International General Insurance Holdings Ltd. Annual Report 2008

Plain-text annual report

C O N T E N T S 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 3 5 7 8 9 10 11 12 13 14 38 39 A B O U T I G I H 2 INTE RNATIONA L GENERAL INSURA N CE H OLDIN GS LTD . 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. 3 2 0 0 8 A N N U A L R E P O R T B O A R D O F D I R E C T O R S 4 INTE RNATIONA L GENERAL INSURA N CE H OLDIN GS LTD . At 7TH June, 2009 Mr. Mohammed Abu Ghazaleh Director (Chairman and C.E.O. Del Monte Fresh Produce, USA) Mr. Wasef Jabsheh Vice Chairman and C.E.O. (Director, Jordan International Insurance Company) 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. Hani Tarazi Director (Director, Saba & Co.) Mr. Khaled Sifri Director (C.E.O. of Arab Emirates Investment Bank P.J.S.C.) 5 2 0 0 8 A N N U A L R E P O R T L E T T E R F R O M T H E B O A R D O F D I R E C T O R S 6 INTE RNATIONA L GENERAL INSURA N CE H OLDIN GS LTD . The Board of Directors of International General Insurance Holdings Limited (IGIH) is pleased to report on the Company’s operations and result for the 2008 year. The strategic decision to change IGIH ﬁnancials to calendar year reporting, in line with our industry peers, means that the Company’s 2008 accounts are reported for the nine months period up to December 31, 2008. The insurance industry has seen earnings impacted not only by the world economic crisis affecting investment returns and asset values, but also by large insurance losses as a consequence of the severe natural catastrophic events occurring during the year. In particular, Hurricane Ike produced devastating losses amounting to several billion dollars in the Gulf of Mexico and mainland USA. This resulted in many insurers re-evaluating their catastrophe management strategy for such events. IGIH is pleased to report that as a consequence of the conservative investment policy adopted, the Company had absolutely no exposure to the dramatic ﬁnancial losses emanating from mortgage backed securities, credit default swaps and the like. The Company did see a minimal deterioration on the market value of the investment portfolio, but the low risk strategy of investing in interest bearing ﬁxed income securities has proven to be a sound policy. IGI’s underwriting result has been impacted by the natural catastrophes which occurred during the year and in particular the Gulf of Mexico Hurricane losses. A thorough review of the portfolio in that region was undertaken. As a consequence of the ﬁndings, IGI have made a strategic decision to withdraw from underwriting this business. IGI continues to develop its unique regional brand. Following the successful restructuring of the group last year, IGI is pleased to announce the successful establishment of marketing ofﬁces in the Dubai International Financial Center (DIFC) and in Kuala Lumpur. These ofﬁces are run by respected and experienced market practitioners and will support the Company’s growth objectives and enhance our proﬁle in our core geographical areas. that the beneﬁts of a Dublin operation had diminished. IGI are in the ﬁnal stages of submitting an application to the UK Financial Services Authority for establishing a separately capitalized subsidiary of the Bermuda Company in the United Kingdom. The attainment in March 2008 of an A- (“Excellent”) ﬁnancial strength rating from A M Best Company Inc. has been a major contributing success factor in the development of the portfolio. In the current difﬁcult ﬁnancial environment, there is an enhanced security requirement from policyholders and IGI are committed to improve further upon this rating. to strengthen IGI continues its existing underwriting units and diversify its product lines where it believes opportunities for long term proﬁtability exist. IGI has added experienced underwriters to both its Financial Institutions and Marine underwriting teams. As part of its continued diversiﬁcation plans, IGI will also start developing an Aviation portfolio. Underwriting of this class is anticipated to commence in the fourth quarter of 2009. 2008 ﬁnancial highlights are as follows (pro forma ﬁgures reﬂect a comparison between 2008 and 2007 calendar years): (cid:129) Gross Written Premium for nine months period stood at US$ 116.3 million. On pro forma basis, this reﬂects a 62% increase from US$ 104 million to US$ 169 million. (cid:129) Net Underwriting Loss was US$ 1 million. On pro forma basis, Underwriting Proﬁt would have decreased from US$ 13.9 million to US$ 2.6 million. (cid:129) Total Assets increased from US$ 374.4 million to US$ 426.7 million, reﬂecting 14% growth. (cid:129) Investment Income decreased from US$ 7.2 million to US$ 4.4 million. (cid:129) Net Loss for the year was US$ 4.8 million. On pro forma basis, this would have resulted in a decrease in Net Income from US$ 16.7 million to US$ 0.91 million. We would like to thank all clients and producers for their continued support throughout 2008. We would also like to thank all employees for their signiﬁcant efforts and contribution this year. Original plans of the Company entailed the establishment of a subsidiary company in Dublin followed by a branch ofﬁce in London. Upon further analysis, it was recognized We look forward to working together in 2009 to fulﬁl the visions and ambitions of the Company and to further establish IGI as the (re)insurer of choice for the region. 7 2 0 0 8 A N N U A L R E P O R T F I N A C I A L S T A T E M E N T S 8 INTE RNATIONA L GENERAL INSURA N CE H OLDIN GS LTD . 