Credit Rating Rated by CRISL AA+ Stable Outlook Highlights

Journey of Promise, innovation succession... Credit Rating Rated by CRISL AA+ Stable Outlook Highlights..... 2013 has been a year of tremendous achievement.

Gross Premium Net Premium

BDT mn1,638.89 BDT mn 704.23 9.93% 9.84%

Earnings Per Share Net Profit Before Tax

BDT 5.33 BDT mn 406.17 35.62% 36.33%

Underwriting Income Investment Income BDT mn 228.88 BDT mn 230.26 23.65% 40.44% Annual Report 2013 Table of Contents

Letter of Transmittal 04 Awards & Recognitions 06 Shareholders' View 09 Notice of the Twenty Sixth Annual General Meeting 10

Corporate Objectives, Values & Structure Vision & Mission 12 12 Core Values 13 Overall Strategic Objective 14 Profi le of the Company 15 Products of Reliance 16 Product Diversifi cation and Innovation 17 Company Information 18 Corporate Milestones 19

Our Management 20 From the Records Book 20 Composition of Board and its Committees 21 Organizational Chart 22 Management & Core Executives 24 Senior Executives 26 Heads of Branches 27

Chairman’s & CEO's Review, Director's Report etc. 28 Chairman's Review 28 Managing Director and CEO's Roundup 30 Directors' Report to the Shareholders 34 Summary of Accounts 40 Key Operating and Financial Highlights 41 Meeting attended by the Directors 42 Pattern of Shareholding 43 Brief Profi le of the Directors 44 Status of Compliance of Corporate Governance Guidelines 50 Certifi cate of Compliance with the Corporate Governance Guidelines 57

Sustainability Reporting 58 Attributes of Sustainability 58 Sustainability Strategy 58 Corporate Social Responsibility 59 Environmental Policy 60 Human Resources Policy 60 Integrated Reporting 61 Report on Going Concern 62 Report on Information Technology 63 Human Resource Accounting 65

Information about Corporate Governance 66 Report on Corporate Governance 66

2 RIL 2013 Annual Report structure objectives, values & Corporate

Performance Summary Performance Indicators 70 70 Value Added Statement 72 Economic Value Added Statement 73 u aaeetChairman’s & CEO’s Our Management Market Value Added Statement 73 Contribution to the National Economy 74 Bangladesh Non-life Insurance Market Composition & Reliance Share 75

Risk Management & Control Environment Risk Management Framework 76 etc.report review, Director’s 76 Insurance Risk & its Mitigation 77 Disclosure of Risk Reporting 79

Specifi c areas for Insurance Sector 80 Claims Management and details of Outstanding Claims (IBNR & 80 reporting Sustainability IBNER) with ageing thereof Solvency Margin 81 Accounting Ratio pertaining to Insurance Sector 82 Review of Asset Quality 83 governance about corporate Information Financial Performance Report of the Audit Committee 85 85 Responsibility Statement of CEO & CFO 86 Auditors' Report to the Shareholders' 87

Statement of Financial Position 88 performance of our Summary Statement of Comprehensive Income 90 Fire Insurance Revenue Account 92 Marine Insurance Revenue Account 94 Miscellaneous Insurance Revenue Account 96

Classifi ed Summary of Assets 98 control environment management & Risk Statement of Cash Flows 100 Statements of Changes in Shareholders Equity 101 Notes to the Financial Statements 102

Stakeholders' Information insurance sector Specifi Dividend Policy and Capital Raising History 118 118 Financial Calendar 118 c areas for Quarterly Analysis 119 Shareholding Composition 120 Redressal of Investors Complaints 121 performance Financial Redressal of Clients Complaints 121 Branch Connectivity 122 Event Highlights 124 Glossary 126 Proxy Form 131 information Stakeholders’

3 Letter of Transmittal

All Shareholders, Bangladesh Securities and Exchange Commission, Insurance Regulatory and Development Authority, Registrar of Join Stock Companies & Firms, Dhaka Stock Exchange Limited and Chittagong Stock Exchange Limited

Dear Sir (s):

Annual report for the year ended December 31, 2013

Enclosed please fi nd a copy of the Annual Report together with the Audited Financial Statements including Statement of Financial Position as at December 31, 2013 and Statement of Comprehensive Income, Statements of Cash Flows for the year ended December 31, 2013 along with notes thereon of Reliance Insurance Limited for kind information and record.

Best regards,

Yours sincerely,

Md. Anisur Rahman Company Secretary

Awards and Recognitions

Mr. Akhtar Ahmed, Managing Director & CEO, Reliance Insurance Limited is receiving the 13th ICAB National Award for Best Presented Annual Reports 2012 under Financial Sector - Insurance (First Position).

Mr. Akhtar Ahmed, Managing Director & CEO, Reliance Insurance Limited is receiving the 12th ICAB National Award for Best Presented Annual Reports 2011 under Financial Sector - Insurance (First Position).

Mr. Akhtar Ahmed, Managing Director & CEO, Reliance Insurance Limited is receiving the ICMAB Best Corporate Awards 2012 (First Position). 6 RIL 2013 Annual Report

Mr. Mohammed Sabir Ahmed, CFO, Reliance Insurance Limited is receiving Certifi cate of Merit from SAFA for Best Presented Annual Report Awards and SAARC Anniversary Awards for Corporate Governance Disclosures 2011.

Mr. Akhtar Ahmed, Managing Director & CEO, Reliance Insurance Limited is receiving the ICMAB 2nd Best Corporate Award 2010.

Mr. Shamsur Rahman, Vice Chairman, Reliance Insurance Limited is receiving the 11th ICAB National Award (First Position) for Best Published Accounts and Reports 2010 under Financial Sector - Insurance.

Mr. Akhtar Ahmed, Managing Director & CEO, Reliance Insurance Limited is receiving the ‘HR Award 2010’ given by Institute of Personnel Management (IPM), Bangladesh in the Corporate Category. 7 Awards and Recognitions

1st position in 13th ICAB Awards 1st position in 12th ICAB Awards 1st position in 11th ICAB Awards for Best Published Accounts and for Best Published Accounts and for Best Published Accounts and Reports 2012 Reports 2011 Reports 2010

1st position in ICMAB Best 2nd position in ICMAB Best HR Award – 2010 Corporate Awards 2012 Corporate Awards 2010 Presented by Institute of Personnel Management

Certifi cate of Merit for Best Presented Accounts and Certifi cate of Merit for Best Presented Accounts and Corporate Governance Disclosure Awards 2011 Corporate Governance Disclosure Awards 2010

8 RIL 2013 Annual Report Shareholders’ View

9 Notice of the Twenty Sixth Annual General Meeting

Notice is hereby given to all members of Reliance Insurance Limited that the twenty sixth Annual General Meeting of the Company will be held at La-Vita Hall, Lake Shore Hotel, House # 46, Road # 41, Gulshan-2, Dhaka-1212, on Sunday, March 30, 2014 at 11:00 am to transact the following business:

1. To receive, consider and adopt the Directors’ Report and Audited Financial Statements for the year ended December 31, 2013 together with the Auditors’ Reports thereon.

2. To declare dividend for the year ended December 31, 2013 as recommended by the Board of Directors.

3. To elect/re-elect Directors.

4. To confi rm the appointment of proposed Managing Director & CEO of the Company.

5. To appoint Auditors and fi x their remuneration.

6. To transact any other business with permission of the Chair.

By order of the Board of Directors

March 3, 2014 Md. Anisur Rahman Company Secretary

Notes:

(a) The “Record Date” shall be Wednesday, March 5, 2014. Shareholders whose names appear in the members’ register of the company on the record date will be eligible to attend the meeting and qualify for dividend.

(b) A member entitled to attend and vote at the Annual General Meeting may appoint a proxy to attend and vote in his/her stead. Duly stamped proxy must be submitted to the Share Department of the Company at least 72 hours before the start of the meeting at 11:00 am on March 30, 2014.

(c) Shareholders and Proxies are requested to record their entry in the Annual General Meeting well in time. No entry will be recorded after 12:00 noon.

(d) Members are advised to update change of address (if any) through their respective Depository Participant.

Vision and Mission

Our Vision

Is to:

become the premier insurance organization and the insurer of fi rst choice in Bangladesh with a sound reputation for dependability, professionalism and the highest standard of customer services.

Our Mission

Is to:

 grow signifi cantly and achieve signifi cant non-life insurance market share.

 continue delivering attractive returns to our shareholders.

 become a caring organization and employer of choice.

 invest in top quality human resources and develop full potentials of employees by providing continued training and insurance education.

 bring innovation in insurance products and selling techniques.

121 RIL 2013 Annual Report structure objectives, values & Corporate

Our Core Values

 Transparency: We encourage and inculcate total transparency and communicate openly & honestly with all our stakeholders and clients. We accept our individual and team responsibilities and we make and support business decisions through experience and good judgment.

 Integrity: We are committed to employ the highest ethical standards, demonstrating honesty and fairness in all our actions.

 Professionalism & Excellence: We believe in developing a highly motivated, valued and diverse workforce. We strive constantly to be the best in quality and in everything we do in order to meet and exceed the highest expectations of our customers.

 Customer Focus: We are dedicated to satisfying customer needs and honoring commitments that we have made to them. Our customers are our partners and we remain committed to build strong relationship with them and value their loyalty as our best rewards.

 Result Focus: We are result focused. We strive to timely, tenaciously and consistently execute well developed plans, goals and objectives and we accept responsibility for the results they deliver.

 Teamwork: We are committed to a teamwork environment where every individual is a valued member, treated with respect, encouraged to contribute and recognized and rewarded for his/her eﬀ orts. 13 Overall Strategic Objectives

We, at Reliance realize that, It is important to recognize the elements that make our intangible resources, such as, our ability to relate to customers regarding for us to prosper, we need to their needs and wants, management style, corporate culture and be ﬂ exible and responsive, to commitment. These elements will diff erentiate us from our competitors satisfy our clients by providing and contribute towards the development of a sustainable competitive them with what they want, edge. Our corporate strategy and guiding principles rest fi rmly on this belief. when they want it and most importantly before other Process focus

competitors can offer it.  To have all products meet standard of excellence guidelines  To continually improve internal process to realize eﬃ ciencies  Improve system accuracy and responsiveness  Improve organizational structure  Improve performance measurement and reporting capability  Reduce administrative overhead  Improve ﬁ nancial analysis, controls, and audit capability

Business focus

 Increase quality  Reduce delivery time  Implement change faster  Increase customer retention  Increase customer loyalty  Introduce new products to new and existing markets  Improve overall productivity and maximize market share  Improve marketing, advertising and public relations  Achieve and maintain outstanding customer service  Continuously broaden customer database by obtaining new information on customer characteristics and needs

People/Learning focus

 To hire, develop and maintain the right people in right place  Employ professionals who create success for customers  Develop broad set of skills useful for customer support  To continually learn and adopt current best practices  Transfer knowledge from leading-edge clients  To align incentives and staﬀ rewards with performance

14 RIL 2013 Annual Report Profi le of the Company structure objectives, values & Corporate

A leading ﬁ rst generation Reliance transacts all classes of non-life insurance business in Bangladesh and its turnover was in excess of BDT 1,638.89 million, private sector Non-life being total gross premium underwritten in 2013. The Company carries Insurance Company in its insurance activities through head offi ce along with 31 (thirty one) Bangladesh, Reliance Insurance branches spread across the whole country. RIL received “AA+ (Double Limited (RIL) was incorporated A Plus)” Surveillance Rating (Stable outlook) from CRISL based on its sound fi nancial performance and claim paying ability. in 1988 as a public limited company under the Companies Reliance has an authorized capital of Tk. 2,000 million and paid up capital of Tk 519.50 million. Shares of the company are traded in both Act, 1913 (Present 1994) and Dhaka Stock Exchange and Chittagong Stock Exchange and are listed subsequently was listed with in the “A” category. The company has a total market capitalization of Dhaka and Chittagong Stock approximately Tk 4,140.40 million as at December 31, 2013. Exchanges in 1995. Reliance is focused on providing professional services of the highest quality to its clientele which include many reputed large national and multinational conglomerates. Over the years, Reliance has established its track record as a sound and dependable insurer, consistently able to meet its commitments and by providing insurance solution to the individual needs of its clients.

The Board of Directors of Reliance comprises a good number of eminent entrepreneurs and personalities of the country. The management team is headed by Mr. Akhtar Ahmed ACII, Ex-Managing Director of SBC, with over 43 years of experience in the insurance industry of which a greater part was spent in the Far East, holding important positions with reputed professional reinsurance companies. Other members of the team are highly qualifi ed professionals, who have been trained at home and abroad. Reliance emphasizes on imparting technical know how of highest standard to its employees and in ensuring that they keep abreast of latest developments in the world of insurance, through training and continued education.

Financial performance of the company has been consistently positive, delivering both underwriting and investment income and by giving attractive returns to its shareholders. The Company has over the years been maintaining strong corporate culture, corporate governance, ethical standards, corporate social responsibilities, superior underwriting skills and abilities and dynamic investment management.

The future plans of Reliance encompass not only development of new products and services, but also marketing activities aimed at tapping the hitherto untapped segments of the market. The Company is fully aware of its social responsibilities and would like to aim its future developments activities in the direction which bring insurance services and benefi ts to the reach of the common people of Bangladesh.

15 Products of Reliance

Property Insurances Miscellaneous Insurances

Fire Insurance (including Allied Perils) Burglary Property Damage All Risks Cash in Safe, Cash in Transit, Cash on Counter, Industrial All Risks (IAR) including Business Interruption Cash in Premises Comprehensive Machinery Insurance Fidelity Guarantee All Risks Marine Insurances Product Liability Public Liability Marine Cargo Directors’ & Offi cers’ Liability Insurance Marine Hull Workmen’s Compensation Builders Risks Insurances Employer’s Liability Marine Terminal Operators Liability (MTOL) Engineering Insurances Comprehensive General Liability Machinery Breakdown Insurance (MBD) Hole in One (Golf) Insurance/Event Cover Deterioration of Stocks (DOS) Hotel Owner’s All Risks (HOAR) Boiler and Pressure Vessel (BPV) Personal Accident Insurance Electronic Equipment Insurance (EEI) People Personal Accident Erection All Risks (EAR) Aviation Insurance-Aircraft Hull, Liability and Related Contractors’ All Risks (CAR) Risks Work Plant (WP) Overseas Mediclaim Oil & Gas Well Drilling Equipment Package (OGD) Contractors Plant & Machinery (CPM) Business and Holiday (B&H) Corporate Frequent Travels (CFT) Motor Insurances Employment and Study (E&S) Motor Insurances for Commercial use Motor Insurances for Private use Health Insurance Specialised Motor Vehicle 16 RIL 2013 Annual Report

Product Diversifi cation and Innovation structure objectives, values & Corporate

Diversifi cation is the key to maximizing profi tability in today’s 4. People’s Personal Accident Insurance insurance market. Most of the Insurance companies in 5. Overseas Mediclaim Insurance Bangladesh focus largely on traditional insurance products 6. Health Insurance like Fire, Marine and Motor Insurance. Health Insurance was not very common in Bangladesh few In today’s competitive market we need to be innovative and years back, but now it is becoming very popular, especially in diversify our product line. The potential untapped insurance the corporate culture. Still, large number of population is not market in Bangladesh is the personal lines business. The under the coverage of Health Insurance. personal lines business remains weak due to the people’s negative perception on insurance industry. We need to provide easy access to the public to be able to buy the above products with ease. Providing one stop The personal lines business may include products such as: service and facility to get insurance coverage via the Internet shall be a positive move on part of the Insurance companies 1. Householders Comprehensive Insurance to generate sizable premium income from the untapped 2. Motor Insurance market. 3. Personal Accident Insurance

17 Company Information The Company was incorporated as a The Company is listed with Dhaka Stock Exchange and Chittagong Stock Exchange as a Publicly Traded Company. public limited company in Bangladesh The Company carries its insurance activities through thirty in the year 1988 under the Companies one branches spread across the country. Act 1913 (at present 1994). The Company within the stipulations laid Registered Name of the Company Reliance Insurance Limited down by Insurance Act 2010 and directives as received from time to Nature time from Insurance Development & Non-life insurance business Regulatory Authority provides Non-life Company Registration No. Insurance services. C-17379(179)/88 Tax Identifi cation Number (TIN) 647975407445/LTU, Dhaka

VAT Registration Number 9011003407

Registered Offi ce Shanta Western Tower Level-5, 186 Tejgaon I/A Dhaka 1208

Contacts Telephone : +88 02 8878836-45 Mobile : +88 01714 014 895 Fax : +88 02 8878831-34 E-mail : [email protected]

Web Presence www.reliance.com.bd

Company Secretary Md. Anisur Rahman

Auditors Malek Siddiqui Wali Chartered Accountants 9-G, Motijheel C/A, Dhaka-1000

Legal Adviser Mr. Rokanuddin Mahmud Barrister-at-Law

Principal Bankers Bank Asia Limited Prime Bank Limited IFIC Bank Limited HSBC Bangladesh Citi Bank N.A. Standard Chartered Bank 18 RIL 2013 Annual Report Corporate Milestones structure objectives, values & Corporate

Reliance Insurance Offi ce Tower foundation laid on 12.03.2014 Received Certificate of Merit for Best Presented Annual Reports 2012 from SAFA 11.03.2014 Received 13th ICAB National Award (First Position) for Best Published Accounts and Reports 2012 21.12.2103 Received Certificate of Merit for Best Presented Accounts and Corporate Governance Disclosure 2011 22.02.2013 from SAFA Received ICMAB First Best Corporate Awards 2012 12.01.2013 Received 12th ICAB National Award (First Position) for Best Published Accounts and Reports 2011 01.10.2012 Received ICMAB Second Best Corporate Awards 2011 12.12.2011 Received Certificate of Merit for Best Presented Accounts and Corporate Governance Disclosure Awards 29.11.2011 2010 from SAFA Received HR Award 2010 Presented by Institute of Personnel Management 15.10.2011 Received 11th ICAB National Award (First Position) for Best Published Accounts and Reports 2010 04.10.2011 Shifting Registered Office 06.03.2011 Received of 10th ICAB National Award (Second Position) for Best Published Accounts and Reports 2009 19.12.2010 Purchase of Office Premises for the Company 18.05.2010 Completion of 20 Years of Service 20.03.2008 Agreement sign with CDBL 31.08.2004 Issuance of first Bonus Share (For the year 2003) 50% Stock & 10% Cash 28.05.2004 Purchase of Land for the Company 27.03.2002 First Dividend Declared in the AGM 30% Cash 18.06.1996 First Trading of Shares on Chittagong Stock Exchange Limited 04.11.1995 Listed with Chittagong Stock Exchange Limited 10.10.1995 First Trading of Shares on Dhaka Stock Exchange Limited 17.07.1995 Subscription Closed 25.05.1995 Subscription Opened 16.05.1995 Listed with Dhaka Stock Exchange Limited 08.05.1995 Publication of prospectus 01.05.1995 Received consent from SEC for issuance of public share of BDT 30 million 12.04.1995 Signing of First Insurance business 21.04.1988 License issued for operating the first Branch 21.04.1988 Certificate of Commencement of Business 22.03.1988 Incorporation of the Company 20.03.1988

19 From the Records Book Respectable Chairmen, Deputy Chairmen and MD & CEOs

Chairmen From Left to Right Mr. Latifur Rahman 1988, 1989, 1997, 2005 Late Azimur Rahman 1990, 1998 Mr. Abdur Rouf Chowdhury 1991, 2002, 2010 Mr. Asadul Huq 1992, 1999, 2007

Mr. Habibullah Khan 1993, 2008 Ms. Joya Pati 1994 Late A. S. Mahmud 1995 Mr. Shamsur Rahman 1996, 2004, 2012

Ms. Yasmeen Khan 2000 Ms. Shahnaz Rahman 2001, 2009, 2013 Mr. Rajiv Prasad Shaha 2003, 2011 Ms. Rokia Afzal Rahman 2006

Deputy Chairmen Mr. M. Shamsul Alam March 2005 to March 2006 Mr. Anwarul Huq March 2005 to March 2008

Managing Director & CEOs

Mr. M. Shamsul Alam March 1988 to March 2005 Mr. Akhtar Ahmed March 2005 to Date

The Company recalls with gratitude their contribution

20 RIL 2013 Annual Report Composition of Board & its Committees

Board of Directors Audit Committee

Chairman Chairman 1. Ms. Shahnaz Rahman 1. Mr. Anis-uz-Zaman Khan Our Management Nominated by Trinco Limited Member Vice Chairman 2. Mr. Habibullah Khan 2. Mr. Habibullah Khan 3. Mr. Md. Khalilur Rahman Choudhury Nominated by Meenhar Fisheries Limited 4. Mr. Amanullah Chowdhury Directors 5. Mr. Atiqur Rahman 3. Ms. Zakia Rouf Chowdhury Nominated by Rangs Limited Finance & Asset Management Committee 4. Mr. Md. Khalilur Rahman Choudhury Chairman Nominated by General Produce International Limited 1. Mr. Shamsur Rahman 5. Ms. Farah Huq Member Nominated by FinAccord Trading Limited 2. Mr. Habibullah Khan 6. Mr. Arshad Waliur Rahman 3. Mr. Atiqur Rahman Nominated by Transfi n Trading Limited 4. Ms. Farah Huq 7. Mr. Imran Faiz Rahman 5. Mr. Akhtar Ahmed Nominated by Arlinks Limited Human Resource Committee 8. Mr. Shamsur Rahman Representing Self Shareholding Chairman 1. Ms. Shahnaz Rahman 9. Mr. Rajiv Prasad Shaha Nominated by Kumudini Welfare Trust of Bengal (BD) Member Limited 2. Mr. Habibullah Khan 10. Mr. Amanullah Chowdhury 3. Mr. Atiqur Rahman Nominated by Rangs Workshop Limited 4. Mr. Amanullah Chowdhury 5. Mr. Arshad Waliur Rahman 11. Ms. Romana Rouf Chowdhury 6. Mr. Akhtar Ahmed Nominated by Deep Sea Fishers Limited 12. Iftikhar Arshad Husain Nominated by Kumudini Handicraft 13. Ms. Yasmeen Khan Nominated by Meenhar Sea Foods Limited 14. Mr. Atiqur Rahman Nominated by Transcom Limited

Independent Directors 15. Mr. Anis-uz-Zaman Khan 16. Dr. Toufi q Ali

Managing Director & CEO 17. Mr. Akhtar Ahmed

21 Organizational Chart of Reliance Insurance Limited

22 RIL 2013 Annual Report Our Management

23 Management and Core Executives And their Profi les

Md. Anisur Rahman Mohammed Sabir Ahmed Mohammad Khaled Mamun Akhtar Ahmed Enamul Haque Khandker

Akhtar Ahmed M.A. ACII (UK), Chartered Insurer Managing Director & CEO After completing B.A. (Honours) and M.A. from Dhaka University in 1970, Mr. Ahmed joined Eastern Federal Union Insurance Company, the largest insurance company in the then Pakistan, as an Executive Offi cer. Following the nationalization of insurance industry in Bangladesh in 1972, his services were absorbed in Sadharan Bima Corporation. In 1981 he joined Asian Reinsurance Corporation, Bangkok, an inter-governmental organization set up by the United Nations and served in various Managerial position till 1989. In 1989 he joined Arab Insurance Group, the largest insurance organization of the Middle East and served for 14 years in various positions as Chief Manager, Regional General Manager and Chief Executive of its Far East operations, based in Hong Kong and Kuala Lumpur. Mr. Ahmed returned back home in 2003 and served as Managing Director of Sadharan Bima Corporation till February 2004. In early 2005 he completed an assignment as Consultant to KPMG, Abu Dhabi, on a project for setting up of a large Reinsurance company in the Middle East. He joined Reliance Insurance Limited as its Managing Director & CEO in March 2005. 24 RIL 2013 Annual Report

Mohammad Khaled Mamun M.Sc, M. Demo, DDP, ABIA, ACII (UK) Deputy Managing Director

Mr. Mamun joined Reliance Insurance in June, 2005 after 11 years of service in Reinsurance Department of the State Owned

Sadharan Bima Corporation. Apart from his Masters degree from Dhaka University, he also obtained Diploma in Development Our Management Planning from Academy for Planning and Development, Dhaka. He is an Associate Member of Bangladesh Insurance Academy, Dhaka and also the Associate Member of the Chartered Insurance Institute, United Kingdom. He received Advanced Non-Life Insurance & Reinsurance Training from Swiss Insurance Training Centre (SITC) of Swiss Re, Zurich, Switzerland and Reinsurance Management Training from Asian Re, Bangkok, Thailand.

Mr. Khaled has also attended a number of seminars on Insurance and Reinsurance at home and abroad.

Enamul Haque Khandker Executive Director (HR & Admin)

Mr. Khandker has obtained his Masters with Honours in Public Administration from University of Dhaka. In a career spanning over nearly thirty years, Mr. Khandker worked mostly for International and Joint Venture Companies both in the country and abroad in the fi eld of Human Resources & Administration. Prior to joining Reliance Insurance Limited in 2005, he served in CARE-International, Bangladesh, Karnaphuli Fertilizer Company Limited (KAFCO), & Saudi-Bangladesh Industrial & Agricultural Investment Company Limited (SABINCO) as General Manager & Head of Human Resources & Administration Division. Mr. Khandker was entrusted with special assignments in CARE Sri Lanka. He is a fellow of Institute of Personnel Management (IPM) and Bangladesh Society for Human Resources Management (BSHRM).

Md. Anisur Rahman M.Com (Marketing), MBA (Finance) DU ABIA, DAIBB Company Secretary, Deputy Executive Director & Head of Operations

Mr. Rahman joined Reliance Insurance Limited in October 2005. He had earlier served Pragati Insurance Limited and United Insurance Company Limited in senior positions. He also worked as an Instructor of Bangladesh Insurance Academy. Starting his career as a banker with Standard Chartered Bank in March 1982, he moved to Investment Corporation of Bangladesh and thereafter Bangladesh Krishi Bank. He received intensive training programme at the University of Philippines, Quezon City, Manila, Reinsurance Management in Bangkok organized by the Asian Re and Annual Seminar of Arab Insurance Group (ARIG) in Bahrain.

Mr. Rahman has also attended a number of seminars on Insurance and claims at home and abroad.

Mohammed Sabir Ahmed M.Com, FCA, FCS Deputy Executive Director & CFO

Mr. Ahmed joined in Reliance Insurance Limited on July 8, 2007. Before joining Reliance Insurance Limited he worked with Bashundhara Group and TeleBarta Limited in Senior Management Positions. Mr. Ahmed is a Chartered Accountant and Chartered Secretary in profession and has been working in fi nancial management and internal audit & control functions for more than fi fteen years. He has also been serving as a member of diff erent committees of “The Instutitute of Chartered Accountants of Bangladesh (ICAB)” including TRC, BCPAR and Audit Committee. He is part time faculty member of ICAB. Mr. Ahmed has attended a number of seminars at home and abroad.

