Annual Report. Bimeh Markazi

Transcription

1 Annual Report Bimeh Markazi

2 Annual Report ( ) Table of Contents Outline 2 Bimeh Markazi 4 President s Report 6 High Council of Insurance 8 Board of Management 10 Organizational Chart 11 Insurance Activities In Iranian Free Trade Zones 12 General Presidential Scope 14 Reinsurance & International Affairs Scope 15 Supervision Scope 15 Bodily Injury Indemnity Fund 16 Insurance Research Institute 17 International Activities 18 Iranian Insurance Market 19 Planning & Development Scope 31 Management Development Scope 31 Balance Sheet 32 Income Statement 34 Notes to Financial Statements 35 Financial Highlights 39 Other International and Regional Activities 40 Annual Report

3 OUTLINE Bimeh Markazi (Central Insurance of IR Iran) Date of Establishment: June, 1971 President: Seyed Mohammad Karimi Address: No. 2, Insurance Tower, Africa Ave , Tehran, Iran Public Relations: P. O. Box: Tel: Fax: pr@centinsur.ir Website: 2 Annual Report

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5 Bimeh Markazi Iran (Central Insurance of IR Iran) was established in the year 1350 (1971) by the Act of Iranian Parliament (Majlis) for the purpose of regulating, expanding and guiding insurance industry in Iran. Besides its regulatory and supervisory missions, Bimeh Markazi Iran, by way of its Establishment Act, has been entrusted to carry out local compulsory reinsurance and to effect inward and outward reinsurance business in both national and international markets. Bimeh Markazi Iran is to rectify following duties and responsibilities: To prepare by-laws and regulations and to issue directives deemed necessary for the promotion and proper execution of insurance operation in Iran, with due regard to the text of this law To compile necessary information on the operation of all insurance organizations, operating in Iran To effect compulsory reinsurance operation To effect facultative reinsurance from Iranian and foreign insurance organizations To cede reinsurance to Iranian and foreign related companies whenever it is deemed necessary To administer the Bodily Injuries Indemnity Fund (BIIF) and to prepare the by-laws relating to the said fund, specified in Article 10 of the Law concerning Compulsory Third Party Liability by owners of Land Motor Vehicles under the Civil Law, approved in 4 Annual Report

6 Day 1347 (January 1968) To guide, to lead and to supervise insurance companies and to afford protection to such companies with a view to ensure a sound insurance market; to regulate matters relating to agencies and brokers; to supervise reinsurance matters to prevent unfair, deceitful and unsound competition and to regulate and supervise insurance industry. Under the Iranian compulsory reinsurance regulations, all insurance companies operating in Iran are still obliged to cede certain percentage of their direct Life and Non-Life business to Bimeh Markazi. Also, if and when, insurance companies intend to acquire reinsurance coverage from abroad they are obliged to offer certain percentage of each reinsurance contract to Bimeh Markazi Iran under the same terms and conditions. Bimeh Markazi Iran endeavors to utilize the local reinsurance capacity by retroceding all or part of compulsory reinsurance to the local insurance companies according to their capacity, after which contribution from international markets is welcomed. Bimeh Markazi Iran plays a key role in the industry by promoting, regulating and supervising insurance activities within the market and also by providing national and international reinsurance services. Annual Report

7 President s Report In the Name of Allah, the Compassionate, the Merciful It is a great pleasure to present this report on the development of the Iranian Insurance Market and the performance of Bimeh Markazi Iran (Central Insurance of IR Iran) for the Iranian year 1390 ( ). Although private Iranian insurance companies including Asia, Alborz, Dana, Parsian, Karafarin, Razi, Tose e, Sina, Mellat, Hafez, Omid, Day, Saman, Novin, Pasargad, Moallem, IranMoeen, Mihan, Kosar, Ma, Arman, Kish P&I Club, Amin Re, and Iranian Re as reinsurance companies have begun their operations in Iran, the only state insurance company, Iran, is still the key player of this market. The Iranian Insurance Industry, in the year concerned, sustained its high growth rate. The volume of total direct premium for the market in this year amounted to IR Rls. 85,909 billion, representing a growth rate of 45.2 percent over the previous year. The insurance penetration went beyond 1.5 percent and seemingly is approaching a higher rate. In the year under review, Motor (T.P.L.) Insurance with a growth rate of 60 percent, Health Insurance with a growth rate of 35.9 percent and Life Insurance with a growth rate of 46.6 percent had the greatest contribution in the overall market growth. The growth in premium income of the Motor (T.P.L.) is, however, accompanied with high loss ratio in this field. This trend is a common one in the Iranian Insurance Market for the past years. Although the loss ratio shows an decrease of 2 units in comparison with the previous year, our efforts are directed towards maintaining loss ratio at about 90 percent. All in all, Motor Third Party Liability with a direct premium of IR Rls. 38,837 billion or 45.2 percent of the total market premium possessed the highest market share followed by Health with IR Rls. 15,179 billion, Life with a direct premium of IR Rls. 6,870 billion, Motor (P.D.) with IR Rls. 6,314 billion, Liability with IR Rls. 4,594 billion and Accident with IR Rls. 4,331 billion, respectively. 6 Annual Report

