ANNUAL REPOR T 2 0 0 5 - EFU Insurance ::: Your ... Abid Raza Rizvi, M.Com Syed Ahmad Hassan, M.B.A Zahid Hussain, A.C.I.I. Assistant Vice Presidents Abdul Hameed Abdul Majeed Abdul

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E F U GENERAL INSURANCE LTD.

A N N U A L

R E P O R T

2 0 0 5

E F U Offices

2Mardan

AbbottabadPeshawar

Islamabad

Rawalpindi

Sargodha

Gujranwala

Sialkot

Lahore

Quetta

Goth Machi Rahim Yar Khan

Sukkur

KarachiHyderabad

1D.I. Khan

D.G. Khan

1

1Bahawalpur

Multan

2

1

2

2

14

1

Sahiwal

Faisalabad

1

1 1

1

231

3

2

2

11


Contents

Company Information 3

Management 4

Vision and Mission Statements 7

Notice of Meeting 8

Report of the Directors 12

Key Financial Data for the Last Six Years 17

Statement of Compliance with Code of Corporate Governance 18

Review Report by Auditors on Corporate Governance 20

Auditors’ Report 21

Balance Sheet 22

Profit & Loss Account 24

Statement of Changes in Equity 25

Statement of Cash Flows 26

Statement of Premiums 27

Statement of Claims 28

Statement of Expenses 29

Statement of Investment Income 30

Notes to the Accounts 31

Pattern of Shareholding 44

Offices 45

Form of Proxy


Company Information

3

Chairman

Rafique R. Bhimjee

Managing Director & Chief Executive

Saifuddin N. Zoomkawala

Directors

Sultan AhmadAbdul Rehman Haji HabibJahangir SiddiquiWolfram W. KarnowskiMuneer R. BhimjeeHasanali AbdullahTaher G. Sachak

Corporate Secretary

Hasanali Abdullah

Legal Advisor

Mohammad Ali Sayeed

Senior Advisor

S.C. (Hamid) Subjally, A.C.I.I.

Advisors

Akhtar K. Alavi, A.C.I.I.Naqi Zamin Ali

Audit Committee

Muneer R. BhimjeeTaher G. SachakAbdul Rehman Haji Habib

Rating Agency: JCR-VIS

Insurer Financial Strength Rating: AAOutlook Stable

Auditors

Gardezi & Co.Chartered AccountantsKarachi

Website

www.efuinsurance.com

Registered Office

11/4, Shahrah-e-Pehlavi, Peshawar

Main Offices

EFU HouseM.A. Jinnah Road, Karachi.

Co-operative Insurance Building23-Shahrah-e-Quaid-e-Azam, Lahore.


Management

Managing Director

Saifuddin N. Zoomkawala

Joint Managing Director

Hasanali Abdullah, F.C.A.

Senior Deputy Managing Director

Mahmood Lotia, A.C.I.I.

Deputy Managing Director

Qamber Hamid, LL.B., LL.M

Senior Executive Directors

Jaffer DossaAbdul Rehman Khandia, A.C.I.I.Salman Rashid

Executive Directors

Akbar AwanIqbal LodhiaJavid Niaz Khan, M.A., A.C.I.I.Nudrat AliS. M. Haider, M.Sc.Salim Rafik Sidiki, M.A.Shaukat Saeed AhmadSyed Ahmad A. Haq, M.Sc.

Deputy Executive Directors

Khurram Ali Khan, B.E.Syed Mehdi Imam, M.A.

Assistant Executive Directors

Altaf Qamruddin Gokal, F.C.A.Austen B. FreitasS. M. M. Rizvi

Senior Executive Vice Presidents

Aftab Hussain Zaidi, M.A., M.B.A.Bashir SejaDarius H. Sidhwa, F.C.I.IKhan Muhammad Anwar PashaM. Shezad HabibMahmood Ali Khan, M.A.Mohammad Iqbal Dada, M.A., A.C.I.I.Mohammad Shoaib Razzak BramchariThomas Leo Fernandez

Executive Vice Presidents

Abdul Hameed Qureshi, M.Sc.Abdul Sattar BalochAbdul WahidAftab Fakhruddin, B.E.Babar A. ShaikhImran Ahmed, M.B.A., A.C.I.I.Javed Akhtar Shaikh, B.B.A.Javed Iqbal Barry, M.B.A., L.L.B., F.C.I.I.Jawahar Ali KassimJehanzeb KaramatKamran Arshad Inam, B.E.Kauser Ali ZuberiKhalid UsmanKhozema T. Haider MotaKhurram NasimM. Mubashirullah KhanMir Babar AliMohammad Rizwanul HaqMuhammad Naeem HanifMusakhar-uz-Zaman, B.E.Ross Masood, M.B.E.Saleem ullah TahirZarrar Ibne Zahoor Bandey

4


Senior Vice PresidentsAbdul Razzak A. SattarAli KausarAslam A. Ghole, F.C.I.S.Atta-ur-Rehman RiazAzharul Hassan ChishtiHaji Mohammad AyubLiaquat Ali Khan, F.C.I.I.Mahmood JafriMatloob Ali Ansari, A.C.I.I.Mohammad Arif BhattiMohammad Haji HashimMohammad HussainMohammad SohailMohammad YounusMuhammad Arif KhanMuhammad Ilyas Khan, A.C.I.I.Muhammad Rashid Akmal, M.B.A.Muhammad Razzaq ChaudhryNaseeruddin AhmedQasim Ali MohammadRizwan-ul-HaqShaharyar Jalees, M.A.Syed Shahid HussainTayyab Hussain Gardezi, M.Sc.Yawar AminuddinZafar Ali Khokhar, M.A.Zakaria Suleman

Vice PresidentsA. Ghaffar A. KareemAbdul WahidAdam Dur Mohd. BalochAli Akbar Zaidy, A.P.A, A.C.A.Atta-ul-Haq KhanBadar Amin SissodiaBaqar Aneel JafariFarrukh Aamir BaigIftikharuddinImran-ul-HaqIrshad Zamir HashmiKaiser AliKhalid Ashfaq AhmedMansoor Abbas AbbasiMasroor HussainMazhar H. QureshiMohammad Kamil Khan, M.A.Mohammad NasirMohammad PervaizMuhammad Sohail Nazir, M.Sc., A.C.I.I.Muhammad Suleman QasimPervez AhmadS. M. ShamimShazim Altaf KothawalaSyed Abdul QuddusSyed Abid Raza Rizvi, M.ComSyed Ahmad Hassan, M.B.AZahid Hussain, A.C.I.I.

Assistant Vice PresidentsAbdul HameedAbdul MajeedAbdul Mateen Farooqui, M.Sc.Abdul Qadir Memon, M.Sc.Abdul RasheedAbdul Shakoor PirachaAli RazaAsif MahmoodArshad Ali Khan, A.C.M.A.Asghar AliDr. Ghulam Jaffar, Ph.DFakhruddin SaifeeFarhat IqbalFarman Ali AfridiFarrukh Ahmad QureshiGhulam Haider, M.Sc.Inayatullah ChaoudhryInayatullah KhalilIrfan Ahmad, A.C.M.A.Javed Iqbal KhanKaleem ImtiazM. A. QayumM. Hussain KhatriM. Siddique KhanMalik Firdaus AlamManan MeboobMohammad Amin Sattar, M.ComMs. Menija N. MessmanMuhammad Ashraf Thara, M.B.AMuhammad Asif Hussain, A.P.A, A.C.M.A.Muhammad Azhar AliMuhammad IlyasMuhammad SalahuddinMusarrat Zaman ShahNadeem Ahmad KhanNadir HussainOmair JavedQuaid JoharRana Zafar IqbalRao Abdul Hafeez KhanRiaz AhmadRizwan Ahmed, M.B.A.S. Anser Shabbir Rizvi, B.E.S. M. Aamir KazmiSaghirul HasanShahid Abdullah GodilShahzad ZakariaSyed Salahuddin, A.C.I.I.Tayab Nisar, A.C.I.I.Usman AliWaqar Ahmad, M.Sc.Waqar Hasan QureshiWasim TasawwarZia MahmoodZia Ur Rehman

Business ConsultantMaqbool Saeed

Chief Medical OfficerDr. Mohbat Ali Khowaja

5


Senior Executive DirectorJahangir Anwar Shaikh

Executive DirectorAltaf Kothawala

Deputy Executive DirectorsAbdul Wahab PolaniHaroon Haji Sattar DadaSyed Kamran RashidSyed Rizwan Hussain

Senior Executive Vice PresidentsAbdullah H. GodilAgha S. U. KhanAkhtar KothawalaMohd. Khalid Saleem, M.A.Mrs. Nargis MehmoodQamar SaleemSyed Asim IqbalSyed Jaweed Envor

Executive Vice PresidentsAbdul WahabAlamgir Anwar ShaikhAli SafderAnis MehmoodIftekhar A. KhanMuhammad Umer MemonRizwan SiddiquiSyed Ali ZaheerSyed Amir Aftab

Senior Vice PresidentsAamir Ali KhanAbootalib DadaAmin YaqoobAzmat MaqboolFaisal FasihFaizan QureshiImran Ali KhanKayomarz H. SethnaKh. Zulqarnain RasheedMs. Kehkashan SultanaMuhammad AsifMuhammad Asif ArifMuhammad Azhar DawraMuhammad FarooqMuhammad UmerMuneeb Farooq KothawalaTalib Abbas ShigriYousuf Alvi

Vice PresidentsAbdul Rasheed KapadiaAmir HassanAtique H. PatelEjaz AhmedFakhar-e-AlamFatima Moiz ShaikhGhulam Murtaza KhuruIrfan Raja JagiraniJameel MasoodMalik Akhtar RafiqueMian Ikram EllahiMohammad IqbalMuhammad Rehan Iqbal BootiMuhammad NiamatullahNighat SartajRashid HabibRizwan HumayunS. Ashad H. RizviShahid YounusShan-e-Raza ZaidiShazia Raheel RazzakSyed AnsarullahSyed Baqar Hasan, M.A.Syed Rizwan HaiderSyed Shahid RazaWasim Ahmed

Assistant Vice PresidentsAzam RafiqueBadar H. QureshiBashir Ahmed SangiFarid KhanH. H. AnsariHamza Siddiq GodilImdadullah AwanM. A. Qayyum KhanM. Amer Arif BhattiM. Anis-ur-RehmanM. Ashraf SamanaM. Aslam HayatM. Mushtaq NajamM. Owais JagiraniM. Saleem BabarM. Yousuf JagiraniM. Zia-ul-HaqMuhammad JavedMuhammad SheerazMuhammad Tayyab NazirNaeemullah JanOmer JavidQamer-ul-Hassan AnsariS. Sohail Haider AbidiSadia MuneerShafaat Hussain MalikSyed Imran ZaidiTanveer MasoodTariq JamilTauqir AbdullahUsman Ali Khan

6

Marketing Executives


Vision and Mission Statements

7

VISION STATEMENTOur vision is to be the first choice company for ourcustomers, shareholders and employees. To achieve thiswe will be driven by an obsession to be better than the best ina continuous journey, not a destination.

At EFU first choice means a sustained commitment to meetand exceed stakeholder expectations. A will to go the “Extra Mile”to delight our customers with products and servicesthat exceed their expectations.

MISSION STATEMENTWe will manage our affairs through modern technology,collective wisdom and institutionalised leadership.We will be a respected, cultured and an educated company witha strong market position. Together with our customers,reinsurers and employees we will achieve world class qualitystandards through continuous quality improvement.Achieve zero defects in everything we do.

We will do good business, with good clients and of the highestintegrity We will not compromise our principles and wewill like to be known as a responsible corporatecitizen aware of our obligation to the Governmentand the society we serve.


Notice Of Meeting

8

Notice is hereby given that the 73rd Annual General Meeting of the Shareholders of E F U General Insurance Ltd. willbe held at the Registered Office of the Company at 11/4, Shahrah-e-Pehlavi, Peshawar on Saturday April 29, 2006 at10:30 a.m. to:

A. ORDINARY BUSINESS:

1. confirm the minutes of the 72nd Annual General Meeting held on April 29, 2005.

2. receive, consider and approve the Audited Financial Statements for the year ended December 31,2005 together with the Directors’ and Auditors’ reports thereon.

3. consider and if thought fit to approve the payment of Dividend at the rate of Rs. 3 per share for theyear ended December 31, 2005 as recommended by the Board of Directors.

4. appoint Auditors for the year 2006 and fix their remuneration.

B. SPECIAL BUSINESS:

5 consider and if thought fit to pass the following Ordinary Resolution with or without modification(s):

RESOLVED that a sum of Rs. 200,000,000 out of the free reserves of the Company be capitalised andapplied to the issue of 20,000,000 Ordinary Shares of Rs.10/- each and allotted as fully paid up BonusShares to the Members, who are registered in the Books of the Company at the close of business onApril 18, 2006 in the proportion of two new shares for every three existing Ordinary Shares held andthat such new shares shall rank pari passu with the existing Ordinary Shares of the Company.

FURTHER RESOLVED that the members’ fractional entitlement to Bonus Shares may be consolidatedand sold in the stock market and the net sale proceeds of such fractional entitlements when realizedbe paid to a charitable institution.

That for the purpose of giving effect to the foregoing, the Managing Director/Chief Executive or theCorporate Secretary be and are hereby singly authorised to give such directions as may be necessaryand settle any questions or any difficulties that may arise in the distribution of the said new shares orin the payment of the sale proceeds of the fractions.

6. consider and if thought fit to pass the following Special Resolution with or without modification(s):

RESOLVED that consent of the Company be and is hereby accorded to:

a) invest up to maximum of Rs. 60,000,000 (Rupees sixty million only) in Ordinary shares of proposedSubsidiary Company, EFU General Takaful Ltd.;

b) invest up to maximum of Rs. 30,000,000 (Rupees thirty million only) in Ordinary shares of proposedAssociated company, EFU Family Takaful Ltd.;

c) further invest maximum of Rs. 100,000,000 (Rupees one hundred million only) in the shares ofEFU Life Assurance Ltd., an associated public limited company.

These investments be made from time to time as the Managing Director (Chief Executive) and/or otherAttorney(s) of the Company may deem fit.

FURTHER RESOLVED that Chief Executive or Corporate Secretary be and are hereby individuallyauthorized to fulfill all legal and corporate formalities for making the above investments.

FURTHER RESOLVED that these Special Resolutions be and are hereby passed for the purpose ofcompliance of Section 208 of the Companies Ordinance, 1984.

7. consider and if thought fit to pass the following Special Resolution with or without modification(s):

RESOLVED that the Authorised Share Capital of the Company be and is hereby increased fromRs. 500,000,000 to Rs. 1,500,000,000 by the creation of 100,000,000 new shares of Rs.10/- each andthe Memorandum and Articles of Association of the Company be amended as under:

That the words and figures “Rs. 500,000,000 (Rupees five hundred million) divided into50,000,000 Ordinary Shares of Rs.10/- each” appearing in Clause V of Memorandum of Associationand Clause 4 of Articles of Association of the Company be substituted with word and figures“Rs. 1,500,000,000 (Rupees one billion and five hundred million) divided into 150,000,000 OrdinaryShares of Rs.10/- each.

8. transact any other matter with the permission of the Chair.

