NAME: Muhammad Jazib Soofi ID # : 10157 PROGRAM: BS (JOINT HONORS) COURSE NAME: AUDITING COURSE SUPERVISOR: MR.

DAREL PAREIRA REPORT #: 3rd

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ORGANIZATIONAL BACKGROUND OF ADAMJEE INSURANCE COMPANY (PVT.) LTD.

Adamjee Insurance Company Limited, the largest general insurance company of the country, was founded in 1960 by Mr. A. W. Adamjee. It was incorporated on 28th September 1960, Adamjee Insurance received its certificate of commencement on 30th November 1960. Adamjee Insurance issued its first policy on 5th December 1960. The first Managing Director of the company was Mr. Hanif Adamjee with Mr. D. W. Purnell as the first General Manager. In 1977, Mr. Mohammed Hanif Adamjee was elected as Chairman and Mr. Mohammed Choudhury joined as the Managing Director. With these changes Company entered into a new era of growth. The pace of growth picked up and the years ahead witnessed a phenomenal increase in business. This can be judged by the fact that at the end of 1976, the paid-up Capital of the company was Rs. 5.31 million while the Gross Direct Premium was Rs. 36.66 million. These figures at the end of 1998 rose to amazing figures of Rs. 390.37 million as Paid-up-Capital, and the Gross Direct Premium at Rs. 3,220.12 million. The net profit for 1996 was an envious Rs. 196.40 million. The Company has an extensive network of branches across the country. Till date 73 branches are functioning within the country, while seven are functioning abroad namely; Dubai, Sharjah, Abu Dhabi, in the UAE and Jeddah, Al-Khobar and Riyadh in Saudi Arabia. Dedicated and highly professional employees man these branches duly supported by technically sound executives and officers. Over 1500 dedicated employees are the real assets of the company. The company has the largest reservoir of qualified personnel amongst the insurance industry.

Company Profile:
Adamjee Insurance Company Limited (AICL) was incorporated as a Public Limited company on September 28, 1960 and is listed on Karachi and Lahore Stock exchanges of the country. The company is also registered with the Central Depository Company of Pakistan Limited. AICL is involved in general insurance business. The company started with a paid up capital of Rs. 2.5 million which has grown phenomenally to the current paid up capital of Rs. 826 million which is the highest amongst all the general insurance companies. AICL enjoys a competitive edge in the insurance industry due to its strong asset base, paid up capital, huge reserves, balanced portfolio mix, steady growth in gross premium and continuous increase in share price at the stock market.

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MISSION STATEMENT
Being the leading insurance company of Pakistan and Second best in Asia, our aim is to be a significant Participant in developing Pakistan's image by Providing maximum insurance protection at the most Competitive price in a highly efficient manner for Industrial and economic growth.

VISION STATEMENT
To remain the leading insurance company of Pakistan Excelling in every aspect of its business and in Delivering its obligations as a good corporate citizen To its clients, employees, shareholders, public and to The country.

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Board Of Directors
Board of Directors
Umer Mansha Ahmed Ebrahim Hasham Ali Munir Alman Aslam Hassan Mansha Ibrahim Shamsi Khalid Qadeer Qureshi Muhammad Usman Ali Usmani (Appointed w.e.f. 08/07/2010 Nabiha Shahnawaz Cheema S. M. Jawed Muhammad Ali Zeb Chairman Director Director Director Director Director Director Director Director Director Managing Director & CEO

Head of Internal Audit

Rehan Ahmed Khan, F.C.A., A.C.M.A.

Executive Directors
Jehangir Bashir Nawaz Manzar Mushtaq

Auditors
M/s Riaz Ahmad & Co. Chartered Accountants, Karachi

Shares Registrar
Technology Trade (Pvt.) Limited Dagia House, 241-C, Block-2, P.E.C.H.S., Off Shahrah-e-Quaideen, Karachi

Advisor
Mian Mohammad Mansha

Audit Committee
Umer Mansha Ahmed Ebrahim Hasham Ali Munir Ibrahim Shamsi S. M. Jawed Chairman Member Member Member Member

Bankers
Askari Bank Limited Bank Alfalah Limited Bank Al-Habib Limited Barclays Bank PLC, Pakistan Citibank N.A. Faysal Bank Limited Habib Bank Limited HSBC Middle East Bank Limited KASHF Mircrofinance Bank Limited MCB Bank Limited National Bank of Pakistan NIB Bank Limited Oman International Bank S.A.O.G. Rozgar Microfinance Bank Limited Soneri Bank Limited Standard Chartered Bank Limited Tameer Micro Finance Bank Limited United Bank Limited Zarai Taraqiati Bank Limited

