our vision Our vision is to be the leading insurance company in terms of services, protection and innovation,

annual report 2006

our vision Our vision is to be the leading insurance company in terms of services, protection and innovation, aiming at exceeding customers expectations our mission Our Mission is to be a profitable company, known for its integrity and customer service, based on long-term growth and financial security for the benefit of our stakeholders.

company details Head office: 1st Floor, IBL House, Caudan, Port Louis, Mauritius Tel: (230) 203 2200 - Fax: (230) 203 2299 Email: caudan@mauritianeagle.com - Website: www.mauritianeagle.com Auditors: Kemp Chatteris Deloitte, Port Louis, Mauritius Consulting actuaries: Deloitte Actuarial & Insurance Solutions, South Africa. Bankers: Barclays Bank PLC, The Mauritius Commercial Bank Limited, HSBC, South East Asian Bank of Mauritius, State Bank of Mauritius. Registrar and transfer office: MCB Registry and Securities, Raymond Lamusse Building, 9-11 Sir William Newton Street, Port Louis, Mauritius. Registered office: 5th floor, IBL House, Caudan, Port Louis, Mauritius. Secretary: Simon-Pierre Rey, B.A (Hons) Econ., A.C.A. contents 4 directors profiles 6 directors of subsidiary company 8 management team 10 notice of annual meeting 12 chairman s and managing director s report 16 corporate governance 28 certificate from the company secretary 30 premium and profitability charts 32 report of the auditors to the shareholders 33 balance sheets 34 income statements 35 income statement - general business 36 income statement - life business 37 statements of changes in equity 39 cash flow statements 40 notes to the accounts

directors profiles 1 2 3 M J Patrice d HOTMAN DE VILLIERS Age 57 - Non-Executive Chairperson Mr d Hotman de Villiers was appointed director in August 1996 and Chairman of the Board in March 1997. He is presently the Chief Executive of Ireland Blyth Limited and also sits on the Board of Sun Resorts Ltd. Mr d Hotman de Villiers was previously the Chief Operating Officer of Mauritius Tuna Fishing and Canning Enterprises Ltd. Eric VENPIN FCA, TEP, Age 40 - Managing Director Mr Venpin was appointed Managing Director of the Company on 1 January 2005. Before this appointment he was in the Global Business sector and was a partner of Kemp Chatteris Deloitte up to 30 June 2003. Nick V BEYERS ACII, AMP (Harvard), Age 60 - Non-Executive Director Mr Beyers joined the Board on 31 March 1998. He is currently the Managing Director of South African Eagle Insurance Company Limited. 4 5 6 M J Gaëtan BOUIC FCA, Age 72 - Independent Non-Executive Director Mr Bouic was appointed as Independent Non- Executive Director on 24 June 2005. He retired as Managing Partner of De Chazal Du Mée Co in 1986. From 1987 to 2002 Mr Bouic was Chief Finance Officer of United Basalt Products Ltd. Dennis BURTON ACII, Age 58 - Non-Executive Director Mr Burton joined the Board on 10 July 2000. He has been in the insurance industry for the past 36 years and is currently the Director, Sales and Marketing of South African Eagle Insurance Company Limited. J. Gilbert ITHIER LLB Hons, Age 51 - Independent Non-Executive Director Me Ithier was appointed as Independent Non-Executive Director on 15 November 2005. Me Ithier has been practicing as a barrister before all the courts of Mauritius since 1979, specialising mostly in civil, commercial, company, insurance and property matters. 7 8 Subhash LALLAH Barrister-At-Law, Age 61 - Independent Non-Executive Director Me Lallah was appointed as Independent Non-Executive Director on 29 March 2005. Former Chairman of the National Transport Corporation and Member of the Board of Governors of the Mauritius Broadcasting Corporation, he is the legal advisor to the Central Electricity Board, the Central Water Authority and The Road Development Authority. Gaëtan LAN HUN KUEN FCA, Age 53 - Non-Executive Director Mr Lan spent 4 years as Chief Executive of Mauritian Eagle Insurance Company Limited. Mr Lan is also a director of the Stock Exchange of Mauritius Ltd and the Central Depository & Settlement Co Ltd. He has been with the IBL Group since 1977 and is currently the Chief Finance Officer of Ireland Blyth Limited. 9 10 Alain MALLIATE FCII, ACIS, Age 49 - Executive Director Mr Malliaté was appointed as Executive Director on 30 March 2004. He has been with the Company since August 1985 and is in charge of the Technical Departments. Simon-Pierre REY BA (Hons) Econ., ACA, Age 54 - Non-Executive Director Mr Rey joined the Board on 3 August 1989 and is also Secretary of the Company since December 1996. Mr Rey is a Director of Sun Resorts Ltd and Mount Sugar Estate Ltd. He is currently the Chief Corporate Affairs Officer in charge of Corporate Services of Ireland Blyth Limited. 4 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 5

directors of subsidiary company Yves MEYEPA Executive Director, Mauritian Eagle Leasing Company Limited Joined in 2001; Mr Méyépa worked for more than 20 years in the IBL Group before joining Mauritian Eagle Leasing Company Limited at its incorporation. Appointed Executive Director in 2005. His areas of responsibility include the management of day-to-day activities and liaison with regulatory authorities. Natasha WONG CHUNG KI ACCA, MBA (Finance), MIPA - Executive Director, Mauritian Eagle Leasing Company Limited Appointed Executive Director in September 2005, after having held office in the audit department of Kemp Chatteris Deloitte and accounting department of DTOS Ltd. Mrs Wong Chung Ki s areas of responsibility include the establishment of policies and procedures and monitoring of the financial affairs of the Company. 6 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 7