By Order of the Board

HASANALI ABDULLAH Joint Managing DirectorMarch 22, 2006 & Corporate Secretary


9

NOTES

1. A member entitled to attend and vote at the General Meeting is entitled to appoint another member as a proxyto attend and vote in respect of him. Form of proxy must be deposited at the Company’s Registered Officenot later than 48 hours before the time appointed for the meeting.

2. CDC Account holders are advised to follow the following guidelines of the Securities and Exchange Commissionof Pakistan.

A. For attending the meeting:

(i) In case of individuals, the account holder or sub-account holder and/or the person whose securitiesare in group account and their registration details are uploaded as per the Regulations, shall authenticatehis identity by showing his original National Identity Card (NIC) or original passport at the time ofattending the meeting.

(ii) In case of corporate entity, the Board of Directors’ resolution/power of attorney with specimen signatureof the nominee shall be produced (unless it has been provided earlier) at the time of the meeting.

B. For appointing proxies:

(i) In case of individuals, the account holder or sub-account holder and/or the person whose securitiesare in group account and their registration details are uploaded as per the Regulations, shall submitthe proxy form as per the above requirement.

(ii) The proxy form shall be witnessed by two persons whose names, addresses and NIC numbers shallbe mentioned on the form.

(iii) Attested copies of NIC or the passport of the beneficial owners and the proxy shall be furnished withthe proxy form.

(iv) The proxy shall produce his original NIC or original passport at the time of the meeting.

(v) In case of corporate entity, the Board of Directors’ resolution/power of attorney with specimen signatureshall be submitted (unless it has been provided earlier) alongwith proxy form to the Company.

3. The Share Transfer Books of the Company will be closed from April 19, 2006 to April 29, 2006 (both daysinclusive).

4. Members are requested to communicate to the Company of any change in their addresses.

5. Statement under section 160 of the Companies Ordinance, 1984 is being sent to all the members.

Statement under section 160 of the Companies Ordinance, 1984 pertaining to the Special business:

1. This statement sets out the material facts pertaining to the Special business to be transacted at the AnnualGeneral Meeting of the Company to be held on April 29, 2006.

2. Item 5 regarding Bonus issue:

Your Directors have recommended the issue of Bonus Shares in the proportion of two new shares forevery three existing Ordinary Shares held at the close of business on April 18, 2006. The Directors areinterested in this business to the extent of their entitlement to Bonus Shares as Members.

3. Item 6 regarding investments in Subsidiary and associated companies:

a & b) The concept of Takaful, sharia compliant alternative to conventional insurance is in the phase ofrapid expansion worldwide, prominently in the Middle East and Far East Markets.

Recently banks have established Islamic Banking Divisions and some new Islamic Banks have emergedin Pakistan, who would be the first customers to obtain insurance from the Takaful Companies and thiswould provide automatic market for General Takaful business. In addition to General Takaful,there is market for life insurance products under Sharia.

The Board of Directors has therefore decided to make investment in EFU General Takaful Ltd. and EFUFamily Takaful Ltd. Both the intended companies are being proposed to be established jointly by EFUGeneral Insurance Ltd. and EFU Life Assurance Ltd. which is a step towards introducing IslamicInsurance products in Pakistan. Keeping in view the right strategy, the proposed Takaful Companieswould provide ample scope for offering the General and Family Takaful products according to theSharia.

The EFU General Takaful Ltd. (proposed) and EFU Family Takaful Ltd. (proposed) will be managedand operated according to guidelines strictly in compliance with Takaful Rules and monitored by theirrespective Sharia Boards.

Therefore, the approval of the Shareholders is sought for making investment up to Rs. 60 million (outof Rs. 80 million proposed Paid-up Capital) in EFU General Takaful Ltd. (proposed) andRs. 30 million (out of Rs. 150 million proposed Paid-up Capital) in EFU Family Takaful Ltd. (proposed).


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The information required under SRO No. 865 (1) 2000 is as under:

i) Name of Investee Company:EFU General Takaful Ltd. (Proposed to be incorporated).

ii) Nature, amount and extent of investment:Long-term strategic investment up to Rs. 60 million by subscription towards Ordinary Shares.

iii) Average market price of the shares intended to be purchased during preceding six months:N/A.

iv) Break-up value of shares intended to be purchased on the basis of last published financial statements:N/A.

v) Price at which shares will be purchased:At par value of Rs. 10/- each.

vi) Earning per share of investee company in last three years:N/A.

vii) Sources of funds from where shares will be purchased:Internal generation.

viii) Period for which Investment will be made:Long-term.

ix) Purpose of Investment:Strategic Investment.

x) Benefits likely to accrue to the Company and the shareholders from the proposed investment:Investment of available funds in the investee company.

xi) Interest of Directors and their relatives in the investee company:No Director or Chief Executive has any interest in the proposed investments, except in their capacitiesas “Directors/Chief Executive” and/or shareholders of the Company. Some Directors of EFU GeneralInsurance Ltd. are proposed to be appointed as nominee Directors on the Board of EFU GeneralTakaful Ltd.

i) Name of Investee Company:EFU Family Takaful Ltd. (Proposed to be incorporated).

ii) Nature, amount and extent of investment:Long-term strategic investment up to Rs. 30 million by subscription towards Ordinary Shares.

iii) Average market price of the shares intended to be purchased during preceding six months:N/A.

iv) Break-up value of shares intended to be purchased on the basis of last published financial statements:N/A.

v) Price at which shares will be purchased:At par value of Rs. 10/- each.

vi) Earning per share of investee company in last three years:N/A.




x) Benefits likely to accrue to the Company and the shareholders from the proposed investment:Investment of available funds in the investee company.

xi) Interest of Directors and their relatives in the investee company:No Director or Chief Executive has any interest in the proposed investments, except in their capacities


11

as “Directors/Chief Executive” and/or shareholders of the Company. Some Directors of EFU GeneralInsurance Ltd. are proposed to be appointed as nominee Directors on the Board of EFU FamilyTakaful Ltd.

c) EFU Life Assurance Ltd. (EFU Life) is the leading life insurance company in the private sector in thecountry. As on December 31, 2005 it had asset base of Rs. 5.97 Billion. Its After tax profit for the years2003, 2004 & 2005 have been Rs. 82 million, Rs. 140.8 million and Rs. 195.8 million respectively. EFULife as on December 31, 2005 has Paid-up Capital of Rs. 210 million, General Reserve ofRs. 130 million and Accumulated Profit of Rs. 196 million.

The information required under SRO No. 865 (1) 2000 is as under:

i) Name of Investee Company:EFU Life Assurance Ltd.

ii) Nature, amount and extent of investment:Long-term strategic investment up to Rs. 100 million in Ordinary shares of Rs. 10 by way of purchasefrom the Stock Exchange at a price ruling on the date of purchase.

iii) Average market price of the shares intended to be purchased during preceding six months:Rs. 159.19 (September 16, 2005 to March 15, 2006).

iv) Break-up value of shares intended to be purchased on the basis of last published financial statements:Rs. 21.20 (September 30, 2005).

v) Price at which shares will be purchased:Not more than the price quoted on Stock Exchange.

vi) Earning per share of investee company in last three years:2003 Rs. 5.472004 Rs. 8.542005 Rs. 9.33




x) Benefits likely to accrue to the Company and the shareholders from the proposed investment:Better return and capital appreciation.

xi) Interest of Directors and their relatives in the investee company:No Director or Chief Executive has any interest in the proposed investments, except in theircapacities as “Directors/Chief Executive” and/or as shareholders of the Company.

4. Item 7 regarding increase in Authorised Capital:

The Authorised Share Capital of EFU General Insurance Limited at present is Rs. 500,000,000. Inorder to take care of expansion, it is considered necessary to increase the Authorised Share Capitalfrom Rs. 500,000,000 to Rs. 1,500,000,000.


Report Of The Directors To Members

12

WRITTEN PREMIUM, NET PREMIUMREVENUE & NET CLAIMS

(Rupees in Million)

2003 20052000 200420022001

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Net ClaimsNet Premium RevenueWritten Premium

The Directors of the Company are pleased to present before you theSeventy Third audited accounts of the Company for the year endedDecember 31, 2005.

Your Directors are pleased to report that 2005 was another recordyear for the Company with a Written Premium of Rs. 6.64 billion.It grew by Rs. 1.6 billion (i.e. 32 %) over the previous year and is thehighest annual growth recorded by any company in the Insuranceindustry in Pakistan. The Net Premium Revenue increased by52 % to Rs. 3.9 billion compared to Rs. 2.5 billion in 2004. The overallclaim ratio (i.e. claims as a percentage of net premium revenue) was70 % as against 60 % in the previous year.

In the past few years your Company has benefited from the expansionof economic activities in the industrial, services and consumer sectorsof the country. EFU General has established itself as the marketleader in insurance of leased motor cars which continues to growrapidly due to aggressive lending by banks and leasing companies.Motor insurance now represents over 50 % of the Company’s TotalWritten Premium. The overall claims ratio rose due to high level oflosses in the fourth quarter of the year.

The Reserve for Un-earned Premium as at December 31, 2005increased by Rs. 828 M to Rs. 2,398 M from Rs. 1,570 M as onDecember 31, 2004.

The Profit after tax for the year was Rs. 506 M compared to Rs. 322 Mlast year.

The Department wise performance was as follows:

FIRE & PROPERTY

The Written Premium of this Department increased by 5 % toRs. 1,930 M as compared to Rs. 1,834 M in 2004. On account ofincreased losses, the Claims ratio on Net Premium Revenue increasedto 56 % in 2005 as against 30 % in 2004. In the last quarter theinsurance industry faced a large number of medium sized losses onaccount of cotton and textile risks thus affecting the overall underwritingprofits. In addition, the earthquake of 8th October 2005 alsocontributed to increased losses to our net account. The UnderwritingProfit was Rs. 52 M compared to Rs. 219 M last year.

MARINE, AVIATION AND TRANSPORT

The Written Premium of this Department increased by 18 % toRs. 914 M compared to Rs. 776 M in 2004 but was offset by a largenumber of losses on account of cotton and sugar inland transitsclaims. These losses were higher in the last three months of the yearbeing the peak of cotton and sugar seasons. The Claims ratio onNet Premium Revenue was 56 % in 2005 as against 42 % in 2004.The Underwriting Profit for the year was Rs. 54 M compared toRs. 100 M in 2004.

MOTOR

The Written Premium of this Department showed a record increase of55 % to Rs. 3,440 M as compared to Rs. 2,216 M in 2004. The Claimsratio on Net Premium Revenue was 75 % as against 76 % in 2004 andas result of increase in business volume, the Underwriting Profitincreased to Rs. 184 M compared to Rs. 63 M last year. Your Companycontinues to improve its underwriting strategies and exercises morecontrol by greater use of IT resources both within the organisation andfor coordination with clients, surveyors and vehicle garages.


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RESERVES & FUNDS(Rupees in Million)

2003 20052000 200420022001

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OTHERS

The Written Premium of this department increased by 45 % toRs. 240 M compared to Rs. 165 M in 2004. The Claims ratio on NetPremium Revenue was 29 % as against 21 % in 2004. There wasUnderwriting Profit of Rs. 26 M compared to Rs. 28 M in 2004.

Other Comments

The after tax profit for the year under report amounted to Rs. 506 M.Your Board proposes to make the following appropriation:

(000)

Rupees Rupees

Profit after tax 506 268Add: Unappropriated profit brought

forward 162 712668 980

Less: Dividend paid for last year 63 000Bonus Shares issued for last year 90 000 153 000

515 980Less: Transfer to General Reserve 210 000Unappropriated Profit carried forward 305 980

Dividend

Your Directors have pleasure in recommending dividend of Rs. 3 pershare (30 %) and issuance of two Bonus Shares for every threeshares held by the Shareholders whose names appear in the ShareRegister of the Company at the close of business on April 18, 2006.

Investment

Your Company invests in equities, TFCs, PIBs and Treasury Bills. Youwould be glad to know that the Government of Pakistan has grantedexemption from Income Tax on Capital Gains, a long awaited requestof the insurance industry for which we are grateful to the Governmentof Pakistan. In view of this, your Company has increased its investmentin Equity Portfolio which at book value stood at Rs. 1,457 M as onDecember 31, 2005 compared to Rs. 863 M as on December 31,2004. The Company has short-term and long-term portfolio strategiesfor equity investments. The equity portfolio of your Company showedexcellent performance even after realising capital gains of Rs. 170 M.The market value of investment in equities showed an appreciation ofRs. 2,497 M as on December 31, 2005 compared to Rs 1,719 M ason December 31, 2004.

Information Technology

Your Company continues to invest in Information Technology to keepits edge over competition. EFU was the first insurance company inPakistan in early 1980s to commence computerisation in COBOLand all in-house programmes have been developed in COBOLenvironment. In order to embrace emerging technologies in software,we have placed an order with Microfocus to provide us advancedversions of COBOL solutions. This strategy is in line with that ofmany major Fortune 500 companies as we not only retain ourinvestment in software development but do not disturb the day today operation of the Company while the system is being upgraded.

We have recently implemented e-commerce applications. The firstB2B application e-claims for leased vehicle insurance has been


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INVESTMENTS & BANK BALANCE(Rupees in Million)

2003 20052000 200420022001

successfully deployed. EFU General is the first non-life insurancecompany in Pakistan to introduce e-commerce. The application hasbeen successfully introduced in Southern Zone and would be launchedin the second quarter of 2006 in Northern Zone. The second B2Bapplication of e-certificates for leased vehicle insurance is in theprocess of deployment.

EFU has implemented Public Key Infrastructure (PKI) for securedand encrypted electronic services. For this we have signed anagreement with NIFT, Certification Authority to provide DigitalCertificates for servicing auto leasing insurance clients all overPakistan to ensure authenticated and secured transactions overinternet.

The Auditors in their report have made mention for the policy oftreating leases as operating leases and for accounting of investmentsin an associated Company at cost. The details for these items havebeen provided in the Notes 17 and 5(i) to the Account. The reasonfor treating the lease as operating lease and recording of investmentsin associated company at cost is due to specialised nature of taxabilityof profits of insurance companies.

As reported last year your Company continues to have JCR-VIS asits rating agency. JCR-VIS has improved the Financial StrengthRating to AA and Outlook to ‘Stable’.

You are aware that consequent to the nationalisation of life insurancebusiness of your Company in 1972 an amount of Rs. 2,856,296 wasreceivable from State Life Insurance Corporation of Pakistan representingthe share of surplus of Life Business allocated to the Shareholders ofthe Company as per valuation report dated January 9, 1973 for threeyears ended December 31, 1971. This report was signed by theChairman and the Directors of State Life Insurance Corporation ofPakistan and the Chairman and Directors of the Company based onwhich the amount was incorporated in the accounts for the year endedDecember 31, 1972. As the amount was not received, your Companyfiled suit in the High Court of Sindh which was dismissed. Subsequentlyan appeal was filed before a Bench of High Court of Sindh and theorder of the learned single judge was set aside and the case wasremanded to the learned Single Judge for decision. Supreme Court ofPakistan on the appeal by State Life referred the matter to a Bench ofHigh Court. Our suit has finally been dismissed in 2005 by a Bench ofthe High Court of Sindh. As the matter has taken over 30 years and lotof time and money has been spent, your Directors decided not to spentmore time and money and did not file appeal in the Supreme Court ofPakistan. The amount of Rs. 2,856,296 has therefore been written off.

Prospects for 2006

The management’s short and long term objectives as in the past willcontinue to strongly focus on providing the best service to its client andintends to keep providing the risk management service at the forefront.

