In The Name Of Allah THE COMPASSIONATE, THE MERCIFUL

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4 In The Name Of Allah THE COMPASSIONATE, THE MERCIFUL

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6 PROFILE (CENTRAL INSURANCE OF IR IRAN) Date of Establishment: June 1971 President: Mohammad Ebrahim Amin Address: No. 2, Insurance Tower, Maryam St., Mandela Ave., , Tehran, Iran P. O. Box: VICE PRESIDENCY Tel/Fax: aird@centinsur.ir 1

7 Table of Contents Profile Overview Minister s Note President s Message High Council of Insurance Organization Chart Management Board Our Top Executives Iranian Insurance Market Financial Statements Our Membership 2

8 Overview Bimeh Markazi Iran (Central Insurance of IR Iran) was founded in 1971 (1350) by the Act of Iranian Parliament for the purpose of regulating, expanding, guiding insurance operations in Iran, and for the guidance of the insurance companies, along with the protection of the insured and their beneficiaries as well as to ensure government supervision of such operations. Parallel with regulatory and supervisory missions, Bimeh Markazi Iran has been entrusted to accomplish local compulsory reinsurance and to conduct inward and outward reinsurance business in both national and international markets. Consistent with its Establishment Act, it continues to operate the following missions; To prepare by-laws and regulations, 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 performance 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 deemed necessary To administer the Bodily Injury Indemnity Fund (BIIF), to prepare by-laws relating to the Fund, specified in Article 10 of law on Compulsory Third Party Liability by Owners of Land Motor Vehicles under the Civil Law, approved in January 1968 (Day 1347) To guide, lead, and supervise insurance companies, to afford protection to such companies in view of ensuring sound 3

9 insurance market, to regulate matters relating to agencies and brokers, to supervise reinsurance matters, to prevent unfair, deceitful, and unsound competition, to regulate and supervise insurance industry. Under the Iranian compulsory reinsurance regulations, all insurance companies operating in Iran are 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 must offer certain percentage of each reinsurance contract to Bimeh Markazi Iran, under the same terms and conditions. Bimeh Markazi Iran endeavors to use local reinsurance capacity by retroceding all or part of compulsory reinsurance to local insurance companies according to their capacity, after which contribution from international markets is welcomed. To summarize, Bimeh Markazi Iran plays a key role in insurance industry by promoting, regulating, and supervising insurance activities within the market while providing national and international reinsurance services. Currently, there are 28 Iranian private insurance and reinsurance companies, namely Asia, Alborz, Dana, Parsian, Karafarin, Razi, Tose e, Sina, Mellat, Hafez, Omid, Day, Saman, Novin, Pasargad, Moallem, Iran Moein, Mihan, Kosar, Ma, Arman, Taavon, Sarmad, Asmari, Kish P&I Club, QITA P&I Club (Qeshm), Amin Re, and Iranian Re, whereas there is only one governmental insurance company, known as Iran Insurance Co. The volume of total direct premium for the market this year amounted to IR Rls. 205,400 billion (US$ 7.3 billion), signifying growth rate of 26.7 percent over the last year. The insurance penetration went beyond 1.9 percent. In the year under review, motor insurance (T.P.L.) with 42.2 percent, health insurance with 19.7 percent, and life insurance with 4

10 10.5 percent, had the greatest contribution in the overall market growth. Motor (T.P.L.) premium income increase is due to high loss ratio which is typical in the Iranian insurance market over the past years. This loss ratio indicates percent increase of 2.7 units, compared with last year. All in all, Motor Third Party Liability with a direct premium of IR Rls. 86,762 billion or 42.2 percent of the total market premium, earned the highest market share followed by health with IR Rls. 40,545 billion, life with a direct premium of IR Rls. 21,509 billion, motor (P.D.) with IR Rls. 13,652 billion, accident with IR Rls. 12,401 billion and liability with IR Rls. 11,404 billion, respectively. In the year under review, Iranian insurance industry issued about 45.8 million policies, representing 7 percent increase over the last year. Total paid losses also amounted to IR Rls. 124,615 billion, i.e percent increase compared with 2013 (1392). The highest share of paid losses is held by motor (T.P.L.), whereas health with 47.5 and 26.8 percent, motor (P.D.), life and liability with 6.1, 5.6 and 5.2 percent of the total paid loss occupy next positions. Moreover, the overall market loss ratio, which delineates incurred loss to earned premium, was 84.6 percent by 4.7 units decrease. In the year 1393 ( ), Bimeh Markazi had a written reinsurance premium of IR Rls. 46,167,145 (US$ 1.6 billion) from local compulsory and optional reinsurance accepted from national and international markets. Total reinsurance accepted in 1393 shows an increase of percent over the preceding year. The volume of retrocession is IR Rls. 1,664,963 million, whereas the retention is IR Rls. 44,502,182 million. In 1393, total reinsurance paid losses by Bimeh Markazi amounted to IR Rls. 28,445,442 million, precisely percent of which was paid in different branches of non-life business and percent in life insurance. During this year, total losses, recovered through reinsurance treaties, amounted to IR Rls. 417,506 million. Investment income of Bimeh Markazi for the year 1393 reached IR Rls. 6,219,003 million, showing an increase of IR Rls.985, 530 million or percent over the past years. 5

