www.njilife.com Annual Report 2010 Contents Vision & Mission 02 Company Information 03 Board of Directors 05 Directors Report to the Shareholders 06 Statement of Value Additions 11 Key Operating and Financial Data 12 Review Report to the Members 20 Statement of Compliance with the Code of Corporate Governance 21 Auditors Report to the Members 23 Balance Sheet 24 Profit & Loss Account 26 Statement of Changes in Equity 27 Cash Flow Statement 28 Revenue Account 29 Statement of Premiums 30 Statement of Claims 31 Statement of Expenses 32 Statement of Investment Income 33 Notes to and Forming Part of the Financial Statements 34 Statement of Directors 71 Statement of Appointed Actuary 71 Pattern of Shareholding 72 Notice of Annual General Meeting 75 Proxy Form Vision To be Pakistan's leading and most highly reputed life insurance company, enjoying the confidence and trust of its Shareholders, Policyholders, Business Partners and the Communities in which it operates. Mission Shareholders are the backbone of our business. They provide the initial capital which enables the Company to commence the business and to grow the business through retention of profits and by investing additional capital when required. We will strive to achieve above average earnings on their invested capital. Our Policyholders are our most valuable assets. We will strive to provide them with a full range of life insurance and other products, security of their investment, a satisfactory return on their investments and efficient personal service. Employees are our Partners enabling us to fulfil our vision and mission. We will endeavour to provide them a fair reward based on their performances and achievements, a good working environment, adequate training and opportunities for self development to empower them to grow and prosper with the company. The Community in which we exist along with our Shareholders, Policyholders, Employees, etc also deserves our consideration. We will participate and contribute to the uplift and welfare of the community, and the improvement of the environment. 02 BOARD OF DIRECTORS BOARD COMMITTEES Masood Noorani Audit Chairman Aly Noor Mahomed Rattansey Chairman Javed Ahmed Managing Director John Joseph Metcalf Member Shahid Mahmood Loan Aly Noor Mahomed Rattansey Member Director Adeel Ahmed Khan John Joseph Metcalf Secretary / Chief Internal Auditor Director Human Resource Shahid Mahmood Loan Director Towfiq Habib Chinoy Chairman Sultan Ali Akbar Allana Masood Noorani Director Member John Joseph Metcalf Member Towfiq Habib Chinoy Director Finance & Investment Manzoor Ahmed Masood Noorani Company Secretary Chairman Javed Ahmed Member APPOINTED ACTUARY Nauman A. Cheema John Joseph Metcalf Nauman Associates, 7-B, Block F, Member Gulberg III, Lahore Ph:(0092)(42)35760204, 35754036 Nurallah Merchant Fax:(0092)(42)35757867 Member E-mail: [email protected] Manzoor Ahmed Member AUDITORS Technical A. F. Ferguson & Co. Chartered Accountants John Joseph Metcalf State Life Building No. 1-C, Chairman I. I. Chundrigar Road, P. O. Box 4716 Karachi - 74000, Pakistan. Javed Ahmed Member Ph: (0092) (21) 32426682-6 / 32426711-5 Fax: (0092) (21) 32415007 / 32427938 Nurallah Merchant Website: www.pwc.com/pk Member 03 MANAGEMENT MANAGEMENT COMMITTEES Javed Ahmed Claims Managing Director & Chief Executive Officer Faisal Qasim Javed Ahmed Faisal Shahzad Abbasi Chairman Farhan Akhtar Faridi Manzoor Ahmed Nurallah Merchant Muhammad Sohail Fakhar Member Munawar Khalil Nurallah Merchant Manzoor Ahmed Zahid Barki Member REGISTERED OFFICE Zahid Barki 26-D, 3rd Floor, Kashmir Plaza, Member Jinnah Avenue, Blue Area, Islamabad Tel: (0092)(51) 2206930-6 Fax: (0092)(51) 2825372 Reinsurance Web: www.njilife.com E-mail: [email protected] Javed Ahmed HEAD OFFICE Chairman 74/1-A, Lalazar, M. T. Khan Road, Karachi -74000 Ph:(0092)(21) 35611071-75, 35611802-08 Nurallah Merchant Fax:(0092)(21) 35610959 Member Web: www.njilife.com E-mail: [email protected] Zahid Barki LEGAL ADVISORS Member Kabraji & Talibuddin Advocate & Legal Counsellors Shan Rabbani Karachi-75530 Member E-mail:[email protected] Underwriting REGISTRAR & SHARE TRANSFER OFFICE CDC House, 99-B, Block-B, S.M.C.H.S. Main Javed Ahmed Shahra-e-Faisal Karachi-74400 Chairman Ph: 0800-CDCPL (23275) Fax: (92-21) 34326053 E-mail: [email protected] Nurallah Merchant Member BANKERS Habib Bank Limited Zahid Barki Standard Chartered Bank (Pakistan) Limited Member 04 Board of Directors Left to Right: Aly Noor Mahomed Rattansey Director Shahid Mahmood Loan Director Towfiq Habib Chinoy Director Masood Noorani Chairman John Joseph Metcalf Director Sultan Ali Akbar Allana Director Javed Ahmed Chief Executive Officer 05 Directors Report to the Shareholders The Directors are pleased to present the Annual Report and the Audited Financial Statements of the Company for the year ended December 31, 2010. Achievements: Alhamd' Ollilah, 2010 has been a year of significant