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 NDEPENDENT AUDITORS’ REPORT TO THE SHAREHOLDERS OF INTERNATIONAL GENERAL INSURANCE HOLDING LIMITED Report on the ﬁnancial statements We have audited the accompanying consolidated ﬁnancial statements of International General Insurance Company Holdings Limited and its subsidiaries (“the Group”), which comprise the consolidated balance sheet as at 31 December 2008 and the consolidated income statement, consolidated cash ﬂow statement and consolidated statement of changes in equity for the period from 1 April 2008 to 31 December 2008, and a summary of signiﬁcant accounting policies and other explanatory notes. Management’s Responsibility for the Financial Statements Management are responsible for the preparation and fair presentation of these ﬁnancial statements in accordance with International Financial Reporting Standards and the applicable provisions of the Companies Law pursuant to DIFC 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 requirements and plan and perform the audit to obtain reasonable assurance whether the ﬁnancial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the ﬁnancial statements. The procedures selected depend on the 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 the directors, as well as evaluating the overall presentation of the ﬁnancial statements. We believe that the audit evidence we have obtained is sufﬁcient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated ﬁnancial statements present fairly, in all material respects, the ﬁnancial position of the Group as of 31 December 2008 and its ﬁnancial performance and its cash ﬂows for the period from 1 April 2008 to 31 December 2008, 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 respect, 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 period which would have had a material effect on the business of the Group or on its ﬁnancial position. Date Dubai, United Arab Emirates A member ﬁrm of Ernst & Young Global Limited 9 2 0 0 8 A N N U A L R E P O R T CONSOLIDATED BALANCE SHEET As at 31 December 2008 ASSETS Premises and equipment Intangible assets Investment in associated companies Investment property Financial assets held to maturity Financial assets available-for-sale Financial assets held for trading 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 Notes 31 December 2008 USD 31 March 2008 USD (Restated) 3 4 5 6 7 18 8 9 13 14 10 1,657,747 560,480 10,197,712 7,905,040 1,690,141 1,292,975 622,312 7,417,111 - 1,690,141 92,428,375 105,176,677 3,889,747 18,073,444 114,963,834 2,817,514 13,427,326 49,671,556 - 12,917,781 93,963,104 2,384,242 10,380,698 22,864,403 109,415,441 115,679,069 426,698,357 374,388,513 EQUITY AND LIABILITIES Equity attributable to equity holders of parent Issued share capital 11 143,375,678 143,375,678 Foreign currency translation adjustment Cumulative changes in fair value of investments Retained earnings Minority interest Total equity LIABILITIES Liabilities arising from insurance contracts Unearned premiums Outstanding claims Other liabilities Reinsurance payable Reinsurance deposit 13 14 15 (231,658) (5,010,043) 14,674,685 8,764 15,560,227 27,217,954 152,808,662 186,162,623 529,981 503,449 153,338,643 186,666,072 78,743,301 141,032,181 69,756,299 76,542,762 219,775,482 146,299,061 1,856,695 34,332,781 13,808,875 981,407 28,408,347 11,116,376 917,250 Deferred policy acquisition costs ceded 18 3,585,881 Total liabilities TOTAL EQUITY AND LIABILITIES 273,359,714 187,722,441 426,698,357 374,388,513 The consolidated ﬁnancial statements were authorised for issue in accordance with a resolution of the Board of Directors on . The attached notes 1 to 24 form part of these consolidated ﬁnancial statements 10 INTE RNATIONA L GENERAL INSURA N CE H OLDIN GS LTD . CONSOLIDATED INCOME STATEMENT For the period from 1 April 2008 to 31 December 2008 For the 9 months ended For the 12 months ended Notes 31 December 2008 USD 31 March 2008 USD (Restated) 16 16 17 17 18 116,299,988 101,973,615 (32,081,401) (26,634,345) 84,218,587 75,339,270 (107,969,060) (60,840,941) 38,095,339 16,860,138 (15,346,205) (15,366,118) Gross premiums Reinsurers’ share of premiums Net premiums earned Claims Reinsurers’ share of claims Policy acquisition costs NET UNDERWRITING RESULT (1,001,339) 15,992,349 Investment income 19 4,441,841 7,159,599 Revaluation gain from ﬁnancial assets held for trading Commission income Net realised gains from sale of ﬁnancial assets available-for-sale Share of proﬁt (loss) from associated companies Impairment loss on ﬁnancial assets available for sale 19 5 7 Loss on sale of equipment General and administrative expenses (Loss) gain on exchange 188,510 20,273 - 135,719 800,809 3,904,956 3,085,601 (1,003,005) (3,436,566) (3,474) - - (7,456,002) (7,514,843) (1,500,496) 683,350 (LOSS) PROFIT FOR THE PERIOD/ YEAR (4,860,843) 19,358,125 Attributable to Equity holders of the parent Minority interest (5,023,905) 19,366,935 163,062 (8,810) (4,860,843) 19,358,125 The attached notes 1 to 24 form part of these consolidated ﬁnancial statements. 11 2 0 0 8 A N N U A L R E P O R T CONSOLIDATED CASH FLOWS STATEMENT For the period from 1 April 2008 to 31 December 2008 OPERATING ACTIVITIES (Loss) proﬁt for the period/ year Adjustments for: Depreciation and amortisation Net gains on sale of ﬁnancial assets available-for-sale Impairment loss on ﬁnancial assets available for sale Loss on sale of equipment Revaluation gain from ﬁnancial assets held for trading Investment income Share of (proﬁt) loss from associated companies Reinsurers’ share of unearned premiums Change in on unearned premiums For the 9 months ended For the 12 months ended Notes 31 December 2008 USD 31 March 2008 USD (Restated) (4,860,843) 19,358,125 3, 4 20 19 5 176,131 (800,809) 3,436,566 3,474 (188,510) (4,441,841) (3,085,601) (3,046,628) 8,987,002 (3,821,059) 131,050 (3,904,956) - - - (7,159,599) 1,003,005 (3,235,540) 14,961,895 21,153,980 Deferred policy acquisition costs (5,155,663) (4,108,408) Receivables arising from insurance and reinsurance contracts (12,671,193) (26,090,200) Other receivables Movement on outstanding claims Reinsurers’ share of outstanding claims Deferred ceded commission Financial assets held for trading Other liabilities Net cash from operating activities INVESTING ACTIVITIES Purchase of premises and equipment Proceeds from sale of 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 Purchase of investment property Dividends received from associates Purchase of ﬁnancial assets held to maturity Deposits maturing after 3 months Investment income (433,272) (832,723) 64,489,419 23,210,277 (26,807,153) 2,668,631 (3,701,237) 697,560 272,319 - 875,288 2,230,320 15,443,761 16,533,125 (472,518) (1,035,619) 7,406 - (106,989) (250,719) (16,176,822) (23,460,731) 3,217,882 12,858,699 - (595,960) (7,905,040) 305,000 - - - (1,690,141) 7,804,229 (11,889,624) 3 4 4 6 19 4,441,841 7,159,599 Net cash used in investing activities (8,885,011) (18,904,496) FINANCING ACTIVITIES Dividends paid 12 (5,018,149) (3,585,774) Net cash used in ﬁnancing activities (5,018,149) (3,585,774) NET CHANGE IN CASH AND CASH EQUIVALENTS 1,540,601 (5,957,145) Cash and cash equivalents at the beginning of the period/ year 103,789,445 109,746,590 CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD/ YEAR 21 105,330,046 103,789,445 The attached notes 1 to 24 form part of these consolidated ﬁnancial statements. 