GROWTH WITH STABILITY Adamjee aspires to grow without compromising on outstanding performance to its customers. The journey to success is riddled

Transcription

1 GROWTH WITH STABILITY Adamjee aspires to grow without compromising on outstanding performance to its customers. The journey to success is riddled with risks and dangers, that only the strongest and most experienced of the entities can make through. Adamjee s strength is represented by a tree, the roots of which nourish the tree with values learned from experience. The branches of this tree spread out to explore every possible avenue that leads to Adamjee s success.

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3 CONTENTS Vision / Core Values Company Information s report to the members on Unconsolidated Condensed Interim Financial Information s report to the members on Unconsolidated Condensed Interim Financial Information (Urdu) Unconsolidated Condensed Interim Financial Information s Report on Consolidated Condensed Interim Financial Information Consolidated Condensed Interim Financial Information Condensed Interim Financial Information Window Takaful Operations

4 VISION Our will is to explore, innovate and differentiate. Our passion is to provide leadership to insurance industry.

5 CORE VALUES Integrity Humility Fun at the Workplace Corporate Social Responsibility

6 COMPANY INFORMATION BOARD OF DIRECTORS Umer Mansha Chairman Fredrik Coenrard de Beer (Resigned Feb. 23, 2018) Ibrahim Shamsi Imran Maqbool Muhammad Anees Muhammad Umar Virk Shaikh Muhammad Jawed Muhammad Ali Zeb Managing & CEO ADVISOR Mian Muhammad Mansha AUDIT COMMITTEE Muhammad Umar Virk Ibrahim Shamsi Shaikh Muhammad Jawed Umer Mansha Chairman Member Member Member ETHICS, HUMAN RESOURCE AND REMUNERATION COMMITTEE Muhammad Anees Chairman Ibrahim Shamsi Member Muhammad Ali Zeb Member Umer Mansha Member INVESTMENT COMMITTEE Umer Mansha Imran Maqbool Muhammad Ali Zeb Muhammad Asim Nagi Chairman Member Member Member COMPANY SECRETARY Tameez ul Haque F.C.A CHIEF FINANCIAL OFFICER Muhammad Asim Nagi A.C.A 6 FIRST QUARTER REPORT

7 EXECUTIVE MANAGEMENT TEAM Muhammad Ali Zeb Muhammad Asim Nagi Adnan Ahmad Chaudhry Asif Jabbar Muhammad Salim Iqbal AUDITORS M/S KPMG Taseer Hadi & Company Chartered Accountants 351, Shadman 1, Main Jail Road, Lahore54000, SHARIAH ADVISOR Muſti Muhammad Hassan Kaleem SHARES REGISTRAR Central Depository Company Limited CDC House, 99B, Block B, S.M.C.H.S., Main ShahraheFaisal, Karachi Ph: (9221) Fax: (9221) BANKERS Abu Dhabi Commercial Bank Askari Bank Limited Bank Alfalah Limited Bank AlHabib Limited Dubai Islamic Bank Limited Emirates Islamic Bank FINCA Microfinance Bank Limited Habib Bank Limited Habib Metropolitan Bank Limited Khushali Bank Limited MCB Bank Limited MCB Islamic Bank Limited Meezan Bank Limited Mobilink Microfinance Bank Limited National Bank of Samba Bank Limited Soneri Bank Limited The Punjab Provincial Cooperative Bank Limited United Bank Limited Zarai Taraqiati Bank Limited REGISTERED OFFICE 4th Floor, 27CIII, Tanveer Building, M M Alam Road, Gulberg III, Lahore 54000, Ph: (9242) , Fax: (9242) info@adamjeeinsurance.com, Web: ADAMJEE INSURANCE 7

8 s Report to the Members on Unconsolidated Condensed Interim Financial Information For the Quarter Ended On behalf of the Board, we are pleased to present the unconsolidated condensed interim financial information of the Company for the first quarter ended. Financial Highlights The highlights for the period under review are as follows: 31 March 2017 Gross Premium Written 3,694,166 4,678,638 Net Premium Revenue 3,147,195 2,906,192 Underwriting results 571, ,027 Investment Income 532, ,848 Profit before tax 950, ,086 Profit after tax 663, ,160 Earnings per share (Rupees) Performance Review The Gross Premium of the Company decreased by 21% while the Net Premium increased by 8.3%. Overall underwriting results have improved by 34% over the corresponding period of last year with Motor line of business leading the underwriting performance with an underwriting profit of Rs. 272,741 thousands. The profit before tax and profit after tax have decreased by 2.2 % and 2.6 % respectively due to decrease in investment income in the current period. Window Takaful Operations The written contribution and deficit of Participants Takaful Fund amounted to Rs. 262,412 thousands (2017: Rs. 248,055 thousands) and Rs. 5,616 (2017: Rs. 6,439 thousands), respectively. Most of the growth in contribution written came from the Motor and Health line of business which contributed 63% and 18%, respectively to the total contribution written in this quarter. Window Takaful Operations profit before tax increased by 33% amounting to Rs. 19,810 thousands for the period ended (2017: Rs. 14,880 thousands). Future Outlook s economy witnessed a GDP growth of 5.28% during the year 2017 and the insurance sector grew at an average annual rate of around 13% on compound basis in the last five years. Considering the steady growth and increased insurance penetration in the past five years, it can be inferred that the sector has been performing healthier. We see a stable and positive regulatory regime going forward to enable the insurance industry to grow faster and increase its penetration across the country. Continued growth is expected in all lines of business in the insurance industry. Also, in view of the opportunities created through CPEC, the Company sees a favorable growth environment in the foreseeable future and is well positioned to tap into these opportunities. Acknowledgements We thank our shareholders, valued customers, employees and development staff for their consistent support that has helped Adamjee Insurance emerge as one of s leading insurance company. We are also grateful to the Insurance Division, the Securities and Exchange Commission of for their continued guidance and assistance. On Behalf of Board of s Lahore: 23 April FIRST QUARTER REPORT Muhammad Umar Virk Muhammad Ali Zeb Managing & Chief Executive Officer