management team Pierre AH SOON Assistant Finance Manager Winson CHAN CHIN WAH ACII Underwriting Manager Michael HENRY ACII Underwriting Manager Jean Claude TSANG YAN SANG MCIM, MBA Marine Manager Joined 2004. Pierre s area of expertise is audit, in which he has more than 5 years experience in an offshore company. He is currently assisting the Finance Manager in the day-to-day management of the Finance department. Joined in 2004. With more than 12 years in the insurance industry, Winson is actually specializing in Fire and Accident insurance. His duties include the underwriting of new and existing risks and to assist both internal and external customers. He is an active member of the Insurance Institute of Mauritius. Joined in 1983. Michael has worked for more than 20 years in the insurance industry. His area of specialization is reinsurance. He was appointed Underwriting Manager as from December 2006 and is responsible for underwriting fire, accident, liability and engineering risks in the Fire & Accident Department. Joined in 2004. Having worked in insurance marketing for the last 9 years, Jean Claude s area of expertise includes marketing analysis and planning. He is currently responsible for the Sales and Marketing and Marine departments. Jean Claude is a member of the Chartered Institute of Marketing and of the Insurance Institute of Mauritius. José ARSENIUS FIAP, MBCS Corporate Systems Manager Joined in 1994; with more than 20 years experience in the IT sector, José is the head of the IT Services Department. He is responsible for all corporate management & information systems such as Information Security, Quality, Business Continuity and IT Service. He is a Fellow of the Institution of Analysts and Programmers and a member of the Board of Executives of the Mauritian Quality Institute. Bruno CHAN SIP SIONG BSc (Hons) Systems Support Manager Joined in 1995. Has been working in the IT field for more than 16 years, including 11 in the insurance industry. Bruno is responsible for day-to-day operations of IT Services department and enduser support. His other areas of responsibility also include the maintenance of insurance application systems. Richard KWON SIN KOY Motor Manager Joined in 1974 after having worked for the Insurance department of Blyth Brothers. With more than 34 years experience in Motor Insurance, he is responsible for the operations of the Motor department which underwrites all classes of vehicles. Vikash MUNGLA BA (Hons) Acc & Fin Reinsurance Manager Jean Mario TYPHIS, ACII Senior Manager Joined in 1987 as Reinsurance Manager after more than 13 years in the reinsurance industry. His responsibilities subsequently moved to the underwriting and development of the Fire and Accident Department which embraces fire, accident, liability and engineering classes of insurance. Mario is an active member of the Insurance Institute of Mauritius. Clency BASSET FAIA Finance Manager Joined in 1984 after having worked for more than 15 years in the accounts department of Blyth Brothers Co. Ltd. Clency s area of competence is financial reporting. He is actually responsible for the activities of the Finance Department. He is a Fellow of the Association of International Accountants and is the Money Laundering Reporting Officer of the Company. Guyto DEVALET ACII Life Technical Manager Joined in 2006 after having served the insurance industry for the past 18 years. His area of responsibility in the life and pensions department covers technical aspects such as underwriting, reinsurance and group life business. Joined 2003. Having worked for more than 5 years with a leading reinsurer, Vikash is now responsible for the Reinsurance Department and its respective activities. His main area of expertise is reinsurance technicalities with specialization in statistical, sensitivity and financial analysis of treaty programmes of different lines of business. Gilbert PETITE Claims Manager Joined 1999. With more than 33 years experience in the insurance industry, Gilbert is conversant with both English and French insurance procedures. He manages the day-to-day operations of the Claims Department which processes motor, fire, accident and engineering claims. He is an active member of the Insurance Institute of Mauritius. Philip VENPIN, BSc (Act Sci) Life & Pension Manager Joined 1991. With more than 16 years in the Life Assurance industry, his current responsibilities include the general management of the Life and Pension Department with specialization areas in business and product development. Philip is a member of the Insurance Institute of Mauritius. 8 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 9

notice of annual meeting Ordinary Resolutions: 7. To re-elect Mr Nick V Beyers as Director. 1. To adopt the minutes of proceedings of the thirty-first annual meeting held on 27 th June 2006. 2. To receive and adopt the Group s and Company s financial statements for the year ended 31 st December 2006 and the Directors and Auditors reports thereon. 8. To re-elect Mr Dennis Burton as Director. 9. To re-elect Me J Gilbert Ithier as Director. 10. To re-elect Me Subhash Lallah as Director. 11. To re-elect Mr Gaëtan Lan Hun Kuen as Director. 3. To re-appoint Messrs Kemp Chatteris Deloitte as Auditors for the ensuing year and to authorise the Board of Directors to fix their remuneration. 12. To re-elect Mr Alain Malliaté as Director. 13. To re-elect Mr Simon-Pierre Rey as Director. 4. To re-appoint Mr M J Gaëtan Bouic as Director in compliance with Section 138(6) of the Companies Act 2001. By Order of the Board Notice is hereby given that the thirty-second Annual Meeting of the Shareholders of the Company will be held at the offices of the Company, 1 st Floor, IBL House, Caudan, Port Louis on Tuesday 26 th June 2007 at 14.00 hours to transact the following business: 5. To re-elect Mr M J Patrice d Hotman de Villiers as Director. 6. To re-elect Mr Eric Venpin as Director. SIMON-PIERRE REY Secretary Port Louis, Mauritius 11 June 2007 Note: A member entitled to attend and vote at the meeting may appoint any person, whether a member or not, to attend and vote in his stead. Proxy forms must be lodged at the registered office of the company not less than twenty-four hours before the meeting. A proxy form is included in the Annual Report and is also available at the Registered Office of the Company. 10 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 11

