vesting conditions,
introduces the concept of non-vesting conditions, requires non-vesting conditions to be reflected in
grant-date fair value and provides the accounting treatment for non-vesting conditions and
cancellations. The application of this standard is not likely to have a material effect on the Company’s
financial statements.
– Revised IFRS 3 Business Combinations (applicable for annual periods beginning on or after
1 July 2009) broadens among other things the definition of business resulting in more acquisitions
being treated as business combinations, contingent consideration to be measured at fair value,
transaction costs other than share and debt issue costs to be expensed, any pre-existing interest in
an acquiree to be measured at fair value, with the related gain or loss recognised in profit or loss and
any non-controlling (minority) interest to be measured at either fair value, or at its proportionate
interest in the identifiable assets and liabilities of an acquiree, on a transaction-by-transaction basis.
The application of this standard is not likely to have an effect on the Company’s financial statements
– Amended IAS 27 Consolidated and Separate Financial Statements (effective for annual periods
beginning on or after 1 July 2009) requires accounting for changes in ownership interest by the group
in a subsidiary, while maintaining control, to be recognized as an equity transaction. When the group
loses control of subsidiary, any interest retained in the former subsidiary will be measured at fair
value with the gain or loss recognized in the profit or loss. The application of the standard is not likely
to have an effect on the Company’s financial statements.
– IFRS 7 – Financial Instruments: Disclosures (effective for annual periods beginning on or after
28 April 2008) supersedes IAS 30 – Disclosures in the Financial Statements of Banks and Similar
Financial Institutions and the disclosure requirements of IAS 32 – Financial Instruments: Disclosure
and Presentation. The application of the standard is not expected to have significant impact on the

Company's financial statements other than increase in disclosures.
– IFRS 8 – Operating Segments (effective for annual periods beginning on or after 1 January
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. This standard will have no effect on the
Company’s reported total profit or loss or equity.
– IFRIC 13– Customer Loyalty Programmes (effective for annual periods beginning on or after 01
July 2008) addresses the accounting by entities that operate or otherwise participate in customer
loyalty programmes under which the customer can redeem credits for awards such as free or
discounted goods or services. The application of IFRIC 13 is not likely to have an effect on the
Company's financial statements.
– IFRIC 15– Agreement for the Construction of Real Estate (effective for annual periods beginning
on or after 1 October 2009) clarifies the recognition of revenue by real estate developers for sale of
55
units, such as apartments or houses, 'off–plan', that is, before construction is complete. IFRIC 15
would not effect the accounting policy of the Company.
– IFRIC 16– Hedge of Net Investment in a Foreign Operation. (effective for annual periods ANNUAL REPORT 2008
beginning on or after 1 October 2008) clarifies that net investment hedging can be applied only to
foreign exchange differences arising between the functional currency of a foreign operation and the
parent entity’s functional currency and only in an amount equal to or less than the net assets of the
foreign operation, the hedging instrument may be held by any entity within the group except the
foreign operation that is being hedged and that on disposal of a hedged operation, the cumulative
gain or loss on the hedging instrument that was determined to be effective is reclassified to profit or
loss. The Interpretation allows an entity that uses the step–by–step method of consolidation an
accounting policy choice to determine the cumulative currency translation adjustment that is
reclassified to profit or loss on disposal of a net investment as if the direct method of consolidation
had been used. The amendment is not relevant to the Company’s operations.
– The International Accounting Standards Board made certain amendments to existing standards
as part of its first annual improvements project. The effective dates for these amendments vary by
standard and most will be applicable to the Company’s 2009 financial statements. These
amendments are unlikely to have an impact on the Company’s financial statements.
– IAS 27 ‘Consolidated and separate financial statements’ (effective for annual periods beginning
on or after 1 January 2009). The amendment removes the definition of the cost method from IAS 27
and replaces it with a requirement to present dividends as income in the separate financial
statements of the investor. The amendment is not likely to have an effect on Company’s financial
investments.
– IFRIC – 17 Distributions of Non–cash Assets to Owners (effective for annual periods beginning
on or after 1 July 2009) states that when a company distributes non cash assets to its shareholders
as dividend, the liability for the dividend is measured at fair value. If there are subsequent changes
in the fair value before the liability is discharged, this is recognised in equity. When the non cash
asset is distributed, the difference between the carrying amount and fair value is recognised in the
income statement. As the Company does not distribute non–cash assets to its shareholders, this
interpretation has no impact on the Company’s financial statements.
– IFRS 5 Amendment – Improvements to IFRSs – IFRS 5 Non–current Assets Held for Sale and
Discontinued Operations (effective for annual periods beginning on or after 1 July 2009) specify that:
if an entity is committed to a sale plan involving the loss of control of a subsidiary, then it would
classify all of that subsidiary’s assets and liabilities as held for sale when the held for sale criteria in
paragraphs 6 to 8 of IFRS 5 are met. Disclosures for discontinued operations would be required by
the parent when a subsidiary meets the definition of a discontinued operation. The amendment is not
likely to have an effect on Company’s financial statements.
– IFRS 4– Insurance Contracts, requires to assess at each reporting date adequacy of its
insurance liabilities through liability adequacy test. Further, it required additional disclosure relating
to identification and explanation of the amount in the financial statements arising from insurance
contracts and the amount, timing and uncertainty of future cash flows from insurance contracts. The
application of the standard requires additional disclosures in the Company's financial statements.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
4.1 Provision for outstanding claims including incurred but not reported (IBNR)
A liability for outstanding claims is recognised in respect of all claims incurred as at the balance sheet
56
date which represents the estimates of the claims intimated or assessed before the end of the
accounting year and measured at the undiscounted value of expected future payments. Provision for
outstanding claims include amounts in relation to unpaid reported claims, claims incurred but not
reported (IBNR) and expected claims settlement costs.
Provision for IBNR is made for the cost of settling claims incurred but not reported at the balance
sheet date.
Reinsurance recoveries against outstanding claims and salvage recoveries are recognised as an
asset and measured at the amount expected to be received.
4.2 Premium deficiency reserves
The Company is required as per SEC (Insurance) Rules, 2002, to maintain a provision in respect of
premium deficiency for the class of business where the unearned premium reserve 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 in the profit and loss account.
No provision has been made as the unearned premium reserve for each class 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 force at
balance sheet date.
4.3 Staff retirement benefits
4.3.1 Defined benefit plan
The Company operates an approved defined gratuity scheme for all its permanent employees who
attain the minimum qualification period for entitlement to gratuity. Contributions to the fund are made
based on actuarial recommendations and in line with the provisions of the Income Tax Ordinance,
2001. The most recent actuarial valuation was carried out for the year ended 31 December 2008
using the Projected Unit Credit Method. Actuarial gains/losses in excess of corridor limit (10% of the
higher of fair value of assets and present value of obligation) are recognised over the average
remaining service life of the employees.
4.3.2 Defined contribution plan
The Company contributes to a provident fund scheme which covers all permanent employees. Equal
contributions are made both by the Company and the employees to the fund at the rate of 8.33

percent of basic salary.
4.3.3 Employees' compensated absences
The Company accounts for the liability in respect of employees' compensated absences in the period
in which they are earned.
4.4 Investments
4.4.1 Recognition
All investments are initially recognized at cost, being the fair value of the consideration given and
include transaction costs, except for held for trading in which case transaction costs are charged to
the profit and loss account. These are recognized and classified as follows:
– Investment at fair value through profit and loss