11 Persian Rug, Oriental Area Rug 6

12 Minister, Economic Affairs & Finance Head, Bimeh Markazi General Assembly 7

13 Minister s Note Since the nature of insurance industry is promising, it is expected that insurance companies be the safest places. In recent years, there have been a number of problems in banking and insurance systems which came up in the absence of solvency and proper supervision, consequently all financial markets faced a risk. Notably, insurance industry is not wide spread in society despite its relatively long life. Hence, provided this industry gets further damaged, it cannot approach its real position. As far as boosting the solvency of insurance companies is concerned, the issue of adding up capital ought to be taken into account seriously. Furthermore, financial and professional status of applicants asking for new insurance companies must be approved by Bimeh Markazi. Obviously, Bimeh Markazi is not going to rival insurance companies. Following that, the appropriate polices of Bimeh Markazi has led to lessen reinsurance, fortunately. The share of life insurance from the portfolio of insurance industry is minimal and our country, in comparison with other countries, has not seen that much growth, yet. Despite the fact that a part of insurance industry has moved apart commercial insurance scope, insurance penetration rate has mounted. Interestingly, the share of Iran insurance company from the portfolio of insurance industry equals 46 percent which shows that the share of private sector has grown. That in turn does not imply incapability of this company, yet proves the efforts made by private sector. The role of Iran insurance company in this industry is to introduce modern tools and then institutionalize them. Following the policies made by Bimeh Markazi, currently insurance industry moves on the right path. When sanctions are lifted, new conditions will prevail. In the past few years, insurance and banking systems distanced from normal systems due to sanctions. Therefore, by utilizing the past experience and positive effects of sanctions, hopefully in new conditions we can approach international standards. Ali Tayyebnia Minister, Economic Affairs & Finance Head, Bimeh Markazi General Assembly 8

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15 President s Message Generally, the responsibilities of Bimeh Markazi Iran (Central Insurance of IR Iran) are divided into three parts including "regulation", "supervision", and "reinsurance". Therefore, in the past two years, Bimeh Markazi has endeavored to take steps in line with these three areas. The supervisory activities of Bimeh Markazi are carried out through four bylaws namely "supervising the solvency margin of insurance companies", "transparency and financial reporting", "protecting the rights of consumers", and "investigating the qualifications of key staff of insurance industry". The sole means of supervision in mature insurance markets is measuring solvency; therefore, the supervisory activities of Bimeh Markazi are conducted on this basis in accordance with market conditions. Another point to mention is that Bimeh Markazi, regardless of its legal obligations, is a reinsurer, but it never uses its authority to the benefit of reinsurance business. The reinsurance section of Bimeh Markazi operates in accordance with the mechanisms and standards of a reinsurer company; activities in this section are aimed at setting up a national reinsurance company. This issue is also included in long-term planning of Bimeh Markazi so that in the strategic plan of Bimeh Markazi reducing the authority of the government and compulsory reinsurance are high on the agenda and for the desirable implementation of this plan, necessary follow-up is done. The main platform of supervision in Bimeh Markazi is based upon Sanhab (Persian abbreviation for insurance electronic guiding supervisory system). If this platform is used properly, financial supervision, insurance and financial transactions of Bimeh Markazi will be fulfilled through this system by the end of 1394 (early 2016). The specified indicators in Sanhab have gotten Bimeh Markazi to supervise the activities of insurance companies regardless of personal taste or individual interpretation; thanks to this system, all activities of insurance companies will be fully supervised by the end of this year. In general, in the last two years supervisory activities of Bimeh Markazi have been carried out in a way that they are irreversible and have actions taken outside the rules and regulations of insurance companies not concealed. Mohammad Ebrahim Amin 10

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17 High Council of Insurance One of the constituent organs of Bimeh Markazi is the High Council of Insurance (HCI), with the prerogative to approve decrees and by-laws. 12