Human Resource Committee

Hassan Mansha Ibrahim Shamsi Umer Mansha Muhammad Ali Zeb Chairman Member Member Member

Risk Management Committee

S. M. Jawed Ali Munir Umer Mansha Chairman Member Member

Strategic Committee
Umer Mansha Alman Aslam S. M. Jawed Muhammad Ali Zeb Chairman Member Member Member

Secretary
Tameez-ul-Haque, F.C.A.

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PRODUCTS/SERVICES
Contractor's All Risk Insurance covers civil works like construction of roads, bridges, dams, high rises, housing projects etc. Coverage This branch of engineering insurance offers comprehensive and adequate protection against all the risks involved in the construction of civil works of any kind, including surrounding property and third-party claims in respect of property damage or bodily injury arising in connection with the execution of a project. Section 1 Material Damage CAR insurance provides very wide cover. Almost any sudden and unforeseen loss or damage occurring to the property insured on the construction site including surrounding property in the care and custody of the insured leading to repair or replacement during the period of insurance will be indemnified. The insurer will indemnify loss or damage due to the following causes:
y y y y y y y y y

Fire, lightning, explosion Flood, inundation Windstorm of any kind Earthquake Theft, burglary Negligence, lack of skill, lack of experience, malicious acts Short-circuit, arcing, excess voltage Excess pressure or vacuum, tearing apart on account of centrifugal force Any other sudden and unforeseen event such as loss or damage due to collapse, foreign objects, on-site transport of items to be constructed, etc.

Electronic Equipment Insurance: Covers all electric equipments with moderate power requirements against material damage. Coverage The term "electronic equipment" comprises, in the context of this insurance, all electrical and electronic systems such as:
y y y y y

Electronic Data Processing (EDP) equipment Electrical equipment for medical use Communication facilities Lighting and navigation facilities Equipment for research and materials testing

The Insurance Protects:

y y

The owner as the operator, the lesser, or the maintainer The hirer

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Material damage cover Electronic equipment insurance is "accident" insurance on an all risks basis covering sudden and unforeseen losses which physically affect the subject matter insured. Losses due to the following causes give rise to the vast majority of all claims:
y y y y y y y y y y

Fire, lightning, explosion Smoke, soot, corrosive gases Water and humidity Failure of air conditioning Short circuit and other electrical causes Design, manufacturing, assembly and erection faults, defects in casting and material, workshop errors, bad workmanship Faulty operation, lack of skill, gross negligence Malicious acts of workmen, employees, third parties Burglary Hail, frost

Main Exclusions
y y y y y y y

War or warlike operations, civil commotion of any kind as well as acts on the part of strikers and locked out persons Willful acts or willful negligence on the part of the insured or of his representatives Faults or defects for which a third party (supplier) is responsible either by law or under contract (losses covered by warranty) Wear and tear Failure or interruption of gas, water or electricity services (certain exceptions being possible in special cases) Aesthetic defects, e.g. scratches on painted, polished or varnished surfaces Consequential loss and liability of all kinds (with the exception of additional expenses for computer operation)

Fire Insurance: Policy provides compensation to the insured person or firm in the event of damage to the property insured (i.e. buildings, stock, machinery and other contents) caused by fire, lightning. Coverage The insurance policy broadly covers losses due to:
y y y

Fire Lightning Explosion (due to domestic boiler only)

Additional Covers
y y y y

Riot and Strike Malicious Damage Explosion Atmospheric Disturbance (Flood, inundation, etc)

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y y y y y y y

Earthquake, Fire and Shock Aircraft Damage Impact Damage Burglary and Housebreaking Electrical Clause "B" Removal of Debris Loss of Rent

Main Exclusions
y y y y y y y y y y y

Theft / Burglary House Breaking Willful Act Gross negligence Loss to bullion, documents, currency etc Loss of earnings/ Business Interruption Losses arising out of War and War like situations Terrorism, Civil Commotion, Popular / Military Rising, Insurrection etc Nuclear Fission/ Biological etc Spontaneous Combustion Loss or damage to the property insured by order of public authority Misrepresentation

Other Property Products Available

y y y y y y y y

Property All Risks Comprehensive Machinery Insurance Consequential Loss due to Fire / Business Interruption Terrorism Hotel Owners All Risk Insurance Home Insurance Shop Owners Comprehensive Insurance law enforcement authorities as soon as possible.