9 رے 31 ADAMJEE INSURANCE 9

10 10 FIRST QUARTER REPORT

11 UNCONSOLIDATED Condensed Interim Financial Information for the Quarter Ended ADAMJEE INSURANCE 11

12 Unconsolidated Condensed Interim Balance Sheet As at EQUITY AND LIABILITIES Share capital and reserves attributable to Company's equity holders Note 31 December 2017 (Audited) Restated Authorized share capital 375,000,000 (2017: 375,000,000) ordinary shares of Rs. 10 each 3,750,000 3,750,000 Issued, subscribed and paid up capital 3,500,000 3,500,000 Reserves 18 7,509,689 6,473,977 Unappropriated Profit 12,527,363 11,863,964 Total Equity 23,537,052 21,837,941 Liabilities Underwriting provisions Outstanding claims including IBNR 11,426,866 11,485,744 Unearned premium reserves 8,136,283 8,912,498 Premium deficiency reserves Unearned reinsurance commission 195, ,306 Retirement benefit obligation 165, ,396 Deferred taxation 36,917 37,302 Premium received in advance 405, ,692 Insurance / reinsurance payables 1,488,327 1,668,516 Other creditors and accruals 2,295,196 2,307,394 Taxation provision less payments 175,381 Accrued expenses 60, ,578 Unclaimed dividends 105, ,214 24,492,027 25,351,640 Total liabilities of Window Takaful Operations Operator's Fund , ,312 Contingencies and commitments 19 48,204,026 47,330,893 The annexed notes form an integral part of this unconsolidated condensed interim financial information. 12 FIRST QUARTER REPORT

13 ASSETS Note 31 December 2017 (Audited) Restated Property and equipment 8 2,689,048 2,585,278 Intangible assets 9 31,335 34,242 Investment in Subsidiary , ,133 Investments Equity securities 11 21,323,933 20,230,227 Debt securities , ,832 Loans and other receivables , ,758 Insurance / reinsurance receivables 14 6,037,101 6,770,967 Reinsurance recoveries against outstanding claims 7,537,938 7,709,161 Salvage recoveries accrued 379, ,289 Deferred commission expense / Acquisition cost 614, ,631 Taxation payments less provision 82,087 Prepayments 15 1,900,835 2,499,931 Cash and bank 16 4,822,976 4,299,108 47,915,026 47,089,644 Total assets of Window Takaful Operations Operator's Fund , ,249 48,204,026 47,330,893 Umer Mansha Chairman Shaikh Muhammad Jawed Muhammad Umar Virk Muhammad Asim Nagi Chief Financial Officer Muhammad Ali Zeb Managing & Chief Executive Officer ADAMJEE INSURANCE 13

14 Unconsolidated Condensed Interim Profit and Loss Account For the Quarter Ended Note 31 March 2017 Revenue account Net Insurance Premium 20 3,147,195 2,906,192 Net Insurance Claims 21 (1,811,177) (1,810,741) Premium deficiency Net Commission and other acquisition costs 22 (279,147) (248,543) Insurance claims and acquisition expenses (2,090,324) (2,059,284) Management expenses (485,858) (420,881) Underwriting results 571, ,027 Investment income , ,848 Rental income 2,515 1,613 Other income 32,570 33,682 Other expenses (190,212) (159,347) Results of operating activities 948, ,823 Exchange gain 1, Profit from window takaful operations 17 19,810 14,880 Workers' welfare fund (19,406) (19,862) Profit before tax 950, ,086 Income tax expense (287,515) (291,926) Profit aſter tax 663, ,160 Balance at the commencement of the period 11,863,964 12,093,769 Profit aſter tax for the period 663, ,160 Balance unappropriated profit at the end of period 12,527,363 12,774,929 Rupees Earnings per share basic and diluted The annexed notes form an integral part of this unconsolidated condensed interim financial information. 14 Umer Mansha Chairman FIRST QUARTER REPORT Shaikh Muhammad Jawed Muhammad Umar Virk Muhammad Asim Nagi Chief Financial Officer Muhammad Ali Zeb Managing & Chief Executive Officer

15 Unconsolidated Condensed Interim Profit and Loss Account For the Quarter Ended Business Underwritten Inside 31 March 2017 Revenue account Net Insurance Premium 1,757,600 1,642,191 Net Insurance Claims (863,946) (844,330) Premium deficiency Net Commission and other acquisition costs (97,795) (93,076) Insurance claims and acquisition expenses (961,741) (937,406) Management expenses (361,013) (329,558) Underwriting results 434, ,227 Investment income 532, ,304 Rental income 2,515 Other income 14,044 32,096 Other expenses (131,785) (120,590) Results of operating activities 852, ,037 Exchange gain 1, Profit from window takaful operations 19,180 14,880 Workers' welfare fund (19,406) (19,862) Profit before tax 854, ,300 The annexed notes form an integral part of this unconsolidated condensed interim financial information. Umer Mansha Chairman Shaikh Muhammad Jawed Muhammad Umar Virk Muhammad Asim Nagi Chief Financial Officer Muhammad Ali Zeb Managing & Chief Executive Officer ADAMJEE INSURANCE 15

16 Unconsolidated Condensed Interim Profit and Loss Account For the Quarter Ended Business Underwritten Outside 31 March 2017 Revenue account Net Insurance Premium 1,389,595 1,264,001 Net Insurance Claims (947,231) (966,411) Premium deficiency Net Commission and other acquisition costs (181,352) (155,467) Insurance claims and acquisition expenses (1,128,583) (1,121,878) Management expenses (124,845) (91,323) Underwriting results 136,167 50,800 Investment income 59,544 Rental income 1,613 Other income 18,526 1,586 Other expenses (58,427) (38,757) Results of operating activities 96,266 74,786 Exchange gain Workers' welfare fund Profit before tax 96,266 74,786 The annexed notes form an integral part of this unconsolidated condensed interim financial information. 16 Umer Mansha Chairman FIRST QUARTER REPORT Shaikh Muhammad Jawed Muhammad Umar Virk Muhammad Asim Nagi Chief Financial Officer Muhammad Ali Zeb Managing & Chief Executive Officer