The prospects for 2006 will depend on the overall level of economicactivities in the country and particularly the pace of privitisation andlending by the banking sector will determine the volume of insurancebusiness potentially available in the market. Your Company is wellorganised to make best use of opportunities available by innovativemarketing strategy, human resource development and greater utilisationof IT resources. At the same time we will continue to follow prudentunderwriting policies to increase the profitability of all classes of business.The management will focus on increasing its human resources andprovide the tools and knowledge to meet these new challenges. Also


15

at the same time keep its objectives in mind of EFU being the firstchoice Company for all our stakeholders i.e. clients, employees andshareholders.

Takaful Rules have been promulgated both for General and Lifebusinesses. The existing General and Life Insurance companies cannot within the existing companies conduct Takaful business. YourDirectors have therefore decided to establish EFU General Takaful Ltdjointly with EFU Life Assurance Ltd and the investments shall be Rs. 60million by EFU General and Rs. 20 million by EFU Life. Similarly EFULife has decided to establish EFU Family Takaful Ltd jointly with EFUGeneral Insurance Ltd and the investments shall be Rs. 30 million byEFU General Insurance Ltd and Rs. 120 million by EFU Life AssuranceLtd. Your Directors have proposed Resolutions for adoption at theAnnual General Meeting to be held on April 29, 2006.

EFU Group’s business is growing at accelerated rate for last few yearsand the management expects the trend to continue. The qualifiedInsurance personnel in the country is not sufficient to meet the growingneeds of the industry. A Human Resource Development Committeehas therefore been formed by the management. A batch of 15 younggraduates of various disciplines have been inducted as ManagementTrainees with objective of training them for the specific requirementsof the Group. These persons after training and further qualification wouldbe placed in suitable management positions. As per future needs newbatches would be inducted.

Compliance with Code of Corporate Governance

The requirements of the Code of Corporate Governance set out bythe regulatory authorities have been duly complied with. A statementto this effect is annexed with the report.

The Directors of your Company were elected at the Extra OrdinaryGeneral Meeting held on June 28, 2005 for a term of three yearsexpiring on July 9, 2008.

The number of meetings attended by each Director is given hereunder:

Sr. Number of MeetingsNo. Name of Directors attended

1. Rafique R. Bhimjee 5 out of 5 2. Saifuddin N. Zoomkawala 5 out of 5 3. Sultan Ahmad 3 out of 5 4. Abdul Rehman Haji Habib 3 out of 5 5. Jahangir Siddiqui 3 out of 5 6. Wolfram W. Karnowski 1 out of 5 7. Muneer R. Bhimjee 3 out of 5 8. Hasanali Abdullah 5 out of 5 9. Taher G. Sachak 5 out of 5

Leave of absence was granted to Directors who could not attend theBoard meetings.

Statement of Ethics and Business Practices

The Board has adopted the statement of Ethics and Business Practices.All employees are informed of this statement and are required toobserve these rules of conduct in relation to business and regulations.

Corporate and Financial Reporting Frame Work

a) The financial statements prepared by the management of theCompany present fairly its state of affairs, the result of itsoperations, cash flow and changes in equity.

b) Proper books of accounts have been maintained by the Company.


16

HASANALI ABDULLAH JAHANGIR SIDDIQUI SAIFUDDIN N. ZOOMKAWALA RAFIQUE R. BHIMJEEDirector Director Managing Director & Chief Executive Chairman

Karachi March 18, 2006Total Assets Total Adjusted Assets

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

TOTAL ASSETS &TOTAL ADJUSTED ASSETS

(Rupees in Million)

2003 20052000 200420022001

c) Appropriate accounting policies have been consistently appliedin preparation of financial statements.

d) The International Accounting Standards, as applicable in Pakistan,have been followed in preparation of financial statements andany departure therefrom has been adequately disclosed.

e) The system of internal control is sound in design and has beeneffectively implemented and monitored.

f) There are no significant doubts upon the Company’s ability tocontinue as a going concern.

g) There has been no material departure from the best practicesof Corporate Governance, as detailed in the listing regulations.

h) The Key operating and financial data for the last six years isannexed.

i) The value of investments of provident, gratuity and pension fundsbased on their audited accounts as on December 31, 2005 werethe following;

Provident Fund Rs. 265 millionGratuity Fund Rs. 130 millionPension Fund Rs. 103 million

The value of investments include accrued interest.

j) Trading of Shares by Chief Executive, Directors, Chief FinancialOfficer, Company Secretary, their spouses and minor children:

No. of SharesPurchase of Shares

Wolfram W. Karnowski 7 500

Sale of Shares NIL

k) The statement of pattern of shareholding in the Company as atDecember 31, 2005 is included with the Report.

Gardezi & Co. Chartered Accountants retire and being willing to continueare recommended for re-appointment as Auditors of the Company forthe year 2006.

We would like to thank our valued customers for their continued patronageand support and to Pakistan Reinsurance Company Limited, to Securitiesand Exchange Commission of Pakistan and to State Bank of Pakistanfor their guidance and assistance.

We are proud to inform that your Company has one of the finestreinsurance arrangements backed by the largest Reinsurance Companyin the world as the leader of our reinsurance treaty panel, i.e. MunichReinsurance Company, Germany (A+), followed by AllianzAktiengesellschaft, Germany (AA-), Hannover Reinsurance Company,Germany (AA-), Mapfre Re Compania De Reassurance, Spain (AA-)and Mitsui Sumitomo, Japan (AA-) are few to quote.

It is a matter of deep gratification for your Directors to place on recordtheir appreciation of the efforts made by officers, field force and staffwho had contributed to the growth of the Company and the continuedsuccess of its operations.


(Rupees in Million)

2005 2004 2003 2002 2001 2000

Written Premium 6 644 5 043 3 944 3 079 2 374 1 979

Net Premium Revenue 3 862 2 536 1 662 1 432 1 293 1 099

Investment & Other Income 445 165 141 107 110 100

Profit before tax 646 474 157 70 23 114

Profit after tax 506 322 106 47 17 69

Shareholders Equity 1 106 663 378 272 251 255

Investments 2 387 1 559 882 472 295 224

Investment Properties 412 428 446 464 470 381

Cash & Bank Balances 1 193 866 483 339 339 266

Total Assets 6 335 4 784 3 256 2 182 1 853 1 249

Key Financial Data for the Last Six Years

17


This statement is being presented to comply with the Code of Corporate Governance contained in the listingregulations of Karachi and Lahore Stock Exchanges 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 Code in the following manner:

1. The Company encourages representation of independent non-executive Directors on its Board. At presentthe Board includes seven independent non-executive Directors, who were elected on June 28, 2005 for thethree years’ term effective July 10, 2005.

2. The Directors have confirmed that none of them is serving as a Director in more than ten listed companies.

3. All the resident Directors of the Company are registered as taxpayers and none of them has defaulted inpayment of any loan to a banking company, a DFI or an NBFI or, being a member of a stock exchange, hasbeen declared as a defaulter by that stock exchange.

4. No casual vacancy occurred in the Board during the year.

5. The Company has prepared a ‘Statement of Ethics and Business Practices’, which has been signed by allthe directors and employees of the Company.

6. The Board has developed a vision/mission statement, overall corporate strategy and significant policies ofthe Company. The significant policies in greater detail are being documented. A complete record ofparticulars of significant policies along with the dates on which they were approved or amended has beenmaintained.

7. All the powers of the Board have been duly exercised and decisions on material transactions have beentaken by the Board including appointment and determination of remuneration and terms and conditions ofemployment of CEO have been taken by the Board.

8. The meetings of the Board were presided over by the Chairman and the Board met at least once in everyquarter. Written notices of the Board meetings, along with agenda and working papers, were circulated atleast seven days before the meetings. The minutes of the meetings were appropriately recorded andcirculated.

9. The management of the Company has submitted a paper to the Board of Directors on August 13, 2005 toconsider it as an orientation course for its Directors and to apprise them of their duties and responsibilities.

10. There was no new appointment of CFO, Company Secretary or Head of Internal Audit during the year.

11. The Directors’ report for this year has been prepared in compliance with the requirements of the Code andfully describes the salient matters required to be disclosed.

12. The financial statements of the Company were duly endorsed by CEO and CFO before approval of the Board.

13. The Directors, CEO and Executives do not hold any interest in the shares of the Company other than thatdisclosed in the pattern of shareholding.

14. The Company has complied with all the corporate and financial reporting requirements of the Code.

15. The Board has formed an Audit Committee. It comprises of three non-executive Directors including theChairman of the Committee.

16. The meetings of the Audit Committee were held at least once every quarter prior to approval of interim andfinal results of the Company and as required by the Code. The terms of reference of the Committee havebeen formed and advised to the Committee for compliance.

17. The Board has an effective team for internal audit. The team is fully conversant with the policies & proceduresof the Company and is involved in the internal audit function on full time basis.

Statement of Compliance with theCode of Corporate Governance

18


18. The statutory auditors of the Company have confirmed that they have been given a satisfactory rating underthe quality control review programme of the Institute of Chartered Accountants of Pakistan, that they or anyof the partners of the firm, their spouses and minor children do not hold shares of the Company and that thefirm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines oncode of ethics as adopted by Institute of Chartered Accountants of Pakistan.

19. The statutory auditors or the persons associated with them have not been appointed to provide other servicesexcept in accordance with the listing regulations and the auditors have confirmed that they have observedIFAC guidelines in this regard.

20. We confirm that all other material principles contained in the Code have been complied with.


Karachi March 18, 2006

19


We have reviewed the Statement of Compliance with the best practices (the statement) contained in the Codeof Corporate Governance (the Code) prepared by the Board of Directors of EFU General Insurance Ltd tocomply with the Listing Regulation No. 37 of the Karachi Stock Exchange and chapter XIII of the Lahore StockExchange where the Company is listed.

The responsibility for compliance with the Code is that of the Board of Directors of the Company. Our responsibilityis to review, to the extent where such compliance can be objectively verified, whether the Statement reflectsthe status of the Company’s compliance with the provisions of the Code and report if it does not. A review islimited primarily to inquiries of the Company personnel and review of various documents prepared by theCompany to comply with the Code.

As part of our audit of the financial statements we are required to obtain an understanding of the accountingand internal control system sufficient to plan the audit and develop an effective audit approach. We have notcarried out any special review of the internal control system to enable us to express an opinion as to whetherthe Board’s statement on internal control covers all controls and the effectiveness of such internal controls.

Based on our review nothing has come to our attention which causes us to believe that the Statement doesnot appropriately reflect the Company’s compliance, in all material respects, with the best practices containedin the Code as applicable to the Company.

GARDEZI & CO.Chartered Accountants


Review Report to the Members on Statement of Compliancewith Best Practices of Code of Corporate Governance

20


We have audited the annexed financial statements comprising of :

(i) Balance sheet;

(ii) Profit and loss account;

(iii) Statement of changes in equity;

(iv) Statement of cash flows;

(v) Statement of premiums;

(vi) Statement of claims;

(vii) Statement of expenses; and

(viii) Statement of investment income

of EFU General Insurance Limited as at December 31, 2005 together with the notes forming part thereof, for theyear then ended in which are incorporated the un-audited certified returns from the branches except for fourbranches which have been audited by us.

It is the responsibility of the Company’s Board of Directors to establish and maintain a system of internal controland prepare and present the financial statements in conformity with the approved accounting standards asapplicable in Pakistan and the requirements of the Insurance Ordinance, 2000 (XXXIX of 2000) and the CompaniesOrdinance, 1984 (XLVII of 1984). 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. These standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financial statementsare free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing the accounting policies and significantestimates made by management, as well as, evaluating the overall financial statements presentation. We believethat our audit provides a reasonable basis for our opinion .

The Company follows the policy of treating finance leases as operating leases the effect of which has not beendetermined as referred to in Note 17.

As more fully explained in note 5(i) to the financial statements the Company’s investments in an associated companyhave been accounted for at cost. International Accounting Standards require that such investments be valuedusing Equity Method. Had the equity method been used for valuation, the value of investments and correspondingeffect on profit as on January 1, 2005 would have been higher by Rs. 61.6 million and value of investments andeffect on profit as on December 31, 2005 would have been higher by Rs. 113.3 million and Rs. 51.65 millionrespectively.

Except for the financial effect of the matters referred to in the preceding paragraph, in our opinion:

(a) proper books of accounts have been kept by the Company as required by the Insurance Ordinance, 2000and the Companies Ordinance, 1984;

(b) the financial statements together with the notes thereon have been drawn up in conformity with the InsuranceOrdinance, 2000 and the Companies Ordinance, 1984, and accurately reflect the books and records ofthe 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 ofthe Company’s affairs as at December 31, 2005 and of the profit, its cash flows and changes in equity forthe year then ended in accordance with approved accounting standards as applicable in Pakistan, andgive the information required to be disclosed by the Insurance Ordinance, 2000 and the CompaniesOrdinance, 1984; and

(d) Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVII of 1980), was deductedby the Company and deposited in the Central Zakat Fund established under Section 7 of that Ordinance.

GARDEZI & CO.Chartered Accountants


Auditors' Report To The Members

21

Note 2005 2004

Share Capital and ReservesAuthorised

50 000 000 Ordinary shares of Rs. 10 each 500 000 500 000

Paid-up share capital 6 300 000 210 000

Retained earnings 305 980 162 712

Reserves 500 000 290 000

805 980 452 712

Reserve for exceptional losses 5 (b) 12 902 12 902

1 118 882 675 614

Underwriting provisionsProvision for outstanding claims (including IBNR) 5 (d) 1 826 554 1 566 221

Provision for unearned premium-net 5 (c) 2 398 372 1 569 973

Commission income unearned 5 (e) 192 392 181 005

Total underwriting provisions 4 417 318 3 317 199

Deferred liabilitiesStaff retirement benefits 7 1 114 13 866

Deferred taxation 5 (g) 5 447 –

6 561 13 866

Creditors and AccrualsPremiums received in advance 8 610 29 516

Amounts due to other insurers/reinsurers 261 178 332 292

Accrued expenses 73 087 60 384

Agent balances 181 925 130 647

Unearned rentals 23 221 46 047

Taxation - provision less payments 58 613 59 262

Other creditors 9 47 670 32 591

654 304 690 739

Other LiabilitiesOther deposits 124 069 74 084

Unclaimed dividend 13 503 12 091

137 572 86 175

Total Liabilities 5 215 755 4 107 979

Total Equity and Liabilities 6 334 637 4 783 593

Contingencies and Commitments 8, 17 & 27


Balance Sheet As At 31 December 2005

22


Rupees ‘000

Note 2005 2004

Cash and Bank DepositsCash and other equivalent 9 788 5 265

Current and other accounts 18 554 206 374 649

Deposits maturing within 12 months 628 912 486 080

1 192 906 865 994

Loans-secured considered goodTo employees 5 839 6 321

Investments 10 2 387 155 1 558 963

Investment properties 11 412 375 427 816

Deferred taxation 5 (g) – 6 000

Other AssetsPremiums due but unpaid - net 12 995 344 670 664

Amounts due from other insurers / reinsurers 84 848 37 844

Salvage recoveries accrued 32 835 25 523

Premium and claim reserves retained by cedants 1 667 1 667

Accrued investment income 13 29 208 15 737

Reinsurance recoveries against outstanding claims 603 215 809 049

Deferred commission expense 5 (e) 312 097 235 911

Prepayments 14 18 446 8 022

Security deposits 21 086 21 450

Other receivables 15 88 372 26 612

Amount due from State Life Insurance Corporation of Pakistan – 2 856

2 187 118 1 855 335

Fixed Assets 16

TangibleLand and buildings 191 238

Furniture, fixtures and office equipment 87 949 51 458

Motor vehicles 61 104 11 468

149 244 63 164

Total Assets 6 334 637 4 783 593

The annexed notes 1 to 31 form an integral part of these accounts.