8 In the year under review, the Insurance Industry of Iran issued about 35.3 million policies, that, in comparison with the last year, represents an increase of 10.5 percent. Total paid losses in this year amounted to IR Rls. 53,700 billion. In comparison with the year 1389 (2010) it reflects 36.9 percent increase. Again, the highest share of paid losses is held by Motor (T.P.L.) and Health with the 49.9 and 27.8 percent, Motor (P.D.) and Life with 7.7 and 4.3 percent of the total paid losses occupy next positions, respectively. In this year, the overall market loss ratio (incurred loss to earned premium) with 2 units decrease, was 76.6 percent. In the year 1390 ( ), Bimeh Markazi had a written reinsurance premium of IR Rls. 23,614,276 million which was derived from local compulsory and optional reinsurance accepted from national and international markets. Total reinsurance accepted in 1390 shows an increase of precent over the preceding year. The volume of retrocession is IR Rls. 655,702 million, whereas the retention is IR Rls. 22,958,574 million. In 1390, total reinsurance paid losses by Bimeh Markazi amounted to IR Rls. 14,066,566 million, precent of which was paid in different branches of Non-Life business and 8.31 percent in Life. In this year, total losses recovered through reinsurance treaties amounted to IR Rls. 350,433 million. Investment income of Bimeh Markazi for the year 1390 amounted to IR Rls. 2,583,896 million, representing an increase of IR Rls. 313,008 million or percent over the previous years. Our training services to accelerate the development of the industry went on with a higher speed comparing with previous years. These activities included training courses, insurance researches and publication of newsletters, two monthly journals and a number of books. In pursuit of our objective to increase the safety measures for loss reduction and loss prevention purposes, we have persistently continued to render our risk management services to the various insurance consuming sectors. Aside from the above mentioned results which show a relatively reasonable performance of the Iranian Insurance Industry, a considerable number of efforts and resources have been allocated to enhance the level of expertise, research and public awareness. The number of seminars and workshops arranged by Bimeh Markazi for the personnel of the Iranian Insurance Industry, as well as its customers, has dramatically increased and is expected to be accelerating in the coming years. The favorable performance and development of our Insurance Industry rest on the commitment and participation of all our colleagues in Bimeh Markazi Iran (Central Insurance of IR Iran), Iranian insurance companies and the development of sales network. I would like to thank them all for their worthy contribution and assistance. I would also like to thank our associates abroad for their support and cooperation. Seyed Mohammad Karimi Annual Report

9 High Council of Insurance One of the constituent organs of Bimeh Markazi Iran is the High Council of Insurance (HCI), with the prerogative to approve decrees and by-laws. The Council is comprised of President of Bimeh Markazi as its Head, Vice Ministers of Economic Affairs and Finance, Labor and Social Affairs, Commerce and Agriculture; together with five authorities and senior experts from the Iranian Insurance Market. The duties of the High Council of Insurance are as follows: 1. To consider and comment on the issuance of establishment, permission or cancellation of such permission of insurance organizations in accordance with the provisions of this law, and to make due recommendations to the General Assembly 2. To approve the form of the balance sheet to be used by insurance organizations 3. To specify the various types of insurance transactions, and general conditions to be included in insurance policies, and to supervise reinsurance operations 4. To determine the rate of commission and insurance premium relating to the various types of direct insurance operations 5. To approve the necessary by-laws governing work in the field of providing guidance on insurance operations and activities of insurance companies 6. To consider and to comment on the report of Bimeh Markazi Iran (Central Insurance of IR Iran) regarding the operations and activities of insurance organizations in Iran, that shall be submitted at least once every six months 7. To comment on any proposals submitted by the Head of the High Council of Insurance 8. To perform other duties as determined for it by this law 8 Annual Report

10 High Council of Insurance Mr. Seyed Mohammad Karimi President Bimeh Markazi Iran Central Insurance of IR Iran Dr. Masood Movahedi Vice Minister Ministry of Industries, Mines & Trade Mr. Ahmad Sadeghi Golmakani Vice Minister Ministry of Economic Affairs & Finance Dr. M. Reza Sepehri Representative Ministry of Cooperative, Labor & Social Wellfare Mr. J. Sahamian Moghadam Managing Director Bimeh Iran Mr. Mohammad Ali Nikbakht Vice Minister Ministry of Jihad Keshavarzi (Agriculture) Mr. Javad Mosaddeghi Representative Iranian Chamber of Commerce (I.C.C.) Mr. M. Ebrahim Amin Representative Insurers Syndicate Dr. Nader Mazloomi Insurance Expert Annual Report

11 Board of Management Mr. Seyed Mohammad Karimi President Mr. Rahim Mosaddegh Vice President Planning & Development Mrs. Mina Sadigh Noohi Vice President Reinsurance & International Affairs Mr. Seyed Kazem Delkhosh Abatari Vice President Supervision Mr. Esmaeil Mahdavinia Vice President Management Development, Human Resources, Parliamentary Affairs 10 Annual Report