18 High Council of Insurance One of the constituent organs of Bimeh Markazi 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, Cooperatives, Labor and Social Welfare, Industry, Mine, and Trade, and Agriculture Jihad, together with representatives of Islamic Parliament of Iran as well as senior experts from the Iranian insurance market. Duties of the High Council of Insurance are as follows; 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 To approve form of the balance sheet to be used by insurance organizations To specify various types of insurance transactions, and general conditions to be included in insurance policies, and to supervise reinsurance operations To determine the rate of commission and insurance premium relating to various types of direct insurance operations To approve necessary by-laws governing work in the field of providing guidance on insurance operations and activities of insurance companies To consider and to comment on the report from 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 To comment on any proposals submitted by the Head of the High Council of Insurance To perform other duties as determined for it by this law. 13

19 1. M. E. Amin Head President Bimeh Markazi Iran Central Insurance of IR Iran 2. H. Ghazavi Member Vice Minister Ministry of Economic Affairs & Finance 3. H. A. Mehrizi Member Vice Minister Ministry of Industry, Mine & Trade 7. M. Asoudeh Member Managing Director Iranian Reinsurance Co. 8. B. Pourseyed Member Legal Expert Judiciary Research Center 9. N. Mazloomi Member Insurance Expert General Assembly 4. M. R. Sepehri Member President Labour & Social Security Institute 10. M. Khajeh Noori Member Delegate Iran Chamber of Commerce, Industries, Mines & Agriculture 5. A. Bakhshandeh Member Vice Minister Ministry of Agriculture (Jihad) 11. N. Mousavi Member Representative Islamic Parliament of Iran 6. A. Hosseini Member Managing Director Iran Insurance Co. 12. M. Sarami Member Representative Islamic Parliament of Iran 14

20 Organization Chart General Assembly Management Board Affiliated Institutions: Insurance Research Center (IRC) Bodily Injury Indemnity Fund President Deputy President Security Central Office Legal Affairs General Dept. Public & International Relations Affairs Dept. General President's Office Dept. & Insurance General Industry Selection Board Staff Anti-Money Laundering Office Inspection, Performance Assessment, & Internal Audit General Dept. Management Development Vice & Presidency Resources Supervision Vice Presidency Planning & Development Vice Presidency Human Capital Development & Support General Dept. Finanical Supervision General Dept. Planning & Development Office Financial Affairs General Dept. Technical Supervision General Dept. Insurance Firms & Institutions Admission General Dept. Investments & Assemblies General Dept. Professional Qualification Supervision General Dept. Safety & Loss Prevention General Dept. Inspectors High Council of Insurance (HCI) Information & Communication Technology General Dept. Technical Affairs General Dept. Reinsurance Vice Presidency Fire, Engineering & Energy Reinsurance General Dept. Marine, Hull & Aviation Reinsurance General Dept. Personal, Motor & Liability Reinsurance General Dept. Reinsurance Accounts and Reserves General Dept. Inward Reinsurance & Green Card General Dept. 15

21 Management Board Mohammad Ebrahim Amin President Parviz Khoshkalam Khosroshahi Deputy President Habib Mirzaei Vice President Supervision Mina Sadigh Noohi Vice President Reinsurance Seyed Morteza H. Aghda Vice President Management & Resources Development Rahim Mosaddegh Vice President Planning & Development 16

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23 Our Top Executives 18

24 Our Top Executives 2 Shahriar Sheibani Special Inspector President s Advisor 1 Mohammad Mahdi Mahmoudi President's Office 4 Farzin Hajati Technical Affairs 3 Mostafa Zandi Public Relations & International Affairs 5 Seyed Javad Mirghassemi Legal Affairs 6 Seyed Ghasem Nemati Marasht Information & Communication Technology 7 Reza Mostafavi Anti-Money Laundering 8 Ali Shokri Inspection, Performance Assessment & Internal Audit 10 Shahram Sheibani Safety & Loss Prevention 9 Mehdi Namanalhosseini Planning & Development 11 Mahmoud Haghverdiloo Insurance Firms & Institutions Admission 12 Farzaneh Ghartakini Technical Supervision 13 Ali Jafari Financial Supervision 19

25 14 Mehrdad Rezaei Professional Qualification Supervision Admission of Insurance Firms & Institutions 16 Soraya Charkhchi Human Capital Development & Support 15 Amir Hossein Farsi Finance 17 Saeed Javadipour Investments & Assemblies 18 Nooshin Taghi Khataei Fire, Engineering & Energy Reinsurance 19 Faranak Hovanloo Marine & Aviation Reinsurance 20 Hamid Reza Navabi Personal, Motor & Liability Reinsurance 22 Ramin Ala Inward Reinsurance & Green Card 21 Seyed Omid Miraghazadeh Reinsurance Accounts & Reserves 23 Nadereh Shariatmadari Reinsurance International Consultant 24 Ali Esmaeilipour Reinsurance Marketing Consultant 25 Hassan Shabaninia Reinsurance Consultant 20