23




Profit And Loss AccountFor The Year Ended 31 December 2005

Rupees ‘000

Note Fire & Marine, Property Aviation & Aggregate Aggregate

Damage Transport Motor Others Treaty 2005 2004

Revenue Account

Net Premium Revenue 19 437 549 543 648 2 749 744 43 488 87 566 3 861 995 2 536 091

Less: Net Claims 245 579 307 011 2 064 239 12 733 64 785 2 694 347 1 529 556

Less: Expenses 20 215 350 100 832 374 940 26 669 – 717 791 538 372

Less: Net Commission ( 75 870 ) 81 593 126 891 ( 22 009 ) 26 985 137 590 47 869

Underwriting result 52 490 54 212 183 674 26 095 ( 4 204 ) 312 267 420 294

Investment Income 372 966 101 731

Rental Income 64 317 55 062

Profit on sale of Fixed assets 7 820 7 956

Difference in Exchange 1 035 1 548

General and administration expenses 21 ( 109 834 ) ( 112 423 )

Amount due from State Life Insurance Corporation of Pakistan-written off ( 2 856 ) –

333 448 53 874

Profit before tax 645 715 474 168

Provision for Taxation- current 128 000 153 000

- deferred 11 447 ( 1 281 )

139 447 151 719

Profit after tax 506 268 322 449

Profit and Loss Appropriation Account

Balance at commencement of year 162 712 58 263

Profit after tax for the year 506 268 322 449

668 980 380 712

Dividend 2004 @ 30 % (2003: @ 20 %) 5 (u) 63 000 38 000

Issue of bonus shares 5 (u) 90 000 20 000

Transfer to General Reserve 210 000 160 000

363 000 218 000

Balance Unappropriated Profit at end of year 305 980 162 712

Rupees Rupees

Earnings per share - basic and diluted Note 26 16.88 10.75


24


Statement of Changes in EquityFor The Year Ended 31 December 2005



Rupees ‘000

Share General UnappropriatedCapital Reserve Profit Total

Balance as at January 1, 2004 - restated 190 000 130 000 58 263 378 263

Issue of bonus shares 20 000 ( 20 000 ) –

Dividend declared for the year 2003 ( 38 000 ) ( 38 000 )

Profit for the year 322 449 322 449

Transfer to General Reserve 160 000 (160 000 ) – Balance as at December 31, 2004 210 000 290 000 162 712 662 712

Issue of bonus shares 90 000 ( 90 000 ) –

Dividend declared for the year 2004 ( 63 000 ) ( 63 000 )


Transfer to General Reserve 210 000 ( 210 000 ) –

Balance as at December 31, 2005 300 000 500 000 305 980 1 105 980


25


Statement of Cash FlowsFor The Year Ended 31 December 2005



Rupees ‘000

2005 2004Operating Cash Flows

a) Underwriting activitiesPremiums received 6 199 200 4 738 853Reinsurance premiums paid ( 2 025 119 ) ( 2 008 226 )Claims paid ( 3 299 777 ) ( 1 950 064 )Reinsurance and other recoveries received 1 137 803 742 313Commissions paid ( 547 742 ) ( 434 698 )Commissions received 396 632 390 618

Net cash flow from underwriting activities 1 860 997 1 478 796

b) Other operating activitiesIncome tax (paid) /refunds ( 128 649 ) 56 201General management expenses paid ( 681 759 ) ( 522 658 )Other operating payments ( 89 618 ) ( 95 512 )Other operating receipts 1 035 1 548Loans advanced ( 2 046 ) ( 1 395 )Loan repayments received 2 528 2 634Other payments on operating assets ( 68 963 ) ( 16 218 )Other receipts in respect of operating assets 44 158 48 152

Net cash flow from other operating activities ( 923 314 ) ( 527 248 )

Total cash flow from all operating activities 937 683 951 548

Investment activitiesProfit / Return received 49 053 22 810Dividends received 139 212 73 435Rentals received 41 492 71 389Payments for investments ( 1 924 886 ) ( 918 825 )Proceeds from disposal of investments 1 267 924 243 175Fixed capital expenditure ( 131 835 ) ( 34 156 )Proceeds from disposal of fixed assets 9 857 10 829

Total cash flow from Investing activities ( 549 183 ) ( 531 343 )

Financing activitiesDividends paid ( 61 588 ) ( 36 920 )

Net cash inflow from all activities 326 912 383 285

Cash at the beginning of the year 865 994 482 709

Cash at the end of the year 1 192 906 865 994

Reconciliation to Profit and Loss Account

Operating cash flows 937 683 951 548Depreciation expense ( 59 154 ) ( 41 166 )Investment and rental income 437 284 156 793Profit on disposal of fixed assets 7 820 7 956Increase in assets other than cash 312 480 413 764(Increase) in liabilities other than running finance ( 1 129 845 ) ( 1 166 446 )

Profit after taxation 506 268 322 449

Definition of cashCash for the purposes of the Statement of Cash Flows consists of:Cash and other equivalents 9 788 5 265Current and other accounts 554 206 374 649Deposits maturing within 12 months 628 912 486 080

1 192 906 865 994


26


Statement of PremiumsFor The Year Ended 31 December 2005



27

Rupees ‘000

Premiums ReinsurancePrepaid Reinsurance

Class Written Unearned Premium Reserve Earned Reinsurance Premium ceded ReinsuranceOpening Closing ceded Opening Closing expense 2005 2004

Direct and Facultative

Fire and Property Damage 1 929 635 890 487 931 122 1 889 000 1 460 238 696 094 704 881 1 451 451 437 549 447 749

Marine, Aviation and Transport 914 186 390 110 468 206 836 090 296 497 144 019 148 074 292 442 543 648 433 241

Motor 3 440 470 1 201 042 1 771 123 2 870 389 9 520 116 012 4 887 120 645 2 749 744 1 573 075

Miscellaneous 239 588 84 827 119 950 204 465 187 751 67 053 93 827 160 977 43 488 36 350

Total 6 523 879 2 566 466 3 290 401 5 799 944 1 954 006 1 023 178 951 669 2 025 515 3 774 429 2 490 415

Treaty 120 521 26 685 59 640 87 566 – – – – 87 566 45 676

Grand Total 6 644 400 2 593 151 3 350 041 5 887 510 1 954 006 1 023 178 951 669 2 025 515 3 861 995 2 536 091


NetPremiumRevenue


Statement of ClaimsFor The Year Ended 31 December 2005



28

Rupees ‘000

Claims ReinsuranceReinsurance Reinsurance and other Reinsurance Net

and other recoveries in respect of and other claimsClass Paid Outstanding Claims recoveries outstanding claims recoveries expense

Opening Closing expense received Opening Closing revenue 2005 2004


Fire and Property Damage 1 076 549 668 094 575 305 983 760 905 834 604 374 436 721 738 181 245 579 133 720

Marine, Aviation and Transport 253 160 214 014 297 752 336 898 42 550 64 631 51 968 29 887 307 011 182 781

Motor 1 903 505 545 954 798 105 2 155 656 124 719 59 188 25 886 91 417 2 064 239 1 191 660

Miscellaneous 59 252 98 710 104 842 65 384 44 867 80 856 88 640 52 651 12 733 7 809

Total 3 292 466 1 526 772 1 776 004 3 541 698 1 117 970 809 049 603 215 912 136 2 629 562 1 515 970

Treaty 53 684 39 449 50 550 64 785 – – – – 64 785 13 586

Grand Total 3 346 150 1 566 221 1 826 554 3 606 483 1 117 970 809 049 603 215 912 136 2 694 347 1 529 556



Statement of ExpensesFor The Year Ended 31 December 2005



29

Rupees ‘000


Fire and Property Damage 231 000 90 278 113 089 208 189 215 350 423 539 284 059 139 480 95 183

Marine, Aviation and Transport 120 642 51 304 60 926 111 020 100 832 211 852 29 427 182 425 150 745

Motor 182 610 80 601 104 827 158 384 374 940 533 324 31 493 501 831 318 819

Miscellaneous 22 155 7 521 11 419 18 257 26 669 44 926 40 266 4 660 365

Total 556 407 229 704 290 261 495 850 717 791 1 213 641 385 245 828 396 565 112

Treaty 42 614 6 207 21 836 26 985 – 26 985 – 26 985 21 129

Grand Total 599 021 235 911 312 097 522 835 717 791 1 240 626 385 245 855 381 586 241

Note: Commission from reinsurers is arrived at taking impact of opening and closing unearned commission.


NetCommission Other Commission underwriting

Class Deferred Net Management Underwriting from expense

Paid or payable Opening Closing expense expenses expense reinsurers 2005 2004


Rupees ‘000

2005 2004Income from Trading Investments

Gain on Sale of Trading Investments 112 959 –Dividend Income 7 093 –

120 052 –Income from Non-Trading Investments

Held to maturity

Return on Government Securities 52 678 19 953

Return on Other Fixed Income Securities and Deposits 33 257 12 353

Amortisation of premium relative to par ( 21 410 ) ( 3 697 )

64 525 28 609Available for sale

Dividend Income 131 205 72 590

Gain on Sale of Non-Trading Investments 57 493 1 375

253 223 102 574

Gain on Revaluation of Trading Investments 779 –Less: Investment Related Expenses 1 088 843

Net Investment Income 372 966 101 731


Statement of Investment IncomeFor The Year Ended 31 December 2005



30


Notes To The AccountsFor The Year Ended 31 December 2005

31

1. Status and Nature of Business

The Company was incorporated as a Public Limited Company on September 2, 1932. The shares of the companyare quoted on Karachi and Lahore Stock Exchanges and is engaged in general insurance business comprisingof fire & property, marine, motor, etc. The Registered office of the company is situated in Peshawar and operatesthrough 55 (including KEPZ Branch) branches in Pakistan and one branch in Jeddah, Saudi Arabia.

The Principal place of business is located at EFU House, M.A. Jinnah Road, Karachi.

2. Basis of Presentation

These financial statements have been prepared in accordance with the format prescribed under InsuranceRules 2002.

3. Statement of Compliance

These financial statements have been prepared in accordance with approved accounting standards asapplicable in Pakistan and the requirements of the Companies Ordinance, 1984, the Insurance Ordinance,2000 and SEC (Insurance) Rules 2002. Approved accounting standards comprise of such InternationalAccounting Standards as notified under the provisions of the Companies Ordinance, 1984. Where therequirements of the Companies Ordinance, 1984, the Insurance Ordinance, 2000 and the SEC (Insurance)Rules 2002 or directives issued by the Securities and Exchange Commission of Pakistan differ with requirementsof these standards, the requirements of the Companies Ordinance, 1984, the Insurance Ordinance, 2000, theSEC (Insurance) Rules 2002 and the requirements of the said directives take precedence.

3.1 Standards, interpretations and amendments to published approved accounting standards that are not yeteffective

Following amendments to existing standards have been published that are mandatory for the Company’saccounting periods beginning on or after January 1, 2006 or later periods:

i. IAS 19 (Amendments) – Employee Benefits effective from January 1, 2006

ii. IAS 1 Presentation of Financial Statements – Capital Disclosures effective from January 1, 2007

Adoption of the above amendments may only impact the extent of disclosures presented in the financialstatements.

4. Basis of Measurement

These financial statements have been prepared on the basis of historical cost convention, except held fortrading investments which are stated at fair value.

The preparation of financial statements in conformity with approved accounting standards requires managementto make judgments, estimates and assumptions that effect the application of policies and reported amountsof assets and liabilities, income and expenses. The estimates and associated assumptions are based onhistorical experience and various other factors that are believed to be reasonable under the circumstances,the result of which form the basis of making the judgements about carrying values of assets and liabilities thatare not readily apparent form the other sources.

Actual results may differ from these estimates. The estimates and underlying assumption are reviewed on anongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revisedif the revision affects only that period, or in the revision and future periods if the revision affects both currentand future periods.

Judgements made by management in the application of approved accounting standards that have significanteffect on the financial statements and estimates with a risk of material adjustment in the next year are:

(a) Provision for un-earned premiums (see note 5 (c))

(b) Outstanding claims (see note 5 (d))

(c) Employees’ retirement benefits (see notes 5 (f) & 7)

(d) Taxation (see notes 5 (g) & 8)


32

5. Significant Accounting Policies

(a) Underwriting result

Underwriting result is calculated by deducting from Gross Premium of each class of business, reinsurancecost incurred, claims, commission, allocable expenses of management and provision for un-earnedpremium.

(b) Reserve for exceptional losses

The Reserve for Exceptional Losses was created prior to 1979 and was charged to income in accordancewith the provisions of the repealed Income Tax Act, 1922 and has been so retained to date.

(c) Provision for un-earned premiums

In accordance with the requirements of the Insurance Rules 2002, the liability for unearned premiumshas been calculated by applying 1/24th method.

Furthermore, the Insurance Rules 2002 require the company to establish premium deficiency reserveto meet expected future liability, after reinsurance, from claims and other expenses, including reinsuranceexpense, commission and other underwriting expenses, expected to be incurred after balance sheetdate in respect of policies in that class of business in force at balance sheet date. During the year,management has reviewed the results of each class of business and considers that no additional reserveis required to be created other than already accounted for unearned premiums.

(d) Outstanding claims

The liability in respect of outstanding claims is based on certified returns of the branches and representsthe estimates of the claims intimated or assessed before the end of the accounting year less anticipatedrecoveries and estimates of claims incurred but not reported (IBNR) by the year-end. During the yearmanagement has carried out an exercise whereby all claims incurred before 31 December 2004 butreported upto December 31, 2005 were aggregated and the ratio of such claims to outstanding claimshas been applied to outstanding claims at December 31, 2005 to arrive at liability for IBNR.

(e) Revenue recognition

Premium

Premiums received / receivable under a policy are recognized at the time of issuance of policy. Similarly,reinsurance premium is recorded at the time the reinsurance is ceded.

Return on investments

Return on investments and profit and loss sharing accounts are recognised on a time proportion basis.Dividend income is recognized when right to receive such dividend is established. Profit or loss on saleof investments is recognized at the time of sale.

Claims

Claims are considered to be incurred at the time when claims are lodged with the company. However,claims incurred but not reported at year end are determined as mentioned in Note 5(d).

Acquisition cost

Commission due on Direct, Facultative and treaty business and on Re-insurance cessions are recognisedin accordance with the policy of recognizing premium revenue.

(f) Employees’ retirement benefits

The company’s retirement benefit plans comprise of a provident fund for all the eligible employees, afunded pension scheme for eligible officers and a funded gratuity scheme for the eligible employeeswho have completed the minimum qualifying period of service. The provident fund is a defined contributionplan. The other two plans are defined benefit plans. The pension plan is a career average salary planand the gratuity plan is a final salary plan. The actuarial valuation of both the schemes is carried outon a yearly basis using the Projected Unit Credit Method and contributions to the schemes are madeaccordingly. The latest actuarial valuation, at December 31, 2005 uses a discount rate of 10.8%, salaryand pension increases to average 8.7% and 5.5% respectively per annum in the long term and returnon assets will equal the discount rate.