– Held to maturity
57
– Available for sale
ANNUAL REPORT 2008

4.4.2 Measurement
4.4.2.1 Investment at fair value through profit or loss
– Investments which are acquired principally for the purposes of generating profit from short term
fluctuation in price or are part of the portfolio in which there is recent actual pattern of short term
profit taking are classified as held for trading.
– Investments which are designated at fair value through profit or loss upon initial recognition.
Subsequent to initial recognition, these investments are remeasured at fair value. Gains or losses on
investments on remeasurement of these investments are recognised in profit and loss account.
4.4.2.2 Held to maturity
Investments with fixed maturity, where management has both the intent and the ability to hold to
maturity, are classified as held to maturity.
Subsequently, these are measured at amortised cost less provision for impairment, if any. Any
premium paid or discount availed on acquisition of held to maturity investment is deferred and
amortised over the term of investment using the effective yield.
These are reviewed for impairment at year end and any losses arising from impairment in values are
charged to the profit and loss account.
4.4.2.3 Available for sale
Investments which are intended to be held for an undefined period of time but may be sold in
response to the need for liquidity, changes in interest rates, equity prices or exchange rates are
classified as available for sale.
Quoted
Subsequent to initial recognition at cost, quoted investments are stated at the lower of cost or market
value (market value on an individual investment basis being taken as lower if the fall is other than
temporary) in accordance with the requirements of the SEC (Insurance) Rules, 2002 vide S.R.O. 938
dated December 2002. The Company uses stock exchange quotations at the balance sheet date to
determine the market value.
Had the Company adopted International Accounting Standard (IAS) 39 "Financial Instruments:
Recognition and Measurement" in respect of recognition of gain / loss on remeasurement of
available for sale securities directly into equity, the investments of the Company would have been
higher by Rs.89.709 million and the net equity would have been increased by the same amount.
Unquoted
Unquoted investments are recorded at cost less accumulated impairment losses, if any.
4.4.2.4 Investment in associates – equity method
Investments in associates, where the Company has significant influence but not control, are
accounted for by using the equity method of accounting. These investments are initially recognised
at cost, thereafter the Company's share of the changes in the net assets of the associates are
accounted for at the end of each year. After application of the equity method, the Company
determines whether it is necessary to recognize any impairment loss with respect to the Company's
net investment in the associate. Share of profit and loss of associate is accounted for in the
58
Company's profit and loss account, whereas changes in the associate's equity which has not been
recognised in the associates profit and loss account, are recognised directly in the equity of the
Company.
4.4.2.5 Date of recognition
Regular way purchases and sales of investments that require delivery within the time frame
established by regulations or market convention are recognised at the trade date. Trade date is the
date on which the Company commits to purchase or sell the investment.
4.5 Investment property
Investment properties are accounted for under the cost model in accordance with approved
International Accounting Standards (IAS) 40, "Investment Property" and S.R.O. 938 issued by the
Securities and Exchange Commission of Pakistan.
– Leasehold land is stated at cost.
– Building on leasehold land is depreciated to its estimated salvage value on straight line basis
over its useful life, which is estimated to be 40 – 80 years.
– Installations forming a part of building on leasehold land but having separate useful lives are
depreciated at the rate of 10 percent under the straight line method.
Depreciation policy, subsequent capital expenditures on existing properties and gains or losses on
disposals are accounted for in the same manner as tangible fixed assets.
4.6 Fixed assets
4.6.1 Tangibles
These are stated at cost less accumulated depreciation and impairment loss, if any. Depreciation is
charged over the estimated useful life of the asset on a systematic basis to income applying the
straight line method at the rates specified in note 21.1 to the financial statements.
Depreciation on additions is charged from the month the assets are available for use. While on
disposal, depreciation is charged up to the month in which the assets are disposed off.

Subsequent cost are included in the assets carrying amount or recognized as a separate asset, as
appropriate, only when it is possible that the future economic benefits associated with the items will
flow to the company and the cost of the item can be measured reliably. Maintenance and normal
repairs are charged to profit and loss account currently.
An item of tangible asset is derecognized upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated
as the difference between the net disposal proceeds and the carrying amount of the asset) is
included in the profit and loss in the year the asset is derecognized.
4.6.2 Intangibles
These are stated at cost less accumulated amortisation and impairment loss. Amortisation is
charged over the estimated useful life of the asset on a systematic basis to income applying the
straight line method at the rates specified in note 21.2 to the financial statements.
59
Amortisation is calculated from the month the assets are available for use. While on disposal,
amortisation is charged up to the month in which the assets are disposed off.
Software development costs are only capitalised to the extent that future economic benefits are ANNUAL REPORT 2008
expected to be derived by the Company.
The carrying amounts are reviewed at each balance sheet date to assess whether these are
recorded in excess of their recoverable amounts, and where carrying values exceed estimated
recoverable amount, assets are written down to their estimated recoverable amounts.
4.7 Premium income
Premiums including administrative surcharge under a policy are recognised as revenue at the time
of issuance of insurance policy.
Revenue from premiums is determined after taking into account the unearned portion of premiums
which is calculated using the 1/24th method. The unearned portion of premium income is recognised
as a liability.
Reinsurance premium is recognised as expense after taking into account the proportion of deferred
premium expense which is calculated using 1/24th method. The deferred portion of premium
expense is recognised as a prepayment.
Pakistan Reinsurance Company Limited (PRCL) retrocession business is booked on the basis of
PRCL statements.
4.8 Commission
Commission expense incurred in obtaining and recording policies is deferred and recognised as an
expense in accordance with pattern of recognition of premium revenue.
Commission and other forms of revenue (apart from recoveries) from reinsurers are deferred and
recognised as liability and recognised in the profit and loss account as revenue in accordance with
the pattern of recognition of the reinsurance premiums.
4.9 Rental income
Rental income from investment properties is recognised on time proportion basis.
4.10 Investment income
Income from held to maturity investments is recognised on a time proportion basis taking into
account the effective yield on the investments. The difference between the redemption value and
the purchase price of the held to maturity investments is amortised and taken to the profit and
loss account over the term of the investment.
Dividend income is recognised when the company's right to receive the payment is established.
Gain / loss on sale of available for sale investments is included in income currently.
Return on fixed income securities classified as available for sale is recognised on a time propor
tionate basis taking into account the effective yield on the investments.
60
Return on bank deposit is recognized on a time proportionate basis taking into account the effec
tive yield.
4.11 Dividend declaration and reserve appropriation
Dividend declaration and reserve appropriation are recognized when approved.
4.12 Expenses of management
Expenses of management have been allocated to various classes of business as deemed equitable
by management. Expenses not allocable to the underwriting business are charged as administrative
expenses.
4.13 Taxation
4.13.1 Current
Provision of current tax is based on the taxable income for the year determined in accordance with
the prevailing law for taxation of income. The charge for current tax is calculated using prevailing tax
rates or tax rates expected to apply to the profit for the year, if enacted. The charge for current tax
also include adjustments, where considered necessary, to provision for tax made in previous years
arising from assessments finalized during the current year for such years.
4.13.2 Deferred
Deferred tax is accounted for using the balance sheet liability method in respect of all temporary
differences at the balance sheet date between the tax bases and carrying amounts of assets and
liabilities for financial reporting purposes. 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 assets and liabilities are measured at the tax rates that are expected to apply to the
period when the asset is realized or the liability is settled, based on the tax rates (and tax laws) that

have been enacted or substantively enacted at the balance sheet date. Deferred tax is charged or
credited in the profit and loss account, 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.
4.14 Segment reporting
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 six primary business segments for reporting purposes namely fire, marine, motor,
accident and health, liability and miscellaneous.
61
The fire insurance segment provides insurance covers against damages caused by fire, riot and
ANNUAL REPORT 2008

strike, explosion, earthquake, atmospheric damage, flood, electric fluctuation and impact.
Marine insurance segment provides coverage against cargo risk, war risk and damages occurring in
inland transit.
Motor insurance provides comprehensive vehicle coverage and indemnity against third party loss.
Liability insurance segment provides coverage against third party liability, product liability and
personal liability.
Accident and health insurance provides inpatient and outpatient medical coverage.
Miscellaneous insurance provides cover against burglary, loss of cash in safe and cash in transit,
personal accident, money, engineering losses, crop and other coverages.
Assets and liabilities are allocated to particular segments on the basis of premium earned. 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. Depreciation and amortisation are allocated
to a particular segment on the basis of premium earned.
4.15 Foreign currency translation
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of
exchange ruling at the balance sheet date. Exchange differences, if any, are taken to profit and loss
account.
4.16 Offsetting of financial assets and liabilities
Financial assets and financial liabilities are only offset and the net amount reported in the balance
sheet when there is a legally enforceable right to set off the recognised amount and the Company
intends to either settle on a net basis, or to realise the asset and settle the liability simultaneously.
4.17 Impairment
The carrying amount of assets are reviewed at each balance sheet date to determine whether there
is any indication of impairment of any asset or group of assets. If such indication exists, the
recoverable amount of the asset is estimated. An impairment loss is recognised whenever the
carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised in
profit and loss account.
4.18 Provisions
A provision is recognised in the balance sheet when the Company has a legal or constructive
obligation as a result of past events and it is probable that an outflow of economic benefits will be
required to settle the obligations and a reliable estimate can be made of the amount of the obligation.
4.19 Financial instruments
Financial instruments carried on the balance sheet include cash and bank, loans to employees,
premiums due but unpaid, amount due from other insurers / reinsurers, accrued investment income,
reinsurance recoveries against outstanding claims, sundry receivables, amount due to other insurers
/ reinsurers, accrued expenses, other creditors and accruals, deposits and other payables and
unclaimed dividends.
All the financial assets and financial liabilities are recognised at the time when the Company
becomes a party to the contractual provisions of the instrument and derecognized when the
Company losses control of contractual rights that comprises the financial assets and in the case of
62
financial liabilities when the obligation specified in the contract is discharged, cancelled or expired.
At the time of initial recognition all financial assets and financial liabilities are measured at cost,
which is the fair value of the consideration given or received for it. Any gain or loss on derecognition
of financial assets and financial liabilities is taken to income directly.
5. PAID–UP SHARE CAPITAL
Issued, subscribed and paid–up
2008 2007 2008 2007