chairman s and managing director s report Overview Whilst reinsurance costs have remained fairly stable in 2006, competition remains fierce as companies seek to increase their market share. Consequently, the underwriting results have been squeezed despite a growth of 24% in gross premiums for our short term business. As Mauritius was not affected by any major weatherrelated losses and through a strict underwriting discipline in our motor business, claims decreased by 7% compared to the previous year. The good performance of the equity market both locally and overseas has helped us achieve higher returns on our investments. After ISO 9001:2000 and QM9004, the company has obtained the ISO 27001:2005 certification and is the only financial organisation holding this certification in Mauritius as well as in the Indian Ocean region. Certification to this internationally recognised standard is an endorsement of the processes that the company has in place to safeguard the security of data and also validates that mechanisms are in place for business continuity and disaster recovery. This standard will provide further comfort to customers, employees, trading partners and stakeholders. 12 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 13

chairman s and managing director s report (CONT D...) Group results Group turnover increased by 21% to reach Rs 912M made up of an increase of 24% in our insurance activities and 15% in our leasing subsidiary. Following provision for asset impairment in our leasing subsidiary, group profit before tax decreased marginally to Rs 56M whilst attributable earnings remained similar to last year. Our insurance funds have been further consolidated with an increase of Rs 70M to reach Rs 307M whilst shareholders funds stood at Rs 327M. Earnings per share was Rs 17.51 at 31 December 2006, compared to Rs 16.05 at the same date last year. Underwriting results Short Term Reasonable underwriting profits have been achieved throughout the business cycle except for our accident department which has been marred by a high incidence of claims relating to heavy machinery. The motor business remains difficult mainly due to the shortcomings of certain insurance companies. Long Term The steady growth of the Life and Pension department was maintained in 2006 with an increase of 23% in gross premium to reach Rs 104M. This was achieved through the launch of new products to meet the requirements of our clients and the sterling efforts of the sales force. The Life Insurance Fund was boosted up by a further Rs 62M and stood at Rs 241M at the end of 2006. Leasing Turnover for Mauritian Eagle Leasing Company limited has increased from Rs 272 last year to Rs 314M and the portfolio was just under Rs 1.2B at the year end. Unfortunately, profit before tax for 2006 was affected following provision for asset impairment but is expected to be back on track in 2007. Dividends The Board has recommended similar dividends to last year as it would be in the interest of the company to retain funds as capital may be required in view of new legislation in the insurance sector and the impending legislation in the leasing industry. The year ahead With fierce competition in the industry and in light of the cyclical nature of our business, significant challenges remain. Our key focus will be on underwriting discipline with appropriate pricing and rigorous risk assessment to endeavour to make an underwriting profit throughout the business cycle. Claims control will remain a high priority. The work already carried out in the motor business will be refined and implemented in other departments. Although cyclone Gamede has given rise to a few claims in the first quarter, we do not expect the group s profitability to be affected over the year. Going forward, our aim will be to increase underwriting performance and deliver consistent operating results to the satisfaction of all our stakeholders Acknowledgement We would like to extend our thanks to employees for the effort they have made in achieving these results with a special mention for their commitment for the ISO 27001:2005 certification. The Board would also like to thank all our business partners and customers for their continued support. Patrice d Hotman de Villiers Chairman Eric Venpin Managing Director 14 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 15

corporate governance report Corporate Governance Statement The Board, management and staff of the Mauritian Eagle Insurance Company Limited (the Company ) fully support and are committed to the principles of business integrity, transparency and professionalism as recommended by the Code of Corporate Governance. We recognize that adhering to good governance principles is not merely compliance with a set of rules and regulations, but entails aiming for the highest standards of Corporate Governance. Furthermore, we strive to ensure that all the activities of the Company are conducted in such a way as to satisfy the characteristics of good Corporate Governance, namely, discipline, transparency, independence, accountability, responsibility, fairness and social responsibility. South African Eagle Company Limited 15% Company Structure Ireland Blyth Limited 60% Mauritian Eagle Insurance Company Limited H. Savy Insurance Company Limited (Seychelles) 20% Other Shareholders 25% Mauritian Eagle Leasing Company Limited 51% Board of Directors The Board bears the responsibility for organizing and directing the affairs of the Company in a manner that is in the best interest of shareholders and other stakeholders. It is also responsible for continually reviewing the activities, practices and trends of the Company so that these are in conformity with legal and regulatory requirements, and with the principles of good governance as set out in the Report on Corporate Governance for Mauritius of April 2004. The Board retains full and effective control over the Company, delegating the day-to-day running and operational issues to the Managing Director and his management team. Composition The Board is responsible for the nomination, selection and appointment of directors who are selected on the basis of their integrity, skill, acumen and experience to make sound judgements relevant to the business of the Company. In compliance with the Code, the Board of directors includes two executive directors and three independent non-executive directors. The Company also complies with Section 30 of the Insurance Bill which states that an insurance company s Board of directors should be composed of no less than 7 natural persons of which 30% should be independent non-executive directors. The independent nonexecutive directors bring their experience and skills to the board and are free from any business or other relationships which would affect their eligibility to exercise independent judgement. Composition of Board for the year under review was as follows: M J P d Hotman de Villiers Chairman E Venpin Managing Director N V Beyers Non-Executive Director M J G Bouic Independent Non-Executive Director D Burton Non-Executive Director J G Ithier Independent Non-Executive Director S Lallah Independent Non-Executive Director G Lan Hun Kuen Non-Executive Director A Malliaté Executive Director S P Rey Non-Executive Director 16 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 17

