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Presented by:


I dedicate whole of my education along with my life to my beloved parents and respected teachers, who were Always kind to me. May God Bless Them And Me (Aamin). M.BILAL KHALID

Air Vice Marshal ( R ) Arshad Rashid Sethi Air Commodore ( R ) Qazi Mahirood Gui Ahmad Bilal M. Naveed Tariq Lan Howell Ross Robert Collings Ross Hamid Guizar


Shehatyar Akbar AsifSulcman


Asif Suleman


KPMG Taseer Iladi & Co. Chartered Accountants

Shaukat Law Associates

10th Floor. Shahen Complex. M.R.Kayani Road, Karachi,


10th Floor Shaheen Complex, M.R.Kayani Road, Karachi.

M/s Corplink (Pvt) Ltd Wings Arcade. 1-K, Commercial, Model Town, Lahore,


The Audit committee of the Company comprises the following members: 1. Air Vice Marshall R. Syed Imtiaz Hyder (Chairman) 2. Mr. Hamid Guizar (Member) 3. Mr. Naveed Tariq (Member) 4

Our mission is to continuously improve ourselves to become a leading, profitable Company, meeting the needs of our customers and enhancing the value of our shareholders Investment. We will accomplish this by using the strengths of our people and the application of innovative science for the development of new insurance products and services that are high in quality and competitive in price. 5


The interest of the Policyholders is supreme. We shall endeavor our utmost to render the best possible service to our clients and shall give them no cause for complaint relating to claims settlement or otherwise. The reinsures provide underwriting capacity to the Company; therefore it shall be our endeavor to ensure that reinsures make profit on our business ceded to them. It is the officers and staff members who carry on with the day to day work load. It is they who are involved in running the affairs of the Company within the policy framework laid down by the Board of Directors. As far as permissible by the financial resources available to the Company they shall be duly recompensed.

Observance of business ethics and profit generation are only two sides of the same coin. One is complementary to the other. By observing business ethics to the utmost extent possible we hope to generate due margin of profit so as to pay dividend to the shareholders after having paid tax to the public exchequer and to build up free reserves for purpose of enhancing the financial strength of our Company. 6

We would like to record our appreciation for the continued guidance and support being extended to us by the regulators, namely Securities and Exchange Commission of Pakistan. We are much obliged to the State Bank of Pakistan for providing full support, particularly, in the matter of remittances of foreign exchange in respect of aviation business. We also appreciate and acknowledge the role of our reinsure and London market brokers for their valued support to us. With profound grief we would like to state that during the year under review two of our technical advisors Mr. Munir Ahmad and Mr. Jamal Hashmi, both highly respected and experienced in insurance sector in Pakistan passed away. We are thankful to them for their valuable services in the early years of the Company. We also like to condole the families of all those who lost their lives in the October earthquake in the northern areas of our country. Most of all we are also grateful to our customers for their continued trust and confidence which has made it possible for us to achieve these results. We would also like to convey our profound gratitude to the management and staff at all levels for their loyalty, devotion and hard work which helped the Company to accomplish good results in 2007.

7 INSURANCE: Insurance, in law and economics, is a form of risk management primarily used to hedge against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium. An insurer is a company selling the insurance. The insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice. Principles of insurance Commercially insurable risks typically share seven common characteristics. 1. A large number of homogeneous exposure units. The vast majority of insurance policies are provided for individual members of very large classes. Automobile insurance, for example, covered about 175 million automobiles in the United States in 2004. The existence of a large number of homogeneous exposure units allows insurers to benefit from the so-called law of large numbers, which in effect states that as the number of exposure units increases, the actual results are increasingly likely to become close to expected results. There are exceptions to this criterion. Lloyd's of London is famous for insuring the life or health of actors, actresses and sports figures. Satellite Launch insurance covers events that are infrequent. Large commercial property policies may insure exceptional properties for which there are no homogeneous exposure units. Despite failing on this criterion, many exposures like these are generally considered to be insurable. 2. Definite Loss. The event that gives rise to the loss that is subject to insurance should, at

least in principle, take place at a known time, in a known place, and from a known cause. The classic example is death of an insured person on a life insurance policy. Fire, automobile accidents, and worker injuries may all easily meet this criterion. Other types of losses may only be definite in theory. Occupational disease, for instance, may involve prolonged exposure to injurious conditions where no specific time, place or cause is identifiable. Ideally, the time, place and cause of a loss should be clear enough that a reasonable person, with sufficient information, could objectively verify all three elements. 8 3. Accidental Loss. The event that constitutes the trigger of a claim should be fortuitous, or at least outside the control of the beneficiary of the insurance. The loss should be pure, in the sense that it results from an event for which there is only the opportunity for cost. Events that contain speculative elements, such as ordinary business risks, are generally not considered insurable. 9


