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About IGIH
Board of Directors
Letter from the Board of Directors
Financial Statements
Auditors Report
Balance Sheet
Income Statement
Statement of Cash Flows
Statement of Changes in Equity
Notes to the Financial Statements
Corporate Officers
IGI Offices
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2007 ANNUAL REPORT
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International General Insurance Holdings Limited (IGIH) is registered in the Dubai
International Financial Centre with operations in Bermuda (IGI Bermuda), the United
Kingdom, Jordan and Malaysia.
IGI Bermuda is a class 3 (re)insurer regulated by the Bermuda Monetary Authority
and is rated A- (“Excellent”) by A.M. Best Company Inc. This subsidiary is the principal
underwriting entity for the Group with the Jordan office providing all management,
underwriting and operational functions. The Group also has a subsidiary company in
Labuan, Malaysia registered as a first tier reinsurer.
IGI Bermuda underwrites a worldwide portfolio of energy, property, marine, engineering,
financial institutions and non-proportional reinsurance treaty business with the main
geographical focus on the Afro-Asian markets
IGIH has assets of more than US$ 375 million and total shareholders’ equity in
excess of US$ 187 million, as at 31st March, 2008.
20 07 ANNUAL REPORT
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2007 ANNUAL REPORT
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at 31st MARCH 2008
Mr. Akbar Habib
Chairman (C.E.O. Oman National Investment Corporation)
Mr. Wasef Jabsheh
Vice Chairman and C.E.O.
Mr. Mohammed Abu Ghazaleh
Director (Chairman and C.E.O. Del Monte Fresh Produce, USA)
Mr. Amir Abu Ghazaleh
Director (General Manager/Partner, Abu Ghazaleh International Co. (LLC) Dubai, UAE)
Mr. Khalifah Al Mulhem
Director (Chairman, Advanced Polypropylene Co. Ltd. Saudi Arabia)
Mr. Rateb Wazani
Director (Former Minister of Justice, Government of Jordan)
Mr. Khaled Sifri
Director (C.E.O. of Arab Emirates Investment Bank P.J.S.C.)
Dr. Adnan Steitieh
Director (Executive Director, Salam International Investment Ltd., State of Qatar)
Mr. Jonathan Silver
Director (Partner, Clyde & Co., Dubai, UAE)
Mr. Hani Tarazi
Director (Director, Saba & Co.)
Mr. Iyad Duwaji
Director (C.E.O. Shuaa Capital psc)
20 07 ANNUAL REPORT
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2007 ANNUAL REPORT
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The Board of Directors of International General
Insurance Holdings Limited (IGIH) is pleased to
report that the Group has achieved its goals for
the 2007 year with satisfactory results for the
period, posting a net profit for the Group’s sixth
year of operations. We would like to thank you
all for your continued support.
for
This result should be reviewed against the
backdrop of weakening rates in the international
the
(re)insurance market, particularly
Property and Engineering lines of business in
the MENA region. We have witnessed what we
consider to be extremely competitive pricing
along with an apparent desire to generate
income based on market share underwriting.
If this trend were to continue for these lines of
business, we believe that direct insurers’, and
in turn their treaty reinsurers’, future results will
be adversely impacted.
IGI has and will continue to maintain its strict
underwriting controls and criteria and does not
compromise its core underwriting philosophy to
compete with unsustainable rate reductions,
and we have thereby fulfilled our operating
profit in line with our planned projections.
During the course of the reporting year, we have
achieved significant developments which will
underpin the continuing success of the Group.
A major achievement and milestone for the
Company was the attainment in March 2008
of a financial rating of A- (“Excellent”) from A
M Best Company Incorporated. The lack of an
excellent rating has been an impediment in the
expansion of the portfolio. This development,
however, will accelerate the growth of the
Company, both in terms of premium and net
profit. The Company will continue to work
diligently to improve the financial rating.
2007 has seen the successful restructuring
of the group with the establishment of a class
three (re)insurer in Bermuda, regulated by
the Bermuda Monetary Authority (BMA). The
existing portfolio was successfully transferred
to the new entity and underwriting in Amman is
now undertaken against the Bermuda capital.
We are also in the final stages of submitting
an application to the Irish Financial Services
Regulatory Authority (IFSRA) for establishing a
separately capitalised subsidiary of the Bermuda
Company in Dublin. This will then be followed
by a branch office in London. It is anticipated
that the Dublin entity will be licensed during
the second half of 2008.
To support the growth objectives and raise
the profile of the group, we are establishing a
“coverholder” office in the Dubai International
Financial Centre (DIFC). We are also in the
process of establishing a marketing office
in Kuala Lumpur to support and develop our
Labuan Company. We have recruited a well
known figure in the Malaysian market to lead
this operation.
IGI continues to diversify its product lines and
has added Financial Institutions to its portfolio
with a dedicated, experienced
individual
employed to underwrite the account.
Substantial progress has also been made
in strengthening the IGI brand. The success
is attributable to greater consistency in the
implementation of our brand and judicious
investments in advertising and sponsorship in
the MENA region. The development of the S R
Bishop Underwriting Limited operation further
serves to raise our profile with London and
European markets.
Our joint equity Partner, Saudi United Co-
operative Insurance Company, received limited
approval to commence underwriting from
the Saudi Arabian Monetary Authority in the
second half of the year and is expected to be
fully operational during 2008.
In reviewing the report for 2007, we are pleased
to announce the following financial highlights:
• Net income increased from US$ 14.8 mil to
US$ 20.4 million reflecting a growth of 38%
• Gross Written Premium increased US$ 89
million to US$ 116.5 million, a 30% increase
• Net underwriting profit increased from US$
12.2 million to US$ 14.1 million
• Investment Income increased from US$ 6.2
million to US$ 11.9 million, an increase of
92% over the previous period
• Total assets now stand in excess of US$ 375
million, up from last year’s total of US$ 293
million
The excellent
result has been achieved
as a consequence of the management’s
commitment to sound underwriting practices
and a loyal and dedicated management team.
We would like to thank all employees for their
significant contribution this year.
We look forward to working together in 2008 to
fulfill the visions and ambitions of the Company
and to further establish IGI as the (re)insurer of
choice for the region.
20 07 ANNUAL REPORT
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2007 ANNUAL REPORT
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P.O. Box 9267
28th Floor - Al Attar Business Tower
Sheikh Zayed Road
Duabi, United Arab Emirates
Tel: +971 4 332 4000
Fax:+971 4 332 4004
dubai.uae@ae.ey.com
www.ey.com/me
INDEPENDENT AUDITORS? REPORT TO THE SHAREHOLDERS OF
INTERNATIONAL GENERAL INSURANCE HOLDINGS LIMITED
Report on the Financial Statements
We have audited the accompanying consolidated financial statements of International General Insurance
Holdings Limited and its subsidiaries(‘the Group’), which comprise the consolidated balance sheet as
at 31 December 2007 and the consolidated income statement, consolidated cash flow statement and
consolidated statement of changes in equity for the year then ended, and a summary of significant
accounting policies and other explanatory notes.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair preparation of these financial statements in
accordance with International Financial Reporting Standards and the applicable provisions of the Companies
Law pursuant to DIFS Law No. 3 of 2006. This responsibility includes: designing, implementing and
maintaining internal control relevant to the preparation and fair presentation of financial statements that
are free from material misstatement, whether due to fraud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditors ‘ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone other than the company and
the shareholders of the company as a body, for our audit work, for this Report, or for the opinions we have
formed. We conducted our audit in accordance with International Standards on Auditing, Those standards
require that we comply with ethical financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial statements. The procedures selected depend on the auditors’ judgement, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation
and fair presentation of the financial statements in order to design audit procedures that are appropriate
for the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the financial statement.
We believed that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of the Group as of 31 December 2007, and its financial performance and its cash flows for the
year then ended in accordance with International Financial Reporting Standards.