corporate governance report (CONT D...) The Board held four meetings during the year under review. Attendance was as follows: Committees 27 March 07 June 12 Sept 07 Nov 2006 2006 2006 2006 The Board fulfils its proper governance responsibilities through various Committees. Two Committees have been formed to deal with Audit, Risk and Corporate Governance issues. M J P d Hotman de Villiers (Chairman) E Venpin (Managing Director) N V Beyers M J G Bouic D Burton G Ithier S Lallah G Lan Hun Kuen A Malliaté S P Rey Directors Responsibilities The directors are required to ensure that adequate records are maintained so as to disclose at any time, and with reasonable adequacy, the financial position of the Company; they are also responsible for the preparation of financial statements which give a true and fair view of the financial position, performance and cash flows of the Company and comply with the Companies Act 2001 and with International Financial Reporting Standards. The directors are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Audit and Risk Committee The Audit and Risk Committee is appointed by the Board of the Company and comprises of a Chairman, who must be an independent non-executive director, and of at least two members, who should both be non-executive directors. For the year under review, the Committee consisted of four directors, namely, Messrs. M G Bouic, Chairman (Independent Non-Executive Director), N V Beyers (Non-Executive Director), G Lan Hun Kuen (Non-Executive Director) and S P Rey (Non-Executive Director). Its principal function is to oversee the financial reporting process. The activities of the Audit Committee include regular reviews and monitoring of the effectiveness of the Company s financial reporting and internal control policies and risk management systems; the effectiveness of the internal audit function; the independence of the external audit process and assessment of the external auditor s performance; the remuneration of external auditors; and to ensure compliance with laws and regulations relevant to financial reporting and with our internal code of business conduct. The Committee meets as frequently as it deems necessary prior to the Board s review of the semi-annual and annual financial statements. Attendance to the Audit and Risk Committee for year under review was as follows: Audit and Risk 10 March 27 March 04 Sept 2006 2006 2006 G Bouic (Chairman) N V Beyers G Lan Hun Kuen S P Rey 18 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 19

corporate governance report (CONT D...) The presence of internal and external auditors and management team was requested when deemed necessary. The internal audit function is entrusted to the internal audit team of the IBL Group which has been provided with unrestricted access to the records, management and employees of the group. The Board confirms that there have been no significant issues that have affected the proper functioning of the internal control systems during the year under review which could have impacted on the financial statements. Risk Management The Audit and Risk Committee is also responsible for reviewing the effectiveness of the risk strategy of the Company, for establishing and maintaining a strong risk control environment and for the monitoring of the risk management process. It ensures that appropriate structures, procedures and systems are in place to mitigate all risks. Risk assessment activities were carried out during the year under review and the risks discussed and identified. A Risk management process was designed and implemented to minimize the impact of identified risks which have been categorised as follows: Insurance Risk The Company s insurance activities are primarily concerned with the pricing, acceptance and management of risks from customers and also include reinsurance risks. Operational Risk Operational risks can have significant negative impact on the Company s financial position. These are fraud risks, reputational risks, material damage, business continuity risks, change management and human resources risks. Regulatory and Environment Risk These include regulatory risks and industry risks. IT Risk These are the risks that hardware and software used are exposing the Company to losses. ISO 27001-2005 Certification (Information Security Management System) has been sought and the Company successfully completed the final audit in December 2006. Corporate Governance Committee The Corporate Governance Committee is appointed by the Board of the Company and comprises of a Chairman, who must be an independent nonexecutive director, and of at least four members. The majority of the Committee should be composed of non-executive directors. The current Committee met thrice during the year under review and is composed of Messrs. S Lallah, Chairman (Independent Non-Executive Director), G Lan Hun Kuen (Non-Executive Director), S P Rey (Non-Executive Director), E Venpin (Managing Director), A Malliaté (Executive Director). Attendance was as follows: Corporate Governance 03 May 27 Nov 27 Dec 2006 2006 2006 S Lallah (Chairman) E Venpin (Managing Director) G Lan Hun Kuen A Malliaté S P Rey The main functions of the Committee are to determine, agree and develop the Company s policy on Corporate Governance in accordance with the recommendations of the Code of Corporate Governance; advise and make recommendations to the Board on all aspects of Corporate Governance provisions; ensure that disclosures are made in accordance with the principles recommended in the Code; prepare the Corporate Governance report. The meetings are held as the Committee deems appropriate. The Board is pleased to report that for the year under review, further measures were identified and implemented to strengthen compliance to the Code. 20 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 21

corporate governance report (CONT D...) Remuneration Philosophy Dividend Policy Common Directors The Board has entrusted the Remuneration Committee the responsibility of determining the adequate remuneration of Directors by taking into consideration the market conditions, benchmarking in the industry and the Company s results. The Human Resources Team of the IBL Group has been delegated the responsibility of determining managers and employees remuneration. This is reviewed annually after taking into consideration market conditions and practices as well as the performances and responsibilities of the employees. Dividends are declared and paid half yearly. Subject to internal cash flow requirements and the need for future capital investments, it is the Company s policy to declare dividends out of profits available for distribution in accordance with the Companies Act 2001 and International Financial Reporting Standards; the balance being transferred to reserves. Statutory Disclosures Directorship of other listed companies Directors of the Company who sit on the Board of other listed companies are as follows: Ireland Blyth Sun Resorts The Mount Limited Limited Sugar Estate M J P d Hotman de Villiers S P Rey The common directors of the Company and its subsidiary are as follows: Mauritian Eagle Insurance Mauritian Eagle Leasing Company Limited Company Limited M J P d Hotman de Villiers (Chairman) M J G Bouic J G Ithier S Lallah G Lan Hun Kuen S P Rey Directors Emoluments The remuneration of directors is set out in the table below: The Company Related Corporations 2006 2005 2006 2005 Rs 000 Rs 000 Rs 000 Rs 000 Full-Time 7,124 5,459 - - Part-Time 260 170 27,907 24,073 Total 7,324 5,629 27,907 24,073 22 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 23