12 General Administration of Security General Administration of Public Relations Management Development, Human Resources, & Parliamentary Affairs General Administration of Human Resources Development and Support General Administration of Finance General Administration of Investment & Assemblies General Administration of Reinsurance Accounts & Reserves Organizational Chart General Assembly Auditors High Council of Insurance Council of Jurisprudence Management Board President Deputy President General Administration of Presidential Office Legal General Administration Information & Communication Technology Office Anti-Money Laundering Management Vice President Supervision Vice President Reinsurance & International Affairs General Administration of Financial Supervision General Administration of Fire, Energy, Engineering, Oil & Energy Reinsurance General Administration of Technical Supervision General Administration of Marine, Hull & Aviation Reinsurance General Administration of Insurance Service Offices Supervision General Administration of Compulsory Reinsurance International Insurance Cooperation Office Affiliated Organizations Bodily Injury Indemnity Fund Staffs Pension Pool Insurance Research Center Office of Performance Assessment, Internal Audit, & Complaint Accountability Technical Office Vice President Planning & Development Planning & Development Office General Administration of Insurance Firms & Institutions Admission General Administration of Loss Prevention & Safety Annual Report

13 Insurance Activities in Iranian Free Trade Zones There are six free trade zones in Iran. They are Kish Island, Gheshm Island, Chabahar Port, the free zone of Arvand, Aras and free zone of Anzali. The first two are located in the middle of the Persian Gulf and the third shore in the Oman Sea. The free zone of Arvand is located in the southeastern part of Iran in Khuzestan province. The free zone of Aras is located near Aras River in the northern border of Iran.The free zone of Anzali is located in the southern coast of the Caspian Sea. Aside from the six free zones, there are various special economic, industrial and trade zones in different parts of Iran. At a meeting held on 23 August 2000, on the basis of the proposal of Bimeh Markazi and by virtue of Article 28 attached to the Law on the Administration of Free Trade-Industrial Zones in the Islamic Republic of Iran (ratified in 1999), the Council of Ministers approved the Regulations on Establishment and Operation of Insurance Institutions in the Free Trade-Industrial Zones in the Islamic Republic of Iran. Highlights of the said Regulations are as follows: Insurance and Reinsurance operations in the Free Trade Zones shall take place through institutions that, based on the proposal of the Authority and under the provisions of these regulations, obtain permission from Bimeh Markazi Iran (Central Insurance of IR Iran) and are registered in one of the following forms: 1. Iranian joint - stock or cooperative insurance companies with real and/or legal Iranian and/or foreign shareholders with registered shares 2. Insurance agency and/or brokerage institution 12 Annual Report

14 Institutions authorized to operate in the Zone, within the framework of these regulations, are not permitted to provide insurance for people residing, subjects and matters located in other parts of the country and transport insurance for goods imported to other parts of the country, the purchase contract of which is concluded of its letter of credit is opened in Iran. Reinsurance transactions are excluded from this Article. Minimum capital for insurance institutions, insurance agents and insurance brokers are as follows: 1. Direct insurance institutions are to be established with a minimum capital of IR Rls. 15 billion, at least 50% of which must be paid initially; 2. Mutual insurance institutions are to be established with a minimum capital of IR Rls. 200 million, at least 50% of which must be paid initially; 3. Reinsurance institutions are to be established with a minimum capital of IR Rls. 85 billion, at least 50% of which must be paid initially; 4. Insurance agencies and/or brokerage institutions are to be established with a minimum capital of IR Rls. 300 million, at least 50% of which must be paid initially. Upon these regulations, five private insurance and reinsurance companies have been registered in the Free Trade Zones. The following companies have already started their business: Amin Reinsurance Co. Omid Insurance Hafez Insurance Co. Iran Moein Insurance Co. Kish P&I Club Annual Report

15 General Presidential Scope A. Naderi Director General Presidential Office Dr. J. Mirghassemi Legal Director General M.Taebi Director General Public Relations M. Norouzi ICT Director General G.A. Sobat Technical Office Director General A. Karami Director General Performance Assessment, Internal Audit, Complaint Accountability N. Momenizadeh Anti-Money Laundring Director 14 Annual Report

16 Reinsurance & International Affairs Scope N. Khataei Director General Fire, Engineering, Oil & Energy Reinsurance H. R. Navabi Director General Compulsory (Legal) Reinsurance M. A. Ganji Director General Marine, Hull & Aviation Reinsurance R. Alla Director General International Insurance Cooperation Supervision Scope M. Namanalhosseini Director General Financial Supervision M. Amini Director General Technical Supervision S. M. Hashemi Tabatabaei Director General Insurance Service Offices Supervision Annual Report

17 Bodily Injury Indemnity Fund R. Jafari Head Bodily Injury Indemnity Fund Bodily Injury Indemnity Fund was established in 1969 (1347) through the Iranian Parliament ratification and has been maintained by the amendment which was approved in 2008 (1387) regarding the Law of Compulsory Third Party Liability Insurance by Owners of Land Motor Vehicle under the Civil Law. The purpose of establishing this Fund is to protect the injured due to traffic accidents, and to compensate third party s bodily injuries in case the person liable for the accident is anonymous, or does not hold insurance policy, or the insurance policy is expired, or the liable person has hit and run. The Head of the Fund is appointed based on the proposal of the President of Bimeh Markazi Iran (Central Insurance of IR Iran), approval of Fund General Assembly, and through the decree of Fund General Assembly Chairman. The members of the Fund General Assembly include the Minister of Economic Affairs and Finance, the Minister of Cooperative, Labor, and Social Welfare, the Minister of Justice, and the President of Bimeh Markazi. The General Assembly holds at least one meeting annually. Monetary resources of the Fund shall be provided according to pertinent laws and by-laws. 16 Annual Report