Report on Other Legal and Regulatory Requirements
We also confirm that, in our opinion, the consolidated financial statements include, in all material respects,
the applicable requirements of the Companies Law pursuant to DIFC Law No. 3 of 2006. We have
obtained all the information and explanations which we required for the purpose of our audit. To the best
of our knowledge and belief, no other violations of the Companies Law pursuant to DIFC Law No. 3 of
2006 have occurred during the year which would have had a material effect on the business of the Group
or on its financial position.
25 May 2008
Dubai, United Arab Emirates
A member firm of Ernst & Young Global Limited
20 07 ANNUAL REPORT
9
CONSOLIDATED BALANCE SHEET As at 31 March 2008
ASSETS
Premises and equipment
Intangible assets
Investment in associated companies
Financial assets held to maturity
Financial assets available-for-sale
Deferred policy acquisition costs
Receivables arising from insurance contracts
Other receivables
Reinsurers’ share of unearned premiums
Reinsurers’ share of outstanding claims
Cash and short term deposits
TOTAL ASSETS
EQUITY AND LIABILITIES Equity
attributable to equity holders of parent
Notes
2008
USD
2007
USD
3
4
5
6
17
7
8
12
13
9
1,292,975
622,312
8,467,399
1,690,141
324,536
93,941
8,420,116
-
105,176,677
74,334,388
12,917,781
8,809,373
93,963,104
59,279,319
2,384,242
10,380,698
1,500,115
7,145,158
22,864,403
23,561,963
115,679,069
109,746,590
375,438,801
293,215,499
Paid in capital
10
143,375,678
143,375,678
Foreign currency translation adjustment
Cumulative changes in fair values
Retained earnings
Minority interest
Total equity
LIABILITIES
Liabilities arising from insurance contracts
Unearned premiums
Outstanding claims
Other liabilities
Reinsurance payable
Reinsurance deposit
Deferred ceded commission
Total liabilities
TOTAL EQUITY AND LIABILITIES
8,764
-
15,560,227
(1,995,393)
28,268,242
12,657,112
187,212,911
154,037,397
503,449
-
187,716,360
154,037,397
12
13
69,756,299
76,542,762
54,794,404
53,332,485
146,299,061
108,126,889
14
981,407
402,101
28,408,347
20,538,819
11,116,376
917,250
9,465,362
644,931
187,722,441
139,178,102
375,438,801
293,215,499
The consolidated financial statements were authorised for issue in accordance with a resolution of the Board
of Directors on 25 May 2008.
The attached notes 1 to 23 form part of these consolidated financial statements
IN TER NATIONAL GENE RAL INSURAN CE HOL DIN GS L TD .
10
CONSOLIDATED INCOME STATEMENT For the year ended 31 March 2008
Insurance premiums earned
Reinsurers’ share of earned premiums
Net premiums earned
Claims
Reinsurers’ share of claims
Policy acquisition costs
Notes
2008
USD
2007
USD
15
15
16
16
17
101,973,615
73,012,625
(26,634,345)
(27,785,048)
75,339,270
45,227,577
(60,840,941)
(43,534,481)
16,860,138
21,146,142
(15,366,118)
(10,593,446)
NET UNDERWRITING RESULT
15,992,349
12,245,792
Investment income
Loss from trading investments
Commission income
Net realised gains from sale of financial
assets available-for-sale
Income from associated companies
General and administrative expenses
Gain on exchange
18
7,159,599
5,728,186
-
(1,811,801)
135,719
-
19
5
3,904,956
1,716,673
47,283
195,352
(7,514,843)
(3,648,400)
683,350
374,971
PROFIT FOR THE YEAR
20,408,413
14,800,773
Attributable to
Equity holders of the parent
Minority interest
20,417,223
14,800,773
(8,810)
-
20,408,413
14,800,773
The attached notes 1 to 23 form part of these consolidated financial statements. 3
20 07 ANNUAL REPORT
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CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 March 2008
OPERATING ACTIVITIES
Profit for the year
Adjustments for:
Depreciation and amortization
Net gains on sale of financial assets available-for sale
Realized loss from financial assets held for trading
Investment income
Income from associated companies
Reinsurers’ share of unearned premiums
Movement in unearned premiums
Operating profit before changes in operating assets
and liabilities
Deferred policy acquisition costs
Notes
2008
USD
2007
USD
20,408,413
14,800,773
3, 4
19
18
5
131,050
117,994
(3,904,956)
(1,716,673)
-
1,811,801
(7,159,599)
(5,728,186)
(47,283)
(195,352)
(3,235,540)
(2,234,878)
14,961,895
15,969,255
21,153,980
22,824,734
(4,108,408)
(2,455,229)
Receivables arising from insurance and reinsurance contracts
(26,090,200)
(24,424,688)
Other receivables
Movement in outstanding claims
Reinsurers’ share of outstanding claims
Deferred ceded commission
Trading investments
Other liabilities
Net cash from operating activities
INVESTING ACTIVITIES
Purchase of premises and equipment
Purchase of intangible assets
Purchase of financial assets available-for-sale
Proceeds from sale of financial assets available-for sale
Cash outflow on acquisition net of cash acquired
Dividends received from associates
Purchase of financial assets held to maturity
Deposits maturing after 3 months
Investment income
(832,723)
(1,049,997)
23,210,277
13,117,661
697,560
3,596,741
272,319
242,109
-
3,272,729
2,230,320
3,931,024
16,533,125
19,055,084
3
4
4
(1,035,619)
(125,412)
(250,719)
(17,099)
(23,460,731)
(8,163,727)
12,858,699
4,244,842
(595,960)
-
155,365
(1,690,141)
-
(11,889,624)
20,000,000
18
7,159,599
5,728,186
Net cash (used in) from investing activities
(18,904,496)
21,822,155
FINANCING ACTIVITIES
Dividends paid
Net cash used in financing activities
NET CHANGE IN CASH AND CASH EQUIVALENTS
11
(3,585,774)
(1,342,884)
(3,585,774)
(1,342,884)
(5,957,145)
39,534,355
Cash and cash equivalents at the beginning of the year
109,746,590
70,212,235
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
20
103,789,445
109,746,590
The attached notes 1 to 23 form part of these consolidated financial statements. 4
IN TER NATIONAL GENE RAL INSURAN CE HOL DIN GS L TD .
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31 March 2008
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20 07 ANNUAL REPORT
13
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
1- ACTIVITIES
International General Insurance Holdings Limited “IGIH” is incorporated as a company
limited by shares under the Companies Law, DIFC Law No. 2 of 2004 on 7 May 2006 and
is engaged in the business of re-insurance and insurance. The Company’s registered office
is in Dubai International Financial Centre.
The company operates in four countries, Dubai, Bermuda, Jordan and Malaysia.
2- BASIS OF PREPARATION
2a SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
The consolidated financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS).
The consolidated financial statements have been presented in United States Dollars “USD”
which is the Group’s functional currency.
The consolidated financial statements are prepared under the historical cost convention
modified to include the measurement at fair value of financial financial assets available-for-
sale.
Except as noted below, the Group’s accounting policies are consistent with those used in
the previous year:
IAS 1 – Presentation of Financial Statements (revised 2005)
The standard requires the presentation of additional disclosures to enable users of the financial
statements to evaluate the entity’s objectives, policies and processes for managing capital.
IFRS 7 – Financial Instruments: Disclosure
The standard requires disclosures that enable users of the financial statements to evaluate
the significance of the entity’s financial
instruments and the nature and extent of risks
arising from those financial instruments.