25 Senior Executives

Mr. Shahadat Hossain Mr. Md. Rakib Uddin Chowdhury Mr. Kazi Altaf Hussain Executive Vice President Deputy Senior Vice President Vice President Re-insurance Re-insurance Specialised Underwriting

Mr. Md. Israfi l Mr. Md. Mahbubur Rahman Mr. Quazi Mozaff ar Asif Rana Executive Vice President Deputy Senior Vice President Vice President Branch Control & Co-ordination Information Technology Marketing Services & Health Plan

Mr. Md. Golam Sarower Mr. Syed Qayem Hussain Mr. Md. Zahurul Haque Executive Vice President Deputy Senior Vice President Vice President Internal Audit and Control Marketing Services & Health Plan Share Department

Mr. Md. Jashim Uddin Mr. Md. Abdul Matin Mr. Md. Abul Kalam Azad Deputy Executive Vice President Deputy Senior Vice President Vice President Accounts Policy Issuing Section Internal Control & Audit

Mr. Nirmal Chandra Roy Mr. Sanjay Kumar Basak Mr. Md. Badaruddoza Deputy Executive Vice President Deputy Senior Vice President Vice President New Product & Services Finance & Accounts Finance & Accounts

Mr. Md. Nazrul Islam Mr. Abu Saleh Md. Musha Khan Senior Vice President Deputy Senior Vice President Human Resources & Admin Marketing Services & Health Plan

Mr. Md. Masud Rana Mr. Ashiqur Rahman Deputy Senior Vice President Vice President Finance Claims

26 RIL 2013 Annual Report Heads of Branches

Mr. Syed Mohammad Akram Mr. Kazi Abdul Bari Mr. Md. Nurul Anwar SEVP & Branch Manager DVP & Branch Manager Branch Manager Kawran Bazar, Dhaka Rajshahi Cox’s Bazar Our Management Mr. Hara Krishna Roy Mr. Md. Shah Jahan Mr. Md. Ashraful Alam Mamun SEVP & Branch Manager DVP & Branch Manager Branch Manager Motijheel, Dhaka Moulvi Bazar, Dhaka Pabna

Mr. Swapan Kumar Saha Mr. Kamal Das Mr. Md. Shahidul Islam SEVP & Branch Manager DVP & Branch Manager Branch Manager Narayangonj Faridpur Rangpur

Mr. Rezwan Karim Mr. Khan Md. Tofail Mr. Md. Nurul Haque EVP & Branch Manager DVP & Branch Manager Branch Manager Local Offi ce, Dhaka Mohakhali, Dhaka Comilla

Mr. Md. Nurul Amin Mr. Md. Soyef Ali Mr. Md. Shariful Islam SVP & Branch Manager AVP & Branch Manager Branch Manager New Market, Dhaka Thakurgaon Sirajgonj

Mr. S.M. Omar Mr. Swapan Kumar Nag Chowdhury Mr. Md. Ibrahim SVP & Branch Manager AVP & Branch Manager Branch Manager Khatungonj, Chittagong Kushtia Narshingdi

Mr. Md. Harun Al Rashid Mr. Tota Miah Sikder Mr. S.M. Mahfuzur Rahman DSVP & Branch Manager AVP & Branch Manager Branch Manager Jessore Madaripur Sylhet

Mr. Musleh Uddin Chowdhury Mr. Reaz Ahmed Siddiqui Mr. Md. Abdul Hai Shaikh VP & Branch Manager DGM (Mkt) & Branch Manager Branch Manager Uttara, Dhaka Jubilee Road, Chittagong Bogra

Mr. Tayyeb Mohsin Mr. Md. Alamgir Hossain Mr. Md. Halimuzzaman VP & Branch Manager Khandaker Branch Manager Bijoynagar, Dhaka DGM (Mkt) & Branch Manager Mymensingh Khulna Ms. Meharoon Hyder Mr. Md. Hafi zur Rahman DVP & Branch Manager Mr. Shafi qul Islam Branch Manager Agrabad, Chittagong AGM (Mkt) & Branch Manager Dinajpur Mogh Bazar, Dhaka Mr. Md. Bashirullah Sheikh DVP & Branch Manager Bangshal, Dhaka

27 Chairman’s Review

Under diffi cult circumstances which prevailed in the country last year, particularly during the last 4 months when economic activities almost came to a standstill, the Company was able to maintain its momentum and achieve a near 10% growth in business. During the year 2013, Gross Premium income attained was Taka 1,638.9 million as against Taka 1,490.8 million in 2012. We record with gratitude the contribution to this growth made by all of our clients: local corporate, in-house, multinational and sundry clients.

28 RIL 2013 Annual Report

Dear Shareholders to introduce new products and services. Its newly introduced report etc.report review, Director’s Chairman’s & CEO’s of Health insurance portfolio is expanding satisfactorily. I have great pleasure to welcome you all to the 26th Annual General Meeting (AGM) of Reliance Insurance Limited. The We have always emphasized on professionalism and the Company last year completed its 25 years of operation and Company is in the hands of highly qualifi ed personnel, who today we are presenting the Accounts for the year 2013, of have rendered dedicated services over the years and moved the 25th completed year with achievements befi tting the the Company forward to where it is now. Development occasion. The Company’s bottom line results for 2013 are of proper human resources is one of the priorities of the the best so far. We all rejoice on this occasion and thank all Company to maintain its ability to provide services of the shareholders and clients for their continuous support to the highest quality to its clients and thus have edge over its Company. competitors. In these days of information technology, the Company is equally attentive to this area and has introduced Under diffi cult circumstances which prevailed in the country new IT facilities and expanded its network services to the last year, particularly during the last 4 months when economic fullest extent activities almost came to a standstill, the Company was able to maintain its momentum and achieve a near 10% growth Dear Shareholders, with its impressive track record, we in business. During the year 2013, Gross Premium income are very much confi dent that the Company is poised to attained was Taka 1,638.9 million as against Taka 1,490.8 accept challenges of the future, capitalize on opportunities million in 2012. We record with gratitude the contribution arising and maintain its momentum in growth in business to this growth made by all of our clients: local corporate, in- and profi tability in the years to come. We are most obliged house, multinational and sundry clients. and appreciative of the continued support and patronage received from our clients and shareholders and would look You will be pleased to know that underwriting profi t achieved forward to continuation of the same. by the Company was Taka 228.9 million as against Taka 185.1 million in 2012, an increase of 23.66%. Investment income Based on the operating profi ts for 2013, we have proposed a increased to Taka 230.3 million from Taka 163.96 million in dividend of 30%: in the form of 15% Bonus shares and 15% 2012, achieving a most notable and praise-worthy increase cash dividend. With the addition of proposed Bonus share, the of 40.4% Paid up capital of the company will be almost Taka 60 crore. The net pre and after tax operating profi t rose to of Taka 406.1 I would like to convey my sincere thanks to my fellow million and Taka 297.9 million respectively, showing increases directors for their support and co-operation. The of 36.3% and 35.9% over the preceding year and are the management team and the staff worked very hard to take highest so far. the Company forward and in delivering excellent results, particularly on the 25th year of operation of the Company; The Company continues with its eff orts towards diversifying I would like to record our deepest appreciation of their its business portfolios by increasing segments of medium dedicated and unfl inching services and convey our thanks to and smaller clients and thus achieving a desirable spread of all of them. business which is fundamental to the business of Insurance. Notwithstanding set backs suff ered in 2012, the Branches as a whole have staged come back and registered a healthy growth of 15% in 2013. Likewise, business from local corporate clients increased by 21%. Shahnaz Rahman This Company continues to strive to develop a well balanced Chairman business portfolio which is not overly dependent on any particular type of business or client. The Company is working

29 Managing Director and CEO’s Round Up

Reliance completed yet another successful year of operation. The year 2013 marked 25th year of the Company’s operation and we closed the year with impressive fi nancial results – contributed by underwriting and investment incomes, a befi tting tribute to our 25th Anniversary.

30 RIL 2013 Annual Report

World Insurance Premium grew to US$4,612.5 billion in tax return increasing to 6% from 4% in the previous year. 2012: Life US$2,620.8 billion and Non-life US$1,991.6 billion, Underwriting results improved but were still negative with registering growths of 0.4% and 1.9% respectively. The growth combined ratio at 102% compared to 105% in the previous report etc.report review, Director’s Chairman’s & CEO’s has been lower than of previous year mainly because of year. 2012. However global reinsurers maintained their strong slower expansion in developed countries. The geographical capitalization. Insurance outlook for emerging markets split of World Non-life Premium Insurance penetration rates in 2013 remains challenging in view of uncertain global are as follows: economic landscape. World Insurance Premium 2012 Following large catastrophic losses suff ered in 2011 Reinsurers introduced higher rates and terms in general. In particular, US$ Million Insurance Continent Penetration event limit under all property proportional treaties have been Life Non-life Total rate % introduced, thereby limiting the reinsurers liability any one North 619,538 773,878 1,393,416 8.03 catastrophic event. However keeping in view of cyclical nature America of reinsurance business and increasing supply of capital has Latin 71,834 96,903 168,737 3.0 led to capacity increases and signs of softening of reinsurance America markets are already there. Europe 876,444 658,732 1,535,176 6.7 Asia 957,712 388,511 1,346,223 5.7 The non-life insurance market of Bangladesh with a gross Africa 49,888 22,002 71,890 3.65 premium income of only Taka 21,475 million in 2012 Oceania 45,448 51,623 97,071 5.6 registered a growth of 11.6%, the penetration rate (Insurance Total 2,620,864 1,991,649 4,612,513 6.5 premium as % of GDP) has been stagnating at around 0.20% World 0.40% 1.90% 1.00% for many years 2002 to 2012, whereas during the same Growth period the life sector has improved from 0.37% to 0.71%. Low

According to Swiss Re, global non-life premium moderately grew by 2.6% in 2012, the main thrust came from emerging markets which grew by an average of 8.6% whereas developed markets grew by an average of 1.5%.

World Non-life Insurance 2012: US$1,991,649 mn

penetration rate in non-life insurance sector points to serious shortcomings in the Industry and its inability to achieve horizontal growth. Although the non-life insurance industry achieved a growth Underwriting results for non-life insurance world wide of 11.6% in 2012, due to political crisis and disturbances in improved in 2012. Natural catastrophic losses accounted 2013 which brought the economy almost to a standstill, the for US$186 billion in 2012, almost half of the level of 2011. insurance industry will register a slow growth. Overall profi tability improved in 2012, with average after

31 According to an international survey, Pricing/Premium rates constitute a factor of 58% among all aspects considered by a client while purchasing insurance. Bangladesh still follows a system whereby premium rates by and large are prescribed by mandatory tariff s. However, the system of tariff does not mean that Premium rates should be pegged at levels not commensurate with the loss experience. Therefore the tariff rates require to be periodically reviewed and scientifi cally adjusted to give a fair deal to the clients. Reliance completed yet another successful year of operation. The year 2013 marked 25th year of the Company’s operation and we closed the year with impressive fi nancial results – contributed by underwriting and investment incomes, a The hitherto untapped segments of population and insurable befi tting tribute to our 25th Anniversary. Looking forward, interests need to be brought under insurance coverage, Reliance will continue to conduct its aff airs in a true spirit of which can only lead to expansion of the Insurance industry professionalism with utmost importance to clients’ services. in real terms and bring the benefi ts of Insurance to those We are committed to take the Company to a glorious future who need it most. For that, the fi rst and foremost is to and accomplish its avowed objective of being the Insurer of remove the negative perception of the public at large of the fi rst choice in Bangladesh. insurance industry as a whole. This is not an individual issue and the industry must tackle this collectively. Conducting business in the most professional way, improving services, introducing new products, using modern marketing tools and eff ective use of IT are some of the key requirements. From the clients’ perspective, pricing is one of the most Akhtar Ahmed important consideration in deciding purchase of Insurance. Managing Director & CEO

Directors’ Report to the Shareholders for the Year Ended December 31, 2013

Dear Shareholders, Ladies and have started to benefi t from stronger external Gentlemen, demand in advanced economies and China. Meanwhile, the World Bank has raised its We have great pleasure to welcome you all global growth forecasts as the easing of to the Twenty Sixth Annual General Meeting austerity policies in advanced economies of the Company and also to place before you supports their recovery, boosting prospects the Directors’ Report along with the Audited for developing markets’ exports. It sees the Accounts and fi nancial statements and the world economy expanding 3.2 per cent this Auditors’ Report for the year ended December year. The forecast for the richest nations was 31, 2013 for your review and approval. In the raised to 2.2 per cent from 2 per cent. Part year 2013 Reliance completed 25 years of its of the increase refl ects improvement in the operation and I am proud to report that this 18-country euro area, while the US is forecast was yet another successful year of operation – to perform better than its developed peers, as a matter of fact the best year so far in terms growing twice as fast as Japan. The bank of profi tability of the Company. lowered its forecast for China this year to 7.7 The Global Economy and Business per cent from 8 per cent. The 2014 forecast Environment for developing markets was cut to 5.3 percent from 5.6 percent. According to IMF, Global economic activity strengthened during the second half of State of The Bangladesh Economy 2013 and is expected to improve further in According to Bangladesh Bank, Bangladesh 2014–15, largely on account of recovery in economy achieved GDP growth of 6.0 percent the advanced economies. Global growth in Financial Year 2013, Substantial remittance is now projected to be slightly higher in infl ows and export activities helped to 2014, at around 3.7 percent, rising to 3.9 achieve this solid economic growth rate. percent in 2015. But downward revisions Infl ation decreased to 6.8 percent. Other than to growth forecasts in some economies European Union and US, export diversifi cation highlight continued fragilities, and downside to the newly discovered markets improved risks remain. In many emerging market and earnings from exports to record a satisfactory developing economies, stronger external growth of 10.7 percent in Financial Year 2013 demand from advanced economies will lift as against 6.2 percent in 2012. The growth of growth, although domestic weaknesses imports decreased from 2.4 percent in 2012 remain a concern. to 0.8 percent in 2013 due mainly to major Growth in the United States is expected to reduction in imports of food grain, some be 2.8 percent in 2014, up from 1.9 percent consumer goods and capital machinery. A in 2013. The euro area is fast recovering from lower trade defi cit and higher growth of recession; growth is projected to strengthen workers’ remittances led the current account to 1 percent in 2014 and 1.4 percent in 2015. balance to a signifi cant surplus of USD 2,525 In Japan, annual growth is expected to remain million in fi nancial year 2013. The overall broadly unchanged at 1.7 percent in 2014, balance also showed a huge surplus of before moderating to 1 percent in 2015. USD 5,128 million in 2013 with substantial contributions from current account balance, Overall, growth in emerging market and capital account and fi nancial account. developing economies is expected to increase to 5.1 percent in 2014 and to 5.4 percent in Growth in agriculture sector declined from 3.1 2015. Growth in China rebounded strongly percent in Financial Year 2012 to 2.2 percent in the second half of 2013, due largely to in 2013. Industry sector grew slightly more at acceleration in investment. Many other 9.0 percent in 2013 compared to 8.9 percent emerging market and developing economies in 2012. Services sector growth decreased to

34 RIL 2013 Annual Report

5.7 percent in 2013 from 6.0 percent in 2012 industry returned to positive overall growth aff ected mainly by lower growth of wholesale of 2.4% in 2012: 2.3% for life and 2.6% for and retail trade sub-sector. Gross fi xed non-life. In 2012 total premiums of advanced investment increased slightly to 26.8 percent countries increased by 1.7% and their global of GDP in 2013 from 26.5 percent in 2012 due share decreased to 84%. Total insurance to increasing growth of public investment. premiums in emerging markets grew by 6.8%. According to Swiss Re, over the last fi fty years, The exports earnings increased to USD etc.report review, Director’s Chairman’s & CEO’s the share of world premiums has vigorously 26,566 million from USD 23,989 million and increased in Asia. The share of Europe and import payments increased marginally to the Anglo-Saxon countries fell from 93% in USD 33,576 million from USD 33,309 million 1962 of total global premium volume to 56% in 2013 over 2012. Trade defi cit declined to in 2012. Over the next ten years, this shift will USD 7,010 million in 2013 from USD 9,320 continue and by 2023, China is expected to million in 2012. Remittance infl ows increased become the second largest insurance market to USD 14,338 million in 2013 from USD after the US. 12,734 million in 2012. As a result, current account balance moved to a surplus of USD Bangladesh Perspective 2,525 million as compared to a defi cit of USD The growth of Non-life insurance companies’ 447 million in 2012. The overall balance of premium income in 2012 was 11.6 percent. payments registered a huge surplus of USD The 43 private insurers and one Government 5,128 million in 2013 compared to a surplus of Corporation in the general insurance sector USD 494 million in 2012. earned TK 21,475 million in 2012. Bangladesh Bank’s projections suggest that Insurance market in Bangladesh remains the GDP growth outlook for Financial Year extremely competitive due to existence and 2014 is unlikely to deviate signifi cantly from operation of a large number of companies, the last 10 years’ average of 6.2 percent. un-commensurate with the size of the However, according to Asian Development market. In addition to the existing 43 non-life Bank (ADB) in Bangladesh, the gross domestic insurance companies, the Government in product (GDP) in Fiscal Year 2013 grew by 2013 issued 2 new non-life insurance licenses. 6.0%, Export growth accelerated briskly, With 45 non-life Insurance companies but imports were fl at, such that net exports operating in a market of the size of US$275 markedly contributed to growth. Agriculture million in Premium income makes us a very growth slowed to 2.2% because weather was crowded market when compared with our unfavorable and rice prices fell. Industry grew neighboring countries: India with a non- by 9.0%, with strong expansion in construction life Premium of US15,000 million has 25 and small-scale manufacturing. Services non-life companies, Sri Lanka with a market growth slowed slightly to 5.7%, refl ecting Premium US$385 million has 17 companies stagnant imports and politically inspired and Pakistan with a market Premium of strikes that disrupted trade. ADB forecasts GDP US$615 million has 29 non-life companies. growth in FY2014 at 5.8%. Consequently, the situation in Bangladesh non-life market has worsened due to intense Insurance Industry Outlook and and cut throat competition among the Possible Future Developments existing players, leading to many unhealthy Global Perspective practices. World insurance premium stood at US$ 4,613 The Regulatory reforms which started with billion in 2012, out of which US$2,621 billion the introduction of the Insurance Act 2010 is attributable to life insurance and US$1,992 is yet to be completed as the important billion to non-life Insurance. Global insurance Regulations under the Act have not yet

35 been put in place. The absence of important underwriting and investments to safeguard Regulations has created a vacuum and we the interests of the Company in the long run. seem to be still governed by the old Insurance Act 1938 to a large extent. Bangladesh is still Risks and Concerns one of the very few remaining Tariff market, it As an entity engaged exclusively in the is being obligatory for insurance companies business of Insurance, Reliance obviously to charge premium rates as determined has to face Risks of diverse nature, a good by the Regulatory Authority. However, number of which are peculiar to the Insurance the tariff rates have not been reviewed for industry. It also has to counter concerns a long time in the light of updated loss arising out of adverse developments in the experience obtaining over the years and as industry and economic arena. These factors such many clients do feel that they are being can be summarized as follows: strategic risk, overcharged. This has further negatively underwriting risks, reinsurance risks, reserving impacted on the public perception of the risks, investment risks, liquidity risks and insurance industry at large thereby hindering socio-politico-economic risks. The Company its growth. Bangladesh non life insurance monitors such risks from time to time, industry is already one of the smallest in keeping abreast of relevant developments the world and insurance penetration (total and takes corrective and/or preventive insurance premium as a percentage of GDP) measures as necessary to protect its interests for non-life insurance sector has remained to the fullest extent. stagnant at 0.20%. Related Party Transactions The future progress of Bangladesh Insurance industry predominantly depends on how Reliance insurance, in normal course of the consumers’ perception of insurance business, carried out a number of transactions as an useful and effi cient vehicle of risk with other entities that fall within the transfer can be bolstered. This can be defi nition of related party contained in achieved through sustained eff orts of the Bangladesh Accounting Standard 24: Related industry as well as Regulators towards Party Disclosures. All transactions involving restoring public confi dence by providing related parties arising in normal course of effi cient services, honoring insurance policy business are conducted on an arm’s length obligations, introducing new products and by basis at commercial rates on the same rationalizing the pricing mechanism. terms and conditions as applicable to the third parties. Details of transactions with Product Wise Performance of The related parties and balances with them as at Company December 31, 2013 are shown in notes to the fi nancial statements. Pictorial presentation on product-wise performance of the Company along with Remuneration Paid to Directors comparable information for earlier years are Including Independent Directors presented graphically. During the year under review company Profi tability of The Company paid total Tk. 0.505 million to the directors Reliance has performed with consistent including independent directors as profi table results over the years, as may remuneration. Details of the directors’ be observed from the statistical fi gures. attendance record are shown in Annexure-III. It’s underwriting and investment incomes Information Technology have always complemented each other and produced one of the most attractive returns Reliance has been able to successfully build in the non-life insurance industry. Considering up its own IT Division, manned by highly that the business of insurance is essentially a experienced and trained professionals, risk taking business and hence vulnerable to working on maintaining and developing fl uctuations, Reliance follows a conservative the company’s IT infrastructure. The IT policy – both in matter of insurance professionals are constantly innovating and

36 RIL 2013 Annual Report

producing in-house programs to meet the activities as well as evolving best practice needs of the company’s ever increasing and recommendations. diversifi ed products and services industry. IT As a leading insurance company in division has successfully implemented a Wide Bangladesh led by professional people Area Network (WAN) to connect the entire Reliance Insurance Limited is committed branch offi ces situated all over the country on in adopting the highest governance real time basis, thereby providing seamless standard and adjusting them as required in connectivity and prompt customer services. protecting the interest of shareholders and We have also acquired a new high confi gured policyholders. server for running our oracle 10g application Good corporate governance system is server to build-up three tier applications and etc.report review, Director’s Chairman’s & CEO’s hardware architecture. vital for effi cient and eff ective business operation to achieve the set goal. In line We have upgraded our oracle Front End with the best practice, the corporate Application from 6i to 10g web version, governance systems and practices in RIL together with migration into three tier are designed to ensure adequate internal systems (like client >> application server >> control in operational process, transparency database server). As a result our CIIS software and accountability. The Board of Directors can be accessed from any where through any always put emphasis on and agreed to the web browser as well, resulting in reduction of point that the company conducts itself as connectivity cost signifi cantly. a good corporate entity and comply with The Company aims at selling its products, corporate behavior and guidelines as well as particularly of personal lines business, adherence to rules and regulations etc. It is through internet in the near future when the also ensured that duties and responsibilities regulatory restrains are done away with. are appropriately segregated between the Board and management to provide suffi cient Human Capital Management check and balance and fl exibility for smooth Reliance has always emphasized on business operations. The Board provides professionalism and development of leadership and direction to the management, appropriate human resource management approves strategic and major policy decisions policies and practices to enhance the quality and oversees management to attain of its employees, and to ensure their optimum predetermined goals and objectives of the contribution towards the achievement of company. corporate goals. At Reliance, we believe Corporate Social Responsibility that our Human Resources (HR) give the organization a signifi cant competitive edge The Company has continued its endeavours in terms of knowledge and experience. to deliver economic and social benefi ts to the The Company has continued its policy of community in discharge of its CSR and has recruiting the best people and implementing extended fi nancial assistance to Management programs to develop and retain high quality and Resources Development Initiative (MRDI), human resources. .In line with this Policy, Bangladesh Thalassemia Hospital (BTH), need based internal and external training Disabled Child Foundation (DCF), TMSS at both home and abroad is regularly and Nursing College (TNC), Society for Education systematically arranged. The Company also and Inclusion of the Disabled (SEID) Trust: ensures competitive compensation and and Anarpur Akramun Nessa Private primary rewards and employee’s health and safety school. to ensure their retention and provide job satisfaction. Credit Rating Corporate Governance Credit Rating Information and Services Limited (CRISL) has reaffi rmed the Claim Awareness of Corporate Governance has Paying Ability (CPA) Rating of the Company grown rapidly worldwide in recent years “AA+” (Pronounced as Double A Plus) due to increased legislative and regulatory based on the fi nancials up to December

37 31, 2012 and other relevant qualitative portfolio issue, technically sound reinsurance and quantitative information up to the arrangements and eff ective monitoring, date of reporting on August 1, 2013. The the company has been able to achieve Reaffi rmation refl ects RIL’s good underwriting favourable fi nancial results in 2013. Taking and fi nancial performance, good market share into consideration of the company’s fi nancial and franchise value, good solvency, good IT needs and the shareholders’ short as well as infrastructure, good reinsurance arrangement long term interests the Board of Directors with SBC and foreign reinsurers, good recommend the appropriation of after-tax business exposure from multinational clients. profi t of Tk. 27,70,60,100.00 as follows: Details of the rating as follows: Taka Claim Paying Ability Reserve for Exceptional CPA Rating AA+ 70,422,824 Losses Outlook Stable Dividend @ 15% Stock and 155,849,265 Date of Reporting August 1, 2013 15% cash Operating Result of The Company Retained Earnings 50,788,011  During the year 2013 Reliance Corporate and Financial Reporting attained a Gross Premium income of Framework Taka 1,638.9 million as against Taka The directors, in accordance with BSEC 1,490.8 million in 2012 – an increase Notifi cation No. SEC/ CMMRCD/ 2006 – 158 of 9.93%, Net Premium income /134/Admin/ 44 dated August 7, 2012 confi rm achieved was Taka 704.2 million as compliance with the fi nancial reporting frame against Taka 641.1 million in 2012 – work for the following an increase of 9.98%. The prevailing political situation and slowing down We report that: of economic activities in the country i) The fi nancial statements prepared in the end half of 2013 hindered by the management of the company business development. present fairly its state of aff airs, the  Underwriting profi t achieved was result of its operations, cash fl ows and Taka 228.88 million as against Taka changes in equity. 185.09 million in 2012, an increase of ii) Proper books of account of the 23.66% company have been maintained.  Investment income grew impressively iii) Appropriate accounting policies to Taka 230.26 million as against Taka have been consistently applied 163.96 million in 2011, an increase of in preparation of the fi nancial 40.45% statements and that the accounting  Net pre tax profi t attained is Taka estimates are based on reasonable 406.1 million as against Taka 297.92 and prudent judgment. million in 2012, an increase of 36.3% iv) International Accounting Standards  After tax Profi t is Taka 277.1 million in (IAS)/ Bangladesh Accounting 2013 as against Taka 203.9 million in Standards (BAS), International 2012, an increase of 35.9% Financial Reporting Standards (IFRS)/ Bangladesh Financial Reporting  Some important statistics relating Standards (BFRS), as applicable in to the performance of the company Bangladesh, have been followed in the year 2013 are shown at in preparation of the fi nancial Annexure-I. statements and any departure there- Financial Results & Appropriation from has been adequately disclosed. We are pleased to report that due to eff ective v) The system of internal control is sound underwriting, marketing, appropriate in design and has been eff ectively implemented and monitored. 38 RIL 2013 Annual Report

vi) There are no signifi cant doubts upon automatically qualify for re-appointment the company’s ability to continue as a under section 210(3) of the Companies Act, going concern. 1994. A resolution will be placed at the AGM for their re-appointment. vii) There are no signifi cant deviations from last year in operating result of Acknowledgement the company. On behalf of the Board of Directors, I would viii) The key operating and fi nancial data like to express my heartfelt gratitude to of preceding fi ve years have been all of our valued clients, shareholders and provided in annexure –II. well wishers at home and abroad for their wholehearted co-operation and active ix) The number of Board meetings held etc.report review, Director’s Chairman’s & CEO’s support in discharging the responsibilities during the year 2013 and attendance reposed on me and the Board during the year by each director are shown in under review. annexure-III. I also thank Insurance Development & x) As on December 31, 2013, Regulatory Authority (IDRA), Registrar of shareholdings pattern of the Joint Stock Companies and fi rms, Bangladesh Company are shown in annexure-IV. Securities and Exchange Commission, xi) A brief resume of the Directors along Government and Non-Government with other necessary particulars are Organizations, Sadharan Bima Corporation, show in annexure –V. Dhaka and Chittagong Stock Exchange, Bangladesh Insurance Association and all the Status of Compliance with the conditions scheduled Banks and Leasing Companies for imposed by Bangladesh Securities and their sincere support and whole hearted co- Exchange omission is enclosed in annexure operation. –VI. The Board also acknowledges with thanks, the Directors contribution made by the honorable Directors In terms of the Article 114 of the Articles of by guiding and giving proper directions from Association, the under-noted Directors from time to time which has made RIL a hallmark in Group A shareholders retire from offi ce, but general insurance industry of Bangladesh. being eligible they off er themselves for re- The Directors also take the opportunity to election. express their sincere appreciation for the 1. Mrs. Zakia Rouf Chowdhury contributions made by the executives and members of the staff for their praiseworthy 2. Mr. Arshad Waliur Rahman eff orts in increasing growth and continued 3. Mrs. Farah Huq progress of the company as well as their In accordance with the same provisions, two eff orts towards putting Reliance among the directors from Group B shareholders retire top insurance companies in Bangladesh. from offi ce and as required by Insurance Without their dedicated and loyal services the Rules, 1958 election of Directors from public company could not have achieved this result. shareholders will be held in the said Annual Thank you all. General Meeting. The necessary notice dated For and on behalf of the January 29, 2014 for election of Directors from public shareholders was published in two Board of Directors national dailies, namely the Daily Star and the

Daily Sokaler Khobor on 29th January 2014. Auditors The auditors of the Company, Malek Siddiqui Shahnaz Rahman Chairman Wali, Chartered Accountants, have consented to continue in offi ce and being eligible,

