Adamjee Insurance: Condensed Interim Financial Information - 31 March 2020

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4. 05 Vision / Core Values 07 Company Information 09 Directors’ Review to the members on Unconsolidated Condensed Interim Financial Information 10 Directors’ Review to the members on Unconsolidated Condensed Interim Financial Information (Urdu) 12 Unconsolidated Condensed Interim Financial Information 34 Directors’ Review to the members on Consolidated Condensed Interim Financial Information 35 Consolidated Condensed Interim Financial Information 61 Condensed Interim Financial Information - Window Takaful Operations
7. COMPANY INFORMATION BOARD OF DIRECTORS Umer Mansha Ibrahim Shamsi Imran Maqbool Muhammad Anees Mohammad Arif Hameed Sadia Younas Mansha Shaikh Muhammad Jawed Muhammad Ali Zeb Chairman Director Director Director Director Director Director Managing Director & Chief Executive Officer ADVISOR Mian Muhammad Mansha AUDIT COMMITTEE Muhammad Anees Ibrahim Shamsi Shaikh Muhammad Jawed Umer Mansha Chairman Member Member Member ETHICS, HUMAN RESOURCE AND REMUNERATION COMMITTEE Muhammad Anees Ibrahim Shamsi Muhammad Ali Zeb Umer Mansha INVESTMENT COMMITTEE Umer Mansha Imran Maqbool Muhammad Ali Zeb Muhammad Asim Nagi Chairman Member Member Member Chairman Member Member Member COMPANY SECRETARY Tameez ul Haque, F.C.A CHIEF FINANCIAL OFFICER Muhammad Asim Nagi, F.C.A  "//6"-
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8. EXECUTIVE MANAGEMNT TEAM BANKERS Muhammad Ali Zeb Muhammad Asim Nagi Adnan Ahmad Chaudhry Asif Jabbar Muhammad Salim Iqbal Askari Bank Limited Abu Dhabi Commercial Bank , UAE Allied Bank Limited Bank Alfalah Limited Bank Al-Habib Limited Bank Islami Pakistan Limited Dubai Islamic Bank Pakistan Limited Emirates Islamic Bank, UAE FINCA Microfinance Bank Limited Habib Bank Limited Habib Metropolitan Bank Khushali Bank Limited MCB Bank Limited MCB Islamic Bank Limited Meezan Bank Limited Mobilink Microfinance Bank Limited National Bank of Pakistan Samba Bank Limited Soneri Bank Limited The Punjab Provincial Cooperative Bank Limited United Bank Limited Zarai Taraqiati Bank Limited AUDITORS Deloitte Yousuf Adil Chartered Accountants 134-A, Abu Bakar Block, New Garden Town, Lahore, Pakistan SHARIAH ADVISOR Mufti Muhammad Hassan Kaleem SHARE REGISTRAR CDC Share Registrar Services Limited CDC House, 99-B, Block-B, S.M.C.H.S., Main Shahra-e-Faisal, Karachi-74400 Ph: (92) 0800-23275 Fax (92-21) - 34326053 REGISTERED OFFICE Adamjee House, 80/A, Block E-1, Main Boulevard Gulberg-III, Lahore- 54000, Pakistan. Phone: (92-42) 35772960-79 Fax (92-42) – 35772868 Email: info@adamjeeinsurance.com Web: www.adamjeeinsurance.com 8
9. Directors ’ Review to the Members on Unconsolidated Condensed Interim Financial Information (Unaudited) For the Quarter Ended 31 March 2020 On behalf of the Board, we are pleased to present the unaudited unconsolidated condensed interim financial information of the Company for the first quarter ended 31 March 2020. Financial Highlights: The highlights for the period under review are as follows: 31 March 2020 31 March 2019 Rupees in thousand (Unaudited) Gross Premium Net Premium Underwriting results Investment Income Profit before tax Profit after tax (Unaudited) 4,580,310 3,743,793 167,464 410,111 673,951 471,702 31 March 2020 6,256,266 3,755,197 298,169 488,896 818,488 588,346 31 March 2019 Rupees (Unaudited) Earnings per share 1.35 (Unaudited) 1.68 Performance Review: The Gross Premium of the Company decreased by 27% and the Net Premium decreased by 0.3%. There was a drop in profitability as underwriting profit decreased by 44% from the last year. The investment income also decreased by 16% in the first quarter of 2020 as compared to the corresponding figures in the last year due to the continuous instability in the stock market. Consequently, the profit before tax & profit after tax decreased by 18 % and 20 % respectively. Window Takaful Operations: The written contribution and Surplus of Participants’ Takaful Fund are Rs. 500,052 thousands (2019: Rs. 329,529 thousands) and Rs. 47,715 thousands (2019: Rs. 41,672 thousands), respectively. Most of the growth in contribution written came from the Accident & Health and Miscellaneous line of businesses which contributed 44% and 7%, respectively to the total contribution written in this quarter. Window Takaful Operations profit before tax increased by 35% amounting to Rs. 35,776 thousands for the period ended 31 March 2020 (2019: Rs. 26,434 thousands). Future Outlook: Insurance Industry in Pakistan has seen several peaks and dips in the recent past. It keeps pace with the development of economy and growth vis-a-vis other sectors of the industry. Despite volatility and turbulence in the domestic financial markets, the Insurance Sector has performed well in 2019, registering a positive growth of 12.8%. However, in the current macro-financial environment, especially the effects of COVID-19 and related global and potential domestic lockdowns, we foresee a distressed growth trajectory of Insurance Sector during the year 2020. Acknowledgements: We would wholeheartedly like to thank our shareholders, valued customers, employees and development staff for their consistent support that has helped Adamjee Insurance emerge as one of the Pakistan’s leading insurance company. We are also grateful to the Securities & Exchange Commission of Pakistan and the State Bank of Pakistan for their continued guidance and assistance. Lahore: 22 May 2020 Shaikh Muhammad Jawed Director Muhammad Ali Zeb Managing Director & Chief Executive Officer 9
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13. Adamjee Insurance Company Limited Unconsolidated Condensed Interim Statement of Financial Position As at 31 March 2020 Note 31 March 2020 31 December 2019 -------- (Rupees in thousand) -------(Unaudited) (Audited) Assets Property and equipment Intangible assets Investment properties Investment in Subsidiary Investments Equity securities Debt securities Term deposits Loans and other receivable Insurance / reinsurance receivables Reinsurance recoveries against outstanding claims Salvage recoveries accrued Deferred commission expense / Acquisition cost Prepayments Cash and bank 7 8 9 10 4,404,935 67,774 401,896 1,096,096 4,232,130 68,927 401,896 694,895 11 12 13 14 15 15,029,713 465,975 6,383,870 469,278 5,265,976 6,196,682 326,723 1,197,363 2,644,630 1,222,860 45,173,771 18,843,017 465,868 5,883,892 477,264 5,810,164 5,931,928 301,420 1,190,146 3,633,739 1,176,685 49,111,971 Total assets of Window Takaful Operations - Operator's Fund 18 507,577 426,291 45,681,348 49,538,262 3,500,000 1,456,318 13,796,703 18,753,021 3,500,000 4,555,491 13,325,001 21,380,492 11,191,266 9,235,451 201,121 213,127 34,191 271,492 2,725,000 1,936,397 700,476 168,686 26,677,207 10,367,347 10,242,348 237,751 225,177 1,329,898 363,002 2,701,164 1,719,334 723,618 52,259 27,961,898 251,120 195,872 45,681,348 49,538,262 16 17 Total Assets Equity And Liabilities Capital and reserves attributable to Company's equity holders Ordinary share capital Reserves Unappropriated Profit Total Equity 19 Liabilities Underwriting provisions Outstanding claims including IBNR Unearned premium reserves Unearned reinsurance commission Retirement benefit obligation Deferred taxation Premium received in advance Insurance / reinsurance payables Other creditors and accruals Deposits and other liabilities Taxation - provision less payments 20 Total liabilities of Window Takaful Operations - Operator's Fund 18 Total Equity and Liabilities Contingencies and commitments 21 The annexed notes 1 to 32 form an integral part of this unconsolidated condensed interim financial information. Chairman Director Director Chief Financial Officer Managing Director & Chief Executive Officer 13
14. Adamjee Insurance Company Limited Unconsolidated Condensed Interim Profit and Loss Account (Un-audited) For the Quarter Ended 31 March 2020 Note Quarter Ended 31 March 31 March 2020 2019 Rupees in thousand Net Insurance Premium 22 3,743,793 3,755,197 Net Insurance Claims 23 (2,343,117) (2,277,791) Net Commission and other acquisition costs Insurance claims and acquisition expenses 24 (515,379) (2,858,496) (369,553) (2,647,344) Management expenses (717,833) (809,684) Underwriting results 167,464 298,169 410,111 20,112 60,011 (17,868) 639,830 488,896 845 37,381 (30,742) 794,549 (1,655) 35,776 (2,495) 26,434 Investment income Rental income Other income Other expenses Results of operating activities 25 Finance cost under IFRS 16 Profit from window takaful operations Profit before tax Income tax expense Profit after tax 673,951 818,488 (202,249) (230,142) 471,702 588,346 -------------(Rupees)------------ Earnings (after tax) per share 26 1.35 1.68 The annexed notes 1 to 32 form an integral part of this unconsolidated condensed interim financial information. Chairman Director Director Chief Financial Officer Managing Director & Chief Executive Officer 14
15. Adamjee Insurance Company Limited Unconsolidated Condensed Interim Statement of Comprehensive Income (Un-audited) For the Quarter Ended 31 March 2020 Quarter Ended 31 March 31 March 2020 2019 Rupees in thousand Profit after tax for the period 471,702 588,346 Other comprehensive income Items that may be reclassified subsequently to profit and loss: Unrealized gain / ( loss) on 'available-for-sale' investments - net of tax (3,214,208) Reclassification adjustment relating to 'available for sale' investments disposed off during the period - net of tax Other comprehensive income from window takaful operations net of tax Effect of translation of investment in foreign branches - net 2,644 10,915 684 423 111,707 8,337 (2,627,471) Total comprehensive income for the period 126,703 734,724 The annexed notes 1 to 32 form an integral part of this unconsolidated condensed interim financial information. __________ Chairman __________ Director __________ Director _____________________ ___________________________ Chief Financial Officer Managing Director & Chief Executive Officer 15
16. Adamjee Insurance Company Limited Unconsolidated Condensed Interim Cash Flow Statement (Unaudited) For the Quarter Ended 31 March 2020 Quarter Ended 31 March 2020 Quarter Ended 31 March 2019 -------------(Rupees in thousand)-----------Cash flows from operating activities Underwriting activities Insurance premiums received Reinsurance premiums paid Claims paid Surrenders paid Reinsurance and other recoveries received Commissions paid Commissions received Other underwriting payments Net cash inflow from underwriting activities 5,161,818 (1,052,823) (3,077,562) (14,058) 1,023,973 (629,277) 86,377 (516,791) 981,657 5,688,215 (1,372,817) (3,718,221) (14,666) 1,258,676 (525,565) 89,055 (871,191) 533,486 Income tax paid Other operating payments Loans advanced Loans repayments received Other operating receipts Net cash outflow from other operating activities (59,341) (19,848) (11,312) 17,138 13,869 (59,494) (36,489) (64,483) (16,138) 13,123 18,744 (85,243) Total cash inflow from all operating activities 922,163 448,243 Other operating activities Cash flows from investing activities Profit / return received on bank deposits Income received from Pakistan Investment Bonds Income from Treasury Bills Dividends received Rentals received Payments for investments Proceeds from disposal of investments Fixed capital expenditure - operating assets Fixed capital expenditure - intangible assets Proceeds from disposal of operating fixed assets Total cash outflow from investing activities 142,330 3,462 6,450 317,163 21,450 (4,970,107) 3,802,845 (202,105) (3,157) 8,269 (873,400) 75,513 7,581 52,771 776 (3,912,778) 2,443,008 (224,887) 9,196 (1,548,820) (2,588) (2,588) (2,281) (2,281) Cash flows from financing activities Dividends paid Net cash outflow from financing activities Net cash (outflow) / inflow from all activities Cash and cash equivalent at the beginning of the period Cash and cash equivalent at the end of the period 46,175 1,176,685 1,222,860 (1,102,858) 2,211,444 1,108,586 16
17. Quarter Ended 31 March 2020 Quarter Ended 31 March 2019 ------------- (Rupees in thousand)-----------Reconciliation to profit and loss account Operating cash flows Depreciation expense Provision for retirement benefit obligations Other income - bank & term deposits (Loss) / gain on disposal of operating assets Rental income Increase / (decrease) in assets other than cash (Increase) / decrease in liabilities Gain on disposal of investments Amortization expense Decrease / (increase) in unearned premium (Decrease) / Increase in loans Income taxes paid Increase in tax liabilities Reversal / (provision) for impairment in value of 'available-for-sale' investments Dividend and other income Income from treasury bills Income from Pakistan Investment Bonds Profit for the period from Window Takaful Operations 922,163 (67,092) (12,593) 85,641 2,721 26,755 (1,132,047) (610,308) 3,724 (5,368) 1,006,897 (5,826) 59,341 (202,249) 350,981 10,911 2,275 35,776 Profit after tax 471,702 Quarter Ended 31 March 2020 448,243 (34,123) (11,564) 45,824 4,192 845 1,037,411 (488,559) 460 (5,495) (701,741) 3,015 36,489 (230,142) 14,700 432,067 10,290 26,434 588,346 Quarter Ended 31 March 2019 -------------(Rupees in thousand)-----------Cash for the purposes of the statement of cash flows consists of: Cash and other equivalents Current and other accounts 7,749 1,215,111 9,512 1,099,074 Total cash and cash equivalents 1,222,860 1,108,586 The annexed notes 1 to 32 form an integral part of this unconsolidated condensed interim financial information. Chairman Director Director Chief Financial Officer Managing Director & Chief Executive Officer 17
18. Adamjee Insurance Company Limited Unconsolidated Condensed Interim Statement of Changes in Equity For the Quarter Ended 31 March 2020 Capital reserve Share capital Issued , subscribed and paid up Reserve for exceptional losses Investment fluctuation reserve Revenue reserve Exchange translation reserve Fair Value Reserve General reserve Unappropriated Profit Total -------------------------------------------------------------------------------------------(Rupees in thousand)------------------------------------------------------------------------------------------3,500,000 Balance as at 31 December 2018 - (Audited) 22,859 3,764 614,062 2,207,015 Profit for the period 01 January 2019 to 31 March 2019 - - - - Other comprehensive income for the period 01 January 2019 to 31 March 2019 - - - 8,337 138,041 - Total comprehensive income for the period - - - 8,337 138,041 - 22,859 3,764 622,399 2,345,056 3,500,000 Balance as at 31 March 2019 - (Unaudited) - 936,500 - - 12,379,158 19,663,358 588,346 588,346 - 146,378 588,346 734,724 12,967,504 20,398,082 - 1,224,629 1,224,629 936,500 Profit for the period 01 April 2019 to 31 December 2019 - - - - Other comprehensive income for the period 01 April 2019 to 31 December 2019 - - - 52,537 572,376 - 7,868 632,781 Total comprehensive income for the period - - - 52,537 572,376 - 1,232,497 1,857,410 - - - - - - (525,000) (525,000) - - - - - - (350,000) (350,000) - - - - - - (875,000) (875,000) 22,859 3,764 Transactions with owners of the Company Final dividend for the year ended 31 December 2018 @ 15% (Rupee 1.50/- per share) Interim dividend for the half year ended 30 June 2019 @ 10% (Rupee 1/- per share) 3,500,000 Balance as at 31 December 2019 - (Audited) 674,936 - - - Other comprehensive income for the period 01 January 2020 to 31 March 2020 - - - 111,707 (3,210,880) - Total comprehensive income for the period - - - 111,707 (3,210,880) - 22,859 3,764 786,643 (293,448) 3,500,000 - 936,500 Profit for the period 01 January 2020 to 31 March 2020 Balance as at 31 March 2020 - (Unaudited) - 2,917,432 - 936,500 13,325,001 21,380,492 471,702 471,702 471,702 13,796,703 (3,099,173) (2,627,471) 18,753,021 The annexed notes 1 to 32 form an integral part of this unconsolidated condensed interim financial information. Chairman Director Director Chief Financial Officer Managing Director & Chief Executive Officer 18