Acquisition of International General Insurance-Jordan “IGI-Jordan”
Effective 1 April 2006, the Company and IGI-Jordan entered into a share purchase agreement
(SPA). Pursuant to this agreement, IGI-Jordan’s shareholders sold their holding in IGI-Jordan
in consideration for the issuance of 143,375,678 shares of the company. As a result of
the issuance of shares, the shareholders of IGI-Jordan obtained control of the Company.
Accordingly, the transaction was accounted for as a reverse acquisition in accordance with
IFRS 3“Business Combinations”. For financial reporting purposes, IGI-Jordan (the legal
subsidiary) is the acquirer and the Company (the legal parent) is the acquiree.
The consolidated financial statements prepared following the reverse acquisition are issued
under the name of the Company, but they are a continuance of the financial statements of
IGI-Jordan, because such consolidated financial statements represent a continuation of the
financial statements of IGI-Jordan:
a) The assets and liabilities of IGI-Jordan have been recognized as measured in the
consolidated financial statements at their pre-combination carrying amounts.
IN TER NATIONAL GENE RAL INSURAN CE HOL DIN GS L TD .
14
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
b) The retained earnings and other equity balances recognized in the consolidated financial
statements are the retained earnings and other equity balances of IGI-Jordan immediately
before the business combination.
c) The equity structure (number of shares) appearing in the consolidated financial
statements reflects the equity structure of the Company.
Basis of consolidation
The consolidated financial statements comprise the financial statements of IGIH and its
subsidiaries as at 31 March:
-International General Insurance/Bermuda, which IGIH owns 100% of its paid in capital
amounting to USD 120,000 as of 31 March 2008. The company was established on 2
May 2007. The Company is engaged in the business of re-insurance and insurance.
-International General Insurance Underwriting/Jordan, which IGIH owns 100% of its paid in
capital amounting to USD 2,676,171 as of 31 March 2008. The company was established
on 4 October 2001. The Company main operation is insurance brokerage.
-SR Bishops Underwriting Limited/London, which IGIH owns 51% of its paid in capital
amounting to USD 19,625 as of 31 March 2008. The company was acquired on 1 April
2007. The Company main operation is insurance brokerage.
The financial statements of the subsidiaries are prepared for the same reporting year as the
Group, using consistent accounting policies. If different accounting policies were applied by
the subsidiaries, adjustments shall be made on their financial statements in order to comply
with those of the IGIH.
All intra-company balances, transactions, income and expenses and profits and losses
resulting from intra-company transactions that are recognised in assets or liabilities, are
eliminated in full.
Subsidiaries are fully consolidated from the date on which control is transferred to IGIH.
Control is achieved where IGIH has the power to govern the financial and operating policies
of an entity in order to obtain benefits from its activities. The results of subsidiaries acquired
or disposed of during the year are included in the consolidated income statement from the
date of acquisition or up to the date of disposal, as appropriate.
Minority interests represent the portion of profit or loss and net assets not owned, directly or
indirectly, by IGIH and are presented separately in the income statement and within equity
in the consolidated balance sheet, separately from parent shareholders’ equity.
New standard issued but not yet effective
The following standard has been issued by the International Accounting Standards Board
(IASB) but is not yet mandatory for these financial statements:
• IAS 1 -Presentation of financial statements (Revised) (effective for annual periods
commencing 1 January 2009)
The application of the above is not expected to have a material impact on the financial
statements as and when it becomes effective. However, the application of IAS 1 (Revised)
will result in amendments to the presentation of the financial statements.
20 07 ANNUAL REPORT
15
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
Premiums earned
Premiums are taken into income over the terms of the policies to which they relate on a
pro-rata basis. Unearned premiums represent the portion of premiums written relating to
the unearned premium of coverage. The change in the provision for unearned premiums is
taken to the income statement in order that revenue is recognised over the period of risk.
Claims
Claims, comprising amounts payable to contract holders and third parties and related
loss adjustment expenses, net of salvage and other recoveries, are charged to income as
incurred. Claims comprise the estimated amounts payable, in respect of claims reported to
the Group and those not reported at the balance sheet date.
The Group generally estimates its claims based on appointed loss adjusters or leading
underwriter’s recommendations. In addition a provision based on management’s judgement
and the Group’s prior experience is maintained for the cost of settling claims incurred but
not reported at the balance sheet date for the fiscal year. Any difference between the
provisions at the balance sheet date and settlements and provisions for the following year is
included in the underwriting account for that year.
Policy acquisition costs
Commissions paid to intermediaries and other direct costs incurred in relation to the
acquisition and renewal of insurance contracts are capitalised as an intangible asset. The
deferred policy acquisition costs are subsequently amortised over the terms of the insurance
contracts to which they relate as premiums are earned.
Liability adequacy test
At each balance sheet date the Group assesses whether its recognised insurance liabilities are
adequate using current estimates of future cash flows under its insurance contracts. If that
assessment shows that the carrying amount of its insurance liabilities (less related deferred
policy acquisition costs) is inadequate in the light of estimated future cash flows, the entire
deficiency is immediately recognised in income and an unexpired risk provision created.
The Group does not discount its liability for unpaid claims as substantially all claims are
expected to be paid within one year of the balance sheet date.
Reinsurance
The Group cedes insurance risk in the normal course of business for all classes of business.
Reinsurance assets represent balances due from reinsurance companies. Recoverable
amounts are calculated in a manner consistent with the outstanding claims provision and
are in accordance with the reinsurance contract.
An impairment review is performed at each reporting date or more frequently when an
indication of impairment arises during the reporting year. Impairment occurs when objective
evidence exists that the Group may not recover outstanding amounts under the terms of the
contract and when the impact on the amounts that the Group will receive from the reinsurer
can be measured reliably. The impairment loss is recorded in the income statement.
Ceded reinsurance arrangements do not relieve the Group from its obligations to
policyholders.
IN TER NATIONAL GENE RAL INSURAN CE HOL DIN GS L TD .
16
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
Premiums and claims on assumed reinsurance are recognised as income and expenses
in the same manner as they would be if the reinsurance were considered direct business,
taking into account the product classification of the reinsured business.
Reinsurance liabilities represent balances due to reinsurance companies. Amounts payable
are calculated in a manner consistent with the associated reinsurance contract.
Premiums and claims are presented on a gross basis for both ceded and assumed
reinsurance.
Reinsurance assets or liabilities are derecognised when the contractual rights are extinguished
or expire or when the contract is transferred to another party.
Interest revenue
Interest revenue is recognised as the interest accrues using the effective interest method,
under which the rate used exactly discounts estimated future cash receipts through the
expected life of the financial asset to the net carrying amount of the financial asset.
Dividend revenue
Dividend revenue is recognised when right to receive the payment is established.
Premises and equipment
Premises and equipment are stated at cost less accumulated depreciation and any
impairment in value. Deprecation is calculated on a straight-line basis over the estimated
useful lives of the assets ranging between 5 to 10 years.
The assets’ residual values, useful lives and method of depreciation are reviewed and
adjusted if appropriate at each financial year end. Impairment reviews take place when
events or changes in circumstances indicate that the carrying value may not be recoverable.
Impairment losses are recognised in the income statement as an expense.
Intangible assets
a) Goodwill
Goodwill acquired in a business combination is initially measured at cost being the excess
of the cost of the business combination over the Group’s interest in the net fair value of
the identifiable assets, liabilities and contingent liabilities acquired. Goodwill arising from
the investment in subsidiaries is separately shown under intangible assets, while that
arising from the investment in associates is shown as part of investment in associates
and subsequently adjusted for any impairment losses.
For the purpose of impairment testing, goodwill acquired in a business combination is
from the date of acquisition allocated to each of the Group’s cash-generating units, or
groups of cash-generating units. Where the recoverable amount of the cash-generating
unit is less than the carrying value, an impairment loss is recognised.
Following initial recognition, goodwill is measured at cost less any accumulated impairment
losses. Goodwill is reviewed for impairment, annually or more frequently, if events or
changes in circumstances indicate that the estimated recoverable amount of a cash-
generating unit or group of cash-generating units is less than their carrying amount.