39 Summary of Accounts 2013

Annexure - i

(BDT mn) Marine Marine Particulars Fire Motor Misc. 2013 2012 Cargo Hull Gross Direct Premium 842.47 395.08 36.73 167.09 192.17 1,633.54 1,486.26 Gross R/I Premium 1.23 - 4.12 - - 5.35 4.56 Total Gross Premium 843.70 395.08 40.85 167.09 192.17 1,638.89 1,490.82 Reinsurance Premium ceded 648.78 112.43 41.39 2.88 129.18 934.66 849.68 Net Premium 194.92 282.65 (0.54) 164.21 62.99 704.23 641.13 Net Premium Reserve retained 0.50 (11.29) 5.13 (7.86) (9.07) (22.59) 36.13 Net Earned Premium 195.42 271.36 4.60 156.35 53.92 681.64 677.26 Commission Paid 121.93 57.03 4.12 21.53 25.11 229.72 285.76 Net R/I Commission Earned 112.43 36.92 12.19 0.30 17.16 178.99 158.45 Management Expenses (Revenue A/C) 119.70 55.93 5.20 24.36 27.63 232.83 221.89 Management Expenses (P & L A/C) - - - - - 52.98 51.13 Gross Incurred Claims 457.01 46.73 4.85 50.46 51.04 610.09 353.02 Net Incurred Claims 32.77 40.05 0.37 50.46 45.55 169.20 142.96 U/W Result 33.44 155.27 7.09 60.30 (27.22) 228.88 185.10 Investment Income (Before Tax) 230.26 163.96 Net Proﬁt before tax 406.17 297.92 Return on Equity 18.71 16.03 Shareholder's fund 3,371.00 3,195.76

40 RIL 2013 Annual Report Key Operating and Financial Highlights

Annexure -ii

Particulars Terms 2013 2012 2011 2010 2009 Financial Position Total assets BDT mn 4,796.38 4,410.74 4,530.84 4,605.93 1,880.29 Investments BDT mn 1,301.27 1,254.70 1,539.70 2,673.34 190.52 Current assets BDT mn 2,110.21 1,763.60 1,587.70 1,392.81 1,337.62

Net current assets BDT mn 739.44 597.79 529.11 335.52 438.60 etc.report review, Director’s Chairman’s & CEO’s Cash & cash equivalents BDT mn 1,559.30 1,228.74 864.80 791.88 759.87 Investment & other income BDT mn 230.26 163.95 159.91 153.68 114.94 Current liabilities BDT mn 1,370.77 1,165.81 1,058.59 1,057.29 899.02 Total reserve BDT mn 3,133.94 2,983.35 3,312.83 3,457.53 891.84 Operational Result Gross premium BDT mn 1,638.89 1,490.82 1,422.06 1,241.00 1,041.13 Net premium BDT mn 704.23 641.13 731.40 618.07 430.25 Net claims BDT mn 169.20 142.96 152.04 137.68 105.09 Underwriting profi t BDT mn 228.88 185.10 194.25 161.00 56.78 Net profi t before tax BDT mn 406.17 297.92 304.97 287.23 146.30 Net profi t after tax BDT mn 277.06 203.93 220.34 217.64 119.75 Cash fl ow from operating activities BDT mn 261.72 401.53 67.57 109.28 226.82 Net operating cash fl ow per share BDT 5.04 8.50 1.65 3.59 9.69 Financial Ratio Dividend in stock % - 10 15 35 30 Dividend in cash % - 15 15 0 0 Earnings per share BDT 5.33 4.32 5.37 7.15 5.12 Return on shareholders' fund % 18.71 16.03 19.50 23.93 17.31 Return on capital employed % 23.04 19.45 21.39 24.80 16.91 Return on assets % 5.78 4.62 4.86 4.73 6.37 Price earnings ratio Ratio 14.95 21.95 19.03 24.29 26.17 Current ratio Ratio 1.54:1 1.51 : 1 1.5 : 1 1.32 : 1 1.49 : 1 Debt equity ratio Ratio - - - 1:.03 - Gross profi t ratio Ratio 57.68 46.47 41.70 46.47 34.00 Dividend payout ratio Ratio - 57.90 55.91 48.92 58.62 Dividend yield Ratio - 2.64 2.94 2.01 2.24 Equity Statistics Paid-up capital BDT mn 519.50 472.27 410.67 304.20 234.00 Shareholders' equity BDT mn 3,371.00 3,195.76 3,427.52 3,513.07 952.44 Market value per share BDT 79.70 94.80 102.10 173.80 133.93 Net assets value per share BDT 64.89 67.66 83.46 115.49 40.70

41 % Meeting Meetings Attended H R & Other Committee H R & Other Committee held Total Total Meetings % Meetings Attended ------held Total Total Meetings % Meetings Attended 7457------7 7 100 4 4 100 1 1 100 held Total Total Board of DirectorsBoard Meeting Meeting committee Audit Meetings n Trading Limited Trading n 7 6 86 - - - 1 1 100 (BD) Limited Limited (BD) General Produce International General Produce Limited 20, 2013 on March q Ali has been appointed q Ali * Independent Director 5 3 60 Name of the Director ZakiaMs. Rouf Chowdhury Rangs Limited By Nominated 7 7 100 Mr. Rajiv Prasad Shaha Rajiv Prasad Mr. of Bengal Trust Welfare Kumudini Mr. Habibullah KhanMr. Huq Farah Ms. Khalilur Md. Rahman Mr. Choudhury Limited Meenhar Fisheries Iftikhar Arshad HusainMr. RahmanWaliur Arshad Mr. HandiCraft Kumudini LimitedTrading FinAccord Shahnaz RahmanMs. Transfi Rahman Imran Faiz Mr. 7 Shamsur RahmanMr. Limited Trinco Rahman Atiqur Mr. Arlinks Limited Amanullah ChowdhuryMr. 7 6 Self Romana Rouf ChowdhuryMs. LimitedWorkshop Rangs Limited Deep Sea Fishers 5 Rahman Faiza Ms. Limited Transcom KhanYasmeen Ms. 86 1 Anis-uz-Zaman KhanMr. 4 Toufi Dr. Limited Storage R.R.Cold Independent Director 4 14 7 Limited Meenhar Fisheries 7 7 80 7 1 6 0 7 7 5 2 7 25 86 7 7 0 100 7 71 0 1 5 4 - 7 6 100 0 71 1 100 2 4 86 - 100 4 50 - 4 - 4 2 100 - 1 100 2 - - - - 2 - 2 - 100 - - - - * Dr. Toufi * Dr. Meeting attended by the Directors of Meeting by the Directors attended Reliance Insurance during Limited 2013 iii Annexure

42 RIL 2013 Annual Report Pattern of Shareholding AS ON DECEMBER 31, 2013 Annexure iv Shareholding by Companies, Directors and their Spouse & Children

Name of Shareholders Represented by No. of Shares Held Percentage Rangs Limited Ms. Zakia Rouf Chowdhury 31,87,142 6.13 General Produce International Ltd. Mr. Md. Khalilur Rahman Choudhury 16,13,216 3.10 FinAccord Trading Ltd. Ms. Farah Huq 16,13,216 3.10 Meenhar Fisheries Ltd. Mr. Habibullah Khan 31,87,395 6.14 Transﬁn Trading Ltd. Mr. Arshad Waliur Rahman 31,87,078 6.13 report etc.report review, Director’s Chairman’s & CEO’s Arlinks Limited Mr. Imran Faiz Rahman 31,87,355 6.14 Trinco Limited Ms. Shahnaz Rahman 31,87,169 6.14 Mr. Shamsur Rahman Self 20,31,175 3.91 Kumudini Welfare Trust of Bengal (BD) Ltd. Mr. Rajiv Prasad Shaha 27,93,665 5.38 Prantik Engineering Co. Ltd. Sponsor Shareholder 8,48,169 1.64 Rangs Workshop Ltd. Mr. Amanullah Chowdhury 18,41,497 3.54 Deep Sea Fishers Ltd. Ms. Romana Rouf Chowdhury 32,93,338 6.33 Transcom Limited Mr. Atiqur Rahman 12,32,476 2.37 Kumudini Handicraft Mr. Iftikhar Arshad Husain 9,02,601 1.73 Meenhar Sea Foods Ltd. Ms. Yasmeen Khan 4,50,225 0.87 Mr. Atiqur Rahman Self 36,710 0.07 Ms. Naﬁsa Rahman Siddiqui Self 5,69,603 1.09 Daughter of Mr. Shamsur Rahman Ms. Fahreen Rahman Self 5,69,603 1.09 Daughter of Mr. Shamsur Rahman Independent Director Nil Managing Director & CEO Nil

B) Shareholders by others

Company Secretary Nil CFO Nil Head of Internal Audit Nil Parent/Subsidiary/Associate and other related parties Nil Shareholding of top fi ve executives Nil Shareholders holding ten percent or more Nil

43 Brief Profi le of the Directors Annexure v

Ms. Shahnaz Rahman Mr. Habibullah Khan Mr. Shamsur Rahman Ms. Shahnaz Rahman is a Director of Mr. Habibullah Khan is the Managing Mr. Shamsur Rahman is the Director of Transcom Limited, Transcom Beverages Director of Meenhar Group of Bangladesh Lamps Limited (licensed Limited (sole franchisee of PEPSI), Companies. Mr. Khan has been manufacturers of PHILIPS lighting Bangladesh Lamps Limited (licensed recognized as CIP by the Government products), Transcom Electronics manufacturers of PHILIPS lighting of Bangladesh for many years for his Limited, Mediastar Limited (publishers products) Transcom Foods Limited (sole outstanding contribution towards of Prothom Alo), Mediaworld Limited franchisee of Pizza Hut & KFC), Transcom industrialization of the country .Under Electronics Limited, Transcom Cables his dynamic leadership, Meenhar Sea (publishers of The Daily Star), ABC Radio Limited (manufacturers of domestic Foods Limited and Meenhar Fisheries (FM Radio Station), Marina Tea Co. and industrial cables), Transcom Mobile Limited was awarded National Export Limited, Monipur Tea Co. Limited and M. Limited, Eskayef Bangladesh Limited, Trophy Gold by the Government Rahman Tea Co. Limited. Transcom Distribution Co. Limited, of Bangladesh for its contribution Mr. Rahman is a Sponsor Director and Bangaldesh electrical Industries in export sector of the country for Limited, Transcom Consumer Products several times. He was the founder immediate past Chairman of Reliance Limited, Trinco Limited, Transfi n Trading Vice President and Former President, Insurance Limited. Limited, Mediastar Limited (publishers Chittagong Stock Exchange Ltd., former of Prothom Alo), Tea Holdings Limited, President of Bangladesh Frozen Food Mediaworld Limited (publishers of The Exporters Association. He is also a Daily Star). Member of the Governing Council of Independent University, Bangladesh, Ms. Rahman is a Director and current Vice President, Bhatiary Golf and Chairman of Reliance Insurance Limited. Country Club, Chittagong and the founder of Habibullah Khan High School, Feni. Mr. Khan is a Sponsor Director and Vice Chairman of Reliance Insurance Limited.

44 RIL 2013 Annual Report report etc.report review, Director’s Chairman’s & CEO’s

Ms. Zakia Rouf Chowdhury Mr. Md. Khalilur Rahman Ms. Farah Huq Ms. Zakia Rouf Chowdhury obtained her Choudhury Ms. Farah Huq is a member of the Board Bachelor of Arts degree from University Mr. Md. Khalilur Rahman Choudhury of Directors of Reliance Insurance of Dhaka. She is the Director of Rangs obtained B.Com (Hons.) and M.Com. Limited. Limited, Rangs Motors Limited, Rangs degree from Dhaka University in 1958 She is a Research Associate at Dr. Kamal Properties Limited, Rangs Industries and 1959 respectively. He received Hossain & Associates, and a Consultant Limited, Rangs Pharmaceuticals training in USA and UK in the fi eld (Communications and Advocacy) at Limited, Rangs Workshop Limited, of “Securities Regulations and Stock Bangladesh Legal Aid and Services Trust Rancon Motors Limited, Ranks ITT Exchanges” under UNDP fellowship. (BLAST). Limited, Ranks Telecom Limited, Ranks He is a retired Joint Secretary of the Interior Limited, Ranks Real Estate Government of the Peoples’ Republic of She obtained her B.A. (Hons) in Limited, Shield Security Services Bangladesh. He served as Joint Secretary English Literature from Queen Mary, Limited, Ranks Steels Limited, Ranks in the Ministry of Finance and Ministry University of London (2009). In 2011, Agro Biotech Limited, Sash Limited, Zest of Commerce. While in government she completed her LL.B (Hons) and the Polymer Limited, Metro Foils Limited, service, he was a member of the Board Bar Professional Training Course from Sea Resources Group. Ms. Chowdhury of Directors of several State owned the University of Law (formerly known is also a member of Board of Director of organizations including Rupali Bank and as The College of Law), London. She Reliance Insurance Limited. Jibon Bima Corporation. He was also a was Called to the Bar at the Honourable Director of the Board of Karmasangsthan Society of Lincolns Inn in October 2011. Bank. Mr. Khalilur Rahman has wide experiences in the fi eld of export and import as he was posted to Trading Corporation of Bangladesh and Bangladesh Jute Mills Corporation on deputation. He is associated with various social activities of his locality.

45 Mr. Arshad Waliur Rahman Mr. Imran Faiz Rahman Mr. Rajiv Prasad Shaha Mr. Arshad Waliur Rahman is a Director Mr. Imran Faiz Rahman is a member Mr. Rajiv Prasad Shaha obtained his of Transcom Limited, Transcom of the Board of Directors of Reliance Graduation from the University of Beverages Limited (sole franchisee of Insurance Limited. He has completed Dhaka. He has been the Managing PEPSI), Transcom Foods Limited (sole Bachelor of Business Administration Director of Kumudini Welfare Trust of franchisee of Pizza Hut & KFC), Transcom (BBA) from a reputed University of Bengal (BD) Limited and Kumudini Electronics Limited, Bangladesh Lamps USA. He is the Chairman of Imaan Cold Pharma Limited since January 2000. Limited (licensed manufacturers of Storage Limited and Managing Director He is a Sponsor Director of Reliance PHILIPS lighting products) Transcom of Arlinks Limited and Imaan Cold Insurance Limited and also a member Cables Limited (manufacturers of Storage Limited. He is also the Director of Micro Industries Development domestic and industrial cables), of R. R. Cold Storage Limited, Aris Assistance and Service (MIDAS). He Transcom Mobile Limited (distributor Holdings Limited, R R Estates Limited. was the Director of Kumudini Welfare for SAMSUNG mobile handsets), Trust of Bengal (BD) Limited and Eskayef Bangladesh Limited (leading Kumudini Pharma Limited since 1987 till pharmaceutical Manufacturers – December 1999. He is a widely travelled formerly SmithKline & French), Transcom person. Distribution Co. Limited ( distributor Mr. Shaha is the grandson of the great of pharmaceutical – SK & F, NOVO philanthropist Rai Bahadur Ranada NORDISK, SERVIER, ALLERGAN and Prashad Shaha (R. P. Shaha), the founder consumer brands – Frito Lay, Heinz, of Kumudini welfare Trust of Bengal (BD) Wrigley, Mars, Energizer, Schick, L’Oreál, Limited. Garnier, Ferrero, ConAgra Foods, Hemas), Transcom Consumer Products Limited, Trinco Limited, Transfi n Trading Limited, Mediastar Limited (publishers of PROTHOMALO),

46 RIL 2013 Annual Report report etc.report review, Director’s Chairman’s & CEO’s

Mr. Amanullah Chowdhury Ms. Romana Rouf Ms. Yasmeen Khan Mr. Amanullah Chowdhury is the Chowdhury Ms. Yasmeen Khan obtained her Vice Chairman of Rangs Limited. Ms. Romana Rouf Chowdhury is a Master of Arts degree from University He is also the Director of Rangs Director of Sea Resources Group of of Dhaka. She is the Chairperson of Pharmaceuticals Limited and the Companies consisting of three export Meenhar Group of Companies. She Managing Director of Sea Resources oriented Deep sea Fishing Companies has been recognized as CIP by the Limited. He was the President of and four other Companies. She is fi nal Government of Bangladesh for many Superpharmacal Laboratories & Vice year student of English Literature years for her outstanding contribution President of Superpharm Corporation (Hons.) of BRAC University. towards economic development of (a pharmaceutical manufacturer in the country. Ms. Khan is a former Area New York from 1979 to 1981). Mr. Director & President of Zonta Club of Chowdhury was District Sales Manager, Chittagong; and also a former Director Calibiochem Behring Corporation, USA of Chittagong Women Chamber of from 1977 to 1979. He was a Senior Commerce & Industry. She is involved Technical Representative of Behring with many social organizations and Corporation-a subsidiary of American activities. Ms. Khan is a Director and Hoechst Corporation from 1974 to former Chairman of Reliance Insurance 1977. Mr. Amanullah Chowdhury Limited. was Marketing Manager of Hoechst (Bangladesh) Limited, Chittagong. He obtained his Bachelor of Pharmacy (Hons.) degree.

47 Mr. Atiqur Rahman Mr. Iftikhar Arshad Husain Mr. Anis-uz-Zaman Khan Mr. Atiqur Rahman is a member of Mr. Iftikhar Arshad Husain is a Director Mr. Anis-uz-Zaman Khan was appointed the Board of Directors of Reliance of Kumudini Welfare Trust of Bengal to the Board of Directors of Reliance Insurance Limited. He is the Group (BD) Limited. Mr. Husain obtained Insurance Limited on 9th September Finance Director of Transcom Group Bachelor of Science degree in Electrical 2012 as independent Director of the of Companies and also a Director Engineering from The Polytechnic, Company. He is also Chairman of the of Transcom Electronics Limited, Regent St. London University in Audit Committee of Reliance Insurance Bangladesh Lamps Limited (licensed 1962. He also obtained a Diploma in Limited. Before taking voluntary manufacturers of PHILIPS, Transcraft Pharmaceutical from Brunswic, New retirement from the Government of the Limited (modern printing Press), Jersy, USA. He is an Associate Member Peoples’ Republic of Bangladesh, he Transﬁn Trading Limited, Trinco Limited, of the Institute of Electrical Engineers served as Secretary in the Ministry of Transcom Cables Limited, Transcom (AIMEE), and a Member of the Institute Information and Rural Development & Mobile Limited, Eskayef Bangladesh of Electrical & Radio Engineers (MIERE). Co-operative. He was also a Director of Limited (leading pharmaceutical He is also a Chartered Engineer (C. Eng). GEC (BD) Ltd. and Managing Director manufacturers), Transcom Beverages of Social Marketing Company Ltd. He Limited (PEPSI), Transcom Foods Limited has visited many countries including (Pizza Hut & KFC),Trascom Limited, USA in 1977 on invitation from the Transcom Distribution Co. Ltd., Transcom US Government under the Leader Consumers Products Limited, Mediastar Exchange Program. Mr. Khan completed Limited (publishers of Prothom Alo), ABC his Master of Arts degree from Radio (FM Radio Station), M. Rahman Tea University of Dhaka and obtained his Co. Limited, Monipur Tea Co. Limited, Post Graduate Diploma in Development Marina Tea Co. Limited (Tea Plantations). Administration from University of He is the Chairman of Heritage Agro Leeds, United Kingdom. Firms Limited.

48 RIL 2013 Annual Report report etc.report review, Director’s Chairman’s & CEO’s

Dr. Toufi q Ali Mr. Akhtar Ahmed Dr. Toufi q Ali was appointed to the Managing Director & CEO Board of Directors of Reliance Insurance After completing B.A. (Honours) and Limited on 20th March 2013 as M.A. from Dhaka University in 1970, he independent Director of the Company joined Eastern Federal Union Insurance and has been the Chief Executive of the Company, the largest insurance Bangladesh International Arbitration company in the then Pakistan, as Centre (BIAC) since October 2010, and an Executive Offi cer. Following the helped establish it. nationalization of insurance industry Mr. Ali has vast experience with in Bangladesh in 1972, his services the Government, having joined the were absorbed in Sadharan Bima erstwhile Civil Service (CSP) in 1968 and Corporation. In 1981 he joined Asian later moving to the Foreign Service. His Reinsurance Corporation, Bangkok, an later appointments included Deputy inter- governmental organization set Chief of Mission in our Embassy in up by the United Nations and served in Washington, Ambassador in the various Managerial position till 1989. In Netherlands, Secretary in the Ministry 1989 he joined Arab Insurance Group, of Foreign Aff airs, and Ambassador in the largest insurance organization of Geneva, Ambassador to the Holy See the Middle East and served for 14 years and to the UN offi ces in Vienna. in various positions as Chief Manager, Regional General Manager and Chief After leaving the Government in 2007, Executive of its Far East operations, he joined the United Nations Industrial based in Hong Kong and Kuala Development Organization in Vienna Lumpur. Mr. Akhtar Ahmed returned as a Senior Adviser (Trade & LDCs) and back home in 2003 and served as returned to Bangladesh in 2009. In Managing Director of Sadharan Bima additional to being the chief Executive Corporation till February 2004. In early of BIAC, Dr. Ali is also a Member of the 2005 he completed an assignment Board of Directors of KAFCO. as Consultant to KPMG, Abu Dhabi, Dr. Ali obtained B.A. (Hons) and an on a project for setting up of a large LL.B. from Dhaka University and then Reinsurance company in the Middle completed MAPE and Ph. D. from East. He joined Reliance Insurance Boston University, USA. Limited as its Managing Director & CEO in March 2005.

49 Status of Compliance with the Corporate

Governance Guidelines (CGG) Annexure vi

Status of compliance with the conditions imposed by the Notifi cation No.SEC/CMRRCD/2006-158/134/Admin/44 dated August 7, 2012 of Bangladesh Securities and Exchange Commission (BSEC) issued under section 2CC of the Securities and Exchange Ordinance 1969:

(Report under Condition No.7.00)

Compliance Status as on Condition Title December 31, 2013 Remarks No. Complied Not Complied 1.1 Board’s Size: The number of the Board members of the Company shall √ not be less than 5 (fi ve) and more than 20 (twenty) 1.2 Independent Directors: 1.2(i) At least one fi fth (1/5) of the total number of directors in √ the Company’s Board shall be Independent Directors 1.2(ii)(a) Who either does not hold share in the company or holds less than one (1%) shares of the total paid up shares of √ the company 1.2(ii)(b) Who is not sponsor of the Company and is not connected with any sponsor or director or shareholder √ who holds one percent or more shares of the Company 1.2(ii)(c) Who does not have any other relationship, whether pecuniary or otherwise, with the company or its √ subsidiary/ associated companies 1.2(ii)(d) Who is not a member, director or offi cer of any stock √ exchange; 1.2(ii)(e) Who is not a shareholder, director or offi cer of any member of stock exchange or an intermediary of the √ capital market; 1.2(ii)(f ) Who is not a partner or an executive or was not a partner or an executive during the preceding 3 (three) years of √ the concerned company’s statutory audit fi rm; 1.2(ii)(g) Who shall not be an independent director in more than 3 √ (three) listed companies; 1.2(ii)(h) Who has not been convicted by a court of competent jurisdiction as a defaulter in payment of any loan to a √ bank or a Non-Bank Financial Institution (NBFI); 1.2(ii)(i) Who has not been convicted for a criminal off ence √ involving moral turpitude. 1.2(iii) Independent Director(s) shall be appointed by the Board of Directors and approved by the Shareholders in the √ Annual General Meeting (AGM); 1.2(iv) The post of independent director(s) cannot remain √ vacant for more than 90 (ninety) days.

50 RIL 2013 Annual Report

Compliance Status as on Condition Title December 31, 2013 Remarks No. Complied Not Complied 1.2(v) The Board shall lay down a code of conduct of all Board members and annual compliance of the code to be recorded. 1.2(vi) The tenure of offi ce of an independent director shall be for a period of 3 (three) years, which may be extended for √ 1 (one) term only. 1.3 Qualifi cationof IndependentDirector(ID):

1.3(i) Independent Director shall be a knowledgeable etc.report review, Director’s Chairman’s & CEO’s individual with integrity who is able to ensure √ compliance with fi nancial, regulatory and corporate laws and can make meaningful contribution to business 1.3(ii) The person should be a Business Leader/Corporate Leader/Bureaucrat/University Teacher with Economics or Business Studies or Law background/Professionals like Chartered Accountants, Cost & Management √ Accountants, Chartered Secretaries. The independent director must have at least 12 (twelve) years of corporate management/professional experiences. 1.3(iii) In special cases the above qualiﬁ cations may be relaxed subject to prior approval of the Commission. Chairman of the Board and Chief Executive Oﬃ cer: The positions of the Chairman of the Board and the Chief Executive Offi cer of the companies shall be fi lled by diff erent individuals. The Chairman of the company shall 1.4 √ be elected from among the directors of the company. The Board of Directors shall clearly defi ne respective roles and responsibilities of the Chairman and the Chief Executive Offi cer. 1.5 Directors Report to Shareholders shall include following additional statements on: 1.5(i) Industry outlook and possible future developments in √ the industry 1.5(ii) Segment-wise or product-wise performance √ 1.5(iii) Risks and concerns √ 1.5(iv) Discussion on Cost of Goods sold, Gross Profi t Margin √ and Net Profi t Margin 1.5(v) Discussion on continuity of any Extra-Ordinary gain or No such item exists loss 1.5(vi) Statement of all related party transactions √ 1.5(vii) Utilization of proceeds from public issues, rights issues No such item exists and/or through any others instruments 1.5(viii) An explanation if the fi nancial results deteriorate after No such event the Company goes for Initial Public Off ering (IPO), Repeat occurred Public Off ering (RPO), Rights Off er, Direct Listing, etc. 1.5(ix) If signifi cant variance occurs between Quarterly Financial performance and Annual Financial Statements the √ management shall explain about the variance on their Annual Report.

51 Compliance Status as on Condition Title December 31, 2013 Remarks No. Complied Not Complied 1.5(x) Remuneration to directors including independent √ directors. 1.5(xi) The fi nancial statements prepared by the management of the issuer company present fairly its state of aff airs, the √ result of its operations, cash fl ows and changes in equity. 1.5(xii) Proper books of account of the issuer company have √ been maintained. 1.5(xiii) Appropriate accounting policies have been consistently applied in preparation of the fi nancial statements and √ that the accounting estimates are based on reasonable and prudent judgment. 1.5(xiv) International Accounting Standards (IAS)/ Bangladesh Accounting Standards (BAS)/ International Financial Reporting Standards (IFRS)/ Bangladesh Financial Reporting Standards (BFRS), as applicable in Bangladesh, √ have been followed in preparation of the fi nancial statements and any departure there- from has been adequately disclosed. 1.5(xv) The system of internal control is sound in design and has √ been eff ectively implemented and monitored. 1.5(xvi) There are no signifi cant doubts upon the issuer company’s ability to continue as a going concern. If the √ issuer company is not considered to be a going concern, the fact along with reasons thereof should be disclosed. 1.5(xvii) Signifi cant deviations from the last year’s operating results of the issuer company shall be highlighted and √ the reasons thereof should be explained. 1.5(xviii) Key operating and fi nancial data of at least preceding 5 √ (fi ve) years shall be summarized. 1.5(xix) If the issuer company has not declared dividend (cash or N/A stock) for the year, the reasons thereof shall be given. 1.5(xx) The number of Board meetings held during the year and √ attendance by each director shall be disclosed. 1.5(xxi) The pattern of shareholding shall be reported to disclose the aggregate number of shares (along with name wise details where stated below) held by:- 1.5(xxi)(a) Parent/Subsidiary/Associated Companies and other √ related parties (name wise details); 1.5(xxi)(b) Directors, Chief Executive Offi cer, Company Secretary, Chief Financial Offi cer, Head of Internal Audit and their √ spouses and minor children (name wise details); 1.5(xxi)(c) Executives ; √ 1.5(xxi)(d) Shareholders holding ten percent (10%) or more voting √ interest in the company (name wise details).

