2014
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Annual Report 2014 Contents Message from the Managing Director Company profile Board of Directors Shareholders of Iranian Re An overview of the Iran s Insurance Industry Senior Management Team Strategic Objectives Company Events Our Professional services Key Financial Figures Profit and Loss Statement Balance Sheet Contact Information 4 6 7 8 9 10 11 12 14 18 22 23 24 3
Message from the Managing Director It is a great pleasure for me to present the annual performance report of Iranian Reinsurance Company for the year 2014 together with a brief indication on what has been targeted for 2015. By the end of 2014 Iranian Re completed its fifth year of operation. During these five years the company was able to achieve most of what had been aimed in its first business plan. Being the first Public joint stock Reinsurance Company in the Islamic Republic of Iran, the company was able to build its desired reputation by providing quality reinsurance services to insurance and reinsurance companies of the market. In the year 2014 Iranian Re was able to increase its paid-up capital from IRR 1297 billion to IRR 1535 billion and once again in early 2015 raised its paid capital by 31 Percent to IRR 2010 billion in order to meet the regulatory requirements and further strengthen its financial status. Iranian Re has proved itself to be a dynamic and professional Reinsurance Company in the market. We have rapidly expanded our business presence and gained a remarkable position in the local market by rendering quality reinsurance services to our clients. In the Year 2014, our gross written reinsurance premium amounted to IRR 399.6 billion representing an increase of 47.84 percent compared with the preceding year. From this amount, IRR 61.8 billion was allocated to acquire reinsurance protection leaving amount of IRR 337.8 billion as net reinsurance premium for the year. In the year 2014 Iranian Capital Market experienced a downturn trend which resulted in a relatively lower investment income for the Company. Total investment income of the company was IRR 324927 million showing 22 percent decrease over the preceding year. Our investment strategy is to 4
Annual Report 2014 actively monitor the changes in the economy and capital market to determine the optimum asset portfolio. The net profit of the year amounted to IRR 389777 million showing 9 percent decrease over the preceding year due to lower investment income of the year. The company s earnings per Share for the year 2014 is IRR 254 compared to IRR 279 of the preceding year. Until late 2014 the company s shares were traded on the Base Market of OTC section of Tehran Stock Exchange as unlisted company. In November 2014 the company were listed in the first market of Iran Fara Bourse which is the second main market for securities and other financial instruments in Iran. Since January 2015 the Iranian Re s Shares are traded in the said Market. The regulatory plan to reduce Obligatory Reinsurance along with the increasing presence of private insurance companies provides a promising perspective for the future of private reinsurance demand in the country. We feel quite confident about our future and will do our utmost to properly respond to the increasing demands of the market. Our plan for 2015 is to further improve our underwriting and investment activities and arrive at IRR 422000 Millions of Gross Reinsurance Premiums and IRR 420000 Millions of investment income. We will also prepare a plan to further increase our capital and utilize a portion of profit for this purpose. I take this opportunity to express my sincere gratitude to all Iranian insurers and reinsurers for the great confidence they have shown in us. We expect continued support from all our clients and firmly believe that our further mutually beneficial cooperation will be based on transparency, reliability and trust. Our company owes its achievements and success to the constant and dedicated efforts of our management team and staff. I highly appreciate their remarkable contributions and wish them all the bests. Sincerely Mohammad Asoodeh 5