12 INTE RNATIONA L GENERAL INSURA N CE H OLDIN GS LTD . CONSOLIDATED STATEMENT OF CHANGE IN EQUITY For the period from 1 April 2008 to 31 December 2008 l a t o T y t i u q e y t i r o n M i t s e r e t n i l a t o T i d e n a t e R i s g n n r a e l e v i t a u m u C n i e g n a h c f o e u a v l r i a f s t n e m t s e v n i i n g e r o F y c n e r r u c l n o i t a s n a r t t n e m t s u d a j n i i - d a P l a t i p a c D S U D S U D S U D S U D S U t n e r a p e h t f o s r e d o h l y t i u q e o t l e b a t u b i r t t A 7 9 3 , 7 3 0 , 4 5 1 - 7 9 3 , 7 3 0 , 4 5 1 2 1 1 , 7 5 6 , 2 1 ) 3 9 3 , 5 9 9 , 1 ( - 8 7 6 , 5 7 3 , 3 4 1 7 0 0 2 l i r p A 1 s a e c n a a B l - - 9 3 8 , 3 0 5 9 3 8 , 3 0 5 4 8 1 , 7 1 0 2 4 , 8 4 6 7 , 8 - - - - 4 6 7 , 8 - - 1 0 3 , 5 3 3 , 6 1 - - 1 0 3 , 5 3 3 , 6 1 - 1 0 3 , 5 3 3 , 6 1 ) 9 1 3 , 0 2 2 , 1 ( 9 1 3 , 0 2 2 , 1 - - 5 8 4 , 2 5 3 , 6 1 0 2 4 , 8 5 6 0 , 4 4 3 , 6 1 ) 9 1 3 , 0 2 2 , 1 ( 0 2 6 , 5 5 5 , 7 1 4 6 7 , 8 5 2 1 , 8 5 3 , 9 1 ) 0 1 8 , 8 ( 5 3 9 , 6 6 3 , 9 1 5 3 9 , 6 6 3 , 9 1 - - 0 1 6 , 0 1 7 , 5 3 ) 0 9 3 ( 0 0 0 , 1 1 7 , 5 3 6 1 6 , 6 4 1 , 8 1 0 2 6 , 5 5 5 , 7 1 4 6 7 , 8 ) 4 7 7 , 5 8 5 , 3 ( - ) 4 7 7 , 5 8 5 , 3 ( ) 4 7 7 , 5 8 5 , 3 ( - - - - - - - - - - ) 4 e t o N ( i p o h s B R S f o n o i t i s u q c a i e h t m o r f g n i t l u s e r t s e r e t n i y t i r o n M i s t n e m t s e v n i l e a s r o f l e b a l i a v a n o s e s s o l d n a i s n a g i d e s n g o c e R r a e y e h t g n i r u d s t n e m t s e v n i l e a s r o f l e b a l i a v a f o e u a v l r i a f n i t n e m e v o m t e N r a e y e h t g n i r u d y t i u q e n i y l t c e r i d i d e s n g o c e r r a e y e h t r o f e s n e p x e d n a e m o c n i l a t o T t n e m t s u d a j l n o i t a s n a r t y c n e r r u c i n g e r o F ) 5 e t o N ( d e t a t s e r – r a e y e h t r o f t ﬁ o r P r a e y e h t r o f e s n e p x e d n a e m o c n i l a t o T ) 2 1 e t o N ( i d a p s d n e d i v i D 2 7 0 , 6 6 6 , 6 8 1 9 4 4 , 3 0 5 3 2 6 , 2 6 1 , 6 8 1 4 5 9 , 7 1 2 , 7 2 7 2 2 , 0 6 5 , 5 1 4 6 7 , 8 8 7 6 , 5 7 3 , 3 4 1 ) d e t a t s e R ( 8 0 0 2 h c r a M 1 3 f o s a e c n a a B l ) 2 5 9 , 6 7 3 ( ) 0 3 5 , 6 3 1 ( ) 2 2 4 , 0 4 2 ( - - ) 2 2 4 , 0 4 2 ( - ) 5 8 4 , 1 7 0 , 3 2 ( - - ) 5 8 4 , 1 7 0 , 3 2 ( - ) 5 8 4 , 1 7 0 , 3 2 ( - ) 5 1 2 , 1 0 5 , 2 ( 5 1 2 , 1 0 5 , 2 - - ) 9 4 1 , 8 1 0 , 5 ( - ) 9 4 1 , 8 1 0 , 5 ( ) 9 4 1 , 8 1 0 , 5 ( - - ) 7 3 4 , 8 4 4 , 3 2 ( ) 0 3 5 , 6 3 1 ( ) 7 0 9 , 1 1 3 , 3 2 ( ) 5 1 2 , 1 0 5 , 2 ( ) 0 7 2 , 0 7 5 , 0 2 ( ) 2 2 4 , 0 4 2 ( ) 3 4 8 , 0 6 8 , 4 ( 2 6 0 , 3 6 1 ) 5 0 9 , 3 2 0 , 5 ( ) 5 0 9 , 3 2 0 , 5 ( - - ) 0 8 2 , 9 0 3 , 8 2 ( 2 3 5 , 6 2 ) 2 1 8 , 5 3 3 , 8 2 ( ) 0 2 1 , 5 2 5 , 7 ( ) 0 7 2 , 0 7 5 , 0 2 ( ) 2 2 4 , 0 4 2 ( - - - - - - - s t n e m t s e v n i l e a s – r o f l e b a l i a v a n o s e s s o l d n a i s n a g i d e s n g o c e R d o i r e p e h t g n i r u d s t n e m t s e v n i l e a s r o f l e b a l i a v a f o e u a v l r i a f n i t n e m e v o m t e N d o i r e p e h t g n i r u d y t i u q e n i y l t c e r i d i d e s n g o c e r r a e y e h t r o f e s n e p x e d n a e m o c n i l a t o T t n e m t s u d a j l n o i t a s n a r t y c n e r r u c i n g e r o F d o i r e p e h t r o f e s n e p x e d n a e m o c n i l a t o T ) 2 1 e t o n ( i d a p s d n e d i v i D d o i r e p e h t r o f t ﬁ o r P 3 4 6 , 8 3 3 , 3 5 1 1 8 9 , 9 2 5 2 6 6 , 8 0 8 , 2 5 1 5 8 6 , 4 7 6 , 4 1 ) 3 4 0 , 0 1 0 , 5 ( ) 8 5 6 , 1 3 2 ( 8 7 6 , 5 7 3 , 3 4 1 8 0 0 2 r e b m e c e D 1 3 f o s a e c n a a B l . s t n e m e t a t s l i a c n a n ﬁ d e t a d i l o s n o c e s e h t f o t r a p m r o f 4 2 o t 1 s e t o n d e h c a t t a e h T 13 2 0 0 8 A N N U A L R E P O R T NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 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, United Arab Emirates, Bermuda, Jordan and Malaysia. The Company had changed its accounting reference period during the period from 31 March to 31 December. Accordingly, the consolidated ﬁnancial statements were prepared for the period from 1 April 2008 to 31 December 2008. 2. 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 assets available-for-sale, ﬁnancial assets held for trading and investment properties. Basis of consolidation The consolidated ﬁnancial statements comprise the ﬁnancial statements of IGIH and its subsidiaries as at 31 December: International General Insurance/Bermuda, IGIH owns 100% of its paid in capital amounting to USD 120,000 as of 31 December 2008. The company was established on 2 May 2007. The subsidiary’s is engaged in the business of re-insurance and insurance. International General Insurance Underwriting/Jordan, IGIH owns 100% of its paid in capital amounting to USD 2,556,171 as of 31 December 2008. The company was established on 4 October 2001. The subsidiary’s main operation is insurance brokerage. SR Bishops Underwriting Limited/London, IGIH owns 51% of its paid in capital amounting to USD 19,625 as of 31 December 2008. The company was acquired on 1 April 2007. The subsidiary’s main operation is insurance brokerage. The ﬁnancial statements of the subsidiaries are prepared for the same reporting period 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. 