Insurance play very important role in the economic life of a nation. The growth of the economy is dependent upon the soundness of its banking system. Although insurance so not create new wealth but borrow, exchange and consume. These make generation of wealth. In this ay, they become most effective partners in the development of that country. To encourage the habit of saving and to mobilize these savings is its basic purpose. If there are no insurance companies, then there would be concentration of wealth in few hands great portion of wealth of a country would be idle. In the fewer developing countries rate of saving is very low and due to this rate of investment

and rate of growth is very low. We can take hank just like a heart in the economic structure and capital provided by it is like blood in it. As long as the blood is in circulation, the organs will remain sound and healthy. If the blood is not provided to any organ then the organ would become useless. So if the finance is not provided to agriculture sector or to industrial sector, it wills he destroyed. 10


Macro economic indicators of the country are showing constant improvements year on year. Pakistan is expected to achieve Gross Domestic Product growth of 7% for the fiscal year despite the earthquake which shook the whole nation in October2007. Our export products are performing better and better. Stock markets and real estate markets are moving upwards at an exceptional pace. Foreign investment is flowing in and the balance of Special Rupee Convertible Account is at the highest mark of US$ 400 million at the end of December 2007. Privatization of state owned entities are moving ahead. Overall economic environment of the country looks to be very positive. Despite all this, the insurance with the exception of Motor business is not growing rapidly. Motor business is still increasing steadily. As a result of the increase in imported vehicles, sales of motor vehicles in 2007 were even higher than the previous year. All these factors have made the market highly competitive. As you all are aware our Company is relatively new in the market as compared to our competitors. Insurance Companies historically takes time to build their reputation in the market and fetch business. However, we are confident the Company will continue to grow profitably and will provide a valuable service to

the policyholders 11

NOTICE OFANNUAL GENERAL MEETING NOTICE IS HEREBY given that 11th Annual General Meeting of
Shaheen Insurance Company Limited will be held on Saturday, April 29, 2007 at the Registered Office of the Company at 10th Floor, Shaheen Complex, M.R.Kayani Road, Karachi at 10.00 a.m. to transact the following.

Ordinary Business

1. To confirm the minutes of the 10th Annual General Meeting of the members. 2. To receive, consider and adopt the Annual Audited Accounts for the year ended December 31, 2006 together with the Directors and Auditors report thereon. 3. To appoint auditors for the year ended December 31, 2007 and to fix their remuneration. 4. To transact any other business with the permission of the Chair. By the Order of Board Asif Suleman Company Secretary Karachi, April 08, 2007 Notes: 1. The share transfer Books of the Company will remain close from April 22, 2007 to April 29, 2007 (both days inclusive). Shareholders are requested to intimate any change in their addresses immediately. 12 2. CDC share holders are requested to bring their original National Identity Cards, Account, Sub-Account number and participant number in Central Depositary System for identification purpose for attending the meeting. In case of corporate entity, the Board of Directors resolution/power of attorney with specimen signature of the nominee shall be produced at the time of the meeting. 3. A member entitle to attend and vote at the Meeting may appoint another

person on his/her behalf as his/her proxy to attend, speak and vote, and a proxy so appointed shall have such right with respect to attending, speaking and voting at the Meeting as are available to the Members. Proxy forms must be deposited at the Companys Registered Office not less then 48 hours before the time for holding the Meeting. 4. Shareholders are requested to intimate any change in their addresses immediately. 13


The Directors of your Company lake pleasure in presenting to you the 13th Annual Report along with the audited financial statements for the year ended December 31. 2007. 14


Year 2007 was a turbulent year for the insurance sector in general in Pakistan, Political instability almost whole throuhou1 the year caused i slowdown to the economic growth and the activity. Unfortunate event of December 27, 2007 and incidents attached to it in subsequent couple of days caused substantial losses to the insurance sector and your Company was no exception to ii. However, you will be pleased to note that the year 2007 was another year of success for your company. Gross premiums underwritten have shown a steady increase of I [19% to Rs. 746.4l million in the year 2007 as compared to Rs. 671.328 million in the year 2006. Management of your Company adopted prudent risk management procedures and transferred higher risks to the reinsurers as compared to prior years thereby increasing the re-insurance expense which mitigated [he above increase of premiums. Our undeviating profitability the

year 2007 is truly reflective of these prudent risk management policies. Our underwriting results shown a decline of Rs. 33632 million in the year under review as compared to the year 2006 mainly due to transfer of larger risks to the re-insurers causing an increase of R:, 30.497 in the re-insurance expenses. However,, this risk nninageinent will help in Loading large claim amounts, Falcate promise for the year under review increased by I S. 10% t Rs. 60.207 million as compared to Rs. 50.979 million .The management of your Company achieved the steady growth keeping their focus on portfolio diversification. Our overall portfolio is becoming more and more balanced with every passing year. Our lire and miscellaneous classes of business has shown a substantial growth of 38% and 40% respectively in the year 2007 as compared to the year 200& Whereas, motor business decreased to 63.43% of the total portfolio for the year under review as compared to 68.22% for the year 20(16 thereby showing a steady decrease of approx. 5% during the year under review alone. 15 16