corporate governance report (CONT D...) Directors Service Contracts Directors Share Interests Audit Fees There are no service contracts between the Company and its directors. Share Dealings Members of the Board have been informed that they should not deal in Company s shares during the 30 calendar days preceding publication of semi-annual and annual results, and prior to the declaration of dividends, or any major event affecting the Company that might influence its share price. Members have also been advised to declare to the Company all transactions conducted by them outside the periods mentioned. The interests of the Chairman and the directors of the Company are as follows: Ordinary Shares of Rs 10 each (Numbers) Mr. G Lan Hun Kuen 1,034 Mr. E Venpin 2,100 The other directors do not hold shares in the Company whether directly or indirectly. None of the directors have a direct or indirect share in the equity of the subsidiary of the Company. Significant Contracts No contracts of significance existed during the period under review between the Company, its subsidiary and any director or controlling shareholder of the Company, either directly or indirectly. Substantial Shareholding The directors have been advised that the following persons or entities (excluding directors) held 5% or more of the nominal value of the share capital of the Company. External auditor s remuneration is as follows: The Company Related Corporations 2006 2005 2006 2005 Rs 000 Rs 000 Rs 000 Rs 000 Audit Fees 238 210 138 125 Other Services 16 16 11 10 Total 254 226 149 135 Share Price Information The evolution of the Company s share price is as follows: 200 150 100 50 South African Eagle Insurance Company Limited 15% 0 2001 2002 2003 2004 2005 2006 24 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 25

corporate governance report (CONT D...) Anti-Money Laundering In line with the requirements of the Financial Intelligence and Anti-Money Laundering Act 2002 and the Regulations 2003, control procedures and internal policies are regularly reviewed and staff training is done at least twice yearly. Safety, Health and Environmental Practices Health and safety policies adopted have ensured satisfactory compliance with the appropriate legislation and ruling standards. No injuries at work were recorded. The Company adheres to the IBL Group s health and safety and environmental policies. Social Responsibility During year under review, donations made by the Group and the Company amounted to Rs 153,000 and Rs 147,000 respectively. (2005: Rs 197,000 for the Group and Rs 186,000 for the Company respectively). Political Contributions The Company did not make any contribution to political parties during the year under review. Relationship with shareholders The Board is committed to properly understand the information needs of all shareholders and other stakeholders of the Company. It ensures that lines of communication are kept open to communicate all matters affecting the Company to its shareholders. Code of Ethics The Company is committed to the highest standards of integrity and ethical conduct with all its stakeholders. Important Events 2007 Calendar Declaration of Final Dividend - Financial Year 2006 27 March 2007 Payment of Final Dividend - Financial Year 2006 28 April 2007 Annual Meeting 26 June 2007 Declaration of Interim Dividend - Financial Year 2007 September 2007 Payment of Interim Dividend - Financial Year 2007 September 2007 26 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 27

certificate from the company secretary In terms of Section 166 (d) of the Companies Act 2001, I certify that the Company has filed with the Registrar of Companies all such returns as are required of the Company under the Companies Act. Simon-Pierre Rey Company Secretary 27 March 2007 28 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 29

premium and profitability charts THE COMPANY Gross Premium Income Management Expense Ratio Profitability Profit before tax Profit after tax Rs M % of Gross Premium Rs M 600 12 50 500 10 40 400 8 30 300 6 20 200 4 100 2 10 0 0 0 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 2002 2003 2004 2005 2006 Gross Class Mix 2006 - Premium Percentage 17% 32% 10% Fire Motor Accident 6% Engineering Marine 19% 16% Life 30 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 31

report of the auditors TO THE SHAREHOLDERS This report is made solely to the company s shareholders, as a body, in accordance with section 205 of the Companies Act 2001. Our audit work has been undertaken so that we might state to the company s shareholders those matters we are required to state to them in an auditor s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company s shareholders as a body, for our audit work, for this report, or for the opinions we have formed. Report on the Financial Statements We have audited the financial statements of Mauritian Eagle Insurance Company Limited on pages 33 to 76 which comprise the balance sheets as at 31 December 2006 and the income statements, statements of changes in equity and cash flow statements for the year then ended and a summary of significant accounting policies and other explanatory notes. Directors responsibilities for the financial statements The directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in compliance with the requirements of the Companies Act 2001 and the Financial Reporting Act 2004. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements on pages 33 to 76 give a true and fair view of the financial position of the group and of the company as at 31 December 2006, and of its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and comply with the requirements of the Companies Act 2001 and the Financial Reporting Act 2004. Report on other legal requirements In accordance with the requirements of the Companies Act 2001, we report as follows: we have no relationship with, or interests in, the company and its subsidiaries other than in our capacities as auditors, tax advisors, and arm s length dealings in the ordinary course of business; we have obtained all information and explanations that we have required; and in our opinion, proper accounting records have been kept by the company as far as appears from our examination of those records. Kemp Chatteris Deloitte Chartered Accountants 27 March 2007 32 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006