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27 Iranian Insurance Market In Iranian insurance market direct premiums of life insurance recorded 45.5% growth during this year. Insurance classes except for Credit, Hull, Aviation and Cargo with negative growth 58.4, 19.8, 18.6 and 15.2 percent, respectively yielded acceptable growth and the increased volume of premiums for all of them resulted in the overall 26.7 percent growth for the total premium of 1393 (). 22

28 Iranian Insurance & Reinsurance Companies 23

29 Alborz Insurance Co. Iran Insurance Co. Asia Insurance Co. Alborz Insurance Co. Dana Insurance Co. Moallem Insurance Co. Parsian Insurance Co. Karafarin Insurance Co. Tose'e Insurance Co. Razi Insurance Co. Sina Insurance Co. بيمه نوين(سهامي عام) Day Insurance Novin Insurance Mellat Insurance Co. Day Insurance Co. Saman Insurance Co. Novin Insurance Co. Pasargad Insurance Co. بیمه کوثر Mihan Insurance Co. Kosar Insurance Co. Ma Insurance Co. Arman Insurance Co. Sarmad Insurance Co. Taavon Insurance Co. Iranian Reinsurance Co. Hafez Insurance Co. Omid Insurance Co. Iran Moein Insurance Co Amin Reinsurance Co. Asmari Insurance Co. Kish P&I Club QITA P&I Club 24

30 Iranian Insurance Market Direct Premium During the year 1393 (2014), one state-owned insurance company, namely Iran Insurance Co., along with 28 private insurance and reinsurance companies operated in the Islamic Republic of Iran, including Asia, Alborz, Dana, Moallem, Parsian, Karafarin, Razi, Tose e, Sina, Mellat, Hafez, Omid, Day, Saman, Novin, Iran Moein, Pasargad, Mihan, Kosar, Ma, Arman, Kish P&I Club, QITA P&I Club, Asmari, Taavon, and Sarmad that produced total direct premium of IR Rls. 205,400 billion; Amin Re and Iranian Re are also major reinsurance companies operating in Iran. Increase in the volume of total premium, compared with last year, was IR Rls. 43,344 billion, representing an increase of 26.7 percent. The following table shows the rising trend in the volume of direct premium over the last five years. Table 1. Direct Premium (Million IRR) Year Amount Growth Rate (%) 1389(2010) 59,161, (2011) 86,092, (2012) 131,567, (2013) 162,055, (2014) 205,399, In Iranian insurance market direct premiums of life insurance recorded 45.5% growth during this year. Insurance classes except for Credit, Hull, Aviation and Cargo with negative growth 58.4, 19.8, 18.6 and 15.2 percent, respectively yielded acceptable growth and the increased volume of premiums for all of them resulted in the overall 26.7 percent growth for the total premium of 1393 (). Figures for other insurance classes are mainly composed of premiums for money and a number of different branches with low premium volume (totally 0.1%) in the market. 25

31 Table 2. Insurance Market Direct Premium Class 1392 (2013) 1393 (2014) Amount Share(%) Growth(%) Amount Share(%) Growth(%) Fire 6,334, ,276, Cargo 2,323, ,969, Accident 9,259, ,400, Motor(P.D) 11,580, ,652, Motor(T.P.L) 69,372, ,762, Health 30,563, ,545, Hull 1,685, ,351, Aviation 1,599, ,301, Engineering 2,088, ,343, Liability 8,984, ,403, Credit 288, , Oil & Energy 3,029, ,583, Life 14,781, ,508, Others 163, , Total 162,055, ,399, (Million IRR) Insurance Market Direct Premium 220, , , , , , ,000 80,000 60,000 40,000 20, (2010) 1390 (2011) 1391 (2012) 1392 (2013) 1393 (2014) 26

32 Insurance Market Direct Premium in % 1393(2014) Oil & Energy 1.7 Credit 0.1 Liability 5.6 Engineering 1.1 Life 10.5 Fire 4.0 Cargo 1.0 Accident 6.0 Others 0.1 Motor(P.D) 6.6 Aviation 0.6 Hull 0.7 Health 19.7 Motor(T.P.L)