The stock exchange of the country has shown substantial positive closing in the year 2007 as compared 10 last year. The (Karachi Stock Exchange 100 Index stood at 14,075.83 points on December 3,14, 2007 as compared to 1O.040.50 points on the same day last year. Thereby posting a net gain of 4019% for the year 2007 as compared to the gain of 5.06% for the year 2006. This rise in capital markets also resulted in substantial profits for your Company. Capital gains from equity market investments of your Company has shown a growth of 9.82 tunes from Rs. 5.157 million for the year 2006 to Rs. 55.874 million for the

year under review. Favorable difference between the lair value and curricle value of the investment properties stands at Rs. 57.016 million as at December31 2007 as against Rs, 52.348 million at the end of year 206. However this has not been recognized in the profit and loss account as the same is not allowed under accounting regulations for non life insurance companies issued by the Securities and Exchange commission of Pakistan. 17


Available for sale investments are required to be stated at the lower of cost or market value (market value being taken as lower if the fail is other than temporary) tinder the Accounting Regulation for Non-Life Insurers prescribed by the Securities and Exchange Commission of Pakistan4 whereas, held for trading investments are carried at their fair values and resultant unrealized gains/losses are taken in to profit and loss account through Statement of Investment Income. The total market value of companies investment in marketable securities is Rs. 214.163 million against the carrying value of Rs. 213.395 million resulting in net unrealized gain of Rs. 0.768 million which was not recorded in the books. 18

These are insurances which Shaheen insurance company insured.


Marine Cargo Insurance

Shaheen provides Marine Cargo insurance coverage for imports and exports as per the needs of the client. This Policy can be extended to provide adequate cover to protect all goods in transit by other modes of transportation, viz., By Air, Rail and Road.

Three broad types of covers are available i.e. Institute Cargo Clauses A, B & C. The cover takes care of risks associated with different modes of transportation.


Motor Cars Insurance

Shaheen provides comprehensive coverage against accidental damage including: Loss or damage due to road accidents Theft & Burglary Snatching away by violent means Riot & Strike damage Loss or damage due to natural calamities Road Traffic Act and at Common Law Third party liability (Bodily Injury and property damage) The Policy can also be extended to include accidental personal injuries to and death of Driver and Passengers. Commercial Vehicles We also insure Motor vehicles used for trade purpose and classified as Commercial Vehicles such as Trucks Trailers, Passenger Buses, Ambulances, Driving tuition vehicles etc. 20

Fire and Allied Perils Insurance
Shaheen provides Fire and Allied Perils Insurance which cover the requirements of all types of Industrial Projects, Business concerns and Private Residential houses. It provides full comprehensive coverage in respect of Loss or damage to property due to Fire and lightning, which can be extended to cover the following. Riot and Strike Damage Malicious Damage Explosion Earthquake (Fire and Shock) Atmospheric disturbance (Rain, Flood, Hurricane, etc.) Impact Damage Air Craft impact Damage Spontaneous Fermentation Heat or Combustion and

Burglary Consequential Loss Due to Fire Shaheen provides this coverage in conjunction with Fire and Allied perils Policy. It provides protection against Loss of Gross Profit incurred as a result of business interruption or interference in Business caused by an event identifiable under Fire and Allied Perils Policy. 21


We are amongst a few Pakistani companies who offer comprehensive aviation insurance plans to the commercial as well as private airlines. Our comprehensive aviation insurance plan protects the insured from probable risks. Shaheen provides following aviation insurance services: Aviation Hull All Risks Aviation Liabilities Aviation Third Party Liabilities Passengers Legal Liabilities Baggage Legal Liabilities Aviation Hull War Loss of License Ferry Flight Insurance Aircrew Legal Liability Legal Liability to Cargo Airport Services Liabilities Owen Damage Airport Services Liabilities Third Party Liability Small Aircraft Insurance Operators of Air-Ports, Hangers Flight Training Insurance Hull Spares & Spares All Risk Legal Liability to Mail Personal Accident Airlines Airport Booth Insurance 22