Company Profile Iranian Reinsurance Company (Iranian Re), was incorporated in 2010 and commenced its operation on 16 th March 2010 with its registered office in Tehran, after obtaining its operation License from the Iranian Insurance Supervisory Authority, Bimeh Markazi Iran. Iranian Re is proud to be the first Public Joint Stock Reinsurance Company in Islamic Republic of Iran, totally financed by private sector. The Company is registered under the authorization of the Establishment Law of Non-Governmental Insurance Institutions as well as the Iranian Stock Exchange Regulations. The main objective of Iranian Re is set to meet the increasing demand of reinsurance protection by a fairly growing number of domestic Insurance companies, and also insurance and reinsurance companies of the region. The authorized capital of Iranian Re is IRR 1,535 billion; The Company initially commenced its operations with 50% paid up capital. The paid-up capital was increased in three stages to 56%, 69% and 84.5% respectively in three consecutive years ending 2013 and full payment of the authorized capital was achieved in 2014. Iranian Re intends to assist local insurers in managing their risks more effectively, utilizing all the existing potentials and establishing a constructive and long term relationship with the International Reinsurance Markets. Iranian Re enjoys experienced and well-trained staff with high education background and a highly qualified management team, well-known in the Iranian Insurance Industry. We are anxiously looking forward to having good and fruitful business relationships based on mutual interest and trust with all our partners in the Local and International Markets. 6
Annual Report 2014 Board of Directors Rasoul Saadi Chairman Mohammad Asoodeh Vice Chairman & Managing Director Hojjat Poustinchi Executive Member Mohammad Mihanyar Executive Member Mojtaba Kobari Non-Executive Member 7
Shareholders of Iranian Re Iranian Re has more than 4,200 shareholders. Two well known Iranian private banks, namely Bank Pasargad and Bank Sarmayeh, and 9 insurance companies are amongst the major shareholders. The following table shows structure and Major shareholders of the company: Shareholders Iranian Re Shareholders Structure As at 21 st December 2014 Pasargad Financial Group including Bank Pasargad Bank Sarmayeh Teachers Investment Funds Banks Employees Pension Fund Saman Majd Investment Co. Sam Group Co. Hamghadam Co. Sam Electronic Co. Pasargad Insurance Company Alborz Insurance Company Parsian Insurance Company Dana Insurance Company Moallem Insurance Company Novin Insurance Company Mihan Insurance Company Mellat Insurance Company Iran Moein Insurance Company Other companies Real persons (4193 people) Total Stake 20.00% 9.77% 3.91% 3.91% 3.91% 3.91% 3.91% 3.91% 5.21% 3.97% 2.93% 2.93% 2.93% 0.49% 0.49% 0.49% 0.36% 10.52% 16.45% 100.00% 8
Annual Report 2014 An overview of the Iran s Insurance Industry Currently one state owned and 24 private direct insurance companies as well as two reinsurance companies are providing insurance and reinsurance services in the Iranian market. The Act for Establishment of Non-Governmental Insurance Institutions that was approved in 2001 paved the way for presence of private insurance companies in the industry. The Iranian Insurance Industry is regulated and supervised by Bimeh Markazi Iran (Central Insurance of Iran) which is an independent institution established in the form of State Owned Company. Bimeh Markazi Iran is also empowered to carry out compulsory and non-compulsory reinsurance business. According to the Law the gradual reduction of Compulsory Reinsurance is in process. Presently all direct insurance companies are obliged to cede 15 percent of their non-life business and 30 percent of their life business to Bimeh Markazi Iran. In the year 2013 the total direct insurance premiums written in the market amounted to IRR 162,078 billion, of which 91 percent is produced in non life insurance business and only 9 percent is written in the life insurance. Insurance Penetration Ratio in Iran is about 1.73 which is well below the world average mainly because of low penetration of life insurance. The volume of non-compulsory reinsurance of the market in the year 2013 is reported to be IRR 5,834 billion which is mainly ceded to local market. This sector of the market will show a considerable growth when the plan to reduce and lift the compulsory reinsurance is fully executed. Insurance companies render their services through 1012 branches and a network of agents and brokers. At the end of the year 2013, there were about 37,000 Insurance Agents and 501 Insurance Brokers active in the industry. The agents may only represent one insurance company while brokers can take their business to different insurance companies. 9