Impairment losses are transferred to the income statement.
20 07 ANNUAL REPORT
17
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
b) Intangible assets
Intangible assets acquired through business combination are recorded at their fair value
on that date. Other intangible assets are measured on initial recognition at cost.
Intangible assets with finite lives are amortised over the useful economic life, while
intangible assets with indefinite useful lives are assessed for impairment at each reporting
date or when there is an indication that the intangible asset may be impaired.
Internally generated intangible assets are not capitalised and are expensed in the income
statement.
Indications of impairment of intangible assets are reviewed for and their useful economic
lives are reassessed at each reporting date. Adjustments are reflected in the current and
subsequent periods.
Intangible assets include computer software and programmes. These intangibles assets
are amortised evenly over their estimated economic useful lives of 5 years.
Impairment and uncollectibility of financial assets
An assessment is made at each balance sheet date to determine whether there is objective
evidence that a specific financial asset may be impaired. If such evidence exists, any
impairment loss is recognised in the income statement.
Impairment is determined as follows:
a) For assets carried at fair value, impairment is the difference between cost and fair
value;
b) For assets carried at cost, impairment is the difference between cost and the present
value of future cash flows discounted at the current market rate of return for a similar
financial asset.
c) For assets carried at amortised cost, impairment is based on estimated cash flows
discounted at the effective interest rates.
Derecognition of financial instruments
The derecognition of a financial instrument takes place when the Group no longer controls
the contractual rights that comprise the financial instrument, which is normally the case
when the instrument is sold, or all the cash flows attributable to the instrument are passed
through to an independent third party.
Investment in associated companies
These investments in associated companies are carried in the balance sheet at cost plus post
– acquisition changes in the Group’s share of net assets of associates, less any impairment
in value. The income statement reflects the share of the results of the operations of the
associates.
Financial assets available-for-sale
Financial assets available-for-sale are non-derivative financial assets that are designated
as financial assets available-for-sale. These investments are initially recorded at cost.
Subsequent to initial recognition, these investments are remeasured at fair value. Fair value
gains and losses are reported as a separate component of equity until the investment is
IN TER NATIONAL GENE RAL INSURAN CE HOL DIN GS L TD .
18
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
derecognised or the investment is determined to be impaired. On derecognition or impairment,
the cumulative fair value gains and losses previously reported in equity is transferred to the
income statement.
If a financial assets available-for-sale is impaired, an amount comprising the difference
between its cost (net of any principal repayment and amortisation) and its current fair value,
less any impairment loss previously recognised in the income statement, is transferred from
equity to the income statement. Reversals in respect of equity instruments classified as
financial assets available-for-sale are not recognised in the income statement. Reversals of
impairment losses on debt instruments classified at financial assets available-for-sale are
reversed through the income statement if the increase in the fair value of the instruments
can be objectively related to an event occurring after the impairment losses were recognised
in the income statement.
Financial assets held to maturity
Held to maturity investments are initially recognised at cost, being the fair value of
consideration given including directly attributable transaction costs. After initial measurement,
held-to-maturity financial investments are subsequently measured at amortised cost using
the effective interest method, less allowance for impairment. Amortised cost is calculated
by taking into account any discount or premium on acquisition and fees that are an integral
part of the effective interest method.
Trade and settlement date accounting
Purchases and sales of financial assets are recognised on the trade date (that being the
date at which the sale or purchase takes place).
Cash and cash equivalents
For the purpose of the Statement of Cash Flows, cash and cash equivalents consist of cash
in hand, bank balances, and short-term deposits with an original maturity of three months
or less, net of outstanding bank overdrafts.
Provisions
Provisions are recognised when the Group has an obligation (legal or constructive) as a
result of a past event, and the costs to settle the obligation are both probable and able to
be reliably measured.
Offsetting
Financial assets and liabilities are offset and the net amount reported in the balance sheet
only when there is a legally enforceable right to offset the recognised amounts and there
is an intention to settle on a net basis, or to realise the assets and settle the liability
simultaneously. Income and expense is not offset in the statement of income unless required
or permitted by any accounting standard or interpretation.
Foreign currencies
Transactions in foreign currencies are initially recorded at the functional currency rate ruling at
the date of the transaction. Monetary assets and liabilities denominated in foreign currencies
are retranslated at the functional currency rate of exchange ruling at the balance sheet date.
Nonmonetary items that are measured in terms of historical cost in a foreign currency are
translated using the exchange rate as at the date of the initial transaction and are not
20 07 ANNUAL REPORT
19
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
subsequently restated. Non-monetary items measured at fair value in a foreign currency
are translated using the exchange rates at the date when the fair value was determined. All
foreign exchange differences are taken to the statement of income except when it relates
to items when gains or losses are recognised directly in equity, the gain or loss is then
recognised net of the exchange component in equity
As at the reporting date, the assets and liabilities of foreign subsidiaries are translated into
the Group’s presentation currency at the rate of exchange ruling at the balance sheet date,
and their income statements are translated at the weighted average exchange rates for the
year. Exchange differences arising on translation are taken directly to a separate component
of equity. On disposal of an entity, the deferred cumulative amount recognised in equity
relating to that particular foreign operation is transferred to the income statement.
Leases
The Group has no finance leases.
Leases where the lessor retains substantially all the risks and benefits of ownership of the
asset are classified as operating leases. Operating lease payments are recognised as an
expense in the income statement on a straight-line basis over the lease term.
Fair values
The fair value of financial instruments that are actively traded in organized financial markets
is determined by reference to quoted market bid prices for assets and offer prices for
liabilities, at the close of business on the balance sheet date. If quoted market prices are
not available, reference is also be made to broker or dealer price quotations.
For financial instruments where there is not an active market, the fair value is determined by
using valuation techniques. Such techniques include using recent arm’s length transactions,
reference to the current market value of another instrument which is substantially the same
and/or discounted cash flow analysis. For discounted cash flow techniques, estimated future
cash flows are based on management’s best estimates and the discount rate used is a
market related rate for a similar instrument.
If the fair value can not be measured reliably, these financial instruments are measured at
cost, being the fair value of the consideration paid for the acquisition of the investment or
the amount received on issuing the financial liability. All transaction costs directly attributable
to the acquisition are also included in the cost of the investment.
Judgements
In the process of applying the Group’s accounting policies, management has made the
following judgements, apart from those involving estimations, which have the most significant
effect in the amounts recognised in the financial statements:
Classification of investments
Management decides on acquisition of an investment whether it should be classified as held
for trading or available for sale or held to maturity.
The group classifies investments as trading if they are acquired primarily for the purpose of
making a short term profit by the dealers.
IN TER NATIONAL GENE RAL INSURAN CE HOL DIN GS L TD .
20
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
Financial assets are classified as held to maturity if the Group has the positive intention and
ability to hold up till maturity.
All other investments are classified as financial assets available for sale.
Impairment of investments
The group treats financial assets available for sale as impaired when there has been a
significant or prolonged decline in the fair value below its cost or where other objective
evidence of impairment exists. The determination of what is “significant” or “prolonged”
requires considerable judgement. In addition, the Group evaluates other factors, including
normal volatility in share price for quoted equities and the future cash flows and discount
factors for unquoted equities.
Estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty
at the balance sheet date, that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year are discussed
below:
Valuation of outstanding claims, whether reported or not
Considerable judgement by management is required in the estimation of amounts due to
contract holders arising from claims made under insurance contracts. Such estimates are
necessarily based on assumptions about several factors involving varying, and possibly
significant, degrees of
judgement and uncertainty and actual results may differ from
management’s estimates resulting in future changes in estimated liabilities.