19. Adamjee Insurance Company Limited Notes to the Unconsolidated Condensed Interim Financial Information (Un-audited) For the Quarter Ended 31 March 2020 1 Legal status and nature of business Adamjee Insurance Company Limited ("the Company") is a public limited Company incorporated in Pakistan on 28 September 1960 under the Companies Act, 1913 (now the Companies Act, 2017). The Company is listed on Pakistan Stock Exchange and is engaged in the general insurance business. The registered office of the Company is situated at Adamjee House Building, 80/A Block E-1, Main Boulevard GulbergIII, Lahore. The Company also operates branches in the United Arab Emirates (UAE) and the Export Processing Zone (EPZ). The Company was granted authorization on December 23, 2015 under Rule 6 of the Takaful Rules, 2012 to undertake Window Takaful Operations in respect of general takaful products by the Securities and Exchange Commission of Pakistan (SECP) and commenced Window Takaful Operations on January 01, 2016. 2 Basis of preparation and statement of compliance This unconsolidated condensed interim financial information of the Company for the quarter ended 31 March 2020 has been prepared in accordance with accounting and reporting standards as applicable in Pakistan. The accounting and reporting standards comprise of: - International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as are notified under the Companies Act, 2017; and - Provision of and directives issued under the Companies Act, 2017 and the Insurance Ordinance, 2000, the Insurance Rules, 2017, the Insurance Accounting Regulations, 2017 and the Takaful Rules, 2012. Where the provisions of and directives issued under the Companies Act, 2017 differ, the Insurance Ordinance, 2000, the Insurance Rules, 2017, the Insurance Accounting Regulations, 2017 and the Takaful Rules, 2012 shall prevail. In terms of the requirements of the Takaful Rules, 2012, read with SECP Circular 25 of 2015 dated 09 July 2015, the assets, liabilities and profit and loss of the Operator Fund of the Window Takaful operations of the Company have been presented as a single line item in the statement of financial position and profit and loss account of the Company respectively. A separate set of statement of financial position of the Window Takaful operations has been annexed to this financial information as per the requirements of the Takaful Rules, 2012. This unconsolidated condensed interim financial information does not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with annual financial statements of the Company for the year ended 31 December 2019. Comparative condensed interim statement of financial position is stated from annual audited financial statements as of 31 December 2019, whereas comparatives for interim profit and loss account, interim statement of comprehensive income, interim statement of changes in equity and interim cash flow statement and related notes are extracted from condensed interim financial information of the Company for the quarter ended 31 March 2019. This unconsolidated condensed interim financial information is presented in Pakistan Rupees which is the Company's functional currency and all financial information presented has been rounded off to the nearest thousand, except otherwise stated. 3 Basis of measurement This unconsolidated condensed interim financial information have been prepared under historical cost convention except for certain foreign currency translation adjustments, certain financial instruments carried at fair value, and defined benefit obligations under employees benefits carried at present value. All transactions reflected in this financial information are on accrual basis except for those reflected in cash flow statements. 19
20. 4 Accounting policies The accounting policies and the methods of computation adopted in the preparation of the unconsolidated condensed interim financial information are same as those applied in the preparation of annual audited financial statements for the year ended 31 December 2019 . The company has adopted all the applicable new standards and amendments to standards, including any consequential amendments to other standards, with a date of initial application of 01 January 2020, as mentioned in the financial statement for the year ended 31 December 2019. There is no significant impact of such changes on this condensed interim financial information of the Company. 5 Use of estimates and judgments The preparation of this unconsolidated condensed interim financial information in conformity with the approved accounting standards requires the use of certain critical accounting estimates. It also requires the management to exercise its judgment in the process of applying the Company's accounting policies. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. During preparation of this unconsolidated condensed interim financial information, the significant judgments made by the management in applying the Company's accounting policies and the key sources of estimation and uncertainty were the same as those that applied in the preceding audited annual published financial statements of the Company for the year ended 31 December 2019. 6 Insurance and Financial risk management The Company's financial risk management objectives and policies are consistent with those disclosed in the unconsolidated annual financial statements for the year ended 31 December 2019. 20
21. Note 7 Property and equipment Opening balance - net book value Additions during the period / year Right of use asset - initial application of IFRS - 16 7.1 4,168,110 16,712 - 2,332,540 1,929,636 171,918 (49,712) (226,400) (37,566) 47,694 (265,984) 4,168,110 7.2 (5,548) (67,092) 40,182 (32,458) 4,152,364 Capital work in progress 7.3 252,571 64,020 4,404,935 4,232,130 2,885 8,768 4,312 746 16,712 1,306,069 57,971 106,078 430,366 23,963 5,189 1,929,636 5,548 5,548 22,084 20,463 7,165 49,712 Additions during the period: Written down values of property and equipment disposed off during the period / year Furniture and fixtures Motor vehicles Machinery and equipment Computer and related accessories 7.3 7.1 Book value of disposals during the period Depreciation charged during the period / year Net book value of transfers to Investment property Exchange differences and other adjustments Land and buildings Furniture and fixtures Motor vehicles Machinery and equipment Computer and related accessories Right of use asset 7.2 (Unaudited) (Audited) 31 March 31 December 2020 2019 ---- (Rupees in thousand) ---- Capital work in progress Capital work in progress as of 31 March 2020 includes advances to different contractors, suppliers and vendors amounting to Rs. 252,571 thousands (31 December 2019: Rs. 64,020 thousands). (Unaudited) (Audited) 31 March 31 December 2020 2019 ---- (Rupees in thousand) ---- 8 9 10 Intangible assets Opening balance - net book value Additions during the period 68,927 - 79,185 8,933 Book value of disposals during the period Amortization charged during the period Exchange differences and other adjustments (5,368) 4,215 (1,153) (24,913) 5,722 (19,191) 67,774 68,927 Net book value as at January 01 Additions and capital improvements Unrealized fair value gain 401,896 - 389,598 12,298 Net book value as at December 31 401,896 401,896 1,096,096 694,895 Investment Properties Investment in subsidiary Adamjee Life Assurance Company Limited - At cost 21
22. 11 Investment in equity securities Available-for-sale 31 March 2020 (Unaudited) 31 December 2019 (Audited) Impairment / Impairment / Carrying Cost Carrying value Cost Provision Provision value --------------------------- Rupees in thousands -----------------------Related parties Listed shares Unlisted shared 7,962,628 748,226 8,710,854 - Unrealized (loss) / gain 7,962,628 748,226 8,710,854 7,962,628 698,226 8,660,854 - (807,879) 7,902,975 7,962,628 698,226 8,660,854 1,853,236 10,514,090 Others Listed shares Unlisted shared Mutual Funds NIT Units 7,769,530 925,360 44,555 161 8,739,606 (2,004,569) (2,004,569) Unrealized gain Total 5,764,961 925,360 44,555 161 6,735,037 6,789,795 925,360 364,265 161 8,079,581 (2,004,569) (2,004,569) 391,701 7,126,738 17,450,460 (2,004,569) 15,029,713 4,785,226 925,360 364,265 161 6,075,012 2,253,915 8,328,927 16,740,435 (2,004,569) 18,843,017 11.1 3,716,710 (2019: 3,716,710) shares of MCB have been pledged against SBLC (Standby Letter of Credit) issued in favour of Meezan Bank Limited on behalf of Hyundai Nishat Motor (Private) Limited. 12 Investment in debt securities Held-to-maturity Note (Unaudited) (Audited) 31 December 31 March 2020 2019 -------- (Rupees in thousand) -------- Others Treasury Bills Pakistan Investment Bonds 13 371,785 94,190 370,491 95,377 465,975 465,868 6,811 176,447 183,258 6,811 175,066 181,877 1,361,532 4,790,351 6,151,883 6,335,141 1,264,698 4,387,207 5,651,905 5,833,782 2,000 46,729 48,729 2,000 48,110 50,110 6,383,870 5,883,892 Investments in Term Deposits Held to maturity Deposits maturing within 12 months Inside Pakistan - related parties - others Outside Pakistan - related parties - others Deposits maturing after 12 months Inside Pakistan - related parties - others 13.1 13.1 These include fixed deposits amounting to Rs. 5,219,206 thousands (AED 115,000 thousands) [2019: Rs. 4,848,009 thousands (AED 115,000 thousands)] kept in accordance with the requirements of Insurance Regulations applicable to the UAE branches for the purpose of carrying on business in United Arab Emirates. These also include liens against cash deposits of Rs. 231,987 thousands (2019: Rs. 231,987 thousands) with banks in Pakistan essentially in respect of guarantees issued by the banks on behalf of the Company for claims under litigation filed against the Company, bid bond guarantees and guarantee to Meezan Bank Limited (MBL) against the loan provided by MBL to Hyundai Nishat Motor (Private) Limited, a related party. 22
23. Note 14 Loans and other receivables Considered good Rent receivable Receivable from related parties Accrued income Security deposits Advances to employees and suppliers Advance agent commission Loans to employees Other receivables 14 .1 15 (Unaudited) (Audited) 31 March 31 December 2020 2019 -------- (Rupees in thousand) -------- 14.1 19,618 39,801 102,673 38,442 173,118 3,253 44,170 48,203 14,313 27,523 125,544 58,399 152,012 3,003 49,484 46,986 469,278 477,264 This represents receivable from Adamjee Life Assurance Company Limited, subsidiary of the Company, in respect of cash value of life policies obtained for key management personnel of the Company. Company is the beneficiary in respect of policies obtained for the employees. Insurance / reinsurance receivables - unsecured and considered good Due from insurance contract holders Provision for impairment of receivables from insurance contract holders 5,220,707 5,730,843 (916,808) 4,303,899 (868,586) 4,862,257 Due from other insurers / other reinsurers Provision for impairment of due from other insurers / reinsurers 1,163,379 1,149,209 (201,302) 962,077 5,265,976 (201,302) 947,907 5,810,164 15.1 Due from insurance contact holders include an amount of Rs. 106,373 thousands (2019: Rs. 212,014 thousands) held with related parties. 16 Prepayments Prepaid reinsurance premium ceded Prepaid rent Prepaid miscellaneous expenses 17 2,445,880 2,066 196,684 3,500,512 2,195 131,032 2,644,630 3,633,739 857 6,599 7,456 476 9,937 10,413 Cash and Bank Cash and cash equivalents Inside Pakistan Cash in hand Policy & revenue stamps, bond papers Outside Pakistan Cash in hand Policy & revenue stamps, bond papers 293 293 - 7,749 10,413 57,770 771,382 829,152 133,822 967,605 1,101,427 380,024 5,935 385,959 59,333 5,512 64,845 1,215,111 1,166,272 1,222,860 1,176,685 Cash at bank Inside Pakistan Current accounts Saving accounts Outside Pakistan Current accounts Savings accounts 17.1 Cash at bank includes an amount of Rs. 129,235 thousands (31 December 2019: Rs. 433,504 thousands) held with MCB Bank Limited, a related party of the Company. 17.2 Lien of Rs. 440,000 thousands (2019: Rs. 291,000 thousands) is marked on cash deposits in saving accounts against SBLC (Standby Letter of Credit) issued in favor of Meezan Bank Limited on behalf of Hyundai Nishat Motor (Private) Limited. 23
24. (Unaudited) (Audited) 31 March 31 December 2020 2019 -------- (Rupees in thousand) -------18 Window takaful operations - operator's fund Assets Cash and bank deposits Qard-e-Hasna to Participant Takaful Fund Investments Intangible assets Property and equipment Current assets - others Total Assets 107,000 146,460 33,922 17,369 17,949 184,877 507,577 91,895 146,460 32,958 17,650 17,733 119,595 426,291 Total liabilities 251,120 195,872 (Unaudited) (Unaudited) 31 March 31 March 2020 2019 -------- (Rupees in thousand) -------Wakala Fee Commission expense Management expense Other Income Mudarib's share of PTF investment income Profit before taxation Taxation Profit after taxation 96,323 (28,468) (35,534) 2,557 898 35,776 (10,422) 25,354 73,917 (22,495) (30,235) 5,247 26,434 (7,402) 19,032 Details of total assets, total liabilities and segment disclosure of window takaful operations are stated in the annexed condensed interim financial information for the quarter ended 31 March 2020. (Unaudited) (Audited) 31 March 31 December 2020 2019 -------- (Rupees in thousand) -------19 Reserves Capital reserves Reserves for exceptional losses Investment fluctuation reserves Exchange translation reserves Fair value reserve Revenue reserves General reserves 20 22,859 3,764 674,936 2,917,432 3,618,991 936,500 936,500 1,456,318 4,555,491 583,443 130,463 32,240 76,485 129,952 177,190 123,241 2,702 680,681 630,736 50,149 33,785 76,485 92,873 170,872 125,829 2,676 535,929 1,936,397 1,719,334 Other creditors and accruals Agents commission payable Federal Excise Duty / Sales Tax / VAT Federal Insurance Fee Workers' welfare fund Tax deducted at source Accrued expenses Unpaid and Unclaimed Dividend Payable to Employees' Provident Fund Sundry creditors 21 22,859 3,764 786,643 (293,448) 519,818 Contingencies and commitments 21.1 Contingencies There has been no significant change in the status of contingencies as reported in the preceding published unconsolidated annual financial statements of the Company for the year ended 31 December 2019 except for the following. - The Company has provided a guarantee to Meezan Bank Limited (MBL) against the loan provided by MBL to Hyundai Nishat Motor (Private) Limited, a related party, amounting to Rs. 990,000 thousands (2019: Rs. 841,000 thousands). - The Company has issued letter of guarantees amounting to AED 374,000 amounting to Rs.16,974 thousands (2019: AED 449,000 amounting to Rs. 18,928 thousands) relating to UAE branch. 24
25. Quarter Ended 31 March 31 March 2020 2019 Rupees in thousand 22 Net Insurance Premium Written Gross Premium Unearned premium reserve opening Unearned premium reserve closing Currency translation effect 4 ,580,310 10,242,348 (9,235,451) 294,959 6,256,266 10,100,901 (10,802,642) 64,942 5,882,166 5,619,467 Reinsurance premium ceded Prepaid reinsurance premium opening Prepaid reinsurance premium closing Currency translation effect (1,076,659) (3,500,512) 2,445,880 (7,082) (2,251,193) (2,866,980) 3,254,355 (452) Reinsurance expense (2,138,373) (1,864,270) 3,743,793 3,755,197 2,833,839 6,197,501 (5,111,264) 4,119,815 5,508,453 (6,030,336) 3,920,076 3,597,932 Reinsurance premium ceded Prepaid reinsurance premium opening Prepaid reinsurance premium closing (1,022,427) (3,425,355) 2,344,222 (2,186,697) (2,838,973) 3,220,928 Reinsurance expense (2,103,560) (1,804,742) 1,816,516 1,793,190 1,746,471 4,044,847 (4,124,187) 294,959 1,962,090 2,136,451 4,592,448 (4,772,306) 64,942 2,021,535 (54,232) (75,157) 101,658 (7,082) (34,813) (64,496) (28,007) 33,427 (452) (59,528) Premium earned 22.1 Net Insurance Premium - Business underwritten inside Pakistan Written Gross Premium Unearned premium reserve opening Unearned premium reserve closing Premium earned 22.2 Net Insurance Premium - Business underwritten outside Pakistan Written Gross Premium Unearned premium reserve opening Unearned premium reserve closing Currency translation effect Premium earned Reinsurance premium ceded Prepaid reinsurance premium opening Prepaid reinsurance premium closing Currency translation effect Reinsurance expense 23 1,927,277 1,962,007 3,077,562 11,191,266 (10,367,347) (473,500) 3,427,981 3,718,221 10,193,465 (10,461,975) (72,992) 3,376,719 (1,038,143) (1,356,971) (6,523,405) (6,178,315) 6,233,348 243,336 (1,084,864) 2,343,117 6,397,245 39,113 (1,098,928) 2,277,791 Net Insurance Claims Expense Claim paid Outstanding claims including IBNR - closing Outstanding claims including IBNR - opening Currency translation effect Claim expense Reinsurance and other recoveries received Reinsurance and other recoveries in respect of outstanding claims - closing Reinsurance and other recoveries in respect of outstanding claims - opening Currency translation effect Reinsurance and other recoveries revenue 25