Actuarial gains and losses are recognized in profit and loss account in the year they arise.


33

(g) Taxation

Current taxation

Provision for current taxation is based on taxable income at current rates of taxation after taking intoaccount tax credits and rebates available, if any.

Deferred taxation

Deferred tax is recognised using the balance sheet liability method for all temporary differences betweenthe amounts attributed to assets and liabilities for financial reporting purposes and the amounts usedfor taxation purposes. The amount of deferred tax recognized is based on the expected manner ofrealisation or settlement of the carrying amount of assets and liabilities using tax rates enacted at thebalance sheet date. A deferred tax asset is recognised only to the extent that it is probable that futuretaxable profits will be available against which the asset can be utilised. Deferred tax assets are reducedto the extent that it is no longer probable that the related tax benefit will be realised.

(h) Creditors, Accruals and Provisions

Liabilities for creditors and other amount payable are carried at cost which is the fair value of theconsideration to be paid in future for goods and / or services. Provisions are recognised when theCompany has a legal or constructive obligation as a result of a past event, and it is probable that outflowof resources embodying economic benefits will be required to settle the obligation and a reliable estimatecan be made of the amount of obligation.

(i) InvestmentsAll investments are initially recognised at cost being the fair value of the consideration given and includetransaction costs. All purchases and sales of investments that require delivery within the time frameestablished by regulations or market convention are accounted for at the trade date. Trade date is thedate when the company commits to purchase or sell the investments.

The above investments are classified into the following categories:

– Held-for-trading– Available-for-sale– Held-to-maturity

Investments which are acquired with the intention to trade by taking advantage of short term market/interestrate movements are considered as held for trading. Subsequent to initial recognition, these are statedat fair values with any resulting gains or losses recognized directly in the profit and loss account.Investments which are intended to be held for an undefined period of time but may be sold in responseto the need for liquidity or changes in interest rates are considered as available for sale. Investmentswith fixed or determinable payments and fixed maturity, where management has both the positive intentand the ability to hold to maturity are classified as held to maturity. Subsequent to initial recognitionthese are valued at amortised cost. Amortised cost is calculated by taking into account any discountor premium on acquisitions by using effective interest rate method.

The company continues to follow its policy of valuing investments classified as available for sale at lowerof cost or market value determined on an aggregate portfolio basis at the balance sheet date. TheSecurities and Exchange Commission of Pakistan vide its letter SC/MF/D/179/2002 dated 16 October2002 has granted exemption from adoption of IAS -39 to insurance companies due to tax implications.Had the company adopted IAS-39 and valued investments available for sale (including investmentsin associates) at fair value, the investments as at December 31, 2005 would have been higher byRs. 2 560 million (2004: Rs. 1 719 million) with consequent increase in equity by the same amount.

Available for sale Investments include investment in an Associated company, EFU Life Assurance Limitedcarried at a value of Rs. 60 million (2004: Rs. 60 million) at cost. International Accounting Standard IAS– 28 (revised) Investment in Associate effective for the financial periods beginning on or after 1 January2005 requires that an investment in associate shall be accounted for under the equity method. TheCompany considers that accounting for these investment at a value above cost would result incomplications similar to those related to the adoption of International Accounting Standard IAS–39


34

“Financial Instrument – Recognition and Measurement”. Had this investment been valued using equitymethod, their carrying value would have been higher by approximately Rs. 113 million (2004: Rs. 62million) with consequent increase in the equity by the same amount.

(j) Investment properties

The Investment Properties are accounted for under the cost model where land is not depreciated andbuilding is depreciated @ 5% annually using the straight line method.

(k) Fixed assets

Fixed assets are stated at cost less accumulated depreciation calculated on the straight line basis usingthe following rates:

Office Premises 5%Furniture, Fixtures and Office Equipments 1 0 %Vehicles 2 0 %Computers 3 0 %

Normal repairs and maintenance are charged to income currently.

Gains or losses on disposal of fixed assets are included in income currently.

Rental for Vehicles, Computers and Equipments under operating leases are charged to income currently.

(l) Expenses of management

Expenses of Management have been allocated to various revenue accounts on equitable basis.

(m) Compensated absences

The liability towards compensated absences accumulated by the employees is provided when theleaves are accumulated.

(n) Loans, advances, deposits, prepayments and other receivables.

Known bad debts are written off while provisions are made for debts considered doubtful.

(o) Foreign currencies

Revenue transactions in foreign currencies are converted into rupees at the rates ruling on the date ofthe transactions as quoted by State Bank of Pakistan. Income and expense amounts relating to foreignbranches have been translated to Pakistan Rupees at the average of the rates of exchange applicableat the end of each quarter. Assets and Liabilities in foreign currencies are translated into rupees at therates of exchange prevailing on the Balance Sheet date. Exchange gains or losses are taken into incomecurrently.

(p) Cash and Cash Equivalents

For the purpose of Cash Flow Statement, Cash and Cash Equivalents include Cash at Bank in Currentand Saving Accounts, Cash and Stamps in hand and Bank Deposits.

(q) Impairment

The carrying amounts of the Company’s assets are reviewed on an ongoing basis to determine whetherthere is any indication of impairment. If such an indication exists, the recoverable amount of the assetsis determined and impairment losses are recognised in the Profit & Loss Account.

(r) Off-setting

Assets and Liabilities are off-set and the net amount is reported in the financial statements only whenthere is legally enforceable right to set-off the recognised amount and the Company intends either tosettle on a net basis or realise the assets and settle the liabilities simultaneously.

(s) Financial Assets and liabilities

Assets and liabilities are initially measures at cost, which is the fair value of the consideration given andreceived respectively. These financial assets and liabilities are subsequently measured at fair / marketvalue, amortised cost or cost, as the case may be.

Gains or losses on derecognition are taken to profit and loss account or revenue account, as the casemay be.


35

(t) Segment reporting

The company has four primary business segments for reporting purposes namely, fire & property, marine,motor, and miscellaneous.

The fire insurance segment provides insurance covers against damages caused by fire, riot and strike,explosion, earthquake, atmospheric damage, flood, electric fluctuation and engineering losses.

Marine insurance segment provides coverage against cargo risk, war risk and damages occurring ininland transit.

Motor insurance provides comprehensive vehicle coverage and indemnity against third party loss.

Miscellaneous insurance provides cover against burglary, loss of cash in safe and cash in transit,personal accident, money and other coverages.

Assets, liabilities and capital expenditures that are directly attributable to segments have been assignedto them while the carrying amount of certain assets used jointly by two or more segments have beenallocated to segments on a reasonable basis. Those assets and liabilities which can not be allocatedto a particular segment on a reasonable basis are reported as unallocated corporate assets and liabilities.

(u) Dividend and bonus shares

Dividend to shareholders is recognised as liability in the period in which it is declared. Similarly, reservefor issue of bonus shares is recognised in the year in which such issue is declared.

(v) Zakat deductible compulsorily under the Zakat and Ushr Ordinance 1980 is accounted for in the yearof deduction.

6. Share CapitalIssued, subscribed and paid-up Rupees ‘000

Number of Shares

2005 2004 2005 2004

Ordinary shares of Rs. 10 each,250 000 250 000 fully paid in cash. 2 500 2 500

Ordinary shares of Rs. 10 each,29 750 000 20 750 000 issued as fully paid bonus shares. 297 500 207 500

30 000 000 21 000 000 300 000 210 000

7. Staff Retirement Benefits Rupees ‘000

Gratuity Pension

Charged for defined benefit plansCurrent service cost 6 406 1 445Interest cost 10 808 7 052Expected return on plan assets ( 10 137 ) ( 8 082 )Past service cost – 19 676Recognition of gains ( 5 963 ) ( 8 718 )Employee contributions – ( 1 248 )

Expense 1 114 10 125

Movement in amount payable to the defined benefit planProvision at beginning of year ( 13 866 ) 10 124Expense ( 1 114 ) ( 10 125 )Company contributions 13 866 312

Balance at end of year ( 1 114 ) 311

Reconciliation of amount payable to defined benefit plansFair value of plan assets 127 227 104 390Obligation ( 128 341 ) ( 104 079 )

Asset/ (Provision) ( 1 114 ) 311

Actual return on plan assets 16 158 19 520


36

8. Taxation

8.1. The income tax assessments of the Company have been finalized upto and including Tax Year 2005 (Financialyear ending 31 December 2004). The appeals relating to assessment years 1962-63 to 1975-76 have beendecided in Company’s favour. However, the department has filed references with the Supreme Court of Pakistanand with the High Court of Sindh for assessment years 1962-63 to 1971-72. Consequently there is a contingenttax liability of Rs. 5.33 million which may arise if the reference petitions are decided against the Company.

Appeal for the Accounting year 2003 is pending before the Commissioner of Income Tax (Appeals) and therecould arise contingent tax liability of Rs. 2 million if the matter is decided against the company.

The Tax Department has filed appeals with Income Tax Appellate Tribunal in respect of Assessment years1999-2000 to 2002-2003. In case appeals are decided against the company additional tax liability of Rs. 135million may arise.

No provision has been made in these financial statements for the above contingencies, as the management,based on tax advisor’s opinion, considers that it has good arguable cases and there is remote possibility ofreversal of the appellate decision.

8.2 Reconciliation of tax charge 2005 2004% %

Applicable tax rate 35.00 35.00Less: Tax effect of amount that are deductible for tax purpose 0.14 ( 2.22 )

Tax effect of amounts tax at reduced rates 6.43 4.59Tax effect of income exempt from tax 8.41 –Tax effect of rebates and tax credit 0.19 0.36

19.83 32.27Add: Deferred tax effect 1.77 ( 0.27 )

Average effective tax rate charged on income 21.60 32.00

9. Other Creditors Rupees ‘000

2005 2004

Federal Insurance Fee 5 194 5 004Federal Excise Duty 30 302 23 414Sundry Creditors 5 746 1 460Others 6 428 2 713

47 670 32 591

10. Investments Rupees ‘000

2005 2004

Held for Trading – at Market ValueShares of Listed Companies 32 252 –

Available for SalePreference Shares of Companies - Listed 20 000 20 000Equity Investment in Associated undertaking - Listed 60 384 60 384Shares of other Listed Companies 1 344 634 782 533

1 425 018 862 917

(a) Market value of quoted ordinary shares (including investment inassociated undertaking) and preference shares carried at costamounted to Rs. 3 985 million (2004: Rs. 2 582 million).

(b) Investments in EFU Life Assurance Limited represent 39% of theissued Capital of that company.


37

Held to Maturity Investments Rupees ‘000

Maturity Profit ProfitName of Investment Year Rate % Payment 2005 2004

Government Securities

6 Months Treasury Bills 2006 8.14 On Maturity 48 050 – 1 Year Treasury Bills 2006 8.60 – 8.79 On Maturity 122 881 96 87010 Years Federal Investment Bonds 2005 15.00 Half Yearly – 350 3 Years Pakistan Investment Bonds 2006 7.00 Half Yearly 50 460 52 679 5 Years Pakistan Investment Bonds 2007 10.00 – 11.00 Half Yearly 288 166 302 92510 Years Pakistan Investment Bonds 2011 – 2013 9.00 – 14.00 Half Yearly 148 536 152 066

658 093 604 890

Market value of Government Securitiescarried at amortised cost amounted toRs. 632 million (2004: Rs. 597 million).

Term Finance Certificates (TFCs):

Shakarganj Mills Ltd 2005 15.25 Half Yearly – 835Union Leasing Ltd 2005 14.50 Half Yearly – 5 187Atlas Investment Bank Ltd 2005 15.00 Half Yearly – 4 476Spell Telecommunications (Pvt) Ltd 2005 15.00 On Maturity – 10 000Pakistan Mobile Communications Ltd 2006 11.60 Half Yearly 75 000 –Dawood Leasing Company Ltd 2006 13.50 Half Yearly 15 343 –First Dawood Investment Bank Ltd 2007 12.25 Half Yearly 9 728 10 495Jahangir Siddiqui & Co. Ltd 2008 7.50 Half Yearly 9 990 9 994Union Bank Ltd 2008 11.00 Half Yearly 11 150 –Pakistan Mobile Communications Ltd 2008 10.39 Half Yearly 38 265 38 448Jahangir Siddiqui & Co. Ltd - 3rd Issue 2010 11.50 Half Yearly 7 650 –Azgard Nine Ltd 2012 11.50 Half Yearly 20 000 –Askari Commercial Bank Ltd 2013 10.31 Half Yearly 50 464 –United Bank Ltd 2013 9.50 Half Yearly 24 202 11 721Askari Commercial Bank Ltd- 2nd Issue 2013 10.78 Half Yearly 10 000 –

271 792 91 156

2 387 155 1 558 963

Market value of Term Finance Certificatescarried at amortised cost amounted toRs. 268 million (2004: Rs. 90 million).

11. Investment Properties Rupees ‘000

Written

Cost Depreciation Down Value

As at 01 As at 31 Rate As at 01 As at 31 As at 31January December % January For the December December

2005 Additions 2005 2005 Year 2005 2005

Leasehold Land 48 006 – 48 006 – – – 48 006

Buildings 468 980 8 429 477 409 5 89 170 23 870 113 040 364 369

2005 516 986 8 429 525 415 89 170 23 870 113 040 412 375

2004 511 582 5 404 516 986 65 721 23 449 89 170 427 816

11.1 The market value of land and buildings is estimated at Rs. 1 470 million (2004: Rs. 1 381 million). The valuationshave been carried out by independent valuers.