ENGINEERING INSURANCE Contractors AU Risks Insurance

The policy is designed to cover comprehensive protection against: Loss of or damage to the under construction projects. Construction plant and equipment and machinery. Third party liability against property damage and bodily injuries. Contractors Plant, Equipment & Machinery

Provides coverage to: Contractors plant Equipment & machinery The above is provided on annual basis, at site of construction / erection. Erection All Risks Insurance Provides coverage against all risks during The erection of machinery, plant and all kinds of steel structures. Testing / Trial run of new machinery, Third party legal liability for loss of or damage to property and \ bodily injuries. Machinery Insurance Shaheen provides adequate insurance protection to all types of mechanical plant, machinery and equipment whilst they are in operation, t rest or under maintenance against sudden and unforeseen loss or damage. Machinery Loss of Profit Insurance (MLOP) Provides coverage against the Ios of profit due to business interruption caused by and accident covered Under the Machinery Policy. 23


This insurance covers the shop owners interests viz., the building of the shop and / or stocks against Fire and Allied Perils including burglary and dacoits.

Home Insurance

This policy to cover the interest of homeowners. The plan provides coverage on building as well as contents against the risks the property may be exposed to. The coverage for buildings includes the risks of fire and all dry/wet perils. Contents (including jeweler and cash) are similarly covered including the risks of burglary and dacoit. House Mortgage Insurance This insurance provides coverage to owner protection against the risk of Fire, Lightning, Explosion, Earthquake (Fire and Shock) and atmospheric disturbance.


Considering the fact that the cost of medical treatment is escalating at an alarming rate, we offer Health Insurance to companies for their employees. We have the full coverage to provide and Health Insurance in respect of: 1. HOSPITALIZATION shall mean the insured members stay in hospital for a period of a minimum of 24 hours for either medically necessary treatment or observation of any disease, sickness or bodily injury. The above includes treatment arising from pregnancy or childbirth, if covered in the policy. 2. HOSPITALIZATION EXPENSES mean reasonable and customary costs and expenses for in-patient Medical, Surgical, Specialist Fees, Hospital, Nursing Home, Nursing Attendance Charges, Cost of Physiotherapy, Massage and Manipulative Treatment, Surgical and Medical Requisites. 3. ACCIDENTAL BODILY INJURY mean physical injury caused by an accident which (a) Is sustained by an insured person during the period of Insurance and (b) Occasions the necessity for the insured person to receive in-patient care and attendance from a hospital. 4. ILLNESS means any kind of sickness or disease. (a) Is sustained during the period of Insurance (b) Occasions the necessity for the Insured Person to receive in-patient care and attendance from a hospital. 5- Dread Disease: Heart disease, Cancer, Kidney Transplantation etc,. 6- OPD & private consultation 7- Maternity (Normal & Caesarian Delivery)



Excise and Customs Bond

Such bonds are issued in connection with the import OT raw material machinery against the payment of customs and excise duties. Bid Bonds Bid bond is issue on behalf of contractors in connection with the submission of tenders for contracts with public authorities and private owners.

Performance Bond This bond is issued on behalf of a contractor and in favor of the project owner to guarantee the full and due performance of the contract. Mobilization Advance Bond This bond is issued on behalf of a contractor and to secure the project owner, where the owner is pre-financing a contractor by an advance payment on the contract. Maintenance Bond This bond is issued on behalf of the contractor and in favor of the project owner to guarantee against defective workmanship or materials after completion of the project.


Contractors AU Risks Insurance

The policy is designed to cover comprehensive protection against: Loss of or damage to the under construction projects. Construction plant and equipment and machinery. Third party liability against property damage and bodily injuries. Contractors Plant, Equipment & Machinery Provides coverage to: Contractors plant Equipment & machinery The above is provided on annual basis, at site of construction / erection. Erection All Risks Insurance Provides coverage against all risks during The erection of machinery, plant and all kinds of steel structures. Testing / Trial run of new machinery, Third party legal liability for loss of or damage to property and \ bodily injuries. Machinery Insurance Shaheen provides adequate insurance protection to all types of mechanical plant, machinery and equipment whilst they are in operation, t rest or under maintenance against sudden and unforeseen loss or damage. Machinery Loss of Profit Insurance (MLOP) Provides coverage against the Ios of profit due to business interruption caused by and accident covered Under the Machinery Policy.


27 A business may be robbed of oash either during normal business hours or after normal business hours. Money may be stolen whilst in transit between the bank and the office or on any other route. Our Cash in Transit & Cash in Safe policy will compensate the business for such loss. The policy may be extended to cover accidental injury to employees of the business who may be injured during a hold up. To facilitate the client we are providing insurance cover against the above mention risk. 28


Shaheens professional indemnity insurance is providing financial indemnity to a professionals man or firm against a legal liability to compensate a third party who has sustained injury, loss or damage through breach of duty. Normally this type insurance cover is provided to service giving professional like: Doctors Engineers Architects Chartered Accountants Consultants etc.