balance sheets AS AT 31 DECEMBER 2006 The Group The Company Notes 2006 2005 2006 2005 Assets Rs 000 Rs 000 Rs 000 Rs 000 Non current assets Intangible assets 5 10,230 1,214 10,177 969 Property, plant and equipment 6 178,674 172,465 63,519 64,740 Investment in subsidiary 7 - - 51,000 51,000 Investment in associate 8 16,291 12,140 6,313 6,313 Statutory and other deposits 9 14,500 15,500 14,500 15,500 Other investments 10 155,329 122,649 127,507 83,142 Mortgage and other loans 11 114,837 102,995 114,837 102,995 Finance lease receivables 12 860,784 748,627 - - Deferred tax asset 21-65 - - 1,350,645 1,175,655 387,853 324,659 Current assets Statutory and other deposits 9 19,000 23,000 19,000 23,000 Mortgage and other loans 11 8,927 5,598 8,927 5,598 Finance lease receivables 12 321,243 230,846 - - Trade and other receivables 13 235,435 204,689 167,085 185,474 Shareholder s loan 14 - - 25,500 - Deposits with Group companies 15 70,693 46,331 70,693 46,331 Amounts due from Group companies 16 20,975 21,093 20,975 19,357 Bank and cash balances 138,771 97,559 55,048 26,193 815,044 629,116 367,228 305,953 Total assets 2,165,689 1,804,771 755,081 630,612 Capital and reserves Share capital 22 26,667 26,667 26,667 26,667 Share premium 21,404 21,404 21,404 21,404 Revaluation reserve 20,216 20,216 20,216 20,216 Investment revaluation reserve 27,160 7,749 27,160 7,749 Retained profits 193,474 163,300 161,608 137,341 Equity attributable to equity holders of the parent 288,921 239,336 257,055 213,377 Minority interest 70,030 68,343 - - Total equity 358,951 307,679 257,055 213,377 Statutory reserve fund 37,652 33,803 37,652 33,803 Insurance funds General insurance fund 23 65,137 56,754 65,137 56,754 Life insurance fund 24 241,383 179,802 241,383 179,802 306,520 236,556 306,520 236,556 Non current liabilities Loans 18 165,000 160,000 - - Deposits from clients 20 654,959 586,654 - - Deferred tax liability 21 1,854-1,125 138 821,813 746,654 1,125 138 Current liabilities Bank overdraft - 167 - - Trade and other payables 17 169,225 119,480 77,056 68,902 Loans 18 114,500 40,000 - - Claims outstanding 19(i) 68,748 70,836 68,748 70,836 Deposits from clients 20 281,355 242,596 - - Taxation 21 6,925 7,000 6,925 7,000 640,753 480,079 152,729 146,738 Total equity and liabilities 2,165,689 1,804,771 755,081 630,612 Approved by the Board of Directors and authorised for issue on 27 March 2007. Patrice d Hotman de Villiers Chairman Eric Venpin Managing Director MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 33

income statements FOR THE YEAR ENDED 31 DECEMBER 2006 income statement - general business FOR THE YEAR ENDED 31 DECEMBER 2006 The Group The Company Notes 2006 2005 2006 2005 Rs 000 Rs 000 Rs 000 Rs 000 The Company 2006 2005 Rs 000 Rs 000 Gross insurance premiums 598,052 484,251 598,233 484,251 Gross lease rental income 314,340 272,479 - - 912,392 756,730 598,233 484,251 Gross premiums 494,372 400,044 Less: Reinsurance premiums 307,695 225,922 Less: Reinsurance premiums 318,594 233,982 318,594 233,982 Capital element of finance lease rental income 212,390 188,489 - - 530,984 422,471 318,594 233,982 Net premiums 186,677 174,122 Investment income 10,331 10,920 Net revenue 381,408 334,259 279,639 250,269 Investment income 34,069 32,777 28,366 25,344 Commission income 40,041 33,452 40,041 33,452 Other income 67,657 14,619 35,814 8,368 523,175 415,107 383,860 317,433 Benefits and expenses Benefits and claims 19(ii) 156,522 158,185 156,522 158,185 Commission paid 43,118 37,421 43,118 37,421 Administrative expenses 100,756 66,558 66,989 52,009 300,396 262,164 266,629 247,615 Commission income 40,041 33,452 Other income 23,484 6,636 260,533 225,130 Expenses Claims 118,344 126,749 Commission paid 35,120 29,818 Administrative expenses 52,419 41,223 205,883 197,790 Profit from operations 25 222,779 152,943 117,231 69,818 Release (to)/from - General insurance fund (8,383) 9,542 (8,383) 9,542 - Life insurance fund (61,581) (42,478) (61,581) (42,478) (69,964) (32,936) (69,964) (32,936) 152,815 120,007 47,267 36,882 Finance costs 26 (102,429) (69,660) - - 50,386 50,347 47,267 36,882 Share of results of associate 5,407 6,940 - - Profit before taxation 55,793 57,287 47,267 36,882 Taxation 21 (7,416) (7,513) (6,484) (7,147) Profit from operations 54,650 27,340 Release from/(to) - Life insurance business 1,000 - - General insurance fund (8,383) 9,542 (7,383) 9,542 Profit before taxation 47,267 36,882 Taxation (6,484) (7,147) Profit after taxation 40,783 29,735 Profit after taxation 48,377 49,774 40,783 29,735 Less: Appropriations - Transfer to statutory reserve fund (3,849) (5,237) (3,849) (5,237) Profit for the year 44,528 44,537 36,934 24,498 Deduct appropriations Transfer to Statutory Reserve Fund (3,849) (5,237) Profit attributable to shareholders 36,934 24,498 Attributable to: Equity holders of the parent 42,841 37,573 36,934 24,498 Minority interest 1,687 6,964 - - 44,528 44,537 36,934 24,498 2006 2005 2006 2005 Rs Rs Rs Rs Earnings per share 27 17.51 16.05 15.29 11.15 34 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 35