26. Quarter Ended 31 March 31 March 2020 2019 Rupees in thousand 23 .1 Net Insurance Claims Expense - Business underwritten inside Pakistan Claim paid Outstanding claims including IBNR - closing Outstanding claims including IBNR - opening Claim expense Reinsurance and other recoveries received Reinsurance and other recoveries in respect of outstanding claims - closing Reinsurance and other recoveries in respect of outstanding claims - opening Reinsurance and other recoveries revenue 23.2 2,030,503 4,823,914 (5,386,215) 1,247,198 1,468,202 (144,400) (1,008,594) (3,114,792) (3,295,122) 2,948,471 (310,721) 936,477 3,769,658 (534,058) 934,144 1,939,178 6,683,485 (5,968,380) (473,500) 2,180,783 1,687,718 5,369,551 (5,075,760) (72,992) 1,908,517 (893,743) (348,377) (3,408,613) (2,883,193) 3,284,877 243,336 (774,143) 1,406,640 2,627,587 39,113 (564,870) 1,343,647 581,734 1,190,146 (1,197,363) 64,137 638,654 488,365 788,431 (799,779) 7,261 484,278 (86,377) (237,751) 201,121 (268) (123,275) 515,379 (89,055) (221,371) 195,759 (58) (114,725) 369,553 200,764 352,673 (295,578) 194,033 297,403 (264,800) 257,859 226,636 (83,830) (236,381) 197,095 (123,116) 134,743 (85,644) (218,690) 191,511 (112,823) 113,813 380,970 837,473 (901,785) 64,137 380,795 294,332 491,028 (534,979) 7,261 257,642 (2,547) (1,370) 4,026 (268) (159) 380,636 (3,411) (2,681) 4,248 (58) (1,902) 255,740 Net Insurance Claims Expense - Business underwritten outside Pakistan Claim paid Outstanding claims including IBNR - closing Outstanding claims including IBNR - opening Currency translation effect Claim expense Reinsurance and other recoveries received Reinsurance and other recoveries in respect of outstanding claims - closing Reinsurance and other recoveries in respect of outstanding claims - opening Currency translation effect Reinsurance and other recoveries revenue 24 1,138,384 4,507,781 (4,398,967) Net commission and other acquisition costs Commission Paid or payable Deferred Commission expense opening Deferred Commission expense closing Currency translation effect Net Commission Commission received or recoverable Unearned reinsurance commission opening Unearned reinsurance commission closing Currency translation effect Commission from reinsurance 24.1 Net commission and other acquisition costs Business underwritten Inside Pakistan Commission Paid or payable Deferred Commission expense opening Deferred Commission expense closing Net Commission Commission received or recoverable Unearned reinsurance commission opening Unearned reinsurance commission closing Commission from reinsurance 24.2 Net commission and other acquisition costs Business underwritten Outside Pakistan Commission Paid or payable Deferred Commission expense opening Deferred Commission expense closing Currency translation effect Net Commission Commission received or recoverable Unearned reinsurance commission opening Unearned reinsurance commission closing Currency translation effect Commission from reinsurance 26
27. Quarter Ended 31 March 31 March 2020 2019 Rupees in thousand 25 Investment Income Business underwritten Inside Pakistan Available-for-sale Income from equity securities Dividend income - associated undertakings - others 239 ,136 111,791 350,927 191,309 227,015 418,324 2,275 10,911 13,186 10,290 10,290 3,533 3,533 367,646 460 460 429,074 367,646 14,700 443,774 54 54 13,743 13,743 191 191 - Income from debt securities - Held to maturity Return on Pakistan Investment Bonds Profit on Treasury Bills Net realized gains on investments Realized gains on - associated undertakings - others Reversal / (Provision) for impairment in value of 'available-for-sale' investments Business underwritten Outside Pakistan Available-for-sale Income from equity securities Dividend income - associated undertakings - others Net realized gains on investments Realized gains on - associated undertakings - others Income from term deposits - associated undertakings - others Net investment income 26 8,737 33,483 42,220 4,063 27,316 31,379 42,465 45,122 410,111 488,896 471,702 588,346 Earnings (after tax) per share - basic and diluted There is no dilutive effect on the basic earnings per share which is based on: Profit after tax for the period attributable to ordinary shareholders - - - - - Number of shares - - - - - Weighted average number of ordinary shares 350,000,000 350,000,000 -------------- (Rupees) -----------Earnings (after tax) per share - basic and diluted 1.35 1.68 27
28. 27 Transactions with related parties The Company has related party relationships with its associates , subsidiary company, entities with common directors, employee retirement benefit plans, key management personnel and other parties. The transactions with related parties are carried out at commercial terms and conditions except for compensation to key management personnel which are on employment terms. There are no transactions with key management personnel other than those specified in their terms of employment. The transactions and balances with related parties during the period other than those which have been specifically disclosed elsewhere in these unconsolidated condensed interim financial statements are as follows: (Unaudited) (Unaudited) 31 March 31 March 2019 2020 ---- (Rupees in thousand) ---i) Transactions Subsidiary company Premiums underwritten Premiums received Claims paid Claims received Premium paid Rent paid / payable Rent / service charges received Investments made 17,881 18,229 1,369 3,000 14,813 401,201 13,202 11,017 1,908 2,500 2,543 750 284 - Premiums underwritten Premiums received Claims paid Commission Paid Rent paid Rent received Dividends received Dividends paid Income on bank deposits Investments made Fee / service charges paid Fee / service charges received Charge in respect of gratuity expense Contribution to Employees' Provident Fund Compensation paid to Key management personnel 315,174 407,632 193,391 14,776 3,456 7,776 203,266 36,839 50,000 4,050 711 12,593 296,689 543,943 166,303 34,847 965 7,822 100,000 1,289 8,410 8,102 8,398 299,917 356,215 Other related parties (Unaudited) (Audited) 31 March 31 December 2020 2019 ---- (Rupees in thousand) ---ii) Period end balances Subsidiary company Balances receivable Balances payable 58,583 1,926 35,962 2,048 109,280 309,948 1,499,578 136,502 215,212 359,782 1,707,013 142,470 Other related parties Balances receivable Balances payable Cash and bank balances including term deposits Payable to Staff Gratuity Fund 28
29. 28 Segment Information Quarter Ended 31 March 2020 Fire and property damage Inside Pakistan Outside Pakistan Marine , aviation and transport Inside Pakistan Outside Pakistan Motor Health Miscellaneous Total Aggregate Inside Pakistan Outside Pakistan Inside Pakistan Outside Pakistan Inside Pakistan Outside Pakistan Inside Pakistan Outside Pakistan Rupees in thousand Premium receivable (Inclusive of federal excise duty, Federal insurance fee and Administrative surcharge) Less: Federal excise duty / VAT Federal insurance fee 1,208,872 (149,873) (10,187) 1,048,812 7,614 (363) 7,251 211,185 (22,427) (1,869) 186,889 4,934 (38) (5) 4,891 816,255 (97,487) (7,209) 711,559 1,801,325 (85,777) 1,715,548 611,251 (7,219) (5,956) 598,076 13,897 (662) 13,235 317,801 (25,840) (3,458) 288,503 5,868 (317) (5) 5,546 3,165,364 (302,846) (28,679) 2,833,839 1,833,638 (87,157) (10) 1,746,471 4,999,002 (390,003) (28,689) 4,580,310 1,048,812 1,043,462 1,463 3,887 1,048,812 7,251 7,220 31 7,251 186,889 181,385 5,504 186,889 4,891 4,891 4,891 711,559 685,190 26,369 711,559 1,715,548 1,713,622 1,926 1,715,548 598,076 597,690 386 598,076 13,235 13,235 13,235 288,503 285,847 2,656 288,503 5,546 5,541 5 5,546 2,833,839 2,793,574 1,463 38,802 2,833,839 1,746,471 1,744,509 1,962 1,746,471 4,580,310 4,538,083 1,463 40,764 4,580,310 1,986,504 8,455 195,260 5,273 695,522 1,942,414 478,634 2,387 564,156 3,561 3,920,076 1,962,090 5,882,166 (1,776,336) 210,168 108,503 318,671 (6,145) 2,310 238 2,548 (27,860) 167,400 80 167,480 12 5,285 5,285 (12,896) 682,626 1,142 683,768 (21,295) 1,921,119 1,921,119 478,634 478,634 (5,477) (3,090) (3,090) (286,468) 277,688 13,391 291,079 (1,908) 1,653 (79) 1,574 (2,103,560) 1,816,516 123,116 1,939,632 (34,813) 1,927,277 159 1,927,436 (2,138,373) 3,743,793 123,275 3,867,068 (64,019) (84,498) (225,562) 583 (285,548) (2,089,207) (376,123) (7,856) (295,946) 195 (1,247,198) (2,180,783) (3,427,981) 1,826 20,197 91,465 6,201 221,652 (52) 310,721 (62,193) (64,301) (134,097) 583 (289,770) (1,341,410) (376,123) (1,655) (74,294) 143 (936,477) (1,406,640) (2,343,117) Commission expense (123,008) (366) (35,026) (305) (49,604) (379,566) (12,972) (327) (37,249) (231) (257,859) (380,795) (638,654) Management expense (73,168) (315) (75,230) (2,057) (243,820) (224,883) (28,945) (2,967) (66,225) (223) (487,388) (230,445) (717,833) - - - - - Gross written premium (inclusive of administrative surcharge) Gross direct premium Facultative inward premium Administrative surcharge Insurance premium earned Insurance premium ceded to reinsurers Net insurance premium Commission income Net underwriting income Insurance claims Insurance claim recoveries from reinsurer Net claims Premium deficiency expense Net insurance claims and expenses Underwriting result - - - (4,222) 747,797 - - - (258,369) (64,982) (244,353) (1,779) (583,194) 60,302 (62,434) (76,873) 3,506 100,574 (1,945,859) (24,740) (418,040) (4,949) (177,768) 60,594 (8,039) 113,311 (311) 1,263 - 774,143 - (1,681,724) (2,017,880) 1,084,864 (3,699,604) 257,908 (90,444) 167,464 Net investment income Rental income Other income Other expenses Finance cost Profit from Window Takaful Operations 367,646 19,634 43,586 (14,996) (624) 35,776 42,465 478 16,425 (2,872) (1,031) - 410,111 20,112 60,011 (17,868) (1,655) 35,776 Profit before tax 708,930 (34,979) 673,951 31 March 2020 Fire and property damage Inside Pakistan Outside Pakistan Marine, aviation and transport Inside Pakistan Outside Pakistan Motor Inside Pakistan Health Outside Pakistan Inside Pakistan Miscellaneous Outside Pakistan Inside Pakistan Outside Pakistan Total Inside Pakistan Outside Pakistan Aggregate Rupees in thousand Segment Assets Unallocated assets Segment Liabilities Unallocated Liabilities 5,231,508 5,552,421 97,130 113,364 572,935 807,317 4,935 24,984 1,209,550 2,383,338 5,624,003 10,731,787 834,543 1,738,285 53,488 63,895 1,780,194 2,180,945 24,339 27,993 9,628,730 22,857,541 5,803,895 7,391,182 15,432,625 30,248,723 32,486,271 13,195,077 45,681,348 12,662,306 2,659,898 10,962,023 644,100 23,624,329 3,303,998 15,322,204 11,606,123 26,928,327 29
30. 28 .1 Segment Information Quarter ended 31 March 2019 Fire and property damage Inside Pakistan Outside Pakistan Marine, aviation and transport Inside Pakistan Outside Pakistan Motor Health Miscellaneous Total Aggregate Inside Pakistan Outside Pakistan Inside Pakistan Outside Pakistan Inside Pakistan Outside Pakistan Inside Pakistan Outside Pakistan Rupees in thousand Premium receivable (Inclusive of federal excise duty, Federal insurance fee and Administrative surcharge) Less: Federal excise duty / VAT Federal insurance fee 2,348,132 (281,907) (20,233) 2,045,992 18,697 (1,341) (61) 17,295 225,853 (24,520) (1,998) 199,335 8,487 (157) (12) 8,318 828,770 (98,975) (7,318) 722,477 2,205,102 (113,361) 2,091,741 640,761 (11,180) (6,291) 623,290 10,647 (507) 10,140 584,689 (50,628) (5,340) 528,721 9,444 (483) (4) 8,957 4,628,205 (467,210) (41,180) 4,119,815 2,252,377 (115,849) (77) 2,136,451 6,880,582 (583,059) (41,257) 6,256,266 2,045,992 2,039,024 2,730 4,238 2,045,992 17,295 17,194 101 17,295 199,335 194,085 167 5,083 199,335 8,318 8,291 27 8,318 722,477 698,612 23,865 722,477 2,091,741 2,091,741 2,091,741 623,290 623,104 186 623,290 10,140 10,140 10,140 528,721 525,544 3,177 528,721 8,957 8,929 28 8,957 4,119,815 4,080,369 2,897 36,549 4,119,815 2,136,451 2,136,295 156 2,136,451 6,256,266 6,216,664 2,897 36,705 6,256,266 1,797,686 11,578 209,298 8,373 709,339 1,983,416 430,167 14,363 451,442 3,805 3,597,932 2,021,535 5,619,467 (1,548,350) 249,336 80,561 329,897 (7,377) 4,201 1,321 5,522 (25,651) 183,647 225 183,872 8,373 8,373 (12,387) 696,952 738 697,690 (40,007) 1,943,409 1,943,409 430,167 430,167 (9,386) 4,977 4,977 (218,354) 233,088 31,299 264,387 (2,758) 1,047 581 1,628 (1,804,742) 1,793,190 112,823 1,906,013 (59,528) 1,962,007 1,902 1,963,909 (1,864,270) 3,755,197 114,725 3,869,922 (356,636) (2,828) (81,418) - (364,771) (1,891,460) (377,212) (14,229) (288,165) - (1,468,202) (1,908,517) (3,376,719) Insurance claim recoveries from reinsurer 302,356 7,856 (423) - 15,325 11,013 216,800 - 534,058 Net claims (54,280) 5,028 (81,841) - (349,446) (1,345,459) (377,212) (3,216) (71,365) - (934,144) (1,343,647) (2,277,791) Commission expense (105,606) (1,504) (26,906) (1,619) (50,797) (254,252) (14,217) (72) (29,110) (195) (226,636) (257,642) (484,278) Management expense (115,308) (441) (68,853) (2,393) (244,418) (268,499) (35,254) (3,216) (70,968) (334) (534,801) (274,883) (809,684) - - - - - Gross written premium (inclusive of administrative surcharge) Gross direct premium Facultative inward premium Administrative surcharge Insurance premium earned Insurance premium ceded to reinsurers Net insurance premium Commission income Net underwriting income Insurance claims Premium deficiency expense Net insurance claims and expenses Underwriting result - - (275,194) 3,083 54,703 8,605 (177,600) 6,272 546,001 - - - (4,012) (644,661) 4,361 53,029 (1,868,210) 75,199 (426,683) 3,484 (6,504) (171,443) (1,527) 92,944 (529) 1,099 - 564,870 - (1,695,581) (1,876,172) 1,098,928 (3,571,753) 210,432 87,737 298,169 Net investment income Rental income Other income Other expenses Finance cost Profit from Window Takaful Operations 443,774 845 27,039 (27,796) (1,321) 26,434 45,122 10,342 (2,946) (1,174) - 488,896 845 37,381 (30,742) (2,495) 26,434 Profit before tax 679,407 139,081 818,488 31 December 2019 Fire and property damage Inside Pakistan Outside Pakistan Marine, aviation and transport Inside Pakistan Outside Pakistan Motor Inside Pakistan Health Outside Pakistan Inside Pakistan Miscellaneous Outside Pakistan Inside Pakistan Outside Pakistan Total Inside Pakistan Outside Pakistan Aggregate Rupees in thousand Segment Assets Unallocated assets Segment Liabilities Unallocated Liabilities 6,992,773 7,060,540 95,788 111,211 489,767 624,861 5,187 25,552 1,062,812 2,359,101 5,552,814 9,993,415 558,513 1,366,492 33,510 40,351 1,923,756 2,307,325 19,249 22,763 11,027,621 26,257,955 5,706,548 6,546,138 16,734,169 32,804,093 37,285,576 12,252,686 49,538,262 13,718,319 3,567,097 10,193,292 679,062 23,911,611 4,246,159 17,285,416 10,872,354 28,157,770 30
31. 29 Fair value measurement of financial instruments Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date . Underlying the definition of fair value is the presumption that the company is a going concern and there is no intention or requirement to curtail materially the scale of its operations or to undertake a transaction on adverse terms. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. IFRS 13 'Fair Value Measurement' requires the company to classify fair value measurements and fair value hierarchy that reflects the significance of the inputs used in making the measurements of fair value hierarchy has the following levels: - Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) Inputs other than quoted prices included within level 1 that are observable for the asset either directly (that is, derived from prices) (Level 2) Inputs for the asset or liability that are not based on observable market data (that is, unadjusted) inputs (Level 3) Transfer between levels of the fair value hierarchy are recognized at the end of the reporting period during which the changes have occurred. The following table shows the carrying amounts and fair value of financial assets and financial liabilities, including their levels in the fair value hierarchy for financial instruments measured at fair value. Note 31 March 2020 (Unaudited) Receivables Cash and Other Available Held to and other cash financial Total Level 1 Level 2 Level 3 Total for sale maturity financial assets equivalents liabilities - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Rupees in thousand - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Financial assets - measured at fair value Investments Equity securities - Quoted Equity securities - Unquoted Debt securities Investment Properties Investments of Window Takaful Operations - Operator's Fund 11 11 12 9 12,104,181 2,925,532 - 18 33,922 465,975 - 401,896 - - - 12,104,181 2,925,532 465,975 401,896 12,104,181 - - - 33,922 33,922 - - 469,278 6,383,870 1,096,096 465,975 - 2,925,532 401,896 12,104,181 2,925,532 465,975 401,896 - - 33,922 - - - - - - - - - - - - Financial assets - not measured at fair value Loans and other receivables * Investment - Term deposits * Investment in subsidiary* Insurance / reinsurance receivables - unsecured and considered good * Reinsurance recoveries against outstanding claims * Salvage recoveries accrued * Prepayments * Cash and bank * Other Assets of Window Takaful Operations Operator's Fund 14 13 10 - 15 16 17 - - 5,265,976 6,196,682 326,723 2,644,630 - 1,222,860 - 5,265,976 6,196,682 326,723 2,644,630 1,222,860 18 - - 366,655 107,000 - 473,655 16,767,936 1,329,860 - 40,011,276 15,063,635 6,383,870 - 6,849,845 469,278 1,096,096 12,138,103 465,975 3,327,428 15,931,506 Financial liabilities - not measured at fair value Underwriting provisions: Outstanding claims (including IBNR)* Insurance / reinsurance payables * Other creditors and accruals* Total liabilities of Window Takaful OperationsOperator's Fund* 23 - - - - 11,191,266 2,725,000 2,294,844 11,191,266 2,725,000 2,294,844 - - - - 18 - - - - 251,120 251,120 - - - - - - - - 16,462,230 16,462,230 - - - - * The Company has not disclosed the fair value of these items because their carrying amounts are a reasonable approximation of fair value. 31