Health Insurance: Adamjee Insurance is one of the largest Health Insurance providers catering to the health and medical needs of the Corporate and SME sectors for their employees with customized benefits structure and value added services. ADAMJEE guarantees you best quality services that not only give you peace of mind for being insured by a leading and dependable insurer but also ensures fast and speedy access to medical services when the need arises while promoting better healthcare practices. Our customized Health insurance plans can cater for your needs. The benefits covered under Adamjee Health Insurance care are briefed as follows: Hospitalization Benefit This benefit covers the eligible hospitalization treatment (other than pregnancy & childbirth) due to illness, surgeries and accidents. Hospitalization expenses payment up to the "Per Annum Limit" in case of different diseases and prolonged illnesses.

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Major Medical Care Benefit (Optional) This benefit enhances the hospitalization limit of in-patient expenses (except maternity related expense) for each insured person for all eligible hospitalization expenses covered under specified benefits structure. Critical Illness Benefit (Optional) These benefits cover the hospitalization for the following critical illnesses
y y y y y y y y

Myocardial infection Coronary artery disease requiring surgery Stroke Cancer Aids Renal failure Major organ transplant Multiple sclerosis

Maternity Benefit (Optional) This benefit pays for medical expenses related to pregnancy and child birth up to the annual maternity limit. It includes:
y y y y y y

Daily room rent Labour Room charges Operation theatre charges Anesthetics fee Pre & postnatal expenses coverage Circumcision

Out Patient Cover (Optional) Adamjee also provides the option of out-patient benefits to its clients which pays for the coverage of expenses incurred on medical treatment where a person does not need to be hospitalized. The following expenses are covered under this rider.
y y y

General practionar / specialist consultation charges Prescribed medicine and treatment Prescribed Laboratory investigations.

Additional Benefits Terrorist cover: The policy also covers hospitalization and surgical expenses of any innocent insured person (not taking part in terrorist activities) who is injured due to an act of terrorism. International cover: The policy covers emergency hospitalization during overseas travel of insured persons. However, the hospitalization expenses will be reimbursed in Pakistan in PakRupees on the basis of what it will cost for a similar procedure to be carried out in Pakistan. Complimentary cover for accidental injury: The hospitalization annual available limit is automatically increased by 25-50 per cent in case of hospitalization due to an accidental injury.

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Exclusions The items, conditions, treatments pertaining to the following and the related expenses are excluded from the policy for which the company will not be liable.
y y y y y y y y y y y y

Cosmetic treatment or plastic surgery Treatment of infertility / sterilization and contraception Psychiatric treatment Personal expenses like, telephone, guest meals & non medical items Self inflicted injury Eye glasses, contact lenses, hearing aids, artificial limbs etc Dental treatments Epidural Anesthesia (for painless delivery) Hospital admission not medically necessary or undertaken specifically to conduct diagnostic or other tests or workup Congenital birth defects General Health checkups and preventive vaccinations Psychiatric treatment , mental or nervous disorder Charges for visiting consultant

Value Added Services

y y y y

Relationship Management functions for constant facilitation of our valued insured members. 24/7 Call Center facilities. 24 hr Medical Hotline to facilitate all your queries regarding hospitalizations. Adamjee supports you as you make healthy choices every day gives you access to special savings on selected pharmacies and diagnostic services all over Pakistan Adamjees Medzine provides usAdamjee Insurancel information regarding common medical issues keeping you in touch with the current developments in health and helps you manage your illness in a better way. Adamjees wellness programs aimed to focus on improving awareness and lifestyle choices for you to improve your health.

Marine Insurance: Marine Insurance covers damages to the shell and machinery of the vessel, cargo carried on the vessel, and also offers protection against liabilities to shipping and transport related companies.
y y y y y y

Marine Hull and Machinery Insurance Marine Cargo Insurance Marine umbrella Liability Insurance Strong treaty based overseas vessel hull insurance Coverage of international marine cargo trait other then Pakistan as well Coverage Demolition voyage in Pakistan

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Adamjee Insurance offers coverage for the following: Marine Hull This policy covers losses / damages to the shell and machinery of the vessel caused by maritime perils. Benefits and Coverage: This insurance policy covers the following perils, losses and damages:
y y y y y y y y y y