In particular, estimates have to be made both for the expected ultimate cost of claims
reported at the balance sheet date and for the expected ultimate cost of claims incurred
but not yet reported (IBNR) at the balance sheet date. The primary technique adopted by
management in estimating the cost of notified and IBNR claims, is that of using past claim
settlement trends to predict future claims settlement trends.
Claims requiring court or arbitration decisions are estimated individually. Independent loss
adjustors normally estimate property claims. Management reviews its provisions for claims
incurred, and claims incurred but not reported, on a quarterly basis.
Reinsurance
The Group is exposed to disputes with, and possibility of defaults by, its reinsurers. The
Group monitors on a quarterly basis the evolution of disputes with and the strength of its
reinsurers.
20 07 ANNUAL REPORT
21
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
3 PREMISES AND EQUIPMENT
Office
furniture Computers
Equipment
Decorations
& leasehold
improvements
Vehicles
USD
USD
USD
USD
USD
Total
USD
Cost
At 1 April 2007
73,872 167,809
55,843
100,880
156,253
554,657
Additions
299,155
21,867
37,861
614,437
62,299
1,035,619
At 31 March 2008
373,027 189,676
93,704
715,317
218,552
1,590,276
Depreciation
At 1 April 2007
23,629
87,307
25,960
37,873
55,352
230,121
Additions
7,466
32,670
4,823
4,239
17,982
67,180
At 31 March 2008
31,095 119,977
30,783
42,112
73,334
297,301
Net carrying amount
At 31 March 2008
341,932
69,699
62,921
673,205
145,218
1,292,975
Office
furniture Computers
Equipment
Decorations
& leasehold
improvements
Vehicles
USD
USD
USD
USD
USD
Total
USD
Cost
At 1 April 2006
67,553 127,196
52,017
50,875
131,604
429,245
Additions
6,319
40,613
3,826
50,005
24,649
125,412
At 31 March 2007
73,872 167,809
55,843
100,880
156,253
554,657
Depreciation
At 1 April 2006
16,522
56,520
17,503
27,931
36,005
154,481
Additions
7,107
30,787
8,457
9,942
19,347
75,640
At 31 March 2007
23,629
87,307
25,960
37,873
55,352
230,121
Net carrying amount
At 31 March 2007
50,243
80,502
29,883
63,007
100,901
324,536
The depreciation charge for the year of USD 67,180 (2007: USD 75,640) has been included
in general and administrative expenses.
IN TER NATIONAL GENE RAL INSURAN CE HOL DIN GS L TD .
22
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
4- INTANGIBLE ASSETS
Goodwill*
USD
Computers
software
USD
2008
Total
USD
Computers
software
USD
2007
-
194,434
194,434
177,335
341,522
250,719
592,241
17,099
341,522
445,153
786,675
194,434
-
-
-
100,493
100,493
63,870
63,870
58,139
42,354
164,363
164,363
100,493
Cost
At 1 April
Additions
At 31 March
Amortization
At 1 April
Additions
At 31 March
Net book value
341,522
280,790
622,312
93,941
* Effective 1 April 2007, the Group completed the acquisition of 51% of S R Bishop
Underwriting Limited.
The details of the fair values of the assets and liabilities acquired and goodwill arising on the
acquisition are as follows:
Insurance receivables
Other receivables
Cash and deposits
Reinsurance payables
Less: minority interest (49%)
Net assets
1 April 2007
Carrying value
Fair value
1,312,321
1,312,321
51,404
51,404
269,966
269,966
(605,448)
(605,448)
1,028,243
1,028,243
(503,839)
524,404
20 07 ANNUAL REPORT
23
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
Goodwill arising on the acquisition is as follows:
Total payments made
Less: Fair value of net assets acquired
Goodwill
Cash outflow on acquisition:
Payments made for acquisition
Cash on hand and at banks from S R Bishop
Net cash outflow
Amount
865,926
524,404
341,522
(865,926)
269,966
(595,960)
During the year S R Bishop net loss amounted to USD 17,979 before minority interest.
There were no purchases or acquisitions of other businesses.
IMPAIRMENT TESTING OF GOODWILL
KEY ASSUMPTIONS USED IN VALUE IN USE CALCULATION
The recoverable amount of S R Bishop Underwriting Limited has been determined based on
the value in use calculation, using cash flow projections based on financial budgets approved
by senior management covering a five-year period based on S R Bishop Underwriting Limited
performance assumptions.
The discount rate used by the Group is 10%.
In the opinion of the Group’s management based on the discounted cash flow projections,
goodwill is not impaired
5- INVESTMENT IN ASSOCIATED COMPANIES
During July 2002 the Group acquired a 33% equity ownership interest in real estate limited
liabilities companies registered in Lebanon.
The Group has the following investments in associates:
Star Rock SAL Lebanon
Sina SAL Lebanon
Silver Rock SAL Lebanon
Golden Rock SAL Lebanon
Country of
incorporation
Ownership
2008
2007
Lebanon
Lebanon
Lebanon
Lebanon
33%
33%
33%
33%
33%
33%
33%
33%
IN TER NATIONAL GENE RAL INSURAN CE HOL DIN GS L TD .
24
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
The following table illustrates summarised information of the Group’s investments in
associates:
Share of associates’ balance sheets:
Current assets
Non-current assets
Current liabilities
Net assets
Share of associates’ revenues and results:
Revenues
Results
6- FINANCIAL ASSETS AVAILABLE-FOR-SALE
2008
USD
2007
USD
69,743
14,025,915
(5,628,259)
8,467,399
3,621,652
11,951,698
(7,153,234)
8,420,116
333,030
47,283
464,048
195,352
2008
USD
2007
USD
Quoted investments
Bonds and debt securities with fixed interest rate
50,301,287
52,398,516
Equity securities
37,566,618
16,334,005
Funds and alternative investments
11,130,431
Unquoted investments*
Government bonds and debt securities with fixed interest rate
Equity securities
1,763,047
4,415,294
-
-
5,601,867
105,176,677
74,334,388
Equity securities have no fixed maturity dates and are generally not exposed to interest rate
risk.
* Included in unquoted bonds and equities are investments carried at cost with value of USD
6,178,341 (2007: USD 5,601,867). The investments were stated at cost since the fair
value could not be measured reliably and there is no indication of impairment in the values
as of the balance sheet date.
7- RECEIVABLES ARISING FROM INSURANCE AND REINSURANCE CONTRACTS
2008
USD
2007
USD
Receivables from insurance companies and intermediaries
66,644,042
40,241,070
Reinsurers – amounts due in respect of claims paid
27,319,062
19,038,249
93,963,104
59,279,319
All of the above amounts are due within twelve months of the balance sheet date.
20 07 ANNUAL REPORT
25
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
8- OTHER RECEIVABLES
Prepaid expenses
Refundable deposits
Employees receivables
Advance payment on investments*
Trade receivables
Accrued interest income
Accrued dividends income
Others
2008
USD
370,234
-
14,369
580,828
96,512
915,234
281,633
125,432
2007
USD
65,868
85
113,906
-
3,675
1,030,299
214,362
71,920
2,384,242
1,500,115
* This represent payments made in advance to acquire the remaining 49% of S R Bishop
share capital, which will be transferred in the name of IGI on or after 30 April 2011. If IGIH
decided not to acquire the remaining 49% the advance payment will be refunded.
9- CASH AND SHORT TERM DEPOSITS
Cash and cash equivalents included in the statement of cash flows include the following
balance sheet amounts:
Cash and bank balances
Time deposits
Demand deposits
2008
USD
2007
USD
7,390,562
8,497,643
96,398,883
81,132,344
11,889,624
20,116,603
115,679,069
109,746,590
The time deposits, which are substantially denominated in US Dollars, are made for varying
periods of between one week and one month depending on the immediate cash requirements
of the Group, and earn interest at the respective short-term deposit rates.