32. 29 .1 Fair value measurement of financial instruments The following table shows the carrying amounts and fair value of financial assets and financial liabilities, including their levels in the fair value hierarchy for financial instruments measured at fair value. Note 31 December 2019 Receivables Cash and Other Held to Available and other cash financial Total Level 1 Level 2 Level 3 Total maturity for sale financial assets equivalents liabilities - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Rupees in thousand - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Financial assets - measured at fair value Investment Equity securities- quoted Equity securities- unquoted Debt securities Investment Properties Investments of Window Takaful Operations Operator's Fund 11 11 12 9 15,968,534 2,874,483 - 465,868 - 401,896 - - 15,968,534 2,874,483 465,868 401,896 15,968,534 - 18 32,958 - - - - 32,958 32,958 14 13 10 - 5,883,892 - 477,264 694,895 - - 477,264 5,883,892 694,895 15 16 17 - - 5,810,164 5,931,928 301,420 3,633,739 - 1,176,685 - 18 - - 301,438 91,895 6,349,760 17,552,744 1,268,580 465,868 - 2,874,483 401,896 15,968,534 2,874,483 465,868 401,896 - - - - - - 5,810,164 5,931,928 301,420 3,633,739 1,176,685 - - - - - 393,333 - - - - - 44,047,059 32,958 Financial assets - not measured at fair value Loans and other receivables * Investment - Term deposits* Investment in subsidiary* Insurance / reinsurance receivables - unsecured and considered good * Reinsurance recoveries against outstanding claims * Salvage recoveries accrued * Prepayments * Cash and bank * Other Assets of Window Takaful Operations Operator's Fund* 18,875,975 16,001,492 465,868 3,276,379 19,743,739 Financial liabilities - not measured at fair value Underwriting provisions: Outstanding claims (including IBNR)* Insurance / reinsurance payables * Other creditors and accruals* Total liabilities of Window Takaful OperationsOperator's Fund* 23 - - - - 10,367,347 2,701,164 2,177,455 10,367,347 2,701,164 2,177,455 - - - - 18 - - - - 195,872 - - - - - - - 15,441,838 195,872 15,441,838 - - - - * The Company has not disclosed the fair value of these items because their carrying amounts are a reasonable approximation of fair value. 32
33. 30 Date of authorization for issue This unconsolidated condensed interim financial information was authorized for issue on 22 May 2020 by the Board of Directors of the Company . 31 Non-adjusting events after balance sheet date 31.1 The Board of Directors of the Company in their meeting held on 13 March 2020 proposed final cash dividend for the year ended 31 December 2019 @ 15% i.e. Rs. 1.5/- per share which has been approved by the members in the Annual General Meeting held on 22 May 2020. This unconsolidated condensed interim financial information for the quarter ended 31 March 2020 does not include the effect of this appropriation which will be accounted for in the unconsolidated condensed interim financial information for the half year ending 30 June 2020. 31.2 The Company follows the development of the Covid-19 corona virus and evaluates the extent to which this may affect the Company's operations in the short and long term. With the high levels of uncertainty surrounding the situation and potential additional initiatives by authorities and customers, it is very difficult to predict the full financial impact that the situation may have on the Company. 32 General 32.1 Corresponding figures have been rearranged and reclassified for better presentation, wherever considered necessary. 32.2 Figures have been rounded off to the nearest thousand rupees unless other wise stated. Chairman Director Director Chief Financial Officer Managing Director & Chief Executive Officer 33
34. Directors ’ Review to the Members on Consolidated Condensed Interim Financial Information (Unaudited) For the Quarter Ended 31 March 2020 On behalf of the Board, We are pleased to present the consolidated condensed interim financial information of Adamjee Insurance Company Limited and its subsidiary, Adamjee Life Assurance Company Limited for the three months ended 31 March 2020. The following appropriation of profit has been recommended by the Board of Directors: 31 March 2020 31 March 2019 Rupees in thousand (Unaudited) Profit before tax (Unaudited) 703,081 891,748 (209,710) (230,231) 493,371 661,517 (2,786) (18,820) 490,585 642,697 Unappropriated profit brought forward 13,610,534 12,521,272 Acquisition of non-controlling interest (56,209) Taxation Profit after tax Less: Profit attributable to non-controlling interest Profit attributable to ordinary shareholders Profit available for appropriation - 14,044,910 31 March 2020 13,163,969 31 March 2019 Rupees Earnings per share - Basic and diluted 1.40 1.84 For and on behalf of the Board Lahore: 22 May 2020 Shaikh Muhammad Jawed Director Muhammad Ali Zeb Managing Director & Chief Executive Officer 34
36. Adamjee Insurance Company Limited Consolidated Condensed Interim Statement of Financial Position As at 31 March 2020 Note 31 March 2020 31 December 2019 -------- (Rupees in thousand) -------(Unaudited) (Audited) Assets Property and equipment Intangible assets Investment property Investments Equity securities Debt securities Term deposits Loan secured against life insurance policies Loans and other receivables Insurance / reinsurance receivables Reinsurance recoveries against outstanding claims Salvage recoveries accrued Deferred commission expense / acquisition cost Taxation - payment less provisions Prepayments Cash and bank 7 8 9 4,783,638 123,567 1,204,026 4,626,364 131,236 1,204,026 10 11 12 26,949,474 13,376,793 10,618,870 30,987 855,278 5,342,458 6,196,682 326,723 1,197,363 101,361 2,718,149 7,268,758 81,094,127 32,184,555 8,617,474 15,468,892 32,785 716,839 5,865,967 5,931,928 301,420 1,190,146 198,833 3,671,070 8,437,244 88,578,779 507,577 426,291 81,601,704 89,005,070 3,500,000 1,457,377 14,044,910 19,002,287 3,500,000 4,552,846 13,610,534 21,663,380 13 14 15 16 Total assets of Window Takaful Operations - Operator's Fund (Parent Company) 17 Total Assets Equity And Liabilities Capital and reserves attributable to Company's equity holders Ordinary share capital Reserves Unappropriated Profit Equity attributable to equity holders of the parent 18 Non-controlling interest - Total Equity 341,508 19,002,287 22,004,888 34,735,633 36,708,430 11,191,266 9,235,451 201,121 260,669 139,433 485,785 2,728,457 2,492,347 878,135 27,612,664 10,367,347 10,242,348 237,751 262,203 1,425,938 623,336 2,826,429 3,212,270 898,258 30,095,880 251,120 195,872 81,601,704 89,005,070 Liabilities Insurance liabilities Underwriting provisions: Outstanding claims including IBNR Unearned premium reserve Unearned reinsurance commission Retirement benefits obligations Deferred taxation Premium received in advance Insurance / reinsurance payables Other creditors and accruals Deposits and other liabilities 19 Total liabilities of Window Takaful Operations - Operator's Fund (Parent Company) 17 Total Equity and Liabilities 20 Contingencies and commitments The annexed notes 1 to 31 form an integral part of these consolidated financial statements. Chairman Director Director Chief Financial Officer Managing Director & Chief Executive Officer 36
37. Adamjee Insurance Company Limited Consolidated Condensed Interim Profit and Loss Account (Un-audited) For the Quarter Ended 31 March 2020 Quarter Ended Note 31 March 2020 31 March 2019 Rupees in thousand Net insurance premium 21 7,216,399 6,253,018 Net insurance claims 22 (3,872,600) (4,035,566) Net commission and other acquisition costs 23 (1,174,240) (947,208) (5,046,840) (4,982,774) (951,975) 1,886,273 3,103,857 (1,069,499) (997,129) (796,384) 1,202,518 1,402,980 Insurance claims and acquisition expenses Management expenses Net change in insurance liabilities (other than outstanding claims) Underwriting results Investment income Net fair value (loss) / gain on financial assets at fair value through profit or loss Net unrealized gain on investment property Rental income Other income Other expenses Results of operating activities Finance cost under IFRS 16 Profit from 'Window Takaful Operations Profit before tax 24 17 Income tax expense Profit after tax Profit attributable to: Equity holders of the parent Non-controlling interest Earnings (after tax) per share - Rupees 25 (3,780,955) 10,297 159,801 (22,271) 673,247 191,716 21,000 1,578 87,897 (40,978) 867,809 (5,942) 35,776 703,081 (2,495) 26,434 891,748 (209,710) (230,231) 493,371 661,517 490,585 2,786 493,371 642,697 18,820 661,517 Rupees 1.40 1.84 The annexed notes 1 to 31 form an integral part of these consolidated financial statements. Chairman Director Director Chief Financial Officer Managing Director & Chief Executive Officer 37
38. Adamjee Insurance Company Limited Consolidated Condensed Interim Statement of Comprehensive Income (Un-audited) For the Quarter Ended 31 March 2020 Quarter Ended 31 March 2020 31 March 2019 Rupees in thousand Profit after tax 493,371 661,517 Other comprehensive income Items that may be reclassified subsequently to profit and loss: Unrealized (loss) / gain on 'available-for-sale' investments - net of tax (3,209,807) Reclassification adjustment relating to 'available for sale' investments disposed off during the period - net of tax Other comprehensive income from window takaful operations net of tax Effect of translation of investment in foreign branches - net Total comprehensive income for the period Total comprehensive income attributable to: Equity holders of the parent Non-controlling interest 128,599 2,644 10,915 684 423 111,707 8,337 (2,601,401) 809,791 (2,604,884) 3,483 (2,601,401) 790,483 19,308 809,791 The annexed notes 1 to 31 form an integral part of these consolidated financial statements. __________ Chairman __________ Director __________ Director _____________________ ___________________________ Chief Financial Officer Managing Director & Chief Executive Officer 38
39. Adamjee Insurance Company Limited Consolidated Condensed Interim Cash Flow Statement (Un-audited) For the Quarter Ended 31 March 2020 Quarter Ended 31 March 2020 31 March 2019 Rupees in thousand Cash flows from operating activities Underwriting activities Insurance premium received Reinsurance premiums paid Claims paid Surrenders paid Reinsurance and other recoveries received Commissions paid Commissions received Other underwriting payments Net cash inflow from / (outflow for) underwriting activities 8,726,152 (1,198,403) (4,795,954) (14,058) 1,023,973 (1,343,973) 86,377 (1,852,218) 631,896 8,254,883 (1,372,817) (5,711,840) (14,666) 1,258,676 (1,108,779) 89,055 (1,509,198) (114,686) Income tax paid Other operating payments Loans advanced Loans repayments received Other operating receipts Net cash outflow for other operating activities (78,174) (19,848) (11,312) 17,138 13,869 (78,327) (62,985) (64,483) (16,138) 13,123 18,744 (111,739) Total cash inflow from / (outflow for) operating activities 553,569 (226,425) Other operating activities Cash flows from investing activities Profit / return received on bank deposits Income received from Government Securities Dividends received Rentals received Payment for investments/ investment properties Loan to policy holder Proceeds from disposal of investments Fixed capital expenditure - operating assets Fixed capital expenditure - intangible assets Proceeds from disposal of operating fixed assets Total cash outflow for investing activities 1,380,692 9,912 355,788 22,950 (64,676,208) 1,874 56,036,974 (206,562) (3,157) 8,269 (7,069,468) 550,818 7,581 56,515 1,776 (36,447,096) 323 35,099,230 (239,196) 9,196 (960,853) (2,588) (2,588) (2,281) (2,281) (6,518,487) 18,022,245 11,503,758 (1,189,559) 16,543,097 15,353,538 Cash flows from financing activities Dividends paid Total cash outflow for financing activities Net cash outflow for all activities Cash and cash equivalents at beginning of period Cash and cash equivalents at end of the period 39
40. Quarter Ended 31 March 2020 31 March 2019 Rupees in thousand Reconciliation to profit and loss account Operating cash flows Depreciation and amortization expense Provision for retirement benefit obligations Other income - bank and term deposits Gain on disposal of property and equipment Rental income Increase / (decrease) in assets other than cash (Increase) / decrease in liabilities Gain on disposal of investments Decrease / (increase) in unearned premium (Decrease) / Increase in loans Income taxes paid Increase in tax liabilities Reversal of impairment in value of 'available-for-sale' investments Dividend and other investment income Revaluation of investment Profit for the year from Window Takaful Operations 553,569 (97,368) (12,593) 85,641 2,836 28,255 (852,122) 2,412,196 3,724 1,006,897 (5,826) 59,341 (202,249) (2,529,107) 4,401 35,776 Profit after taxation (1,031,121) (58,380) (11,564) 45,824 4,192 1,578 2,539,539 (1,608,024) 361,554 (701,741) 3,015 36,489 (230,142) 14,700 1,267,268 1,896 26,434 493,371 661,517 12,624 7,256,134 4,235,000 29,472 2,548,066 12,776,000 11,503,758 15,353,538 Cash and bank for the purposes of the cash flow statement consists of: Cash and other equivalents Current and other accounts Term deposit maturing within three months The annexed notes 1 to 31 form an integral part of these consolidated financial statements. Chairman Director Director Chief Financial Officer Managing Director & Chief Executive Officer 40
41. Adamjee Insurance Company Limited Consolidated Condensed Interim Statement of Changes in Equity (Un-audited) For the Quarter Ended 31 March 2020 Share capital Issued, subscribed and paid up Capital reserves Reserve for exceptional losses Investment fluctuation reserve Revenue reserves Exchange translation reserve Fair Value Reserve General reserve Retained earnings Equity attributable to equity holders of the parent Non-controlling interest Total Equity -------------------------------------------------------------------------------------------(Rupees in thousand)------------------------------------------------------------------------------------------3,500,000 Balance as at 31 December 2018 - (Audited) 22,859 3,764 614,062 2,204,097 936,500 12,521,272 19,802,554 288,797 20,091,351 Profit for the period 01 January 2019 to 31 March 2019 Other comprehensive income for the period 01 January 2019 to 31 March 2019 - - - 8,337 139,449 - 642,697 - 642,697 147,786 18,820 488 661,517 148,274 Total comprehensive income for the period - - - 8,337 139,449 - 642,697 790,483 19,308 809,791 22,859 3,764 622,399 2,343,546 13,163,969 20,593,037 308,105 20,901,142 3,500,000 Balance as at 31 March 2019 - (Unaudited) 936,500 Profit for the period 01 April 2019 to 31 December 2019 Other comprehensive income for the period 01 April 2019 to 31 December 2019 - - - 52,537 571,241 - 1,329,348 (7,783) 1,329,348 615,995 39,216 (5,813) 1,368,564 610,182 Total comprehensive income for the period - - - 52,537 571,241 - 1,321,565 1,945,343 33,403 1,978,746 - - - - - - (525,000) (350,000) (525,000) (350,000) - (525,000) (350,000) - - - - - - (875,000) (875,000) - (875,000) 22,859 3,764 674,936 2,914,787 - - 111,707 (3,207,176) 22,859 3,764 111,707 786,643 (3,207,176) (292,389) - - - - - - (56,209) (56,209) (344,991) (401,200) - - - - - - (56,209) (56,209) (344,991) (401,200) 22,859 3,764 Transactions with owners of the Company Final cash dividend at Rs. 1.5 per share - December 31, 2018 Interim cash dividend at Rs. 1.0 per share - June 30, 2019 3,500,000 Balance as at 31 December 2019 - (Audited) Profit for the period 01 January 2020 to 31 March 2020 Other comprehensive income for the period 01 January 2020 to 31 March 2020 3,500,000 Total comprehensive income for the period 936,500 936,500 13,610,534 21,663,380 341,508 22,004,888 490,585 - 490,585 (3,095,469) 2,786 697 493,371 (3,094,772) 490,585 14,101,119 (2,604,884) 19,058,496 3,483 344,991 (2,601,401) 19,403,487 Transactions with owners of the Company Acquisition of Non-controlling interest 3,500,000 Balance as at 31 March 2020 - (Unaudited) 786,643 (292,389) 936,500 14,044,910 19,002,287 - 19,002,287 The annexed notes 1 to 31 form an integral part of these consolidated financial statements. __________ Chairman __________ Director __________ Director _____________________ Chief Financial Officer ___________________________ Managing Director & Chief Executive Officer 41