17 Unconsolidated Condensed Interim Statement of Comprehensive Income For the Quarter Ended 31 March 2017 Restated Profit aſter tax for the period 663, ,160 Other comprehensive income Items that may be reclassified subsequently to profit and loss: Unrealized gains on 'availableforsale' investments 1,012,560 13,401 Other comprehensive income from window takaful operations Effect of translation of investment in foreign branches net , Total comprehensive income for the period 1,699, ,471 The annexed notes form an integral part of this unconsolidated condensed interim financial information. Umer Mansha Chairman Shaikh Muhammad Jawed Muhammad Umar Virk Muhammad Asim Nagi Chief Financial Officer Muhammad Ali Zeb Managing & Chief Executive Officer ADAMJEE INSURANCE 17

18 Unconsolidated Condensed Interim Cash Flow Statement For the Quarter Ended Cash flows from operating activities 31 March 2017 Underwriting activities Premiums received 4,637,931 4,521,055 Reinsurance premiums paid (1,058,108) (898,848) Claims paid (2,807,430) (2,107,421) Surrenders paid (14,790) (7,265) Reinsurance and other recoveries received 882, ,523 Commissions paid (394,854) (374,512) Commissions received 90, ,676 Other underwriting payments (245,159) (274,637) Net cash generated from underwriting activities 1,090,724 1,406,571 Other operating activities Income tax paid (23,979) (16,896) General and management expenses paid (288,720) (290,284) Loans disbursed (10,868) (12,378) Loans repayments received 12,556 11,451 Other receipts 6,868 1,558 Net cash used in other operating activities (304,143) (306,549) Total cash generated from all operating activities 786,581 1,100,022 Cash flows from investing activities Profit / return received on bank deposits 15,352 28,179 Return on investment bonds 13,531 Income received from TFCs Income from treasury bills 11,116 2,859 Dividends received 130,542 91,032 Rentals received 768 1,613 Payments for investments (968,882) (1,402,925) Proceeds from disposal of investments 744, ,400 Fixed capital expenditure tangible assets (128,120) (68,429) Fixed capital expenditure intangible assets (185) (1,656) Proceeds from disposal of operating fixed assets 2,460 10,924 Total cash used in investing activities (192,076) (820,472) Cash flows from financing activities Dividends paid (637) (269) Net cash used in financing activities (637) (269) Net cash generated from all activities 593, ,281 Cash at the beginning of the period 4,192,858 4,300,905 Cash at the end of the period 4,786,726 4,580, FIRST QUARTER REPORT

19 Unconsolidated Condensed Interim Cash Flow Statement For the Quarter Ended 31 March 2017 Reconciliation to profit and loss account Operating cash flows 786,581 1,100,022 Depreciation expense (30,608) (28,144) Provision for gratuity (11,160) (1,205) Other income bank deposits 26,391 27,642 Gain on disposal of operating fixed assets 1,011 4,727 Rental income 2,515 1,613 (Decrease) / increase in assets other than cash (1,307,553) 649,817 Decrease / (increase) in liabilities other than running finance 136,449 (1,212,766) Profit on sale of investments 104, ,175 Amortization expense (3,956) (5,170) Decrease / (Increase) in unearned premium 776,215 (270,147) Amortization of income on Government Securities net Decrease in loans (1,688) (927) Income taxes paid 23,979 16,896 Reversal / (provision) for impairment in value of 'availableforsale' investments 37,012 Dividend and other income 383, ,052 Income from treasury bills 6,827 2,350 Return on investment bonds 5,846 Income from TFCs 1,351 1,425 Profit from Window Takaful Operations 19,810 14,880 Profit before tax 950, ,086 Definition of cash Cash comprises cash in hand, bank balances excluding Rs. 36,250 thousands (2017: Rs 106,250 thousands) held under lien, and other deposits which are readily convertible to cash and which are used in the cash management function on a daytoday basis. Cash for the purposes of the statement of cash flows consists of: 31 March 2017 Cash and other equivalents 8,111 7,081 Current and other accounts 2,511,525 4,083,199 Deposits maturing within 12 months 2,267, ,906 Total cash and cash equivalents 4,786,726 4,580,186 The annexed notes form an integral part of this unconsolidated condensed interim financial information. Umer Mansha Chairman Shaikh Muhammad Jawed Muhammad Umar Virk Muhammad Asim Nagi Chief Financial Officer Muhammad Ali Zeb Managing & Chief Executive Officer ADAMJEE INSURANCE 19

20 Unconsolidated Condensed Interim Cash Flow Statement For the Quarter Ended Business Underwritten Inside 31 March 2017 Cash flows from operating activities Underwriting activities Premiums received 3,215,128 2,786,052 Reinsurance premiums paid (995,837) (814,542) Claims paid (1,632,181) (863,531) Surrenders paid (14,790) (7,265) Reinsurance and other recoveries received 531,144 23,891 Commissions paid (176,736) (214,828) Commissions received 87, ,152 Other underwriting payments (145,513) (225,745) Net cash generated from underwriting activities 869, ,184 Other operating activities Income tax paid (23,979) (16,896) General and management expenses paid (211,270) (224,777) Loans disbursed (7,090) (10,489) Loans repayments received 9,457 9,313 Other receipts 6,872 1,558 Net cash used in other operating activities (226,010) (241,291) Total cash generated from all operating activities 643, ,893 Cash flows from investing activities Profit / return received on bank deposits 7,866 26,594 Return on investment bonds 13,531 Income received from TFCs Income from treasury bills 11,116 2,859 Dividends received 130,542 91,032 Rentals received 768 Payments for investments (968,882) (1,402,925) Proceeds from disposal of investments 744, ,400 Fixed capital expenditure tangible assets (117,708) (67,267) Fixed capital expenditure intangible assets (185) (1,656) Proceeds from disposal of operating fixed assets 2,299 10,924 Total cash used in investing activities (189,311) (822,508) Cash flows from financing activities Dividends paid (637) (269) Net cash used in financing activities (637) (269) Net cash generated from / (used in) all activities 453,073 (263,884) Cash at the beginning of the period 1,107,943 2,597,822 Cash at the end of the period 1,561,016 2,333, FIRST QUARTER REPORT