Perils of the seas, rivers, lakes or other navigable waters Fire and explosion Violent theft by outside persons: Jettison or Piracy Contact with land conveyance, dock or harbor equipment or installation Earthquake, volcanic eruption or lightning Accidents in loading, discharging or shifting cargo or fuel Bursting of boilers, breakage of shafts or any latent defect in the machinery or hull Negligence of Master Officers, Crew or Pilots Negligence of repairers or charter Barratry of Master Officers or crew Contact with aircrafts, helicopters or similar objects, or objects falling there from Salvage charges when general average is declared

Marine Cargo Marine Cargo caters to losses /damages pertaining to cargo / freight carried on the vessels. We provide all risks coverage as well as policies covering limited risks depending upon the needs of our valued clients. Benefits and Coverage: Our marine cargo insurance covers different risks depending upon the type of coverage sought by our customers. The policy provides:
y y

Protection against "All Risk" for loss and damage to cargo resulting from a fortuity during transit by sea, air, road and rail. Restricted coverage depending upon customer need other then All Risk for transit by sea, air, road and rail.

Marine Umbrella Marine Umbrella Liability is a broad spectrum cover offering protection against liabilities to shipping / logistics and transport related companies. Benefits and Coverage: This insurance could be of substantial benefit to:
y y y

Ship or vessel operators Freight forwarders, road transport operators, NVOC, railway operators, carriers by air, ware house depot operators Ship agents, brokers and the services associated with shipping transportation

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y y

Terminal operators, stevedores operators, operators of container/trailer, storage and repairers Port harbors or port authorities

Premium Payment Method Premium payment can be made through cash, cheque, pay order, demand draft, telex transfer to the concerned Adamjee Insurance branch. Claim Reporting Process Please intimate your claim by calling (subsequently informing through a reliable medium), or writing to your concerned Adamjee Insurance branch. Insurance policy also bears the details required for intimating any claim. Surveyor will be appointed after the intimation and required documents will be collected. Crop Insurance: The time period from crop sowing to harvest is extremely crucial for the farmers. But the unforeseen climatic changes only add to their worries. The field of agriculture is always exposed to hazards of floods, droughts, rains, and hail storms. Most of the farmers in our country are small cultivators and their financial resources are less and inadequate. All unforeseen catastrophes bring disaster in their lives. AICL provides coverage to all farmers in these disasters.

Travel Insurance: Adamjee Insurance "FAASLAY ASAAN" gives you freedom from unforeseen traveling hassles. Providing you the convenience of an Instant Overseas Claim Settlement, whether you are on a vacation or a business trip. In collaboration with International SOS, we offer services of International healthcare, just a toll free call away to assist you in over 70 different languages. Our people will connect you with the local help available at your foreign destination. Besides medical assistance, our customer care services also excel in providing concierge, travel, cash emergency and a wide range of hotline services. Motor Insurance: Motor Insurance policy is mandatory under the Motor Vehicle Act. Owing Adamjee Insurance Company Limited Motor Insurance ensures that the owner of vehicle is protected from financial losses, caused by damage or theft to the vehicle and third party liability. Coverage Adamjee comprehensive motor insurance policy gives you the maximum coverage against theft, accidental damage and third party liability with greater benefits, innovative features and hassle free post and pre insurance processing. The major scope of the cover includes:

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Loss or Damage Due To:

y y y y y y

Accidental means, Fire external explosion, Self - ignition Lightning, Flood Theft & Burglary Malicious Act Whilst in transit (Road & Rail) Terrorism, Riots & Strikes (Optional)

Third Party Liability

y y y

Property Damage Bodily Injury Death

Value Added Services

y y y

Call Center 24/7 with Toll Free Number 0800-00242 Tracker at Insurance Company Cost (Optional) Adamjee Catch Card (Optional)

Some Exclusion
y y y y

Losses incurred outside geographical area of Pakistan Consequential loss depreciation wear and tear Mechanical or electrical breakdown failures or breakage Damage to Tyres and Battery unless the Motor Car is damaged at the same time where the liability of the company is limited to 50% of the cost of the replacement

Premium Payment Method Premium payment can be made through cash, cheque, pay order, demand draft, telex transfer to the concerned Adamjee Insurance branch. the policy taken for verification. 0800-00242
y y y

Company appoints surveyor who inspects the vehicle and submits the loss report. After completion of required formalities and documents claim is processed by the company immediately. On approval of the claim the payment cheque is released.