14 INTE RNATIONA L GENERAL INSURA N CE H OLDIN GS LTD . NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2008 Summary of signiﬁcant accounting policies: 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. Premiums written include adjustments to premiums written in prior accounting periods and estimates for “pipeline” premiums. An estimate is made at the balance sheet date to recognise retrospective adjustments to premiums or commissions. Outward reinsurance premiums are accounted for in the same accounting period as the premiums for the related direct insurance or inwards reinsurance business. 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 underwriters’ 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. 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. 15 2 0 0 8 A N N U A L R E P O R T NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2008 Ceded reinsurance arrangements do not relieve the Group from its obligations to policyholders. 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. 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 lives, while 16 INTE RNATIONA L GENERAL INSURA N CE H OLDIN GS LTD . NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2008 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 licenses. These intangible 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 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 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. 17 2 0 0 8 A N N U A L R E P O R T NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2008 Financial assets held for trading Financial assets held for trading are those purchased with the intent to be resold in the near future to generate gains as a result of changes in market prices of such investments. They are initially recognised at the fair value of consideration given and subsequently remeasured at fair value. All realised and unrealised gains or losses are transferred to the income statement including any gains or losses resulting from the translation of such assets held in foreign currencies to the functional currency. Interest earned is included in interest income and dividends received are included in gains (losses) from ﬁnancial assets and liabilities held for trading. 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. Non-monetary 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 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. 18 INTE RNATIONA L GENERAL INSURA N CE H OLDIN GS LTD . NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2008 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. 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. 19 2 0 0 8 A N N U A L R E P O R T NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2008 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. Investment properties Investment properties are stated at fair value which is determined based on valuations performed by professional independent valuers. 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. Change in accounting policies The accounting policies adopted are consistent with those used in the previous ﬁnancial period except the change in accounting policy used to account for investment property, which was changed from the cost model to the fair value model as the management believe that using the fair value model provides more relevant information than the cost model. The associates holds certain properties as investments to earn rental income, for capital appreciation or both. Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which reﬂects market conditions at the balance sheet date. Gains or losses arising from changes in the fair values of investment properties are included in the income statement in ‘Other operating income’ in the year in which they arise. The effect of the adjustments on the company’s consolidated ﬁnancial statements for the period ended 31 March 2008 is illustrated in (note 5). New standard and interpretations issued but not yet effective The following standards have been issued by the International Accounting Standards Board (IASB) but are not yet mandatory for these ﬁnancial statements: IFRS 3R Business Combinations and IAS 27R Consolidated and Separate Financial Statements The revised standards were issued in January 2008 and become effective for ﬁnancial years beginning on or after 1 July 2009. IFRS 3R introduces a number of changes in the accounting for business combinations occurring after this date that will impact the amount of goodwill recognised, the reported results in the period that an acquisition occurs, and 20 INTE RNATIONA L GENERAL INSURA N CE H OLDIN GS LTD . NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2008 future reported results. IAS 27R requires that a change in the ownership interest of a subsidiary (without loss of control) is accounted for as an equity transaction. Therefore, such transactions will no longer give rise to goodwill, nor will it give rise to a gain or loss. Furthermore, the amended standard changes the accounting for losses incurred by the subsidiary as well as the loss of control of a subsidiary. Other consequential amendments were made to IAS 7 Statement of Cash Flows, IAS 12 Income Taxes, IAS 21 The Effects of Changes in Foreign Exchange Rates, IAS 28 Investment in Associates and IAS 31 Interests in Joint Ventures. The changes by IFRS 3R and IAS 27R will affect future acquisitions or loss of control and transactions with minority interests. IAS 1 Revised Presentation of Financial Statements The revised Standard was issued in September 2007 and becomes effective for ﬁnancial years beginning on or after 1 January 2009. The Standard separates owner and non-owner changes in equity. The statement of changes in equity will include only details of transactions with owners, with non-owner changes in equity presented as a single line. In addition, the Standard introduces the statement of comprehensive income which presents all items of recognised income and