21 Unconsolidated Condensed Interim Cash Flow Statement For the Quarter Ended Reconciliation to profit and loss account 31 March 2017 Operating cash flows 643, ,893 Depreciation expense (25,346) (23,411) Provision for gratuity (5,213) (4,120) Other income bank deposits 7,866 26,056 Gain on disposal of operating fixed assets 1,369 4,727 Rental income 2,515 (Decrease) / increase in assets other than cash (1,456,589) 297,935 Decrease / (increase) in liabilities other than running finance 668,680 (678,894) Profit on sale of investments 104, ,149 Amortization expense (2,390) (3,073) Decrease in unearned premium 446,385 72,785 Amortization of income on Government Securities net Increase in loans (2,367) (678) Income taxes paid 23,979 16,896 Reversal / (provision) for impairment in value of 'availableforsale' investments 37,012 Dividend and other income 383, ,534 Income from treasury bills 6,827 2,350 Return on investment bonds 5,846 Income from TFCs 1,351 1,425 Profit from Window Takaful Operations 19,810 14,880 Profit before tax 854, ,300 Definition of cash Cash comprises cash in hand, bank balances excluding Rs. 36,250 (2017: Rs 106,250) held under lien, and other deposits which are readily convertible to cash and which are used in the cash management function on a daytoday basis. Cash for the purposes of the statement of cash flows consists of: 31 March 2017 Cash and other equivalents 8,086 2,569 Current and other accounts 1,552,195 2,330,634 Deposits maturing within 12 months Total cash and cash equivalents 1,561,016 2,333,938 The annexed notes form an integral part of this unconsolidated condensed interim financial information. Umer Mansha Chairman Shaikh Muhammad Jawed Muhammad Umar Virk Muhammad Asim Nagi Chief Financial Officer Muhammad Ali Zeb Managing & Chief Executive Officer ADAMJEE INSURANCE 21

22 Unconsolidated Condensed Interim Cash Flow Statement For the Quarter Ended Business Underwritten Outside 31 March 2017 Cash flows from operating activities Underwriting activities Premiums received 1,422,803 1,735,003 Reinsurance premiums paid (62,271) (84,306) Claims paid (1,175,249) (1,243,890) Surrenders paid Reinsurance and other recoveries received 351, ,632 Commissions paid (218,118) (159,684) Commissions received 2,515 19,524 Other underwriting payments (99,646) (48,892) Net cash generated from underwriting activities 221, ,387 Other operating activities Income tax paid General and management expenses paid (77,450) (65,507) Loans disbursed (3,778) (1,889) Loans repayments received 3,099 2,138 Other receipts (4) Net cash used in other operating activities (78,133) (65,258) Total cash generated from all operating activities 143, ,129 Cash flows from investing activities Profit / return received on bank deposits 7,486 1,585 Return on investment bonds Income received from TFCs Income from treasury bills Dividends received Rentals received 1,613 Payments for investments Proceeds from disposal of investments Fixed capital expenditure tangible assets (10,412) (1,162) Fixed capital expenditure intangible assets Proceeds from disposal of operating fixed assets 161 Total cash (used in) / generated from investing activities (2,765) 2,036 Cash flows from financing activities Dividends paid Net cash generated from / (used in) financing activities Net cash generated from all activities 140, ,165 Cash at the beginning of the period 3,084,915 1,703,083 Cash at the end of the period 3,225,710 2,246, FIRST QUARTER REPORT

23 Unconsolidated Condensed Interim Cash Flow Statement For the Quarter Ended 31 March 2017 Reconciliation to profit and loss account Operating cash flows 143, ,129 Depreciation expense (5,262) (4,733) Provision for gratuity (5,947) 2,915 Other income bank deposits 18,525 1,586 Gain on disposal of operating fixed assets (358) Rental income 1,613 Increase in assets other than cash 149, ,882 Increase in liabilities other than running finance (532,231) (533,872) Profit on sale of investments 51,026 Amortization expense (1,566) (2,097) Decrease / (Increase) in unearned premium 329,830 (342,932) Amortization of income on Government Securities net Increase/(decrease) in loans 679 (249) Income taxes paid Reversal / (provision) for impairment in value of 'availableforsale' investments Dividend and other income 8,518 Income from treasury bills Return on investment bonds Income from TFCs Profit from Window Takaful Operations Profit before tax 96,266 74,786 Definition of cash Cash comprises cash in hand, bank balances excluding Rs. Nil (2017: Rs Nil) held under lien, and other deposits which are readily convertible to cash and which are used in the cash management function on a daytoday basis. 31 March 2017 Cash for the purposes of the statement of cash flows consists of: Cash and other equivalents 25 4,512 Current and other accounts 959,330 1,752,565 Deposits maturing within 12 months 2,266, ,171 Total cash and cash equivalents 3,225,710 2,246,248 The annexed notes form an integral part of this unconsolidated condensed interim financial information. Umer Mansha Chairman Shaikh Muhammad Jawed Muhammad Umar Virk Muhammad Asim Nagi Chief Financial Officer Muhammad Ali Zeb Managing & Chief Executive Officer ADAMJEE INSURANCE 23