18 Insurance Research Center Dr. Gh. Mahdavi Head Insurance Research Center Insurance Research Center, affiliated to Bimeh Markazi Iran (Central Insurance of IR Iran), has been established in order to meet the research requirement for the development of insurance industry in Iran and to make a close relationship between the insurance industry and scientific centers (universities and research institutes) and also to investigate the main opportunities and challenges confronting the insurance industry. The main objectives of the Center are as follows: - Promoting the role of research in insurance decision making, regarding the increasingly important role of research in the insurance industry, and consequently in economic development - Creating a sound environment to encourage research activities in insurance Responsibilities & Obligations: 1. To support theses and research projects on insurance 2. To develop the most appropriate methods and techniques in insurance industry 3. To cooperate with other domestic and international research and training institutes in insurance 4. To hold conferences and workshops on insurance 5. To publish journals, books, academic report concerning the goals of the Center Annual Report

19 International Activities Foreign insurance companies have been permitted by Iranian Cabinet to set up contact offices in the mainland following amendments to former regulations authorizing operation of foreign insurance institutions in the Iranian Free Trade Zones (FTZs). In the amendment, an additional note has been affixed to Article 1 of the ratification according to which insurance companies, registered in the Iranian Free Trade Zones, can set up contact office across the country to facilitate links with Bimeh Markazi Iran (Central Insurance of IR Iran) and other concerned organizations. Bimeh Markazi outlined regulations to implement the above. Before this amendment, Iranian High Council of Insurance (HCI) approved and published the regulations on the establishment of contact offices of foreign insurance and brokerage institutions in the Islamic Republic of Iran. Highlights of the said regulations are as follows; Foreign insurance and brokerage institutions are allowed to open their contact offices in the Islamic Republic of Iran, after securing the approval of Bimeh Markazi. These contact offices are subject to the Laws of the government of the Islamic Republic of Iran and their operation, as the operation of a legal person is allowed within the framework of these laws and regulations that govern Iranian Insurance Industry. Contact offices are allowed to liaise between their mother company and Iranian insurance institutions to follow up the reinsurance affairs, to offer technical services and to provide insurance technical know-how. However, they are not permitted to offer insurance and to operate in those fields that are within the exclusive duties of the local insurance institution. Bimeh Markazi shall supervise the operation of these contact offices, on the basis of its lawful duties. Foreign insurance institutions can dissolve and / or temporarily close their contact offices in Iran, after informing Bimeh Markazi and through legal procedures. If and when a contact office, at the discretion of Bimeh Markazi, violates the regulations, Bimeh Markazi can highlight the case by sending a note or a warning or, can prevent its further operation by the approval of the President of Bimeh Markazi. The procedure for establishment, rules of operation and dissolution of contact offices have been done and published by Bimeh Markazi within the framework of these regulations. 18 Annual Report

20 Iranian Insurance Market Bimeh Iran Bimeh Dana Bimeh Asia Bimeh Parsian Bimeh Razi Bimeh Moallem بيمه دي Bimeh Iran Moein Bimeh Day Bimeh Tose e Bimeh Saman Bimeh Mihan Bimeh Sina Bimeh Hafez Bimeh Kosar Bimeh Omid Bimeh Ma Bimeh Arman Annual Report

21 Iranian Insurance Market During the year 1390 (2011), three companies, namely Ma, Arman, and Kish P&I Club joined the non-governmental section. Thus, one state-owned insurance company operating in Iran, namely Iran, and twenty four non-state owned insurance and reinsurance companies operating in Iran, namely Asia, Alborz, Dana, Moallem, Parsian, Karafarin, Razi, Tose e, Sina, Mellat, Hafez, Omid, Day, Saman, Amin Re, Novin, IranMoein, Pasargad, Mihan, Kosar, Ma, Arman, Kish P&I Club, and Iranian Re produced a total direct premium of IR Rls. 85,909 billion. The increase in the volume of total premium, in comparison with the previous year, was IR Rls. 26,748 billion, representing an increase of 45.2 percent. The following table shows the rising trend in the volume of premium in the last five years: Year 1386 (2007) 1387 (2008) 1388 (2009) 1389 (2010) 1390 (2011) Direct Premium Amount 33,824,091 40,560,989 46,438,228 59,161,052 85,908,792 Million IRR Growth Rate (%) Billion IRR Insurance Market Direct Premium (2007) 1387 (2008) 1388 (2009) 1389 (2010) 1390 (2011) 20 Annual Report