expense, either in one single statement, or in two linked statements. The Company is still evaluating whether it will have one or two statements. IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements – Puttable Financial Instruments and Obligations Arising on Liquidation These amendments to IAS 32 and IAS 1 were issued in February 2008 and become effective for ﬁnancial years beginning on or after 1 January 2009. The revisions provide a limited scope exception for puttable instruments to be classiﬁed as equity if they fulﬁl a number of speciﬁed features. The amendments to the standards will have no impact on the ﬁnancial position or performance of the Company, as the Company has not issued such instruments. IAS 39 Financial Instruments: Recognition and Measurement – Eligible Hedged Items These amendments to IAS 39 were issued in August 2008 and become effective for ﬁnancial years beginning on or after 1 July 2009. The amendment addresses the designation of a one-sided risk in a hedged item, and the designation of inﬂation as a hedged risk or portion in particular situations. It clariﬁes that an entity is permitted to designate a portion of the fair value changes or cash ﬂow variability of a ﬁnancial instrument as hedged item. The Company has concluded that the amendment will have no impact on the ﬁnancial position or performance of the Company, as the Company has not entered into any such hedges. IFRIC 16 Hedges of a Net Investment in a Foreign Operation IFRIC 16 was issued in July 2008 and becomes effective for ﬁnancial years beginning on or after 1 October 2008. The interpretation is to be applied prospectively. IFRIC 16 provides guidance on the accounting for a hedge of a net investment. As such it provides guidance on identifying the foreign currency risks that qualify for hedge accounting in the hedge of a net investment, where within the group the hedging instruments can be held in the hedge of a net investment and how an entity should determine the amount of foreign currency gain or loss, relating to both the net investment and the hedging instrument, to be recycled on disposal of the net investment. The Company is currently assessing which accounting policy to adopt for the recycling on disposal of the net investment. IFRS 2 Share-based Payment (Revised) The IASB issued an amendment to IFRS 2 in January 2008 that clariﬁes the deﬁnition of a vesting condition and prescribes the treatment for an award that is effectively cancelled. This amendment becomes effective for annual periods beginning on or after 1 January 2009. The amendment is not expected to have any impact on the ﬁnancial position or performance of the company. 21 2 0 0 8 A N N U A L R E P O R T NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2008 3. PREMISES AND EQUIPMENT Ofﬁce furniture Computers Equipment Decorations & leasehold improvements Vehicles USD USD USD USD USD Total USD Cost At 1 April 2008 373,027 189,676 93,704 715,317 218,552 1,590,276 Additions Disposal 108,973 89,518 42,897 231,130 - 472,518 - (6,183) - - (19,720) (25,903) At 31 December 2008 482,000 273,011 136,601 946,447 198,832 2,036,891 Depreciation - - - - - - At 1 April 2008 31,095 119,977 30,783 42,112 73,334 297,301 Additions Disposal 38,070 24,241 8,909 3,176 22,470 96,866 - (6,183) - - (8,840) (15,023) At 31 December 2008 69,165 138,035 39,692 45,288 86,964 379,144 Net carrying amount At 31 December 2008 412,835 134,976 96,909 901,159 111,868 1,657,747 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 The depreciation charge for the period of USD 96,866 (2007: USD 67,180) has been included in general and administrative expenses. 22 INTE RNATIONA L GENERAL INSURA N CE H OLDIN GS LTD . NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2008 4- INTANGIBLE ASSETS Goodwill* Computers software USD USD Total USD USD 31 December 2008 31 March 2008 Cost Beginning Balance Additions 341,522 - 445,153 106,989 Foreign currency translation adjustment (89,556) - 786,675 106,989 (89,556) 194,434 592,241 - Ending Balance Amortization Beginning Balance Additions Ending Balance Net book value 251,966 552,142 804,108 786,675 - - - 164,363 164,363 79,265 79,265 243,628 243,628 251,966 308,514 560,480 100,493 63,870 164,363 622,312 * 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 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 1 April 2007 Carrying value Fair value 1,312,321 1,312,321 51,404 269,966 51,404 269,966 (605,448) (605,448) 1,028,243 1,028,243 (503,839) 524,404 Amount 865,926 524,404 341,522 (865,926) 269,966 (595,960) During the year ended 31 March 2008 S R Bishop net income amounted to USD 332,780 before minority interest. 23 2 0 0 8 A N N U A L R E P O R T NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2008 There were no purchases or acquisitions during the period ended 31 December 2008. 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 companies registered in Lebanon as shown below: 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 Lebanon Lebanon Lebanon Lebanon Ownership 31 December 2008 31 March 2008 33% 33% 33% 33% 33% 33% 33% 33% The following table includes 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 Proﬁt (loss) 31 December 2008 31 March 2008 USD USD (Restated) 496,456 15,890,798 (6,189,542) 10,197,712 3,547,338 3,085,601 69,743 12,975,627 (5,628,259) 7,417,111 333,030 (1,003,005) Movement on investment in associates was as follows: Beginning balance Share of (loss) income from associated company 31 December 2008 31 March 2008 USD USD (Restated) 7,417,111 (22,845) 8,420,116 47,283 Share of fair value gain (loss) on investment properties 3,108,446 (1,050,288) Dividends received (305,000) - 10,197,712 7,417,111 24 INTE RNATIONA L GENERAL INSURA N CE H OLDIN GS LTD . NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2008 Investment properties of the associates are stated at fair value, which has been determined based on valuation performed by professional independent valuers that are specialist in valuing these types of investment properties. The fair value