42. Adamjee Insurance Company Limited Notes to the Consolidated Condensed Interim Financial Information (Un-audited) For the Quarter Ended 31 March 2020 1 The group and its operations: 1.1 The group comprises of: 2019 2020 (Holding percentage) Parent Company Adamjee Insurance Company Limited 100% 100% Subsidiary Company Adamjee Life Assurance Company Limited 100% 74.28% Adamjee Insurance Company Limited (Parent Company) The Parent Company is a public limited company incorporated in Pakistan on September 28, 1960 under the repealed Companies Act, 1913 (now the Companies Act, 2017). The Parent Company is listed on Pakistan Stock Exchange limited and is principally engaged in the general insurance business. The registered office of the Parent Company is situated at Adamjee House Building, 80/A Block E-1, Main Boulevard Gulberg-III, Lahore. The Parent Company also operates branches in the United Arab Emirates (UAE) and the Export Processing Zone (EPZ). The Parent Company was granted authorization on 23 December 2015 under Rule 6 of the Takaful Rules, 2012 to undertake Window Takaful Operations in respect of general takaful products by Securities and Exchange Commission of Pakistan (SECP) and commenced Window Takaful Operations on 01 January 2016. Adamjee Life Assurance Company Limited (Subsidiary Company) The Subsidiary Company was incorporated in Pakistan on August 04, 2008 as a public unlisted company under the Companies Act, 2017. The Subsidiary Company started its operations from April 24, 2009. Registered office of the Subsidiary Company is at 1st floor, Islamabad Stock Exchange Towers, 55-B, Jinnah Avenue, Blue Area, Islamabad while its principal place of business is at Adamjee House, 3rd and 4th Floor, I.I Chundrigar Road, Karachi. The Subsidiary Company was an associate of IVM Intersurer B.V having a holding of 25.72% since February 25, 2020 in the share capital of the Subsidiary Company. IVM Intersurer B.V. nominated Hollard Life Assurance Company Limited ('HLA'), an associate company of IVM Intersurer B.V. to act on its behalf in respect of matters relating to the Subsidiary Company. The shareholders of the Parent Company in their Extra Ordinary General Meeting (EOGM) held on February 25, 2019 had approved acquisition of 24,059,855 ordinary shares at par value of Rs. 10 each of Non controlling interest of the Subsidiary Company from IVM intersurer B.V. at share price of Rs.16.68 per share (approx.), for an aggregate price of Rs. 401,200 thousands. The Parent Company after obtaining the approval for payment of State Bank of Pakistan credited the sum to IVM's bank account on February 25, 2020. After the acquisition of aforementioned shares (representing 25.72%) Adamjee Life Assurance Company Limited has become a wholly owned subsidiary of the Parent Company. The Subsidiary Company is engaged in life assurance business carrying on non-participating business only. In accordance with the requirements of the Insurance Ordinance, 2000, the Subsidiary Company has established a shareholders' fund and the following statutory funds in respect of each class of its life assurance business: - Conventional Business Accident and Health Business Individual Life Non-unitized Investment Linked Business Individual Life Unit Linked Business Individual Family Takaful Business The Subsidiary Company was granted authorization on May 04, 2016 under Rule 6 of Takaful Rules, 2012 to undertake Takaful Window Operations in respect of family takaful products by the SECP and subsequently the Subsidiary Company commenced Window Takaful Operations from July 14, 2016. The Subsidiary Company formed a Waqf Fund namely the Adamjee Life Assurance Company Limited Window Takaful Operations Waqf Fund (here-in-after referred to as the Participant Takaful Fund (PTF) on December 22, 2015 under a Waqf deed executed by the Subsidiary Company with the ceded amount of Rs. 500,000. The ceded money is required to be invested in Shariah compliant investments and any profit thereon can be utilized only to pay benefits to participants or defray PTF expenses. Waqf deed also governs the relationship of the Subsidiary Company and policy holders for the management of Takaful operations, investment of policy holders' funds and shareholders' funds as approved by the Shariah Advisor appointed by the Subsidiary Company. 2 Basis of preparation and statement of compliance This consolidated condensed interim financial information of the Group for the quarter ended 31 March 2020 has been prepared in accordance with accounting and reporting standards as applicable in Pakistan. The accounting and reporting standards comprise of: 42
43. - International Financial Reporting Standards ('IFRS') issued by the International Accounting Standards Board ('IASB') as are notified under the Companies Act, 2017; and - Provision of and directives issued under the Companies Act, 2017 and the Insurance Ordinance, 2000, the Insurance Rules, 2017, the Insurance Accounting Regulations, 2017 and the Takaful Rules, 2012. In case requirements differ, the provision of and directives issued under the Companies Act, 2017, the Insurance Ordinance, 2000 the Insurance Rules, 2017, the Insurance Accounting Regulations, 2017 and the Takaful Rules, 2012 shall prevail. As per the requirements of the SECP Takaful Rules, 2012 and SECP Circular No. 25 of 2015 dated July 09, 2015, the assets, liabilities and profit and loss account of the Operator's Fund of the General Takaful Operations of the Parent Company have been presented as a single line item in the consolidated statement of financial position and profit and loss account respectively. This consolidated condensed interim financial information does not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with annual financial statements of the Group for the year ended 31 December 2019. Comparative condensed interim statement of financial position is stated from annual audited financial statements as of 31 December 2019, whereas comparatives for interim profit and loss account, interim statement of comprehensive income, interim statement of changes in equity and interim cash flow statement and related notes are extracted from condensed interim financial information of the Group for the quarter ended 31 March 2019. Items included in the consolidated financial statements are measured using the currency of the primary economic environment in which the Group operates ('the functional currency'). The financial statements are presented in Pak Rupees, which is the Group's functional and presentation currency. All the financial information presented in Pak Rupees has been rounded off to the nearest thousand in rupee, unless otherwise stated. 3 Basis of measurement These consolidated financial statements have been prepared under historical cost convention except for certain foreign currency translation adjustments, certain financial instruments carried at fair value, and retirement benefit obligations under employee benefits carried at present value. 4 Accounting policies The accounting policies and the methods of computation adopted in the preparation of the consolidated condensed interim financial information are same as those applied in the preparation of annual audited financial statements for the year ended 31 December 2019. The Group has adopted all the applicable new standards and amendments to standards, including any consequential amendments to other standards, with a date of initial application of 01 January 2020, as mentioned in the financial statement for the year ended 31 December 2019. There is no significant impact of such changes on this condensed interim financial information of the Group. 5 Use of estimates and judgments The preparation of this consolidated condensed interim financial information in conformity with the approved accounting standards requires the use of certain critical accounting estimates. It also requires the management to exercise its judgment in the process of applying the Group's accounting policies. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. During preparation of this consolidated condensed interim financial information, the significant judgments made by the management in applying the Group's accounting policies and the key sources of estimation and uncertainty were the same as those that applied in the preceding audited annual published financial statements of the Group for the year ended 31 December 2019. 6 Insurance and Financial risk management The Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated annual financial statements for the year ended 31 December 2019. 43
44. (Unaudited) 31 March 2020 Note 7 7.2 Capital work in progress 7.3 4,560,942 20,274 - 2,481,588 2,056,756 373,801 (5,548) (85,482) 40,182 (50,848) 4,530,368 253,270 4,783,638 (67,645) (308,034) (23,218) 47,694 (351,203) 4,560,942 65,422 4,626,364 Additions during the period 4,253 8,769 4,510 2,546 196 20,274 1,364,391 78,175 113,408 437,606 30,814 27,173 5,189 2,056,756 5,548 5,548 29,637 22,948 8,754 6,306 67,645 Written down values of property and equipment disposed off during the period / year Furniture and fixtures Motor vehicles Machinery and equipment Computer equipment Leasehold Improvements 7.3 7.1 Book value of disposals during the period Depreciation charged during the period / year Net book value of transfers to Investment property Exchange differences and other adjustments Building - Freehold Furniture and fixtures Motor vehicles Machinery and equipment Computer equipment Leasehold Improvements Right of use asset 7.2 Rupees in thousand Property and equipment Opening balance - net book value Additions during the period / year Right of use asset - initial application of IFRS - 16 7.1 (Audited) 31 December 2019 Capital work in progress Capital work in progress as of 31 March 2020 includes advances to different contractors, suppliers and vendors amounting to Rs. 253,270 thousands (31 December 2019: Rs. 65,422 thousands). (Unaudited) 31 March 2020 (Audited) 31 December 2019 Rupees in thousand 8 9 Intangible assets Opening balance - net book value Additions during the period 131,236 - 160,602 14,998 Book value of disposals during the period Amortization charged during the period Exchange differences and other adjustments (11,884) 4,215 (7,669) 123,567 (50,086) 5,722 (44,364) 131,236 Investment Properties Net book value as at January 01 Additions and capital improvements Unrealized fair value gain 1,204,026 - 855,394 315,334 33,298 Net book value as at December 31 1,204,026 1,204,026 44
45. 10 Investment in equity securities 31 March 2020 (Unaudited) Cost Impairment / provision 31 December 2019 (Audited) Unrealized Gain / (loss) Carrying value Cost Impairment / provision Unrealized Gain / (loss) Carrying value Rupees in thousands Available-for-sale Related parties Listed shares Unlisted shares 7,963,718 748,226 8,711,944 (261,128) (261,128) (977,604) 14,971 (962,633) 6,724,986 763,197 7,488,183 9,086,355 698,226 9,784,581 (290,808) (290,808) 2,098,765 13,922 2,112,687 10,894,312 712,148 11,606,460 7,791,629 925,360 44,555 161 8,761,705 (1,743,441) (1,743,441) (687,645) 1,236,975 (10,727) 538,603 5,360,543 2,162,335 33,828 161 7,556,867 5,686,610 925,360 364,265 161 6,976,396 (1,713,761) (1,713,761) 759,400 1,236,975 68 635 1,997,078 4,732,249 2,162,335 364,333 796 7,259,713 17,473,649 (2,004,569) (424,030) 15,045,050 16,760,977 (2,004,569) 4,109,765 18,866,173 Others Listed shares Unlisted shared Mutual Funds NIT Units Total - available for sale Fair value through profit and loss Related parties Listed shares Mutual Funds 1,384,403 4,656,426 6,040,829 - - 1,384,403 4,656,426 6,040,829 1,633,771 5,014,226 6,647,997 - - 1,633,771 5,014,226 6,647,997 4,996,516 867,079 5,863,595 - - 4,996,516 867,079 5,863,595 5,828,985 841,400 6,670,385 - - 5,828,985 841,400 6,670,385 11,904,424 - - 11,904,424 13,318,382 - - 13,318,382 26,949,474 30,079,359 Others Listed shares Mutual Funds Total - fair value through profit and loss 29,378,073 (2,004,569) (424,030) (2,004,569) 4,109,765 32,184,555 45
46. (Unaudited) 31 March 2020 Note 11 (Audited) 31 December 2019 Rupees in thousand Investments in debt securities Held to maturity Treasury Bills Pakistan Investment Bonds 371,785 94,190 465,975 370,491 95,377 465,868 557,145 98,595 655,740 558,153 93,684 651,837 1,542,543 600,000 1,171,833 6,796,455 2,144,247 12,255,078 1,588,848 50,000 1,135,121 3,828,677 897,123 7,499,769 13,376,793 8,617,474 Available for sale Treasury Bills Pakistan Investment Bonds Fair value through profit and loss Term Finance Certificate Advance against purchase of term finance certificate Corporate sukuks Ijarah sukuks Treasury Bills Pakistan Investment Bonds (Unaudited) 31 March 2020 (Audited) 31 December 2019 Rupees in thousand 12 Investments in Term Deposits Held to maturity Deposits maturing within 12 months Inside Pakistan - related parties - others Outside Pakistan - related parties - others Deposits maturing after 12 months Inside Pakistan - related parties - others 12.1 281,811 4,136,447 4,418,258 156,811 9,610,066 9,766,877 1,361,532 4,790,351 6,151,883 10,570,141 1,264,698 4,387,207 5,651,905 15,418,782 2,000 46,729 48,729 2,000 48,110 50,110 10,618,870 15,468,892 12.1 These include fixed deposits amounting to Rs. 5,219,206 thousands (AED 115,000 thousands) [2019: Rs. 4,848,009 thousands (AED 115,000 thousands)] kept in accordance with the requirements of Insurance Regulations applicable to the UAE branches of the Parent Company for the purpose of carrying on business in United Arab Emirates. These also include liens against cash deposits of Rs. 231,987 thousands (2019: Rs. 231,987 thousands) with banks in Pakistan essentially in respect of guarantees issued by the banks on behalf of the Parent Company for claims under litigation filed against the Parent Company, bid bond guarantees and guarantee to Meezan Bank Limited (MBL) against the loan provided by MBL to Hyundai Nishat Motor (Private) Limited, a related party. 46
47. (Unaudited) 31 March 2020 Note 13 Rupees in thousand Loans and other receivables - considered good Rent receivable Accrued income Security deposits Advances to employees and suppliers Advance agent commission Loans to employees Receivable against the sale of investment Receivable from related parties Other receivables 14 9,091 270,602 75,523 173,118 3,253 50,953 180,307 92,431 7,295 351,017 92,526 152,012 3,003 56,318 5 54,663 855,278 716,839 5,297,189 5,786,646 (916,808) 4,380,381 (868,586) 4,918,060 1,163,379 1,149,209 Insurance / reinsurance receivables - unsecured and considered good Due from insurance contract holders Provision for impairment of receivables from insurance contract holders 14.1 Due from other insurers / reinsurers Provision for impairment of due from other insurers / reinsurers (201,302) 962,077 5,342,458 14.1 Note 5,865,967 (Audited) 31 December 2019 Rupees in thousand Prepayments Prepaid reinsurance premium ceded Prepaid rent Prepaid miscellaneous expenses 16 (201,302) 947,907 Due from insurance contact holders include an amount Rs. 118,997 thousands (2019: Rs. 221,567 thousands) held with related parties. (Unaudited) 31 March 2020 15 (Audited) 31 December 2019 2,445,880 25,143 247,126 2,718,149 3,500,512 12,488 158,070 3,671,070 3,736 8,595 12,331 819 24,993 25,812 293 293 12,624 25,812 68,149 6,802,026 6,870,175 289,356 8,057,231 8,346,587 380,024 5,935 385,959 59,333 5,512 64,845 7,256,134 8,411,432 7,268,758 8,437,244 Cash and bank Cash and cash equivalents Inside Pakistan Cash in hand Policy and revenue stamps, bond papers Outside Pakistan Cash in hand Policy and revenue stamps, bond papers Cash at bank Inside Pakistan Current accounts Savings accounts Outside Pakistan Current accounts Savings accounts 47
48. 16 .1 Cash at bank includes an amount of Rs. 3,237,755 thousands (2019: Rs. 1,835,434 thousands) held with MCB Bank Limited, a related party of the Group. 16.2 Lien of Rs. 440,000 thousands (2019 : 291,000) is marked on cash deposits in saving accounts against SBLC (Standby Letter of Credit) issued in favor of Meezan Bank Limited on behalf of Hyundai Nishat Motor (Private) Limited by the Parent Company. (Unaudited) 31 March 2020 Note 17 (Audited) 31 December 2019 Rupees in thousand Window Takaful Operations - Parent Company Operator's Fund Assets Cash and bank deposits Qard-e-Hasna to Participant Takaful Fund Investments Intangible assets Property and equipment Current assets - others Total Assets 107,000 146,460 33,922 17,369 17,949 184,877 507,577 91,895 146,460 32,958 17,650 17,733 119,595 426,291 Total liabilities 251,120 195,872 (Unaudited) 31 March 2020 Note (Unaudited) 31 March 2019 Rupees in thousand Profit and loss account Wakala Fee Commission expense Management expense Other Income Mudarib's share of PTF investment income Profit before taxation Taxation Profit after taxation 96,323 (28,468) (35,534) 2,557 898 35,776 (10,422) 25,354 73,917 (22,495) (30,235) 5,247 26,434 (7,402) 19,032 Details of total assets, total liabilities and segment disclosure of window takaful operations of the Parent Company are stated in the annexed condensed interim financial information for the quarter ended 31 March 2020. (Unaudited) 31 March 2020 (Audited) 31 December 2019 Rupees in thousand 18 Reserves Capital reserves Reserves for exceptional losses Investment fluctuation reserves Exchange translation reserves Fair value reserve Revenue reserves General reserves 22,859 3,764 786,643 (292,389) 520,877 22,859 3,764 674,936 2,914,787 3,616,346 936,500 936,500 1,457,377 4,552,846 48