Demand deposits maturing after three months amounted to USD 11,889,624 as of 31
March 2008 (2007:nil).
10- SHARE CAPITAL
Authorised
Issued and fully paid
2008
USD
2007
2008
2007
USD
Shares of USD 1 each
143,375,678
143,375,678
143,375,678
143,375,678
IN TER NATIONAL GENE RAL INSURAN CE HOL DIN GS L TD .
26
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
11- DIVIDENDS PAID
The Board of directors and shareholders of IGI approved on their meeting held on 21 May
2007 to distribute cash dividends amounting to USD 3,585,774 (USD 0.03 per share).
(2007: USD 1,342,884 (USD 0.01 per share)).
12- UNEARNED PREMIUMS
Gross
2008
Reinsurers’
share
Net
Gross
2007
Reinsurers’
share
Net
USD
USD
USD
USD
USD
USD
Unearned premiums
69,756,299
(10,380,698)
59,375,601
54,794,404
(7,145,158)
47,649,246
Details of the movements of the provision for unearned premium and the related reinsurers’
share is contained in (Note 15).
13- OUTSTANDING CLAIMS
The movement in the provision for outstanding claims, and the related reinsurers’ share,
was as follows:
Gross
2008
Reinsurers’
share
2007
Net
Gross
Reinsurers’
share
Net
USD
USD
USD
USD
USD
USD
At the beginning of the year
Claims incurred
49,832,485 (23,561,963)
26,270,522
38,214,824
(27,158,704) 11,056,120
Claims incurred but not reported
3,500,000
-
3,500,000
2,000,000
-
2,000,000
53,332,485
(23,561,963) 29,770,522
40,214,824
(27,158,704) 13,056,120
Insurance claims paid in the year
(37,630,664) 17,557,698
(20,072,966)
(30,416,820) 24,742,883
(5,673,937)
Provided during the year
60,840,941
(16,860,138 ) 43,980,803
43,534,481
(21,146,142) 22,388,339
At the end of the year
76,542,762
(22,864,403 ) 53,678,359
53,332,485
(23,561,963) 29,770,522
Analysis of outstanding claims
At the end of the year
Claims incurred
71,042,762
(22,864,403 ) 48,178,359
49,832,485
(23,561,963) 26,270,522
Claims incurred but not reported
5,500,000
-
5,500,000
3,500,000
-
3,500,000
76,542,762
(22,864,403 ) 53,678,359
53,332,485
(23,561,963) 29,770,522
There are no material amounts for which amount and timing of claims payment is not
resolved within one year of the balance sheet date.
The carrying amounts disclosed above reasonably approximate fair value at balance sheet
date.
20 07 ANNUAL REPORT
27
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
Claims development (Gross)
Underwriting year
2002
USD
2003
USD
2004
USD
2005
USD
2006
USD
2007
USD
2008
USD
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Current estimate of
cumulative claims
Cumulative
payment to date
Total cumulative
claims recognised
in the balance
sheet date
785,399
2,882,715
2,636,351 27,196,242 14,169,367 23,280,006
3,242,945
4,973,033
9,280,790 47,999,136 40,889,955
3,525,326
8,559,142 14,954,618 58,363,593
3,736,717 10,117,423 17,709,267
3,515,448 10,948,303
3,471,996
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,471,996 10,948,303 17,709,267 58,363,593 40,889,955 23,280,006 154,663,120
3,136,545
7,441,877 12,046,126 36,728,190 15,102,641
3,664,979
78,120,358
335,451
3,506,426
5,663,141 21,635,403 25,787,314 19,615,027
76,542,762
14- OTHER LIABILITIES
Accounts payable
Amounts due to related parties (note 22)
Accrued expenses
15- NET INSURANCE PREMIUM REVENUE
2008
USD
231,865
-
749,542
981,407
2008
USD
2007
USD
13,451
29,978
358,672
402,101
2007
USD
Insurance premiums
Change in unearned premiums
Gross premiums
116,935,510
88,981,880
(14,961,895)
(15,969,255)
101,973,615
73,012,625
Reinsurers’ share of insurance premiums
(29,869,885)
(30,019,926)
Reinsurers’ share of change in unearned premiums
3,235,540
2,234,878
Reinsurers’ share of gross premiums
(26,634,345)
(27,785,048)
75,339,270
45,227,577
During the year the Company has revised the estimates of unearned premiums reserves
on construction risk policies based on project duration vis-a-vis related risks and this has
resulted in an increase in net earned premium an amount of USD 2.2 million.
IN TER NATIONAL GENE RAL INSURAN CE HOL DIN GS L TD .
28
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
16- CLAIMS
Gross
2008
Reinsurers’
share
Net
Gross
2007
Reinsurers’
share
Net
USD
USD
USD
USD
USD
USD
Claims paid
37,630,664
(17,557,698) 20,072,966
30,416,820
(24,742,883)
5,673,937
Change in provision
for outstanding claims 23,210,277
697,560
23,907,837
13,117,661
3,596,741
16,714,402
60,840,941
(16,860,138) 43,980,803
43,534,481
(21,146,142) 22,388,339
17- DEFERRED POLICY ACQUISITION COSTS
At 1 April
Additions
Amortisation
At 31 March
18- INVESTMENT INCOME
Financial assets available-for-sale
Dividends
Interest
2008
USD
2007
USD
8,809,373
6,354,144
19,474,526
13,048,675
(15,366,118)
(10,593,446)
12,917,781
8,809,373
2008
USD
2007
USD
928,482
552,743
6,231,117
5,175,443
7,159,599
5,728,186
19- NET REALISED GAINS ON FINANCIAL ASSETS AVAILABLE-FOR-SALE
Realised gains
Equity securities
2008
USD
2007
USD
3,904,956
1,716,673
20 07 ANNUAL REPORT
29
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
20- CASH AND CASH EQUIVALENTS
Cash and cash equivalent balances in the statement of cash flows consist of the following
balances:
Cash and bank balances
Time and demand deposit
2008
USD
2007
USD
7,390,562
8,497,643
108,288,507
101,248,947
Less: Demand deposits maturing after 3 months
(11,889,624)
-
103,789,445
109,746,590
21- COMMITMENTS AND CONTINGENCIES
As of the date of the financial statements,
followings:
the Group is contingently liable to the
Letters of guarantee amounting to USD 10,563 (2007: USD 8,450) to the order of the
Jordanian Ministry of Trade and Industry with margin of USD 1,056 (2007: USD 845).
Letters of credit amounting to USD 23,809,705 to the order of reinsurance companies(2007:
USD 19,377,854).
The Group has entered into commercial leases on certain apartments and offices where
it is not in the best interest of the Group to purchase these assets. These leases have an
average life 1 year with renewal terms included in the contracts. Renewals are at the option
of the Group.
22- RELATED PARTY TRANSACTIONS
Transactions with related party (Eastern Insurance Brokers Company) included in the financial
statements are as follows:
Accounts Receivable/(Payable)
Commission paid
2008
USD
610,471
211,228
2007
USD
(29,692)
32,811
Compensation of key management personnel of the Group, consisting of salaries and
benefits, was USD 1,179,694 (2007: USD 1,028,139).
23- RISK MANAGEMENT
The risks faced by the Group and the way these risks are mitigated by management are
summarised below.
Insurance risk
Insurance risk is the risk that actual claims payable to contract holders in respect of insured
events exceed the carrying amount of insurance liabilities. This could occur because the
frequency or amounts of claims are more than expected. The Group only issues short term
IN TER NATIONAL GENE RAL INSURAN CE HOL DIN GS L TD .
30
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
insurance contracts in connection with property and energy (collectively known as fire and
accident), and marine risks,
Frequency and amounts of claims
The frequency and amounts of claims can be affected by several factors. The Group
underwrites mainly fire and accident and marine risks. These are regarded as short-term
insurance contracts as claims are normally advised and most are settled within one year of
the insured event taking place. This helps to mitigate insurance risk.