represents the amount, which the assets could be exchanged between a knowledgeable, willing seller in an arm’s length transaction at the date of valuation. All the investment properties generated rental income during the current period and the prior years. In accordance with IAS 8, Accounting policies, changes in estimates and errors, the ﬁnancial statements for the period ended 31 March 2008 have been restated to reﬂect the change in accounting policy for investment property from the cost model to the fair value model. The restatements were as follows: After restatement Before restatement change USD USD USD Investment in associated companies 7,417,111 8,467,399 (1,050,288) Change in equity 186,666,072 187,716,360 (1,050,288) Proﬁt for the 12 months ended 31 March 2008 19,358,125 20,408,413 (1,050,288) 6. INVESTMENT PROPERTY Investment property as of December 31, 2008 is registered in the name of others. The Company’s directors obtained an irrevocable proxy over this investment property. There is no signiﬁcant difference between the carrying amount and fair value of the land. 7- FINANCIAL ASSETS AVAILABLE-FOR-SALE 31 December 2008 31 March 2008 USD USD Quoted investments Bonds and debt securities with ﬁxed interest rate 43,353,223 50,301,287 Equity securities Funds and alternative investments Unquoted investments* Government bonds and debt securities with ﬁxed interest rate Equity securities 31,436,502 37,566,618 10,747,329 11,130,431 1,410,934 5,480,387 1,763,047 4,415,294 92,428,375 105,176,677 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 6,891,321 (31 March 2008: USD 6,178,341). 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. Impairment loss charged for the period ended 31 December 2008 amounted to USD 3,436,566 (31 March 2008:USD 0) 25 2 0 0 8 A N N U A L R E P O R T NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2008 8- RECEIVABLES ARISING FROM INSURANCE AND REINSURANCE CONTRACTS Receivables from insurance companies and intermediaries Reinsurers – amounts due in respect of claims paid 31 December 2008 31 March 2008 USD 88,173,971 26,789,863 114,963,834 USD 66,644,042 27,319,062 93,963,104 All of the above amounts are due within twelve months of the balance sheet date. 9- OTHER RECEIVABLES Prepaid expenses Refundable deposits Employees receivables Advance payment on investments* Trade receivables Accrued interest income Accrued dividends income Others 31 December 2008 31 March 2008 USD 501,101 17,850 315,637 580,828 36,173 761,427 501,704 102,794 USD 370,234 - 14,369 580,828 96,512 915,234 281,633 125,432 2,817,514 2,384,242 * 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. 10- 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 31 December 2008 31 March 2008 USD 10,963,620 94,366,426 4,085,395 USD 7,390,562 96,398,883 11,889,624 109,415,441 115,679,069 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 4,085,395 as of 31 March 2008 (31 March 2008: USD 11,889,624). 11- SHARE CAPITAL Authorised Issued and fully paid 31 December 2008 31 March 2008 31 December 2008 31 March 2008 USD USD USD USD Shares of USD 1 each 143,375,678 143,375,678 143,375,678 143,375,678 26 INTE RNATIONA L GENERAL INSURA N CE H OLDIN GS LTD . NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2008 12- DIVIDENDS PAID The Board of directors and shareholders of IGI approved on their meeting held on 25 May 2008 to distribute cash dividends amounting to USD 5,018,149 (USD 0.04 per share). (31 March 2008: USD 3,585,774 (USD 0.03 per share). 13- UNEARNED PREMIUMS 31 December 2008 31 March 2008 Gross Reinsurers’ share Net Gross Reinsurers’ share Net USD USD USD USD USD USD Unearned premiums 78,743,301 (13,427,326) 65,315,975 69,756,299 (10,380,698) 59,375,601 Details of the movements of the provision for unearned premium and the related reinsurers’ share are contained in (Note 16). 14- OUTSTANDING CLAIMS The movement in the provision for outstanding claims, and the related reinsurers’ share, was as follows: 31 December 2008 31 March 2008 Gross Reinsurers’ share Net Gross Reinsurers’ share Net USD USD USD USD USD USD At the beginning of the period/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 Insurance claims paid in the period/year (43,479,641) 11,288,186 (32,191,455) (37,630,664) 17,557,698 (20,072,966) Provided during the year 107,969,060 (38,095,339) 69,873,721 60,840,941 (16,860,138 ) 43,980,803 At the end of the period/ year 141,032,181 (49,671,556) 91,360,625 76,542,762 (22,864,403 ) 53,678,359 Analysis of outstanding claims At the end of the period/ year Claims incurred 110,800,288 (48,439,663) 62,360,625 71,042,762 (22,864,403 ) 48,178,359 Claims incurred but not reported 30,231,893 (1,231,893) 29,000,000 5,500,000 - 5,500,000 141,032,181 (49,671,556) 91,360,625 76,542,762 (22,864,403 ) 53,678,359 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. 27 2 0 0 8 A N N U A L R E P O R T NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2008 Claims development (Gross) Underwriting year 2002 USD 2003 USD 2004 USD 2005 USD 2006 USD 2007 USD 2008 USD Total USD Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Current estimate of cumulative claims Cumulative payment to date Total cumulative claims recognised in the balance sheet date 180,600 34,484 2,450,788 17,460,334 6,958,339 6,103,919 51,128,784 2,857,564 4,844,696 8,425,232 44,966,702 33,226,096 66,650,694 3,468,525 7,641,461 15,253,975 55,308,231 51,338,574 3,805,057 10,529,120 15,690,098 59,106,443 3,566,020 12,452,376 19,212,614 3,471,030 13,005,598 3,493,287 - - - - - - - - - - - - - - - - - - - - - - - - - - - - 3,493,287 13,005,598 19,212,614 59,106,443 51,338,574 66,650,694 51,128,784 263,935,994 3,234,511 8,205,515 12,922,194 43,787,694 25,758,994 25,413,740 3,581,165 122,903,813 273,978 5,075,716 6,553,608 16,621,685 26,511,806 43,691,703 36,303,685 141,032,181 15- OTHER LIABILITIES Accounts payable Related parties payable (note 23) Accrued expenses 16- NET INSURANCE PREMIUM REVENUE Insurance premiums Change in unearned premiums Gross premiums 31 December 2008 31 March 