22 Iranian Insurance Market Insurance Market Direct Premium 1390 (2011) Credit Credit %0.6 %0.6 Engineering Engineering %1.7 % 1.7 Oil & &Energy Energy Oil %1.8 % 1.8 Life Life % 8.0 %8.0 Others Others %0.1 % 0.1 Fire Fire Cargo Cargo % 4.8 %4.8 % 1.0 %1.0 Accident Accident %5.0 % 5.0 ( Motor(P.D Motor (P.D) %% Liability Liability %5.3 % 5.3 Aviation %0.7 % 0.7 Hull %0.7 % 0.7 Health Health %17.7 % 17.7 Motor Motor(T.P.L) (T.P.L) Motor(T.P.L) %% Insurance Market Paid Loss 1390 (2011) Oil Oil & Energy Others Others Fire %0.4 %0.4 %0.1 % 0.1 % 1.8 %1.8 Life Life Liability Liability Credit Credit %4.3 % 4.3 %3.4 % 3.4 %0.2 %0.2 Aviation Aviation % 0.3 %0.3 Engineering Engineering % 1.0 %1.0 Cargo Cargo %0.5 %0.5 Accident % 2.1 %2.1 Motor (P.D) (Motor Motor(P.D (P.D) % 7.7 %7.7 Hull Hull %0.4 %0.4 Health Health %27.8 %27.8 Motor Motor(T.P.L) (T.P.L) Motor(T.P.L) % % Annual Report

23 Iranian Insurance Market The comparative detailed development of direct premium, the percentage share of each of the market, and the growth rates can be seen in the following table: Insurance Market Direct Premium Million IRR Class 1389 (2010) 1390 (2011) Amount Share(%) Growth(%) Amount Share(%) Growth(%) Fire 3,352, ,083, Cargo 872, , Accident 2,523, ,330, Motor(P.D) 5,459, ,313, Motor(T.P.L) 24,279, ,836, Health 11,171, ,179, Hull 396, , Aviation 543, , Engineering 1,256, ,498, Liability 3,211, ,594, Credit 381, , , Oil & Energy 931, ,568, Life 4,686, ,869, Others 94, , Total 59,161, ,908, The market direct premium of Accident, Oil & Energy, and Motor (T.P.L) classes shows the highest growth rate of 71.6, 68.3 and 60, respectively in 1390 ( ) compared with the previous year. The premium for Life recorded an acceptable growth of 46.6% during this year. All of the branches, except for Cargo Insurance have an acceptable growth. The negative growth of Cargo Insurance with increased volume of premium for other thirteen branches have resulted in the overall 45.2 percent growth for the total premium of 1390 ( ). The figures for "Other Branches" are mainly composed of premiums for Money and some of the different branches with low premium volume (totally 0.13%) in the market. 22 Annual Report

24 Iranian Insurance Market The comparative detailed development of paid loss, the percentage share of each branch of the market, and the growth rates can be seen in the following table: Class Insurance Market Paid Loss 1389 (2010) 1390 (2011) Million IRR Amount Share(%) Growth(%) Amount Share(%) Growth(%) Fire 834, , Cargo 158, , Accident 758, ,107, Motor(P.D) 3,539, ,147, Motor(T.P.L) 20,049, ,814, Health 9,782, ,936, Hull 101, , Aviation 148, , Engineering 373, , Liability 1,366, ,812, Credit 32, , Oil & Energy 355, , Life 1,698, ,330, Others 24, , Total 39,223, ,699, In 1390 (2011) similar to previous years, the share of paid losses in the Motor Third Party Liability has a main share. This is mainly attributed to the upward trend in the court reward for blood money (Dieh Claim) and the number of car accidents. It is mentionable that 57.7% of total paid loss amount of our market belongs to Motor (T.P.L. and P.D.). Besides, the Health share of insurance market paid losses 27.8% is noticeable due to an abnormal competition in this field and the rising reimbursements of healthcare expenses. The positive growth rate for paid losses in all branches except Oil & Energy has resulted in the overall 36.9 percent growth for the total paid loss of Annual Report

25 Iranian Insurance Market The figures for earned premium, incurred loss and loss ratio for the past five years are reflected below: Earned Premium, Incurred Loss & Loss Ratio Million IRR Year Earned Premiums Incurred Losses Loss Ratio(%) 1386 (2007) 29,972,473 22,080, (2008) 33,825,409 25,249, (2009) 41,774,258 31,245, (2010) 52,347,521 41,121, (2011) 70,669,837 54,122, Insurance Market Earned Premium & Incurred Loss Billion IRR (2007) 1387 (2008) Premium 1388 (2009) 1389 (2010) 1390 (2011) Loss 24 Annual Report

26 Insurance Market Earned Premium & Incurred Loss 1390 (2011) Billion IRR Billion IRR Earned Premium Incurred Loss Health Hull Aviation Engineering Liability Credit Oil & Energy Life Others Fire Cargo Accident Motor (P.D) Motor (T.P.L) Loss Ratio 1390 (2011) (%) Loss 13 (201 ) Market / %% Fire Cargo Accident Motor (P.D) Motor (T.P.L) Health Hull Aviation Engineering Liability Credit Oil & Energy Life Others Annual Report

