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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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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.
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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.)
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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.
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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)
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(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.
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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
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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