49. (Unaudited) 251,120 Note 19 Rupees in thousand Other creditors and accruals Agents commission payable Payable against the purchase of investment Federal Excise Duty / Sales Tax / VAT Federal Insurance Fee Payable to related parties Workers' welfare fund Tax deducted at source Accrued expenses Unpaid and unclaimed dividend Payable to employees' provident fund Sundry creditors 20 (Audited) 195,872 822,595 31,321 130,463 32,240 4,644 76,485 140,747 440,642 123,241 2,702 687,267 1,039,000 847,474 50,149 33,785 7,131 76,485 104,056 386,051 125,829 2,676 539,634 2,492,347 3,212,270 Contingencies and commitments Contingencies Parent Company There has been no significant change in the status of contingencies as reported in the preceding published consolidated annual financial statements of the Group for the year ended 31 December 2019 except for the following. - The Parent Company has provided a guarantee to Meezan Bank Limited (MBL) against the loan provided by MBL to Hyundai Nishat Motor (Private) Limited, a related party, amounting to Rs. 990,000 thousands (2019: Rs. 841,000 thousands). - The Parent Company has issued letter of guarantees amounting to AED 374,000 amounting to Rs.16,974 thousands (2019: AED 449,000 amounting to Rs. 18,928 thousands) relating to UAE branch. (Unaudited) 31 March 2020 (Audited) 31 December 2019 Rupees in thousand Subsidiary Company Claims against the Subsidiary Company not acknowledged as debt 67,197 57,118 Number of cases 45 27 This represents various cases initiated against the Subsidiary company concerning policyholder claims referred to Court, Federal Insurance Mohtasib and Small Dispute Resolution Committee rejected by the company on different grounds. However, the management believes that no significant liability is likely to occur in these cases. The exemption from the Sindh sales tax on life insurance premium has expired on June 30, 2019 and subsequently the sales tax has become applicable on the life insurance premium from July 01, 2019. The matter for renewal of the exemption has been taken-up at the collective level of Insurance Association of Pakistan with the SRB through its consultants. However, as the effort remained unconcluded, the Subsidiary Company, along with the other companies within the industry, through the consultant of Insurance Association of Pakistan (IAP) had filed a Constitution Petition bearing No. D-7677 of 2019, titled ‘EFU Life Assurance Limited & Others vs The Province of Sindh & Another’ with Sindh High Court. However, High Court in its order issued on December 2, 2019, stated that the Sindh Revenue Board ought to consider approving the exemption on the levy of this tax under Section 10 of Sindh Sales Tax on Services Act, 2011.In view of the fact that the exemption is still pending, the Subsidiary Company and other life insurance companies have not yet billed their customers for SST for the period commencing from July 01, 2019 on the Premium of life insurance coverage. Commitments Subsidiary Company Commitments in respect of ljarah rentals payable in future period as at March 31, 2020 amounted to Rs. 76.70 million (December 31, 2019: Rs. 80.59 million) for vehicles. (Unaudited) 31 March 2020 Not later than one year Later than one year and not later than five years (Audited) 31 December 2019 Rupees in thousand 22,409 22,543 54,293 58,045 76,702 80,588 49
50. Quarter Ended 31 March 2020 Note 21 31 March 2019 Rupees in thousand Net Insurance Premium Parent Company Written gross premium Unearned premium reserve opening Unearned premium reserve closing Currency translation effect 4 ,562,429 10,242,348 (9,235,451) 294,959 6,256,266 10,100,901 (10,802,642) 64,942 5,864,285 5,619,467 Reinsurance premium ceded Prepaid reinsurance premium opening Prepaid reinsurance premium closing Currency translation effect (1,076,659) (3,500,512) 2,445,880 (7,082) (2,251,193) (2,866,980) 3,254,355 (452) Reinsurance expense (2,138,373) (1,864,270) 3,725,912 3,755,197 759,704 644,655 1,191,343 731,736 478,347 987,117 Premium earned Net insurance premium - Parent Company 21.1 & 21.2 Subsidiary Company Regular premium / contributions individual policies - first year - second year renewal - subsequent years renewal Single premium / contributions individual policies Group policies without cash values Less: Experience refund Total gross premiums / contributions 21.3 21.3 869,713 164,108 (601) 3,628,922 309,390 141,366 (9,665) 2,638,291 Less: reinsurance premiums / retakaful contributions ceded On individual life first year business On individual life second year business On individual life subsequent renewal business On single premium individual policies On group policies Profit commission on reinsurance Net premiums / contributions - Subsidiary Company 21.1 (8,473) (16,275) (25,702) (1,791) (104,819) 393 (29,668) (138,435) (140,470) 2,497,821 7,216,399 6,253,018 2,815,958 6,197,501 (5,111,264) 4,119,815 5,508,453 (6,030,336) 3,902,195 3,597,932 Reinsurance premium ceded Prepaid reinsurance premium opening Prepaid reinsurance premium closing (1,022,427) (3,425,355) 2,344,222 (2,186,697) (2,838,973) 3,220,928 Reinsurance expense (2,103,560) (1,804,742) 1,798,635 1,793,190 1,746,471 4,044,847 (4,124,187) 294,959 2,136,451 4,592,448 (4,772,306) 64,942 1,962,090 2,021,535 Net insurance premium - Business underwritten inside Pakistan Premium earned Net insurance premium - Business underwritten outside Pakistan Written gross premium Unearned premium reserve opening Unearned premium reserve closing Currency translation effect Premium earned Reinsurance premium ceded Prepaid reinsurance premium opening Prepaid reinsurance premium closing Currency translation effect (54,232) (75,157) 101,658 (7,082) (64,496) (28,007) 33,427 (452) Reinsurance expense (34,813) (59,528) 1,927,277 21.3 (86,054) - 3,490,487 Written gross premium Unearned premium reserve opening Unearned premium reserve closing 21.2 (3,292) (3,224) 1,962,007 Individual policies are those underwritten on an individual basis. 50
51. Quarter Ended 31 March 2020 Note 22 31 March 2019 Rupees in thousand Net insurance claims expense Parent Company Claims paid Outstanding claims including IBNR closing Outstanding claims including IBNR opening Currency translation effect 3 ,077,562 11,191,266 (10,367,347) (473,500) 3,718,221 10,193,465 (10,461,975) (72,992) 3,427,981 3,376,719 Reinsurance and other recoveries received Reinsurance and other recoveries in respect of outstanding claims net of impairment (if any) closing Reinsurance and other recoveries in respect of outstanding claims net of impairment (if any) opening Reinsurance and other recoveries revenue (1,038,143) (1,356,971) (6,523,405) (6,178,315) 6,233,348 243,336 6,397,245 39,113 Reinsurance and other recoveries revenue (1,084,864) (1,098,928) 2,343,117 2,277,791 Gross claims Claims under individual policies - by death - by insured event other than death - by maturity - by surrender 122,015 700 167,575 1,234,725 73,424 7,075 332,561 1,283,251 Total gross individual policy claims 1,525,015 1,696,311 Claims expense Net insurance claims expense 22.1 & 22.2 Subsidiary Company Claims under group policies - by death - by insured event other than death 112,387 4,969 156,594 (16,171) Total gross group policy claims 117,356 140,423 1,775 1,966 1,644,146 1,838,700 Claim related expenses Total gross claims Less: Reinsurance recoveries - on individual claims - on group claims Net claims - Subsidiary Company 22.1 (15,964) 96,889 114,663 80,925 1,529,483 1,757,775 3,872,600 4,035,566 1,138,384 4,507,781 (4,398,967) 2,030,503 4,823,914 (5,386,215) 1,247,198 1,468,202 Net insurance claims expense - Business underwritten inside Pakistan Claim Paid Outstanding claims including IBNR closing Outstanding claims including IBNR opening Claim expense Reinsurance and other recoveries received Reinsurance and other recoveries in respect of outstanding claims net of impairment (if any) closing Reinsurance and other recoveries in respect of outstanding claims net of impairment (if any) opening Reinsurance and other recoveries revenue 22.2 34,145 80,518 (144,400) (1,008,594) (3,114,792) (3,295,122) 2,948,471 (310,721) 3,769,658 (534,058) 936,477 934,144 Net insurance claims expense - Business underwritten outside Pakistan Claim Paid Outstanding claims including IBNR closing Outstanding claims including IBNR opening Currency translation effect Claim expense Reinsurance and other recoveries received Reinsurance and other recoveries in respect of outstanding claims net of impairment (if any) closing Reinsurance and other recoveries in respect of outstanding claims net of impairment (if any) opening Currency translation effect Reinsurance and other recoveries revenue 1,939,178 6,683,485 (5,968,380) (473,500) 1,687,718 5,369,551 (5,075,760) (72,992) 2,180,783 1,908,517 (893,743) (348,377) (3,408,613) (2,883,193) 3,284,877 243,336 2,627,587 39,113 (774,143) 1,406,640 (564,870) 1,343,647 51
52. Quarter Ended 31 March 2020 Note 23 31 March 2019 Rupees in thousand Net commission expense / acquisition costs Parent Company Commission paid or payable Deferred commission expense opening Deferred commission expense closing Currency translation effect 581,734 1,190,146 (1,197,363) 64,137 Net commission 488,365 788,431 (799,779) 7,261 638,654 484,278 Commission received or recoverable Unearned reinsurance commission opening Unearned reinsurance commission closing Currency translation effect (86,377) (237,751) 201,121 (268) (89,055) (221,371) 195,759 (58) Commission from reinsurance (123,275) (114,725) 515,379 369,553 338,496 340,154 34,407 26,738 27,916 18,263 96,500 24,450 6,477 78,691 515,582 476,510 20,674 478 21,152 10,198 1,458 11,656 122,127 89,489 658,861 577,655 1,174,240 947,208 Net commission expense / acquisition costs - Parent Company 23.1 & 23.2 Subsidiary Company Remuneration to insurance / takaful intermediaries on individual policies: - Commission on first year contribution / premium - Commission on second year contribution / premium - Commission on subsequent years renewal contribution / premium - Commission on single contribution / premium - Other benefits to insurance intermediaries Remuneration to insurance intermediaries on group policies: - Commission - Other benefits to insurance intermediaries Other acquisition costs 23.1 Net commission and other acquisition costs - Business underwritten inside Pakistan Commission paid or payable Deferred commission expense opening Deferred commission expense closing 200,764 352,673 (295,578) 194,033 297,403 (264,800) 257,859 226,636 Commission received or recoverable Unearned reinsurance commission opening Unearned reinsurance commission closing (83,830) (236,381) 197,095 (85,644) (218,690) 191,511 Commission from reinsurance (123,116) (112,823) 134,743 113,813 380,970 837,473 (901,785) 64,137 294,332 491,028 (534,979) 7,261 380,795 257,642 Net commission 23.2 Net commission and other acquisition costs - Business underwritten outside Pakistan Commission paid or payable Deferred commission expense opening Deferred commission expense closing Currency translation effect Net commission Commission received or recoverable Unearned reinsurance commission opening Unearned reinsurance commission closing Currency translation effect Commission from reinsurance (2,547) (1,370) 4,026 (268) (3,411) (2,681) 4,248 (58) (159) (1,902) 380,636 255,740 52
53. Quarter Ended 31 March 2020 31 March 2019 Rupees in thousand 24 Investment income Business underwritten Inside Pakistan Income from equity securities Dividend Income - Available for sale - Held for trading 351 ,092 78,704 429,796 418,458 119,852 538,310 120,909 82,096 82,096 Income from debt securities Return on debt securities - Fair value through profit or loss - Held to maturity 120,909 Return on government securities - Available for Sale - Fair value through profit or loss - Held to maturity Income from term deposit receipts - Held to maturity Tax on dividend under final tax regime 12,995 446,043 459,038 9,050 140,465 10,290 159,805 146,672 146,672 201,535 201,535 (10) (10) (142) (142) Net realized fair value gains on investments Available for sale - Equity securities - Government securities 3,533 3,533 Held for trading - Equity securities - Fixed income securities - Government securities Reversal of impairment in value of 'available-for-sale' investments (82,187) 82,302 115 460 (24) 436 362,082 (964) 361,118 1,160,053 14,700 1,357,858 54 54 13,743 13,743 191 191 - Business underwritten Outside Pakistan Income from equity securities Dividend income - Available for Sale Net realized gains on investments - Available for Sale Return on term deposits - Held to maturity 42,220 42,220 42,465 31,379 31,379 45,122 1,202,518 1,402,980 53
54. Quarter Ended 31 March 2020 31 March 2019 Rupees in thousand 25 Earnings per share - basic and diluted There is no dilutive effect on the basic earnings per share which is based on : Profit after tax for the period attributable to ordinary shareholders 490,585 642,697 Number of shares Weighted average number of ordinary shares outstanding 350,000,000 350,000,000 Rupees Earnings per share - basic and diluted 26 1.40 1.84 Transactions with related parties The Group has related party relationships with its associates, subsidiary company, employee retirement benefit plans, key management personnel and other parties. Transactions are entered into with such related parties for the issuance of policies to and disbursements of claims incurred by them and payments of rentals for the use of premises rented from them. There are no transactions with key management personnel other than those specified in their terms of employment. Investment in related parties have been disclosed in note 10 & 12 to the consolidated condensed interim financial information. Other transactions with related parties are summarized as follows: Quarter Ended 31 March 2020 31 March 2019 Rupees in thousand Parent Company i) Transactions Premiums underwritten Premiums received Claims paid Security deposit received Commission Paid Rent paid Rent received Dividends received Dividends paid Income on bank deposits Investments made Investments sold Fixed assets sold Purchases Fee / service charges paid Fee / service charges income Fee / service charges received Charge in respect of gratuity expense Contribution to Employees' Provident Fund Compensation paid to Key management personnel 315,174 407,632 193,391 296,689 543,943 166,303 14,776 3,456 7,776 203,266 36,839 50,000 34,847 965 7,822 100,000 4,050 1,289 711 12,593 8,410 8,102 8,398 299,917 356,215 (Unaudited) 31 March 2020 (Audited) 31 December 2019 Rupees in thousand ii) Period end balances Balances receivable Balances payable Cash and bank balances including term deposits Payable to Staff Gratuity Fund 109,280 309,948 1,499,578 136,502 215,212 359,782 1,707,013 142,470 54
55. Quarter Ended 31 March 2020 31 March 2019 Rupees in thousand Subsidiary Company i ) Transactions Associated undertakings Premium written Claims expense Commission and other incentives in respect of bancassurance Profit on bank deposits Bank charges Investments purchased Investments sold Dividend income Reinsurance claim recoveries Reinsurance premium ceded Other related parties Premium written Claims expense Investment advisor fee Trustee fee 15,302 53,072 235,696 51,313 582 2,315,941 617,557 24,623 - 4,407 77,116 354,633 32,591 1,607 1,710,651 986,819 24,644 1,271 4,395 4,657 1,031 2,428 2,492 16,938 1,484 4,862 2,553 (Unaudited) 31 March 2020 (Audited) 31 December 2019 Rupees in thousand ii) Period end balances Associated undertakings Premium due but unpaid Premium received in advance Bank deposits Investments held Accrued Income Commission payable Claims payable Reinsurance receivable/ (payable) Other related parties Premium due but unpaid Remuneration payable for the management of discretionary investment portfolio Remuneration payable to trustee Other payable/(receivables) Staff Retirement Benefit Plan (Gratuity Fund) Charge for the period (Payable to)/ receivable from Gratuity fund 9,511 898 3,202,182 6,316,715 184,576 ` 402 - 6,526 1,475,870 6,799,087 101 337,441 2,370 1,874 3,113 3,027 (3,178) 462 (892) 3,792 486 (892) 10,516 (47,542) 51,447 (37,026) 55