52 RIL 2013 Annual Report

Compliance Status as on Condition Title December 31, 2013 Remarks No. Complied Not Complied 1.5(xxii) In case of the appointment/re-appointment of a director the company shall disclose the following information to the shareholders:- 1.5(xxii)(a) A brief resume of the director; √ 1.5(xxii)(b) Nature of his/her expertise in specifi c functional areas; √ 1.5(xxii)(c) Names of companies in which the person also holds the directorship and the membership of committees of the √ etc.report review, Director’s Chairman’s & CEO’s board. 2.0 Chief Financial Offi cer (CFO), Head of Internal Audit and Company Secretary (CS): 2.1 The company shall appoint a Chief Financial Offi cer (CFO), a Head of Internal Audit (Internal Control and Compliance) and a Company Secretary (CS). The Board √ of Directors should clearly defi ne respective roles, responsibilities and duties of the CFO, the Head of Internal Audit and the CS. 2.2 Requirement to attend the Board Meetings: The CFO and the Company Secretary of the companies shall attend the meetings of the Board of Directors, provided that the CFO and/or the Company Secretary √ shall not attend such part of a meeting of the Board of Directors which involves consideration of an agenda item relating to their personal matters. 3.0 Audit Committee: 3.0(i) The company shall have an Audit Committee as a sub- √ committee of the Board of Directors. 3.0(ii) The Audit Committee shall assist the Board of Directors in ensuring that the fi nancial statements refl ect true and √ fair view of the state of aff airs of the company and in ensuring a good monitoring system within the business. 3.0(iii) The Audit Committee shall be responsible to the Board of Directors. The duties of the Audit Committee shall be √ clearly set forth in writing. 3.1 Constitution of the Audit Committee: 3.1(i) The Audit Committee shall be composed of at least 3 √ (three) members. 3.1(ii) The Board of Directors shall appoint members of the Audit Committee who shall be directors of the company √ and shall include at least 1 (one) Independent Director. 3.1(iii) All members of the audit committee should be “fi nancially literate” and at least 1 (one) member shall √ have accounting or related fi nancial management experience. 3.1(iv) Filling of casual vacancy in the Audit Committee √

53 Compliance Status as on Condition Title December 31, 2013 Remarks No. Complied Not Complied 3.1(v) The company secretary shall act as the secretary of the √ Committee 3.1(vi) The quorum of the Audit Committee meeting shall not √ constitute without Independent Director 3.2 Chairman of the Audit Committee: 3.2(i) The Board of Directors shall select 1 (one) member of the Audit Committee to be Chairman of the Audit √ Committee, who shall be an independent director. 3.2(ii) Chairman of the audit committee shall remain present in Will be ensured the Annual General Meeting (AGM) 3.3 Role of Audit Committee: 3.3(i) Oversee the fi nancial reporting process √ 3.3(ii) Monitor choice of accounting policies and principles √ 3.3(iii) Monitor Internal Control Risk management process √ 3.3(iv) Oversee hiring and performance of external auditors √ 3.3(v) Review along with the management, the annual fi nancial √ statements before submission to the board for approval 3.3(vi) Review along with the management, the quarterly and half yearly fi nancial statements before submission to the √ board for approval 3.3(vii) Review the adequacy of internal audit function √ 3.3(viii) Review statement of signifi cant related party √ transactions submitted by the management 3.3(ix) Review Management Letters/ Letter of Internal Control √ weakness issued by statutory auditors 3.3(x) Declaration to Audit Committee by the Company N/A regarding utilization of IPO/RPO, Right issue money. 3.4 Reporting of the Audit Committee: 3.4.1(i) The Audit Committee shall report on its activities to the √ Board of Directors. 3.4.1 (ii) The Audit Committee shall immediately report to the

Board of Directors on the following fi ndings, if any:- 3.4.1(ii)(a) Report on confl icts of interests; No such event

found 3.4.1(ii)(b) Suspected or presumed fraud or irregularity or material No such event

defect in the internal control system; found 3.4.1(ii)(c) Suspected infringement of laws, including securities No such event

related laws, rules and regulations; found 3.4.1(ii)(d) Any other matter which shall be disclosed to the Board of No such event

Directors immediately. found

54 RIL 2013 Annual Report

Compliance Status as on Condition Title December 31, 2013 Remarks No. Complied Not Complied 3.4.2 Reporting to the Authorities: No such event Reported to the Board of Directors about anything found which has material impact on the fi nancial condition and results of operation 3.5 Reporting to the Shareholders and General Investors: Report on the activities carried out by the Audit No such event

Committee, including any report made to the Board of found etc.report review, Director’s Chairman’s & CEO’s Directors under condition 3.4.1 (ii) 4.0 External/Statutory Auditors: The issuer company should not engage its external/statutory auditors to perform the following services of the company; namely:- 4.0(i) Appraisal or valuation services or fairness opinions. √ 4.0(ii) Financial information systems design and √ implementation. 4.0(iii) Book-keeping or other services related to the accounting √ records or fi nancial statements. 4.0(iv) Broker-dealer services. √ 4.0(v) Actuarial services. √ 4.0(vi) Internal Audit service. √ 4.0(vii) Any other services that the Audit Committee determines. √ 4.0(viii) No partner or employees of the external audit fi rms shall possess any share of the company they audit at √ least during the tenure of their audit assignment of that company. 5.0 Subsidiary Company: 5.0(i) Provisions relating to the composition of the Board of Directors of the holding company shall be made N/A applicable to the composition of the Board of Directors of the subsidiary company. 5.0(ii) At least 1 (one) independent director on the Board of Directors of the holding company shall be a director on N/A the Board of Directors of the subsidiary company. 5.0(iii) The minutes of the Board meeting of the subsidiary company shall be placed for review at the following N/A Board meeting of the holding company. 5.0(iv) The minutes of the respective Board meeting of the N/A holding company shall state that they have reviewed the aff airs of the subsidiary company also. 5.0(v) The Audit Committee of the holding company shall also review the fi nancial statements, in particular the N/A investments made by the subsidiary company. 6.0 Duties of Chief Executive Offi cer (CEO) and Chief Financial Offi cer (CFO): The CEO and CFO shall certify to the Board that -

55 Compliance Status as on Condition Title December 31, 2013 Remarks No. Complied Not Complied 6.0(i) They have reviewed fi nancial statements for the year and √ that to the best of their knowledge and belief: 6.0(i)(a) These statements do not contain any materially untrue statement or omit any material fact or contain √ statements that might be misleading; 6.0(i)(b) These statements together present a true and fair view of the company’s aff airs and are in compliance with existing √ accounting standards and applicable laws. 6.0(ii) There are, to the best of knowledge and belief, no transactions entered into by the company during the √ year which are fraudulent, illegal or violation of the company’s code of conduct. 7.0 Reporting and Compliance of Corporate Governance: 7.0(i) The company shall obtain a certifi cate from a practicing Professional Accountant/Secretary (Chartered Accountant/Cost and Management Accountant/ Chartered Secretary) regarding compliance of conditions √ of Corporate Governance Guidelines of the Commission and shall send the same to the shareholders along with the Annual Report on a yearly basis. 7.0(ii) The directors of the company shall state, in accordance with the Annexure attached, in the directors’ report √ whether the company has complied with these conditions.

56 RIL 2013 Annual Report

73/3 Green Road (1st Floor), Dhaka - 1205 ALAM CHOWDHURY MOSTAFA & CO. Phone: 8118839 Chartered Accountants Fax: 880 - 2 - 8118839 Email: [email protected]

Certiﬁcate on compliance of conditions of corporate governance guidelines to the shareholders of Reliance Insurance Limited report etc.report review, Director’s Chairman’s & CEO’s

We have examined the compliance status of Reliance Insurance Limited for the year ended 31 December 2013 regarding conditions of corporate governance guidelines issued by the Bangladesh Securities and Exchange Commission as stipulated in Condition No. 7(i) of the BSEC notiﬁcation No. SEC/CMRRCD/2006-158/134/Admin/44 dated 7 August 2012.

The compliance of conditions of corporate governance guidelines as stated in the aforesaid notiﬁcation and reporting of the status of compliance is the responsibility of the Company’s management. Our examination for the purpose of issuing this certiﬁcation was limited to the checking of procedures and implementations thereof, adopted by the Company for ensuring the compliance of conditions of corporate governance and correct reporting of compliance status on the attached statement on the basis of evidence gathered and representation received.

To the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of corporate governance stipulated in the above mentioned BSEC notiﬁcation dated 7 August 2012.

Md. Fazlul Haque FCA Partner ICAB Enrolment Number 933 For, Alam Chowdhury Mostafa & Co. Chartered Accountants

Dhaka, Feb 16, 2014

57 Sustainability Reporting Introduction Corporate Accountability: This contributes to a sustainable business practice in that corporate accountability provides a In the corporate world, the term sustainability has come legal and ethical basis for a company to report on its impact into use in a broad spectrum mainly as a result of increased on society and the environment, in addition to their fi nancial environmental awareness. However, sustainability is wider performance. than just environmental issue. Sustainability is a business strategy that drives long-term corporate growth and Sustainability Strategy profi tability by obligating the inclusion of environmental and social issues in the business model. The very purpose of Operational Risk Management: Operational risk management sustainability is to generate a maximum increase in company, lowers the cost and risk of compliance. Additionally, it enables consumer, and employee value by embracing opportunities greater access to markets by enabling an enterprise to comply and managing risks derived from environmental and social with customer requirements. developments. Resource Productivity: Resource productivity reduces Corporate sustainability achieve long-term shareholder value costs through process effi ciency, including supply chain by gearing their strategies and management to harness the optimization. It is critical in a world with increasingly volatile market’s potential for sustainable products and services commodity pricing. while at the same time successfully reducing and avoiding Maintain Sustainable workforce: Sustainable workforce both sustainability costs and risks. The quality of a company’s ensures access to the right talent in the right market in the strategy and management and its performance in dealing face of demographic shifts and provides foresight to meet the with opportunities and risks deriving from economic, changing requirements of a new generation of workers. environmental and social developments can be quantifi ed and used to identify and select leading companies for investment Sustainable consumption: Sustainable consumption enables purposes. us to generate brand value and customer loyalty through more sustainable operations and to grow revenues by entering new Attributes of Sustainability markets. Sustainable development: This concept balances the corporate Financial: Meeting shareholders’ demands for sound fi nancial need for economic growth with environmental activism/ returns, long-term economic growth, open communication protection and societal progress. With regards to sustainability, and transparent fi nancial accounting. Sustainable development sets the boundaries of the societal Customer & Product: Fostering loyalty by investing in customer and environmental issues and defi nes the company’s goal(s). relationship management and product and service innovation Corporate social responsibility: Corporate Social Responsibility that focuses on technologies and systems, which use fi nancial, is concerned with treating the stakeholders of a company natural and social resources in an effi cient, eff ective and or institution ethically or in a responsible manner. ‘Ethically economic manner over the long-term. or responsible’ means treating key stakeholders in a Governance and Stakeholder: Setting the highest standards of manner deemed acceptable according to international corporate governance and stakeholder engagement, including norms. Corporations use CSR as tool to address societal and corporate codes of conduct and public reporting. environmental issues. Sustainability incorporates societal and environmental issues as building blocks within a business model. Therefore, a sustainable business will use some CSR practices. CSR policy functions as a built-in, self-regulating mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards, national and international norms. In some models, a fi rm’s implementation of CSR goes beyond compliance and engages in actions that appear to further some social good, beyond the interests of the fi rm and that which is required by law. Stakeholders: Stakeholders exist both within a fi rm and outside. Sustainability focuses on stakeholders rather than shareholders.

58 RIL 2013 Annual Report

Corporate Social Responsibility

Corporate Social Responsibility (CSR) is a process with the TMSS Nursing College (TNC): TMSS Nursing College (TNC) aim to embrace responsibility for the company’s actions has been established at the Foundation Offi ce of TMSS near and encourage a positive impact through its activities on Rafatullah Community Hospital (RCH) in 2009 through the the environment, consumers, employees, communities, approval of Ministry of Health and Family Welfare (Nursing stakeholders and all other members of the public sphere who wing) and Bangladesh Nursing Council. It is also affi liated by may also be considered as stakeholders Rajshahi University. It is located in Thengamara village under Bogra District. There is a fi ve stored separate building for this As part of the CSR initiatives, Reliance Insurance Limited institution with modern facilities. In every session 80 students focuses primarily on underprivileged children and physically get the opportunity for admission according to the approval challenges peoples of the society for their physical, mental and by the authority for both in the Diploma-in Nursing and educational improvement. To achieve the said purpose, RIL Midwifery Course and BSc.-in Nursing Course. The purpose of worked with the following social development organizations the college is: for the last few years: 1. To provide knowledge and skill with new discoveries and Society for Education and Inclusion of the Disabled (SEID) innovation, balance and relevant education for lifelong Trust: SEID trust is one of the pioneer social organizations learning of the global Bangladeshi.

in Bangladesh specially for promoting rights of children with reporting Sustainability intellectual and multiple disabilities as well as autism. SEID 2. To able to bridge cultural gaps in caring, work, with Trust is providing services to more than 450 underprivileged cultural diff erences and enable clients and families to children with disabilities including pre-primary and achieve meaningful and supportive caring. special education, education materials, medical services, 3. To prove knowledge, skilled and competent nurses. physiotherapy, speech therapy, vocational training, lunch and transport facilities through its four Centre’s situated at 4. To provide culturally responsible/accountable nurses for Shyamoli, Hazaribag, Kamrangir Char and Rayer Bazar. Reliance their activity to their clients and peers and reasonably Insurance Limited donated total Tk. 853,880 in the year 2011 independent and self-governing in decision making and and 2012 for providing physiotherapy service to such children nursing practice. with disabilities more comprehensively. Reliance Insurance Limited donated Tk.5 lac in the year 2009 Management and Resources Development Initiative for purchasing essential equipments for the laboratory. (MRDI): MRDI is a multi-disciplinary, not-for-profi t, non- Disabled Child Foundation: Disabled Child Foundation is a government organization engaged in a wide spectrum of non-Government, non-profi table and non-political voluntary social development activities. Its objectives are developing organization was established in June 2005 by the initiatives the standard and quality of the media, enhancing physical of a group of committed visually challenged, physical and mental well-being of the people and empowerment challenged and sighted person which is duly registered of women, adolescents, children, minority and other by the Government of Peoples’ Republic of Bangladesh. marginalised sections of the population. Partners of the Disabled Child Foundation has been working for the children MRDI include well reputed think tank, research organisations with disabilities (CWDs) in the country with the faith in the and development agencies. Besides, it gets support from morals of working for the poorest rural people irrespective international and local donors, embassies and UN agencies. of discrimination and the ideal service for them is to convert Reliance Insurance donated a total of Tk. 966,000 in the the CWDs into working and towards self-reliance to lead a year 2011, 2012 and 2013 for infrastructure development of decent life with dignity and courage so that their rights and primary schools in off shore areas of Char Fashion & Bhola. privileges are recognized and the opportunity to be ensured Bangladesh Thalassaemia Hospital: Bangladesh Thalassaemia to participate into the mainstream of national development Hospital is a project of Bangladesh Thalassaemia Samity. activities. Reliance Insurance Limited donated Tk.2 lacs in the It is an unique institution treating Thalassaemia patients. year 2012. Thalassaemia is a deadly disease which is considered to In addition to the above in the year 2013 Reliance Insurance be a blood related genetic disorder inherited by children Limited donated considerable amount of money to Prime from parents having Thalassaemia trait. Red blood cell of Minister Relief Fund as donation for the victims of garments a Thalassaemia patient dies very fast resulting in multiple workers of Rana Plaza tragedy and Bangladesh Insurance complications. Bangladesh Thalassaemia Hospital located at Association for supporting to hold 8th Bangladesh Games Green Road having requisite facilities to provide transfusion 2013. service to the Thalassaemia patients. Reliance Insurance Limited donated total of Tk. 600,000 in the year 2008 and 2010.

59 Environmental Policy

Human activity can have harmful eff ects on ecological daily operational needs that do the least damage to the systems, climate and public health. Recognizing this, environment. Reliance Insurance Limited fully supports the principles of 5. Conserve natural resources by adopting pollution its commitment to promoting good environmental practice prevention practices. Extending the life of equipments and sustainability of its activities. RIL committed to providing through preventive maintenance scheduling, purchasing quality service in a manner that ensures a safe & healthy and reworking used equipments etc. workplace for our employees protecting the environment, conserving energy and natural resources. With these policies 6. Comply with all applicable environmental regulations. in place, we believe that we can achieve a healthy and safe 7. Establish procedures to ensure that all employees are environment. We are committed to do and will: knowledgeable of, understand and comply with all 1. Integrate the consideration of environmental concerns applicable environmental laws and regulations. Train and impacts into our decision making and activities. all our employees on our environmental program and empower them to contribute and participate. 2. Develop and improve operations and technologies to minimize waste and other pollution, minimize health and 8. Communicate our environmental commitment to our safety risks, and dispose of waste safely and responsibly. clients, contractors, suppliers and the community. 3. Minimize energy and water use within our premises and 9. Strive to continually improve RIL’s environmental processes in order to conserve supplies and minimize the management system and performance & implement consumption of natural resources. corrective actions. 4. As far as possible, we will try to identify and purchase preferable products, supplies and services for all our

Human Resources Policy

RIL recognizes the interdependence between the employer 6. To adopt and institute a planned and systematic approach and the employees and believes that each should give the to anticipated changes and develop plans for preparing other fair treatment. To this end, RIL specifi cally aims to do the employees for technological and environmental changes. following: 7. To identify employees’ training and development 1. To establish and administer the policies that enable needs and provide them with necessary development RIL to develop and implement opportunities related to opportunities for them to advance in their career. recruitment, promotion, remuneration, benefi ts, transfer 8. To ensure that employment opportunities conform to the and training opportunities without any regard to age, sex, established and acceptable practices of the country. race, political belief and religion. 9. To ensure that there are proper manpower planning and 2. To create a climate of trust and support within the forecasting system in place to ensure that there will be company which encourage the employees to work well enough people with the right skills and talents to meet together as a team and at the same time, to encourage company’s current and future growths and needs. them to be innovative and creative in order to achieve company goals. 10. To ensure that there are transparent processes in place for selection, promotion, appraisal and performance 3. To maintain work place and environmental conditions management, reward & recognition systems. which permit employees to work to maximum eff ectiveness and to ensure that safety rules and hygiene 11. To put in place succession plans for all senior management are strictly observed. positions in the company. 4. To provide information to employees regularly about 12. To ensure that people with high capabilities proven by diff erent aspects of the operation and its progress which track record reach key management position regardless of are relevant to them and involve them in matters which their sex, religion, caste, creed and more importantly age are of concern to their job and work situation. and seniority. 5. To develop an eff ective internal communication and involvement mechanism which encourage employees to identify themselves with the company and its activities.

60 RIL 2013 Annual Report

Integrated Reporting

Integrated reporting is a process which results in effi cient and create a culture of openness and accountability. RIL communication and leads to value creation over a period of considers that its corporate governance practices are in full time. An integrated report is a concise communication about compliance with all the aspects of BSEC Notifi cation No. how an organization’s strategy, governance, performance SEC/CMMRRCD/2006-158/134/Admin/44 dated 07 August and prospects lead to the creation of value over the short, 2012. In addition to establishing high standards of corporate medium and long term. governance, RIL also considers best governance practices in all of its activities. The independent role of Board of Directors, The process of integrated representation envisages separate and independent role of Chairman and Chief evaluation of a company’s performance in terms of both Executive Offi cer, distinct role of Company Secretary and fi nancial and other value relevant information. Integrated Chief Financial offi cer, diff erent Board Committees allows RIL Reporting provides greater context for performance data, to achieve excellence in best corporate governance practices. clarifi es how value relevant information fi ts into operations or a business, and may help embed long-term approach Value creation through performance: Real Leaders, who are into a company’s decision making process. While the clear about their company’s reason for being good corporate communications that result from Integrated Reporting will citizens, are able to deliver and sustain both performance and be of benefi t to a range of stakeholders, they are principally employee satisfaction over time. The creation of a purposeful

aimed at providers of fi nancial capital allocation decisions. culture—one that recognizes employees for exceeding reporting Sustainability performance expectations while modeling the organization’s Value creation through proper strategy: History reveals declared values—is critical for business leaders in today’s that the most successful companies understand their marketplace. Developing a high performance, values-aligned corporate pasts, their corporate values. They also understand culture requires four integrated steps and they are: their stakeholders, know what the market wants, listen to customers and develop products that even the customer 1. Clarify performance expectations hasn’t yet imagined. So proper strategy play pivotal role in 2. Defi ne values in behavioral terms and establish creation of value in the long run. Reliance Insurance Limited, motivation at every level being aware of this position. always focuses on its strategic objectives covering process, business, people and learning. 3. Hold leaders and staff accountable Value creation through good governance: The maintenance 4. Monitor regularly and adjust strategies as necessary of eff ective corporate governance remains a key priority of Some key features of the company for the last few years the Board of Reliance Insurance Limited (RIL). To exercise are mentioned below which clearly indicate how RIL is clarity about Directors responsibilities towards the creating value through performance and advancing toward shareholders, corporate governance must be dynamic and realization of its corporate objective, vision and mission: remain focused on the business objectives of the Company

Particulars 2009 2010 2011 2012 2013 Gross premium income 1,041.1 1,241.0 1,422.1 1,490.8 1,638.9 Net premium income 430.3 618.1 731.4 641.1 704.2 Underwriting profi t 56.8 161.0 194.3 185.1 228.9 Investment income 114.9 153.7 159.9 164.0 230.2 Profi t before tax 146.3 287.2 305.0 297.9 406.2 Profi t after tax 119.7 217.6 220.3 203.9 277.1 Fixed Deposit 612.9 658.7 718.1 1,107.5 1,483.9 Total assets 1,880.3 4,605.9 4,530.8 4,410.7 4,796.4 Total reserve 891.8 3,457.5 3,312.8 2,983.4 3,133.94 Paid up capital 234.0 304.2 410.7 472.3 519.5 Shareholders' fund 952.5 3,513.1 3,427.5 3,195.8 3,371.0

61 Report on Going Concern

Financial Statements are normally prepared on the Operating Indications assumption that an enterprise is a going concern and will continue in operation for the foreseeable future. Hence, it is  No key management turnover assumed that the enterprise has neither the intention nor  Good business expansion the need to liquidate or curtail materially the scale of its operations; if such an intention or need exits, the fi nancial  Spread of business across diverse clientele statement may have to be prepared on a diff erent basis and,  Good market reputation and clients satisfaction if so, the basis used is disclosed. On the other hand Listed  Good Corporate environment and employee satisfaction Companies are required by BSEC to report on its ability to continue as going concern. Other Indications The Board of Directors of Reliance Insurance Limited has  Maintenance of suffi cient capital base as required by law made annual assessment about whether there exist material uncertainties which may cast signifi cant doubt upon  Strong equity base the Company’s ability to continue as going concern. The  Strong claim Paying Ability (CPA) director’s assessment of whether the company is a going concern involves making appropriate inquiries including  Anticipates no signifi cant change in legislation or review of budget, forecast, assumptions and future outcome government policy of inherent uncertainties in existence. The Directors are convinced from the following indications, which give reasonable assurance as to company’s ability to continue as a going concern for the foreseeable future. Financial Indications

 Positive net current assets  Fixed term debt with realistic renewal or repayment  Less reliance on short term borrowing  Continuous fi nancial support by lenders  Positive operating cash fl ows  Positive key fi nancial ratios  Consistent payment of dividends  Credibility in payment of obligations  Performance growth  Positive underwriting results and trends

62 RIL 2013 Annual Report

Report on Information Technology

Background: Since the very beginning of the Company till programmers, it was completed and on 1st of July 2004 it was 2004, RIL had a computerized General Ledger for Central implemented successfully at RIL. On the job training was also Accounts Department only. But like most other insurance provided to all end users. companies, its’ operation was based on stand alone PC’s Key Beneﬁ ts of RIL IT system: Huge saving in working and manual system. There was no IT enabled MIS system in time in preparing document, Money Receipt and some large place to help RIL analyze the business fi gures and to track informative monthly reports with excellent print quality performance of products, customers, branches, department and people. As a result RIL was severely handicapped in the  Getting 400 Plus system generated MIS report which fi eld of IT, resulting in ineffi ciency and improper management helps management to take decisions properly and negatively impacting its endeavor to maintain its’ position at timely the top of the Insurance fraternity.  Integrated Accounts where 80% Journal Voucher are Formation of IT Division: Against the backdrop of the passing through system as well as Final Accounts above mentioned situation, RIL management decided in the report like Balance Sheet, Profi t & Loss Account, year 2000 to introduce a modern computer system to cater Revenue Account, General Ledger and Trial Balance are to future prospects of the Company. As part of that vision, an generating automatically through system reporting Sustainability Information Technology Division was established to make the  Controlling business procurement trough Computer dream come true. Integrated Insurance System (CIIS) software The information technology’s role in the business sector  Quick accessing the underwriting documents through certainly can hardly be over emphasized. It is of utmost CIIS for departmental integration with UW dept. like importance, which enables businesses to eff ectively and Co-Insurance, Claims, Commission, Re-Insurance and successfully plan, manage, execute strategies which lead to Accounts department profi t. Therefore the mission of this Division is to completely re-engineer and automate RIL’s business processes to  A Disaster Recovery Center has been established to achieve higher productivity, lower cost, improved secure the company’s valuable data in a professional quality, enhanced service and eﬃ cient management. manner. IT mainly deals with computer applications which are now On-line branches: Including Head Offi ce and Local Offi ce completely automated. The technology has not only made 24 (Twenty Four) branches are already connected to the IT communication cheaper, but also much faster. Division through optical fi ber and data modem during the last eight years. Information Technology Division has taken pragmatic approaches to bring the technological boon and Future Plan: Making all the RIL branches as on-line to advancement into RIL’s business process to make it more operate their daily business smoothly through the system competitive and adaptive for the 21st century. and get all the IT benefi ts. The software applications and the hardware devices are  Preparing Data Center for providing Information to the the main elements of use in information technology. So management from data archive as and when required. a modern and dynamic IT Division was created with two  A network department to be established for providing departments like Hardware and Software including a services to all online branches. structured LAN for its smooth operation and getting the technical advantage. Operating the IT system at Reliance,  Our management has decided to develop a new there are six experienced and professional IT personnel. software module for Health Plan Department by our own resources. Software development & implementation: Software is an important integral part of information technology which  Higher Training on latest information technology to relates to computer applications that enable a company to be provided to the IT professionals for development generate, store, program, and retrieve data as and when of new software to meet the users demand by using needed. Like an ERP Software, a Computer Integrated present technology. Insurance System (CIIS) was jointly developed with the co- RIL has highly experienced and trained professionals operation of IBCS PRIMAX (Bangladesh) Ltd. Under which working on maintaining and developing the company’s IT all the business process and functionalities were included. infrastructure. The IT professionals are constantly innovating After 14 months of development by IBCS and RIL’s 10 and producing in-house programs to meet the needs of

63 the company’s ever increasing and diversifi ed products and Conclusion: Information technology provides the ability to services industry. IT division has successfully implemented a process a large amount of information and in a way which Wide Area Network (WAN) to connect all of the branch offi ces presents the information in a clear and concise manner in greater Dhaka, Chittagong, Khulna, Jessore, Dinajpur, to employees. Anticipated benefi ts of implementing an Madaripur, Kustia, Rajshahi, Thakurgaon, Mymenshing and information technology system include improvements in Comilla on real time basis, thereby providing seamless profi t performance, and a higher degree of accuracy among connectivity and prompt customer services. We have information within the possible shortest time. Insurance also purchased a new high confi gured server for running business has made great strides in risk evaluation as well our oracle 10g application server to build-up three tier as their calculation and reporting abilities. Much of such applications and hardware architecture. analyses can be done by developing new software of risk infrastructure, data model governance and quality. In this We have upgraded our oracle Front End Application from 6i perspective IT sector of Reliance have been playing an to 10g web version, together with migration into three tier important role during the last 11 years and contributing to systems (like client >> application server >> database server). the economic stability of the company. As a result our CIIS software can be accessed from anywhere through any web browser as well as our connectivity cost has reduced signifi cantly. Two new software modules named VAT management System and Commission Information System have been developed and added to our CIIS to manage our VAT & commission as required by the NBR and IDRA.