38

Rupees ‘000

2005 2004

12. Premium due but unpaid - net

Considered good 995 344 670 664Considered doubtful 1 093 1 093

996 437 671 757Less: Provision for doubtful balances 1 093 1 093

995 344 670 664

13. Accrued Investment Income

Return accrued on Fixed Income securities 22 682 9 805Dividend Income 3 172 4 085Others 3 354 1 847

29 208 15 737

14. Prepayments

Prepaid Rent 8 686 6 816Group health insurance premium 511 –Others 9 249 1 206

18 446 8 022

15. Other Receivables

Advances to employees 81 196EFU pension fund 311 10 124For shares disposal 72 827 35Others 15 153 16 257

88 372 26 612

16. Fixed Assets Rupees ‘000

WrittenCost Depreciation Down Value

As at 01 Sales/ As at 31 Rate As at 01 Sales/ As at 31 As at 31January Adjust- December % January For the Adjust- December December

2005 Additions ment 2005 2005 Year ment 2005 2005

Furniture andFixtures 143 696 36 732 1 588 178 840 10 99 898 11 854 1 572 110 180 68 660

Equipments 21 964 5 254 287 26 931 10 14 864 1 742 81 16 525 10 406

Computers 3 848 12 411 21 16 238 30 3 288 4 088 21 7 355 8 883

Office Premises 928 – – 928 5 690 47 – 737 191

Vehicles 63 218 69 006 11 924 120 300 20 51 750 17 555 10 109 59 196 61 104

2005 233 654 123 403 13 820 343 237 170 490 35 286 11 783 193 993 149 244

2004 219 008 28 752 14 106 233 654 164 010 17 712 11 232 170 490 63 164


39

16.1 Sale of Fixed Assets Rupees ‘000

Mode of Original Accumulated Book SaleDisposal Cost Depreciation Value Proceeds Sold to

VehicleNegotiation 51 41 10 175 Shamim Akhtar, Lahore

68 55 13 100 Ahmad Nawaz Jagirani, Karachi71 57 14 300 Parvin Akhtar, Karachi71 57 14 250 Sohail Rashid, Karachi48 38 10 175 Abdul Qayum Khan, Karachi48 38 10 125 Abdul Hameed Qureshi, Karachi48 38 10 110 Hasan Reyaz, Karachi36 29 7 125 Ashraf Jehan, Karachi28 22 6 75 Muhammad Fahimuddin, Karachi49 39 10 180 Zahida Ejaz Malik, Islamabad28 22 6 100 Muhammad Zahid Alvi, Karachi52 42 10 60 Shahina Rizwan, Karachi28 23 5 55 Noor Islam, Karachi28 23 5 110 Shagufta Nasrin, Karachi59 36 23 300 Syed Farhat Abbas Jaffery, Karachi71 43 28 200 Haroon Dada, Karachi35 21 14 150 Amreen, Karachi60 24 36 50 Muhammad Sohail, Karachi68 27 41 50 Sohail Mustafa, Karachi

109 44 65 60 Nasim Afaq Ahmed, Karachi43 17 26 100 Jawahar Ali, Karachi51 10 41 150 Talib Abbas, Karachi51 10 41 150 Syed Aamir Aftab, Karachi67 13 54 125 Mumtaz Lakhani, Karachi86 17 69 200 M. Naeem M. Hanif, Karachi68 14 54 200 Syed Asim Iqbal, Karachi74 15 59 250 Muhammad Aiman Khan, Karachi81 16 65 100 Shahin Altaf, Karachi

100 40 60 100 Tahir Masood, Lahore71 27 44 376 Javed Akhtar Sheikh, Karachi

249 149 100 125 Najam Riaz, Peshawar77 – 77 300 Faisal Fasih, Karachi

170 – 170 200 M. Bashir Hussain, Karachi170 – 170 200 Zakaria Suleman, Karachi227 – 227 250 Aslam A. Ghole, Karachi117 – 117 400 Shaukat Saeed Ahmad, Lahore113 8 105 134 Insurance Claim

Written down valueBelow Rs. 5 000 9 052 9 052 – 3 358 Various

Furniture, Fixture& Office Equipments Negotiation 106 45 61 75 Gemco, Karachi

266 250 16 19 Abid, Karachi179 36 143 179 Insurance Claim

Written down valueBelow Rs. 5 000 1 346 1 345 1 116

13 820 11 783 2 037 9 857

17. Commitments

17.1 Commitments under operating leases for Equipments, Vehicles and Computers amounts to Rs. 106 millionand the period in which these payments will become due are:

Rupees ‘000

2005 2004

Year to December 31, 2005 – 49 371Year to December 31, 2006 48 673 41 629Year to December 31, 2007 37 768 30 532Year to December 31, 2008 18 437 11 638Year to December 31, 2009 1 349 –

106 227 133 170


40

18. Cash and Bank Balances

Current and other account balances include cheques in hand amounting to Rs. 19.79 million(2004: Rs. 10.77 million)

Rupees ‘000

2005 200419. Net premium revenue

Premium revenue (net of reinsurers) 3 736 544 2 488 121Administrative surcharge 125 451 47 970

3 861 995 2 536 091

20. Management Expenses

Salaries, wages and benefits 448 707 332 545Rent, rates and taxes 20 644 16 955Telephone 20 729 19 151Postage & telegrams 6 875 4 923Gas and electricity 14 764 14 235Printing and stationery 19 544 17 703Traveling and entertainment 40 990 23 287Depreciation 35 285 17 717Repairs furniture, equipment and computer 7 393 8 579Legal and professional charges 498 775Publicity 25 318 13 071Other expenses 77 044 69 431

717 791 538 372

21. General and Administration Expenses

Bonus 53 732 41 779Gratuity 1 114 13 866Depreciation 23 870 23 449Property management expenses 26 321 27 186Donation 4 518 5 446Zakat 279 697

109 834 112 423

In addition, the Chief Executive, Directors and certain Executives are provided with free use of Company carsand certain items of household furniture and fixtures in accordance with their entitlements. The Chief Executiveis not given any rent allowance but is provided with maintained furnished accommodation.

22. Remuneration of Chief Executive, Directors and Executives

The aggregate amount charged in the accounts for remuneration, including all benefits, to the Chief Executive,Directors and Executives of the Company are as follows:

Rupees ‘0002005 2004

Chief ChiefExecutive Directors Executives Total Executive Directors Executives Total

Managerial Remuneration (Including Bonus) 9 495 5 588 54 918 70 001 7 406 4 703 29 040 41 149

Utilities 153 328 2 493 2 974 170 344 1 361 1 875

Medical expenses 270 212 1 326 1 808 259 446 1 382 2 087

Leave passage – 276 1 696 1 972 328 – 1 458 1 786

Total 9 918 6 404 60 433 76 755 8 163 5 493 33 241 46 897

Number of persons 1 3 35 39 1 3 22 26


41

24. Financial Instruments and related disclosures

(a) Liquidity Risk

Liquidity risk is the risk that the Company will be unable to meets it funding requirements. To guard against thisrisk, assets are managed with liquidity in mind maintaining a healthy balance of cash and cash equivalents andreadily marketable securities. The maturity profile is monitored to ensure that adequate liquidity is maintained.

(b) Mark-up Rate Risk Exposures

The company’s exposure to markup rate risk, based on the earlier of contractual repricing or maturity date as atDecember 31, 2005 is as follows:

23. Segment Reporting Rupees ‘000

Effective Maturity Maturity Sub Maturity Maturity Sub

yield Upto after Total upto after Total Total

% one year one year one year one year

Financial AssetsDeposit accounts with banks 4.25 628 912 628 912 – 628 912

Current accounts with banks 179 782 179 782 374 424 374 424 554 206

Cash and stamps in hand – 9 788 9 788 9 788

Investments 17.75 339 229 590 656 929 885 1 457 270 1 457 270 2 387 155

Loans to employees 1 685 4 154 5 839 – 5 839

Premiums due but unpaid-net – 995 344 995 344 995 344

Amount due from other insurers/reinsurers – 84 848 84 848 84 848

Salvage recoveries accrued – 32 835 32 835 32 835

Premium and claim reserves retained by cedants – 1 667 1 667 1 667

Accrued investment income – 29 208 29 208 29 208

Reinsurance recoveries against outstanding claims – 603 215

Security deposits – 21 086 21 086 21 086

Other receivables – 88 372 88 372 88 372

–

Financial LiabilitiesProvision for outstanding claims (including IBNR) –

Amount due to other insurers/reinsurers – 261 178 261 178 261 178

Accrued expenses – 73 087 73 087 73 087

Agent balances – 181 925 181 925 181 925

Other creditors – 47 670 47 670 47 670

Other deposits – 124 069 124 069 124 069

Un-claimed dividends – 13 503 13 503 13 503

– – –

Interest/Mark-up bearing Non-Interest/Mark-up bearing

Rupees ‘000

2.25

4.00

603 215 603 215

5 442 4753 698 0573 698 0571 744 418594 8101 149 608

2 527 986 2 527 986 2 527 986–

1 826 554 1 826 554 1 826 554

2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004

Segmented Assets 994 982 1 005 775 257 350 246 846 172 051 171 189 583 788 350 642 21 836 6 207 2 030 007 1 780 659

Unallocated Assets – – – – – – – – – – 3 002 934

Total Assets 994 982 1 005 775 257 350 246 846 172 051 171 189 583 788 350 642 21 836 6 207 4 783 593

Segmented Liabilities 1 213 891 1 268 210 719 979 582 225 2 595 625 1 696 192 229 346 198 458 110 190 64 569 4 869 031 3 809 654

Unallocated Liabilities 298 325

Total Liabilities 1 213 891 1 268 210 719 979 582 225 2 595 625 1 696 192 229 346 198 458 110 190 64 569 4 107 979

Capital Expenditure 123 403 28 752

Location

2005 2004 2005 2004 2005 2004

Pakistan 2 531 108 4 652 243 28 752EPZ 5 076 3 810 19 525 45 708 – –Saudi Arabia – 1 173 83 189 85 642 – –

Total 2 536 091 4 783 593 28 752

Fire Insurance Business Marine, Aviation & Transport Motor

Capital Expenditureof Segmented

AssetsGeographical Segmentsless reinsurance by

External Premium

Others TotalTreaty Business

Carrying amount

– – – – – – – – – –

4 304 630

346 724

6 334 637

5 215 755

3 856 919 6 231 923

3 861 995 6 334 637

123 403

123 403


42

(c). Market Risk

Market risk is the risk that the value of financial instruments will fluctuate as a result of change in market prices,whether those changes are caused by factors specific to the individual security, or factors affecting all securitiestraded in the market.

The Company is exposed to market risk with respect to its investments.

The Company limits markets risk by maintaining a diversified portfolio and by continues monitoring of developmentsin government securities, equity and term finance certificate (TFCs) markets. In addition, the company activelymonitors the key factors that affect the underlying value of these securities.

(d). Credit Risk

Credit risk is the risk, which arises with the possibility that one party to a financial instrument will fail to dischargeits obligation and cause the other party to incur a financial loss.

Concentration of credit risk arises when a number of counterparties have a similar type of business activities.As a result, any change in economic, political or other conditions would effect their ability to meet contractualobligations in similar manner.

The Company is exposed to credit risk on premiums receivable from group clients and claim recoveries frominsurer and investment in term finance certificates. The management monitors exposure to credit risk throughregular review of credit exposure, assessing credit worthiness of counterparties and prudent estimates of provisionfor doubtful debts.

Due to the nature of financial assets, the company believes it is not exposed to any major concentration of creditrisk.

(e). Reinsurance Risk

Reinsurance ceded do not relieve the Company from its obligations to policy holders and as a result the companyremains liable for the portion of outstanding claims reinsured to the extent that reinsurer fails to meet the obligationsunder the reinsurance agreements.

In Common with other insurance companies, in order to minimize the financial exposure arising from large claims,the Company, in the normal course of business, enters into agreement with other reinsurers.

In order to manage the risk the Company obtains reinsurance cover only from companies with soundfinancial health.

(f). Fair Value

The fair value of all major financial assets are estimated to be not significantly different from their carryingvalues except for quoted investments (held for trading), detail of which are given in note No. 10 to thesefinancial statements.

25. Auditors’ Remuneration Rupees ‘000

2005 2004

Audit fee (Gardezi & Co.) 200 200Branches and other Certification (Gardezi & Co.) 100 100Audit of Accounts of Provident Fund, Gratuity and Pension Funds (Hyder Bhimji & Co.) 15 15Out of Pocket Expenses (Taseer Hadi Khalid & Co.) – 38

315 353

26. Basic and diluted earnings per shares Rupees ‘000

2005 2004


Weighted average number of ordinary shares (Numbers ‘000) 30 000 30 000

Earnings per share Rupees 16.88 10.75


43

Rupees in ‘000

2005 2004

Premium written 137 635 69 569Rent received 693 693Premium paid 3 547 3 268Commission paid 41 966 11 638Travelling expenses paid 70 16Claims Paid 58 811 17 832Dividend paid 22 228 13 407Dividend received 9 657 5 852Bonus Shares issued 6 139 1 364Bonus Share received 17 557 5 852Contribution to Provident, Gratuity and Pension Funds 22 813 18 987Others – 79Balance receivable 7 343 10 020Balance payable 12 109 –

29. Number of employees as at December 31, 2005 was 1,195 (2004: 1,096)

30. GeneralFigures have been rounded off to the nearest thousands.

31. These accounts were authorized for issue by the Board of Directors in their meeting held on March 18, 2006.

27. Proposed DividendsThe Board of Directors at their meeting held on March 18, 2006 have proposed payment of Dividend ofRs. 3 per share amounting to Rs. 90 million for approval of the members at the Annual General Meeting tobe held on April 29, 2006.

These financial statements do not reflect the proposed dividend as payable, which will be accounted for inthe statement of changes in equity as an appropriation from the unappropriated profit in the year endingDecember 31, 2006.

28. Transactions with Associated UndertakingsRelated parties comprise of associated companies, entities under common control, entities with commondirectors, major shareholders, directors, key management personnel and employee retirement benefit funds.The transaction with these related parties are carried out at arm’s length prices determined under “comparableuncontrolled price method”. The transactions and balances with related parties, other than remuneration underthe terms of employment or those disclosed elsewhere, are as follows:




Number of ShareholdingsShareholders From To Shares held

260 1 100 11 431216 10 1 500 63 795103 50 1 1 000 79 487252 1 001 5 000 629 210

76 5 001 10 000 558 94536 10 001 15 000 442 15816 15 001 20 000 288 11812 20 001 25 000 273 100

9 25 001 30 000 247 3715 30 001 35 000 159 7004 35 001 40 000 153 3464 40 001 45 000 169 3052 45 001 50 000 93 7522 50 001 55 000 100 815

10 55 001 60 000 597 0383 60 001 65 000 188 5171 65 001 70 000 68 4422 70 001 75 000 143 1482 75 001 80 000 154 7993 85 001 90 000 263 0021 100 001 105 000 103 8212 105 001 110 000 213 1751 110 001 115 000 114 0973 115 001 120 000 360 0001 130 001 135 000 131 2741 135 001 140 000 139 0401 145 001 150 000 145 8021 150 001 155 000 151 4071 160 001 165 000 163 8801 165 001 170 000 165 9501 170 001 175 000 173 9172 190 001 195 000 381 5871 200 001 205 000 201 5971 205 001 210 000 208 8591 210 001 215 000 212 0021 305 001 310 000 309 6311 315 001 320 000 315 0541 375 001 380 000 377 5241 525 001 530 000 527 6941 595 001 600 000 598 0431 610 001 615 000 614 9501 710 001 715 000 710 5881 940 001 945 000 945 0001 1 095 001 1 100 000 1 097 6551 1 625 001 1 630 000 1 628 0611 1 880 001 1 885 000 1 881 1401 2 025 001 2 030 000 2 029 2461 2 420 001 2 425 000 2 420 9491 2 485 001 2 490 000 2 486 9911 2 860 001 2 865 000 2 862 7471 3 640 001 3 645 000 3 642 840

1 053 Total 30 000 000

Categories of Shareholders Shareholders Shares Held

Associated Companies, Undertakings and Related PartiesEFU Life Assurance Limited 1 1 097 655Trustees EFU Staff Provident Fund (Pakistan) 1 30 000

NIT & ICP - -CEO, Directors, their spouses and minor children

Rafique R. Bhimjee 1 2 486 991Saifuddin N. Zoomkawala 1 87 561Sultan Ahmad 1 103 821Abdul Rehman Haji Habib 1 3 542Jahangir Siddiqui 1 2 630Wolfram W. Karnowski 1 50 673Muneer R. Bhimjee 1 2 420 949Hasanali Abdullah 1 151 407Taher G. Sachak 1 1 247Mrs. Naila Bhimjee W/o. Rafique R. Bhimjee 1 201 597Mrs. Lulua Saifuddin W/o. Saifuddin N. Zoomkawala 1 190 232Mrs. Onaiza Ahmad W/o. Sultan Ahmad 1 9 804

Shareholders holding 10% or more voting interestEbrahim Alibhai Foundation 1 3 642 840