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ADAMJEE INSURANCE FINANCIALS

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AUDITORS REPORT
We have audited the annexed financial statements comprising of: ii.. iiii.. iiiiii.. iiv.. v v.. v vii.. v viiii.. v viiiiii.. v Balance sheet Profit and loss account Statement of changes in equity Cash flow statement Statement of premium Statement of claim Statement of expenses; and Statement of investment income

of ADAMJEE INSURANCE General Insurance Ltd. As at Dec 31st 2004 together with the notes forming part thereof, for the year then ended in which are incorporated the unaudited certified returns from the branches except for seven branches which have been audited by us. It is the responsibility of the companys board of directors to establish and maintain a system of internal control and present the financial statements in conformity with the Approved Accounting Standards as applicable in Pakistan and the requirements of the Insurance Ordinance, 2000(XXXIX of 2000) and the Companies Ordinance, 1984 (XLVII of 1984). Our responsibility is to express an opinion on these statements base on audit. The financial statements of the Company as of December 31, 2003, were audited by another firm of Chartered Accountants whose report dated March 27, 2004, expressed qualified opinion due to disagreement in view of accounting for leases as operating lease instead of finance lease in accordance with IAS-17 and reasonably determination of the amount due from State Life Insurance Corporation of Pakistan (SLIC) and realization or otherwise thereof as explained in note 11. We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting policies and significant estimates made by the management, as well as, evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

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The company follows the policy of treating finance leases as operating leases the effect of which has not been determined as referred to in note12. The realization or otherwise of amount due from State Life Insurance Corporation of Pakistan (SLICP) as referred to in note 11 cannot be reasonably determined. Had the company provided for the amount due from SLIC, profit for the year would have been lower by Rs. 2.856 million. Except for the financial effect of the matters referred to in the preceding paragraph, in our opinion: a) Proper books of accounts have been kept by the company as required by the Insurance Ordinance, 2000 and the Companies Ordinance, 1984; The financial statements together with the notes thereon have been drawn up in conformity with the Insurance Ordinance, 2000 and the Companies Ordinance, 1984, and accurately reflect the books and records of the company are further in accordance with the accounting policies consistently applied except for the change as stated in note 5(s) to the financial statements, with which we concur; The financial statements together with the notes thereon present fairly, in all material respects, the state of the Company s affairs as at December 31 2004 and of the profit, its cash flows and changes in equity for the year then ended, in accordance with the Approved Accounting Standards as applicable in Pakistan and give the information required to be disclosed by the Insurance Ordinance, 2000 and the Companies Ordinance, 1984; and Zakat was deductible at source under the Zakat and Ushr Ordinance 1980 (XVII of 1980), was deducted by the company and deposited in the Central Zakat Fund established under section 7 of that Ordinance.

b)

c)

d)

GARDEZI & CO Chartered Accountants

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ORGANIZATIONAL CHART

M.D/ CEO

Internal Audit

Advisor

Public Relations

Human Resources Department

Deputy Managing Director

Deputy Managing Director

Human Resources Department

Finance

Administration

Data Processing Budget & Statistics

Fire & Property

Marine

Motor

Miscellaneous

Investment

Credit & Suretyships

Reinsurance

Northern Zone Region & Branches

Southern Zone Division & Branches

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INFORMATION ABOUT ADAMJEE INSURANCE DEPARTMENT

1. The management flowchart of ADAMJEE INSURANCE General Insuarance Limited are divided into two zones one is South Zone in which those branches are included which are situated in Karachi and Hyderabad. The other is the North Zone in which those branches are included which are situated outside Karachi and Hyderabad. 2. In ADAMJEE INSURANCE Head Office there are 12 departments which come under the two Deputy Managing Director and other four department are directly reported to Managing Director.

DETAIL OF MANAGEMENT FLOWCHART

In ADAMJEE INSURANCE the top position is the Managing Director or Chief Executive Officer. There are four departments who directly report to the Managing Director or Chief Executive Officer. These departments are as follows: 1. Internal Audit 2. Public Relations 3.Advisors who supervise the Human Resource Department. Then the Executive Director of both South Zone and North Zone are reported directly to Managing Director or Chief Executive Officer. These two Executive Director are head of Southern Zone and Northern Zone respectively.After that there are two Deputy Managing Director who report to Managing Director. Each is the head of six department.one Deputy Managing Director is the head of Finance, Administration, Data Processing, Budget & Statistics, investments and Corporate Affairs department. Other is the head of Fire & Property, Marine, Motor, Miscellaneous, Credit & Suretyships and Re-Insuarnce Department.