(Number of shares in ‘000) (Rupees in '000)
210 210 Ordinary shares of Rs. 10 each

issued as fully paid in cash 2,100 2,100
65,705 54,719 Ordinary shares of Rs. 10 each
issued as fully paid bonus shares 657,048 547,190
65,915 54,929 659,148 549,290
Shares of the Company held by associates amount to Rs.424.695 million (42,469,489 shares of Rs.
10 each) [31 December 2007: Rs. 335.732 million (33,573,225 shares of Rs. 10 each)].
6. RESERVES 2008 2007

(Rupees in '000)
Capital reserves
Reserve for exceptional losses 6.1 9,384 9,384
Revenue reserves
General reserve 6.2 1,550,000 1,200,000
Company's share of capital contributed to statutory

funds by an associated company (6,152) (5,445)
1,553,232 1,203,939
6.1 Under the Income Tax Act, 1922 applicable to insurance companies, the Company set aside in prior
years amounts upto 10 percent of premium earnings, net of reinsurances of the year as a reserve
for exceptional losses, which was treated as an allowable deduction in arriving at the taxable income.
This option was withdrawn by the Income Tax Ordinance, 1979 with retrospective effect to the
accounting year ended 31 December 1978. Accordingly, the Company has ceased to set aside such
amounts, but has retained the reserves created upto 31 December 1978.

2008 2007
(Rupees in '000)
6.2 General reserve
Balance at beginning of the year 1,200,000 700,000

Transfer from retained earnings 350,000 500,000
Balance at end of the year 1,550,000 1,200,000
7. TAXATION
7.1 The Company has filed returns upto tax year 2008. The income tax assessments of the Company
have been finalised upto and including assessment year 2002–2003 and tax year 2004. Whereas,
the returns filed for tax years 2003, 2005, 2006, 2007 and 2008 are also deemed to be orders under
the provisions of section 120 of the Income Tax Ordinance, 2001 unless any amendments have been
made by the tax authorities.
63
ANNUAL REPORT 2008
7.2 The Taxation Officer has passed an assessment order in respect of tax year 2004 consequent to
finalisation of tax audit proceedings where disallowances have been made on account of bad debts
written off, amortisation of negative goodwill and allocation of expenses against dividend income.
Further, the claim of tax credits has also not been allowed in full. The Company has filed an appeal
before the Commissioner of Income Tax who has maintained the order passed by the Taxation
Officer except allocation of expenses against dividend income. The Company has filed an
appeal before the Income Tax Appellate Tribunal (ITAT) which is pending adjudication. Tax
amounting Rs. 54.4 million in this respect has been recorded.
7.3 In the assessment order for the assessment year 2002–2003 certain items have been disallowed
and further additional tax has been levied. The appeal against the order filed before the
Commissioner of Income Tax (Appeals) has been decided mostly in favour of the company. The
Company has filed an appeal before the Income Tax Appellate Tribunal (ITAT). No provision
amounting to Rs.11.11 million (31 December 2007: Rs.11.11 million) in this respect has been made
in the financial statements as the management of the Company is confident of favourable outcome
of ITAT appeal.
8. OTHER CREDITORS AND ACCRUALS 2008 2007

(Rupees in '000)
Federal excise duty 19,059 9,716

Federal insurance fee 1,089 595
Workers welfare fund 5,801 –
Tax deducted at source 1,240 635
Premiums and commissions 286,689 225,952
Miscellaneous 18,402 18,202
332,280 255,100
9. DEPOSITS AND OTHER PAYABLES
Advance rent 86,834 153,072

Security deposits against bond insurance 147,185 109,666
Other deposits 118 118
234,137 262,856
10. CONTINGENCIES
Contingencies in respect of income tax are stated in note 7.

2008 2007
11. CASH AND BANK DEPOSITS
(Rupees in '000)
Cash and other equivalents
– Cash 216 760
– Policy stamps and bond papers in hand 2,618 1,491
2,834 2,251
Current and other accounts
– Current accounts 138,841 75,179
– PLS savings accounts 290,074 615,671
428,915 690,850
Deposits maturing within 12 months
– Term deposits 1,238,406 987,524
1,670,155 1,680,625
64
12. LOANS TO EMPLOYEES – secured and 2008 2007

unsecured (considered good)
(Rupees in '000)
Due from employees 988 1,036

988 1,036
Less: current portion 20 624 603

364 433
These represent loans provided to employees for the purchase of motor vehicles (CTF) at the mark
up rate of 6 percent per annum and interest free loans for general purposes in accordance with the
terms of their employment. These loans are recoverable in four years. The maximum amount due
from executives calculated with reference to month – end balances was Rs. Nil (31 December 2007:
Rs. 0.027 million).
13. INVESTMENTS 2008 2007

(Rupees in '000)
In related parties
Investment in an associate – equity accounting 13.1 29,961 26,060

Available for sale 13.4.1 256,717 2,437
286,678 28,497
Others
Held to maturity
– Government securities 13.2 138,998 141,899
– Term finance certificates – quoted 13.3 72,717 50,439
Available for sale

– Quoted 13.4.2 929,324 1,732,557
– Unquoted 2,500 2,500
1,143,539 1,927,395
1,430,217 1,955,892

13.1 Investment in an associate – equity accounting
13.1.1 Particulars of investment in associate – listed
Face value
Number of shares per share Name of associate
2008 2007 (Rupees)
4,032,766 4,032,766 10
New Jubilee Life Insurance
Company Limited (Chief Executive:
Mr. Javed Ahmed) 29,961 26,060
Market value of investment and percentage of holding in associate is Rs. 182.00 million and 6.43%
respectively (31 December 2007: Rs. 284.51 million and 6.43%).
13.1.2 Movement of investment in associate 2008 2007
65
(Rupees in '000)
ANNUAL REPORT 2008

Beginning of the year 26,060 19,458
Share in profit upto 30 September 6,624 6,818
Less: Dividend received 2,016 2,016
4,608 4,802
Share in net equity as at 30 September (707) 1,800
Closing balance 29,961 26,060
13.1.3 Following information has been summarised based on financial statements as at 30 September 2008
of the associated company:
Total assets 5,888,878 5,579,493

Total liabilities 5,422,938 5,174,208
Net equity 465,940 405,285
Profit after tax 27,068 49,513
13.2 Government securities
Face value Profit rate Profit Particulars Maturity 2008 2007

(Rupees) % payment date
(Rupees in '000)
Pakistan Investment
50,000,000 10 Semi annually Bond – 20 years 20–01–2024 58,458 58,740
Pakistan Investment
Pakistan Investment
138,998 141,899
Market value of Pakistan Investment Bonds is Rs. 99.64 million (31 December 2007: Rs. 123.19
million). Market values is determined based on quotations obtained from brokers.
Pakistan Investment Bonds amounting to Rs. 66.00 million (2007: Rs.Nil) are placed with State Bank
of Pakistan under Section 29 of the Insurance Ordinance, 2000.
13.3 Term Finance Certificates – quoted
Face value
2008 2007 per certificate Type of security 2008 2007
(Number of certificates) (Rupees) (Rupees in '000)
– 300 5,000 MCB Bank Limited – 449
10,000 10,000 5,000 Bank AL Habib Limited 49,970 49,990
5,056 – 5,000 United Bank Limited 22,747 –
72,717 50,439
Market value of quoted term finance certificates is Rs. 66.72 million (31 December 2007: Rs. 51.17
million). The market values is determined as per rates quoted by Mutual Funds Association of
Pakistan on 12 January 2009.
66
Details of term finance certificates are as follows:

Particulars Profit rate Profit Maturity
per annum payment date
Bank AL Habib Limited Base rate plus 1.95% per annum Semi–annually 06–02–2015
United Bank Limited 6 months KIBOR plus 0.85% per annum Semi–annually 14–02–2018
13.4 Available for sale securities

2008 2007
13.4.1 In related parties (Rupees in '000)
Cost 383,498 2,437

Less: Impairment during the year (126,781) –
256,717 2,437
13.4.2 Others
Cost 1,453,685 1,732,557

Less: Impairment during the year (524,361) –
929,324 1,732,557
13.4.3 Market value of quoted available for sale Investments is Rs.1,275.75 million (31 December 2007: Rs.
2,258.81 million).
13.4.4 The Karachi Stock Exchange (Guarantee) Limited (“KSE”) placed a “Floor Mechanism” on the market value
of securities based on the closing prices of securities prevailing as on 27 August 2008. Under the “Floor
Mechanism”, the individual security price of equity securities could vary within normal circuit breaker limit,

but not below the floor price level. The mechanism was effective from 28 August 2008 and remained in place
until 15 December 2008. Consequent to the introduction of ‘floor mechanism’ by KSE, the market volume
declined significantly during the period from 27 August 2008 to 15 December 2008. There were lower floors
on a number of securities at 31 December 2008. The equity securities have been valued at prices quoted
on the KSE on 31 December 2008 without any adjustment as allowed by the Securities and Exchange
Commission of Pakistan (SECP) circular No. Enf/D–III/Misc./1/2008 dated 29 January 2009 and disclosed
in the financial statements as required.
Furthermore, SECP vide circular no.3/2009 dated 16 February, 2009 has allowed that for the purpose of
application of clause 16(1)(a) of Part A and clause 13(1)(a) of Part B to the Annexure II: “Statements
required to be filed by life and non–life insurers” of the Insurance Rules 2002, where the market value of
any available for sale investment as at 31 December 2008 is less then cost, the fall in value may be treated
as temporary and the investment valued at cost. The fall in value of available for sale investments as
temporary, then twenty five percent of the difference after any adjustment/effect for price movements shall
be taken to Profit and Loss account on quarterly basis during the calendar year ending on 31 December
67
2009. The decline in value of available for sale investment as at 31 December 2008 shall be treated as
ANNUAL REPORT 2008

charge to profit and loss account for the purpose of distribution of dividend.
International Accounting Standard 39 – Financial Instruments: Recognition and Measurement (IAS 39)
requires that available for sale equity investments are impaired when there has been a significant or
prolonged decline in the fair value below its cost. Such impairment loss should be charged to Profit and
Loss Account.
In order to comply with the requirements of IAS 39 and in view of market conditions and current economic
scenario in the country, the Company decided to record full impairment of Rs. 651.142 million in the value
of available for sale securities in these financial statements.
14. INVESTMENT PROPERTIES
2008
Cost Depreciation
Written down Useful
As at Additions As at As at For the As at value as at life
1 January (disposals) 31 December 1 January year 31 December 31 December
2008 2008 2008 2008 2008
(Rupees in '000)
Leasehold land 34,164 – 34,164 – – – 34,164 –
Building 39,527 41,813 81,340 4,568 841 5,409 75,931 40–80 years
Lifts and other

installations 12,782 9,128 19,595 5,708 1,317 5,868 13,727 10 years
(2,315) (1,157)
86,473 50,941 135,099 10,276 2,158 11,277 123,822
(2,315) (1,157)
2007
Cost Depreciation
Written down Useful
As at Additions As at As at For the As at value as at life
1 January 31 December 1 January year 31 December 31 December
2007 2007 2007 2007 2007
(Rupees in '000)
Leasehold land 34,164 – 34,164 – – – 34,164 –
Building 34,945 4,582 39,527 3,920 648 4,568 34,959 40–80 years
Lifts and other

installations 12,782 – 12,782 5,036 672 5,708 7,074 10 years
81,891 4,582 86,473 8,956 1,320 10,276 76,197
14.1 The market value of the investment properties as per valuation carried out by professional valuers in 2007 is Rs. 1,214.70 million.
15. DEFERRED TAXATION 2008 2007

(Rupees in '000)
68
Deferred tax debits / (credits) arising in respect of:

– Accelerated depreciation (5,122) (15,965)
– Provision for doubtful debts 41,557 41,557
– Share of profit from associate (461) –
– Taxable loss and impairment – 36,978
35,974 62,570
16. PREMIUMS DUE BUT UNPAID – unsecured
Considered good 714,385 703,209

Considered doubtful 64,274 64,274
778,659 767,483
Less: Provision for doubtful balances 16.1 64,274 64,274

714,385 703,209
2008 2007
16.1 Provision for doubtful balances (Rupees in '000)
Opening balance 64,274 54,274

Add: Provision made during the year 23 – 10,000
64,274 64,274
17. AMOUNTS DUE FROM OTHER INSURERS /

REINSURERS
Considered good 181,303 45,672

Considered doubtful 54,459 54,459
235,762 100,131
Less: Provision for doubtful balances 54,459 54,459

181,303 45,672

18. REINSURANCE RECOVERIES AGAINST
OUTSTANDING CLAIMS
These are unsecured and considered good.
19. PREPAYMENTS
Prepaid reinsurance premium ceded 500,225 447,208

Rent 9,494 5,946
Miscellaneous expenses 3,339 1,367
513,058 454,521
69
20. SUNDRY RECEIVABLES
ANNUAL REPORT 2008

Current portion of long term loans 12 624 603
Advances to suppliers and contractors 21,869 47,562
Rent receivable 1,326 1,326
Security deposits 5,490 3,260
Receivable in respect of acquisition – 464
Other advances – considered good 12,089 14,901
Receivable against redemption of units 25,000 –
66,398 68,116
21. FIXED ASSETS
21.1 Tangible assets

2008
Cost Depreciation Written down Depreciation
As at Additions / Adjustments As at As at For the year / Adjustments As at value as at rate
1 January (disposals) 31 December 1 January (disposals) 31 December 31 December %
2008 2008 2008 2008 2008
(Rupees in '000)
Furniture and fixtures 37,651 15,799 256 52,703 17,167 4,842 – 21,159 31,544 17
(1,003) (850)
Office equipment 44,504 13,691 (291) 56,708 17,706 5,940 (34) 22,809 33,899 17
(1,196) (803)
Computer equipment 27,260 4,365 (51) 31,552 16,768 4,029 (53) 20,741 10,811 25
(22) (3)
Vehicles 153,873 1,224 (4,345) 28,983 32,695 10,599 674 10,500 18,483 20
(121,769) (33,468)
263,288 35,079 (4,431) 169,946 84,336 25,410 587 75,209 94,737
(123,990) (35,124)
2007
Cost Depreciation Written down Depreciation
As at Additions / Adjustments As at As at For the year Adjustments As at value as at rate
1 January (disposals) 31 December 1 January (disposals) 31 December 31 December %
2007 2007 2007 2007 2007 2007
(Rupees in '000)
Furniture and fixtures 28,015 10,429 – 37,651 12,398 5,189 – 17,167 20,484 17
(793) (420)
Office equipment 28,215 18,083 – 44,504 13,962 4,805 – 17,706 26,798 17
(1,794) (1,061)
Computer equipment 23,836 4,378 (913) 27,260 16,109 682 (15) 16,768 10,492 25
(41) (8)
Vehicles 122,425 48,498 (1,414) 153,873 34,675 7,034 (1,414) 32,695 121,178 20
70
(15,636) (7,600)
202,491 81,388 (2,327) 263,288 77,144 17,710 (1,429) 84,336 178,952
(18,264) (9,089)
21.2 Intangible assets
Cost Amortisation Written down Amortisation