33 Iranian Insurance Market Paid Loss 1393 (2014) In 1393 (2014), as in previous years, the share of paid loss for motor third party liability has a major 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 notable that 53.6% of total paid loss amount of our market belongs to motor (TPL & PD). Besides, health insurance market paid loss with 26.8% is noticeable due to an abnormal competition in this field and the rising reimbursements of healthcare expenses.the positive growth rate for paid loss in all classes except for Hull and Credit resulted in the overall 18.8 percent growth for the total paid loss of The following table displays comparative statistics of paid loss, the percentage share of each insurance class in the market, and the growth rates. Table 3. Insurance Market Paid Loss (Million IRR) Class 1392 (2013) 1393 (2014) Amount Share(%) Growth(%) Amount Share(%) Growth(%) Fire 1,917, ,611, Cargo 254, , Accident 3,033, ,354, Motor(P.D) 6,452, ,604, Motor(T.P.L) 49,258, ,195, Health 32,608, ,410, Hull 1,011, , Aviation 124, , Engineering 501, ,130, Liability 4,751, ,513, Credit 95, , , Oil & Energy 142, , Life 4,678, ,952, Others 47, , Total 104,877, ,614,

34 Insurance Market Paid Loss in % 1393(2014) Fire Cargo Accident Motor(T.P.L) Motor(T.P.L) Health Aviation Hull Engineering Liability Credit Oil & Energy Life Others 29

35 Earned Premium, Incurred Loss & Loss Ratio Class-wise direct earned premium and incurred loss, along with loss ratio are shown in the table below. Considerable share and high loss ratio in TPL and health have contributed to the maintenance of the total loss ratio of the market at about 84.6 percent. Table 4. Earned Premium, Incurred Loss & Loss Ratio (Million IRR) Year Earned Premiums Incurred Losses Loss Ratio (%) 1389(2010) 52,347,521 41,121, (2011) 70,870,334 54,052, (2012) 100,495,359 83,027, (2013) 129,954, ,022, (2014) 157,311, ,055, Based on bylaw ratified by HCI, in calculating earned premium, paid legal tax is deducted. Also, in calculating loss ratio, sales network commissions & general administrative expenses are excluded. 30

36 Insurance Market Earned Premium & Incurred Loss 165,000 Billion IRR 155, , , , , ,000 95,000 85,000 75, ,000 55,000 45,000 35,000 25,000 15, (2010) 1390 (2011) 1391 (2012) 1392 (2013) 1393 (2014) Earned Premium Incurred Loss Insurance Market Earned Premium & Incurred Loss 1393 (2014) Billion IRR Fire Cargo Accident Motor(P.D) Motor(T.P.L) Health Hull Aviation Engineering Liability Credit Oil & Energy Life Others 31

37 Loss Ratio 1393 (2014) Market 84.6% Fire Cargo Accident Motor(P.D) Motor(T.P.L) Health Hull Aviation Engineering Liability Credit Oil & Energy Life Others Table 5. Earned Premium, Incurred Loss & Loss Ratio Class Earned Premiums 1392(2013) 1393(2014) Incurred Losses Loss Ratio(%) Earned Premiums Incurred Losses Loss Ratio(%) Fire 5,878,838 2,457, ,085,906 2,769, Cargo 1,594, , ,397, , Accident 7,986,545 3,436, ,243,784 6,456, Motor(P.D) 10,284,518 6,612, ,743,152 8,131, Motor(T.P.L) 51,629,440 53,553, ,326,008 68,443, Health 30,500,606 35,801, ,808,891 33,836, Hull 2,022, , ,427, , Aviation 1,349,454 69, ,409, , Engineering 2,003, , ,204, , Liability 8,317,991 6,835, ,375,415 6,552, Credit 202, , , ,186 - (Million IRR) Oil & Energy 2,047, , ,749,405 1,036, Life 5,963,780 4,298, ,149,323 3,775, Others 171,780 44, ,029 57, Total 129,954, ,022, ,311, ,055, Based on the bylaw ratified by HCI, in calculating earned premium, paid legal tax is deducted from Motor (T.P.L.) and Accident. Also, in calculating loss ratio, sales network commissions and general administrative expenses are excluded. 32

38 Sales Network in Iranian Insurance Market By the end of 2014 (1393), 29 insurance companies, 1,037 branches, 34,047 general agents, 591 official brokers, 4,879 life insurance agents, and 212 loss adjusters operate in Iranian insurance market. Thus, by increasing the number of insurance companies in the country during last years, the employment has increased in insurance industry as well, and until the end of the year 1393 (), about 18,989 individuals were in service. Table 6. Sales Network in Iranian Insurance Market Item 1389(2010) 1390(2011) 1391(2012) 1392(2013) 1393(2014) Number of Companies * Number of Branches Number of Brokers Number of General Agents Number of Life insurance agents Number of Loss adjuster ** Number of Policies 31,931,184 35,880,048 39,387,073 42,788,184 45,799,593 Number of Claims 6,692,495 8,877,434 13,397,313 17,674,160 19,422,174 * Two of the companies just do reinsurance operation. ** Number of issued permits without considering cancellation or pending Table 7. Sales Network of Insurance Industry Year Nubmer State Owned Companies Companies Private Companies Employees State Owned Companies* Private Companies Branches General agents Life insurance agents Brokers Loss adjuster ** 1389(2010) (2011) (2012) (2013) (2014) * Including the staff of Bimeh Markazi ** Number of issued permits without considering cancellation or pending 33