Professional Indemnity Insurance includes:

Breach of professional duty. Breach of copyright. Breach of confidentiality. Libel and slander. Loss of documents. If any professional provides advice or consultancy services then the business has a responsibility to clients. Incorrect advice leading to a quantifiable loss by his client could easily result in a claim against him. This will not only have serious financial implications but could easily tarnish the reputation of both the professional and his firm both. 29


Shaheen Insurance offers various products, but not limited to the following, under the head of Miscellaneous Insurance: Plasticard Insurance Personal Accident Insurance Workmen Compensation Insurance Fidelity Guarantee Insurance Public Liability Insurance Product Liability Insurance All Risks Insurance Burglary/Theft Shaheen provides adequate insurance protection to all types of mechanical plant, machinery and equipment whilst they are in operation, at rest or under maintenance against sudden and unforeseen loss or damage. 30


This statement is being presented to comply with the Code of Corporate Governance contained in the listing regulations of Karachi, Lahore and Islamabad Stock Exchanges, where Shaheen Insurance Company Limited he Company) is listed the Code of Corporate Governance applicable to listed insurance companies issued under SRO 68(1)72003 by the Securities and Exchange Commission of Pakistan (the Codes for the purpose of establishing a framework of good governance. whereby a listed company is managed in compliance with the best practices of corporate governance. The Company has applied the principles contained in the Codes in the following manner I. The Company encourages representation of independent nonexecutive directors and directors representing minority interests on its Board of Directors, At present all the directors are non-executive directors other than the Chief Executive Officer of the Company. 2. The directors have confirmed that none of then Is serving as a director in more than ten listed companies, including the Company.

3. All the resident directors of the Company have confirmed that they are registered as taxpayers and none of them has defaulted in payment of any loan to a banking company, a development Financial Institution (1)9) or a Non Banking Finance Company (NBFC) and none of them is a member of any stock exchange. 4. One casual vacancy occurred in the Board of Directors during the year which was filled within 30 days thereof 5. The Company has prepared a Statement of Ethic and Business Practices*, which has been signed by all the directors and the employees of the Company. 6. The Board has developed and approved a mission statement and overall corporate strategy and is in process of developing the significant policies and a 31 complete record of the particulars of these significant policies. 7. All the powers of the I3oard have been duly exercised and decisions on material transactions have been taken by the Board, There was no new appointment of the Chief Executive Officer. His remuneration and terms and conditions of employment have been approved by the Hoard of l) directors, all the meetings of the Board were presided over by the Chairman and the Hoard met one in every quarter. Written notices of the Board meetings, along with the agenda and working papers. Were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated. 8. The Board has established a system of internal control, which is implemented at all levels within the company. The company is making efforts and arrangements to include all the necessary aspects of internal controls given in the code. 10. An orientation course was arranged for the directors of the company to update them about their dunes and responsibilities. All the directors attended the

course except for a director who was appointed subsequent to a casual vacancy. 11. There was no new appointment of Chief Financial Officer, company Secretary and I lead of Internal Audit during the year. The remuneration and the terms and conditions of the employment of Chief Financial Officer, Company Secretary and Head obliterate Audit, as determined by the Chief Executive Officer, have been approved by the Board of Directors. 12. The directors report for the year has been prepared in compliance with the requirements of the Code and fully describes the salient matters required to he disclosed, 13. The financial statements of the company were duly endorsed by Chief Executive Officer and Chief Financial Officer before approval of the Board. 14. The directors, Chief Executive Officer and executives neither do nor hold any interest in the shares of the Company other than that disclosed in the pattern of shareholding. 15. The Company has complied with all the corporate and financial reporting requirements of the Code. 16. The Board has formed underwriting, claim settlement and reinsurance & coinsurance committees. 17. The Company has formed an audit committee comprising of three members. All the members are non- executive directors including the Chairman of the committee. 18. The meetings of the audit committee were held once every quarter prior to the approval of interim and final results of the Company. as required by the Code. There was no change in terms of reference of the committee which was formed and advised to the committee for compliance in previous years. I9. The l3oard is in the process of setting up an effective internal audit function.