achievements for the Company, the highlights of which are as follows: - The gross written premium amounted to Rs. 5,802 million, an increase of 33%, over the previous year (2009: Rs. 4,363 million). - Life insurance business has generated a surplus of Rs. 516 million, which is 63% higher than the previous year (2009: Rs. 318 million). - A record surplus transfer of Rs. 200 million (2009: Rs. 100 million) from the Revenue Account has been made to the Profit & Loss account, which includes a first time contribution of Rs. 40 million from the Individual Life Unit Linked Fund. - The Company has achieved the distinction of becoming the leader in Bancassurance business by writing individual life premium of Rs. 2,623million (2009: Rs. 1,666 million), an increase of 57%. The Company now has the largest Bancassurance distribution net-work in the Country. - The Company has been able to establish to the satisfaction of the Appointed Actuary, the stand alone solvency of the Individual Life Unit Linked Fund. This has enabled the Directors to repatriate the amount of Rs. 519.328 million which had been advanced from the Shareholders' fund to the Individual Life Unit Linked Fund during the period from 1996 to 2006, in order to maintain the solvency of the Fund. - The repayment of the amount of Rs. 519.328 million to the Shareholders' Fund has primarily contributed to increase the Shareholders' equity from Rs. 546.505 million in 2009 to Rs. 1,149.873 million in 2010. - In this context, we would like to remind the Shareholders that the Company was incorporated in Pakistan in June 1995 under the name of Commercial Union Life Assurance Company (Pakistan) Limited (CULAP), as a subsidiary of CGU International Insurance Plc of U.K. With effect from January 1, 2003, the Aga Khan Fund for Economic Development S.A. Switzerland (AKFED) acquired the shareholding of CGU International Insurance Plc in CULAP. At that time, the Shareholders' equity of CULAP stood at Rs. 32.075 million against the paid up capital of Rs. 402 million. - JCR-VIS has upgraded the Insurer Financial Strength (IFS) rating of the Company to "AA-"(Double A minus) with stable outlook vide letter dated December 23, 2010. Business Performance and Operating Results The performance of each statutory fund and the overall operating results are summarized below: - The Individual Life Unit Linked Fund has performed very satisfactorily in 2010. The fund has generated a surplus of Rs. 363 million during the year as compared to Rs. 170 million in 2009, an increase of 114%. - The Conventional Business Fund comprising mainly of Group Life Insurance business has also performed satisfactorily despite tough competition during the year. It has generated a surplus of Rs. 125 million (2009: Rs. 125 million). - The Accident & Health Fund comprising mainly of Group Health has performed satisfactorily, generating a surplus of Rs. 27 million in 2010 compared to Rs. 23 million in 2009, an increase of 17%. - The total surplus generated by the statutory funds is Rs. 515 million in 2010 as compared to Rs. 318 million in 2009, an increase of 62%. - An amount of Rs. 200 million has been transferred from the Revenue Account to the Profit & Loss Account as compared with Rs. 100 million in 2009. 06 Investment Performance The Company continued its prudent policy for managing the investment portfolio of statutory funds. The total investment income of Rs. 1303 million in both the periods comprise of the income from fixed income securities, dividends and return from bank deposits amounting to Rs. 946 million (2009: Rs. 686 million) and the unrealized gain on investments amounting to Rs. 357 million (2009: Rs. 617 million). The return to the policyholders on their investment in the unit linked schemes has also been quite satisfactory as may be seen from the following chart showing the year on year growth of the bid prices: Sr. No. Fund name Bid price (PKR) per unit Bid price (PKR) per unit % Increase effective 31.12.2010 effective 31.12.2009 1. Managed 527.24 458.98 14.87% 2. Sarmaya 265.56 215.61 23.17% 3. Meesaq 508.94 471.67 7.90% 4. Yaqeen Growth 548.80 503.09 9.09% Profit & Loss Account The Profit & Loss Account shows a pre-tax profit of Rs. 217 million compared with Rs. 161 million in 2009, an increase of 35%. The after tax profit of the year is Rs. 147 million compared to Rs. 130 million in 2009, an increase of 13%. Earnings per Share The earning per share for the year is Rs.2.34 (2009: Rs.2.07), an increase of 13%. Dividend In view of the higher profits earned during the year, the Directors are pleased to recommend the payment of a cash dividend of Rs1.50 (15%) per share for the year ended 31 December 2010 (2009: Rs.1.00 (10%) per share, subject to the approval of the members at the Annual General Meeting to be held on 30 March 2011. Human Resource The Company accords top priority to the training and development of its employees at all levels.