Senior Management Team Leila Ameri Reinsurance Director Mohammad Asoodeh Managing Director Hojjat Poustinchi Head of Technical Steering Committee Mohammad Mihanyar Deputy Managing Director, Reinsurance Farangis Jahandar Finance Director 10
Annual Report 2014 Strategic Objectives Overall Objectives: To Create Value and make reasonable and steady Profit; A proper, reasonable and steady profit can be obtained by creating a Homogenous Portfolio of Reinsurance Business together with effective investment of financial resources. Social and National Responsibility; Besides pursuing the interests of Shareholders, Iranian Re has the responsibility to participating and performing an effective role in development of Insurance Industry as well as economic growth of the country. Strategic Goals: The Overall Objectives can be met by pursuing and implementing the Strategic Goals of the Company as set below: Gaining a Proper Market Share in the Local Reinsurance Market; Effective participation in increasing the Capacity as well as Retention of the Local Insurance Market; Being recognized as a well reputable Reinsurance Company in the emerging markets of the Region ; Building an effective and constructive business relationship with regional and International Insurance and Reinsurance Markets; Efficient and Optimum Investment of Financial Resources; Our Vision: By achieving the above Goals, we pursue the following Vision: To become a Capable and Professional Leading Reinsurance Company in the Local and Regional Markets and a recognized reinsurer in the International Markets Our Motto: Together, we manage the risk 11
Company Events On 15 March 2015 the Annual General Assembly approves 2014 Financial Statements On 11 May 2015 Extraordinary General Assembly approves 31 percent capital increase 12
Annual Report 2014 On 14 January 2015 Company s stock were listed in Iran Farabours Stock Exchange Market 13
Our Professional Services Iranian Re has the skills, experiences and Technical know-how to support its clients in all aspects of Reinsurance. We provide a wide range of services in designing, structuring and implementing risk transfer programs in all different Insurance lines. Our main objective is Providing a Secure and High Quality Coverage as well as the best cost effective solutions for our clients, matching their particular needs. Iranian Re offers a wide range of expertise and various reinsurance consulting services to help our clients adapt to the changing insurance market, improve the efficiency and effectiveness of their reinsurance operations and boost their businesses in the short-term while positioning themselves for long-term success. Every Facultative Offer, regardless of the volume of risk, is a new challenge for Iranian Re s Team. Our Technical Team has the experience in analyzing statistics and structuring the Proportional and Non- Proportional Treaties, by focusing on our Clients needs. Iranian Re is a Proactive Company, with the power to move quickly and easily to a different product mix in order to shape what our clients want or demand and to respond accordingly. Iranian Re, together with the rest of Insurance Industry, strongly supports the efficient Risk Management. What We Offer Technical Consultancy Facultative Treaty Marine (Cargo & Hull) Fire & Allied Perlis Energy Engineering (Onshore & Aviation Liability Offshore) Surplus Quota Share Risk & CAT XL 14
Annual Report 2014 Milad Tower Tehran 15
Gross Reinsurance Premiums Amounts (Millions of IRR) Class 2012 2013 2014 Amount Amount Share Growth Amount Share Growth Fire 48,290 86,479 32% 79% 103,348 26% 20% Marine Cargo 34,432 30,135 11% -12% 33,414 8% 11% Marine Hull 12,683 10,704 4% -16% 34,741 9% 225% Aviation 23,461 12,106 4% -48% 21,373 5% 77% Health 10,358 14,868 6% 44% 8,284 2% -44% Engineering 19,063 30,587 11% 60% 47,558 12% 55% Oil & Energy 49,684 71,453 26% 44% 130,875 33% 83% Others 10,274 13,975 5% 36% 20,022 5% 43% Total 208,246 270,307 100% 30% 399,614 100% 48% Incurred Reinsurance Losses Amounts (Millions of IRR) Class 2012 2013 2014 Amount Share Amount Share Amount Share Fire 25,646 63% 33,420 34% 25,349 14% Marine Cargo 263 1% 18,558 19% 16,008 9% Marine Hull -252-1% 4,463 5% 4,443 2% Aviation 1,922 5% 652 1% 16,806 9% Health 9,795 24% 14,382 15% 10,204 6% Engineering 3,874 9% 15,437 16% 12,950 7% Oil & Energy 6,881 17% 9,547 10% 79,344 45% Others -7,214-18% 2,519 3% 12,849 7% Total 40,915 100% 98,978 100% 177,953 100% 16
Annual Report 2014 Breakdown of Gross Reinsurance Premiums 2014 17