2008 USD 1,299,961 212,677 344,057 1,856,695 USD 231,865 - 749,542 981,407 For the 9 months ended 31 December 2008 For the 12 Months ended 31 March 2008 USD USD 125,286,990 116,935,510 (8,987,002) (14,961,895) 116,299,988 101,973,615 Reinsurers’ share of insurance premiums (35,128,029) (29,869,885) Reinsurers’ share of change in unearned premiums 3,046,628 3,235,540 Reinsurers’ share of gross premiums (32,081,401) (26,634,345) 84,218,587 75,339,270 28 INTE RNATIONA L GENERAL INSURA N CE H OLDIN GS LTD . NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2008 17- CLAIMS For the 9 months ended 31 December 2008 For the 12 months ended 31 March 2008 Gross Reinsurers’ share Net Gross Reinsurers’ share Net USD USD USD USD USD USD Claims paid 43,479,641 (11,288,186) 32,191,455 37,630,664 (17,557,698) 20,072,966 Change in provision for outstanding claims 64,489,419 (26,807,153) 37,682,266 23,210,277 697,560 23,907,837 107,969,060 (38,095,339) 69,873,721 60,840,941 (16,860,138) 43,980,803 18- DEFERRED POLICY ACQUISITION COSTS 31 December 2008. 31 March 2008. Policy acquisition cost Ceded policy acquisition cost Net Policy acquisition cost Ceded policy acquisition cost Net USD USD USD USD USD USD Beginning Balance 12,917,781 917,250 12,000,531 10,494,246 827,548 9,666,698 Additions 22,036,918 4,203,681 17,833,237 18,852,827 1,152,876 17,699,951 Amortizations 16,881,255 1,535,050 15,346,205 16,429,292 1,063,174 15,366,118 Ending Balance 18,073,444 3,585,881 14,487,563 12,917,781 917,250 12,000,531 19- INVESTMENT INCOME For the 9 months ended 31 December 2008 For the 12 months ended 31 March 2008 USD USD Dividends Interest 565,331 3,876,510 4,441,841 928,482 6,231,117 7,159,599 20- NET REALISED GAINS ON FINANCIAL ASSETS AVAILABLE-FOR-SALE For the 9 months ended 31 December 2008 For the 12 months ended 31 March 2008 USD USD Realised gains Equity securities 800,809 3,904,956 29 2 0 0 8 A N N U A L R E P O R T NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2008 21- 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 31 December 2008 31 March 2008 USD USD 10,963,620 7,390,562 98,451,821 108,288,507 Less: Demand deposits maturing after 3 months (4,085,395) (11,889,624) 105,330,046 103,789,445 22- COMMITMENTS AND CONTINGENCIES As of the date of the ﬁnancial statements, the Company is contingently liable to the followings: (cid:129) Letters of Guarantee amounting to USD 3,100 (31 March 2008: USD 10,563) to the order of the Jordanian Ministry of Trade and Industry with margin of USD 310 (31 March 2008: USD1,056). (cid:129) Letters of Credit amounting to USD 46,205,755 to the order of reinsurance companies(31 March 2008: USD 23,809,705). 23- RELATED PARTY TRANSACTIONS The company enters into transactions with its associate and key management personnel and board of directors in the normal course of business. The sales to and purchases from related barites are main at normal market prices. Transactions with related parties (Eastern Insurance Brokers Company) and SR Bishop directors included in the ﬁnancial statements are as follows: Balance sheet balances with related parties Accounts Receivable Accounts payable 31 December 2008 31 March 2008 USD 1,363,896 212,677 USD 610,471 - For the 9 months ended 31 December 2008 For the 12 months ended 31 March 2008 Income statement transactions Commission paid USD 240,710 USD 211,228 Compensation of key management personnel of the Group, consisting of salaries and beneﬁts, was USD 920,990 (31 March 2008: USD 1,179,694). 30 INTE RNATIONA L GENERAL INSURA N CE H OLDIN GS LTD . NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2008 24- 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 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 insurance contracts as claims are normally advised. 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, 38%, 19% , 15% and 28% 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. (31 March 2008 : 51%, 15%, 15% and 19%) 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 31 2 0 0 8 A N N U A L R E P O R T NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2008 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. Financial risk The Group’s principal ﬁnancial instruments are ﬁnancial assets available-for-sale, ﬁnancial assets held for trading ﬁnancial assets held to maturity 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 December 2008 Less than 1 year 1 to 5 years USD - USD - Non- interest bearing items USD Total USD 3,889,747 3,889,747 Financial assets held for trading Financial assets available-for-sale 2,815,946 41,948,211 47,664,218 92,428,375 Financial assets held to maturity - 1,690,141 Cash and short term deposits 109,415,441 - - - 1,690,141 109,415,441 112,231,387 43,638,352 51,553,965 207,423,704 31 March 2008 Effective Interest Rate on interest bearing assets % 5.40 9.50 2.40 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 5.45 115,679,069 51,991,428 54,875,390 222,545,887 32 INTE RNATIONA L GENERAL INSURA N CE H OLDIN GS LTD . NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2008 There is no signiﬁcant difference between contractual repricing or maturity dates. The following table demonstrates the sensitivity of income statement 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. 