As at Additions Adjustments As at As at For the year Adjustments As at value as at period
1 January 31 December 1 January 31 December 31 December
(Rupees in '000)
Computer softwares
2008 6,569 2,007 – 8,576 4,289 1,064 – 5,353 3,223 5 years

2007 4,934 737 898 6,569 4,007 282 – 4,289 2,280 5 years
21.3 Disposal of tangible assets

Cost Accumulated Book Sale Profit / Mode of Particulars of buyers
depreciation value proceeds (loss) disposal
(Rupees in '000)
Disposal of tangible assets during

the year having book
value exceeding Rs. 50,000
Motor vehicles (including 2,888 1,009 1,879 1,575 (304) Offer price Tahir Ahmed Employee
trackers) 1,543 187 1,356 1,271 (85) Offer price Syed Sohail Ahmed Employee
1,080 76 1,004 738 (266) Offer price Syed Ather Abbas Employee
1,091 219 872 746 (125) Offer price Abida Saleem Employee
988 117 871 715 (156) Offer price Shehzad Noorani Employee
921 64 856 704 (153) Offer price Siddique Memon Employee
936 94 842 711 (131) Offer price M. Uzair Mirza Employee
931 95 837 728 (109) Offer price Rizwan Ehsan Puri Employee
928 93 835 704 (132) Offer price Khawaja Iqbal Ahmed Employee
925 94 831 831 (0) Offer price Ejaz Mahmood Employee
931 102 829 728 (101) Offer price Mian Allah Nawaz Employee
922 93 828 728 (100) Offer price Akber Sultan Employee
922 93 828 728 (100) Offer price Muhammad Iqbal Employee
922 93 828 704 (124) Offer price Sunnu F. Golwalla Employee
1,023 195 828 815 (13) Offer price Razzak Choudhry Employee
922 102 819 728 (91) Offer price Syed Tanzeem–Ul–Hassan Employee

922 103 819 728 (91) Offer price Vishandas Nankani Employee
922 103 819 728 (91) Offer price Syed Waqar Hyder Taqvi Employee
924 111 813 831 18 Offer price Azfar Arshad Employee
902 90 811 704 (108) Offer price Zahid Farman Employee
892 90 802 704 (98) Offer price Nahid Afzal Panawala Employee
922 120 801 728 (73) Offer price Azam Sultan Employee
1,023 224 799 815 16 Offer price Ilyas Muhammad Employee
1,024 226 797 815 18 Offer price Haji Muhammad Ramzan Employee
924 130 794 831 37 Offer price Syed Imran Rabbani Employee
933 140 792 834 42 Offer price Nasim–Ul–Haq Employee
933 140 792 831 39 Offer price Atta–Ul–Haq Shaikh Employee
924 138 786 800 14 Negotiation Mian Mushtaq Ahmed Other
862 86 776 704 (72) Offer price Syed Obaid–Ur–Rehman Employee
959 183 776 805 29 Offer price M. Afzal Qureshi Employee
890 124 766 704 (62) Offer price Bilal Q. Alvi Employee
890 125 765 704 (61) Offer price Akber Habib Rajan Employee
1,439 676 763 746 (16) Offer price Tahir Ahmed Employee
1,202 462 740 746 7 Offer price Mehboob Parvaiz Employee
944 208 736 644 (92) Offer price Syed Noman Kadri Employee
928 195 733 675 (58) Offer price Abdul Qadir Moochala Employee
928 195 733 644 (89) Offer price Hashim M. Shamim Employee
1,196 467 730 746 17 Offer price Muhammad Safdar Employee
71
889 169 720 675 (45) Offer price M. Nadeem Irshad Employee
928 213 714 675 (39) Offer price Sharif Ahmed Khan Employee
1,032 320 712 785 73 Offer price Shehnaz Kassim Employee
ANNUAL REPORT 2008

928 232 696 675 (21) Offer price Ishtiaq Ahmed Employee
928 232 696 675 (21) Offer price Shaikh Muhammad Issa Employee
928 232 696 741 45 Auction Faisal Abdul Aziz Other
920 230 690 675 (15) Offer price Asif Ali Employee
868 181 687 714 27 Offer price Qamar Saleem Employee
916 229 687 675 (12) Offer price Zubair Dada Employee
1,103 419 684 780 96 Auction Rehman Mithani Other
923 249 674 500 (174) Negotiation Sunail Kumar Talreja Other
886 213 673 675 2 Offer price Amir Mumtaz Paracha Employee
898 229 669 793 124 Auction Syed Riaz Ahmed Other
886 230 656 675 19 Auction Karim Arif Other
898 242 655 675 20 Offer price Arslan Bhatti Employee
1,087 438 648 811 163 Auction Syed Riaz Ahmed Other
865 230 635 717 82 Auction Muhammad Ovais Gaziani Other
866 268 598 651 53 Offer price Karim Merchant Employee
950 354 596 751 155 Offer price Bashir Ahmed Khan Employee
865 277 588 651 63 Offer price Zulfiqar Ali Abdullah Employee
847 296 551 668 118 Auction Zahid Qadri Other
600 61 539 557 17 Offer price Asghar Moiz Employee
600 61 539 514 (25) Offer price Tariq Zia Employee

(Rupees in '000)
601 67 533 468 (66) Offer price Syed Shoaib Kamal Zaidi Employee
600 67 533 514 (19) Negotiation Syed Tanveer Akhtar Ex–Employee
610 80 529 484 (45) Offer price Captain Shahid Ahmed Employee
913 384 529 662 133 Auction Syeda Hafsa Malik Other
600 72 528 535 7 Offer price Muhammad Arif Employee
889 364 524 649 124 Auction Nauman Ahmed Siddiqui Other
590 66 524 514 (10) Offer price Khalid Hameed Employee
600 78 522 514 (8) Auction Muhammad Aslam Khan Ex–Employee
605 85 520 514 (6) Offer price Mehboob Merchant Employee
849 331 518 461 (57) Auction Rehan Other
849 331 518 458 (60) Offer price Aziz Surani Employee
600 84 516 514 (2) Offer price Ch. Aamir Ali Employee
819 303 516 672 156 Auction Sarfaraz Khan Other
600 84 516 514 (2) Offer price Shabbir Hassan Employee
632 117 515 653 138 Auction Haji Nazeer Ahmed Other
843 329 514 458 (56) Offer price Syed Abdul Rahim Employee
931 419 512 702 190 Auction Atif Shabbir Other
571 67 504 453 (51) Auction Muhammad Ovais Gaziani Other
1,008 507 502 717 216 Offer price Hamid Hussain Zaidi Employee
1,041 543 498 717 219 Offer price Ch. Sardar Ali Employee
578 81 497 514 17 Offer price Abdul Hayee Khan Employee
577 81 496 514 18 Offer price Riaz A. Bhatti Employee
1,009 514 494 717 223 Offer price Zahoor A. Shaheen Employee
950 456 494 717 223 Offer price Mirza Ali Mahmood Employee
610 117 494 507 13 Auction Malik Abdul Khaliq Other
540 55 485 546 61 Auction Syed Farhat Abbas Jaffri Other
593 119 474 485 11 Offer price Adnan Junaid Employee
583 111 472 484 12 Offer price Dr. Siddique Hossain Employee
605 139 466 484 19 Offer price Amjad Habib Employee
813 351 462 508 46 Auction Sarfaraz Khan Other
1,152 691 461 600 139 Offer price Muhammad Ikram Employee
600 144 456 484 28 Offer price Zermin Sohail Employee
809 353 455 487 32 Auction Muhammad Owais Other
1,123 674 449 698 249 Offer price Atiq A. Mehmudi Employee
488 39 449 410 (39) Offer price Munawwar Ali Siddiqui Employee
595 155 440 484 44 Negotiation Tayyab Farooq Other
639 204 435 485 50 Offer price Atiq A. Mehmudi Employee
639 217 422 450 28 Auction Ratna Kumari Other
72
619 222 397 491 94 Auction Sultan Hassan Khan Other