27 Iranian Insurance Market The branch-wise direct earned premium and the incurred loss along with the loss ratio are shown in the table below: Class Earned Premium, Incurred Loss & Loss Ratio 1389 (2010) 1390 (2011) Million IRR Earned Premiums Incurred Losses Loss Ratio(%) Earned Premiums Incurred Losses Loss Ratio(%) Fire 3,085, , ,917,070 1,143, Cargo 816, , , , Accident 2,958, , ,235,220 1,101, Motor(P.D) 5,657,657 3,595, ,045,011 4,169, Motor(T.P.L) 22,695,526 20,853, ,807,213 27,659, Health 7,968,141 9,920, ,000,626 15,094, Hull 229, , , , Aviation 536, , , , Engineering 1,141, , ,454, , Liability 2,995,220 1,522, ,081,819 1,651, Credit 154, , ,258 49, Oil & Energy 902, , ,073, , Life 3,118,294 1,759, ,423,783 1,596, Others 87,188 25, ,184 28, Total 52,347,521 41,121, ,669,837 54,122, The considerable share and high loss ratio in Third Party Liability have contributed to the maintenance of the total loss ratio of the market at about 76.6 percent. Sales Network in Iranian Insurance Market Item 1386 (2007) 1387 (2008) 1388 (2009) 1389 (2010) 1390 (2011) Number of Companies * Number of Branches Number of Brokers Number of Agents Number of Life Insurance Agents Number of Loss Adjusters Number of Policies 25,408,860 28,569,285 29,478,857 31,931,184 35,290,747 Number of Claims 3,382,674 3,641,654 4,024,834 6,692,495 7,141,026 * Two of the companies just do reinsurance operation in 1390 (2011). 26 Annual Report

28 Iranian Insurance Market By the end of 2011 (1390), 25 insurance companies, 850 branches 25,304 agents, 384 official brokers, 3,956 life insurance agents, and 106 loss adjusters are active in Iranian Insurance Market. Thus, by increasing the number of insurance companies in the country, the employement has increased in insurance industry as well, and until the end of the year 1390 ( ), about 16,333 persons were working in insurance companies. Number of Insurance Companies (2007) 1387(2008) 1388 (2009) 1389 (2010) 1390 (2011) Sales Network of Insurance Industry Year Nubmer State Owned Companies Companies Private Companies State Owned Companies Employees Private Companies Branches Agents Life Insurance Agents Brokers Loss Adjusters 1386 (2007) (2008) (2009) (2010) (2011) Annual Report

29 Iranian Insurance Market Share of Insurance Companies At the time of privatization movement in insurance industry in the year 1382 (2003), the share of non-governmental insurance companies from market s premium increased; in the year 1390 (2011), about 53.2 percent of market s premium and 48.4 percent of market s loss belonged to this section. Share of Private Companies of Insurance Market (2007) 1387 (2008) 1388 (2009) 1389 (2010) 1390 (2011) Share of Direct Premium Share of Paid Loss Share of Companies in Insurance Market in % Year Share of Direct Premium State Owned Companies Private Companies Share of Paid Loss State Owned Companies Private Companies 1386 (2007) (2008) (2009) (2010) (2011) Annual Report

30 Iranian Insurance Market Share of Islamic Republic of Iran in Global Market and the Zone in 1390 (2011) In the year 1390 (2011), the share of insurance industry of Islamic Republic of Iran from produced premium of global insurance market was 0.15 percent and in the insurance market of the Zone was 14.1 percent. The premium of Iranian Insurance Industry has increased from 5.7 billion Dollars in 1389 (2010) to 7 billion Dollars in 1390 (2011). Thus, the Islamic Republic of Iran s worldwide rank is 44 in terms of premium production. The premium of Islamic Republic of Iran per person has increased in recent years and it has increased from thousand Rials (76.4 Dollars) in 1389 (2010) to thousand Rials (93.2 Dollars) in 1390 (2011). The Insurance penetration rate of the Islamic Republic of Iran increased to about 1.5 percent this year. Iranian Share of Direct Premium in Global Insurance Market and the Zone in % Year Share of World Market Share of Zone Market* 1386 (2007) (2008) (2009) (2010) (2011) *The Zone specified in rule document of 20-year vision of IR Iran for 1404 (2025) includes 25 countries. Annual Report

31 Iranian Insurance Market Insurance Density & Penetration (2007) 1387 (2008) 1388 (2009) 1389 (2010) 1390 (2011) Insurance Density (US$) Insurance Penetration (%) Worldwide Rank of Iranian Insurance & Economy Iranian Insurance Iranian Economy Year Direct Premiums * Rank Insurance Density (Rls) Rank Insurance ** Penetration (%) *** Gross Domestic Exchange Rate Rank Rank Product (GDP) * (Rls) to (US$) 1386 (2007) , ,861, , (2008) , ,378, , (2009) , ,562, , (2010) , ,304, , (2011) ,143, ,260 In Billions of Rls. (GDP in 2011 is not announced officially by CBI) * ** Premium per Capita *** Direct Premiums divided by GDP 30 Annual Report