39 Number of Insurance Companies (2010) 1390 (2011) 1391 (2012) 1392 (2013) 1393 (2014) Share of Insurance Companies At the time of privatization movement in insurance industry in the year 1383 (2004), the share of non-governmental insurance companies from market s premium increased; in the year 1393 (2014), about 59.3 percent of market s premium and 52.4 percent of market s loss belonged to this section. Share of Private Companies of Insurance Market 1389 (2010) 1390 (2011) 1391 (2012) 1392 (2013) 1393 (2014) Share of Direct Premium Share of Paid Loss 34

40 Table 8. Share of Companies in Insurance Market (In %) Year Share of Direct Premium State Owned Companies Private Companies State Owned Companies Share of Paid Loss Private Companies 1389(2010) (2011) (2012) (2013) (2014) Iran s Share in Global Market and the Region in 1393 (2014) In the year 1393 (2014), 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 in the Region was 12 percent. The premium of Iranian insurance industry increased from 6.5 billion Dollars in 1392 (2013) to 7.3 billion Dollars in 1393 (2014). Moreover, the worldwide rank of the Islamic Republic of Iran is 45 in terms of premium production. The insurance premium per person has increased from 2.1 million Rials (84 Dollars) in 1392 (2013) to 2.6 million Rials (94 Dollars) in 1393 (2014). National insurance penetration rate increased to 1.90 percent this year. Table 9. Iranian Insurance Share of Direct Premium in Global Insurance Market Year Share of World Market (in %) Share of Regional Market (in %)* 1389(2010) (2011) (2012) (2013) (2014) * The Region specified in rule document of 20 years vision in IR Iran for 1404 (2025) that includes 25 countries. It is worth mentioning that due to changes in exchange rate (Dollar to Rial) from IRR in 1391 (2012) to IRR in 1392 (2013), amount of produced premium has decreased in dollar terms which has had a descending impact in the share of Iran in regional and global insurance market. 35

41 Insurance Density & Penetration (2010) 1390 (2011) 1391 (2012) 1392 (2013) 1393 (2014) Insurance Density (US$) Insurance Penetration (%) Table 10. Worldwide Rank of Iranian Insurance & Economy Iranian Insurance Iranian Economy Year Direct Premiums * rank Insurance Density ** rank Insurance Penetration (%) *** rank Gross Domestic Product (GDP) * 1389(2010) 59, ,304, , (2011) 86, ,104, , (2012) 131, ,091, , (2013) 162, ,343, , (2014) 205, ,807, ,994 * In Billions of Rls ** Premiums per Capita (in Millions of Rls) *** Direct Premiums divided on GDP rank Exchange rate (Rls) to (US$) The Decline of penetration rate in Iranian insurance industry in 1392 is due to lower produced premium growth (23.2%), compared with GDP nominal growth (31.8%). The reduction of produced premium growth in insurance market is somehow affected by withdrawal of health suplementary coverage of social security organization contrary to laws and regulations of commercial insurance from the portfolio of insurance industry. 36

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43 Financial Statements In the year 1393(), Bimeh Markazi had a gross reinsurance premium of IRR 46,167,145 Million showing an increase of IRR 8,938,539 or percent over the preceding year. 38

44 Balance Sheet as at 29/12/1393 ( ) (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 909,439 12,191, ,003 3,521,110 89,530 17,021, ,467 8,198, ,743 2,685,148 95,218 12,171,133 Investment Short-term Long-term 19,877,071 20,861,435 40,738,506 10,983,893 21,870,103 32,853,996 Other Assets Tangible Assets and Inventories Intangible Assets Tax Paid in Advanced Other Assets 1,435,877 9,937 2,466,393 1,217,944 5,130,151 1,363,539 10,853 1,651, ,640 3,705,039 TOTAL ASSETS 62,890,215 48,730,168 39