773 379 394 377 (17) Auction Kamran Yaseen Wasti Other
579 185 394 457 63 Offer price Ali Aasim Khan Employee
600 221 379 457 78 Offer price Amanullah Khan Employee
404 31 374 326 (48) Offer price Azam Khan Employee
405 34 371 326 (45) Offer price M. Ilyas Qureshi Employee
404 38 367 326 (41) Offer price Abdul Aziz Employee
600 234 366 395 29 Offer price Hashim M. Shamim Employee
406 42 364 326 (39) Offer price M. Saleem Hashim Employee
757 394 363 388 24 Offer price Iqbal A. Rohilla Employee
405 42 363 326 (37) Offer price Ghufranullah Khan Employee
396 36 360 326 (35) Offer price Birgis Fatima Employee
396 37 360 326 (34) Offer price M. Amin Memon Employee
399 41 358 326 (32) Offer price Tariq Rafiq Employee
396 41 355 326 (30) Offer price Zobia Fayyaz Employee
379 26 353 326 (27) Offer price Naeem Zafar Employee
399 52 347 326 (21) Offer price Muhammad Arif Moten Employee
850 510 340 455 115 Offer price Mian Saeed–Ur–Rehman Employee
820 492 328 487 159 Auction Kamran Yaseen Wasti Other
403 75 327 308 (19) Offer price Israr Ali Shah Employee
404 78 326 308 (18) Offer price Zulfiqar A. Karim Employee

(Rupees in '000)
403 77 325 309 (16) Offer price S.M. Jaffri Employee

395 74 322 253 (69) Offer price Arshad Mahmood Employee
803 482 321 491 170 Auction Sarzameen Khan Other
395 75 319 318 (2) Auction Syed Riaz Ahmed Other
412 93 319 308 (11) Offer price Tabassum Bashir Qureshi Employee
381 68 313 304 (9) Auction Syed Riaz Ahmed Other
395 83 312 287 (26) Auction Rizwan Other
391 80 311 286 (25) Auction Sultan Hassan Khan Other
417 121 296 235 (61) Negotiation Nisar Hussain Uttanwala Ex–Employee
373 79 294 297 3 Auction Saleem Akhtar Khan Other
733 440 293 368 75 Auction Amir Mehmood Other
423 133 290 291 1 Auction Faisal Abdul Aziz Other

468 182 285 335 50 Offer price Ghulam Hussain Employee
408 129 279 276 (4) Negotiation Amir Fazal Ex–Employee
439 161 278 250 (28) Auction Jan Muhammad Behlum Other
406 129 277 275 (2) Offer price Abid Hussain Employee
406 132 274 363 89 Auction Peeral Other
345 75 270 288 18 Auction Muhammad Ovais Gaziani Other
450 181 269 249 (20) Offer price S.M. Abbas Zaidi Employee
391 138 253 257 4 Negotiation Tahir Ahmed–LZO Ex–Employee
634 397 237 411 174 Auction Rehan Khalid Other
417 209 208 249 41 Offer price Amer Sardar Employee
466 261 205 333 129 Auction Wasim Mirza Other
250 80 170 223 53 Auction Muhammad Ayoub Other
73
324 175 149 190 41 Auction Muhammad Usman Other
294 179 115 151 36 Auction Kamran Yaseen Wasti Other
ANNUAL REPORT 2008

250 150 100 100 – Auction Syed M. Baqar Abidi Other
122 31 92 50 (42) Negotiation Winson (Pvt. ) Ltd. Other
225 135 90 259 169 Negotiation Ilyas Mirza Other
135 47 88 216 128 Auction Muhammad Kamran Other
Furniture and fixtures 542 464 78 78 – Auction M. Khalid Awan Other
Office equipment, electrical

installations and computers 403 282 121 132 10 Auction M. Khalid Awan Other
75 23 52 53 1 Offer price Shaikh Muhammad Issa Employee
22. ADMINISTRATIVE SURCHARGE
Premium written and net premium revenue include administrative surcharge, class wise detail of
which is given below:
2008 2007
(Rupees in '000)
Fire and property damage 10,690 9,405

Marine, aviation and transport 10,579 9,783
Motor 21,550 21,389
Miscellaneous 5,658 4,192
48,477 44,769
23. MANAGEMENT EXPENSES
Salaries, wages and benefits 23.1 307,973 224,750

Rent, taxes and electricity 32,117 23,469
Communications 14,548 12,781
Directors' fee and expenses 840 –
Printing and stationery 12,447 11,059
Travelling and entertainment 20,488 19,225
Repairs and maintenance 3,360 2,508
Advertisement and sales promotion 27,734 14,251
Depreciation 21.1 25,410 17,710
Amortisation 21.2 1,064 282
Bad debts written off 1,034 2,735
Provision for doubtful balances 16.1 – 10,000
Other expenses 59,309 66,662
506,324 405,432
23.1 These include Rs.8.24 million (31 December 2007: Rs. 6.89 million ) in respect of employees'
provident fund and Rs.10.87 million (31 December 2007: Rs. 8.29 million ) in respect of defined
benefit plan.
24. RENTAL INCOME
Rental revenue 93,073 79,207

74
Investment property related expenditure (9,873) (8,343)

83,200 70,864
25. OTHER INCOME
Income from financial assets

Exchange gain / (loss) 6,450 (14)
Return on loans to employees 56 30
Income from non–financial assets

Gain on sale of fixed assets 1,012 1,817
Others 3,255 978
10,773 2,811
26. GENERAL AND ADMINISTRATION EXPENSES 2008 2007

(Rupees in '000)
Legal and professional 5,614 1,311

Subscription 364 235
Registration fee 294 131
Insurance ombudsman 225 –
Workers welfare fund 5,801 –
Charity and donations 26.1 5,017 2,548
Expense on bonus issue 1,252 1,451
Authorized capital fee – 1,250
Auditors' remuneration 26.2 986 943
19,553 7,869
26.1 During the year, no donations were made to any donee in which a director, executives or their
spouses were interested.
26.2 Auditors' remuneration
Audit fee 250 250

Interim review 75 75

Tax advisory services 100 79
Special reports and certificates for various
government agencies and sundry advisory services 450 450
Out of pocket expenses 111 89
986 943
27. TAXATION – NET
Current (61,500) (12,761)

Deferred (26,596) 26,176
(88,096) 13,415
27.1 Relationship between tax expense and

accounting (loss) / profit
(Loss) / profit before taxation (179,153) 575,041
75
Tax at the applicable rate of 35% (62,704) 201,264
(31 December 2007: 35%)
Tax effect of expenses that are not allowable in ANNUAL REPORT 2008
determining taxable income 226,432 5,750
Tax effect of capital gains exempt from tax (34,885) (174,664)
Tax effect of income subject to lower rates (40,747) (45,765)

88,096 (13,415)
28. TRANSACTIONS WITH RELATED PARTIES
Related parties comprise associated companies, directors, key management personnel and
retirement benefit funds. Investments in related parties have been disclosed in the relevant balance
sheet note. Remuneration to the key personnel are included in note 30 to these financial statements
and are determined in accordance with the terms of their appointments.
Details of transactions with related parties during the year, other than those which have been
disclosed elsewhere in these financial statements, are as follows:
2008 2007
(Rupees in '000)
Insurance premium:
– Balance at beginning of the year 233,187 62,938
– Insurance premium written (including government levies

administrative surcharge and policies stamps) 357,010 360,332
– Received / adjusted during the year (352,554) (190,083)
– Balance at end of the year 237,643 233,187
Insurance commission expense 9,723 2,868
Insurance claims expense 191,223 100,598
Purchases of goods and services 7,115 9,304
Dividend income 3,608 5,461
Rent income 14,363 13,751
Contributions / provision for staff retirement benefit plans 19,083 15,172
29. EMPLOYEES BENEFITS
Defined benefit plan
The actuarial valuations are carried out annually and contributions are made accordingly. Following
were the significant assumptions used for valuation of the scheme:
– Discount rate 15% (2007: 10%) per annum.