32 20. The statutory auditors of the Company have confirmed that they have been given a satisfactory rating under the Quality Control Review programme of the Institute of Chartered Accountants of Pakistan. that they or any of the partners of the firm, their spouses and minor children do not hold shares of the company and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by Institute of Chartered Accountants of Pakistan. 21. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the listing regulations and the auditors have confirmed that they have observed WAC guidelines in this regard. 22. We confirm that all other material principles contained in the Code have been complied with. 33


We have audited the annexed financial statements comprising of: (1) balance sheet: (ii) profit and loss account; (iii) statement of changes in equity (iv) cash flow statement (v) statement of premiums; vi) statement of claims; vii) statement of expenses; and viii) statement of investment income of Shaheen Insurance Company Limited (the Company) as at 31 December 2007 together with the notes forming part thereof, for the year then ended. It is the responsibility of the Companys 8oard of Directors to establish and maintain a system of internal control, and prepares and presents the financial statements in conformity with the Approved Accounting Standards as applicable in Pakistan and the requirements of the Insurance Ordinance. 2000 (XXXIX of

2000) and the Companies Ordinance, 1984 (XLVII of 184. Our responsibility is to express an opinion on these statements based on our audit; we conducted our audit in accordance with the Auditing Standards as applicable in Pakistan. Those standards require that we plan and performance the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement An audit includes examining, on a test basis,, evidence support not the amounts and disclosures in the financial statements. An audit also includes assessing the accounting policies used and significant estimates made by management, as well as, evaluating the overall financial statements presentation. W believes that our audit provides a reasonable basis for our opinion. In our Opinion: a) proper books of account have been kept by the company as required by the Insurance Ordinance, 2000 and the Companies Ordinance, 1984; b) financial statement together with the notes thereon have been drawn up in conformity with the Insurance Ordinance, 2000 and the Companies Ordinance, I 34 84, and accurately reflect the hooks and records of the Company and are further in accordance with accounting policies consistently applied; c) the financial statements together with the notes thereon present fairly, in all material respects. the state of the Conmpany4s affairs as aL3l December 2007 and of the profit, its cash flows and changes in equity for the year then ended in accordance with Approved Accounting Standards as applicable in Pakistan, and give the information required to he disclosed by the Insurance Ordinance. 2000 and the companies Ordinance, 1984. 35

36 37 38 39 40 41 42


Shaheen Insurance Company Limited was incorporated under the Companies Ordinance, I s a Pubic Company In March 1995 and obtained the certificate for commencement of business in July 1995. It was registered with the Controller of 1nsurance in November 1995 to carry out non4ift insurance business comprising lire. Marine. Motor. vaunts, engineering, transportation, etc. 11w shares of the company are Listed on Karachi, Lahore and [Islamabad Stock Exchanges. Ts registered is located at Shaheen Cornmercial Camps Karachi 2. BASIS (if PREPARATION) These financial statements have been pr red on the format of financial statements by the Scents and Exe1ianjc Commission of Pakistan (SECP) I through Securities and E,charnjc Commission (Insurance) mule%. 20(12, side SR,O, 9311 dated 12 December 2002, 2.1 Statement if corpulence The financial comments have been prepared in accordance with approved a until standards as applicable in Pakistan. Approved accounting standards comprise 01 such International Financial Reporting Standards (IFRS) issued by the international Accounting Standards Board as are notified under the Compares Ordinance, 1984, provisions of and directives issued under the Companies Ordinance. 19114, the taunted Ordixnmcc.. 2000 and SEC (insurance Rules, 2002. In case recommends differ, the provisions or directives the Companies

Ordinance, I84, insurance Ordinance, 2000 and SEC (Insurance) Rules, 2002 shall prevail. The SEC Pleas allowed the insurance companies to defer the application of International Account Standard 39(1 \S Finarieia1 1xsIrurncnt: Rccotjnition And Measurement in respect evaluations of 9nvestmcnt available for-sale. According. the requirements of IAS4Y to the extent allowed by S1(P as albcesaid have not been considered in the preparanon of these financial state insurance nicety. 2.2 Basis of measurement These financial statements have been prepared under the historical convention, except that held for oration nlvesiinents ewer L,r & 43 2.3 Functional mid presentation currency These financial ateliers are presented in Pakistan Rupees, such is the Companys functional and pre Selection currency and have been roun&4 off to the nearest rupees. 2.4 Use Gkdma1ti and 11tttn be pralines of fiiiaudal statements in conformity with approved scamming standards as applicable requires management to make judgemncnts, estimates and assumptions that Altaic the application of policies and reposed amounts 01 assets and liabilities, income and expense& The estimates and associated assumptions arc based on historical experience and versus other factors that are & lived in he reasonable under the result if which farm the basis of making the carrying values of assets and liabilitjs that arc not readily apparent from other ,salaries, Asocial results may differ from these estimates The estimates and under lying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are reckoned in the period in which the estimate is incised if the revision effects only that period or in the period of the revision and future periods