56. 27 Segment Information The Group conducts general insurance business both inside and outside Pakistan while life assurance is conducted only in Pakistan . Quarter Ended 31 March 2020 General Insurance Fire and property damage Inside Pakistan Outside Pakistan Marine, aviation and transport Inside Pakistan Outside Pakistan Motor Inside Pakistan Accident & health Outside Pakistan Inside Pakistan Miscellaneous Outside Pakistan Inside Pakistan Total Outside Pakistan Inside Pakistan Outside Pakistan Aggregate General Insurance Life Insurance Aggregate Rupees in thousands Premium receivable (Inclusive of federal excise duty, Federal insurance fee and Administrative surcharge) Federal excise duty / VAT Federal insurance fee 1,208,872 (149,873) (10,187) 1,048,812 7,614 (363) 7,251 211,185 (22,427) (1,869) 186,889 4,934 (38) (5) 4,891 816,255 (97,487) (7,209) 711,559 1,801,325 (85,777) 1,715,548 593,370 (7,219) (5,956) 580,195 13,897 (662) 13,235 317,801 (25,840) (3,458) 288,503 5,868 (317) (5) 5,546 3,147,483 (302,846) (28,679) 2,815,958 1,833,638 (87,157) (10) 1,746,471 4,981,121 (390,003) (28,689) 4,562,429 3,628,922 3,628,922 8,610,043 (390,003) (28,689) 8,191,351 1,048,812 1,043,462 1,463 3,887 1,048,812 7,251 7,220 31 7,251 186,889 181,385 5,504 186,889 4,891 4,891 4,891 711,559 685,190 26,369 711,559 1,715,548 1,713,622 1,926 1,715,548 580,195 579,809 386 580,195 13,235 13,235 13,235 288,503 285,847 2,656 288,503 5,546 5,541 5 5,546 2,815,958 2,775,693 1,463 38,802 2,815,958 1,746,471 1,744,509 1,962 1,746,471 4,562,429 4,520,202 1,463 40,764 4,562,429 3,628,922 3,628,922 3,628,922 8,191,351 8,149,124 1,463 40,764 8,191,351 1,986,504 8,455 195,260 5,273 695,522 1,942,414 460,753 2,387 564,156 3,561 3,902,195 1,962,090 5,864,285 3,628,922 9,493,207 (1,776,336) 210,168 108,503 318,671 (6,145) 2,310 238 2,548 (27,860) 167,400 80 167,480 12 5,285 5,285 (12,896) 682,626 1,142 683,768 (21,295) 1,921,119 1,921,119 460,753 460,753 (5,477) (3,090) (3,090) (286,468) 277,688 13,391 291,079 (1,908) 1,653 (79) 1,574 (2,103,560) 1,798,635 123,116 1,921,751 (34,813) 1,927,277 159 1,927,436 (2,138,373) 3,725,912 123,275 3,849,187 (138,435) 3,490,487 3,490,487 (2,276,808) 7,216,399 123,275 7,339,674 (64,019) (84,498) (225,562) 583 (285,548) (2,089,207) (376,123) (7,856) (295,946) 195 (1,247,198) (2,180,783) (3,427,981) (1,644,146) (5,072,127) 1,826 20,197 91,465 6,201 221,652 (52) 310,721 (62,193) (64,301) (134,097) 583 (289,770) (1,341,410) (376,123) (1,655) (74,294) 143 (936,477) (1,406,640) (2,343,117) (1,529,483) (3,872,600) Commission expense (123,008) (366) (35,026) (305) (49,604) (379,566) (12,972) (327) (37,249) (231) (257,859) (380,795) (638,654) (658,861) (1,297,515) Management expense (73,168) (315) (75,230) (2,057) (243,820) (224,883) (28,945) (2,967) (63,165) (223) (484,328) (230,445) (714,773) (237,202) (951,975) (258,369) (64,982) (244,353) (1,779) (583,194) (1,945,859) (418,040) (4,949) (174,708) (311) (1,678,664) (2,017,880) (3,696,544) (2,425,546) (6,122,090) 1,886,273 1,886,273 Gross written premium (inclusive of administrative surcharge) Gross direct premium Facultative inward premium Administrative surcharge Insurance premium earned Insurance premium ceded to reinsurers Net insurance premium Commission income Net underwriting income Insurance claims Insurance claim recoveries from reinsurer Net claims Net insurance claims and expenses Net change in insurance liabilities (other than outstanding claims) Underwriting result - - - - - 60,302 (62,434) (76,873) 3,506 (4,222) 100,574 747,797 - - - - (24,740) 42,713 (8,039) - - 116,371 1,263 Investment income Net fair value unrealized gain / (loss) on financial assets at fair value through profit or loss Net unrealized gains on investment property Rental income Other income Other expenses Results of operating activities Finance cost under IFRS - 16 Profit from Window Takaful Operations - Operators Fund (Parent Company) Profit before taxation - 774,143 - 1,084,864 - 114,663 1,199,527 243,087 (90,444) 152,643 2,951,214 3,103,857 367,646 42,465 410,111 792,407 1,202,518 9,107 43,586 (14,996) 648,430 478 16,425 (2,872) (33,948) 9,585 60,011 (17,868) 614,482 (3,780,955) 712 99,790 (4,403) 58,765 (3,780,955) 10,297 159,801 (22,271) 673,247 (438) 35,776 (1,031) - (1,469) 35,776 (4,473) - (5,942) 35,776 683,768 (34,979) 648,789 54,292 703,081 31 March 2020 General Insurance Fire and property damage Inside Pakistan Outside Pakistan Marine, aviation and transport Inside Pakistan Outside Pakistan Motor Inside Pakistan Accident & health Outside Pakistan Inside Pakistan Outside Pakistan Miscellaneous Inside Pakistan Total Outside Pakistan Inside Pakistan Outside Pakistan Aggregate General Insurance Life Insurance Aggregate Rupees in thousands Segment Assets Unallocated assets Segment Liabilities Unallocated Liabilities 5,231,508 5,552,421 97,130 113,364 572,935 807,317 4,935 24,984 1,209,550 2,383,338 5,624,003 10,731,787 834,543 1,738,285 53,488 63,895 1,780,194 2,180,945 24,339 27,993 9,628,730 21,530,299 5,803,895 7,391,182 15,432,625 28,921,481 36,131,678 1,115,920 51,564,303 30,037,401 31,159,029 13,195,077 44,354,106 37,247,598 81,601,704 12,662,306 2,486,609 10,962,023 644,100 23,624,329 3,130,709 34,802,251 1,042,128 58,426,580 4,172,837 15,148,915 11,606,123 26,755,038 35,844,379 62,599,417 56
57. 27 .1 Segment Information The Group conducts general insurance business both inside and outside Pakistan while life assurance is conducted only in Pakistan. Quarter ended 31 March 2019 General Insurance Fire and property damage Inside Pakistan Marine, aviation and transport Outside Pakistan Inside Pakistan Outside Pakistan Motor Inside Pakistan Accident & health Outside Pakistan Miscellaneous Outside Pakistan Inside Pakistan Inside Pakistan Total Outside Pakistan Inside Pakistan Outside Pakistan Aggregate General Insurance Life Insurance Aggregate Rupees in thousands Premium receivable (Inclusive of federal excise duty, Federal insurance fee and Administrative surcharge) Federal excise duty / VAT Federal insurance fee 2,348,132 (281,907) (20,233) 2,045,992 18,697 (1,341) (61) 17,295 225,853 (24,520) (1,998) 199,335 8,487 (157) (12) 8,318 828,770 (98,975) (7,318) 722,477 2,205,102 (113,361) 2,091,741 640,761 (11,180) (6,291) 623,290 10,647 (507) 10,140 584,689 (50,628) (5,340) 528,721 9,444 (483) (4) 8,957 4,628,205 (467,210) (41,180) 4,119,815 2,252,377 (115,849) (77) 2,136,451 6,880,582 (583,059) (41,257) 6,256,266 2,647,956 2,647,956 9,528,538 (583,059) (41,257) 8,904,222 2,045,992 2,039,024 2,730 4,238 2,045,992 17,295 17,194 101 17,295 199,335 194,085 167 5,083 199,335 8,318 8,291 27 8,318 722,477 698,612 23,865 722,477 2,091,741 2,091,741 2,091,741 623,290 623,104 186 623,290 10,140 10,140 10,140 528,721 525,544 3,177 528,721 8,957 8,929 28 8,957 4,119,815 4,080,369 2,897 36,549 4,119,815 2,136,451 2,136,295 156 2,136,451 6,256,266 6,216,664 2,897 36,705 6,256,266 2,647,956 2,647,956 2,647,956 8,904,222 8,864,620 2,897 36,705 8,904,222 1,797,686 11,578 209,298 8,373 709,339 1,983,416 430,167 14,363 451,442 3,805 3,597,932 2,021,535 5,619,467 2,647,956 8,267,423 (1,548,350) 249,336 80,561 329,897 (7,377) 4,201 1,321 5,522 (25,651) 183,647 225 183,872 8,373 8,373 (12,387) 696,952 738 697,690 (40,007) 1,943,409 1,943,409 430,167 430,167 (9,386) 4,977 4,977 (218,354) 233,088 31,299 264,387 (2,758) 1,047 581 1,628 (1,804,742) 1,793,190 112,823 1,906,013 (59,528) 1,962,007 1,902 1,963,909 (1,864,270) 3,755,197 114,725 3,869,922 (140,470) 2,507,486 2,507,486 (2,004,740) 6,262,683 114,725 6,377,408 (356,636) (2,828) (81,418) - (364,771) (1,891,460) (377,212) (14,229) (288,165) - (1,468,202) (1,908,517) (3,376,719) (1,848,365) (5,225,084) Insurance claim recoveries from reinsurer 302,356 7,856 (423) - 15,325 11,013 216,800 - 534,058 Net claims (54,280) 5,028 (81,841) - (349,446) (1,345,459) (377,212) (3,216) (71,365) - (934,144) (1,343,647) (2,277,791) (1,767,440) (4,045,231) Commission expense (105,606) (1,504) (26,906) (1,619) (50,797) (254,252) (14,217) (72) (29,110) (195) (226,636) (257,642) (484,278) (577,655) (1,061,933) Management expense (115,308) (441) (68,853) (2,393) (244,418) (268,499) (35,254) (3,216) (70,968) (334) (534,801) (274,883) (809,684) (259,815) (1,069,499) Net insurance claims and expenses (275,194) (177,600) (4,012) (644,661) (1,868,210) (426,683) (6,504) (171,443) (529) (1,695,581) (1,876,172) (3,571,753) (2,604,910) (6,176,663) (997,129) (997,129) (1,094,553) (796,384) Gross written premium (inclusive of administrative surcharge) Gross direct premium Facultative inward premium Administrative surcharge Insurance premium earned Insurance premium ceded to reinsurers Net insurance premium Commission income Net underwriting income Insurance claims Net change in insurance liabilities (other than outstanding claims) Underwriting result 3,083 546,001 - - - - - - - - - - - 54,703 8,605 6,272 4,361 53,029 75,199 3,484 (1,527) 92,944 1,099 Investment income Net fair value unrealized gain on financial assets at fair value through profit or loss Net unrealized gains on investment property Rental income Other income Other expenses Results of operating activities Finance cost under IFRS - 16 Profit from Window Takaful Operations - Operators Fund (Parent Company) Profit before taxation - 564,870 - 1,098,928 - 80,925 210,432 87,737 298,169 443,774 45,122 488,896 914,084 845 27,039 (27,796) 654,294 10,342 (2,946) 140,255 845 37,381 (30,742) 794,549 191,716 21,000 733 50,516 (10,236) 73,260 (1,321) 26,434 (1,174) - (2,495) 26,434 679,407 139,081 818,488 73,260 1,179,853 1,402,980 191,716 21,000 1,578 87,897 (40,978) 867,809 (2,495) 26,434 891,748 31 December 2019 General Insurance Fire and property damage Inside Pakistan Outside Pakistan Marine, aviation and transport Inside Pakistan Outside Pakistan Motor Inside Pakistan Accident & health Outside Pakistan Inside Pakistan Miscellaneous Outside Pakistan Inside Pakistan Total Outside Pakistan Inside Pakistan Outside Pakistan Aggregate General Insurance Life Insurance Aggregate Rupees in thousands Segment Assets Unallocated assets Segment Liabilities Unallocated Liabilities 6,992,773 7,060,540 95,788 111,211 489,767 624,861 5,187 25,552 1,062,812 2,359,101 5,552,814 9,993,415 558,513 1,366,492 33,510 40,351 1,923,756 2,307,325 19,249 22,763 11,027,621 25,463,418 5,706,548 6,546,138 16,734,169 32,009,556 39,189,702 1,071,643 55,923,871 33,081,199 36,491,039 12,252,686 48,743,725 40,261,345 89,005,070 13,718,319 3,509,258 10,193,292 679,062 23,911,611 4,188,320 37,970,494 929,757 61,882,105 5,118,077 17,227,577 10,872,354 28,099,931 38,900,251 67,000,182 57
58. 28 Fair value measurement of financial instruments Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date . Underlying the definition of fair value is the presumption that the company is a going concern and there is no intention or requirement to curtail materially the scale of its operations or to undertake a transaction on adverse terms. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. IFRS 13 'Fair Value Measurement' requires the company to classify fair value measurements and fair value hierarchy that reflects the significance of the inputs used in making the measurements of fair value hierarchy has the following levels: - Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) Inputs other than quoted prices included within level 1 that are observable for the asset either directly (that is, derived from prices) (Level 2) Inputs for the asset or liability that are not based on observable market data (that is, unadjusted) inputs (Level 3) Transfer between levels of the fair value hierarchy are recognized at the end of the reporting period during which the changes have occurred. Note 31 March 2020 Receivables Cash and Other Held to Fair value Available and other cash financial Total Level 1 Level 2 Level 3 Total maturity through P&L for sale financial assets equivalents liabilities - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (Rupees in thousand) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Financial assets - measured at fair value Investment Equity securities- quoted Equity securities- unquoted Debt securities Investments of Window Takaful Operations Operator's Fund 10 10 11 12,119,518 2,925,532 655,740 17 33,922 465,975 - 11,904,424 12,255,078 - - - - 24,023,942 2,925,532 13,376,793 24,023,942 - - - - 33,922 33,922 - - 855,278 30,987 10,618,870 13,376,793 2,925,532 - 24,023,942 2,925,532 13,376,793 - - - - - - 5,342,458 6,196,682 326,723 7,268,758 - - - - 438,337 71,438,282 - - - - 33,922 Financial assets - not measured at fair value Loans and other receivables * Loan secured against life insurance policies* Investment - Term deposits* Insurance / reinsurance receivables - unsecured and considered good * Reinsurance recoveries against outstanding claims * Salvage recoveries accrued * Cash and bank * Other Assets of Window Takaful Operations Operator's Fund* 13 12 - 10,618,870 - 855,278 30,987 - 16 - - - 5,342,458 6,196,682 326,723 - 7,268,758 - 17 - - - 331,337 107,000 - 13,083,465 7,375,758 - 14 15,734,712 11,084,845 24,159,502 24,057,864 13,376,793 2,925,532 40,360,189 Financial liabilities - not measured at fair value Underwriting provisions: Outstanding claims (including IBNR)* Insurance / reinsurance payables * Other creditors and accruals* Deposits and other liabilities Total liabilities of Window Takaful OperationsOperator's Fund* 19 17 - - - - - 11,191,266 2,728,457 2,112,412 878,135 11,191,266 2,728,457 2,112,412 878,135 - - - - - - - - - 251,120 - - - - - - - - 17,161,390 251,120 17,161,390 - - - - * The Group has not disclosed the fair value of these items because their carrying amounts are a reasonable approximation of fair value. 58
59. 28 .1 Fair value measurement of financial instruments Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Underlying the definition of fair value is the presumption that the company is a going concern and there is no intention or requirement to curtail materially the scale of its operations or to undertake a transaction on adverse terms. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. IFRS 13 'Fair Value Measurement' requires the company to classify fair value measurements and fair value hierarchy that reflects the significance of the inputs used in making the measurements of fair value hierarchy has the following levels: - Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) Inputs other than quoted prices included within level 1 that are observable for the asset either directly (that is, derived from prices) (Level 2) Inputs for the asset or liability that are not based on observable market data (that is, unadjusted) inputs (Level 3) Transfer between levels of the fair value hierarchy are recognized at the end of the reporting period during which the changes have occurred. Note 31 December 2019 Receivables Cash and Other Held to Fair value Available and other cash financial Total Level 1 Level 2 Level 3 Total maturity through P&L for sale financial assets equivalents liabilities - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (Rupees in thousand) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Financial assets - measured at fair value Investment Equity securities- quoted Equity securities- unquoted Debt securities Investments of Window Takaful Operations Operator's Fund 10 10 11 15,991,690 2,874,483 651,837 17 32,958 465,868 - 13,318,382 7,499,769 - - - - 29,310,072 2,874,483 8,617,474 29,310,072 - - - - 32,958 32,958 - - 716,839 32,785 15,468,892 8,617,474 2,874,483 - 29,310,072 2,874,483 8,617,474 - - - - - - 5,865,967 5,931,928 301,420 8,437,244 - - - - 357,950 77,948,012 - - - - 32,958 Financial assets - not measured at fair value Loans and other receivables * Loan secured against life insurance policies* Investment - Term deposits* Insurance / reinsurance receivables - unsecured and considered good * Reinsurance recoveries against outstanding claims * Salvage recoveries accrued * Cash and bank * Other Assets of Window Takaful Operations Operator's Fund* 13 12 - 15,468,892 - 716,839 32,785 - 16 - - - 5,865,967 5,931,928 301,420 - 8,437,244 - 17 - - - 266,055 91,895 - 13,114,994 8,529,139 - 14 19,550,968 15,934,760 20,818,151 29,343,030 8,617,474 2,874,483 40,834,987 Financial liabilities - not measured at fair value Underwriting provisions: Outstanding claims (including IBNR)* Insurance / reinsurance payables * Other creditors and accruals* Deposits and other liabilities Total liabilities of Window Takaful OperationsOperator's Fund* 19 17 - - - - - 10,367,347 2,826,429 3,566,335 898,258 10,367,347 2,826,429 3,566,335 898,258 - - - - - - - - - 195,872 - - - - - - - - 17,854,241 195,872 17,854,241 - - - - * The Group has not disclosed the fair value of these items because their carrying amounts are a reasonable approximation of fair value. 59
60. 29 Date of authorization for issue This consolidated condensed interim financial information was authorized for issue on 22 May 2020 by the Board of Directors of the Holding Company . 30 Non - adjusting events after balance sheet date The Board of Directors of the Parent Company in their meeting held on 13 March 2020 proposed final cash dividend for the year ended 31 December 2019 @ 15% i.e. Rs. 1.5/- per share which has been approved by the members in the Annual General Meeting held on 22 May 2020. This consolidated condensed interim financial information for the quarter ended 31 March 2020 does not include the effect of this appropriation which will be accounted for in the consolidated condensed interim financial information for the half year ending 30 June 2020. The Group follows the development of the Covid-19 corona virus and evaluates the extent to which this may affect the Group's operations in the short and long term. With the high levels of uncertainty surrounding the situation and potential additional initiatives by authorities and customers, it is very difficult to predict the full financial impact that the situation may have on the Group. 31 General 31.1 Corresponding figures have been rearranged and reclassified for better presentation, wherever considered necessary. 31.2 Figures have been rounded off to the nearest thousand rupees unless other wise stated. Chairman Director Director Chief Financial Officer Managing Director & Chief Executive Officer 60