– Expected rate of increase in the salaries of the employees 15% (2007: 10%) per annum.
76
– Expected interest rate on plan assets of the fund 10% (2007: 10%) per annum.
– Expected service length of the employees 15 years (2007: 15 years).
29.1 Asset / (liability) in balance sheet 2008 2007

(Rupees in '000)
Present value of defined benefit obligation 52,504 38,922

Fair value of plan assets (43,503) (35,427)
Net actuarial losses not recognised (9,001) (3,495)
– –
29.2 Movement in asset / (liability) during the year
Opening balance – –
Charge to profit and loss account 10,846 8,286
Contributions to the fund during the year (10,846) (8,286)
Closing balance – –
29.3 Reconciliation of the present value of the 2008 2007

defined benefit obligations (Rupees in '000)
Present value of obligation as at 1 January 38,922 36,842

Current service cost 10,496 7,971
Interest cost 3,892 3,684
Benefits paid (5,589) (10,677)
Actuarial loss 4,783 1,102
Present value of obligation as at 31 December 52,504 38,922
29.4 Changes in fair value of plan assets
Fair value of plan assets as at 1 January 35,427 33,700

Expected return on plan assets 3,542 3,370
Contribution to the fund 10,846 8,286
Benefits paid (5,589) (10,677)

Actuarial gain / (loss) (723) 748
Fair value of plan assets as at 31 December 43,503 35,427
29.5 Charge for the defined benefit plan
Current service cost 10,496 7,972

Interest cost 3,892 3,684
Expected return on plan assets (3,542) (3,370)
10,846 8,286
29.6 Actual return on plan assets
Expected return on assets 3,542 3,370
77
Actuarial gain / (loss) on assets (723) 748
2,819 4,118
ANNUAL REPORT 2008
2008 2007
29.7 Composition of fair value of plan assets Fair value Percentage Fair value Percentage
(Rupees in (Rupees in
000) 000)
Debt instruments 14,480 33% 15,080 43%

Equity instruments 24 0% 4,378 12%
Others 28,999 67% 15,969 45%
Fair value of plan net assets 43,503 35,427
29.8 Historical data of the fund 2008 2007 2006 2005 2004
(Rupees in '000)
Present value of defined

benefit obligations 52,504 38,922 36,842 29,927 27,199
Fair value of plan assets (43,503) (35,427) (33,699) (30,036) (27,224)

Deficit / (surplus) 9,001 3,495 3,143 (109) (25)
Experience adjustments
– Actuarial loss / (gain) on obligation 4,783 1,102 1,260 473 (612)
– Actuarial gain /(loss) on assets (723) 748 (1,991) 1,209 (249)
29.9 The estimated contribution to the Fund for the year ending 31 December 2009 is Rs. 12.97 million.
30. REMUNERATION OF MANAGING DIRECTOR, DIRECTORS AND EXECUTIVES
Managing Director Directors Executives Total

2008 2007 2008 2007 2008 2007 2008 2007
(Rupees in '000)
Director fees – – 840 – – – 840 –

Managerial remuneration
– including bonus 6,600 5,477 – – 46,071 30,950 52,671 36,427
Retirement benefits 900 706 – – 4,794 2,950 5,694 3,656
House rent 1,620 1,271 – – 14,925 9,564 16,545 10,835
Utilities 540 424 – – 4,001 2,496 4,541 2,920
Medical expenses 16 12 – – 1,511 1,115 1,527 1,127
Leave passage /
assistance 555 808 – – 2,009 2,417 2,564 3,225
Others 1,382 180 – – 17,989 5,815 19,371 5,995
11,613 8,878 840 – 91,300 55,307 103,753 64,185
78
Number of persons 1 1 8 8 47 29 56 38
In addition, the managing director and some of the executives are provided with free use of certain items of household furniture, fixtures and
equipments in accordance with their entitlements.
31. SEGMENT REPORTING
Class of business wise revenue and results have been disclosed in the profit and loss account prepared in accordance with the requirement of Insurance Ordinance, 2000 and the SEC
(Insurance) Rules, 2002. The following table presents information regarding segment assets, liabilities as at 31 December 2008 and 31 December 2007, unallocated capital expenditures
and non–cash expenses during the year:
Fire Marine Motor Liability Accident & Health Miscellaneous Total

2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007
(Rupees in ‘000)
SEGMENT ASSETS
Segment assets 549,685 556,864 285,655 312,824 393,412 202,712 111,037 122,826 203,231 77,205 348,018 581,559 1,891,038 1,853,990
Unallocated corporate
assets 3,534,134 4,078,716
Consolidated total assets 5,425,172 5,932,706
SEGMENT LIABILITIES
Segment liabilities 905,202 1,059,366 470,407 427,401 647,856 674,634 182,852 99,714 334,673 235,446 573,104 834,560 3,114,094 3,331,121
Unallocated corporate
liabilities 249,764 189,922
Consolidated total
liabilities 3,363,858 3,521,043
Depreciation /
amortisation 7,915 4,181 4,262 3,781 4,963 5,751 3,407 136 2,470 2,917 3,457 1,226 26,474 17,992
Non–cash expenses other

than depreciation /
amortisation 309 2,959 166 2,676 194 4,072 133 96 97 2,064 135 868 1,034 12,735
Unallocated capital
expenditure 88,027 86,707
ANNUAL REPORT 2008 79 NEW JUBILEE INSURANCE COMPANY LIMITED

32. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
Liquidity risk
Liquidity risk is the risk that the Company will be unable to meet its funding requirements. To guard
against the risk, the Company has diversified funding sources and assets are managed with liquidity
in mind, maintaining a healthy balance of cash and cash equivalents and readily marketable
securities. The maturity profile is monitored to ensure adequate liquidity is maintained.
Interest / Markup rate risk
The Company invests in securities and has deposits that are subject to interest / markup rate risk.
Interest / markup rate risk to the Company is the risk of changes in market interest / markup rates
reducing the overall return on its interest bearing securities. The Company limits interest / markup
rate risk by monitoring changes in interest / markup rates in the currencies in which its cash and
investments are denominated. The Company's interest sensitivity and liquidity positions based on
maturities is as follows:
2008
Effective Interest / mark–up bearing financial instruments Non – interest /
rate % Maturity Maturity over Maturity Sub total mark–up bearing Total
per annum upto one one year to more than financial
year five years five years instruments
(Rupees in '000)
FINANCIAL ASSETS
Cash and bank deposits 0.25–19.25 1,528,480 – – 1,528,480 141,675 1,670,155

Loans to employees 6 – 364 – 364 – 364
Investments 10–14.35 – 80,540 131,175 211,715 1,218,502 1,430,217
Premiums due but unpaid – – – – 714,385 714,385
reinsurers – – – – 181,303 181,303
Reinsurance recoveries due
but unpaid – – – – 20,035 20,035
Accrued investment income – – – – 26,626 26,626
outstanding claims – – – – 365,729 365,729
80
Sundry receivables 278 – – 278 44,251 44,529

1,528,758 80,904 131,175 1,740,837 2,712,506 4,453,343
FINANCIAL LIABILITIES
Provision for outstanding claims – – – – 1,190,064 1,190,064

Amounts due to other insurers /
reinsurers – – – – 146,696 146,696
Accrued expenses – – – – 12,914 12,914
Other creditors and accruals – – – – 310,892 310,892
Deposits and other payables – – – – 147,185 147,185
Unclaimed dividend – – – – 16,561 16,561
– – – – 1,824,312 1,824,312
Inter risk sensitivity gap 1,528,758 80,904 131,175 1,740,837 888,194 2,629,031
Cumulative interest risk sensitivity gap 1,528,758 1,609,662 1,740,837

2007
Effective Interest / mark–up bearing financial instruments Non – interest /
rate % Maturity Maturity over Maturity Sub total mark–up bearing
per annum upto one one year to more than financial Total
year five years five years instruments
(Rupees in '000)
FINANCIAL ASSETS
Cash and bank deposits 0.25 to 10.50 1,603,195 – – 1,603,195 77,430 1,680,625
Loans to employees 6 – 433 – 433 – 433
Investments 10 to 14 449 83,159 108,730 192,338 1,763,556 1,955,894
Premiums due but unpaid – – – – 703,209 703,209
reinsurers – – – – 45,672 45,672
Reinsurance recoveries due
but unpaid – – – – 17,691 17,691
Premium and claim reserves
retained by cedants – – – – 1,080 1,080
Accrued investment income 13 3,296 2,247 5,556 8,401 13,957

outstanding claims – – – – 501,680 501,680
Sundry receivables 296 – – 296 20,258 20,554
1,603,953 86,888 110,977 1,801,818 3,138,977 4,940,795
FINANCIAL LIABILITIES
Provision for outstanding claims – – – – 1,428,812 1,428,812