if the revision tests both current arid Liner, Justin made by the management in application approved accounting banditry a applicubk iii Pakistan that have significant effect on the financial statement end estimates who a inefficient risk of maternal adjustments in the next year are as follows: The company records claims based on the around of claim lodged by the entirety, lowered the secrete oath he heavies i made based on the easement apprised rot asr1anment of co pans I Knit flied remoras assessment coke differ significantly with the claims lodged by the insured, and accordion amount of clam nettled could materially differ with the amount of liability argued, The provision of claims incurred but not reported (1BNR) is made on the basis of actuarial valuating. The actuarial liaison is made on the basis of past trend and pattern of reporting of chimps, The actual amount of IDNR may niarerialb differ from the actuarial impacts. At! ditio,,al poison for unexpired rakes Additional provision for unexpired risks is based on actuarial valuation for class wise insurance business. The actuary teamsters the trends of gross arid net loss radio of the erupting. Accordingly the anural rebus may differ with the assumption (based on historical trend) used by the actuary. Reinsurance recoveries are accrued on the bas of share insurers in outstanding claims including IRNR as cued above. The neoteric are families when the amounts olouistanding claims arc final ixi based on surveyors assessment. Therefore, icinsurnncs recoveries booked conk! proportionately differ with the agouti of reinsurance rockeries accrued at the balance sheet date. In making the estimates for income (tows currently payable by the company, the rnarlagctncnt kiosk at the current ivories tax law and the decisions up appellate authorities on certain issues in the past.

rig company determines that investments are impaired wham there lia been a significant or plunged decline in the fair value below its cost. The delermrnanon 44 of what is significant or prolonged ranges judgment. In making this judgment, the Company imitates among oilier forms, the annual volatility in priers In additions the impingent ma l appropriate when there is an evidence of deterioration in the phenomenal heath of the invested industry and sector performance, changes in technology and operational financial cash flows. lime Company also cinders the nude for impairment provision against other assets. including the premium due hut unpaid. While assessing such a requirement. various factors including the delinquency in the decorum. Financial positions of the eon rmlerpanv, etc. are considered. Fired The Companies management determines the screamed useful lvs and related depreciation charge for its $ibid. asset, The Company also reviews the value of the assets for possible impairmernon an annual basis. Any change in the estimates in future years might affect the carrying amounts of the respective items of lbwd assets lie a correspuriding affect on the depreciation charge amid impairment. STANDARDS. Interpretations Ant) AMFNDMENTS 10 PIJKI.JSHEI) APPROVED ACCOUNTING STANDARDS THAT ARE NOT YET EFFECTIVE The flowing standards, urnendmeiits inwrpretalions of approved according standards effective for accounting paned I getting our or after (ii January 20{W. us either no relent t the (man elation to are it or expected to have significant impact art the Companies financial abetments other than certain increased disclosures in certain cases: Rated LAS I - Predication of Financial Statements Revised lass 23 8ornwin each)less - IFRS 2- IFRIC 11 - Group and Treasury Share Transaction

- WRIC I a- Sacks Concession ArrangeTnc11is IFRIC 13 Customer loyalty Programmers - lAS 19 - WRIC 14 The Limit on l3ermed &nefit Asset, Minimum Funding Requirement and abeir Interaction, 4. SIGNIFICANT ACCOUNTING POLICIES 41 Claims; lamblike A Liability for ouistandmg dainty i reignited in respect olios claims incurred as at the balance 1icct date lice repressions the stoma of the clause intimated or assessed before the end of die accounting year and are measured at the undiscounted value of pasted future payments 1roviion for outstanding claims indudeamoi,mis in relation to unpaid reports claims, damps incurred but not reported IBNR) and expected claims settlement costs based on which liability of R, II Jl4 million (2O06 Rs. 4553 million has been tee sized by the Company. Provision for II3NR is made for the cost of settling claims incurred hut not. reported at. the balance shellacs on the basis of actuarial valuation, The latest valuation says carried oil as o131 December 2007. Any significant event may effect the judgment which could effect the provision made for IHNR. 45 Reinsurance reveries against outstanding elands and selvage recoveries are reorganized a an asset and measured at the amount expected to be received. 4.2 Problem Premium under policy is recognized at the nine of the issuance f assurance policy. Revenue from pronouns is recognized after Liking into account the unearned piker of premium which is calculated using the 1/24th method. The unearned portion ofpreruium income is recognized as a liability. cleaned premium income and commission income are ticternuned on the basin of 1/24th method for all

classes of business Under (Ins niche, the habit try above unearned income is equal to 1/24 of the prairies I commission riding to policies commencing in the first month of financial year, 3/24 of the premiums I commission relating t policies commencing in the second month of the finical year, and so on, Reinsurance premium is recognized as expense after taking into account the proportion of deferred premium expense which is copulated using 1/24th method The deferred portion of premium expense is reccniscd as a prepayment. Administrative surcharge is included in the profit and loss acolyte fax premium income) at the time (he policies are issued and arc not amortized. 46


The growth of your company has increased the need to retain capital in the business. Therefore, in the circumstances your directors have decided not to recommend payment of a cash dividend. However, Bonus shares in the ratio of one share for every four shares held (25%) is recommended by the Board for your approval.