24 Unconsolidated Condensed Interim Statement of Changes in Equity For the Quarter Ended Share capital Capital reserves Revenue reserves Issued, subscribed and paid up Reserve for exceptional losses Investment fluctuation reserve Exchange translation reserve General reserve Fair Value Reserve Unappropriated Profit Total Balance as at 31 December 2016 (Audited) 3,500,000 22,859 3, , ,500 12,093,769 17,000,603 Effect of restatement as disclosed in note ,223,371 7,223,371 Balance as at 31 December 2016 (Audited) restated 3,500,000 22,859 3, , ,500 7,223,371 12,093,769 24,223,974 Profit for the period 01 January 2017 to 31 March , ,160 Other comprehensive income for the period 01 January 2017 to 31 March ,871 14,311 Total comprehensive income for the period , , ,471 Balance as at 31 March 2017 restated 3,500,000 22,859 3, , ,500 7,237,242 12,774,929 24,919,445 Profit for the period 01 April 2017 to 31 December , ,068 Other comprehensive income for the period 01 April 2017 to 31 December ,949 (2,193,488) (51,033) (2,221,572) Total comprehensive income for the period 22,949 (2,193,488) 489,035 (1,681,504) 3,500,000 22,859 3, , ,500 5,043,754 13,263,964 23,237,941 Final dividend for the year ended 31 December 25% (Rupee 2.5/ per share) (875,000) (875,000) Interim dividend for the period ended 30 June 15% (Rupees 1.5/ per share) (525,000) (525,000) (1,400,000) (1,400,000) Balance as at 31 December 2017 (Audited) restated 3,500,000 22,859 3, , ,500 5,043,754 11,863,964 21,837,941 Profit for the period 01 January 2018 to 663,399 Other comprehensive income for the period 01 January 2018 to 22,393 1,013,319 Total comprehensive income for the period 22,393 1,013, , ,399 1,035,712 1,699,111 Balance as at 3,500,000 22,859 3, , ,500 6,057,073 12,527,363 23,537,052 The annexed notes form an integral part of this unconsolidated condensed interim financial information. 24 Umer Mansha Chairman FIRST QUARTER REPORT Shaikh Muhammad Jawed Muhammad Umar Virk Muhammad Asim Nagi Chief Financial Officer Muhammad Ali Zeb Managing & Chief Executive Officer

25 Notes to the Unconsolidated Condensed Interim Financial Information For the Quarter Ended 1 Legal status and nature of business Adamjee Insurance Company Limited ("the Company") is a public limited company incorporated in on 28 September 1960 under the Companies Act, 1913 (now the Companies Act, 2017). The Company is listed on Stock Exchange and is engaged in the general insurance business comprising fire & property, marine, motor, accident and health and miscellaneous. The registered office of the Company is situated at Tanveer Building, 27CIII, MM Alam Road, Gulberg III, Lahore. The Company also operates branches in the United Arab Emirates (UAE) and the Export Processing Zone (EPZ). The Company was granted authorization on 23 December 2015 under Rule 6 of the Takaful Rules, 2012 to undertake Takaful Window Operations in respect of general takaful products by Securities and Exchange Commission of (SECP) and commenced Window Takaful Operations on 01January Basis of preparation The unconsolidated condensed interim financial information has been prepared in accordance with the requirements of the International Accounting Standard (IAS) 34 'Interim Financial Reporting' as applicable in, provisions of and directives issued under Companies Act, 2017, the Insurance Ordinance, 2000, Insurance Rules, 2017, the Insurance Accounting Regulations, 2017 and Takaful Rules, In case where requirements differ, the provisions of or directives issued under the Companies Act, 2017, the Insurance Ordinance, 2000, Insurance Rules, 2017, the Insurance Accounting Regulations, 2017 and Takaful Rules, 2012 have been followed. This unconsolidated condensed interim financial information does not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with annual financial statements of the Company for the year ended 31 December Statement of Compliance 3.1 This unconsolidated condensed interim financial information has been prepared under the historical cost convention except that certain investments are carried at fair value and the obligations under certain employee benefits that are measured at present value. Accrual basis of accounting has been used except for cash flow information. 3.2 The Companies Act, 2017 ( the Act ) was enacted on 30 May 2017 and replaced and repealed the Companies Ordinance, 1984 ( the repealed Ordinance ) with its application from January 01,2018. Accordingly, this unconsolidated condensed interim financial information has been prepared in accordance with the provision of the Companies Act, Securities and Exchange Commission of ( SECP ) vide S.R.O 88(1)/2017 and S.R.O 89(1)/2017 dated 9 February 2017 has issued the Insurance Accounting Regulations, 2017 and Insurance Rules, 2017 (the new Rules and Regulations). The application of these Regulations and Rules for the purpose of preparation and presentation of the financial statements was effective from 1 April However, SECP vide letter ID/OSM/Adamjee/2017/12269 dated 11 October 2017 has allowed the Company for the application of new Regulations effective from 1 January Consequently, the Company has changed its accounting policies in respect of presentation of financial statements and availableforsale investments as explained in note 4.1 of this unconsolidated condensed interim financial information. 4 Summary of significant accounting policies The accounting policies and methods of computation adopted in the preparation of this unconsolidated condensed interim financial information are the same as those applied in the preparation of the unconsolidated financial statements of the Company for the year ended 31 December 2017 except for changes in accounting policies in note 4.1 of this unconsolidated condensed interim financial information. The Company has adopted all the applicable new standards and amendments to standards, including any consequential amendments to other standards, with a date of initial application of 01 January 2018, as mentioned in the financial statements for the year ended 31 December There is no significant impact of such changes on this unconsolidated condensed interim financial information of the Company. ADAMJEE INSURANCE 25