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VERIFICATION OF ASSETS AND PROCEDURES

FIXED ASSETS
The fixed assets include: y Office premises y y Furnitre, fixture and equipment y y Vehicles y y Computers y

LIQUID ASSETS
The liquid assets include: y Cash y y Securities y y Capital y These assets are verified by two methods: LEDGER BALANCES The accounts for these assets are maintained, balanced, and verified through ledger. PHYSICAL VERIFICATION The accounts are also maintained by physically counting the fixed and liquid assets. If errors of assets result in ledger balances, physical verification is carried out. If still an error persists then rectification of assets are done. The process is carried out like this that first the error is located and solved if occured through miscalculation. If not miscalculation error then the error is corrected by adding money or assets.

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ACCOUNT RECIEVABLE POLICIES AND PROCEDURES

Major activities in a Accounts Receivable Cycle would include: Granting of credit to the customer, Updating customers accounts; recording of sales/premium and adjustments; receiving, processing, and recording of cash receipts; providing allowances for, and writing off, bad debts; recording of sales /premium and billing, and cash receipts and adjustments, by journalizing and posting to appropriate accounts; protecting cash and accounts receivable records; maintaining the accuracy and completeness of cash records and accounts receivable record balances. Folowing are the policies and procedures of Accounts Receivable: y Before granting credit to any customer, customer background verified y y If credit rating of customer is bad then the credit denied, if gredit rating of y customer is good then case refer to branch head for approval. y After approval of branch head, credit is granted to that custsomer. y y Statements of accounts are mailed to the customers on a regular/monthly basis. y y After receiving ofacsh receipt, customer account is properly adjusted. y y If in case, after due date customer doesnt clear his account, reminders are sent to y him. y If no reply received from customer second, third and fourth reminder are sent to y him. y If still no respnse made from customer then Aging Analysis done and allowances y for bad debts created, approved and Accounts Receivable balance of that customer adjusted.

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FIXED ASSETS
(Methods of recording depreciation)
INTRODUCTION
Fixed assets are those assets which give the benefit for more than one year. Fixed assets are the assets of a company like building, equipment, computer and vehicles. The government give some rates of depreciation. There are five methods of depreciation.

DEPRECIATION METHODS AND THE RATES OF DEPRECIATION

Administrative fixed assets are stated at cost less accumulated depreciation calculated on the straight line basis because it is mentioned in IIS and another important thing that it it is easy to calculate and equal amount should be charged for depreciation.there are some rates of depreciation. The following rates: Office premises Furnitures, Fixtures and Office Equipments Vehicles Computer 5% 10% 20% 30%

POLICIES OF CHARGING DEPRECIATION

A full years depreciation is charged on fixed assets capitalised during the year and no depreciation is charged in the year of disposal.

DIRECTLY CHARGED TO INCOME

There are some depreciation which is charged directly in income. These are as follows: 1. Normal repairs nad maintenance are charged to income currently. 2. Gains or losses on disposals of fixed assets are included in income currently. 3. Rental for Vehicles, Computers and Equipments under operating leases are charged to income currently.

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DIRECTORS REPORT TO THE MEMBERS

The directors of the company are pleased to present before you the Seventy-second audited accounts of the company for the year ended December 31, 2004. Your company continued to benefit from the strong growth of the countrys economy both in the industrial and consumer sectors. Your directors are pleased to report that 2004 was a year of record growth for the Company. The Gross Written Premium (excluding Administrative Surcharge) grew by Rs. 1 billion to Rs. 4.89 billion representing an increase of 27 % over previous year and is the highest annual growth recorded by any company in the insurance industry in Pakistan. The overall claims ratio on Net Premium Revenue in 2004 was 60% as against 63% in 2003. The overall underwriting profit rose to Rs. 420 M as compared to Rs. 127 M in the previous year. Your company is the market leader in insurance of leased motorcars. This business continued to increase rapidly mainly due to growth in Car Financing Schemes by banks and leasing companies. Motor insurance now represents almost 40% of the Companys total Written Premium. The Claims ratio of this class of business was 76% in 2004 as compared to 71% in 2003 The reserve for Un-earned Premium as at 31st December 2004 increased by Rs. 435 million to Rs. 1,570 million as compared to Rs. 1,135 million as on December 31, 2003. An important source of income (other than profit from insurance underwriting) is from rentals of ADAMJEE INSURANCE House Lahore. The building is located in one of the prime locations in Lahore and has well known national and multinational organizations as tenants. In 2001 your company was fortunate to get the opportunity of purchasing ADAMJEE INSURANCE House in Karachi which is under renovation. Not only a number of branches in Karachi been shifted from other rented premises to ADAMJEE INSURANCE House but even new branches have established with plans for opening of more branches and offices in the future. The savings in outgoing rental stream therefore provides a good return on investment in ADAMJEE INSURANCE House. The Profit after tax for the year was 322 M as compared to Rs. 106 M last year.