64 RIL 2013 Annual Report

Human Resource Accounting The Concept & Its Importance for Reliance Insurance Limited

Human Resource Accounting (HRA) is a new branch of 1. Competitive Compensation Package: Reliance is, perhaps, accounting. It is based on traditional concept that all the market leader in the industry when it comes to expenditure of human capital formation is treated as a charge the question of compensation packages off ered to its against the revenue of the period as it does not create any employees. The salary scale is very fl exible and off ers physical asset. But now a day this concept has changed competitive salary and other benefi ts commensurate and the cost incurred on any asset (as human resource) with the position to an employee taking into account his/ should be capitalized as it yields benefi ts measurable in her academic & professional qualifi cations & experiences monetary terms. HRA means accounting for people as etc. thereby off ering the much needed fi nancial relief to the organizational resources. It is the measurement of the an employee from day one. cost and value of people to organizations. It is a process of 2. Staff Development & Training: The company has its accounting people as an organization resource and tries own in-house training unit where training is off ered to place a value on the organizational human resources as to employees, new & old, on diverse areas both core assets and not as expense. business & management areas on a regular basis. Besides, Management of any concern continuously strives hard for as part of continuous eff orts for staff development

obtaining maximum effi ciency. In order to measure the initiatives, employees receive training both from in- reporting Sustainability eff ectiveness of any fi rm the normal method is to examine country & abroad to keep the employees updated on the fi nancial statements. These statements include balance modern approaches to enhance their skills & capacity sheets in which physical assets such as cash accounts building in their respective fi elds. A substantial sum of receivables, inventory and plant are recorded. However, these money is budgeted and used for this purpose. statements normally do not mention the productive capacity 3. Performance Appraisal: Reliance has a modern of the workers or goodwill of the company. It is needless to performance appraisal system in place which allows say that the following variables contribute heavily to make a management to give unbiased ratings linked with fi rm superior to other fi rms: deserved salary increment upon review of individual 1. Level of intelligence and aptitude of the personnel. performance of employee besides giving feed back & document his/her strengths & areas needed to be 2. Level of training of employees. improved which are monitored closely throughout the 3. Level of performance targets and motivation to achieve year. success for the organization. 4. Recognition & Incentives: Reliance fi rmly believes in 4. Quality of leadership. recognizing the employees for a job well done and at the same time takes this opportunity to motivate 5. Capability to use diff erences for purpose of innovation & the non-performers by showing them the success of improvement. others. Towards achievement of this policy, we have 6. Quality of sound communication, cooperative team work a Performance Linked Variable (PLV) incentive bonus & eff ective coordination within the organization. system whereby employees are gainfully awarded bonus based on their achievements obtained purely on 7. Eff ectiveness of decision making. performances. 8. Quality of control process. 5. Uniformity of Policies & Procedures: In order to be fare 9. Ability to use experience and measurements to guide to each & every employee on all HR issues, the company decisions, improve operations and innovations. has a comprehensive HR Manual containing standardized and uniform policies and procedures applicable for These factors are not accounted for in the balance sheet. employees across the company. This provides a congenial HRA has developed in an attempt to overcome this and enabling working atmosphere for employees to grow defi ciency. HRA is the art of valuing, recording and presenting and pursue a long term career with the company and systematically the work of human resources in the books help bring down employee dissatisfaction & grievances of account of an organization. Thus, it is primarily an signifi cantly. information system, which informs the management about the changes that are taking place in the human resource of an organization. In view of the importance of the emerging concept of HRA, Reliance Insurance places its utmost importance in obtaining benefi ts of HRA by way of making investments on its employees in the following key areas:

65 Report on Corporate Governance

Corporate governance is the system by which companies corporate governance practice .The Board determines the are directed and controlled by the management in the best corporate governance arrangements for the company. interest of all the stakeholders, thereby ensuring greater As with all its business activities, the Board is proactive in transparency and better and timely fi nancial reporting. respect of corporate governance and puts in all place those arrangements which it consider are in the best interest of The maintenance of eff ective corporate governance remains the company and its shareholders, and consistent with its a key priority of the Board of Reliance Insurance Limited responsibilities to other stakeholders. (RIL). To exercise clarity about directors responsibilities towards the shareholders, corporate governance must be The Board of Directors is in full control of the company’s dynamic and remain focused on the business objectives aff airs and is also fully accountable to the shareholders. of the Company and create a culture of openness and They fi rmly believe that the success of the company largely accountability. RIL considers that its corporate governance depends on the credible corporate governance practices practices comply with all the aspects of BSEC Notifi cation No. adopted by the Company. Taking this into consideration, SEC/CMMRRCD/2006-158/134/Admin/44 dated 07 August the Board of Directors of RIL set out its strategic focus and 2012. In addition, to establishing high standards of corporate oversees the business and related aff airs of the company. governance, RIL also considers best governance practices The Board also formulates the strategic objectives and in its activities. The independent role of Board of Directors, policy framework for the company. In discharging the above separate and independent role of Chairman and Chief responsibilities, the Board caries out, the following functions Executive Offi cer, distinct role of Company Secretary and as per the charter of the Board. Chief Financial offi cer, diff erent Board Committees allows RIL  Determine, monitor and evaluate strategies, policy, to achieve excellence in best corporate governance practices. management performance criteria and business plan. Board of Directors  Periodic and timely reporting to the shareholders on Composition the aff airs, progress and performance of the company The Board of RIL considers that its membership should  Ensuring proper decision making and accountability comprise of directors with an appropriate mix of skills, structure throughout the Company so that the staff experience and personal attributes that allow the directors, down the line is fully accountable to the corporate individually and the board, collectively, to discharge their management. responsibilities and duties, under the law, effi ciently and  Delegation to Board Committees and management and eff ectively, understand the business of the company and approval of transactions in excess of delegated level assess the performance of the management.  Approval of annual budgets including major capital The Board of RIL comprise of sixteen directors who possess expenditure proposals a wide range of skills and experience over a range of professions, business and service. All of them are nominated  Critical evaluation of all proposals which require Board’s by their respective institutions except for two independent approval and \ or directives directors. Each of our directors brings in independent  Regular review of fi nancial performance and overdue judgment and considerable knowledge to perform their roles situation eff ectively. The Board of directors ensure that the activities of the company are always conducted with adherence to  Appointment and evaluation of the performance of the strict and highest possible ethical standards and in the best top management positions interests of the stakeholders.  Ensuring that the senior management team has the The Directors are appointed by the shareholders in the necessary skill and experience to perform their function Annual General Meeting (AGM). Casual vacancies, if any, are eff ectively, in the best interest of the Company fi lled by the Board in accordance with the stipulations of the  Monitoring the adequacy, appropriateness and Companies Act, 1994 and Article of the Company. In addition, operation of internal controls. one third of the directors retires from the board every year in the AGM, but remains eligible for re – election. Role of the Chairman Role and Responsibilities of the Board The Chairman of the Board is not the Chief Executive of the Company. The role of Chairman and Managing Director & The Board is committed to the company seeking to achieve CEO are independent and separate. The Chairman runs the superior fi nancial performance and long term prosperity, Board while the CEO & Managing Director takes all executive while meeting stakeholder’s expectations of sound decisions as delegated and empowered by the Board.

66 RIL 2013 Annual Report

Code of Conduct for The Board Members 7. Compliance With Laws and Regulations As a leading non-life Insurance Company in Bangladesh, the In carrying out their duties and responsibilities, Board Board of Directors of Reliance Insurance Limited is committed members shall comply, and endeavor to ensure that the to demonstrating the high standards of ethical behavior management is causing the Company to comply, with in their relationships with the Company’s customers, applicable laws, rules and regulations. In addition, if any shareholders, employees, regulators and the public. The Board member becomes aware of any information that he or Board of Directors is accountable for establishing the she believes constitutes evidence of a material violation of framework that creates culture of integrity and objectivity. any securities or other laws, rules or regulations applicable Board members are also responsible for complying with to the Company or the operation of its business, by the laws and regulations as well as avoiding behavior that might Company, any employee or another Board member, then compromise the company’s success. such Board member should bring such information to the attention of the CEO & Managing Director of the Company. The following Code of Conduct for members of the board of directors of Reliance Insurance Limited serves as ethical 8. Avoiding Insider Trading decision making guidelines: Board members shall not do insider trading with respect 1. Avoiding Confl icts of Interest to the purchase and sale of the Company’s securities. Board members shall not buy or sell securities while in Directors should avoid any confl icts between their interests possession of material non-public information about the and the Company’s interests. A confl ict of interest can issuer of that security, whether the issuer is the Company or occur when a director’s personal interest is adverse to the another company. Board members shall not also pass such

interests of the company or when a director (or a family governance about corporate Information information on to someone who may buy or sell. member) receives improper personal benefi ts as a result of his/her position as a director. To avoid any appearance of 9. Compensation from Non-Company Sources impropriety, directors must hold themselves to the highest Directors may not accept compensation (in any form) from ethical standards, understanding that the perception of a any source other than the Company for services performed confl ict can be as damaging as an actual confl ict of interest for the company. 2. Pursuing Business Opportunities 10. Gifts Directors may not compete for, or pursue either personally or Directors and members of their families may accept gifts of on behalf of another fi rm, company business opportunities, nominal value as long as they aren’t being made to infl uence including opportunities that are discovered through the use the directors’ actions and don’t create the appearance of a of Reliance Insurance property, information or their position confl ict of interest as a director. Board Meetings 4. Company Property The meetings of the Board of Directors of RIL are normally In carrying out their duties and responsibilities, Board held at the Registered and Corporate Head Offi ce of the member shall endeavor to ensure that management is Company. The meetings are held frequently to discharge causing the Company’s assets, proprietary information and its responsibilities and functions as mentioned above. resources to be used by the Company and its employees only Meeting is scheduled well in advance and the notice of each for legitimate business purposes of the Company. Board Meeting is given, in writing, to each Director by the 5. Maintaining Confi dentiality Company Secretary. It is essential to handle all non-public information The Company Secretary prepares the detailed agenda for carefully and appropriately. Directors should maintain the the meeting. The Board papers comprising the agenda, confi dentiality of company information entrusted to them, explanatory notes and proposed regulations are circulated regardless of the source. Directors may disclose certain non- to the directors in advance for their review. The Members public information if it is legally mandated or the director has of the Board have complete access of all information of the the authority to do so. company enabling them to work effi ciently. The Members of the Board are also free to recommend inclusion of any matter 6. Fair Dealing in the agenda for discussion. The Company Secretary and In carrying out their duties and responsibilities, Board Chief Financial Offi cer always attends the Board Meeting and members shall endeavor to deal fairly, and should promote other senior management is invited to attend Board Meeting fair dealing by the Company, its employees and agents, with to provide additional inputs to the items being discussed by customers, suppliers and employees. the Board and make necessary presentations.

67 Internal Control by major category (capital expenditure, sales and marketing expenses, working capital, etc), on a The Board is responsible for ensuring that the Company has quarterly basis, as a part of their quarterly declaration an adequate and eff ective control system in place. Although of fi nancial results. Further, on an annual basis, the no system of internal fi nancial control can provide absolute company shall prepare a statement of funds utilized assurance against material mis-statement or loss, The for the purposes other than those stated in the off er company’s internal control system have been designed to document/prospectus. provide the directors with reasonable assurance that assets are safeguarded against unauthorized use by the employees Human Capital / or management and / or third parties, transactions are RIL believes that Human capital is vitally important for the authorized and properly recorded and material error and Company’s success. It is prime asset of the Company. It irregularities are either prevented or detected with in a is the stock of competencies, knowledge and personality reasonable period of time. attributes embodied in the ability to perform jobs as to Properly designed management structure, clearly defi ned produce economic value to the Company. Human capital can responsibilities, delegation or authorities, establishment of be increased through education, training and experience. accountability at each level and system of periodic reporting Reliance insurance Limited has the following policy to and monitoring performance are the key elements of the increase human capital: internal control framework employed in RIL. 1. Establish and administer transparent policies Audit Committee that enable Company to develop and implement opportunities of recruitment, promotion, remuneration, Audit committee of Reliance Insurance Limited is the Sub- benefi ts, rewards and recognition system, transfer and Committee of the Board of Directors. Audit Committee training and performance management system without comprises of fi ve Directors nominated by the Board of any regard to age, sex, race, political belief and religion. Directors. The Committee is headed by a director who is an Independent Director of the Company. The Chief Internal 2. Create a climate of trust and support within the Audit & Control offi cer has direct access to the Committee company which encourage the employees to work well and the Committee is directly reportable to the Board. It together as a team and at the same time, to encourage operates according to the Terms of Reference approved them to be innovative and creative in order to achieve by the Board and in compliance with Section 3.00 of the company goals. Bangladesh Securities and Exchange Commission Notifi cation 3. Develop an eff ective internal communication and No. SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August involvement mechanism which encourage employees 2012. Role of the Committee: to identify them with the company and its activities. (i) Oversee the fi nancial reporting process. 4. Adopt and institute a planned and systematic approach (ii) Monitor choice of accounting policies and principles. to anticipated changes and develop plans for preparing employees for technological and environmental (iii) Monitor Internal Control Risk management process. changes and accordingly Identify employees’ training (iv) Oversee hiring and performance of external auditors. and developmental needs and provide them with necessary development opportunities for them to (v) Review along with the management, the annual advance in their career. fi nancial statements before submission to the board for approval. 5. Ensure that the employment opportunities conform to the established and acceptable practices of the country. (vi) Review along with the management, the quarterly and half yearly fi nancial statements before submission to 6. Ensure that there are proper manpower planning and the board for approval. forecasting system in place to ensure that there will be enough people with the right skills and talents to meet (vii) Review the adequacy of internal audit function. company’s current and future growths and needs. (viii) Review statement of signifi cant related party 7. Ensure that people with high capabilities proven transactions submitted by the management. by track record reach key management positions (ix) Review Management Letters/ Letter of Internal Control regardless of their sex, religion, cast creed, and more weakness issued by statutory auditors. importantly age and seniority in addition to putting in place succession plans for all senior management (x) When money is raised Repeat Public Off ering (RPO)/ positions in the company. Rights Issue, the company shall disclose to the Audit Committee about the uses/applications of funds

Performance Indicators

70 RIL 2013 Annual Report performance of our Summary

71 Value Added Statement

2013 2012 Particulars % % (BDT mn) (BDT mn) Value Added

Gross premium 1,638.89 1,490.80 VAT & stamp duty 283.36 289.62 Investment & other income 230.26 163.96 Total Value Added 2,152.50 100% 1,944.38 100%

Distribution of Value Addition

To Government VAT & Stamp Duty 283.36 13% 289.62 15% Tax 129.10 6% 93.99 5%

To Employees as remuneration 154.99 7% 150.97 8%

To Shareholders as dividends 118.07 5% 123.20 6%

Retained in business Reserve & Surplus 158.99 7% 80.73 4%

Others Net Claims Incurred 169.20 8% 142.96 7% Net Reinsurance Cost 755.66 35% 691.23 36% Management Expenses 360.54 17% 407.81 21% Additional reserve for Unexpired Risks 22.59 1% (36.13) -2% Total Distribution 2,152.50 100% 1,944.39 100%

72 RIL 2013 Annual Report Economic Value Added Economic Value Added (EVA) is the fi nancial performance measure that attempts to measure the true economic profi t of an organization. It provides a measurement of a company’s economic achievement (success or failure) over a period of time. Such a metric is useful for investors who wish to determine how well a company has added value for its investors and it can be compared against company’s peers for a quick analysis of how well the company is operating in its industry. Companies which earn higher returns than cost of capital create value, and companies which earn lower returns than cost of capital are deemed harmful for shareholder value. Economic value added is calculated by taking a company’s net profi t after tax less cost of capital.

(BDT mn) Particulars 2013 2012 2011 *Average shareholders’ equity at the end 1480.45 1,272.28 1,129.95 **Cost of equity (%) 11.20 13.45 13.46

Economic Value Added 111.25 32.81 68.25 Net profi t after tax 277.06 203.93 220.34 Less: Cost of equity 165.81 171.12 152.09

*Land revaluation reserve and fair value adjustment of shares were not considered while computing average shareholders’ equity. *It is the opportunity cost i.e. the expected risk free return on investments, plus a risk premium. Interest on Bangladesh Government Sanchaya Patra plus 2% risk premium has been assumed to be the cost of equity.

Market Value Added Statement for the year ended December 31, 2013 performance of our Summary

Market Value Added (MVA) is the diff erence between the total market value (based on the quoted price in the main bourse) and total book value of the Company’s shares. The higher the MVA, better the Company’s position. A high MVA indicates the Company has created substantial wealth for the shareholders. A negative MVA means that the value of management’s action and investments are less than that value of the capital contributed to the Company by the capital market (or that wealth and value have been destroyed).

As of December 31, 2013 the total share market value of Reliance Insurance Limited stood at Taka 4,140.40 million whereas the book value of the Shareholder’s Equity stood 3,371.00 million, resulting a Market Value Added of Taka 769.40 million. The calculation of Market Value is given below:

Numbers of Value Per Share Total Value Particulars Shares (Taka) (Taka in Million) Market Value 51,949,755 79.70 4,140.40 Book Value 51,949,755 64.89 3,371.00 Market Value Added 769.40

73 Contribution to the National Economy

Reliance Insurance Limited recognizes that the company has also paid a total amount of Tk.154.99 million as salary and certain responsibilities to the society for their development allowances to its employees and employees of the company and the development of the nation as a whole. For this, paid Tk. 5.90 million as taxes to the Government with highest company made signifi cant contribution to the Government payment of Tk. 2.72 million by an individual employees. In each year by payment of Tax, VAT, Stamp duty etc. During addition to the above, over the past many years Reliance the year 2013 company contributed Tk. 364.74 million to the Insurance Limited has been paying a satisfactory dividend national exchequer as against Tk. 358.87 million in 2012. to its shareholders placing it among the top ranking non-life insurance company in the country. Company also make an economic impact by creating employment and trained them to serve the country. Reliance Insurance Limited employed as many as 338 employees as on 31st December 2013. During the year 2013 company spent Tk. 0.83 million for training and HR development. Company

Year-wise contribution to the National Exchequer (BDT mn)

74 RIL 2013 Annual Report Bangladesh Non-Life Insurance Market Composition & Reliance Share

Bangladesh non-life insurance Premium in 2012 was Taka 21,475 million. Last 6 year’s Premium growth and penetration rate (Non- life insurance premium as % of GDP) is shown in the chart below:

Bangladesh Non-Life Insurance Market Bangladesh Market Premium Growth Rate

The non life market in Bangladesh is comprised of 43 insurance companies (45 in 2013) including one state enterprise. The Premium income of top 7 Non-life Insurance companies in 2012 and their respective market shares are shown below. It may be performance of our Summary observed that no single insurer has a large market share. The top 7 private sector insurers collectively account for a market share of 41.45% :

Top 7 Non-Life Insurers Premium Income In Top 7 Non-Life Companies Market Share In % 2012 2012 (BDT mn)

75 Risk Management & Control Environment

Reliance Insurance Risk Defi ned The basic facets of a risk management framework are: i) identifi cation of risk, ensures proper risk Risk is an integral part of our day to ii) analysis of risk factors, iii) evaluation day life and is associated with the management of their of risk, iv) control/mitigation of risk, and probability of an unfortunate event to last but not the least v) risk inspection at clients which benefi ts occur with its possible consequences. regular interval and risk fi nancing upon them as saving resources The fundamental features of risk lie in review of the ensuing risk factors for loss the unpredictable, uncertain nature minimization. of the events, possible combination of hazards/threats to any venture/ Risk Mitigation Methodology life, causing the possibility of loss. Although risk can never be eliminated Risks may be categorized into two in full, risk, however, can be minimized. fundamental types, viz, speculative Risk management decisions, therefore, risks (where there are chances of gain/ involve physical loss prevention loss) and pure/operational risk (which measures and risk fi nancing tools is rather associated with unpredictable towards minimizing risk. consequence of loss). Physical loss preventive measures Risk Management include

 compliance of safety rules guided by Framework Factories Act and Building Code An organization needs to understand critically the risks to which it is  installation of fi re fi ghting exposed and the possible quantum equipment and performance of fi re of loss associated with such risks. One drill at regular interval, and single incident may cause a chain of  maintenance of clean and damage that ultimately be viewed as wholesome environment for the unacceptable to the shareholders. On personnel as well as for the overall clear understanding of the risk, the workplace, etc. management of an organization can make decisions about the acceptability Risk fi nancing tools include or otherwise in relation to those Decisions regarding partial risk retention exposures. Risk management thus with acceptance limit and spreading / enables a management to eff ectively transfer of the remaining portion of risk. deal with uncertainty and its associated One of the vital risk minimizing tools risks along with the opportunity for is insurance; because insurance is a capacity building. The fundamental mechanism of spreading or transferring objective of risk management is the risk of one onto the shoulders of preservation of assets and earning many. It has two fundamental features: power from loss or destruction. one is shifting of risk from one individual Risk management framework of an to a group, and the other is sharing of enterprise is greatly infl uenced by the losses on equitable basis by all members risk perception of its management. of the group. Risk perception may vary from one to Whilst it becomes almost impossible for another depending on the risk factors an individual to bear the entire loss of pertaining to the nature of venture, his property or interest by himself arising socio-economic threats, volatility out of unforeseen contingency, risk of political and legal environment, fi nancing method allows the aggrieved possibility of act of God to occur in individual to shift the burden of loss on relation to geographical strata/position, others within the group. etc. and fi nally the fi nancial strength of the entrepreneur. 76 RIL 2013 Annual Report

Insurance Risk and its Mitigation

Insurance is a mechanism of spreading may cause fairly low damage but Reliance Insurance the risk of one onto the shoulders happen frequently then logically the risk through their expert of many. It has two fundamental is unacceptable. characteristics: one is shifting of risk professionals imparts from one individual to a group and the On clear understanding of the risk responsiveness with the an organisation is exposed, the other is sharing of losses on equitable clients with a view to basis by all members of the group. organisation can make decisions about Whilst it becomes somewhat impossible the acceptability or otherwise of those achieve the objectives for a man to bear by himself 100% loss exposures. Once an understanding of how to analyze the those risks that have either a potential to his own property or interest arising risk factors associated out of an unforeseen contingency, level of impact or a frequency of insurance is a method which distributes incident that is unacceptable has been with diff erent activities, the burden of the loss on a number of established, then something needs to observe how risk persons within the group formed for this be done to bring these risks down to the acceptable level. can aff ect decision particular purpose. making processes, how From an individual point of view, Reliance Insurance, through their operational risk can be professionals, undertakes pre-insurance insurance is an economic device managed properly with whereby the individual substitutes a surveys of large and complicated risks small certain cost (the premium) for a which thus ultimately facilitates in the the help of insurance. large uncertain fi nancial loss (the risk defence of national property and wealth. insured against) which would exist if it Services basically aim at reducing the were not for the insurance contract. happening of the casualty itself rather than minimising the extent of loss after One of the prime objectives of Reliance the happening of the casualty. Insurance is the creation of the counterpart of risk which is security. Apart from this, Reliance Insurance Insurance does not take away the attempts proper handling of salvage risk. The insurance company does not (residue after incidence) with the guarantee that the event insured against ultimate object of minimizing the extent will not happen. The house may still of loss which has already occurred burn down, the car may still be involved thereby contributing to the economy or control environment management & Risk in an accident but at least a large at least safeguarding the depreciation of element of the cost involved will be met the economy. by insurance company. Without such an understanding Reliance Insurance imparts technical insurance premiums and other monies expertise in a professional manner to the spent on managing the wrong risks can clients and loss adjusters and renders be wasted. Furthermore, potentially connoisseur counsels to minimize losses. damaging exposures can be missed, In turn, the loss adjusters and clients can leading to direct loss or even destruction improve the risk to a substantial degree of the Company. and minimise the possibility of the Risk management ensures proper number of misfortunes. The handling of understanding of the right level of salvage after loss by the loss adjusters risk acceptance, risk control and risk also contributes much to the reduction related expenditure. Furthermore, the of losses. risk and recovery planning expenditure An organisation needs to understand can neither be less nor more, than the critically the risks to which it is exposed. organization needs it to be. One incident may cause a chain of The pre-underwriting inspection of damage that becomes unacceptable to fi re hazards to the insurable property the stakeholders. One type of incident

77 is of paramount importance. Before Risk management exists to provide value accepting risks it is prudent and for its stakeholders. essential to have the risks of the subject matter to be inspected for underwriting Risk management enables management and reinsurance purposes. On the to eff ectively deal with uncertainty basis of the pre-inspection report and associated risk & opportunity, the underwriter may recommend enhancing the capacity to build value. segregation of risk by installation of Reliance Insurance always considers and fi re proof door to reduce premium, forecasts risk factors well so that risk can cleanliness of factory premises and to be minimized through employing risk reduce fi re hazards. Recommended fi re management tools. Value maximization prevention measures not only reduce encompasses – aligning risk appetite fi re hazards but also help the insured to & strategy, enhancing risk response get rebate on the rate of premium. decisions, reducing operational surprises and losses, identify and managing Reliance Insurance assumes pre- multiple and cross – enterprise risks, inspection of risk which is very helpful seizing opportunities and improving for reinsurance purpose as well. Without deployment of capital. pre-inspection it is diffi cult to segregate “risks” and make retention and cession to Reliance Insurance through their expert reinsurers. Inspection surveyor’s advice professionals imparts responsiveness for risk improvement largely contributes with the clients with a view to achieve towards reducing the possibility of the objectives how to analyze the hazards rather than minimizing the risk factors associated with diff erent extent of loss after the happening of the activities, observe how risk can aff ect casualty. decision making processes, how operational risk can be managed Risk can be considered as a state of properly with the help of insurance. nature or a state of the world in which we live. Perceived risk might be zero, Reliance Insurance ensures proper risk whereas the actual risk is not zero. An management of their clients which eff ective framework for managing risk benefi ts them as saving resources: time, ensures full identifi cation and awareness assets, income, property, and people of signifi cant risks, which are then are all valuable resources that can be measured in a consistent manner across saved if fewer claims occur, protecting asset classes and businesses. A proper the reputation and public image of the set of management controls for non clientele, preventing or reducing legal quantifi able risks should also form part liability and increasing the stability of of this framework. It should link risk- operations, protecting people from taking activities to capital consumption harm, protecting the environment, and performance evaluation at various enhancing the ability to prepare levels – product, customer, profi t – for various circumstances, reducing centre, business – unit and enterprise. liabilities, assisting in clearly defi ning insurance needs. Reliance Insurance almost universally has embarked upon an upgrading of Reliance Insurance, through its eff ective their fi nancial risk management and risk management practice, cannot control systems to reduce their exposure eliminate risks but the endeavour shows to risk and better manage the amount that the Company is committed to loss they accept. Insurance Management of reduction or prevention and makes the risk is a science though it is one of the client a better risk to insure as well. most inexact of the social sciences.

78 RIL 2013 Annual Report

Disclosure of Risk Reporting

For sake of establishing an effi cient risk Risk reporting disclosure ensures management system, disclosure of risk transparency of the existing risk in respect of date and time of occurrence management system that Reliance of incident and its corresponding extent Insurance always encourages its client of loss, internal enquiry report in order to maintain. It helps keeping records to fi nd out the possible cause of such to aid risk inspection properly and thus incident, measures taken to control arrange for proper insurance protection the loss, regular safety compliance and provide further advisory support for & maintenance records, etc. must be better risk management. documented so that proactive measures Reliance Insurance thus ensures proper for loss prevention can be prescribed. risk management of their clients which It is also essential for an enterprise benefi ts them as saving resources: time, to ensure all environmental safety assets, income, property, and people compliance and as such must not be are all valuable resources that can be responsible for any casualty due to any saved if fewer claims occur, protecting default/negligence in construction the reputation and public image of the and maintenance of the factory / offi ce clientele, preventing or reducing legal premise. Risk disclosure is therefore vital liability and increasing the stability of for risk management, especially, in case operations, protecting people from of risk identifi cation, risk control and risk harmful events, and thereby protecting fi nancing. the environment by enhancing Risk reporting disclosure helps competence and effi ciency, reducing identifi cation of physical hazards based liabilities, assisting in clearly defi ning on risk factors, analysis on measures to insurance needs. control risks and last but most vitally to Reliance Insurance though cannot decide on the extent of risk fi nancing. eliminate risks of its clientele but Reliance Insurance through their expert through its experience of effi cient risk professionals imparts responsiveness management practice endeavours to set with the clients with a view to achieve forth its commitment to help its clients the objectives of how to analyse the in loss minimization or provide advisory risk factors associated with diff erent

support for loss prevention and thus control environment management & Risk activities, observe how risks can aff ect makes the client to manage a better risk decision making process, and how to insure as well. Our concerted eff orts operational risks can be managed thus aid to control overall manufacturing properly with the help of insurance. and business environment.