26 Notes to the Unconsolidated Condensed Interim Financial Information For the Quarter Ended 4.1 Changes in accounting policies Presentation and disclosure of financial statements As per Insurance Rules, 2017, the presentation and disclosure requirements of the financial statements have changed under the format prescribed in Annexure II of the said Rules. Accordingly, change in presentation and disclosures of this unconsolidated condensed interim financial information has been applied retrospectively Investments Financial assets were previously measured as per the provisions of repealed SEC (Insurance) Rules, Starting from financial year 2018, Financial Assets fall in the scope of IAS 39 Financial Instruments Recognition and Measurement, and are classified as loans and receivables, heldtomaturity investments or availableforsale financial assets, as appropriate. Financial assets are initially measured at cost, which is the fair value of consideration given and received respectively. These financial assets are subsequently measured at fair value or cost as the case may be. The Company determines the classification of its financial assets after initial recognition and, where allowed and appropriate, reevaluates this designation at each financial year end Basis for measurement of availableforsale investments Under the repealed SEC (Insurance) Rules, 2002, the Company previously recorded its availableforsale investments at cost and remeasured them at lower of cost or market value. The Insurance Rules, 2017 require the initial measurement of availableforsale investments at cost with the subsequent remeasurement at fair value at each reporting date. The unrealized gains and losses arising from changes in fair values are directly recognized in equity in the period in which these arise until the investments are sold or determined to be impaired. The said change in accounting policy has been made in accordance with the requirements of IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors". Consequent to this change, investments as at December 31, 2017 have been increased by Rs. 5,043,626 thousands with a corresponding increase in fair value reserve in equity amounting to Rs. 5,043,626 thousands relating to conventional business and Rs. 7 thousands relating to Window Takaful Operations. Furthermore, fair value reserve as at December 31, 2016 has increased by Rs. 7,223,250 thousands relating to conventional business and Rs. 121 thousands relating to Window Takaful Operations. There is no impact of this change on earnings per share of the Company in preceding years Basis for measurement of heldtomaturity investments Nonderivative financial assets with fixed or determinable payments and fixed maturity are classified as heldtomaturity when the Company has the positive intention and ability to hold to maturity and are initially measured at cost. These are subsequently measured at amortized cost. Investments intended to be held for an undefined period are not included in this classification. Previously, fixed income securities, such as Fixed Deposits and Treasury Bills, redeemable at a given date were classified under the category Availableforsale securities as per the repealed SEC (Insurance) Rules, From the financial year starting from January 01, 2018, fixed income securities fall in the scope of IAS 39 and are now reclassified under the category Heldtomaturity investments. The reclassification does not affect the recognition and measurement criteria and such securities are continued to be measured on amortized cost i.e. where the cost was different from the redemption value, such difference is amortized uniformly over the period between the acquisition date and the date of maturity in determining cost at which these investments are stated Premium revenue The Insurance Accounting Regulations, 2017 remodel the recognition criteria for the premium written under an Insurance Policy. The said regulations require the Company to recognize premium receivable under an Insurance policy / cover note as written from the date of attachment of risk to the policy / cover note. Accordingly, the Company is required to account for cover notes which are effective as at balance sheet date. 26 FIRST QUARTER REPORT As per repealed SEC (Insurance) Rules, 2002, the premium was written under an insurance policy at the time of its issuance. The change is considered to be a change in accounting policy in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. The impact of the same is not considered to be material to the financial information and accordingly not included in the comparative restated financial information.

27 Notes to the Unconsolidated Condensed Interim Financial Information For the Quarter Ended 5 Use of estimates and judgments The preparation of this unconsolidated condensed interim financial information in conformity with the approved accounting standards requires the use of certain critical accounting estimates. It also requires the management to exercise its judgment in the process of applying the Company's accounting policies. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. During preparation of this unconsolidated condensed interim financial information, the significant judgments made by the management in applying the Company's accounting policies and the key sources of estimation and uncertainty were the same as those that applied in the preceding audited annual published financial statements of the Company for the year ended 31 December Functional and presentation currency This unconsolidated condensed interim financial information is presented in i Rupees, which is also the Company s functional currency. 7 Financial risk management The Company's financial risk management objectives and policies are consistent with those disclosed in the financial statements for the year ended 31 December Property and equipment Opening balance net book value 2,132,353 1,077,862 Additions during the period ,911 1,176,961 Less: Book value of disposals during the period 8.2 (1,449) (11,958) Depreciation / amortization charged during the period (30,608) (120,002) Exchange difference 7,707 9,490 (24,350) (122,470) 2,125,914 2,132,353 Capital work in progress 563, ,925 2,689,048 2,585, Additions during the period Land and buildings 1,040,575 Furniture and fixtures 2,175 26,004 Motor vehicles 13,544 76,110 Machinery and equipments 1,003 14,173 Computer and related accessories 1,189 20,099 Note 31 December 2017 (Audited) 8.2 Written down values of property and equipment disposed off during the period 17,911 1,176,961 Land and buildings Furniture and fixtures Motor vehicles 1,396 10,111 Machinery and equipments 53 1,847 Computer and related accessories 1,449 11,958 ADAMJEE INSURANCE 27

28 Notes to the Unconsolidated Condensed Interim Financial Information For the Quarter Ended 31 December 2017 (Audited) 9 Intangible assets Opening balance net book value 34,242 49,687 Additions during the period 185 2,973 Less: Book value of disposals during the period Depreciation / amortization charged during the period (3,956) (19,665) Exchange difference 864 1,247 (3,092) (18,418) 31,335 34, Investment in subsidiary 31 December 2017 (Audited) Restated Cost 694, ,895 Unrealized gain 295, ,238 End of the period 990, , December 2017 Cost Impairment/ provision Carrying value Cost Impairment/ provision Carrying value 11 Investment in equity securities (Audited) Restated Availableforsale Related parties Listed shares 7,962,628 7,962,628 7,819,534 7,819,534 Unrealized gain 2,565,918 2,197,985 10,528,546 10,017,519 Others Listed shares 7,356,344 (1,098,083) 6,258,261 7,454,844 (1,135,095) 6,319,749 Unlisted shared 925, , , ,360 NIT Units Mutual Funds 416, , , ,035 7,600,357 7,662,305 Unrealized gain 3,195,030 2,550,403 10,795,387 10,212, Total 21,323,933 20,230,227 FIRST QUARTER REPORT