Iranian Reinsurance Company Key Financial Figures (Millions of IRR) 2011 2012 2013 2014 Gross Reinsurance Premiums 134,435 208,246 270,307 399,614 Earned Premiums 124,549 183,849 260,467 384,278 Ceded Reinsurance Premiums 25,730 36,007 61,857 44,906 Net Reinsurance Premium Earned 101,041 151,559 195,050 336,213 Incurred Losses 38,980 40,914 98,978 177,953 Net Incurred Losses 34,305 35,718 88,599 176,308 Gross Underwriting Results 36,611 86,582 67,231 89,271 Investment Income 218,530 238,599 415,911 324,927 Operating Profit 237,814 293,065 433,383 353,424 Pre-tax Net Profit 235,143 301,489 430,517 410,967 Net Profit 230,990 284,929 427,186 389,778 Total Investments 1,096,903 1,337,357 1,936,319 2,384,369 Total Assets 1,243,244 1,606,826 2,253,481 2,763,685 Technical Provisions 90,368 121,670 200,535 342,302 Net Technical Provisions 77,413 103,662 179,127 326,384 Paid Capital 867,275 1,059,150 1,297,075 1,535,000 Shareholders Equity 1,122,038 1,406,311 1,930,112 2,319,890 Loss Ratio 31.29% 22.25% 38.00% 46.31% Combined Ratio 60.69% 48.76% 63.45% 69.62% Number of Staff 13 14 15 15 18
Annual Report 2014 Shareholders Equity (Million IRR) Total Assets (Million IRR) 3,000,000 3,000,000 2,000,000 1,000,000 0 2014 2013 2012 2011 2,000,000 1,000,000 0 2014 2013 2012 2011 Total Investment Technical Provision (Million IRR) (Million IRR) 3,000,000 400,000 2,000,000 1,000,000 2014 2013 2012 200,000 2014 2013 2012 0 2011 0 2011 19
Net Profit (Million IRR) Investment Income (Million IRR) 600,000 400,000 200,000 0 2014 2013 2012 2011 600,000 400,000 200,000 0 2014 2013 2012 2011 Gross Reinsurance Premiums (Million IRR) 400,000 200,000 0 2014 2013 2012 2011 20
Annual Report 2014 21
Iranian Reinsurance Company Profit and Loss Statement for the years ended 21st December2014 and 2013 Profit and Loss Statement ( in Thousands of IRR) 2014 2013 Assumed Reinsurance Premiums 399,613,556 270,307,312 Earned Premiums 384,278,209 260,467,338 Ceded Reinsurance Premium Expenses ( 48,064,761) ( 65,417,242) Net Reinsurance Premium Earned 336,213,449 195,050,097 Incurred Losses ( 177,953,137) ( 98,978,230) Reinsurers Share of Incurred Losses 1,645,444 10,378,859 Net Incurred Losses ( 176,307,693) ( 88,599,371) Commission Expenses ( 89,570,883) ( 66,295,112) Commission Income 2,028,900 6,276,344 Net Other Underwriting Expenses ( 10,682,045) ( 7,748,805) Investments Income Derived from Technical Provisions 27,589,199 28,548,253 Gross Underwriting Results 89,270,928 67,231,405 Investments Income Derived from Shareholders Funds 297,337,413 387,362,948 Administrative and General Expenses ( 33,183,955) ( 21,211,156) Other Income and Expenses 57,542,950 ( 2,865,742) Pre-tax Net Profit 410,967,336 430,517,455 Tax ( 21,189,750) ( 3,331,133) Net Profit 389,777,586 427,186,322 Earning Per Share 253.93 278.30 Iranian Re s fiscal year ends on 21 st December every year 22
Annual Report 2014 Iranian Reinsurance Company Balance Sheet As at December 21st.,2014 ( in Thousands of IRR) Assets Liabilities & Shareholders Equity 21 Dec. 2014 21 Dec. 2013 21 Dec. 2014 21 Dec. 2013 Cash & Cash Equivalents 16,992,241 5,168,315 Amounts Due to Reinsurers 7,200,873 21,094,700 Short- term Investments 1,429,868,481 1,032,008,006 Other Payable Accounts 12,247,741 56,925,731 Amounts Due from Reinsurers 114,973,504 127,078,064 Provision for Income Tax 52,810,155 3,913,847 Other Receivables 104,182,124 50,574,254 Provision for Unearned Premiums 97,434,894 82,099,547 Reinsurers Share of Technical Provisions 15,918,198 21,407,610 Provision for Outstanding Losses 213,545,704 97,754,711 Other Technical Provisions 31,321,962 20,680,741 Deferred Premium Income 26,254,756 38,974,263 Non-current Receivables 5,260,390 4,185,742 Employee s Termination Benefits 2,978,437 1,925,267 Total Liabilities 443,794,522 323,368,807 Long-term Investments 954,501,189 904,311,189 Shareholders Equity : Tangible Assets 116,164,922 99,437,987 Capital Intangible Assets 364,941 34,203 1,535,000,000 shares per 1000 (IRRs.) Other Assets 5,458,796 9,276,116 Total Assets 2,763,684,786 2,253,481,486 100 percent paid 1,535,000,000 1,297,075,000 Legal Reserve 73,220,000 53,731,000 Capital Reserve 146,440,000 107,462,000 Foreign Currency Exchange Reserve 97,014,647 97,014,646 Accumulated Profit 468,215,619 374,830,034 Total Shareholders Equity 2,319,890,266 1,930,112,680 Total Liabilities &shareholders Equity 2,763,684,788 2,253,481,487 23
Contact Information No. 5 Zayandeh-Roud St. North Shirazi Ave. Mollasadra Ave. Tehran Iran. Postal Code: 1991634491 Tel : (+98) (21) 8862 8611-16 Fax : (+98) (21) 8862 8617 www.iranianre.com info@iranianre.com