79 Claims Management & Details of Outstanding Claims (IBNR & IBNER) with Aging Thereof

Claims Management consists of services or advisory support quantum of loss and company’s liability etc. Reliance in respect of claims for compensation, restitution, repayment Insurance also suggests their clients the preventive measures or any other remedy for loss or damage. Underwriting and to be adopted to avert/minimize the loss and to take steps to claims settlement are the two vital aspects of operation of protect the salvage. an insurance company. The basis of insurance is risk pooling, which carries the obligation of paying losses. A client obtains As soon as Reliance Insurance receives all necessary papers an insurance policy by paying a price termed as premium, along with survey report from the loss adjuster, the company with the expectation that upon happening of a loss against quickly scrutinizes all documents against its check list of some named perils to the subject matter of insurance, requirements, verifi es the loss adjustment made by the the fi nancial losses will be indemnifi ed. Hence, out of any surveyor and if in order, proceeds with the settlement of insurance contract, the client has the following expectations claim without any loss of time. Besides settlement of claims from the insurer: that are possible to dispose off during the accounting period, a) Adequate insurance coverage, which does not leave him adequate provision for outstanding claims, if any, are also high and dry in time of need, with right pricing. maintained against unsettled claims. b) Timely delivery of defect-free policy documents with In recognition to the claims services, Reliance Insurance has relevant guidelines endorsements/warranties/conditions. been awarded a Credit Rating of AA+ in claims pay-ability by c) Should a claim happen, quick settlement to the the Credit Rating Information and Services Limited (CRISL). satisfaction of the insured. Outstanding Claims (IBNR and IBNER) with aging thereof Excellence in claims handling is a competitive edge for an insurance company and it is a service that clients greatly Apart from claims settled in an accounting period, value. Payment of legitimate insurance claims for losses that outstanding liabilities against insurance claims may exist or the insured have reasonably suff ered is the primary reason for arise in respect of claims which have been reported but not buying insurance. yet settled (IBNER) or against which have been incurred but not yet reported (IBNR). In general, there might be a delay Claims management is one of the crucial functions of an in the insurer’s settlement of the claim, typical reasons are: insurance company as it is the ultimate test of a responsible (i) reporting delay (time gap between claims occurrence and effi cient insurer. Reliance Insurance has its corporate and claims reporting at the insurance company); and (ii) philosophy on claims management setting out broad settlement delay, because it usually takes time to evaluate approaches aimed at providing high quality service and the whole size of the claim. The time diff erence between expeditious settlement of claims. It specifi es the nature of claims occurrence and claims closing (fi nal settlement) can claims service and also the IT enabled interactive process to take days (e.g. in case of property insurance) but it can also monitor the status of the claim. take years (typically in case of liability insurance). Reliance Insurance manages the claims rather than handling Provisions are created by setting aside a portion of them. The claim handling process starts with the notifi cation net premium so that the insurer is able to settle all the of loss to Reliance Insurance and the company appoints outstanding claim liabilities that are proximately caused by a licensed loss adjuster immediately upon receipt of the perils falling within the scope of insurance contracts. The intimation. In order to ensure speedy disposal of claims, the following formula is usually applied to calculate the provision insured and/or their agent are always requested to submit for such outstanding claims: all available supporting documents without delay. A list of minimum requirement of supporting documents/papers for Total IBNR = “Pure IBNR” + “IBNER” claims arising under each class of business is maintained at the Head Offi ce. For sake of proper accounting practice, reserve for each outstanding claims are maintained in respect of the fi nancial Reliance Insurance undertakes all necessary steps years. Reserve for claims incurred but not reported (IBNR) expeditiously in an orderly sequence: contact the insured, and Reserve for claims incurred but not enough reported arrange to inspect the loss through a loss adjuster, ascertain (IBNER) are the two terms that can be regarded as of identical

80 RIL 2013 Annual Report

meaning. In some types of work, especially in reinsurance Incurred But Not Enough Reported (IBNER) and in the London market, IBNR provisions include any IBNER Loss Reserve provisions. IBNER refers to a reserve refl ecting expected changes Sometimes, the provision for claims incurred on or before the (increases and decreases) in estimates for reported claims valuation date is referred to as the True IBNR or the pure IBNR. only. The abbreviation is sometimes stated as applying to “incurred but not enough reserved”. The liability for outstanding claims in the Balance Sheet of a non-life insurance company includes a provision for both Some liability claims may be fi led long after the event that IBNR and IBNER. Technically, there is a practice of creating caused the injury to occur. Asbestos-related diseases, for reserve against future liability arising out of claims which instance, do not show up until decades after the exposure. have occurred but have not yet been settled. Reserve for such outstanding claims also has to be created Incurred But Not Reported (IBNR) Losses adequately against IBNER losses. Reserve IBNER also refers to estimates made about claims already reported but where the full extent of injury is not yet known, IBNR refers to the losses that are not fi led with the insurer or such as, workmen’s compensation claim where the degree to re-insurer until years after the insurance policy is sold. It is a which work-related injuries prevents a worker from earning reserve to provide for claims in respect of claim events that what he or she earned before the injury unfolds over time. have occurred before the accounting date but have still to be Reliance Insurance regularly adjusts reserves for such losses reported to the insurer by that date. In case of a re-insurer, as and when new information becomes available. the reserve needs also to provide for claims that, although known to the cedant, have not yet been reported to the re- As per the existing directives of our local Insurance insurer as being liable to involve the re-insurer. Regulatory body IDRA (Insurance Development and Regulatory Authority) of Bangladesh, quarterly reporting IBNR refl ects the total amount owed by the insurer to all of all outstanding claims with aging thereof including their valid claimants who have had a covered loss but have not specifi c reasons for delay in settlement of such respective yet reported it. Since the insurer knows neither how many of outstanding claims is mandatory. Reliance Insurance these losses (the frequency) have occurred, nor the severity maintains an adequate provision against each of such of each loss, IBNR is necessarily an estimate. The quality outstanding claims with respective aging thereof. Under the of this estimation is often used as a tool in assessing the current Insurance Laws of Bangladesh, it is not yet obligatory fi nancial accounting skills of a given insurer. Insurers track to provide reserves for IBNR and/or IBNER claims. However, IBNR by policy periods (when incepted), along with other in accordance to the solvency margin regulations proposed categorizations. under Insurance Act 2010, such reserves will be required to The characteristics of IBNR makes it look more like a reserve be maintained in the manner to be prescribed by the relevant or provision for the particular types of losses not reported, Rules. hence gives a better estimation of profi ts for the insurer’s current business period. insurance sector Specifi

Solvency Margin c areas for

Solvency margin is the amount by which the assets of Moreover solvency margin assists fi nancial investment an insurer exceed its liabilities, and will form part of the managers when making a decision on the risk or reward insurer’s shareholder’s funds. Method of valuations of assets capability of a company to return dividends to stockholders. and liabilities of an insurer are prescribed in the insurance In Bangladesh regulations for solvency margin for non- regulations. The regulations stipulate the minimum solvency life insurance Company has not yet been fi nalized by the margin, which an insurer must maintain at all times. The regulator. solvency of an Insurance Company corresponds to its ability to pay claims. The solvency of insurance Company or its fi nancial strength depends chiefl y on whether suffi cient technical reserves have been set up for the obligations entered into and whether the Company has adequate capital as security.

81 Accounting Ratios Partaining to the Insurance Sector

2013 2012

R/I premium ceded as % of gross premium 57.03 56.99

Commission Paid as % of Gross Premium 14.02 19.17

Net R/I Commission Earned as % of Gross Premium 10.92 10.63

Net R/I Commission Earned as % of Net Premium 25.42 24.71

Management Expenses (Revenue A/C) as % of Gross Premium 14.21 14.88

Management Expenses (Revenue A/C) as % of Net Premium 33.06 34.61

Combined ratio as % on Gross Premium 86.03 *87.58

Combined ratio as % on Net Premium 67.50 *71.13

Net Claims Incurred as % of Gross Premium 10.32 9.59

Net Claims Incurred as % of Net Premium 24.03 22.30

Underwriting Result as % of Gross Premium 13.97 12.42

Underwriting Result as % of Net Premium 32.50 28.87

* Combined Ratios 2012 has been restated.

82 RIL 2013 Annual Report Review of Assets Quality

Reliance insurance Limited always focuses on the superior assets quality so that these will bring highest value to the Company, ensure satisfactory return to the stakeholders and ensure sustainable development. To perform the said objectives, company has the policy to review of its assets periodically and as a result of continuous monitoring and development of the assets quality, Company could achieve the hefty growth for the past years. Following fi gures showing fi ve years growth of the assets may demonstrate how the Company maintains its assets quality to increase value to the Company.

Reliance ensures high degree of liquidity of its assets - around 60% of its assets comprise of cash and quickly disposable shares and securities. Its share investment portfolio comprise of investments into companies with strong fundamentals. Notwithstanding rather adverse performance of stock markets in Bangladesh during the year 2013, Reliance could earn its investment income better than 2012, which bear testimony to the prudent investment policies followed by the Company.

Position of Total Assets Cash, Fixed Property, plant & Year Investments Deposit and Other assets Total equipments Bank Balances 2009 352.14 190.52 759.87 577.76 1,880.29 2010 539.78 2,673.34 791.89 600.92 4,605.93 2011 1,403.49 1,539.70 864.80 722.85 4,530.84 2012 1,387.94 1,254.70 1,228.74 539.36 4,410.74 2013 1,378.88 1,301.27 1,559.30 556.93 4,796.38

Position of Investable Assets Particulars 2013 % 2012 % Share & Debentures Long term 1,236.96 29.1 1,209.04 31.2 Short term 64.32 1.5 45.66 1.2 Total 1,301.27 30.7 1,254.70 32.4 Cash in Bank 1,559.30 36.7 1,228.74 31.7 Fixed assets and other 1,384.89 32.6 1,392.44 35.9 Total 4,245.47 100.0 3,875.88 100.0 insurance sector Specifi Total assets (BDT mn) Investable Assets (BDT mn) c areas for

RIL 2013 Annual Report Report of the Audit Committee

The Audit Committee of the Reliance Insurance Limited Branch activities and recommended appropriate comprises of fi ve Directors nominated by the Board of measures to the management arising out of the Directors. The Chief of Internal Control & Audit Division has ﬁ ndings of such reports. direct access to the Committee and the Committee directly  Reviewed the status report of Audit Plan 2013 and reports to the Board. It operates according to the Terms also approved the Audit Plan for 2014 of Reference as approved by the Board and in compliance with section 3 of the Securities and Exchange Commission During its meeting held on February 22, 2014, the Audit Notifi cation No.SEC/CMRRCD/2006-158/134/Admn/44 dated Committee reviewed and examined the internal audit reports 07 August 2012. The Audit Committee comprises of the on the draft annual fi nancial statements for the year 2013 and following members: recommended the audited accounts for the year 2013 to the Board of Directors for their consideration and approval. Mr. Anis-uz-Zaman Khan, Chairman The Audit Committee is of the view that the internal control Mr. Habibullah Khan, Member and procedures are adequate to present a true and fair view Mr. Md. Khalilur Rahman Choudhury, Member of the activities and fi nancial status of the Company. Finally, Mr. Amanullah Chowdhury, Member the Audit Committee would like to convey their appreciation to the members of the Board, key Management personnel Mr. Atiqur Rahman, Member and Internal Audit Division for the cooperation and support During the year under review i.e. 2013, four (4) meetings of the received during the year 2013. Audit Committee were held to carry out the following tasks: performance Financial  Reviewed and discussed the Management Report by External Auditor for the year ended December 31, 2013 and management’s response (s) to the report. Anis-uz-Zaman Khan  Reviewed the appointment of External Auditors. Chairman  Reviewed quarterly and half yearly Financial Audit Committee Statements.  Reviewed various reports of Internal Control & Audit Division on operational, ﬁ nancial procedures and

85 Responsibility Statement of Chief Executive Offi cer & Chief Financial Offi cer Including Duties as per Condition No. 6 of Corporate Governance Guidelines

The fi nancial statements are prepared in accordance with Bangladesh Accounting Standards issued by the Institute of Chartered Accountants of Bangladesh and in compliance with Insurance Act 2010, Company Act 1994, the Securities and Exchange Rules 1987 and the Listing Regulations of the Dhaka and Chittagong Stock Exchanges.

We are responsible for establishing and maintaining proper internal control system. We have designed such control or caused such control to be designed under our supervision, to ensure that material information relating to the Company is made known to us and for safeguarding the Company’s assets and preventing and detecting fraud and error.

We have evaluated the eff ectiveness of the Company’s internal control system and are satisfi ed that the internal control system were eff ective as of the end of the period under review. Moreover signifi cant estimates and accounting policies that involve a high degree of complexity and judgment were discussed with our external auditors and the audit committee of the Board.

We certify to the Board that:-

(i) We have reviewed fi nancial statements for the year and that to the best of our knowledge and belief;

a) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

b) these statements together present a true and fair view of the Company’s aff airs and are in compliance with existing accounting standards and applicable laws.

(ii) There are, to the best of our knowledge and belief, no transaction entered into by the Company during the year which are fraudulent, illegal or violation of the Company’s code of conduct.

Mohammed Sabir Ahmed Akhtar Ahmed Chief Financial Offi cer Managing Director & CEO

86 Auditors’ Report To the Shareholders of Reliance Insurance Limited

We have audited the accompanying Statement of Financial Position of Reliance Insurance Limited as at 31 December, 2013 and the related Statement of Comprehensive Income, Statement of Cash Flows, Statement of Change in Equity and Notes for the period from January 1, 2013 to December 31, 2013.

Respective Responsibilities of Directors and Auditors:

The preparation of these fi nancial statements is the responsibility of the company’s management. Our responsibility is to express an independent opinion on these fi nancial statements based on our audit.

Basis of Audit opinion:

We conducted our audit in accordance with Bangladesh Standard on Auditing (BSA). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatements. An audit also includes examining, on a test basis, evidence supporting the amount and disclosures in the fi nancial statements. An audit also includes assessing the accounting principles used and signifi cant estimates made by the management, as well as evaluating the overall fi nancial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

Opinion:

In our opinion, the fi nancial statements are prepared in accordance with Bangladesh Accounting Standards (BAS), give a true and fair view of the state of Company’s aff airs as at December 31, 2013 and of the results of its operations and its cash fl ows for the period then ended and comply with the companies Act 1994, The Insurance Act 2010, the Securities and Exchange Rules 1987, Bangladesh Accounting Standards and other applicable laws and regulations.

We also report that: a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verifi cation thereof; b) The company Management has followed relevant provision of laws and rules in managing the aff airs of the company and proper books of accounts, record and other statutory books have been properly maintained and (where applicable) proper returns adequate for the purposes of our audit have been received from branches not visited by us. c) In our opinion, the Company has kept proper books of accounts as required by law so far as it appeared from our examination of those books; d) As per section 63(2) of the Insurance Act 2010, we certify that to the best of our knowledge and belief and according to the information and explanation given to us, all expenses of management wherever incurred and whether incurred directly or indirectly, in respect of insurance business of the company transacted in Bangladesh during the year under report have been duly debited to the related Revenue Account and the Statement of Comprehensive Income of the Company. e) We certifi ed that to the best of our information and as shown by its books, the company during the year under report has not paid any commission to any person in any form outside Bangladesh in respect of any of its business re-insured abroad. performance Financial c) The Company’s Statement of Financial Position, Statement of Comprehensive Income and its Statement of cash fl ows dealt with by the report are in agreement with the books of account and returns; d) The expenditure incurred was for the purpose of the company’s business.

Dated: Dhaka Malek Siddiqui Wali Feb 23, 2014 Chartered Accountants

87 Statement of Financial Position as of December 31, 2013

2013 2012 Particulars Notes Taka Taka Shareholders' Equity & Liabilities Shareholders' equity 3,370,996,113 3,195,762,743 Share capital 3.00 519,497,550 472,270,500 Reserves and surplus 4.00 2,851,498,563 2,723,492,243

Liabilities and Provisions 1,425,385,043 1,214,979,528 Balance of funds and accounts 5.00 282,444,612 259,855,804 Premium deposit 6.00 251,753,177 200,503,495 Deferred liability for employees gratuity 54,614,110 49,172,724

Unpaid dividend 1,653,463 1,128,658 Estimated liability in respect of outstanding claims whether due or intimated 7.00 196,262,490 156,333,453

Amounts due to other persons or bodies carrying on insurance 8.00 120,199,981 119,559,663 business Outstanding refundable premium 9.00 1,170,933 753,827 Sundry creditors 10.00 517,286,277 412,037,833 Overdrawn on current account - 15,634,071

Total shareholders’ equity & liabilities 4,796,381,156 4,410,742,271

The annexed notes 1 to 35 form an integral part of these fi nancial statements

Dated, Dhaka Shahnaz Rahman Atiqur Rahman Feb 23, 2014 Chairman Director

88 RIL 2013 Annual Report

Statement of Financial Position as of December 31, 2013

2013 2012 Particulars Notes Taka Taka Assets Non-Current assets 2,686,168,932 2,647,137,848 Property, plant & equipments 11.00 1,378,876,088 1,387,936,600 Fixed assets under construction 12.00 6,018,702 4,503,702 Investments 13.00 1,301,274,142 1,254,697,546

Current assets 2,098,059,011 1,752,348,533 Inventories 14.00 7,534,978 6,586,977 Sundry debtors (including advances, deposits and prepayments) 15.00 386,744,366 370,881,595

Premium control account 16.00 38,820,473 56,108,142 Interest receivable account 17.00 74,840,275 60,874,278 Amount due from other persons or bodies carrying on insurance 18.00 30,816,576 29,158,979 business Cash and cash equivalents 1,559,302,343 1,228,738,562 Cash in hand 385,671 440,246 Cash at bank 19.00 74,970,912 121,252,556 Fixed deposit 20.00 1,483,945,760 1,107,045,760

Deferred tax assets 12,153,213 11,255,890 Total assets 4,796,381,156 4,410,742,271

performance Financial Md. Khalilur Rahman Choudhury Akhtar Ahmed Malek Siddiqui Wali Director Managing Director & CEO Chartered Accountants

89 Statement of Comprehensive Income For the year ended December 31, 2013

2013 2012 Particulars Notes Taka Taka Expenses of management 52,981,917 51,129,862 (Not applicable to any particular fund or account) Director’s meeting attendance fees 580,750 546,250 Fees and charges 338,813 439,200 Advertisement and sign board 3,974,059 2,421,617 Donations 400,000 1,705,535 Subscriptions 1,886,864 1,174,967 Legal and Professional fees 1,065,612 927,529 Employees welfare expenses 170,000 191,000 Securities services 381,040 461,580 Tax deduction at source 1,341,109 2,883,725 Depreciation 21,893,010 20,265,395 Registration fees 5,501,910 4,977,210 Bonus 15,000,000 14,718,354 Audit fees 448,750 417,500 Profi t before tax 406,162,778 297,920,768 129,102,678 93,994,263 Provision for companies income tax 21.00 130,000,000 94,000,000 Deferred tax assets/(liabilities) (897,322) (5,737) Profi t after tax transferred to profi t & loss appropriation account 277,060,100 203,926,505 Total 459,144,695 349,050,630

Profi t & Loss Appropriation Account

2013 2012 Particulars Notes Taka Taka 188,490,449 187,314,028 Reserve for exceptional losses 4.01 70,422,824 64,113,028 Dividend for the year- 2012 118,067,625 123,201,000 Balance transferred to balance sheet (Note-4) 321,874,336 233,304,686 Total 510,364,786 420,618,713

2013 2012 Particulars Notes Taka Taka Weighted average no. of outstanding shares 51,949,755 51,949,755 Earnings per share 5.33 3.93 (Basic earnings per share-par value Tk. 10 each)

The annexed notes 1 to 35 form an integral part of these fi nancial statements

Dated, Dhaka Shahnaz Rahman Atiqur Rahman Feb 23, 2014 Chairman Director

90 RIL 2013 Annual Report

Statement of Comprehensive Income For the year ended December 31, 2013

2013 2012 Particulars Notes Taka Taka Profi t/(Loss) transferred from: 228,882,154 185,094,327 Fire revenue account 33,441,776 (14,225,409) Marine revenue account 162,358,914 146,172,618 Miscellaneous revenue account 33,081,464 53,147,118

Interest and dividend income 22.00 187,415,622 140,947,090 Other Income 23.00 42,846,919 23,009,213

Total 459,144,695 349,050,630

Profi t & Loss Appropriation Account

2013 2012 Particulars Notes Taka Taka Opening Balance of Appropriation account 233,304,686 216,692,208 Net Profi t after tax for the year brought down 277,060,100 203,926,505

Total 510,364,786 420,618,713

Other Comprehensive Income

2013 2012 Particulars Notes Taka Taka Profi t after tax 277,060,100 203,926,505 Other comprehensive income: (32,936,878) (374,085,647) Changes in fair value the shares available-for-sale 13.04 (32,936,878) (374,085,647)

Total Comprehensive Income for the year 244,123,222 (170,159,142) performance Financial

Md. Khalilur Rahman Choudhury Akhtar Ahmed Malek Siddiqui Wali Director Managing Director & CEO Chartered Accountants

91 Fire Insurance Revenue Account For the year ended December 31, 2013

2013 2012 Particulars Notes Taka Taka Claims under policies less re-insurances 32,771,749 45,124,613 Claims paid during the year 137,950,535 188,156,165 Paid/Adjusted on PSB 109,209 40,639 Paid on re-insurance acceptance - 516,475 Recovered/adjusted on reinsurance ceded (105,125,471) (149,224,101) Claims outstanding at the end of the year 468,503,774 149,552,402 Recoverable on reinsurance cedence (439,121,383) (120,007,487) Claims outstanding at the end of the previous year (29,544,915) (23,909,480)

Expenses of management 119,702,929 123,011,754

Commission 121,933,980 145,079,049

Profi t/(Loss) transferred to Statement of Comprehensive Income 33,441,776 (14,225,409)

Balance of account at the end of the year 5.00 77,968,988 78,468,565 as shown in the Statement of fi nancial position being reserve for unexpired risks @ 40% of premium income of the year

Total 385,819,422 377,458,572

Dated, Dhaka Shahnaz Rahman Atiqur Rahman Feb 23, 2014 Chairman Director

92 RIL 2013 Annual Report

Fire Insurance Revenue Account For the year ended December 31, 2013

2013 2012 Particulars Notes Taka Taka Balance of Account at the beginning of the year 78,468,565 80,554,973

Premium less reinsurances 194,922,469 196,171,414 Premium underwritten 847,168,202 831,551,197 Premium refunded (7,792,736) (9,227,507) Premium on PSB 3,093,169 2,794,350 Reinsurance premium on PSB (2,093,180) (1,615,542) Premium on reinsurance accepted 1,229,335 1,634,977 Reinsurance premium ceded (646,682,321) (628,966,061)

Commission on reinsurances 112,428,388 100,732,185 Commission earned on re-insurance ceded 112,138,028 100,493,827 Commission earned on PSB 290,360 238,358

Total 385,819,422 377,458,572

Md. Khalilur Rahman Choudhury Akhtar Ahmed Malek Siddiqui Wali Director Managing Director & CEO Chartered Accountants performance Financial

93 Marine Insurance Revenue Account For the year ended December 31, 2013

2013 2012 Particulars Notes Taka Taka

Claims under policies less re-insurances 40,423,002 23,642,016 Claims paid during the year 67,904,069 72,741,367 Paid/adjusted on PSB 3,041,745 87,867 Recovered/adjusted on PSB (2,666,656) (21,782) Paid on re-insurance acceptance - 130,055 Recovered/adjusted on reinsurance ceded (37,831,650) (30,079,122) Claims outstanding at the end of the year 107,791,831 127,156,000 Recoverable on reinsurance cedence (20,717,074) (50,056,737) Claims outstanding at the end of the previous year (77,099,263) (96,315,632)

Expenses of management 61,133,322 59,347,166

Commission 61,145,575 96,037,617

Profi t/(Loss) transferred to Statement of Comprehensive Income 162,358,914 146,172,618

Balance of account at the end of the year 5.00 113,596,189 107,441,703

as shown in the Statement of fi nancial position being reserve for 113,058,201 101,768,881 unexpired risks @ 40% of premium income of the year (Marine Cargo)

as shown in the Statement of fi nancial position being reserve for 537,988 5,672,822 unexpired risks @ 100% of premium income of the year (Marine Hull)

Total 438,657,002 432,641,120

Dated, Dhaka Shahnaz Rahman Atiqur Rahman Feb 23, 2014 Chairman Director

94 RIL 2013 Annual Report

Marine Insurance Revenue Account For the year ended December 31, 2013

2013 2012 Particulars Notes Taka Taka

Balance of Account at the beginning of the year 107,441,703 126,121,468

Premium less reinsurances 282,107,515 260,095,024 Premium underwritten 422,840,071 386,766,224 Premium refunded (5,779,254) (423,063) Premium on PSB 14,746,254 13,175,428 Reinsurance premium on PSB (9,925,129) (9,855,947)

Premium on reinsurance accepted 4,121,495 2,922,225 Reinsurance premium ceded (143,895,922) (132,489,843)

Commission on reinsurances 49,107,784 46,424,628 Commission earned on re-insurance ceded 44,479,840 44,119,949 Profi t commission 2,747,985 460,659 Commission earned on PSB 1,879,959 1,844,020

Total 438,657,002 432,641,120

performance Financial

Md. Khalilur Rahman Choudhury Akhtar Ahmed Malek Siddiqui Wali Director Managing Director & CEO Chartered Accountants

95 Miscellaneous Insurance Revenue Account For the year ended December 31, 2013

2013 2012 Particulars Notes Motor Misc. Total Total Taka Taka Taka Taka Claims under policies less re-insurances 50,456,982 45,552,145 96,009,127 74,194,877 Claims paid during the year 52,490,739 15,607,646 68,098,385 63,122,078 Paid/adjusted on PSB 83,343 471,095 554,438 1,964,137 Recovered/adjusted on PSB - (458,004) (458,004) (1,752,023) Recovered/adjusted on reinsurance ceded - (2,301,759) (2,301,759) (2,248,053) Claims outstanding at the end of the year 29,203,900 72,312,100 101,516,000 68,677,000 Recoverable on reinsurance cedence - (21,710,659) (21,710,659) (18,987,726) Claims outstanding at the end of the previous year (31,321,000) (18,368,274) (49,689,274) (36,580,537)

Expenses of management 24,363,328 27,627,842 51,991,170 39,534,850

Commission 21,526,269 25,113,997 46,640,266 44,647,150

Profi t/(Loss) transferred to Statement of 60,297,745 (27,216,281) 33,081,464 53,147,118 Comprehensive Income

Balance of account at the end of the year 5.00 65,684,843 25,194,594 90,879,437 73,945,536 as shown in the Statement of fi nancial position being reserve for unexpired risks @ 40% of premium income of the year

Total 222,329,167 96,272,297 318,601,464 285,469,532

Dated, Dhaka Shahnaz Rahman Atiqur Rahman Feb 23, 2014 Chairman Director

96 RIL 2013 Annual Report

Miscellaneous Insurance Revenue Account For the year ended December 31, 2013

2013 2012 Particulars Notes Motor Misc. Total Total Taka Taka Taka Taka Balance of Account at the beginning of the 57,820,749 16,124,787 73,945,536 89,308,577 year Premium less reinsurances 164,212,107 62,986,483 227,198,590 184,863,843 Premium underwritten 167,071,072 169,758,389 336,829,461 243,128,016 Premium refunded (1,802,014) (680,640) (2,482,654) (1,209,500) Premium on PSB 1,820,578 23,091,247 24,911,825 19,704,466 Reinsurance premium on PSB (115,352) (22,494,820) (22,610,172) (18,065,285)

Reinsurance premium ceded (2,762,177) (106,687,693) (109,449,870) (58,693,855)

Commission on reinsurances 296,311 17,161,027 17,457,338 11,297,112 Commission earned on re-insurance ceded 296,311 14,795,080 15,091,391 9,449,498 Profi t Commission - - - 362,739 Commission earned on PSB - 2,365,947 2,365,947 1,484,874

Total 222,329,167 96,272,297 318,601,464 285,469,532

performance Financial Md. Khalilur Rahman Choudhury Akhtar Ahmed Malek Siddiqui Wali Director Managing Director & CEO Chartered Accountants

97 Classifi ed Summary of Assets As at December 31, 2013

(Amount in Taka)

2013 2012 Particulars Book Value Book Value Non Current Assets: Property, Plant & Equipments Land 1,182,187,500 1,182,187,500 Building 156,536,850 165,744,900 Furniture & fi xtures 15,144,565 16,134,341 Offi ce equipments & IT installation 4,191,796 3,439,198 Air coolers 1,589,943 453,208 Vehicles 14,573,523 14,343,778 Fans 53,920 70,722 Electrical equipments 4,126,085 4,947,754 Telephone installation 471,906 615,199 Sub Total 1,378,876,088 1,387,936,600 Fixed Assets Under Construction 6,018,702 4,503,702

Investments Bangladesh Govt. treasury bond 25,000,000 4,500,000 Debentures 1,998,059 2,358,292 Shares of listed companies 1,131,099,996 1,110,671,258 Shares of unlisted companies 1,569,450 1,569,450 Orascom bond 8,000,000 12,000,000 IDLC 29,318,637 26,798,546 Mutual fund 104,288,000 96,800,000 Sub Total 1,301,274,142 1,254,697,546

Dated, Dhaka Shahnaz Rahman Atiqur Rahman Feb 23, 2014 Chairman Director

98 RIL 2013 Annual Report

Classifi ed Summary of Assets (contd...) As at December 31, 2013

(Amount in Taka)