29 Notes to the Unconsolidated Condensed Interim Financial Information For the Quarter Ended 12 Investment in debt securities Heldtomaturity Note 31 December 2017 (Audited) Others Term Finance Certificate ,948 70,948 Treasury Bills 655, , , ,832 No of certificates 31 December 2017 Face value Value of Certificates 31 December Term Finance Certificate ,000,000 70,948 70,948 70,948 70, December Loans and other receivables Considered good Rent receivable 13,676 (Audited) 6,090 Accrued investment income 368, ,631 Security deposits 44,903 44,525 Advances 173, ,581 Agent commission receivable 20,147 20,547 Loans to employees 41,505 43,193 Other receivables 199,438 16, , , Insurance / reinsurance receivables unsecured and considered good Due from insurance contract holders 5,318,304 6,152,145 Less: Provision for impairment of receivables from insurance contract holders (381,869) (375,801) 4,936,435 5,776,344 Due from other insurers / other reinsurers 1,251,968 1,145,925 Less: provision for impairment of due from other insurers / reinsurers (151,302) (151,302) 1,100, ,623 6,037,101 6,770, Prepayments Prepaid reinsurance premium ceded 1,759,176 2,349,147 Prepaid rent 13,571 19,663 Prepaid miscellaneous expenses 128, ,121 1,900,835 2,499,931 ADAMJEE INSURANCE 29

30 Notes to the Unconsolidated Condensed Interim Financial Information For the Quarter Ended 16 Cash and Bank Cash and cash equivalents Cash in hand Policy & revenue stamps, bond papers 7,563 7,289 8,111 7,676 Cash at bank Current accounts 1,739,623 1,478,477 Saving accounts , ,461 2,511,524 2,270,938 Deposits maturing within 12 months Fixed and term deposits ,303,341 2,020,494 Note 31 December 2017 (Audited) 4,822,976 4,299, These include fixed deposits amounting to Rs. 217,983 thousands (AED 6,951 thousands) [2017: Rs. 208,736 thousands (AED 6,951 thousands)] kept in accordance with the requirements of Insurance Regulations applicable to the UAE branches for the purpose of carrying on business in United Arab Emirates. These also include liens against cash deposits of Rs. 36,250 thousands (2017: Rs. 106,250 thousands) with banks in essentially in respect of guarantees issued by the banks on behalf of the Company for claims under litigation filed against the Company. 17 Window takaful operations operator's fund 31 December 2017 (Audited) Restated Assets QardeHasna 117, ,000 Cash and bank deposits 7,676 41,119 Investments 31,268 30,343 Current assets others 111,196 30,605 Fixed assets 21,860 22,182 Total Assets 289, ,249 Total liabilities current 174, , March 2017 Wakala Fee 52,862 28,923 Commission expense (13,056) (5,748) Management expense (21,051) (8,437) Net Investment income 1, Profit from Window Takaful Operations 19,810 14, Details of total assets, total liabilities and segment disclosure of window takaful operations are stated in the annexed condensed interim financial information for the quarter ended. FIRST QUARTER REPORT

31 Notes to the Unconsolidated Condensed Interim Financial Information For the Quarter Ended 18 Reserves 31 December 2017 (Audited) Restated Capital reserves Reserves for exceptional losses 22,859 22,859 Investment fluctuation reserves 3,764 3,764 Exchange translation reserves 489, , , ,723 Revenue reserves General reserves 936, ,500 Fair value reserve 6,057,073 5,043,754 6,993,573 5,980, Contingencies and commitments Contingencies 7,509,689 6,473,977 There has been no significant change in the contingencies since the date of preceding published annual financial statements. Commitments The Company has issued letter of guarantees amounting to Rs. 6,869 thousands (AED 219,000) [2017: 24,992 thousands(aed 832,250)] relating to its UAE branch. 20 Net Insurance Premium 31 March 2017 Written Gross Premium 3,694,166 4,678,638 Add: Unearned premium reserve opening 8,912,498 7,349,511 Less: Unearned premium reserve closing 8,136,283 7,619,658 Add: Currency translation effect 149,516 1,220 Premium earned 4,619,897 4,409,711 Less: Reinsurance premium ceded 877,919 1,322,707 Add: Prepaid reinsurance premium opening 2,349,147 2,356,182 Less: Prepaid reinsurance premium closing 1,759,176 2,175,511 Add: Currency translation effect 4, Reinsurance expense 1,472,702 1,503,519 3,147,195 2,906,192 ADAMJEE INSURANCE 31

32 Notes to the Unconsolidated Condensed Interim Financial Information For the Quarter Ended 31 March Net Insurance Premium Business underwritten inside Written Gross Premium 2,506,526 2,830,321 Add: Unearned premium reserve opening 5,186,518 4,515,372 Less: Unearned premium reserve closing 4,740,133 4,442,587 Premium earned 2,952,911 2,903,106 Less: Reinsurance premium ceded 820,460 1,104,584 Add: Prepaid reinsurance premium opening 2,079,920 1,922,263 Less: Prepaid reinsurance premium closing 1,705,069 1,765,932 Reinsurance expense 1,195,311 1,260,915 1,757,600 1,642, Net Insurance Premium Business underwritten outside Written Gross Premium 1,187,640 1,848,317 Add: Unearned premium reserve opening 3,725,980 2,834,139 Less: Unearned premium reserve closing 3,396,150 3,177,071 Add: Currency translation effect 149,516 1,220 Premium earned 1,666,986 1,506,605 Less: Reinsurance premium ceded 57, ,123 Add: Prepaid reinsurance premium opening 269, ,919 Less: Prepaid reinsurance premium closing 54, ,579 Add: Currency translation effect 4, Reinsurance expense 277, ,604 1,389,595 1,264, Net Insurance Claims Expense Claims Paid 2,807,430 2,107,421 Add: Outstanding claims including IBNR closing 11,426,866 10,024,986 Less: Outstanding claims including IBNR opening 11,485,744 9,475,718 Less: Currency translation effect 201,209 1,593 Claims expense 2,547,343 2,655,096 Less: Reinsurance and other recoveries received 988, ,294 Add: Reinsurance and other recoveries in respect of outstanding claims net of impairment (if any) closing 7,917,116 6,950,610 Less: Reinsurance and other recoveries in respect of outstanding claims net of impairment (if any) opening 8,056,450 6,615,596 Less: Currency translation effect 113, Reinsurance and other recoveries revenue 736, ,355 1,811,177 1,810, FIRST QUARTER REPORT