Amounts due to other
insurers / reinsurers – – – – 270,643 270,643
Accrued expenses – – – – 7,553 7,553
Other creditors and accruals – – – – 244,154 244,154
Deposits and other payables – – – – 109,666 109,666
Unclaimed dividend – – – – 15,186 15,186
– – – – 2,076,014 2,076,014
81
Inter risk sensitivity gap 1,603,953 86,888 110,977 1,801,818 1,062,963 2,864,781
ANNUAL REPORT 2008

Cumulative interest risk sensitivity gap 1,603,953 1,690,841 1,801,818
33. FOREIGN CURRENCY RISK
The Company is not materially exposed to risk from foreign currency exchange rate fluctuation.
34. MARKET RISK
Market risk is the risk that the value of a financial instrument will fluctuate as a result of changes in
market prices, whether those changes are caused by factors specific to the individual security, or its
issuer, or factors affecting all securities traded in the market.
The Company is exposed to market risk with respect to its investments.
The Company limits market risk by maintaining a diversified portfolio and by continuous monitoring
of developments in equity, money market fund and term finance certificates (TFCs) markets. In
addition, the Company actively monitors the key factors that affect stock, money market and TFCs
market.
35. CREDIT RISK AND CONCENTRATION OF CREDIT RISK
Credit risk is the risk, which arises with the possibility that one party to a financial instrument will fail
to discharge its obligation and cause the other party to incur a financial loss. The Company attempts
to control credit risk by monitoring credit exposures by undertaking transactions with a large number
of counter parties in various industries and by continually assessing the credit worthiness of counter
parties.
Concentration of credit risk arises when a number of counter parties have a similar type of business
activities. As a result, any change in economic, political or other conditions would affect their ability
to meet contractual obligations in a similar manner.
The Company is exposed to credit risk on premiums receivable from customers and co–insurers; and
for commission and claim recoveries from reinsurers. The management monitors exposure to credit
risk through regular review of credit exposure and prudent estimates of provisions for doubtful
receivables.
36. REINSURANCE RISK
Reinsurance ceded do not relieve the Company from its obligation to policy holders and as a result
82
the Company remains liable for the portion of outstanding claims reinsured to the extent that
reinsurer fails to meet the obligation under the reinsurance agreements.
To minimise its exposure to significant losses from reinsurer insolvencies, the Company obtains
reinsurance from a number of reinsurers, who are dispersed over several geographical regions.
37. CAPITAL MANAGEMENT
The management's policy is to maintain a strong capital base for the confidence of stakeholders and
to sustain future development of the business. The management closely monitors the return on
capital along with the level of distributions to ordinary shareholders. The Company meets minimum
paid up capital requirements as required by Securities and Exchange Commission of Pakistan.
38. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is an amount for which an asset could be exchanged, or a liability settled, between
knowledgeable willing parties in an arm's length transaction. Consequently, difference may arise
between the carrying values and the fair values estimates.
The fair value of all the financial instruments are estimated to be not significantly different from their
carrying values except for quoted investments in associate, held to maturity and available for sale
securities which fair value is Rs. 1,624.11 million (31 December 2007: Rs. 2,717.68 million). The fair
value of quoted investments is based on quoted market price (Refer note 13.4).
39. (LOSS) / EARNINGS PER SHARE
Basic (loss) / earnings per share are calculated by dividing the net (loss) / profit for the year by the
weighted average number of shares as at the year end as follows:
2008 2007
(Rupees in '000)
(Loss) / profit after tax for the year (267,249) 588,456

(Number of shares in '000)
Restated
Weighted average number of shares of Rs.10 each 65,915 65,915

(Rupees)

(Loss) / earnings per share of Rs. 10/= each - basic & diluted (4.05) 8.93
39.1 No figure for diluted (loss) / earnings per share has been presented as the Company has not issued
any instrument which would have an impact on (loss) / earnings per share when exercised.
39.2 The number of shares for the prior year has been adjusted for the effect of bonus shares issued
during the current year. Hence, the figure for the prior year's earnings per share has also been
restated.
40. SUBSEQUENT EVENT – NON ADJUSTING
The Board of Directors in its meeting held on 11 March 2009 has announced a final cash dividend
in respect of the year ended 31 December 2008 of Rs. 1.5 per share of Rs.10 each (15%) [31
December 2007: Rs. 1.5 per share of Rs.10 each (15%) cash dividend and bonus shares 20%]. In
addition, the Board of Directors has also approved the transfer from general reserve to
83
unappropriated profit amounting to Rs. 300 million [31 December 2007: Transferred to general
reserve of Rs 350 million]. These financial statements for the year ended 31 December 2008 do not
ANNUAL REPORT 2008

include the effect of these appropriations which will be accounted for subsequent to the year end.
41. AUTHORISATION FOR ISSUE
These financial statements have been authorised for issue in accordance with a resolution of the
Board of Directors on 11 March 2009.
42. GENERAL
All figures have been rounded off to the nearest thousand of rupees.

(Chief Executive)

Balance Sheet: Share Capital and Reserves

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Balance Sheet: Share Capital and Reserves

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Balance Sheet

Note 2008 2007

Paid-up share capital 5 659,148 549,290

Creditors and accruals

TOTAL LIABILITIES 3,363,858 3,521,043

TOTAL EQUITY AND LIABILITIES 5,425,172 5,932,706

Twofiq H. Chinoy Akbarali Hashwani

Note 2008 2007

Investments 13 1,430,217 1,955,892

Investment properties 14 123,822 76,197

Deferred taxation 15 35,974 62,570

Current assets- others

NEW JUBILEE INSURANCE COMPANY LIMITED

Akbarali Pesnani Tahir Ahmed

Expenses 23 114,494 91,795 159,398 4,274 83,898 52,465 -- 506,324 405,432

Investment income 181,707 599,208

(Loss) / profit before tax (179,153) 575,041

Taxation -- net 27 (88,096) 13,415

(Loss) / profit after tax (267,249) 588,456

Profit and loss appropriation account:

Balance at commencement of the year 658,434 938,002

(Loss) / profit after tax for the year (267,249) 588,456

Balance of unappropriated (loss) / profit at end of the year (151,066) 658,434

Twofiq H. Chinoy Akbarali Hashwani Akbarali Pesnani Tahir Ahmed

Share capital Reserves Total Total

Changes in equity for the

Company's share of capital

Total recognised income ––

– Final cash dividend – – – (175,773) (175,773) (175,773) (175,773)

NEW JUBILEE INSURANCE COMPANY LIMITED

Changes in equity for the

Company's share of capital

Total recognised loss –

– Final cash dividend – – – (82,393) (82,393) – (82,393) (82,393)

ANNUAL REPORT 2008

Twofiq H. Chinoy Akbarali Hashwani Akbarali Pesnani Tahir Ahmed

(a) Underwriting activities

Net cash (outflow) / inflow from underwriting activities (121,506) 150,448

(b) Other operating activities

Total cash inflow from investing activities 173,434 188,678

Net cash (outflow) from all activities (10,470) (5,936)

Cash at beginning of the year 1,680,625 1,686,561

Operating cash flows (102,885) 58,306

(Loss) / profit after taxation (267,249) 588,456

NEW JUBILEE INSURANCE COMPANY LIMITED

Cash and bank deposits

Cash and other equivalents

Deposits maturing within 12 months (encashable on demand)

Twofiq H. Chinoy Akbarali Hashwani Akbarali Pesnani Tahir Ahmed

Business underwritten inside Pakistan

Direct and facultative

5. Accident and health 401,440 150,188 189,322 362,306 – – – – 362,306 294,819

7. Proportional / non–proportional (67) – – (67) – – – – (67) 40

Twofiq H. Chinoy Akbarali Hashwani Akbarali Pesnani Tahir Ahmed

Business underwritten inside Pakistan

Direct and facultative

5. Accident and health 243,454 32,802 38,691 249,343 – – – – 249,343 197,957

NEW JUBILEE INSURANCE COMPANY LIMITED

7. Proportional / non–proportional 216 – – 216 – – – – 216 2,963

Twofiq H. Chinoy Akbarali Hashwani Akbarali Pesnani Tahir Ahmed

Business underwritten inside Pakistan

Other 2008 2007