32 Planning & Development Scope H. Mirzaei Director General Planning & Development Office R. Mostafavi Director General Insurance Firms & Institutions Admission H. Ghafari Director General Loss Prevention & Safety Management Development, Human Resources, Parliamentary Affairs Scope M. H. Falahatkar Director General Human Resources Development & Support M. Esameilzadeh Director General Reinsurance Accounts & Reserves A. Akhavanfard Director General Investment & Assemblies A. Motiei Director General Finance Annual Report

33 Balance Sheet As at ( ) Million IRR Items Assets Current Assets Cash & Cash Equivalents Amount Due from Local Insurance Co. Amount Due from Foreign Insurance Co. Other Receivables Deposit on Reinsurance Accepted 555,078 6,573, ,526 1,931,117 68, ,531 5,498, , ,982 62,937 9,273,583 6,606,339 Investment Short-term Long-term 4,490,254 11,500,870 3,732,551 9,768,402 15,991,124 13,500,953 Other Assets Tangible Assets and Inventories Intangible Assets Tax Paid in Advanced Other Assets 1,072,444 6, , , ,155 4,353 25, ,426 2,419,043 1,149,554 TOTAL ASSETS 27,683,750 21,256, Annual Report

34 Million IRR Items Liability and Equity Current Liability Amount Due to Local Insurance Co. Amount Due to Foreign Insurance Co. Deposit on Premium Ceded Creditor and Dividend Other Liabilities Long Term Liability Employees Funds Technical Provisions Life Gross Provisions Less Retroceded Bussiness Non-Life Gross Provisions Less Retroceded Bussiness Equity Issued Capital Legal Reserve Capital Reserve Reserve for Foreign Currency Exchange Net Profit Total of Liability and Equity 283,612 44,778 14, ,377 1,726,910 69,222 7,482,381 15,623, ,544 1,200, , , ,045 12, ,515,854 69,222 7,482,381 15,176,801 2,439,492 2,585,076 22,659,182 2,439,492 27,683, ,439 48,488 18, ,657 1,395,817 1,877,461 55,000 1,932,461 5,191,892 5,191,892 13,118, ,628 12,608,327 17,800, ,000 98, , , ,976-1,524,166 21,256,846 Annual Report

35 Income Statement For the years 1389 and 1390 in Annual Accounting Basis ( ) Million IRR Items Technical Account NOTE Earned Premiums Gross Written Premiums 1 23,614,276 16,365,497 Retroceded Premiums 3 540, ,702-22,958,574 15,825,149 Change in gross unearned premiums 2,330,763-4,816,855- Change in retroceded share of unearned premiums 59,707 54,988 2,275,775-4,757,148-18,201,426 13,549,374 Claims Incurred Claims Paid Gross Amount 2 10,291,749-14,066,566- Retroceded Amount 3 350, ,470 10,147,279-13,716,133- Change in provision for outstanding claims Gross Amount 952,919-3,761,332- Retroceded Amount 20, , ,070-3,885,123-11,120,349-17,601,256- Commissions Commission Paid 2,153,231-2,852,594- Commission Received 98,250 92,100 2,061,131-2,754,344-2,754,344- Changes in Other Technical Provisions 3,783, ,964- Other Underwriting Expenses 962,867-2,759,953- Investment Income 2,583,896 2,270,888 Result of Technical Account 1,453, ,951 Personnel and Administrative Expenses 215, ,923- Other Expenses (contribution to pension fund) 100, ,500 Other Income 22, Net Retained Profits 1,115, , Annual Report

36 Notes to Financial Statements In the year 1390 ( ), Bimeh Markazi had a gross reinsurance premium of IRR 23,614,276 million showing an increase of IRR 7,248,779 or percent over the preceding year. The volume of non-life reinsurance premium amounted to IRR 20,180,528 million represented an increase of percent over the last year. The life reinsurance showed an increase of percent in the year 1390 (2011). The comparative figures for our reinsurance premium, accepted by the class of business, are shown below: Reinsurance Premium Accepted Million IRR Class 1388 (2009) Amount Amount 1389 ( ) Share (%) Growth (%) Amount 1390 ( ) Share (%) Growth (%) Fire 798,749 1,010, ,129, Marine Cargo 214, , , Marine Hull 44, , , Accident 811, , ,100, Motor (P.D) 1,357,233 1,357, ,570, Motor (T.P.L) 4,981,004 6,030, ,657, Aviation 197, , , Engineering 295, , , Oil & Energy 235, , , Health 1,402,175 2,830, ,763, Others 730, , ,347, Life 1,610,471 2,348, ,433, Total 12,679,306 16,365, ,614, Annual Report

37 Notes to Financial Statements The comparative branch-wise figures for reinsurance claims paid, percentage share of each class and the respective growth rates can be seen in the following table: Reinsurance Claim Paid Million IRR 1388 (2009) 1389 ( ) 1390 ( ) Class Share Growth Share Amount Amount Amount Growth (%) (%) (%) (%) Fire 209, , , Marine Cargo 49,367 62, , Marine Hull 15,718 28, , Accident 176, , , Motor (P.D) 764, , ,032, Motor (T.P.L) 4,337,918 4,995, ,679, Aviation 136,955 56, , Engineering 87, , , Oil & Energy 119,173 87, , Health 1,233,850 2,435, ,722, Others 319, , , Life 674, , ,168, Total 8,125,215 10,291, ,066, Annual Report