2013 2012 Particulars Book Value Book Value Current Assets Fixed deposits & SND accounts with bank 1,550,773,583 1,221,677,661 Cash in hand & current account with bank 5,528,760 5,060,901 Remittance in transit 3,000,000 2,000,000 Premium control account 38,820,473 56,108,142 Interest accrued & overdue 370,000 536,280 Interest accrued but not due 74,470,275 60,337,998 Sundry debtors 386,744,366 370,881,595 Stock of Stationery 1,058,384 1,014,768 Stamps in hand 6,476,594 5,572,209 Amount due from other persons or bodies carrying on insurance business 30,816,576 29,158,979 Sub Total 2,098,059,011 1,752,348,533

Other Assets Deferred tax assets 12,153,213 11,255,890 Total Assets 4,796,381,156 4,410,742,271

Md. Khalilur Rahman Choudhury Akhtar Ahmed Malek Siddiqui Wali performance Financial Director Managing Director & CEO Chartered Accountants

99 Statement of Cash Flows For the year ended December 31, 2013

2013 2012 Particulars Taka Taka Cash fl ow from operating activities : 261,723,945 401,532,528 Collection from premium & other income 2,063,183,778 2,389,060,496 Payment for management expense, re-insurance and claim (1,472,658,667) (1,667,379,370) VAT paid (207,234,986) (208,174,156) Income tax paid (81,386,323) (69,243,922) TDS & VDS paid (40,179,857) (42,730,520)

Cash fl ow from investing activities : 127,158,242 12,415,557 Acquisition of fi xed assets (13,873,545) (7,267,215) Proceeds from disposal of fi xed assets 4,119,973 29,030 Payment against purchase of investments (94,139,474) (85,000,000) Redeemption of debentures 360,233 720,466 Amortization of OTBL bond 4,000,000 4,000,000 Proceeds from disposal of investments 83,822,000 - Dividend received 7,734,488 5,955,291 Interest received 155,634,567 93,977,985 Govt. Treasury Bond (20,500,000) -

Cash fl ow from fi nancing activities : (58,318,406) (50,011,489) Dividend Paid (58,318,406) (50,011,489)

Net increased / (decreased) 330,563,781 363,936,596

Reconciliation: 330,563,781 363,936,596 Cash at the beginning of the year 1,228,738,562 864,801,966 Cash at the end of the year 1,559,302,343 1,228,738,562

Dated, Dhaka Shahnaz Rahman Atiqur Rahman Feb 23, 2014 Chairman Director

Md. Khalilur Rahman Choudhury Akhtar Ahmed Malek Siddiqui Wali Director Managing Director & CEO Chartered Accountants

100 RIL 2013 Annual Report Total (Amount in Taka) in (Amount Director 1,950,722 1,950,722 Total Atiqur Rahman Atiqur 2,851,498,563 3,370,996,113 Malek Siddiqui Wali Malek Siddiqui Chartered Accountants (70,840,575) (70,840,575) (70,840,575) earnings Retained reserve General General losses Reserve for Reserve for exceptional exceptional Reserve & Surplus Capital Capital reserve - 1,950,722 - - - Chairman Akhtar Ahmed Akhtar Shahnaz Rahman reserve Managing Director & CEO Managing Director Fair value value Fair 780,872,327 2,379,041 635,444,631 1,250,000 321,874,336 - Land reserve revaluation revaluation 1,109,678,226 ------(32,936,878) - - - - - 70,422,824 - - - - (70,422,824) - 277,060,100 277,060,100 277,060,100 - - (32,936,878) (32,936,878) - - Share Share 47,227,050 - - - - - (47,227,050) (47,227,050) - capital 472,270,500 1,109,678,226 813,809,205 428,319 565,021,807 1,250,000 233,304,686 2,723,492,243 3,195,762,743 519,497,550 performance Financial Director t after tax Md. Khalilur Rahman ChoudhuryMd. Balance as at January as at 1, 2013 Balance Particulars in changes equity:Items involved Bonus issued dividend paid Cash Net profi made during the year Appropriation income Other comprehensive gain realised Capital 31, 2013 December as at Balance Statement of Changes in Shareholders Equity of Changes in Shareholders Statement 31, 2013 ended December the year For Dated, DhakaDated, 23, 2014 Feb 101 Reliance Insurance Limited Notes to the Financial Statements For the Year ended 31 December 2013

1.00 Legal form of the Company Reliance Insurance Ltd was incorporated as a public limited Company in Bangladesh in the year 1988 under the Companies Act 1913 (present 1994). The Company, within the stipulations laid down by Insurance Act 2010 and directives as received from Insurance Development & Regulatory Authority (IDRA) time to time, provides Non-life Insurance services. The company is listed with Dhaka Stock Exchange and Chittagong Stock Exchange as a Publicly Traded Company. The Company carries its insurance activities through thirty one branches throughout the country. 1.01 Principal Activities and Nature of Operations The principal activity of the company continued to be carrying on non-life insurance business. There were no signifi cant changes in the nature of the principal activities of the Company during the year 2013 under review. 1.02 Date of Financial Statements authorized for issue Financial Statements of the Company for the year ended December 31, 2013 were authorized for issue on Feb 23, 2014 in accordance with a resolution of the Board of Directors. 2.00 Summary of Signifi cant Accounting and Related Policies 2.01 Basis of preparation The fi nancial statements of the Company under reporting have been prepared under historical cost convention in a going concern concept and on accrual basis in accordance with Generally Accepted Accounting Principles and practice in Bangladesh. Disclosure of fi nancial information as required by Insurance Act 2010 have been complied with while preparing statement of fi nancial position , statement of comprehensive income and revenue accounts for specifi c classes of insurance business in the form set forth in the fi rst, second and third schedule of the Insurance Act and also in compliance with the Companies Act 1994. In addition, the Bangladesh Securities and Exchange Commission Rules 1987, Listing Regulations of Dhaka Stock Exchange Ltd. (DSE) & Chittagong Stock Exchange Ltd. (CSE), International Accounting Standards (IAS) as adopted by the Institute of Chartered Accountants of Bangladesh (ICAB), as Bangladesh Accounting Standards (BAS) have also been complied with. 2.02 Premium Recognition Premium is recognized when insurance policies are issued, but the premium of Company’s share of public sector insurance business (PSB) is accounted for in the year in which the statements of account from Sadharan Bima Corporation are received. Up to 31 December 2013 statements of account for the period 01 July 2012 through 30 June 2013 have been received and, accordingly, the Company’s share of PSB for that period has been recognized in these fi nancial statements. 2.03 Accounting Estimates Preparation of fi nancial statements requires Management to make judgments, estimates and assumptions that aff ect the application of policies and reported amount of assets and liabilities, income and expenses. The estimates and underlying assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments amount carrying values of assets and liabilities that are not readily apparent from other sources. While Management believes that the amounts included in the fi nancial statements refl ect the company’s best estimates and assumptions, actual result could diff er from estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions of the accounting estimates are recognized in the period in which the estimates are revised. Signifi cant areas requiring the use of Management estimates in these fi nancial statements relate to the useful life of depreciable assets and provisions for loans. However, assumptions and judgments made by Management in the application of accounting policies that have signifi cant eff ect on the fi nancial statements are not expected the result in material adjustment to the carrying amount of assets and liabilities in the next year. 2.04 Functional and presentation currency The Financial Statements are presented in Bangladeshi Taka which is the Company’s functional currency.

102 RIL 2013 Annual Report

2.05 Materiality and aggregation Each material class of similar items is presented separately in the Financial Statements. Item of a dissimilar nature or function are presented separately unless they are immaterial. 2.06 Foreign currency transaction All foreign exchange transactions are converted to Bangladeshi Taka, which is the reporting currency, at the rate of exchange prevailing at the time the transaction were eff ected. Insurance contracts which were underwritten in foreign currency are converted to Bangladeshi Taka at the rate of exchange prevailing at the time of underwriting and revenue is recognized accordingly. 2.07 Property, plant and equipment 2.07.01 Recognition and measurement Property, Plant and Equipment are recognized if it is probable that future economic benefi ts associated with the asset will fl ow to the Company and cost of the asset can be measured reliably. Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use and the cost of dismantling and removing the items and restoring the site on which they are located. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment. When revalued assets are sold, the relevant amount included in the revaluation reserve is transferred to retained earnings. 2.07.02 Subsequent cost The cost of replacing a component of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefi ts associated with the part will fl ow to the Company and its cost can be measured reliably. The carrying amount of the replaced component is de-recognised. 2.07.03 Revaluations Revaluation on freehold land and building is performed by professionally qualifi ed valuers. The frequency of revaluations depends upon the movements in the fair values of the items of property, plant and equipment being revalued. Usually Land and buildings are revalued every two to three years. The revaluation surplus is recognised in the net carrying amount of the assets and is transferred to revaluation reserve after restating the asset at the revalued amount. Any revaluation loss is directly recognised in the Statement of Comprehensive Income but any revaluation loss arising from an asset which has been previously recognized in the revaluation reserve is debited to the extent of any credit balance existing in the revaluation reserve in respect of that asset. 2.07.04 Depreciation Depreciation on fi xed assets is charged on straight-line method on the estimated useful lives of the assets. Depreciation of an asset begins when the asset is available for use. Full month’s depreciation has been charged on additions in performance Financial irrespective of date when the related assets are put in to use and no depreciations is charged for the month of disposal. Asset category wise depreciation rates are as follows:

Particulars Rate Offi ce Building (SPL Tower) 5% Furniture & Fixture 10% Motor Vehicles 20% Offi ce & Electrical Equipments 15% Miscellaneous Items 20%

103 2.07.05 De-recognition An item of property, plant and equipment is de-recognised upon disposal or when no future economic benefi ts are expected from its use. Any gain or loss arising on de-recognition of the asset is included in the statement of Comprehensive income in the year the asset is de-recognized. 2.07.06 Impairment of assets The carrying amounts of the company’s non fi nancial assets, other than deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. An impairment loss is recognized if the carrying amount of an asset or its cash generating unit exceeds its estimated recoverable amount. Impairment losses are recognised in the statement of comprehensive income. Considering the present conditions of the assets, management concludes that there is no such indications exist. 2.08 Investment In Shares All investments of RIL are initially recognized at cost, being the fair value of the consideration given which include transaction cost and these are classifi ed into the following categories: 2.08.01 Held To Maturity Investments with fi xed maturity that the management has the intent and ability to hold to maturity are classifi ed as held to maturity and are initially measured at cost. 2.08.02 Held for Trading These fi nancial assets are acquired principally for the purpose of generating profi t from short-term fl uctuation in prices. 2.08.03 Available for Sale Available for sale investments are those non-derivative investments that are designated as available for sale or are not classifi ed in any other category. These are primarily those investments that are intended to be held for an undefi ned period of time or may be sold in response to the need for liquidity are classifi ed as available for sale. The Company follows trade date accounting for ‘regular way purchase and sales’ of investments. 2.09 Employee Benefi ts 2.09.01 Defi ned Contribution Plan Company operates a provident fund, recognized by the Income Tax Authorities. Confi rm employees of the Company are eligible for the said provident fund. Employees of the Company will contribute ten percent of their basic salary and the employer will make a matching contribution. The provident fund is wholly administered by a Board of Trustees and no part of the fund is included in the assets of the Company. 2.09.02 Gratuity The Company operates a gratuity scheme under which a regular confi rmed employee is entitled to benefi t at a graduated scale based on the length of service. The Length of service for the purpose of gratuity shall be reckoned from the date of joining in the regular service of the Company. Calculation of gratuity is made on the basis of last drawn basic salary. An employee will receive one month’s basic salary for each completed year of service if he/she completed fi ve years & above but less than ten years of continuous services and two month’s basic salary for each completed year of service if he/she completed ten years & above of continuous services. Gratuity will be payable only on their separation from the company. 2.09.03 Other benefi ts In addition to the above, Reliance Insurance Limited is providing other benefi ts to its employees like Performance Linked Variable Bonus ( PLV), Group Life Scheme (GLS), Group Medical Benefi ts plan, House Building Loan Scheme and Car/Motor Cycle Loan Scheme subject to fulfi llment of certain terms and conditions.

104 RIL 2013 Annual Report

2.10 Investment Income Recognition 2.10.01 Interest and dividend Interest on debentures, Bangladesh Government Treasury Bond and FDRs are recognized on accrual basis after making provision for income tax deductible at source. Interest on STD/SND account, cash dividend on investment in shares and other income are recognized as and when amount credited to our account. For stock dividend that received by the company against its investment, number of shares increased and average cost of investment decreased. 2.10.02 Other Income Other income is recognized on an accrual basis. Net gains and losses of the revenue nature on the disposal of Property, Plant & Equipment and other non-current assets including investments have been accounted for in the Statement of Comprehensive Income, having deducted from the proceeds on disposal, the carrying amount of the assets and related selling expenses. 2.11 Expenses and Taxes 2.11.01 Recognition of Expenses Expenses are recognised in the Statement of Comprehensive Income on the basis of a direct association between the cost incurred and the earning of specifi c heads of income. All expenditure incurred has been charged to the Statement of Comprehensive Income in the running of the business and in maintaining the property, plant and equipment in a state of effi ciency. 2.11.02 Borrowing Costs Borrowing costs that are directly attributable to the acquisition and construction of a qualifying asset form part of the cost of that asset and, therefore, should be capitalised. Other borrowing costs are recognised as an expense. 2.12 Income tax Income tax expense comprises current tax and deferred tax. Income tax expense is recognized in the Statement of Comprehensive Income. 2.12.01 Current Tax The tax currently payable is based on taxable profi ts for the year. Taxable profi ts diff ers from profi ts as reported in the Statement of Comprehensive Income because it excludes items of income or expenses that are taxable or deductible in other year or are never taxable or deductible. Company’s liability for current tax is calculated using tax rates that have been enacted the balance sheet date. 2.12.02 Deferred tax assets Deferred tax is recognized on diff erences between the carrying amounts of assets and liabilities in the fi nancial statements and the corresponding tax bases used in the computation of taxable profi t and are accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary diff erence. Deferred tax assets are generally recognized for all deductible temporary diff erences to the extent that it is probable that taxable profi ts will be available against which such diff erences can be utilized. Deferred tax is charged or credited to the Statement of Comprehensive Income.

2.13 Reserve or Contingencies Accounts performance Financial 2.13.01 Reserve for exceptional losses As per Para 6 of the 4th schedule, to meet the exceptional losses, Company sets aside ten percent of the premium income of the year in which it is set aside from the balance of the profi t to the Reserve for exceptional losses 2.13.02 Land revaluation reserve The Land revaluation surplus is transferred to revaluation reserve after restating the asset at the revalued amount. Any revaluation loss is directly recognized in the Statement of Comprehensive Income but any revaluation loss arising from an asset which has been previously recognized in the revaluation reserve is debited to the extent of any credit balance existing in the revaluation reserve in respect of that asset. 105 2.14 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 diff erent from those of other business segments. The Company accounts for segment reporting of operating results using the classes of business .The performance of segments is evaluated on the basis of underwriting results of each segment. The Company has four primary business segments for reporting purposes namely fi re, marine, motor and miscellaneous. 2.15 Earnings per share The Company presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profi t or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. 2.16 Statement of Cash Flows The Statement of Cash Flows has been prepared in accordance with BAS -7 and the cash from the operating activities has been presented under direct method. 2.17 Status of Compliance of Bangladesh Accounting Standards and Bangladesh Financial Reporting Standards In preparing Financial Statements, we applied following BAS and BFRS:

Status of Name of the BAS BAS No. application Presentation of Financial Statements 1 Applied Inventories 2 Applied Cash fl ow Statements 7 Applied Accounting Policies, Changes in Accountng estimates and errors 8 Applied Event after Balance Sheet date 10 Applied Construction Contacts 11 N/A Income Tax 12 Applied Property, Plant & Equipments 16 Applied Leases 17 N/A Revenue Recognition 18 Applied Employee Benefi ts 19 Applied Accounting for Govt. Grants and Discloser of Govt. Assistants 20 N/A The eff ects of Changes in Foreign Exchange Rates 21 Applied Borrowing Costs 23 Applied Related Party Disclosures 24 Applied Accounting for Investments 25 Applied Consolidated Financial Statements and Accounting for Investment in 27 N/A subsidiary Accounting for Investment in Associates 28 N/A Interests in Joint Venture 31 N/A Earnings Per Share 33 Applied Provisions, Contingent Liabilities and Contingent Assets 37 Applied Intangible Assets 38 Applied Financial Instruments: Recognition & Measurement 39 Applied Investment Property 40 Applied Agriculture 41 N/A

106 RIL 2013 Annual Report

Status of Name of the BFRS BFRS No. application First Adoption of BFRSs 1 N/A Share based payment 2 N/A Business Combination 3 N/A Insurance Contracts 4 Applied Non- Current assets Held for Sales and Discontinued Operation 5 N/A Exploration for and Evaluation of Mineral Resources 6 N/A Financial Instruments: Disclosure 7 Applied Operating Segments 8 Applied 2.18 General The fi nancial statements are prepared in Bangladeshi Taka (BDT), rounded off to the nearest taka. These are prepared on the historical cost basis and therefore, do not take into consideration the eff ect of infl ation. Previous year’s fi gures have been rearranged, whenever necessary, to confi rm the current year presentation. 3.00 Authorized, Issued, Subscribed and Paid up Capital

2013 2012 Particulars %Taka%Taka Authorized: 2,000,000,000 2,000,000,000 200,000,000 ordinary shares of Tk.10 each Issued, subscribed and paid up: Group A—Sponsors: 47.81 248,355,800 47.81 225,778,000 24,835,580 ordinary shares of Tk.10 each fully paid in cash

Group B—Others: 52.19 271,141,750 52.19 246,492,500 27,114,175 ordinary shares of Tk.10 each fully paid in cash

1) Employees 0.036 187,019 0.04 170,100 2) Bank, ICB’s MF, Insurance companies, BSRS 5.390 28,000,959 3.94 18,599,000 3) ICB Investors’ accounts 0.037 192,214 0.61 2,902,800 4) General public 46.730 242,761,558 47.60 224,820,600 Total 100.00 519,497,550 100.00 472,270,500

Classifi cation of shareholders’ by holding The distribution schedule of shareholdings as on December 31, 2013 was as under

Number of Holders Total Holding % Holdings 2013 2012 2013 2012 Group-A 800,000-2,500,000 4 4 11.76 11.76 performance Financial 2,500,001-4,000,000 6 6 36.05 36.05 Group-B 10-5,000 1,437 1,123 3.23 3.99 5,001-10,000 48 56 0.67 0.88 10,001-50,000 86 79 3.64 3.36 50,001-100,000 10 9 1.37 1.36 100,001-300,000 11 10 3.87 4.01 300,001-600,000 7 8 6.45 7.81 600,001-4,000,000 11 9 32.96 30.78 Total 100 100 107 4.00 Reserves & Surplus

2013 2012 Particulars Notes Taka Taka Reserve for exceptional losses 4.01 635,444,631 565,021,807 Capital reserve 2,379,041 428,319 Retained earnings 321,874,336 233,304,686 General reserve 1,250,000 1,250,000 Land revaluation reserve 1,109,678,226 1,109,678,226 Fair value reserve 13.04 780,872,327 813,809,205 Total 2,851,498,563 2,723,492,243 4.01 Reserve for Exceptional Losses As per paragraph 6 of the Fourth Schedule of Income Tax Ordinance 1984, as earlier, for the year 2013, 10% of the net premium was transferred to reserve for exceptional losses. Details calculation as under:

2013 2012 Particulars Taka Taka Opening Balance 565,021,807 500,908,779 Add: Provision made for the year (10% of net premium Tk 704,228,236) 70,422,824 64,113,028 Total 635,444,631 565,021,807 5.00 Balance of funds and accounts Balance of fund and account consist as follows:

2013 2012 Business Taka Taka Fire Insurance 77,968,988 78,468,565 Marine Insurance 113,596,189 107,441,703 Misc. Insurance 90,879,437 73,945,536 Total 282,444,612 259,855,804 6.00 Premium Deposit The above mentioned amount includes premium received against cover notes for which policies have not been issued within 31st December 2013. While the risks against non-marine and marine hull have been assumed from the issuance of cover notes, risks against marine cargo have not been assumed until shipment advices are provided and accordingly, policies are issued. The class wise summary of the premium deposit is as follows:

2013 2012 BUSINESS Taka Taka Fire Insurance 4,097,845 4,959,265 Marine cargo Insurance 245,755,969 195,368,059 Miscellaneous Insurance 1,899,363 176,171 Total 251,753,177 200,503,495

108 RIL 2013 Annual Report

7.00 Estimated Liability in respect of Outstanding Claims whether Due or Intimated

2013 2012 BUSINESS Taka Taka Fire 29,382,391 29,544,915 Marine cargo 85,317,711 75,459,846 Marine hull 1,757,047 1,639,418 Motor 50,601,441 31,321,000 Miscellaneous 29,203,900 18,368,274 Total 196,262,490 156,333,453

All the claims against which the Company received intimations within 31st December 2013 have been taken into consideration while estimating the liability in respect of outstanding claims. 8.00 Amount due to other Persons or Bodies carrying on Insurance Business

2013 2012 PARTICULARS Taka Taka Co-insurance premium payable 41,345,294 17,112,200 Co-insurance salvage payable 88,418 88,418 Green Delta Insurance Co. Ltd. for reinsurance ceded 4,389,617 4,599,995 Sadharan Bima Corp. & Others for reinsurance ceded 73,681,552 97,759,050 Port Folio Premium Withdrawal/Transfer (Cedence) 695,100 - Total 120,199,981 119,559,663 9.00 Outstanding Refundable Premium

2013 2012 BUSINESS Taka Taka Fire 824,467 467,722 Marine cargo 280,401 243,174 Motor 1,066 1,066 Miscellaneous 64,999 41,865 Total 1,170,933 753,827 performance Financial

109 10.00 Sundry Creditors

2013 2012 Particulars Taka Taka Statutory Audit fee 287,500 287,500 Special Audit fee 780,000 650,000 Premium received in advance 46,262,667 53,885,016 VAT payable (4,357,314) (4,180,069) Bills payable 21,911,896 20,920,527 Tax payable on misc. items 1,440,472 5,281,746 VAT payable on money receipt 14,064,105 7,709,045 VAT payable on misc. items 356,687 138,183 Insurance stamps on deposit premium 39,054,568 23,450,142 Provision for income tax ( Note 21.00) 339,529,199 286,457,458 Employees’ income tax 989,304 168,115 (Short)/Excess collection of premium (218,372) 201,007 Liability for income tax deductible at source 7,409,952 6,068,843 Installment audio - video A/C (Transcom) - 22 Agency Commission Payable 49,530,312 10,750,492 Group Hospitalization Insurance Premium Payable (5,968) (1,463) Deposit against cancel document 251,269 251,269 Total 517,286,277 412,037,833 11.00 Property, plant and equipment

Motor Offi ce & Land & Furniture & Telephone Software Signboard Assets Vehicle & Electrical Computers Total Building Fixtures Installation Installation & Hoarding Bicycle Equipments Cost Balance at 1,366,348,500 38,322,735 25,622,485 16,029,015 10,310,824 1,718,141 3,507,618 1,015,580 1,462,874,898 01.01.2013 Additions - 7,332,925 2,514,590 2,137,976 1,271,366 - 616,688 - 13,873,545 Disposals/ - 2,356,325 1,555,709 1,504,864 128,400 - - - 5,545,298 adjustments Balance at 1,366,348,500 43,299,335 26,581,366 16,662,127 11,453,790 1,718,141 4,124,306 1,015,580 1,471,203,145 31.12.2013 Accumulated Depreciation Balance at 18,416,100 23,978,957 9,488,145 10,214,281 7,329,699 1,102,942 3,394,618 1,013,557 74,938,298 01.01.2013 Charge for the year 9,208,050 7,094,451 2,497,426 1,725,984 1,070,997 143,293 150,794 2,015 21,893,010 Disposals/ - 2,347,596 548,769 1,498,080 109,806 - - - 4,504,251 Adjustments Balance at 27,624,150 28,725,812 11,436,801 10,442,185 8,290,890 1,246,235 3,545,412 1,015,572 92,327,057 31.12.2013 Carrying Amount Balance at 1,338,724,350 14,573,523 15,144,565 6,219,941 3,162,901 471,906 578,894 8 1,378,876,088 31.12.2013 Balance at 1,347,932,400 14,343,778 16,134,341 5,814,733 2,981,126 615,199 113,000 2,023 1,387,936,600 31.12.2012

110 RIL 2013 Annual Report

12.00 Fixed assets under construction Fixed assets under construction are stated at cost and closing balances stand Tk. 6,018,702 & Tk. 4,503,702 for the year ended 2013 & 2012 respectively. These are expenses of a capital nature directly incurred in property, plant and equipment, waiting for capitalization. 13.00 Investments The investments comprise the following:

2013 2012 Investment Classifi cation Notes Taka Taka Held to maturity 13.01 34,998,059 18,858,292 Held for trading 13.02 29,318,637 26,798,546 Available for sale 13.03 1,236,957,446 1,209,040,708 Total 1,301,274,142 1,254,697,546 13.01 Held to maturity Investments with fi xed maturity that the management has the intent and ability to hold to maturity are classifi ed as held to maturity. During the year 2013 Company hold the following investments:

2013 2012 Sl. # Types Taka Taka 1 OTBL Bond 8,000,000 12,000,000 2 BD Govt. Treasury Bond (5 & 10 yrs) 25,000,000 4,500,000 3 14% Debenture-Beximco Textiles 1,998,059 2,358,292 Total 34,998,059 18,858,292 13.02 Held for trading These fi nancial assets are acquired principally for the purpose of generating profi t from short-term fl uctuation in prices. Company appointed IDLC Finance Limited as portfolio manager to deal with held for trading securities. As per IDLC’s statement, value of securities as of 31st December’13 was Tk. 2.93 crore. So Tk. 0.25 crore was recognized as gain in the accounts for the year 2013. 13.03 Available for sale Available for sale investments are those non-derivative investments that are designated as available for sale or are not classifi ed in any other category. These are primarily those investments that are intended to be held for an undefi ned period of time or may be sold in response to the need for liquidity are classifi ed as available for sale. The Company follows trade date accounting for ‘regular way purchase and sales’ of investments. As of December 31, 2013 Company designated the following shares as available for sale. Details are as follows:

No. of Value at Fair Market Value at Fair Market Sl. Shares Name of the Company cost as on Value as on cost as on Value as on

as on performance Financial No. 31/12/2013 31/12/2013 31/12/2012 31/12/2012 31/12/2013 1 IDLC BD Ltd. 11,261,250 86,762,760 708,332,625 86,762,760 796,083,750 2 National Housing & Fin. Ltd. 5,123,295 41,148,560 168,044,076 24,621,800 123,950,700 3 CDBL 571,181 1,569,450 1,569,450 1,569,450 1,569,450 4 AB Bnak Ltd. 36,000 993,960 943,200 - - 5 Bank Asia Ltd. 295,076 1,558,759 6,786,748 577,500 4,741,266 6 Brac Bank Ltd. 34,000 993,358 1,108,400 - - 7 Esatern Bank Ltd. 30,000 815,288 873,000 - - 8 Mercantile Bank Ltd. 330,213 1,276,953 5,514,557 1,276,953 5,839,882