45 Items 1393 (Million IRR) 1392 Liability and Equity Current Liability Amount Due to Local Insurance Co. Amount Due to Foreign Insurance Co. Deposit on Premium Ceded Other Liabilities 821,464 81,780 20,597 2,097,513 3,021,354 1,598, ,352 21,311 1,238,999 3,043,222 Long Term Liability Employees Funds 178, ,529 3,199, ,476 3,176,698 Technical Provisions Life Gross Provisions Less Retro Ceded Business 21,607,317-21,607,317 14,846,294-14,846,294 Non-Life Gross Provisions Less Retro Ceded Business 34,859,579 1,669,304 33,190,275 54,797,592 26,844,949 1,360,541 25,484,408 40,330,702 Equity Issued Capital Legal Reserve Capital Reserve Reserve for Foreign Currency Exchange Net Profit 1,200, , ,626 3,344,863 (312,809) 4,892,740 4,892,740 1,200, , ,575 3,737,991 (339,841) 5,222,768 Total of Liability and Equity 62,890,215 48,730,168 40

46 Income Statement For the years 1392 & 1393 in Annual Accounting Basis () Items Technical Account Note 1393 (Million IRR) 1392 Earned Premiums Gross Premiums Written Retro Ceded Premiums ,167,145 (1,664,963) 44,502,182 37,228,606 (1,576,151) 35,652,455 Change in Gross Unearned Premiums Change in Retro Ceded Share of Unearned Premiums (9,260,419) 127,856 (9,132,563) 35,369,619 (4,738,050) 312,189 (4,425,861) 31,226,594 Claims Incurred Claims Paid Gross Amount Retro Ceded Amount 2 3 (28,445,442) 417,506 (28,027,936) (26,227,129) 279,902 (25,947,227) Change in Provision for Outstanding Claims Gross Amount Retro Ceded Amount (3,290,125) 180,907 (3,109,218) (31,137,154) (2,730,308) 89,320 (2,640,988) (28,588,215) Commissions Commission Paid Commission Received Changes in Other Technical Provisions (5,149,196) 301,303 (4,847,893) (4,847,893) (2,225,109) (4,273,834) 260,149 (4,013,685) (1,782,682) Other Underwriting Expenses (3,190,703) (2,570,199) Investment Income 6,219,003 5,233,473 Result of Technical Account Personnel and Administrative Expenses Other Income Net Retained Profits 187,763 (624,045) 616, ,340 (494,714) (540,753) 674,399 (361,068) 41

47 Reinsurance Premium Accepted Class Reinsurance Claim Paid Notes to Financial Statements Note 1: In the year 1393(), Bimeh Markazi had a gross reinsurance premium of IRR 46,167,145 Million showing an increase of IRR 8,938,539 or percent over the preceding year. The volume of non-life reinsurance premium amounted to IRR 37,751,530 Million represented an increase of percent over the last year. The life reinsurance showed an increase of percent in the year 1393 (2014). The comparative figures for our reinsurance premium, accepted by the class of business, are shown below. (Million IRR) 1391 (2012) 1392 ( ) 1393 () Amount Amount Share (%) Growth (%) Amount Share (%) Growth (%) Fire 1,588,207 1,893, ,164, Marine Cargo 402, , , Marine Hull 287, , , Accident 385, , , Motor (P.D.) 2,047,401 2,246, ,710, Motor (T.P.L.) 16,488,545 15,268, ,099, Aviation 322, , , Engineering 494, , , Oil & Energy 504, , , Health 6,609,090 6,063, ,998, Others 1,601,365 2,096, ,482, Life 4,851,647 6,515, ,415, Total 35,582,881 37,228, ,167, Class Note 2: 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: (Million IRR) 1391 (2012) 1392 ( ) 1393 () Amount Amount Share (%) Growth (%) Amount Share (%) Growth (%) Fire 482, , , Marine Cargo 65,750 99, , Marine Hull 82, , , Accident 135, , , Motor (P.D.) 1,266,365 1,479, ,532, Motor (T.P.L.) 9,937,361 12,468, ,906, Aviation 57,329 48, , Engineering 153,419 96, , Oil & Energy 24,975 29, , Health 5,692,201 7,522, ,700, Others 1,014,035 1,357, ,532, Life 1,707,750 2,162, ,057, Total 20,619,944 26,227, ,445,

48 Reinsurance Premium Accepted & Claim Paid 1393 () 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 Fire Marine Cargo Marine Hull Accident Motor(p.D.) Motor(T.P.L.) Aviation Engineering Oil & Energy Health Others Life Reinsurance Premium Claim Paid Note 3: In the years 1392 (2013) and 1393 (2014) 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 retro ceded premiums and claims collected in different branches: Retrocession Premiums & Claims Collected (Million IRR) Class Retrocession Premiums Share of Paid Loss 1392 (2013) 1393 (2014) 1392 (2013) 1393 (2014) Marine 501, , , ,983 Non-Marine 440, ,653 67, ,557 Oil & Energy 633, ,171 13,603 66,966 Total 1,576,151 1,664, , ,506 43