38 Reinsurance Premium Accepted & Claim Paid 1390 ( ) 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 ire Marine Cargo Marine ull Accident Motor (P ) Motor (TP ) Aiation Engineering Oil & Energy ealt Oters ie Reinsurance Premium Claim Paid In the years 1389 (2010) and 1390 (2011) various types of reinsurance covers have been acquired for Marine, Non-Marine, and Oil & Energy business from local and foreign reinsurance. The following table shows retroceded premiums and claims collected in different branches: Retrocession Premiums & Claims Collected Million IRR Class Retrocession Premiums Claims Collected 1389 (2010) 1390 (2011) 1389 (2010) 1390 (2011) Marine 167, ,412 46,343 79,843 Non-Marine 249, ,679 23,486 87,854 Oil & Energy 123, ,611 74, ,736 Total 540, , , ,433 Annual Report

39 Total investment of Bimeh Markazi, with a percent increase, amounted to IRR 15,991,124 million, at the end of 1390 (2011). Investment income for the year 1390 (2011) amounted to IRR 2,583,896 million, representing an increase of IRR 313,008 million or percent over the previous year. Total assets at the end of the year, by percent increase amounted to IRR 27,683,750 million, of this figure percent represents liabilities and technical provisions and the remaining 8.81 percent represents the capital funds. The retained premium of year 1390 (2011) amounted IRR 22,958,574 million corresponding to percent of Life and Non-Life technical provisions of Bimeh Markazi including reserves for unearned premiums and outstanding claims, amounted to a total of the IRR 22,659,182 million at the end of that year Personnel and administrative expenses for the year 1390 (2011) amounted to IRR 259,923 million compared to IRR 215,663 million in the previous year. Net profit before tax for the years 1389 (2010) and 1390 (2011) amounted to IRR 462,579 million and IRR 1,115,942 million, respectively. Total Assets, Technical Reserves & Total Investment 30,000, (2009) 1389(2010) 1390(2011) 25,000,000 Total Asset 16,274,797 21,558,377 27,683,750 Technical P 13,655,411 20,000,000 17,800,219 22,659,182 Total Inves 11,132,682 13,500,953 15,991,124 15,000,000 10,000,000 5,000, (2009) 1389(2010) 1390(2011) Total Assets Technical Provisions Total Investment 38 Annual Report

40 Financial Highlights Million IRR Growth (%) 1390 Growth (%) Gross Premium 12,679,306 16,365, ,614, Retained Premium 12,175,763 15,825, ,958, % of Gross Premium Earned Premium 10,591,462 13,549, ,201, Incurred Loss 8,059,239 11,120, ,601, % of Earned Premium Net Claim 7,908,980 10,147, ,716, % of Retained Premium Investment & Other Income 1,808,090 2,061, ,777, General Expenses 191, , , % of Retained Premium Profit (Loss) 741, , ,115, Total Assets 16,274,797 21,256, ,683, Shareholders Equity* 1,623,233 1,524, ,439, Technical Reserve 13,655,411 17,800, ,659, Unexpired Risks 9,373,633 12,203, ,827, Outstanding Loss 1,748,225 2,946, ,832, Definitions: 1) Earned premium: Premium during year of account + Unearned premium at the end of preceding year of account - Unearned Premium at the end of year of account 2) Incurred Loss: Losses paid during the year of account + Reserve for outstanding losses at the end of year of account - Reserve for outstanding losses at the end of preceding year of account 3) Unexpired Risks: Part of premium not yet earned at the end of year of account (premium reserve at the end of year of account) ( * ) Reserve for foreign currency exchange included. Annual Report

41 Other International & Regional Activities Aside from reinsurance operations, other international activites head the agenda of Bimeh Markazi. Part of its role in the international arena is to prove its image and standing as an internationally active reinsurance organization. Besides, it is presented in various international and regional cooperating bodies. Some of the major entities are as follows: Asian Reinsurance Corporation (Asian Re) Asian Re is a regional inter-governmental corporation established in 1979 through the initiative of UN/ESCAP to operate as a professional reinsurer. Federation of Afro-Asian Insurers and Reinsurers (FAIR) Objectives: To promote and foster collaboration in the markets of insurance and reinsurance among Afro-Asian countries through defined means. Some of the established entities within the framework of the Federation which Bimeh Markazi is a member, are as follows: FAIR Non-Life Reinsurance Pool FAIR Aviation Pool FAIR Oil & Energy Insurance Syndicate Economic Cooperation Organization (ECO) Association of Insurance Supervisory Authorities of Developing Countries (AISADC) AISADC is entrusted to develop and expand international collaboration and cooperation in the field of insurance supervision and regulation. Association of Insurers and Reinsurers of Developing Countries (AIRDC) Green Card Bureau The International Motor Insurance Card System (known as the Green Card System) is designed to cater for the separate interests of traveling motorists and the party victims of such motorists in visited countries, through reciprocal cooperation of members under a uniform agreement between bureau. It came into operation in Iran has been a member since 1978 and is represented by Bimeh Markazi that administers the Iranian Bureau. 40 Annual Report

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