Information as required under the Code of Corporate Governance

Pattern Of Shareholding As At 31 December 2005

44

Categories of Shareholders Number Shares Held PercentageAssociated Companies, Undertakings and Related Parties 2 1 127 655 3.76NIT & ICP - - -CEO, Directors, their spouses and minor children 12 5 710 454 19.03Executives 13 340 336 1.13Public sector companies & corporations 1 710 588 2.37Joint Stock companies 25 3 248 898 10.83Banks, Development Finance Institutions, 20 2 283 916 7.61 Non-Banking Finance Institutions, Insurance Co. Modaraba and Mutual FundsForeign investors (repatriable basis) 1 1 881 140 6.27Charitable Institutions 2 3 654 840 12.18Administrator of Abandoned Properties 1 1 628 061 5.43Individuals/Others 976 9 414 112 31.39

Total 1 053 30 000 000 100.00


Offices

45

SOUTHERN ZONE4th Floor EFU HouseM.A. Jinnah Road Karachi2311626 - 23116102313471-90. Fax: 2313608

JAFFER DOSSASenior Executive Director/Zonal Head

SALIM RAFIK SIDIKI, M.A.Executive DirectorPublic Relation/Marketing/Corporate Clients

MUHAMMAD SULEMAN KASSAMVice President

SYED ABDUL QUDDUSVice President

SAGIRUL HASANAsstt. Vice President

ZIA MAHMOODAsstt. Vice President

Central Division206, Kashif Centre, KarachiShahrah-e-Faisal5653907-9 - 5670145-65678812. Fax: 5676560 - 5211982

SYED SALMAN RASHIDSenior Executive Director

ABDUL SATTAR BALOCHExecutive Vice President

ABDUL RASHIDAsstt. Vice President

KALIM IMTIAZAsstt. Vice President

M. ASHRAF THARAAsstt. Vice President

NADIR HUSSAINAsstt. Vice President

OMAIR JAVEDAsstt. Vice President

RIZWAN HUSSAINDeputy Executive Director (Development)

SYED KAMRAN RASHIDDeputy Executive Director (Development)

SYED JAWEED ENVORSenior Executive Vice President (Development)

RIZWAN SIDDIQUIExecutive Vice President (Development)

AMIR HASSANVice President (Development)

ATIQUE H. PATELVice President (Development)

SYED ANSARULLAHVice President (Development)

AZAM RAFIQUEAsstt. Vice President (Development)

MUHAMMAD JAWEDAsstt. Vice President (Development)

SYED IMRAN ZAIDIAsstt. Vice President (Development)

ADEEL AHMEDChief Manager (Development)

FAISAL MAHMOOD JAFFERYChief Manager (Development)

MOHAMMED SHAMIM SIDDIQUIChief Manager (Development)

SYED IFTIKHAR H. ZAIDIChief Manager (Development)

SYED RASHID ALIChief Manager (Development)

WASIF MUBEENChief Manager (Development)

NADEEM SHEIKHDy. Chief Manager (Development)

RAJA JAMIL AHMEDManager (Development)

TAUSEEF HUSSAIN KHANManager (Development)

City Branch4th Floor Lakhani Centre, KarachiI.I. Chundrigar Road2637711-4. Fax: 2634181

ALI KAUSARSenior Vice President

ABDUL MATEEN FAROOQUIAsstt. Vice President

M. ABRAR KHANDy. Chief Manager (Development)

ABDUL HAKEEM SIDDIQUIManager (Development)

MANECK B. JAVATManager (Development)

M. YOUSUF IQBALManager (Development)

SYED SARDAR HUSSAINManager (Development)


46

Clifton Division311 & 312 Clifton CentreBlock 5, Clifton, Karachi5873151-3 - 5837031-3 - 5873338-9Fax: 5873136 - 5836860

NUDRAT ALIExecutive Director

KHOZEMA T. HAIDER MOTAExecutive Vice President

YAWAR AMINUDDINSenior Vice President

ABDUL HAMEEDAsstt. Vice President

ALI RAZAAsstt. Vice President

RIAZ AHMEDAsstt. Vice President

WASEEM TASSAWARAsstt. Vice President

AGHA S. U. KHANSenior Executive Vice President (Development)

MOHAMMAD UMER, M.A.Senior Vice President (Development)

GHULAM MURTAZA KHUROVice President (Development)

AKHTAR HAYAT KHANChief Manager (Development)

SYED RAEES AHMADChief Manager (Development)

SAIFUR REHMANDy. Chief Manager (Development)

HASAN SAJJAD RIZVIManager (Development)

SHAHZAD ALIManager (Development)

Continental Branch211 Beaumont PlazaBeaumont Road, Karachi5653623-24 - 5653612 - 56853315684338 - 5653792. Fax: 5684080

MOHAMMAD YOUNUSSenior Vice President

ANIS-UR-REHMANAsstt. Vice President (Development)

M. ASHRAF SAMANAAsstt.Vice President (Development)

SULTAN AHMED SIDDIQUIChief Manager (Development)

S. NAQI ALIChief Manager (Development)

Corporate Division8th Floor Business PlazaMumtaz Hasan RoadOff I.I. Chundrigar Road, Karachi2425898 - 2428965-9 - 2428198 - 24245102428090 - 2425783. Fax: 2428119 - 2428290

ABDUL REHMAN KHANDIA, A.C.I.ISenior Executive Director

MATLOOB ALI ANSARI, A.C.I.ISenior Vice President

ABDUL WAHIDVice President

S. M. SHAMIMVice President

ABDUL MAJEEDAsstt. Vice President

M.A. QAYUMAsstt. Vice President

MOHD. KHALID SALEEM, M.A.Senior Executive Vice President (Development)

QAMAR SALEEMSenior Executive Vice President (Development)

IMRAN ALI KHANSenior Vice President (Development)

HAMZA SIDDIQ GODILVice President (Development)

JAMEEL MASOODVice President (Development)

MOHAMMAD REHAN IQBAL BOOTIVice President (Development)

RIZWAN HUMAYUNVice President (Development)

TANVEER MASOODAsstt. Vice President (Development)

MRS. SADIA MUNEERAsstt. Vice President (Development)

QAMAR AZIZDeputy Chief Manager (Development)

ALI MOHAMMAD MEMONManager (Development)

MOHAMMAD MUSSARRAT HUSSAINManager Development

SHAHID AZIZManager (Development)

MRS. ZOHRA USMAN RAJKOTIManager (Development)


47

Corporate Division ( J. P. Unit )8th Floor Business PlazaMumtaz Hasan RoadOff I.I. Chundrigar Road, Karachi2428070 - 2401911-3. Fax: 2401914

JAHANGIR ANWAR SHAIKHSenior Executive Director (Development)

ALAMGIR ANWAR SHAIKHExecutive Vice President (Development)

SYED SAAD JAFRIChief Manager (Development)

AFZAL H. MUGHALManager (Development)

ASIF ELAHIManager (Development)

FAISAL HASANManager (Development)

MANSOOR AHMEDManager (Development)

MINA ALAMGIRManager (Development)

Cosmopolitan BranchJapan Plaza, M. A. Jinnah Road, Karachi2765385 - 2765390 - 2721518. Fax: 2723594

A. GHAFFAR A. KARIMVice President

WAQAR QURESHIAsstt. Vice President

AJMAL FAROOQIManager (Development)

SYED ALI HAIDER RIZVIManager (Development)

SYED IRFAN AKHTARManager (Development)

Denso Hall Branch2nd Floor Azzaineb CourtCampbell Street, Karachi2629891 - 2629893 - 2629895 - 2624882-3Fax: 2629835

MUHAMMAD NAEEM HANIFExecutive Vice President

MRS. RUKHSANAChief Manager (Development)

ABDUL AZIZManager (Development)

MUHAMMAD IMRAN NAEEMManager (Development)

Export Processing Zone BranchExtension Landhi Industrial Area, Karachi5082095

SALMAN RASHIDSenior Executive Director

Jinnah Division2nd Floor, EFU House, M.A. Jinnah Road, Karachi2313471-90 - 2311742-3 - 2312328 - 2313854-552314783-84. Fax: 2311668

MUHAMMAD IQBAL LODHIAExecutive Director

ABDUL RAZZAK SATTARSenior Vice President

IRSHAD ZAMIR HASHMIVice President

ASGHAR ALIAstt. Vice President

ZIA-UL-REHMANAsstt. Vice President

AAMIR ALI KHANSenior Vice President (Development)

MUHAMMAD ASIFSenior Vice President (Development)

MUHAMMAD ASIF ARIFSenior Vice President (Development)

MUHAMMAD SHEERAZAsstt. Vice President (Development)

JAVED ASLAM AWANChief Manager (Development)

SYED ATHAR ALIChief Manager (Development)

MRS. TANVEER KHURSHIDChief Manager (Development)

WALI MOHAMMAD BAIGChief Manager (Development)

ARIF FAROOQDy. Chief Manager (Development)

FARHANDeputy Chief Manager (Development)

MUHAMMAD ARFEENDy. Chief Manager (Development)

SYED NISAR AHMEDDy. Chief Manager (Development)

SHAHID NAQVIManager (Development)

S. M. AHSANManager (Development)


48

K.I.T.E. BranchAiwan-e-Sanat. St. 4/3, Sector-23Korangi Industrial Area, Karachi5051188 - 5050079-80 - 5068445Fax: 5050056

KAUSER ALI ZUBERIExecutive Vice President

HAMEED-US-SALAMManager (Development)

IQBAL HUSSAIN KHANManager (Development)

OMAR MAQSOODManager (Development)

RASHID A. ISLAMManager (Development)

TAHIR ALI ZUBERIManager (Development)

Karachi Branch2nd Floor Dock Labour Board BuildingWest Wharf, Karachi2313943-4 - 2312320 - 2316152-32200884-5. Fax: 2313945

MIR BABAR ALIExecutive Vice President

KAISER ALIVice President

HAROON HAJI SATTAR DADADeputy Executive Director (Development)

S. ASHAD H. RIZVIVice President (Development)

SYED BAQAR HASAN, M.A.Vice President (Development)

FARID KHANAsstt. Vice President (Development)

MRS. ZOHRA HAROON DADAChief Manager (Development)

RASHID UMER BURNEYManager (Development)

SIRAJ AHMED ALVIManager (Development)

Kehkashan Branch612-613, The Forum, Block - 9Clifton, Karachi5361582-84 - 5361585Fax: 5361586

AUSTEN B. FREITASAssistant Executive Director

MOHAMMAD ARIF KHANSenior Vice President

ASIF MAHMOODAsstt. Vice President

MUHAMMED SALAHUDDINAsstt. Vice President

TAUQIR ABDULLAHAsstt. Vice President (Development)

Mehran Branch6th Floor, EFU HouseM. A. Jinnah Road, Karachi2200483 - 2200484 - 2200486Fax: 2200489

ABDUL WAHIDExecutive Vice President

Metropolitan Branch6th Floor, E F U HouseM.A. Jinnah Road Karachi2313471-90 - 2202897 - 2202903Fax: 2201450

MUHAMMAD IQBAL DADA, M. A., A.C.I.I.Senior Executive Vice President

KHAN MOHAMMED ANWAR PASHASenior Executive Vice President

MUSAKHAR-UZ-ZAMANExecutive Vice President

SHAZIM ALTAF KOTHAWALAVice President

SHAHID A. GODILAsstt. Vice President

SHAHZAD ZAKRIAAsstt. Vice President

FAKHRUDDIN SAIFEEAsstt. Vice President

ALTAF KOTHAWALAExecutive Director (Development)

ABDULLAH H. GODILSenior Executive Vice President (Development)

IFTIKHAR A. KHANExecutive Vice President (Development)

MUHAMMAD UMER MEMONExecutive Vice President (Development)

ABOOTALIB DADASenior Vice President (Development)

AMIN YAQOOBSenior Vice President (Development)

FAIZAN QURESHISenior Vice President (Development)

KAHKASHAN SULTANASenior Vice President (Development)


49

KAYOMARZ H. SETHNASenior Vice President (Development)

MOHAMMAD AZHAR DAWRASenior Vice President (Development)

MUNEEB FAROOQ KOTHAWALASenior Vice President (Development)

Ms. SHAZIA RAHILVice President (Development)

Ms. FATIMA MOIZ SHEIKHVice President (Development)

MUHAMMAD SHAKILManager (Development)

New Plaza Branch6th Floor, EFU HouseM. A. Jinnah Road, Karachi2200480 - 2200490 - 2200733 - 22015642313471-90. Fax : 2203380

S. M. M. RIZVIAsstt. Executive Director

SYED ALI ZAHEERExecutive Vice President (Development)

KHAWAJA ZULQARNAIN RASHIDSenior Vice President (Development)

MUHAMMAD NIAMATULLAHVice President (Development)

IRFAN KHAN IRTIZAManager Development

Port View Branch517 EFU HouseM. A. Jinnah Road Karachi2201957 - 2201958 - 2201959 - 22019602313471-90. Ext.: 283

KHALID USMANExecutive Vice President

ABDUL WAHABExecutive Vice President (Development)

Rizvia Society Branch101-103 Rizvia Market ChowrangiNazimabad, Karachi6686608 - 6688250-51. Fax: 6686449

MAZHAR H. QURESHIVice President

WAQAR AHMEDAsstt. Vice President

SHAMSUZ ZAMANDeputy Chief Manager (Development)

BABAR ZEESHANManager Development

IFTIKHAR ALAMManager Development

S. KASHIF ALIManager (Development)

TAHIR RAFIQManager (Development)

Saddar Branch2nd Floor, Hajra MansionZebunnisa StreetSaddar, Karachi5220436-38 - 5220434 - 5220435Fax: 5220439

BASHIR SEJASenior Executive Vice President

YOUSUF ALVISenior Vice President (Development)

ABDUL RASHEED KAPADIAVice President (Development)

M. AMIN ABDUL GHANIChief Manager (Development)

Shahrah-e-Liaquat Branch406 & 462 State Life Bldg. No. 4Shahrah-e-Liaquat, Karachi2410342 - 2411760Fax: 2424959

MOHAMMAD HUSSAINSenior Vice President

ABDUL WAHAB POLANIDeputy Executive Director (Development)

WALEED POLANIChief Manager (Development)

S.I.T.E. DivisionShopping Centre, Manghopir RoadS.I.T.E., Karachi2574062-3 - 2578529 - 25635282577868-9. Fax: 2570927

S. M. HAIDER, M.Sc.Executive Director

FARRUKH AAMIR BEGVice President

KHALID ASHFAQ AHMEDVice President

SYED SALAHUDDIN, A.C.I.I.Asstt. Vice President

SYED ASIM IQBALSenior Executive Vice President (Development)

ALI SAFDERExecutive Vice President (Development)

SYED AMIR AFTABExecutive Vice President (Development)


50

FAISAL FASIHSenior Vice President (Development)

TALIB ABBAS SHIGRISenior Vice President (Development)

IRFAN RAJA JAGIRANIVice President(Protocol & Business Development)

SYED SHAHID RAZAVice President (Development)

WASIM AHMEDVice President (Development)

MOHAMMAD ZIAUL HAQAsstt. Vice President (Development)

M. BADAR H. QURESHIAsstt. Vice President (Development)

M. OWAIS JAGIRANIAsstt. Vice President (Development)

M. YOUSUF JAGIRANIAsstt. Vice President (Development)

SYED SOHAIL HYDER ABIDIAsstt. Vice President (Development)

SYED ABID RAZAChief Manager (Development)

MURTAZA ISPAHANIDy. Chief Manager (Development)

MS. MAHJABEEN JAFFARManager (Development)

M. YASIR H. CHAUDHARYManager (Development)

MUZAFAR ALIManager (Development)