income statement - life business FOR THE YEAR ENDED 31 DECEMBER 2006 statements of changes in equity FOR THE YEAR ENDED 31 DECEMBER 2006 The Company Note 2006 2005 Rs 000 Rs 000 Gross premiums 103,861 84,207 Less: Reinsurance premiums 10,899 8,060 The Group Equity Investment attributable to Share Share Revaluation revaluation Retained equity holders Minority Total Note capital premium reserve reserve profits of the parent interests equity Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Net premiums 92,962 76,147 At 1 January 2005 26,667 21,404 20,216 5,645 138,394 212,326 41,779 254,105 Investment income 18,035 14,424 Other income 12,330 1,732 123,327 92,303 Benefits & expenses Benefits and claims 30 38,178 31,436 Commission paid 7,998 7,603 Administrative expenses 14,570 10,786 60,746 49,825 Change in fair value of available-for-sale investments - - - 6,198-6,198-6,198 Net income recognised directly in equity - - - 6,198-6,198-6,198 Revaluation surplus realised - - - (4,094) - (4,094) - (4,094) Profit attributable to shareholders - - - - 37,573 37,573 6,964 44,537 Total recognised income and expense - - - 2,104 37,573 39,677 6,964 46,641 Issue of shares to minorities - - - - - - 19,600 19,600 Dividend 28 - - - - (12,667) (12,667) - (12,667) Profit from operations 62,581 42,478 Less: Release to General Insurance Business 1,000-61,581 42,478 Less: Transfer to Life Insurance Fund 61,581 42,478 - - At 31 December 2005 26,667 21,404 20,216 7,749 163,300 239,336 68,343 307,679 Change in fair value of available-for-sale investments - - - 23,879-23,879-23,879 Net income recognised directly in equity - - - 23,879-23,879-23,879 Revaluation surplus realised - - - (4,468) - (4,468) - (4,468) Profit attributable to shareholders - - - - 42,841 42,841 1,687 44,528 Total recognised income and expense - - - 19,411 42,841 62,252 1,687 63,939 Dividend 28 - - - - (12,667) (12,667) - (12,667) At 31 December 2006 26,667 21,404 20,216 27,160 193,474 288,921 70,030 358,951 36 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 37

statements of changes in equity FOR THE YEAR ENDED 31 DECEMBER 2006 (CONT D...) cash flow statements FOR THE YEAR ENDED 31 DECEMBER 2006 The Group The Company Note 2006 2005 2006 2005 Cash flows from operating activities Rs 000 Rs 000 Rs 000 Rs 000 The Company Investment Share Share Revaluation revaluation Retained Note capital premium reserve reserve profits Total Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 Rs 000 At 1 January 2005 26,667 21,404 20,216 5,645 125,510 199,442 Change in fair value of available-for-sale investments - - - 6,198-6,198 Net income recognised directly in equity - - - 6,198-6,198 Revaluation surplus realised - - - (4,094) - (4,094) Profit attributable to shareholders - - - - 24,498 24,498 Total recognised income and expense - - - 2,104 24,498 26,602 Dividend 28 - - - - (12,667) (12,667) Profit before taxation 55,793 57,287 47,267 36,882 Adjustments for: Depreciation 23,927 8,587 7,852 5,638 Profit on sale of plant and equipment (415) - (415) - Profit on sale of investments (19,483) (7,429) (19,483) (7,429) Provision for credit losses 1,800 5,200 - - Dividend income (4,025) (2,164) (5,281) (2,699) Interest income (25,617) (22,171) (23,084) (22,646) Interest expense 102,429 69,660 - - Exchange difference on revaluation of other investments (2,343) - (2,343) - Share of results of associate (5,407) (6,940) - - Net life insurance fund 61,581 42,478 61,581 42,478 Net general insurance fund 8,383 (9,542) 8,383 (9,542) Operating profit before working capital changes 196,623 134,966 74,477 42,682 (Increase)/decrease in trade and other receivables (30,562) (37,985) 18,573 (30,417) Increase in mortgage and other loans (15,171) (13,313) (15,171) (13,313) (Decrease)/increase in claims outstanding (2,088) 5,946 (2,088) 5,946 Increase in trade and other payables 49,745 41,249 8,154 13,862 1,924 (4,103) 9,468 (23,922) Cash generated from operations 198,547 130,863 83,945 18,760 Taxation paid (5,572) (9,693) (5,572) (6,918) Interest paid (102,429) (69,660) - - Net cash generated from operating activities 90,546 51,510 78,373 11,842 At 31 December 2005 26,667 21,404 20,216 7,749 137,341 213,377 Change in fair value of available-for-sale investments - - - 23,879-23,879 Net income recognised directly in equity - - - 23,879-23,879 Revaluation surplus realised - - - (4,468) - (4,468) Profit attributable to shareholders - - - - 36,934 36,934 Total recognised income and expense - - - 19,411 36,934 56,345 Dividend 28 - - - - (12,667) (12,667) At 31 December 2006 26,667 21,404 20,216 27,160 161,608 257,055 Cash flow from investing activities Increase in shareholder s loan - - (25,500) - Decrease/(increase) in amount due from Group companies 118 31,937 (1,618) - Purchase of investments (93,591) (102,591) (93,591) (63,822) Increase in investment in subsidiary - - - (20,400) Net decrease in statutory and other deposits 5,000 6,000 5,000 6,000 Proceeds from sale of investments 104,048 65,398 90,279 34,858 Purchase of plant and equipment (28,242) (111,709) (4,996) (3,210) Purchase of intangible assets (11,741) (2,469) (11,674) (1,733) Proceeds from sale of plant and equipment 1,246-1,246 - Interest received 23,533 23,603 23,084 22,646 Dividend received 4,025 2,164 5,281 2,699 Investment in finance lease (607,792) (537,146) - - Capital repayment of finance lease 403,438 209,796 - - Net deposits received 107,064 165,231 - - Net cash used in investing activities (92,894) (249,786) (12,489) (22,962) (2,348) (198,276) 65,884 (11,120) Cash flow from financing activities Net loans received 79,500 200,000 - - Dividend received from associate 1,256 534 - - Dividend paid (12,667) (12,667) (12,667) (12,667) Proceeds from issue of shares to minority shareholders - 19,600 - - Net cash generated from/(used in) financing activities 68,089 207,467 (12,667) (12,667) Net increase/(decrease) in cash and cash equivalents 65,741 9,191 53,217 (23,787) Cash and cash equivalents at beginning of the year 29 143,723 134,532 72,524 96,311 Cash and cash equivalents at end of the year 29 209,464 143,723 125,741 72,524 38 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 39