111 No. of Value at Fair Market Value at Fair Market Sl. Shares Name of the Company cost as on Value as on cost as on Value as on as on No. 31/12/2013 31/12/2013 31/12/2012 31/12/2012 31/12/2013 9 National Bank Ltd. 122,857 1,048,918 1,449,713 59,978 1,212,340 10 One Bank Ltd. 355,226 1,259,432 5,612,571 1,259,432 7,042,760 11 Prime Bank Ltd. 55,102 1,851,195 1,427,142 865,920 659,340 12 Pubali Bank Ltd. 207,706 11,470,236 6,750,445 10,491,938 5,897,298 13 The City Bank Ltd. 53,625 2,832,017 1,083,225 2,832,017 1,306,500 14 Standard Bank Ltd. 112,642 803,952 1,667,102 803,952 1,848,499 15 Uttara Bank Ltd. 114,670 4,830,894 3,566,237 4,315,930 3,417,570 16 Southeast Bank Ltd. 374,180 13,138,483 6,697,822 12,147,033 6,233,600 17 IBBL 27,500 998,920 951,500 - - 18 Delta Life Insurance Co. Ltd. 30,800 6,712,503 8,214,360 - - 19 Eastland Insuarnce Co. Ltd. 26,000 1,473,872 1,222,000 1,473,872 1,132,000 20 FarEast Life Insurance Co. Ltd. 10,350 935,452 993,600 - - 21 Green Delta Insurance Co. Ltd. 1,450 118,315 137,605 2,253,498 1,835,000 22 Meghna Life Insurance 20,000 2,209,232 2,326,000 - - 23 Karnaphuli Insuarnce Co. Ltd 240 - 5,832 - 7,464 24 National Life Insurance 2,000 494,405 652,000 - - 25 Pioneer Insurance Co. Ltd. 49,200 3,355,067 3,266,880 3,355,067 2,993,000 26 Pragai Life Insurance 300 36,578 49,290 - - 27 Pragati Insurance Ltd. 21,500 1,323,403 1,156,700 1,323,403 1,248,000 28 Nitol Insurance Ltd. 22,260 940,145 747,936 902,495 794,000 29 Rupali Insurance Co. Ltd. 24,000 957,414 806,400 957,414 918,000 30 Standard Insurance Ltd. 23,000 1,034,120 913,100 1,034,120 858,000 31 BGIC 20,024 651,596 580,696 651,596 644,773 32 BD Shipping Corporation 1,000 - - 558,746 273,000 33 DESCO 26,450 2,055,439 1,544,680 2,055,439 1,442,000 34 Power Grid Co. BD Ltd. 60,000 3,792,108 3,168,000 - - 35 MJL Bd Ltd. (Mobil) 14,536 1,264,080 1,091,654 1,264,080 1,158,519 36 Jamuna Oil 4,000 - - 981,109 714,000 37 Khulna Power Co. Ltd. 78,324 7,840,125 3,845,708 7,840,125 3,467,176 38 BSRM Ltd. 236,500 20,947,308 16,247,550 11,888,617 6,790,000 39 GrameenPhone Ltd. 245,000 46,761,983 49,220,500 32,030,690 31,290,000 40 MI Cement Co. Ltd. 391 29,449 30,576 29,449 29,512 41 Niloy Cement Ltd. 31 3,100 3,100 3,100 3,100 42 RAK Ceramics (BD) Ltd. 10,004 360,864 533,213 360,864 516,596 43 Singer BD Ltd. 12 1,973 2,242 2,095,248 1,321,005 44 Square Pharmaceuticals Ltd. 568,325 62,299,361 108,095,415 59,453,815 89,304,385 45 Square Textile Ltd. 60,030 6,008,456 5,426,712 6,008,456 5,366,160 46 Standard Ceramic 90 - 3,600 - 2,169 47 Summit Alliance Port Ltd. 82 5,945 2,485 5,945 2,093 48 Maq Enterprise Ltd. 38 3,800 3,800 3,800 3,800 49 ICB Employees Mutual Fund 40,000 1,115,892 228,000 1,115,892 324,000 50 RI Mutual Fund:Scheme One 12,100,000 110,000,000 104,060,000 110,000,000 96,800,000 Total 456,085,119 1,236,957,446 395,231,503 1,209,040,708

* Investment in shares that do not have any quoted market price in the active market and whose fair value cannot be measured reliably, were 112 recognized at cost. RIL 2013 Annual Report

13.04 Changes in fair value of the shares available for sale

Particulars 2013 2012 Taka Taka Fair value of the investment 1,236,957,446 1,209,040,708 Less: Cost price of the investment 456,085,119 395,231,503 Fair value reserve at December 31 780,872,327 813,809,205 Less: Fair value reserve at Jan 01 813,809,205 1,187,894,852 Fair value adjustment for the year (32,936,878) (374,085,647) 14.00 Inventories Inventories comprise as follows

2013 2012 Particulars Taka Taka Postage stamps 1,260 1,260 Insurance stamps 6,475,334 5,570,949 Stock of stationery 1,058,384 1,014,768 Total 7,534,978 6,586,977 15.00 Sundry Debtors (including advances, deposits and prepayments)

2013 2012 Particulars Taka Taka Advance against Offi ce Space purchase ( Agrabad, Chittagong) 44,046,955 26,933,240 Insurance stamps collectible on outstanding premium 256,980 676,274 Security deposit 2,727,200 1,309,120 Advance against expenses, tax, rent, salary etc. 258,267,499 247,674,829 Advance commission against cover notes 47,620,011 28,109,916 Advance against registration cost-SPL Tower 5,390,954 5,390,954 Receivable Amount 3,881,676 17,079,356 Collection control account: 24,553,092 43,707,906 For premium on policies 8,173,748 12,001,409 For premium on cover notes 16,379,344 31,706,497

Total 386,744,366 370,881,595

Out of the total amount Tk. 24,553,092 mentioned above, Tk. 1,956,908 was realized within February 12, 2014.

16.00 Premium Control Account performance Financial

2013 2012 Business Taka Taka Fire 23,252,460 29,115,923 Marine ( cargo and hull ) 3,248,930 9,422,715 Motor 10,754,725 16,320,448 Miscellaneous 1,564,358 1,249,056 Total 38,820,473 56,108,142

Out of total outstanding Tk.38,820,473 of 2013 as mentioned above, Tk 23,167,661.98 was realized within February 12, 2014. 113 17.00 Interest receivable account

2013 2012 Particulars Taka Taka Accrued and overdue: 370,000 350,430 Fixed Deposits 370,000 350,430

Accrued but not due: 74,470,275 60,523,848 Govt. Treasury Bond 740,752 185,850 Fixed Deposits 73,729,523 60,337,998

Total 74,840,275 60,874,278 18.00 Amount due from other persons or bodies carrying on insurance business

2013 2012 Particulars Taka Taka Sundry co-insurance claims recoverable 2,024,293 1,290,039 Co-insurance premium recoverable (including refund) 14,615,141 17,265,181 Premium Receivable on SBC (PSB Account) 355,814 - Re-insurance Premium Receivable 13,821,328 10,603,759 For reinsurance acceptance with SBC 8,470,498 6,693,087 For reinsurance acceptance with GDIL 5,350,830 3,910,672 Total 30,816,576 29,158,979

19.00 Cash at bank

2013 2012 Particulars Taka Taka SND accounts 66,827,823 114,631,901 Current accounts 5,143,089 4,620,655 Remittance in transit 3,000,000 2,000,000 Total 74,970,912 121,252,556 20.00 Fixed Deposit (FDR) Investment in FDR consists of FDR investment in Banks and Non-Banking Financial Institutions total Taka 1,483,945,760 which is easily encashable with a short notice. 21.00 Provision for income tax

2013 2012 Particulars Taka Taka Balance as on 1st January 286,457,458 203,060,990 Add: Provision made during the year 130,000,000 94,000,000 Less: Payment & adjustment (65,226,630) - 351,230,828 297,060,990 Less: Tax deducted at source for transfer to advance tax (11,701,629) (10,603,532) Balance at 31st December 339,529,199 286,457,458

114 RIL 2013 Annual Report

Total Tax

2013 2012 Particulars Taka Taka Current Tax (as above ) 130,000,000 94,000,000 Deferred Tax (897,322) (5,737) Total 129,102,678 93,994,263 22.00 Interest & dividend income

2013 2012 Particulars Taka Taka Fixed Deposit 168,999,341 125,905,299 SND Accounts 4,428,385 5,179,372 5-years Bangladesh Government Treasury Bond 2,352,702 371,700 Interest on Debenture 601,012 139,120 Dividend on shares 9,667,682 7,431,599 Interest on OTBL Bond 1,366,500 1,920,000 Total 187,415,622 140,947,090 23.00 Other income

2013 2012 Particulars Taka Taka Profi t on sale of assets 1,121,878 81,906 Profi t on sale of shares 39,922,140 20,047,758 Service charges income (net) 1,491,336 2,648,205 Sundry income 311,566 231,344 Total 42,846,919 23,009,213 24.00 Audit Fees Annual audit fees include the following: 2013 2012 Particulars Taka Taka Annual audit fee (including VAT) 318,750 287,500 Special audit fee 130,000 130,000 Total 448,750 417,500 performance Financial

115 25.00 Earnings Per Share 25.01 Basic Earnings Per Share The Company calculates Earnings per Share (EPS) in accordance with BAS 33: Earnings Per Share, which has been shown on the face of the income statement and this has been calculated by dividing the basic earnings by the weighted average number of ordinary shares outstanding for the year. Details of calculations were as follows:

2013 2012 Particulars Taka Taka Earnings attributable to ordinary shareholders(Net profi t after taxation and 277,060,100 203,926,505 Provision) (Taka) Ordinary Shares at 1st January 47,227,050 41,067,000 Bonus Shares Issued 4,722,705 6,160,050 Weighted Average number of ordinary Shares outstanding during the year 51,949,755 47,227,050 Restated Weighted Average number of ordinary Shares 51,949,755 51,949,755 Basic earnings Per share (Taka) 5.33 3.93

Earnings Per Share in 2012 was Tk.4.32 while restating EPS of 2012 as per BAS 33, an adjustment has been given for 4,722,705 number of bonus shares in 2013. 25.02 Diluted Earnings per Share Diluted earnings per share refl ects the potential dilution that could occur if additional ordinary shares are assumed to be issued under securities or contracts that entitle their holders to obtain ordinary shares in future, to the extent such entitlement is not subject to unresolved contingencies. At 31st December 2013, there was no scope for dilution and hence no dilution EPS is required to be calculated. 26.00 Transactions with related Parties Reliance insurance, in normal course of business, carried out a number of transactions with other entities that fall within the defi nition of related party contained in Bangladesh Accounting Standard 24: Related Party Disclosures. All transactions involving related parties arising in normal course of business are conducted on an arm’s length basis at commercial rates on the same terms and conditions as applicable to the third parties. Details of transactions with related parties and balances with them as at December 31, 2013 were as follows:

Premium Premium Amount Nature of Outstanding Claim paid Name of the related party Relationship Earned in Realized transaction up to in 2013 2013 Subsequently 31.12.2013 Kumudini Welfare Trust of Common Insurance 1,351,937 11,888 - - Bengal (BD) Ltd. and related Director Companies Meenhar Fisheries Ltd. and Common Insurance 10,520,896 - - 665,049 related companies Director Rangs Limited and related Common Insurance 69,895,675 5,987,208 3,836 31,626,229 companies Director Transcom Ltd and related Common Insurance 224,312,481 - - 27,645,388 Companies Director Arlinks and related Common Insurance 135,500 - - - companies Director Total 306,216,489 5,999,096 3,836 59,936,666

116 RIL 2013 Annual Report

27.00 Contingent liability There is dispute on claims amounting to Tk. 168,091,153 which has not been admitted by the company. Additionally cases, both in lower and superior courts, by or against the company were pending in respect of insurance claims; net eff ects of which, it is believed, will not materially aff ect the fi nancial statements. 28.00 Number of employees engaged The number of employees engaged for whole year who received a total remuneration of Tk. 36,000 and above per annum was 338. 29.00 Management expenses Management expenses as charged to Revenue Accounts amounting to Tk. 232,827,421 represents 14.21% of the gross premium of Tk.1,638,885,168 and 33.06% of net premium of Tk. 704,228,236 in 2013. Moreover, an amount of Tk. 16,777,122 was paid to the Directors and Managing Director & CEO as fees and remuneration. 30.00 Compensation (Board & CEO) No compensation was allowed to the Chief Executive Offi cer of the Company or any member of the Board for any special services rendered except as noted in note 29. 31.00 Claims The Company had no claim against it which has not been acknowledged as debt at the balance sheet date. 32.00 Credit facility There was no credit facility as on 31st December 2013 availed by the Company under any contract other than trade credit available in the course of business. 33.00 Head Offi ce & Branch Offi ces The registered offi ce of the Company is located at Shanta Western Tower, Level-5, Space No. 503 & 504, 186, Tejgaon Industrial Area, Dhaka-1208, Bangladesh. The Company carries its insurance activities through 31 (thirty One) branches throughout the country. 34.00 Credit Rating Report Credit Rating Information and Services Limited (CRISL) has reassigned the Claim paying ability (CPA) rating of the Company to AA+ (Pronounced as double A Plus) based on the audited fi nancial statements up to December 31, 2012 and other relevant qualitative and quantitative information up-to the date of rating on August 1, 2013. 35.00 Post balance sheet Events Board of Directors has recommended15% cash and 15% stock dividend for the year ended December 31, 2013. performance Financial

Dated, Dhaka Shahnaz Rahman Atiqur Rahman Feb 23,2014 Chairman Director

Md. Khalilur Rahman Choudhury Akhtar Ahmed Malek Siddiqui Wali Director Managing Director & CEO Chartered Accountants

117 Stakeholders’ Information Dividend Policy and Capital Raising History

One of the prime objectives of Reliance Insurance limited is to provide consistently good return to its shareholders. Below are the dividend percentage and capital raising history. From the history it may be observed that Company has been maintained a stable and attractive dividend policy in line with the sound underwriting and investment results. The Company has also adhered to a policy of timely preparation of its Accounts and holding of AGM, as may be noted from the fi nancial calendar below:

Cumulative Date Particulars No. of Shares Value in Taka Paid-up-capital in Taka 1988 As per MOA & AOA 3,00,000 3,00,00,000 3,00,00,000 1995 Initial Public Off erings 3,00,000 3,00,00,000 6,00,00,000 2003 50% Bonus shares 3,00,000 3,00,00,000 9,00,00,000 2004 33.33% Bonus shares 3,00,000 3,00,00,000 12,00,00,000 2005 25% Bonus shares 3,00,000 3,00,00,000 15,00,00,000 2006 20% Cash - - - 2007 20% Bonus shares 3,00,000 3,00,00,000 18,00,00,000 2008 30% Bonus shares 5,40,000 5,40,00,000 23,40,00,000 2009 30% Bonus shares 7,02,000 7,20,00,000 30,42,00,000 2010 35% Bonus Shares 10,64,700 10,64,70,000 41,06,70,000 2011 15% Bonus & 15% Cash 61,60,050 6,16,00,500 47,22,70,500 2012 10% Bonus & 15% Cash 47,22,705 4,72,27,050 51,94,97,550 2013 (Proposed) 15% Bonus & 15% Cash 77,92,463 7,79,24,630 59,74,22,180

Financial Calendar

Events for the year 2011 2012 2013 2014 Publication of Financial Statements for May 12, 2011 May 13, 2012 May 14, 2013 - the 1st Quarter Publication of Financial Statements for July 29, 2011 July 26, 2012 July 29, 2013 - the Half Year Publication of Financial Statements for October 30, 2011 October 23, 2012 October 28, 2013 - the 3rd Quarter Announcement of ﬁnal results March 22, 2011 March 15, 2012 March 20, 2013 February 23, 2014 Record date April 4, 2011 April 29, 2012 April 3, 2013 March 5, 2014 Annual report dispatched April 13, 2011 April 15, 2012 April 11, 2013 March 13, 2014 Annual General Meeting April 30, 2011 April 30, 2012 April 27, 2013 March 30, 2014 Transfer of Stock dividend to BO May 5, 2011 May 24, 2012 May 20, 2013 - Accounts Dispatch of sales proceeds of fractional June 16, 2011 June 24, 2012 June 6, 2013 - shares

118 RIL 2013 Annual Report

Quarterly Analysis

BDT mn 2013 2012 Particulars Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total

Gross premium income 399.08 422.92 512.00 304.89 1,638.89 381.59 375.33 470.27 263.64 1,490.82

Net premium income 180.57 191.68 105.45 226.53 704.23 179.76 183.57 104.82 172.97 641.13 Net R/I commission earned 38.42 46.74 53.53 40.30 178.99 39.53 35.63 60.77 22.52 158.45

Add : Investment & other income 43.57 46.06 60.01 80.62 230.26 42.83 26.40 60.57 34.16 163.96 Total income 262.56 284.48 218.99 347.45 1,113.48 262.12 245.60 226.16 229.66 963.54

M. expenses with (Cliams allocable) 143.04 198.22 132.20 180.88 654.34 146.62 193.10 131.25 143.53 614.49 M. expenses (Unallocable) 14.09 12.27 12.48 14.14 52.98 11.55 11.84 11.19 16.54 51.13 Total expenses 157.13 210.49 144.67 195.02 707.32 158.17 204.93 142.44 160.07 665.62

Net proﬁ t before tax 105.43 73.99 74.32 152.42 406.16 103.95 40.67 83.72 69.58 297.92 Provision for income tax 22.50 30.00 22.50 54.10 129.10 22.00 13.00 32.50 26.49 93.99 Net proﬁ t after tax 82.93 43.99 51.82 98.31 277.05 81.95 27.67 51.22 43.09 203.93

Earnings per share (EPS) 1.60 0.85 1.00 1.88 5.33 1.58 0.53 0.99 0.83 3.93 information Stakeholders’

119 Shareholding Composition of Reliance Insurance Limited As on December 31, 2013

Sl. No. Name of Shareholders No. of Shares %

1 Sponsors/Directors: General Produce International Ltd. 1,613,216 3.10 FinAccord Trading Limited 1,613,216 3.10 Trinco Limited 3,187,169 6.14 Rangs Limited 3,187,142 6.13 Transfi n Trading Limited 3,187,078 6.13 Meenhar Fisheries Limited 3,187,395 6.14 Arlinks Limited 3,187,355 6.14 Kumudini Welfare Trust of Bengal (BD) Ltd. 2,793,665 5.38 Prantik Engineering Co. Limited 848,169 1.64 Mr. Shamsur Rahman(Self) 2,031,175 3.91 Deep Sea Fishers Limited 3,293,338 6.33 Transcom Limited 1,232,476 2.37 Rangs Workshop Ltd. 1,841,497 3.54 Kumudini Handicraft 902,601 1.73 Meenhar Sea Foods Ltd. 450,225 0.87 Sub-Total 29,338,302 62.66 2 General Institutions/Employees: Bank/ICB’s MF, Insurance Co’s 2,800,092 5.390 ICB Investors’ Accounts 19,221 0.037 Employees 18,702 0.036 Sub-Total 2,838,015 5.463 Individuals: General Public (Individuals) 16,556,023 31.877 Sub-Total Total Holdings 51,949,755 100.00

120 RIL 2013 Annual Report

Redress of Investors Complaints Reliance Insurance Limited is committed to maintaining instantaneously. Generally, shareholders raise issues relating highest standard of conduct and professional behavior to utilization of Company’s resources, yearly, half yearly in dealing with its shareholders. Share Department of the and quarterly accounts, business turnover and profi tability, Company maintains systematic records and information declaration of entitlements, issuance of share certifi cates, relevant to the shareholders. Share Department offi cials share transfer and transmission, changes of shareholders are always ready to help shareholders whenever in need address, non-receipt of Annual report, date and time of AGM, of share related services like share transfer, transmission, minutes of meetings of all AGM/EGM, implementation of dividend warrant issue, dividend warrant re-validation decision of the AGM & EGM and so on. It is the responsibility etc. Shareholders of the company are also free to raise of the Company Secretary to oversee that necessary actions their claim, if any, throughout the year. Shareholders get are taken expeditiously so that these issues are resolved to opportunity to speak on various issues relating to the the satisfaction of shareholders. operation of the Company at the Annual General Meeting which is held once a year, in which the Chairman/Managing Director of the Company with the help of CFO and Company Secretary respond to all queries raised by the shareholders

Redress of Clients Complaints Insurance being a service industry, clients’ satisfaction is of various types, the management actively solicits the clients’ paramount importance in maintaining existing clientele base views on the Company’s services, shortcomings, if any, and and tapping new business, thereby to achieve satisfactory their suggestions. Clients views and complaints are discussed business growth in the long run. Being fully aware of at the management committee meeting held at head offi ce this, Reliance always attends to its clients complaints – and also during meetings with Branch Managers. This aspect whether related to its services or claim settlement. Reliance also features prominently at the Annual Conference of the encourages its clients to come forward with any complaint Company. they may have and the top management is completely accessible to all them. Complaints can be lodged with the management in writing, over telephone, by e-mail or through the web site. During regular meetings with its clients of information Stakeholders’

121 Branch Connectivity

LOCAL OFFICE MOULVI BAZAR Rahmans’ Regnum Centre (4th fl oor), 191 Tejgaon I/A 31/32, Moulvi Bazar Road Dhaka-1208 Dhaka-1100 Phone : 880 (2) 8879293-95 Phone : 880 (2) 7315489 Mobile : 01713-440987 Mobile : 01713-440983 email : [email protected] email : [email protected] BANGSHAL MOTIJHEEL Eastern Bank Building (3rd Floor), 68, Shahid Nazrul Islam Sarani, Rahman Chamber (2nd Floor) 12-13, Motijheel C/A, Bangshal, Dhaka-1100 Dhaka 1000 Phone : 880 (2) 9556225 Phone : 880 (2) 9567827 Mobile : 01713-010695 Mobile : 01730-097293 email : [email protected] email : [email protected] KAWRAN BAZAR NEW MARKET BSEC Bhaban (3rd Floor) 102 Kazi Nazrul Islam Avenue, Kawran Khan Plaza (2nd Floor), 32/1, Mirpur Road Bazar Dhaka-1215, Dhaka-1205 Phone : 880 (2) 9112468, 8110455 Phone : 880 (2) 9669449 Mobile : 01713- 440980 Mobile : 01713-440981 email : [email protected] email : [email protected] BIJOYNAGAR MOHAKHALI Akram Tower (6th Floor), 15/5, Bijoynagar M.H.B. Bhaban (2nd Floor), 94, Mohakhali C/A, Dhaka-1000 Dhaka-1212 Phone : 880 (2) 9341832 Phone : 880 (2) 9886872 Mobile : 01755-638298 Mobile : 01713-185581 email : [email protected] email : [email protected] UTTARA MOGH BAZAR H.M. Plaza (8th Floor), Plot No. 34, Road No-2, Sector-3 Uttara, Gulfesha Tower (12th Floor) Dhaka -1230 69 Circular Road, Mogh Bazar, Dhaka-1217 Phone : 880 (2) 8956076 Phone : 880 (2) 9332798 Mobile : 01755-638293 Mobile : 01755-550215 email : [email protected] email : [email protected] MYMENSINGH COMILLA 19, G. K. M. C. Saha Raod, (2nd Floor), Chotto Bazar 163/149, Chatti Patty, Rajgonj Mymensingh Comilla-3500 Phone : 880 (91) 51432 Phone : 880 (81) 69617 Mobile : 01718-353666 Mobile : 01713-440988 email : [email protected] email : [email protected] NARAYANGONJ DINAJPUR 71, B.B. Road, Narayangonj-1400 Charu Babur More, Khettri Para, Dinajpur-5200 Phone : 880 (2) 7631962 Phone : 880 (531) 63308 Mobile : 01713-440982 Mobile : 01713-440995 email : [email protected] email : [email protected] PABNA RAJSHAHI Trafi c More, (1st Floor), A. Hamid Road, Pabna-6600 Kaimon Plaza, Mia Para, New Natore Rd, Rajshahi-6000 Phone : 880 (731) 66073 Phone : 880 (721) 773364 Mobile : 01713-440958 Mobile : 01713-209667 email : [email protected] email : [email protected]

122 RIL 2013 Annual Report

AGRABAD KHATUNGONJ 58 Agrabad C/A, Chittagong- 4100 304, Khatungonj, Chittagong-4100 Phone : 880 (31) 712221 Phone : 880 (31) 615105 Mobile : 01713-276429 Mobile : 01713-106641 email : [email protected] email : [email protected] JUBILEE ROAD JESSORE 175, Jubilee Road, Chittagong -4000 7, Garikhana Road, Jessore-7400 Phone : 880 (31) 616506 Phone : 880 (421) 68523 Mobile : 01713-100891 Mobile : 01713-440990 email : [email protected] email : [email protected] KHULNA MADARIPUR 141, Sir Iqbal Road , Khulna-9000 Amin Super Market, Main Road, Madaripur- 7900 Phone : 880 (41) 725475 Phone : 880 (661) 61510 Mobile : 01730-033001 Mobile : 01713-014856 email : [email protected] email : [email protected] KUSHTIA THAKURGAON Lovely Tower, 55/1, N.S. Road, Kushtia 7000 S.M. Ali Road, Thakurgaon-5100 Phone : 880 (71) 71384 Phone : 880 (561) 52323 Mobile : 01713-400508 Mobile : 01713-440997 email : [email protected] email : [email protected] BOGRA NARSHINGDI Jhaotalabazar, Bogra-5800 C & B Road, Narshingdi-1600 Phone : 880 (51) 65828 Phone : 880 (2) 9462677 Mobile : 01713-440994 Mobile : 01755-538003 FARIDPUR COX’S BAZAR 89/A, Mujib Sarak, Alipur, Faridpur-7800 1065, Bazar Ghata Main Road, Cox’s Bazar-4700 Phone : 880 (631) 64118 Phone : 880 (341) 64892 Mobile : 01711-430375 Mobile : 01713-440989 SYLHET SIRAJGONJ Karimullah Market (5th Floor), Bandar Bazar, Sylhet-3100 S.S. Road, Sirajgonj-6700 Phone : 880 (821) 724767 Phone : 880 (751) 63350 Mobile : 01713-440999 Mobile : 01730-351425 RANGPUR Station Road, Rangpur-5400 Phone : 880 (521) 63221 Mobile : 01713-440996 information Stakeholders’

123 Events Highlight 2013 Annual Picnic held on 15th February 2014 at Jinda Park, Jinda-Rupgonj, Narayangonj

RIL T20 Cricket Team

124 RIL 2013 Annual Report information Stakeholders’

125 Glossary

Terms Meaning

Accounting Policies The specifi c principles, bases conventions, rules, and practices adopted by the enterprise in preparing and presenting fi nancial statements Accrual Accounting The reporting of revenues from sales in the period in which they are sold, regardless of when the cash is received, and the reporting of expenses in the period of purchase, regardless of when the payment is made. Accounts Receivable Short-term monetary assets that arise from sales on credit to customers at either the wholesale or the retail level. Account Payable Amount owed to a creditor for delivered goods or completed services. Amortization Amortization is the systemic allocation of the depreciable amount of an intangible asset over its useful life. Book Value The total assets of a company less total liabilities; owners' equity; Fixed Assets less Depreciation. Budget Financial plan that serves as an estimate of future cost, revenues or both. Cash Flow Statement A fi nancial statement that shows a company's sources and uses of cash during an accounting period. Cash Flows Infl ows and outfl ows of cash and cash equivalents. Current Tax The amount of income taxes payable (recoverable) in respect of taxable profi t (tax loss) for a period. Claim A demand made by the insured or the insured’s benefi ciary for payment of the benefi t as provided by the policy. Cash Equivalents Short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignifi cant risk of changes in value. Carrying Amount The amount at which an asset is recognized in the balance sheet after deducting any accumulated depreciation and accumulated impairment loess thereon. Depreciation The systemic allocation of the depreciable amount of an asset over its useful life. Earnings Per Share (EPS) EPS is calculated by dividing the profi t or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Fair Market Value Fair market value is the price that two parties are willing to pay for an asset or liability when both parties have full information and are not pressured to close the sale. Generally Accepted Account The conventions, rules, and procedures necessary to defi ne accepted accounting Principles (GAAP) practice at a particular time. Gross premium underwritten That is the total sum before expenses or cost. Held to maturity investment Financial assets with fi xed or determinable payments and fi xed maturity that an enterprise has the positive intent and ability to hold to maturity other than loans and receivables originated by the enterprise. Intangible Assets Long-term assets that have no physical substance but have a value based on rights or privileges accruing to the owner. Interest The cost associated with the use of money for a specifi c period of time. Marketable Securities An investment in securities which are readily marketable; temporary investments. Market Value The amount obtainable from the sale or payable on the acquisition, of a fi nancial instrument in an active market. Net Premium underwritten Gross premium less deductions for commission and ceded re insurance.

126 RIL 2013 Annual Report

Terms Meaning

Prepaid Expenses The expenses paid in advance that do not expire during the current accounting period Premium The price of insurance protection for a specifi ed risk for a specifi ed period of time. Provision A liability of uncertain timing or amount. Return on Assets A measure of profi tability that shows how effi ciently a company is using all its assets Re – insurance Also known as “Insurance for insurers”. The contract between an insurance company and a third party to protect the insurance company from loss. Reserve for Exceptional Losses A reserve either specifi c or general required by law. Related Parties Parties are considered to be related if one party has the ability to control the other party or exercise signifi cant infl uence over the other party in making fi nancial and operating decisions. Related party Transaction A transfer of resources or obligations between related parties, regardless of whether a price is charged. Tangible Assets Long-term assets that have physical substance Tax Liability The amount of tax that must be paid based on taxable income and the applicable tax table. Unpaid Dividend A dividend that is owed to stockholders of record but has yet to be distributed. Working Capital The amount by which the total current assets exceed total current liabilities. information Stakeholders’