49 Total investment of Bimeh Markazi, with a 24% percent increase, amounted to IRR 40,738,506 million, at the end of 1393 (2014). Investment income for the year 1393 (2014) amounted to IRR 6,219,003 million, representing an increase of IRR 985,530 million or percent over the previous year. Total assets at the end of the year, by percent increase amounted to IRR 62,890,215 million, of this figure percent represents liabilities and technical provisions and the remaining 7.78 percent represents the capital funds. The retained Premium of year 1393(2014) amounted IRR 44,502,182 million corresponding to percent of Life and Non-Life technical provisions of Bimeh Markazi Iran including reserves for unearned premiums and outstanding claims, amounted to a total of the IRR 54,797,592 million at the end of that year. Personnel and administrative expenses for the year 1393 (2014) amounted to IRR 624,045 million compared to IRR 540,753 million in the previous year. Net loss and net profit in the years 1392 (2013) and 1393 (2014) amounted to IRR (361,068) million and IRR 180,340 million, respectively. Total Assets, Technical Reserves & Total Investment 70,000,000 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000, (2012) 1392(2013) 1393(2014) Total Assets Technical Provisions Total Investment 44

50 Financial Highlights Growth (%) 1393 Growth (%) Gross Premium 35,582,881 37,228, ,167, Retained Premium 34,609,802 35,652, ,502, % of Gross Premium Earned Premium 28,825,863 31,226, ,369, Incurred Loss 22,106,834 28,588, ,137, % of Earned Premium Net Claim 20,499,649 25,947, ,027, % of Retained Premium Investment & Other Income (Amounts in millions IR Rls.) 4,497,231 5,907, ,835, General Expenses 467, , , % of Retained Premium Profit (Loss) 1,280, , , Total Assets 39,901,821 48,933, ,890, Shareholders Equity* 5,197,479 5,222, ,892, Technical Reserve 31,481,172 40,330, ,797, Unexpired Risks 21,139,849 25,565, ,698, Outstanding Loss 5,127,149 7,768, ,877, Catastrophic Risk Reserve 5,214,174 6,996, ,221, 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. 45

51 Our responsibilities in Bimeh Markazi Iran (Central Insurance of IR Iran) are divided into three parts including «regulation», «supervision», and «reinsurance». Therefore,we endeavor to take steps in line with these three areas. 46

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53 Our Membership In addition to reinsurance operations, other international activities head the agenda of Bimeh Markazi. 48

54 In addition to reinsurance operations, other international activities head the agenda of Bimeh Markazi. Indeed, part of the role of Bimeh Markazi 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) Its major objective is to 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 in which Bimeh Markazi is a member, are FAIR Non-Life Reinsurance Pool, FAIR Aviation Pool, and FAIR Oil & Energy Insurance Syndicate. Economic Cooperation Organization (ECO) The ECO was established in 1985 as a trilateral organization of Iran, Pakistan, and Turkey to promote multi dimensional regional cooperation with a view to creating conditions for sustained socioeconomic growth in the member states. Its objectives as its modes of operation were identical to those of its forerunner, the Regional Cooperation for Development (RCD) which remained in existence from 1964 to Activities of ECO evolve projects and programs of mutual benefit in the fields of trade and investment, transport and telecommunications, energy, minerals and environment, agriculture, industry and tourism, human resources and sustainable development, project and economic research and statistics. Association of Insurance Supervisory Authorities of Developing Countries (AISADC) AISADC is entrusted to develop and expand interregional collaboration and cooperation in the field of insurance supervision or regulation, extend assistance to any developing country upon its request, in the establishment or strengthening of insurance supervision in such country. Association of Insurers and Reinsurers of Developing Countries (AIRDC) AIRDC is a non-political, non-governmental, non-religious and non-profit making association whose members are insurance or reinsurance entities, domestically incorporated and owned by nations, bodies and/or organizations of developing countries or areas, or other related insurance organization such as companies, broker(s), national association(s), research or training institute licensed or registered in any developing country or area. Green Card Bureau The International Motor Insurance Card System (known as 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 bureaux. It came into operation in Iran has been a member since 1978 and is represented by Bimeh Markazi that administers the Iranian Bureau. 49

55 Contributors Publisher: Bimeh Markazi Iran (Central Insurance of IR Iran) Executive Manager: Mostafa Zandi Department Editor: Javad Goudarzi Coordinator: Seyed Mohammad Pishnamazzadeh Senior Editor: Maliheh Mansouri Photographer: Behnam Moazen Design & Print : Negareh

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