Property and energy
Property and energy insurance is designed to compensate contract holders for damage
suffered to properties or for the value of property lost. Contract holders could also receive
compensation for the loss of earnings caused by the inability to use the insured properties.
For property and energy insurance contracts the main risks are fire and business interruption.
In recent years the Group has mostly underwritten policies for properties containing fire
detection equipment.
These contracts are underwritten by reference to the replacement value of the properties
and contents insured. The cost of rebuilding properties and obtaining replacement contents
and the time taken to restart operations which leads to business interruptions are the main
factors that influence the level of claims.
Marine
Marine insurance is designed to compensate contract holders for damage and liability arising
through loss or damage to marine craft and accidents at sea resulting in the total or partial
loss of cargoes.
For marine insurance the main risks are loss or damage to marine craft and accidents
resulting in the total or partial loss of cargoes.
The underwriting strategy for the marine class of business is to ensure that policies are well
diversified in terms of vessels and shipping routes covered.
Geographical concentration of risks
Approximately, 51%, 15% , 15% and 19% of the Group’s insurance risk relates to policies
written in the Middle/Far East and Asia, Europe, USA and the rest of the world respectively.
( 2007 : 48%, 22%, 18% and 12%)
Reinsurance risk
In common with other insurance companies, in order to minimise financial exposure arising
from large claims, the Group, in the normal course of business, enters into contracts with
other parties for reinsurance purposes. Such reinsurance arrangements provide for greater
diversification of business, allow management to control exposure to potential losses arising
from large risks, and provide additional capacity for growth. A significant portion of the
reinsurance is effected under treaty, facultative and excess-of-loss reinsurance contracts.
To minimise its exposure to significant losses from reinsurer insolvencies, the Group evaluates
the financial condition of its reinsurers. The Group only deals with reinsurers approved by the
board of directors, which are generally rated A or above by international rating agencies.
20 07 ANNUAL REPORT
31
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
Financial risk
The Group’s principal financial instruments are financial financial assets available-for-sale,
receivables arising from insurance and reinsurance contracts, trading investments and cash
and cash equivalents.
The Group does not enter into derivative transactions.
The main risks arising from the Group’s financial instruments are interest rate risk, foreign
currency risk, credit risk, market price risk and liquidity risk. The board reviews and agrees
policies for managing each of these risks and they are summarised below.
Interest rate risk
Interest rate risk arises from the possibility that changes in interest rates will affect future
profitability or the fair values of financial instruments. The Group is exposed to interest rate
risk on certain of its investments and cash and cash equivalents. The Group limits interest
rate risk by monitoring changes in interest rates in the currencies in which its cash and
interest bearing investments and borrowings are denominated.
Details of maturities of the major classes of financial assets are as follows:
31 March 2008
Less than
1 year
1 to
5 years
Non-
interest
bearing
items
USD
USD
USD
Effective
Interest Rate
on interest
bearing assets
%
Total
USD
Financial assets available-for-sale
Financial assets held to maturity
-
-
Cash and short term deposits
115,679,069
-
50,301,287
54,875,390 105,176,677
5.00
1,690,141
-
-
1,690,141
115,679,069
9.50
5.45
31 March 2007
115,679,069 51,991,428
54,875,390 222,545,887
Less than
1 year
1 to
5 years
Non-
interest
bearing
items
USD
USD
Effective
Interest Rate
on interest
bearing assets
%
Total
USD
52,398,516
21,935,872
74,334,388
3.65
Financial assets available-for-sale
USD
-
Cash and short term deposits
109,746,590
-
-
109,746,590
3.75
109,746,590 52,398,516
21,935,872
184,080,978
There is no significant difference between contractual repricing or maturity dates.
IN TER NATIONAL GENE RAL INSURAN CE HOL DIN GS L TD .
32
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
The following table demonstrates the sensitivity of income statement and the Group’s equity
to reasonably possible changes in interest rates, with all other variables held constant.
The sensitivity of the income statement is the effect of the assumed changes in interest
rates on the Group’s profit for the year, based on the floating rate financial assets and
financial liabilities held at 31 March 2008.
2008
2007
Increase/ decrease
in basis
Effect on profit
points for the year
+ 25
- 50
+ 25
- 50
USD
289,187
(578,395)
274,366
(548,732)
Foreign currency risk
Foreign currency risk is the risk that the value of a financial instrument will fluctuate due to
changes in foreign exchange rates.
Management believes that there is minimal risk of significant losses due to exchange rate
fluctuations since most of there transactions are in US Dollars and consequently the Group
does not hedge its foreign currency exposure.
Credit risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation
and cause the other party to incur a financial loss. For all classes of financial assets held by
the Group, the maximum credit risk exposure to the Group is the carrying value as disclosed
in the balance sheet.
The Group only enters into insurance and reinsurance contracts with recognised, credit
worthy third parties. It is the Group’s policy that all customers who wish to trade on credit
terms are subject to credit verification procedures. In addition, receivables from insurance
and reinsurance contracts are monitored on an ongoing basis in order to reduce the Group’s
exposure to bad debts.
The Group portfolio is managed by the Vice-Chairman and CEO in accordance with the
investment policy established by the board of directors.
The Group’s bank balances are maintained with a range of international and local banks in
accordance with limits set by the board of directors.
There are no significant concentrations of credit risk within the Group. The table below
provides information regarding the credit risk exposure of the Group by classifying assets
according to the Group’s credit rating of counterparties:
20 07 ANNUAL REPORT
33
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
31 March 2008
Neither past due nor impaired
Non
investment
grade
(satisfactory)
Non
investment
grade
(un-satisfactory)
Past due
or
impaired
investment
grade
USD
USD
USD
USD
Financial assets available- for-sale
50,301,287
54,875,390
Financial assets held to maturity
Receivables arising from
insurance and reinsurance contracts
Reinsurers’ share of unearned premium
-
-
-
1,690,141
93,963,104
10,380,698
Reinsurers’ share of outstanding claims
21,054,522
1,809,881
Cash and short term deposits
55,225,009
60,454,060
126,580,818 223,173,274
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31 March 2007
Neither past due nor impaired
Non
investment
grade
(satisfactory)
Non
investment
grade
(un-satisfactory)
Past due
or
impaired
investment
grade
USD
USD
USD
USD
Financial assets available- for-sale
32,398,516
41,935,872
Receivables arising from
insurance and reinsurance contracts
Reinsurers’ share of unearned premium
-
-
59,279,319
7,145,158
Reinsurers’ share of outstanding claims
21,802,997
1,758,966
Cash and short term deposits
50,235,634
59,510,956
104,437,147
169,630,271
-
-
-
-
-
-
-
-
-
-
-
-
Total
USD
105,176,677
1,690,141
93,963,104
10,380,698
22,864,403
115,679,069
349,754,092
Total
USD
74,334,388
59,279,319
7,145,158
23,561,963
109,746,590
274,067,418
IN TER NATIONAL GENE RAL INSURAN CE HOL DIN GS L TD .
34
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
The following table provides an aging analysis of receivables arising from insurance and
reinsurance contracts past due but not impaired:
Past due but not impaired
Neither past due
nor impaired
Up to
90 days
91 to
180 days
181 to
270 days
271 to
360 days
USD
USD
USD
USD
USD
Total
USD
31 March 2008
63,544,785
14,597,258
13,934,188
672,494
1,214,379
93,963,104
31 March 2007
27,156,021
13,084,602
15,326,945
1,256,975
2,454,776
59,279,319
For assets to be classified as ‘past due and impaired’ contractual payments are in arrears for
more than 360 days and an impairment adjustment is recorded in the income statement for
this. When the credit exposure is adequately secured, arrears more than 360 days might still
be classified as ‘past due but not impaired”, with no impairment adjustment recorded.