31 December 2008 31 March 2008 Increase/ decrease in basis points Effect on proﬁt for the year + 25 - 50 + 25 - 50 USD 273,538 (547,077) 289,187 (578,395) 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: 33 2 0 0 8 A N N U A L R E P O R T NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2008 31 December 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 Financial assets held for trading Financial assets held to maturity Receivables arising from insurance and reinsurance contracts 43,353,223 - - 49,075,152 3,889,747 1,690,141 - 114,963,834 Reinsurers’ share of unearned premium Reinsurers’ share of outstanding claims - 44,231,566 13,427,326 5,439,990 Cash and short term deposits 63,049,775 46,365,666 150,634,564 234,851,856 - - - - - - - - - - - - - - - - 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 Financial assets held to maturity Receivables arising from insurance and reinsurance contracts Reinsurers’ share of unearned premium Reinsurers’ share of outstanding claims 50,301,287 - - - 21,054,522 54,875,390 1,690,141 93,963,104 10,380,698 1,809,881 Cash and short term deposits 55,225,009 60,454,060 126,580,818 223,173,274 - - - - - - - - - - - - - - Total USD 92,428,375 3,889,747 1,690,141 114,963,834 13,427,326 49,671,556 109,415,441 385,486,420 Total USD 105,176,677 1,690,141 93,963,104 10,380,698 22,864,403 115,679,069 349,754,092 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 December 2008 72,885,553 26,326,627 6,148,074 3,172,082 6,431,498 114,963,834 31 March 2008 63,544,785 14,597,258 13,934,188 672,494 1,214,379 93,963,104 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. 34 INTE RNATIONA L GENERAL INSURA N CE H OLDIN GS LTD . NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2008 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 proﬁt for the period and 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. 31 December 2008 31 March 2008 Change in equity price USD +5% +5% +5% +5% Effect on equity USD 595,181 399,670 70,546 Effect on proﬁt - - - 506,429 194,487 Change in equity price USD +5% +5% +5% +5% Effect on equity USD 712,879 1,040,319 70,755 54,377 Effect on proﬁt - - - - Amman Stock Exchange Saudi Arabia Dubai International Financial Exchange Other quoted 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. The table below summarizes the maturity proﬁle of the company’s ﬁnancial liabilities at 31 December 2008 based on contractual undiscounted payments: Period ended 31 December 2008 Liabilities arising from insurance contracts Unearned premiums Outstanding claims Other liabilities Reinsurance payable Reinsurance deposits Deferred ceded commission Total liabilities Year ended 31 March 2008 Liabilities arising from insurance contracts Unearned premiums Outstanding claims Other liabilities Reinsurance payable Reinsurance deposits Deferred ceded commission Total liabilities Less than one year USD More than one year USD No term USD Total USD 66,931,806 91,899,136 1,856,695 34,332,781 - 3,047,999 11,811,495 49,133,045 - - 13,808,875 537,882 198,068,417 75,291,297 - - - - - - - 78,743,301 141,032,181 1,856,695 34,332,781 13,808,875 3,585,881 273,359,714 Less than one year USD More than one year USD No term USD Total USD 59,292,854 57,407,072 981,407 28,408,347 - 779,662 10,463,445 19,135,690 - - 11,116,376 137,588 146,869,342 40,853,099 - - - - - - - 69,756,299 76,542,762 981,407 28,408,347 11,116,376 917,250 187,722,441 35 2 0 0 8 A N N U A L R E P O R T NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 2008 Maturity analysis of assets and liabilities The table below shows analysis of assets and liabilities analysed according to when they are expected to be recovered or settled: 31 December 2008 Less than one year More than one year No term Total ASSETS Premises and equipment Intangible assets Investment in associated companies Investment property Financial assets held to maturity - - - - - 1,657,747 560,480 10,197,712 - - - 1,657,747 560,480 10,197,712 - 7,905,040 7,905,040 1,690,141 - - 1,690,141 3,889,747 Financial assets hold for Trading 3,889,747 - Financial assets available-for-sale 2,815,946 41,948,211 47,664,218 92,428,375 Deferred policy acquisition costs 15,362,427 2,711,017 Receivables arising from insurance contracts 88,173,971 26,789,863 Other receivables 2,817,514 - Reinsurers’ share of unearned premiums 11,010,407 2,416,919 Reinsurers’ share of outstanding claims 37,750,383 11,921,173 Cash and short term deposits 109,415,441 - - - - - - - 18,073,444 114,963,834 2,817,514 13,427,326 49,671,556 109,415,441 TOTAL ASSETS EQUITY AND LIABILITIES Equity Share capital Foreign currency translation adjustment Cumulative changes in fair values Retained earnings Total equity 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 271,235,836 99,893,263 55,569,258 426,698,357 - - - - - - - - - - - - - - 143,375,678 143,375,678 (231,658) (231,658) (5,010,043) (5,010,043) 14,674,685 14,674,685 152,808,662 152,808,662 529,981 529,981 153,338,643 153,338,643 66,931,806 11,811,495 91,899,136 49,133,045 1,856,695 34,332,781 - - - 13,808,875 3,047,999 537,882 198,068,417 75,291,297 - - - - - - - 78,743,301 141,032,181 1,856,695 34,332,781 13,808,875 3,585,881 273,359,714 TOTAL EQUITY AND LIABILITIES 198,068,417 75,291,297 153,338,643 426,698,357 36 INTE RNATIONA L GENERAL INSURA N CE H OLDIN GS LTD . NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 December 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 7,417,111 - - - 1,292,975 622,312 7,417,111 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 EQUITY AND LIABILITIES Equity Paid in capital 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 238,486,138 99,550,270 36,352,105 374,388,513 - - - - - - - - - - - - - - 143,375,678 143,375,678 8,764 8,764 15,560,227 15,560,227 27,217,954 27,217,954 186,162,623 186,162,623 503,449 503,449 186,666,072 186,666,072 59,292,854 10,463,445 57,407,072 19,135,690 981,407 28,408,347 - - - 11,116,376 779,662 137,588 146,869,342 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 40,853,099 186,666,072 374,388,513 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. 37 2 0 0 8 A N N U A L R E P O R T 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 38 INTE RNATIONA L GENERAL INSURA N CE H OLDIN GS LTD . 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 3688 Facsimile: +441 295 2584 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 Representative Office: 29.03, 29th Floor, Menara TA One Jalan P Ramlee 50250 Kuala Lumpur Telephone: +60 32 166 1786 Facsimile: +60 32 171 1786 Auditor: Loss Reserve Specialist Ernst & Young P.O. Box 9267 Al Attar Business Tower, 28th Floor Sheikh Zayed Road Dubai, United Arab Emirates Ernst & Young Reid Hall 3 Reid Street Hamilton HM BX Bermuda 39 2 0 0 8 A N N U A L R E P O R T

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