notes to the accounts FOR THE YEAR ENDED 31 DECEMBER 2006 1 2 Legal form and activity The Company is a public Company incorporated in Mauritius. Its registered office is situated at 5th Floor, IBL House, Caudan and it carries on business at 1st Floor, IBL House, Caudan, Port Louis. The Company carries out short and long term insurance businesses while the subsidiary is a private Company dealing in finance leases. Short term insurance comprise of general insurances and covers the following: - Fire and allied perils - Accidents - Marine - Motor and travel Long term insurance relates to life assurances and pension plans. Adoption of new and revised International Financial Reporting Standards (IFRS) In the current year, the Company has adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board ( IASB ) and the International Financial Reporting Interpretations Committee ( IFRIC ) of the IASB that are relevant to its operations and effective for accounting periods beginning on 1 January 2006. At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but not yet effective: IAS 1 Amendment to IAS 1: Presentation of financial statements - Capital Disclosures IFRS 7 Financial Instruments: Disclosure IFRS 8 Operating Segments IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies 3 IFRIC 8 Scope of IFRS 2 IFRIC 9 Reassessment of Embedded Derivatives IFRIC 10 Interim Financial Reporting and Impairment IFRIC 11 Group and Share Treasury Transactions IFRIC 12 Service Concession Arrangements The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements of the Group and the separate financial statements of the Company. Accounting policies (a) Basis of accounting The financial statements are prepared under the historical cost convention as modified by the revaluation of land and building and certain available-for-sale investments and in accordance with International Financial Reporting Standards. (b) Basis of consolidation The consolidated accounts include the results of the Company and of its subsidiary. The results of the subsidiary acquired or disposed of during the year are included in the consolidated income statements from the date of their acquisition or up to the date of their disposal. Inter-Group transactions and balances are eliminated on consolidation. Minority interests in the net assets of consolidated subsidiary are identified separately from the Group s equity therein. Minority interests consist of the amount of those interests at the date of the original business combination and the minority share of changes in equity since the date of the combination. Losses applicable to the minority in excess of the minority s interest in the subsidiary s equity are allocated against the interests of the Group except to the extent that the minority has a binding obligation and is able to make an additional investment to cover the losses. (c) Revenue recognition General business Gross premiums on general business excluding marine, motor and part of fire businesses are earned on a pro-rata basis over the term of the policy coverage. The portion of the unearned premiums, which is calculated using the 1/8 method, is transferred to the general insurance fund. Premiums are shown gross of commission. Gross premiums on marine business are accounted for on an underwriting year basis and the net surplus is transferred to the general insurance fund to be released to the income statement at the end of a period of two years. Life business Insurance contracts with fixed and guaranteed terms Gross premiums from life insurance business are recognised when they become payable from the policyholders and are shown gross of commission and other expenses. Unit-linked insurance contracts Insurance premiums are recognised directly as liabilities. Lease business Gross earnings on finance lease are accounted for in the year in which they are receivable. Rental income from operating leases is recognised on a straight line basis over the term of the relevant lease. Other revenues Other revenues earned by the Company are recognised on the following bases: Dividend income from listed investments is recognised on an accrual basis whereas those from unquoted investments are recognised on a receipt basis. Commission income from reinsurers is recognised on an accrual basis in accordance with the substance of the relevant agreement. Profit commission from reinsurers is recognised on a receipt basis. Interest income on banks deposits and debentures is recognised on an accrual basis whereas those on mortgages and policy loans are recognised on a receipt basis. (d) Property and equipment Property and equipment are stated at cost or revalued amount less accumulated depreciation. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair values at balance sheet date. Increases in carrying amount arising from revaluation of land and building are credited to revaluation reserve. Decreases in carrying amount that offset previous increases are charged against the revaluation reserve; all other decreases are charged to the Income Statement. Profit or loss on disposal of property, plant and equipment is determined as the difference between the carrying amount of the assets and the net disposal proceeds and is accounted for in the income statement. (e) Depreciation No depreciation is charged on land. Depreciation on other property and equipment is calculated to write off their costs or revalued amount in their residual values on a straight line basis over their expected useful lives. The annual depreciation rates used for the purpose are as follows: 40 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 MAURITIAN EAGLE INSURANCE COMPANY LIMITED annual report 2006 41