Market price risk
Market price risk is the risk that the value of a financial instrument will fluctuate as a result
of changes in market prices (other than those arising from interest rate risk or currency risk),
whether those changes are caused by factors specific to the individual security, or its issuer,
or factors affecting all securities traded in the market.
Amman Stock Exchange
Saudi Arabia
Dubai International Financial Exchange
Other quoted
Change in
equity price
Effect on
equity
Change in
equity price
Effect on
equity
2008
2007
USD
+5%
+5%
+5%
+5%
USD
712,879
1,040,319
70,755
54,377
USD
+5%
-
-
USD
784,680
-
-
+5%
32,020
The company’s equity price risk exposure relates to financial assets whose values will
fluctuate as a result of changes in market prices.
The following table demonstrates the sensitivity of the cumulative changes in fair value to
reasonably possible changes in equity prices, with all other variables held constant. The
effect of decreases in equity prices is expected to be equal and opposite to the effect of the
increases shown.
The Company also has unquoted investments carried at cost where the impact of changes
in equity prices will only be reflected when the investment is sold or deemed to be impaired,
when the statement of income will be impacted.
The Group limits market risk by maintaining a diversified portfolio and by monitoring of
developments in equity markets.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its commitments associated
with insurance contracts and financial liabilities as they fall due.
Liquidity requirements are monitored on a monthly basis and management ensures that
sufficient liquid funds are available to meet any commitments as they arise.
All liabilities are non-interest bearing liabilities.
20 07 ANNUAL REPORT
35
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
ASSETS
Premises and equipment
Intangible assets
Investment in associated companies
31 March 2008
Less than
one year
More than
one year
No term
Total
-
-
-
1,292,975
622,312
8,467,399
-
-
-
1,292,975
622,312
8,467,399
Financial assets available-for-sale
16,760,238
52,064,334
36,352,105 105,176,677
Financial assets held to maturity
-
1,690,141
Deferred policy acquisition costs
10,980,114
1,937,667
Receivables arising from insurance contracts
66,644,042
27,319,062
Other receivables
2,384,242
-
Reinsurers’ share of unearned premiums
8,512,000
1,868,698
Reinsurers’ share of outstanding claims
17,526,433
5,337,970
Cash and short term deposits
115,679,069
-
-
-
-
-
-
-
-
1,690,141
12,917,781
93,963,104
2,384,242
10,380,698
22,864,403
115,679,069
TOTAL ASSETS
238,486,138 100,600,558
36,352,105 375,438,801
EQUITY AND LIABILITIES
Equity
Paid in capital
Foreign currency translation adjustment
Cumulative changes in fair values
Retained earnings
Minority interest
Total equity
Liabilities
-
-
-
-
-
-
-
-
-
-
-
-
-
-
143,375,678 143,375,678
8,764
8,764
15,560,227
15,560,227
28,268,242
28,268,242
187,212,911 187,212,911
503,449
503,449
187,716,360 187,716,360
Liabilities arising from insurance contracts
Unearned premiums
Outstanding claims
Other liabilities
Reinsurance payable
Reinsurance deposit
Deferred ceded commission
59,292,854
10,463,445
57,407,072
19,135,690
981,407
28,408,347
-
-
-
11,116,376
779,662
137,588
Total liabilities
146,869,342
40,853,099
-
-
-
-
-
-
-
69,756,299
76,542,762
981,407
28,408,347
11,116,376
917,250
187,722,441
TOTAL EQUITY AND LIABILITIES
146,869,342
40,853,099
187,716,360 375,438,801
IN TER NATIONAL GENE RAL INSURAN CE HOL DIN GS L TD .
36
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008
ASSETS
Premises and equipment
Intangible assets
Investment in associated companies
31 March 2007
Less than
one year
More than
one year
No term
Total
-
-
-
324,536
93,941
8,420,116
-
-
-
324,536
93,941
8,420,116
Financial assets available-for-sale
16,760,238
51,972,283
5,601,867
74,334,388
Deferred policy acquisition costs
7,487,967
1,321,406
Receivables arising from insurance contracts
37,142,374
22,136,945
Other receivables
1,500,115
-
Reinsurers’ share of unearned premiums
6,073,384
1,071,774
Reinsurers’ share of outstanding claims
17,526,433
6,035,530
Cash and short term deposits
109,746,590
-
-
-
-
-
-
-
8,809,373
59,279,319
1,500,115
7,145,158
23,561,963
109,746,590
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity
Paid in capital
Cumulative changes in fair values
Retained earnings
Total equity
Liabilities
196,237,101
91,376,531
5,601,867 293,215,499
-
-
-
-
-
-
-
-
143,375,678 143,375,678
(1,995,393)
(1,995,393)
12,657,112
12,657,112
154,037,397 154,037,397
Liabilities arising from insurance contracts
Unearned premiums
Outstanding claims
Other liabilities
Reinsurance payable
Reinsurance deposit
Deferred ceded commission
46,575,244
8,219,160
40,001,200
13,331,285
402,101
20,538,819
-
-
-
9,465,362
548,191
96,740
Total liabilities
108,065,555
31,112,547
-
-
-
-
-
-
-
54,794,404
53,332,485
402,101
20,538,819
9,465,362
644,931
139,178,102
TOTAL EQUITY AND LIABILITIES
108,065,555
31,112,547 154,037,397 293,215,499
Capital management
The Group manages its capital by ‘Enterprise Risk Management’ techniques, using a dynamic
financial analysis model. The Asset Liability match is reviewed and monitored on regular
basis to maintain a strong credit rating and healthy capital adequacy ratios to support its
business objectives and maximise shareholders’ value.
Adjustments to capital levels are made in light of changes in market conditions and risk
characteristics of the Group’s activities
20 07 ANNUAL REPORT
37
OFFICERS
CORPORATE OFFICERS
Mr. Wasef S. Jabsheh
Vice Chairman & CEO
Mr. Paul K. Munday
President
Mr. Waleed W. Jabsheh
Executive Vice President
Ms. Rachel A Butler
Senior Vice President Operations
Mr. Mark M Jeffrey
Senior Vice President Underwriting
Mr. Soumitra Biswas
Senior Vice President Finance
Mr. Rod Smith
Business Development Manager
IN TER NATIONAL GENE RAL INSURAN CE HOL DIN GS L TD .
38
OFFICES
International General Insurance Holdings Limited
Office Location:
Dubai International Financial Centre,
Unit 101, Level 1, Gate Village 1, Dubai
Postal Address:
P.O. Box 506646
Dubai
United Arab Emirates
Telephone: +971 4 363 3520
International General Insurance Company Limited
Office:
44 Church Street
Hamilton HM 12
Bermuda
Telephone: +441 295 1422
Facsimile: +441 292 4728
International General Insurance Underwriting Company Limited
Office Location:
47 Al-Ameer Shaker Bin Zeid St.
Shmeisani, Amman
Postal Address:
P.O. Box 941428
Amman 11194
Jordan
Telephone: +962 6 566 2082
Facsimile: +962 6 566 2085
International General Insurance Company (Labuan Branch) Limited
Office:
Level 1, LOT 7, Block F, Saguking Commercial Building,
Jalan Patau- Patau
87000 Labuan
Malaysia
Telephone: +908 7 417672
Facsimile: +908 7 417675
Auditor:
Actuary:
Consultant:
Ernst & Young
P.O. Box 9267
Al Attar Business Tower, 28th Floor
Sheikh Zayed Road
Dubai, United Arab Emirates
KPMG
Crown House
4 Par-la-Ville Road
Hamilton, HMO8
Bermuda
SLW International, LLC
7941 Katy Freeway, #529
Houston
Texas, 77024
U.S.A.
20 07 ANNUAL REPORT
39