SYED MOJIZ HASSANManager (Development)

SYED QAMAR RAZAManager (Development)

SYED SALEEM HUSSAIN SHAHManager (Development)

Tariq Road Branch964 - 5 C Commercial AreaAllama Iqbal Road, P.E.C.H.S., Karachi4525552 - 4535991 - 4547478 - 4522730Fax: 4545584

JAVED IQBAL BARRY, M.B.A., LL.B., F.C.I.IExecutive Vice President

ADAM DUR MOHAMMAD BALOCHVice President

MRS. NARGIS MEHMOODSr. Executive Vice President (Development)

ANIS MEHMOODExecutive Vice President (Development)

AZMAT MAQBOOL, M.B.A.Senior President (Development)

H. H. ANSARIAsstt. Vice President (Development)

M. A. QAYYUM KHANAsstt. Vice President (Development)

SYED AZHAR ABBASChief Manager (Development)

FAISAL AYUBManager (Development)

MUHAMMAD SALIMManager (Development)

S. SHAHID MAHMOODManager (Development)

Tower Branch5th Floor Dock Labour Board BuildingWest Wharf, Karachi2203555 - 2204021. Fax: 2205028

MUHAMMAD SHOAIB RAZAK BRAMCHARISenior Executive Vice President

MUHAMMAD RASHID AKMAL, M.B.A.Senior Vice President

HYDERABADHyderabad BranchAl-Falah Chambers, Jinnah Road611397 - 631088. Fax: 615816

MOHAMMAD AMIN SATTAR, M.ComAsstt. Vice President

BASHER A. KHASKHELYChief Manager (Development)

SUKKUR (Sub-Office)9, Glamour Centre, 1st FloorMission Road, SukkurP.O. Box No. 17923936. Fax: 26512

MOHAMMAD AMEEN MEMONManager

MULTANMultan DivisionRajput Commercial CentreTareen Road513723 - 580773Fax: 573343 - 580772

M. SHEHZAD HABIBSenior Executive Vice President

MUHAMMAD AZHAR ALIAsstt. Vice President


51

RASHID HABIBVice President (Development)

SHAHID YOUNUSVice President (Development)

MUSHTAQ NAJAM BUTTAsstt. Vice President (Development)

ALI HASNAIN SHAHChief Manager (Development)

HAMID ALI JANJUADeputy Chief Manager (Development)

HAMMAD AKHTAR SHEIKHDeputy Chief Manager (Development)

AGHA KASHIF HUSSAIN KHANManager (Development)

MALIK RASHID AZIZManager (Development)

D. G. Khan (Sub-Office)House No. 59, Street No.2Block-Z, Model Town69360 - 61895

BASHIR AHMAD SANGHIAsstt. Vice President (Development)

CHICHAWATNI (Sub-Office)44 Railway Road2386 - 610474

JAVED IQBAL CHEEMAChief Manager (Development)

VEHARI (Sub-Office)56-B Grain Market62900. Fax: 62900

TARIQ JAMEELAsstt. Vice President (Development)

RAHIM YAR KHAN (Sub-Office)7-Shaheen MarketShahi Road73794. Fax: 77194

MIAN ABDUL RAZZAK RAZAChief Manager (Development)

BAHAWALPUR (Sub-Office)Circular Road884624 - 886371Fax: 884624

MALIK AKHTAR RAFIQUEVice President (Development)

M. ASLAM HAYATAsstt. Vice President (Development)

CHISTIAN (Sub-Office)105 - E, Chistian53989

SHAHID IQBALChief Manager (Development)

LAYYAH (Sub-Office)Opposite Bank of PunjabChowbara Road, Layyah

AMJAD ALIDevelopment Officer

QUETTA (Sub-Office)42 - Regal PlazaCircular Road822926. Fax: 837732

NORTHERN ZONECo-operative Insurance Building23 Shahrah-e-Quaid-e-Azam, Lahore7352028 - 7353566 - 7312166 - 73121967244178 - 7243290. Fax: 7357966 - 7229604

QAMBER HAMID, LL.B, LL.M.Deputy Managing Director/Zonal Head

ATTA-UR-REHMAN RIAZSenior Vice President

ZAHID HUSSAIN A.C.I.IVice President

LAHOREPUNJAB REGIONMak Plaza, 130-E/1, Main BoulevardGulberg III, Lahore5750763. Fax: 5756764

SHAUKAT SAEED AHMADExecutive Director

Al - Falah Branch306-7 Al-Falah BuildingShahrah-e-Quaid-e-Azam, Lahore6312519 - 6361081-82. Fax: 6312518

ATTA-UL-HAQ KHANVice President

MOHAMMAD IQBALVice President (Development)

MUHAMMAD SALIM MALIKVice President (Development)

MRS. GHAZALA AMBREENManager (Development)

SHAHID RAZA KAZMIManager (Development)


52

Anarkali BranchUpper Floor, Al-Sarwar BuildingBank Square, Lahore7351173. Fax: 7350614

MUHAMMAD RAZZAQ CHAUDHRYSenior Vice President

Al Hamd BranchMurtaza Shopping CentreMoon Market, Allama Iqbal Town, Lahore5419273 - 5418687. Fax: 5419268

SALEEMULLAH TAHIRExecutive Vice President

MUBASHIR SALEEMManager (Development)

Bank Square BranchAl - Khush Building, Bank Square, Lahore7323081 - 7323640. Fax: 7314244

BABAR A. SHEIKHExecutive Vice President

Canal Branch137-Habitat Flat Shadman IINear Cricket House, Lahore7520991 - 7594908 - 7585180Fax: 7520992

IFTIKHAR UDDINVice President

SHAN-E-RAZA ZAIDIVice President (Development)

M. SALEEM BABARAsstt. Vice President (Development)

City BranchAl - Sarwar Building, Bank Square, Lahore7352934 - 7352938. Fax: 7352941

ZARRAR IBN ZAHOOR BANDEYExecutive Vice President

Eden Centre BranchRoom No. 201Eden Centre, Jail Road, Lahore7576029 - 7551059. Fax: 7570068

ROSS MASOOD, M.B.E.Executive Vice President

MUHAMMAD LATIF BHATTIChief Manager (Development)

MUHAMMAD QASIM BUTTManager (Development)

Egerton Road BranchVenus Plaza, 7 - E, Egerton RoadEgerton & Davis Road Crossing, Lahore6365826 - 6306454 - 6302695. Fax: 6302705

MUHAMMAD RIZWAN-UL-HAQExecutive Vice President

MIAN IKRAM ELLAHIVice President (Development)

MUHAMMAD AMIN QURESHIChief Manager (Development)

Gulberg BranchMak Plaza, 103 E - 1 Main BoulevardGulberg III, Lahore5879242 - 5757428 - 5750763. Fax: 5756764

JAVED AKHTAR SHEIKH, B.B.A.Executive Vice President

MUHAMMAD FAROOQSenior Vice President (Development)

QAMER-UL-HASSAN ANSARIAsstt. Vice President (Development)

Ichhra Branch204, Latif Center101 Ferozepur Road, Lahore7533731-32. Fax: 7585814

JAVAID IQBAL KHANAsstt. Vice President

MIAN SIKANDER SHIRAZManager (Development)

Lahore DivisionCo-operative Insurance Building23 Shahrah-e-Quaid-e-Azam, Lahore7312166 - 7243290 - 7244178 - 73506167312196 - 7323130 - 7353566. Fax: 7357966

LIAQUAT ALI KHAN FCIISenior Vice President

USMAN ALIAsstt. Vice President

FAKHAR-E-ALAMVice President (Development)

MUHAMMAD TAYYAB NAZIRAsstt. Vice President (Development)

ASHLEY ARSHADManager (Development)

Leeds Centre BranchRoom No. 15, 2nd Floor, Leeds Centre11-E/2, Main Boulevard, Gulberg III, Lahore5788055-57. Fax: 5784058 - 5874374

AZHARUL HASSAN CHISHTISenior Vice President

Model BranchEFU House, 6 - D Jail Road, Lahore5715616-18. Fax: 5715619

TAYYAB HUSSAIN GARDEZI, M.Sc.Senior Vice President


53

New Garden Town BranchFlat No. 2 R.B. 1st FloorAwami Complex, Usman Block, Lahore5833759 - 5834721. Fax: 5881671

MOHAMMAD SOHAILSenior Vice President

MUHAMMAD AZAMManager (Development)

FAISALABADFaisalabad BranchAhmed Plaza, Bilal Road, Faisalabad2610363 - 2610368 - 2610566 - 2625001Fax: 2611667

MAHMOOD ALI KHAN, M.A.Senior Executive Vice President

USMAN ALI KHANAsstt. Vice President (Development)

ASRAR AHMEDManager (Development)

City Branch16 Chenab Market, Susan RoadMadina Town, Faisalabad8732902 - 8734649 - 8714642. Fax: 8733402

DR. GHULAM JAFFAR, Ph.DAsstt. Vice President

GUJRANWALAGujranwala Branch3rd Floor, Din Plaza, G.T. Road, Gujranwala845883-84. Fax: 840883

MOHAMMAD ARIF BHATTISenior Vice President

AMIR ARIF BHATTIAsstt. Vice President (Development)

G. T. Road Branch2nd Floor, Zaheer Plaza, G.T. Road, Gujranwala859290 - 253224. Fax: 859190

HAJI MOHAMMAD AYUBSenior Vice President

QASIM AYUBManager (Development)

SIALKOTSialkot Branch1st Floor, Riaz Plaza, Paris Road, Sialkot267001-3. Fax: 267583

TARIQ NAEEM BAJWABranch Manager

MUHAMMAD NAEEM AHSANManager (Development)

City BranchEx-Sky Lark Building, Kutchery Road, Sialkot4292270. Fax: 4292280

IMRAN-UL-HAQVice President

SARGODHASargodha Branch1st Floor, Improvement Trust Plaza26, Fatima Jinnah Road3721381 - 3728253. Fax: 3729023

ABDUL SHAKOOR PARACHAAsstt. Vice President

Sahiwal Branch15, Sattar Complex, Stadium Road4220522 - 4462998. Fax: 4220622

INAYATULLAH CHAUDHRYAsstt. Vice President

ISLAMABAD REGION2nd Floor, Ferozsons Building, 32 Saddar RoadRawalpindi Cantt., Rawalpindi5514323 - 5563065 - 5562024 - 22713725516085. Fax: 5565406

AKBAR AWANExecutive Director/Regional Head

Bank Road Branch2nd Floor, Ferozsons Building, 32 SaddarRoad Rawalpindi Cantt., Rawalpindi5584563. Fax: 5516882

MALIK FIRDAUS ALAMAsstt. Vice President

SHEHZAD AKHTARManager (Development)

Islamabad Branch1st Floor, Muhammad Gulistan Khan House82 East Fazle Haq RoadBlue Area, Islamabad2875018 - 2875084 - 2271373 - 2823868Fax: 2271374

RIZWANUL HAQSenior Vice President & Branch Head

EJAZ AHMEDVice President (Development)

IMDADULLAH AWANAsstt. Vice President (Development)

ZAKA ULLAH KHANChief Manager (Development)

MISS AZRA QURESHIManager (Development)

MOIN-UR-REHMANManager (Development)

QAZI ALTAFManager (Development)


54

Markaz Branch1st Floor, Muhammad Gulistan Khan House82 East Fazle Haq RoadBlue Area, Islamabad2271375. Fax: 2271376

NASEERUDDIN AHMEDSenior Vice President

CH. SAJJID MAHMOODManager (Development)

Murree Road Branch2nd Floor, Ferozsons Building32 Saddar RoadRawalpindi Cantt., Rawalpindi5794684. Fax: 5794685

AGHA ALI KHANBranch Manager

SYED ZEESHAN ABBAS ABEDIManager (Development)

Rawalpindi Division2nd Floor, Ferozsons Building, 32 Saddar RoadRawalpindi Cantt., Rawalpindi5794634 - 5563065 - 5562024 - 5516085Fax: 5565406

ZAFAR ALI KHOKHAR, M.A.Senior Vice President

SHAFAAT HUSSAIN MALIKAsstt. Vice President (Development)

ABBOTTABAD106 Iqbal Shopping ComplexMall Road, 336371

KAMRAN SAMIOfficer Incharge

GOTH MACHIGoth Machi Branch6, Commercial Area (F.F.C.)Distt. Rahim Yar Khan5873001-9 - 5786420-9 Ext.: 5154Fax: 5786410

ALTAF HUSSAINOfficer Incharge

PESHAWAR REGION11/4, Shahrah-e-Pehlavi5272185 - 5275487 - 5278476 - 5284384Fax: 5271709

SYED AFTAB HUSSAIN ZAIDI, M.A., M.B.A.Senior Executive Vice President& Regional Head

Peshawar Division11/4, Shahrah-e-Pehlavi, Peshawar5272185 - 5275487 - 5278476 - 5284384Fax: 5271709

SYED MUHAMMAD AAMIR KAZMIAsstt. Vice President

OMER JAVIDAsstt. Vice President (Development)

MANSOOR AHMAD KASHIF PARACHAChief Manager (Development)

Jamrud Road Branch7 -10, Upper Ground FloorAzam Tower, Jamrud Road, Peshawar5846120 - 5850190. Fax: 5846121

FARMAN AI AFRIDI B.E.Asstt. Vice President

NAEEM ULLAH JANAsstt. Vice President (Development)

MARDANMardan Branch3 Cantonment Plaza, Bank Road862294. Fax: 866096

INAYATULLAH KHALILAsstt. Vice President

ARSHAD IQBALChief Manager (Development)

DERA ISMAIL KHAN (Sub-Office)3rd Floor State Life BuildingCircular Road, D.I. Khan9280192

ABDUL QAYYUM KAKARManager (Development)

ABBOTTABAD (Sub-Office)Al-Asif PlazaMansehra Road334186

IJAZ ALIOfficer Incharge

I/We

of

being a member of E F U GENERAL INSURANCE LIMITED hereby appoint

Mr.

of

or failing him

of

E F U GENERAL INSURANCE LIMITEDForm Of Proxy

as my/our proxy in my/our absence to attend and vote for me/us and on my/ourbehalf at the 73rd Annual General Meeting of the Company to be held on SaturdayApril 29, 2006 at 10:30 a.m. and at any adjournment thereof.

This form of Proxy, duly completed, must be deposited at the Company's Registered Officeat 11/4, Shahrah-e-Pehlavi, Peshawar, not later than 48 hours before the time appointedfor the meeting.

CDC Shareholders and their Proxies are each requested to attach attested photocopy oftheir National Identity Card or Passport with this proxy form before submission to theCompany.

CDC Shareholders or their Proxies are requested to bring with them their Original NationalIdentity Card or Passport alongwith the Participant's ID number and their account numberat the time of attending the Annual General Meeting in order to facilitate their identification.

Signed this day of April 2006.

1. Signature:

Name:

Address:

NIC OrPassport No:

2. Signature:

Name:

Address:

NIC OrPassport No:

WITNESSES:

Important:

RevenueStamp

Signature of Member(s)

Shareholder's Folio No.and/or CDCParticipant I.D.No.and Sub Account No.

Documents

ANNUAL REPOR T 2 0 0 5 - EFU Insurance ::: Your ... Abid Raza Rizvi, M.Com Syed Ahmad Hassan, M.B.A Zahid Hussain, A.C.I.I. Assistant Vice Presidents Abdul Hameed Abdul Majeed Abdul