33 Notes to the Unconsolidated Condensed Interim Financial Information For the Quarter Ended 31 March Net Insurance Claims Expense Business underwritten inside Claims Paid 1,430, ,531 Add: Outstanding claims including IBNR closing 6,630,290 5,623,831 Less: Outstanding claims including IBNR opening 7,084,282 5,480,119 Claims expense 976,980 1,007,243 Less: Reinsurance and other recoveries received 510,256 65,399 Add: Reinsurance and other recoveries in respect of outstanding claims net of impairment (if any) closing 5,205,590 4,318,051 Less: Reinsurance and other recoveries in respect of outstanding claims net of impairment (if any) opening 5,602,812 4,220,537 Reinsurance and other recoveries revenue 113, , , , Net Insurance Claims Expense Business underwritten outside Claims Paid 1,376,458 1,243,890 Add: Outstanding claims including IBNR closing 4,796,576 4,401,155 Less: Outstanding claims including IBNR opening 4,401,462 3,995,599 Less: Currency translation effect 201,209 1,593 Claims expense 1,570,363 1,647,853 Less: Reinsurance and other recoveries received 478, ,895 Add: Reinsurance and other recoveries in respect of outstanding claims net of impairment (if any) closing 2,711,526 2,632,559 Less: Reinsurance and other recoveries in respect of outstanding claims net of impairment (if any) opening 2,453,638 2,395,059 Less: Currency translation effect 113, Reinsurance and other recoveries revenue 623, , , , Net Commission Expense / Acquisition Cost Commission Paid or payable 279, ,797 Add: Deferred Commission expense opening 733, ,281 Less: Deferred Commission expense closing 614, ,693 Add: Currency translation effect 15, Net Commission 414, ,520 Less: Commission received or recoverable 90, ,673 Add: unearned reinsurance commission 240, ,881 Less: unearned reinsurance commission 195, ,588 Add: Currency translation effect , , , ,543 ADAMJEE INSURANCE 33

34 Notes to the Unconsolidated Condensed Interim Financial Information For the Quarter Ended 31 March Net Commission Expense / Acquisition Cost Business underwritten Inside Commission Paid or payable 153, ,303 Add: Deferred Commission expense opening 326, ,331 Less: Deferred Commission expense closing 254, ,118 Net Commission 224, ,516 Less: Commission received or recoverable 88, ,150 Add: unearned reinsurance commission 227, ,685 Less: unearned reinsurance commission 188, , , ,440 97,795 93, Net Commission Expense / Acquisition Cost Business underwritten Outside Commission Paid or payable 125, ,494 Add: Deferred Commission expense opening 407, ,950 Less: Deferred Commission expense closing 359, ,575 Add: Currency translation effect 15, Net Commission 189, ,004 Less: Commission received or recoverable 2,146 19,523 Add: unearned reinsurance commission 12,580 34,196 Less: unearned reinsurance commission 7,142 31,193 Add: Currency translation effect ,955 22, , , FIRST QUARTER REPORT

35 Notes to the Unconsolidated Condensed Interim Financial Information For the Quarter Ended 23 Investment Income Business underwritten Inside Availableforsale Income from equity securities Dividend income associated undertakings 191, ,021 others 192, , , ,534 Income from debt securities Held to maturity Return on Term Finance Certificates 1,351 1,425 Return on Investment Bonds 5,846 Profit on Treasury Bills 6,827 2,350 8,178 9,621 Net realized gains on investments 31 March 2017 Realized gains on associated undertakings others 104, , , , , ,304 Reversal / (provision) of impairment in value of 'availableforsale' investments 37,012 Business underwritten Outside Availableforsale Income from equity securities 532, ,304 Dividend income 8,518 Net realized gains on investments 51,026 59,544 Net investment income 532, , Earnings per share basic and diluted There is no dilutive effect on the basic earnings per share which is based on: Net profit aſter tax for the period 663, ,160 Number of shares Weighted average number of shares 350,000, ,000,000 Rupees Basic earnings per share ADAMJEE INSURANCE 35

36 Notes to the Unconsolidated Condensed Interim Financial Information For the Quarter Ended 25 Transactions with related parties The Company has related party relationships with its associates, subsidiary company, employee retirement benefit plans, key management personnel and other parties. Transactions are entered into with such related parties for the issuance of policies to and disbursements of claims incurred by them and payments of rentals for the use of premises rented from them. There are no transactions with key management personnel other than those specified in their terms of employment. Investment in related parties have been disclosed in note 10 & 11 to the unconsolidated condensed interim financial information. Other transactions with related parties are summarized as follows: i) Transactions Subsidiary company Other related parties 31 March 2017 Premiums underwritten 11,562 7,026 Premiums received 9, Claims paid Claims received 2,500 Premium paid 2,200 Rent / service charges received 510 Premiums underwritten 231, ,384 Premiums received 533, ,390 Claims paid 145, ,126 Rent paid 1,309 1,283 Commission Paid 13,262 4,405 Rent received 1,613 Income on bank deposits 5,493 7,272 Investments made 143, ,272 Fee / service charges paid 2,088 Charge in respect of gratuity expense 8,164 4,733 Contribution to Employees' Provident Fund 7,638 7,091 Compensation paid to Key management personnel 222, , December 2017 (Audited) 36 ii) FIRST QUARTER REPORT Period end balances Subsidiary company Balances receivable 15, Balances payable Other related parties Balances receivable 209, ,219 Balances payable 706, ,382 Cash and bank balances 1,031,467 1,375,420 Payable to Staff Gratuity Fund 89,655 84,442 Payable to Employees' Provident Fund 2,354 2,325