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The Department wise performance was as follows: FIRE & PROPERTY The Net Premium Revenue of this department increased to Rs. 448 M compared to Rs. Rs. 314 M in 2003. The claims ratio was 30% in 2004 as against 26% in 2003. The Underwriting Profit was Rs. 219 M compared to Rs. 126 M last year. MARINE, AVIATION AND TRANSPORT The Net Premium Revenue of this department was Rs. 433 M compared to Rs. 292 M in 2003. The Claims ratio improved from 59% in 2003 to 42% in 2004. The Underwriting Profit was Rs. 100 M compared to Rs. 5 M in 2003. MOTOR The Net Premium Revenue of this department was Rs. 1,573 M compared to Rs.946 M in 2003. The Claims ratio was 76% compared to 71% in 2003. There was Underwriting Profit of Rs. 63 M compared to Rs. 50 M last year. OTHERS The Net Premium Revenue of other departments was Rs. 36 M compared to Rs.46 M in 2003. The Claims Ratio decreased to 21% in 2004 from 53% in 2003. There was Underwriting Profit of Rs. 28 M compared to Rs.13 M in 2003.

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OTHER COMMENTS The after profit tax for the year under report amounted to Rs. 322 M. Your board proposes to make the following appropriation:
Rupees 000

RUPEES Profit after tax Add: Unappropriated profit brought forward

RUPEES 322 499 263 322 712

Less: Dividend declared on 29 March 2005 Reserve for issue of Bonus Shares Transfer to General Reserve Profit Appropriated Unappropriated Profit carried forward DIVIDEND Your directors have pleasure in recommending dividend of Rs. 3 per share (30%) and issuance of 3 (three) Bonus shares for every 7 (seven) shares held by the Shareholders whose names appear in the Share Register of the Company at the close of business on April 19, 2005. INVESTMENT

63 000 90 000 160 000 313 000 9 712

Your company invests in equities, TCFs, PIBs and Treasury Bills. The investment strategy of your Company is based on a long-term view with emphasis on returns from Fixed Income Securities and dividend income from equities. As your Company s investment policy is based o a long-term view of the capital market, short-term speculative activities are avoided. The market value of investment in shares showed an appreciation of Rs 1, 719 M as on December 31, 2004 compared to Rs. 953 M as on December 31, 2003.

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The objective of the management of your company is to provide high quality service to the satisfaction of its customers. We provide our clients expertise on modern risk management method relevant to their industries along with inputs from the insurance market with a view to providing them with the most cost effective insurance coverage. The company also has a reputation for prompt settlement of claims. The management of the company follows prudent and sound strategies to provide fair ad stable return to its shareholders. We continue in the state of the art software and hardware to take advantage of emerging technologies to further enhance the competitive position of the Company. The IT department has introduced a secured Virtual Public Network (VPN) and Web Mail to upgrade internal communication within the organisation. All the branches of the company are fully computerized and we can proudly claim that we have been able to maintain our position as having most comprehensive IT systems in the insurance industry of Pakistan. The auditors in their report have made mention of the amount due from State Life Insurance Corporation of Pakistan, policy of treating leases as operating leases. The reason for treating the lease as operating lease is due to specialized nature of taxability of profits of insurance companies. As reported last year your Company continues to have JCR-VIS as its rating agency. JCR-VIS has assigned Financial Strength rating of AA- and improve outlook to Positive from Stable. PROSPECTS FOR 2005
The prospects for 2005 will depend to a larger extent

on the growth rate of the economy in general but particularly on the success of the privatization of state owned enterprises and continued growth of lease financing business of motor vehicles by financial institutions. If the pace of privatization continues at the same pace as in the past few years, your company should continue to benefit from it in 2005.

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