Basic and Diluted Earning per Share of the Company for the year ended December 31, 2007 is Rs. 6.92


The Auditors at the end of their report have drawn attention to investment properties costing Rs. 9.555 Million which is in the name of our Ex-CEO of the Company. The said properties were purchased in Defense Housing Islamabad (DHI) with an aim of disposing off at good prices. The Company will sell these properties during the current year.


The investments of Employees Provident Fund as at December 31, 2005 are

Rs.1.082 million. These investments are in Term Finance Certificates and the return ranges from 8.45% to 9.5% p.a. which is distributed bi annually. 47


There are no statutory payments on account of taxes, duties, levies and charges which are outstanding except in the ordinary course of business and described in the financial statement. 48


Following is the summary of key operational and financial data of the Company for last six years:


The corporate laws, rules and regulations framed here-under spell out the overall functions of the Board of Directors of the Company. The Board is fully aware of its corporate responsibilities as envisaged under the Code of Corporate Governance, prescribed by the Securities and Exchange Commission of Pakistan and is pleased to certify that: 1) The financial statements, prepared by the Company, present fairly its state of affairs, the result of its operations, cash flows and changes in equity. 2) The Company has maintained proper books of accounts as required under the Companies Ordinance, 1984. 3) The Company has consistently followed appropriate accounting policies in preparation of the financial statements. Changes wherever made, have been adequately disclosed and accounting estimates are on the basis of prudent and reasonable judgment. 4) Financial statements have been prepared by the Company in accordance with International Accounting

Standards as applicable in Pakistan. Although lAS 39 requires all companies to record marketable securities classified as available for sale subsequent to initial recognition at market value your Company has not done so in view of the exemption since obtained by the insurance companies from SECP. 5) The Company has implemented a sound system of internal control. However, such a system is designed to provide reasonable but not absolute assurance against material misstatements or loss. 6) The fundamentals of the Company are strong and there is no doubt about its ability to continue as a going concern. 7) The Company has followed the best practices of the Corporate Governance as laid down in the Listing Regulations of the stock exchanges and there has been no material departure there from. 49


The company makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Provision for outstanding claims (including IBNR) The company records claims based on the amount of claim lodged by the insured. However, the settlement of all the claims is made based on the surveyors assessment appointed for ascertainment of companys liability. The surveyors assessment could differ significantly with the claims lodged by the insured, and accordingly amount of claims settled could materially differ with the amount of liability accrued.

The provision of claims incurred but not reported (IBNR) is made on the basis of actuarial valuation. The actuarial valuation is made on the basis of past trend and patter of reporting of claims. The actual amount of IBNR may materially differ from the actuarial estimates. Premium deficiency reserve Premium deficiency reserve (PDR) is based on actuarial valuation for individual class wise insurance business. The actuary considers the trends of gross and net off reinsurance loss ratio of the company. Reinsurance recoveries against outstanding claims Reinsurance recoveries are accrued on the basis of share of reinsures in outstanding claims including IBNR as stated above. The recoveries are finalised when the amounts of outstanding claims are finalized based on surveyors assessment. Therefore, reinsurance recoveries booked could proportionately differ with amount of reinsurance recoveries accrued at balance sheet date. Income taxes In making the estimates for income taxes currently payable by the company, the management looks at the current income tax law and the decisions of appellate authorities on certain issues in the past. There are various matters where companys view differs with the view taken by the income tax department.


These financial statements were authorized for issue in the Board of Directors meeting held on March 29, 2007.


Total number of employee as at 31 December 2006 was 145 (2004: 131). The corresponding figures of amount due from! Due to other insurance! Reinsures amounting to Rs. 4.857 million have been set-off as these are payable on a net basis and for comparison purposes.


First of all my dear ALLAH who is always helps me, protect me and bless me. Then my Parents and my whole family they always sport me and care me. Then all my Teachers. They all ways help me in doing the work and show me the right way. A lot of thanks to my honourable teacher Mr. Bilal Lodhi. Then all my office members and other staff they always help me for seeking the business and a lot of thanks to my manager Mr. Anwar Zaidi. Then my all friends for helping me.