62. Adamjee Insurance Company Limited Window Takaful Operations Condensed Interim Statement of Financial position (Unaudited) As at 31 March 2020 Note Operator's Fund 31 December 31 March 2020 2019 Rupees in thousand (Unaudited) (Audited) Participants' Takaful Fund 31 December 31 March 2020 2019 Rupees in thousand (Unaudited) (Audited) ASSETS 146,460 146,460 - - 8 9 17,949 17,369 17,733 17,650 - - 10 11 12 13 33,922 6,377 143,031 35,469 107,000 361,117 32,958 6,731 70,933 41,931 91,895 279,831 125,000 21,407 505,575 56,820 31,256 96,627 425,411 1,262,096 125,000 21,655 261,580 88,706 13,631 105,379 434,658 1,050,609 507,577 426,291 1,262,096 1,050,609 50,000 2,040 204,417 256,457 50,000 1,356 179,063 230,419 Qard-e-Hasna to Participants' Takaful Fund Property and equipment Intangible assets Investments Equity Securities Debt Securities Loans and other receivables Takaful / re-takaful receivables Re-takaful recoveries against outstanding claims Salvage recoveries accrued Wakala and mudarib fee receivable Deferred commission expense Prepayments Cash and Bank 22 14 15 TOTAL ASSETS FUNDS AND LIABILITIES Funds attributable to Operator and Participants Operator's Fund Statutory fund Reserves Unappropriated profit Waqf / Participants' Takaful Fund Ceded money Accumulated deficit / (surplus) Qard-e-Hasna from Operator's Fund Liabilities Underwriting provisions Outstanding claims including IBNR Unearned contribution reserve Unearned retakaful rebate Contribution deficiency reserve Retirement benefit obligations Deferred taxation Contribution received in advance Takaful / re-takaful payables Wakala and mudarib fee payable Unearned wakala fee Other creditors and accruals Taxation - provision less payments Total Liabilities 21 19 20 16 23 17 TOTAL FUND AND LIABILITIES - - - - - ` - 500 128,501 129,001 500 80,786 81,286 146,460 146,460 3,878 1,262 185,787 52,689 7,504 251,120 3,878 987 139,979 51,028 195,872 253,192 479,666 15,508 30,071 10,545 18,516 143,031 36,106 986,635 257,810 377,586 15,979 30,071 13,109 38,513 70,933 18,862 822,863 507,577 426,291 1,262,096 1,050,609 18 Contingencies and commitments The annexed notes from 1 to 33 form an integral part of this condensed interim financial information. __________ Chairman __________ Director __________ Director _____________________ Chief Financial Officer _____________________ Managing Director & Chief Executive Officer 62
63. Adamjee Insurance Company Limited Window Takaful Operations Condensed Interim Profit and Loss Account (Unaudited) For the Quarter Ended 31 March 2020 Note Quarter Ended 31 Quarter Ended 31 March 2020 March 2019 Rupees in thousand Participant Takaful Fund- Revenue Account Contributions earned Less: Contributions ceded to retakaful Net Contribution revenue 19 255,840 (70,944) 184,896 207,604 (57,579) 150,025 Retakaful Rebate Earned Net underwriting income 20 12,458 197,354 10,301 160,326 Net Takaful claims Contribution deficiency reserve 21 (148,617) (148,617) (16,095) 32,642 (114,225) (114,225) (12,008) 34,093 25 26 4,489 11,482 (898) 47,715 1,196 6,383 41,672 23 22 24 96,323 (28,468) (34,764) 33,091 73,917 (22,495) (29,282) 22,140 898 (770) 2,557 35,776 (953) 5,247 26,434 (10,422) (7,402) 25,354 19,032 Other Direct expenses Surplus / (Deficit) before investment income Investment income Other Income Less: Mudarib's share of investment income Surplus transferred to accumulated surplus Operator Takaful Fund - Revenue Account Wakala Income Commission expense General, administrative and management expenses Mudarib's share of PTF investment income Direct Expenses Other Income Profit before taxation 26 . Less: Provision for Taxation Profit after taxation The annexed notes from 1 to 33 form an integral part of this condensed interim financial information. __________ Chairman __________ Director __________ Director ___________________ Chief Financial Officer _____________________ Managing Director & Chief Executive Officer 63
64. Adamjee Insurance Company Limited Window Takaful Operations Condensed Interim Statement of Comprehensive Income (Unaudited) For the Quarter Ended 31 March 2020 Quarter Ended Quarter Ended 31 March 2020 31 March 2019 Rupees in thousand PARTICIPANT TAKAFUL FUND Surplus for the period 47,715 41,672 - - 47,715 41,672 25,354 19,032 Other comprehensive income for the period - - Unrealized gains on available-for-sale investment- Net of tax 684 423 26,038 19,455 Other comprehensive income for the period Total comprehensive income for the period OPERATOR`S TAKAFUL FUND Profit after taxation Total comprehensive income for the period The annexed notes from 1 to 33 form an integral part of this condensed interim financial information. __________ Chairman __________ Director __________ Director ___________________ Chief Financial Officer _____________________ Managing Director & Chief Executive Officer 64
65. Adamjee Insurance Company Limited Window Takaful Operations Condensed Interim Statement of Changes in Funds (Unaudited) As at 31 March 2020 Statutory Fund Balance as at January 01 2019 102,357 - 19,032 - 19,032 - 19,032 423 423 423 19,455 50,000 121,389 441 171,830 - 57,674 - 57,674 - 57,674 915 915 915 58,589 50,000 179,063 1,356 230,419 - 25,354 - 25,354 - 25,354 684 684 684 26,038 50,000 204,417 2,040 256,457 Profit for the period 01 April 2019 to 31 December 2019 Other comprehensive income for the period 01 April 2019 to 31 December 2019 Total comprehensive income for the period Balance as at 31 December 2019 - (Audited) Profit for the period 01 Jan 2020 to 31 March 2020 Other comprehensive income for the period 01 Jan 2020 to 31 March 2020 Total comprehensive income for the period Balance as at 31 March 2020 - (Unaudited) Total 50,000 Profit for the period 01 Jan 2019 to 31 March 2019 Other comprehensive income for the period 01 Jan 2019 to 31 March 2019 Total comprehensive income for the period Balance as at 31 March 2019 - (Unaudited) Operator's Fund Unappropriated Fair value Profit Reserve Rupees in thousand 18 152,375 Participants' Takaful Fund Ceded Money Accumulated Surplus / (Deficit) Fair value Reserve Total Rupees in thousand Balance as at January 01 2019 500 (28,849) - (28,349) Surplus for the period 01 Jan 2019 to 31 March 2019 Other comprehensive surplus/ (deficit) for the period 01 Jan 2019 to 31 March 2019 Total comprehensive surplus for the period - 41,672 - 41,672 - 41,672 - 41,672 Balance as at 31 March 2019 - (Unaudited) 500 12,823 - 13,323 Surplus for the period 01 April 2019 to 31 December 2019 Other comprehensive surplus/ (deficit) for the period 01 April 2019 to 31 December 2019 Total comprehensive surplus for the period - 67,963 - 67,963 - 67,963 - 67,963 Balance as at 31 December 2019 - (Audited) 500 80,786 - 81,286 Surplus for the period 01 Jan 2020 to 31 March 2020 Other comprehensive surplus/ (deficit) for the period 01 Jan 2020 to 31 March 2020 Total comprehensive surplus for the period - 47,715 - 47,715 - 47,715 - 47,715 Balance as at 31 March 2020 - (Unaudited) 500 128,501 - 129,001 The annexed notes from 1 to 33 form an integral part of this condensed interim financial information. __________ Chairman __________ Director __________ Director ___________________ Chief Financial Officer _____________________ Managing Director & Chief Executive Officer 65
66. Adamjee Insurance Company Limited Window Takaful Operations Condensed Interim Cash Flow Statement (Unaudited) For the Quarter Ended 31 March 2020 Operator's Fund Quarter Ended Quarter Ended 31 March 2020 31 March 2019 Rupees in thousand Participants' Takaful Fund Quarter Ended Quarter Ended 31 March 2020 31 March 2019 Rupees in thousand Operating cash flows (a) Takaful activities Contributions received Wakala fee received / (paid) Retakaful / co-takaful paid Claims paid Retakaful and other recoveries received Commissions paid Retakaful rebate received Management expenses paid Other underwriting payments Net cash inflows / (outflows) from takaful activities (b) Other operating activities Income tax paid Other receipts Other operating Payments - net Net cash inflows / (outflows) from other operating activities Total cash inflows / (outflows) from operating activities 70,932 (19,764) (36,796) 14,372 87,025 (27,441) (31,448) 28,136 (491) (491) (525) (525) 13,881 27,611 301,207 (70,931) (101,901) (184,554) 13,591 11,987 (7,525) (38,126) 311,116 (87,025) (22,366) (134,555) 11,593 (10,161) 68,602 14,249 14,249 (7,007) (7,007) (23,877) 61,595 (c) Investment activities Profit received on bank deposits and investments Payment for investments Fixed capital expenditures Total cash inflows / (outflows) from investing activities 3,106 (1,882) 5,201 (699) 14,630 - 7,661 (50,000) - 1,224 4,502 14,630 (42,339) - - - - (d) Financing activities Contribution to Operator's fund Ceded money Total cash inflows from financing activities Net Cash inflows / (outflows) from all activities Cash and cash equivalent at the beginning of the period Cash and cash equivalent at the end of the period - - - - 15,105 32,113 (9,247) 19,256 91,895 102,039 434,658 432,489 107,000 134,152 425,411 451,745 13,881 (646) (1,301) 65,831 (54,968) 2,557 27,611 (1,641) 4,883 (17,068) 5,247 (23,877) 221,958 (166,337) 4,489 11,482 61,595 85,507 (113,009) 7,579 25,354 19,032 47,715 41,672 Reconciliation to profit and loss account Operating cash flows Depreciation expense Amortization expense Increase in assets other than cash Decrease / (Increase) in liabilities other than cash Investment income Other Income Net profit / Surplus for the period Definition of cash Cash comprises of cash in hand, policy stamps, bond papers, bank balances and other deposits which are readily convertible to cash in hand and which are used in cash management function on a day-to-day basis. Operator's Fund Quarter Ended Quarter Ended 31 March 2020 31 March 2019 Rupees in thousand Attributed to Surplus in participants' equity Profit before tax Participants' Takaful Fund Quarter Ended Quarter Ended 31 March 2020 31 March 2019 Rupees in thousand 25,354 19,032 47,715 - 41,672 - 25,354 19,032 47,715 41,672 The annexed notes from 1 to 33 form an integral part of this condensed interim financial information. __________ Chairman __________ Director __________ Director ___________________ Chief Financial Officer _____________________ Managing Director & Chief Executive Officer 66
67. Adamjee Insurance Company Limited Window Takaful Operations Notes to the Condensed Interim Financial Information (Unaudited) For the Quarter Ended 31 March 2020 1 Legal status and nature of business Adamjee Insurance Company Limited ("the Operator") is a public limited company incorporated in Pakistan on 28 September 1960 under the Companies Act, 1913 (now the Companies Act, 2017). The Operator is listed on Pakistan Stock Exchange and is engaged in general takaful business comprising fire & property, marine, motor, accident and health and miscellaneous. The registered office of the Operator is situated at Adamjee House, 80/A, Block E-1, Main Boulevard, Gulberg-III, Lahore. The Operator was granted authorization on 23 December 2015 under Rule 6 of the Takaful Rules, 2012 to undertake Window Takaful Operations ("WTO") in respect of general takaful products by the Securities and Exchange Commission of Pakistan ("SECP"). For the purpose of carrying on the Takaful business, the Operator has formed a Waqf (Participants’ Takaful Fund (PTF)) on 01 January, 2016 under the Waqf deed with a ceded money of Rs.500,000. The Waqf deed govern the relationship of Operator and Participants for management of Takaful operations. 2 Basis of preparation and statement of compliance This condensed interim financial information for the three months period ended 31 March 2020 has been prepared in accordance with accounting and reporting standards as applicable in Pakistan for interim financial reporting and the Insurance Ordinance, 2000, the Insurance Rules, 2017, the Insurance Accounting Regulations, 2017, General Takaful Accounting Regulations 2019 and the Takaful Rules, 2012. The accounting and reporting standards as applicable in Pakistan for interim financial reporting comprise of: - International Accounting Standard - 34 - "Interim Financial Reporting" issued by the International Accounting Standards Board (IASB) as are notified under the Companies Act, 2017; and - Provision of and directives issued under the Companies Act, 2017, the Insurance Ordinance, 2000, the Insurance Rules, 2017, Insurance Accounting Regulations, 2017, General Takaful Accounting Regulations 2019 and the Takaful Rules, 2012. Where the provisions of and directives issued under the Companies Act, 2017 differ, the Insurance Ordinance, 2000, the Insurance Rules, 2017, the Insurance Accounting Regulations, 2017, General Takaful Accounting Regulations 2019 and the Takaful Rules, 2012 shall prevail. This condensed interim financial information does not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with annual financial statements of the Operator for the year ended 31 December 2019. Comparative condensed interim statement of financial position is stated from annual audited financial statements as of 31 December 2019, whereas comparatives for interim profit and loss account, interim statement of comprehensive income, interim statement of changes in funds and interim cash flow statement and related notes are extracted from condensed interim financial information of the Operator for the three months period ended 31 March 2019. The condensed interim financial information reflect the financial position and result of operations of both Operator's Fund ('OPF') and PTF in a manner that the assets, liabilities, income and expenses of the OPF and PTF remain separately identifiable. This condensed interim financial information is unaudited and being submitted to the shareholders as required under Section 237 of the Companies Act, 2017 and the listing regulations of Pakistan Stock Exchange Limited. This condensed interim financial information is presented in Pakistan Rupees which is the Operator's functional currency and all financial information presented has been rounded off to the nearest thousand, except otherwise stated. 3 Changes in accounting policies The Operator manages the general takaful operations for the participants and charges 28 % (2019: 28 %) for Fire and Property, 35 % (2019: 35 %) for Marine, Aviation and Transport, 32.5 % (2019: 27.5 %) for Motor, 25 % (2019: 25%) for Health and 25 % (2019: 25 %) for Miscellaneous, of gross contribution written including administrative surcharge as wakala fee against the services. 67
68. 4 Basis of measurement This condensed interim financial information has been prepared under historical cost convention except certain financial instruments carried at fair value , and defined benefit obligations under employees benefits carried at present value. All transactions reflected in this financial information are on accrual basis except for those reflected in cash flow statement. 5 Accounting policies The accounting policies and the methods of computation adopted in the preparation of the condensed interim financial information are same as those applied in the preparation of annual audited financial statements for the year ended 31 December 2019. The Operator has adopted all the applicable new standards and amendments to standards, including any consequential amendments to other standards, with a date of initial application of 01 January 2020, as mentioned in the financial statement for the year ended 31 December 2019. Furthermore, the Company has adopted the temporary exemption which allows the Company to defer the application of both IFRS 9 and IFRS 17 until 31 December, 2021. There is no significant impact of such changes on this condensed interim financial information of the Operator. 6 Use of estimates and judgments The preparation of this condensed interim financial information in conformity with the approved accounting standards requires the use of certain critical accounting estimates. It also requires the management to exercise its judgment in the process of applying the Operator's accounting policies. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. During preparation of this condensed interim financial information, the significant judgments made by the management in applying the Operator's accounting policies and the key sources of estimation and uncertainty were the same as those that applied in the preceding audited annual published financial statements of the Operator for the year ended 31 December 2019. 7 Takaful and Financial risk management The Operator's financial risk management objectives and policies are consistent with those disclosed in the annual financial statements for the year ended 31 December 2019. 68
69. Adamjee Insurance Company Limited Window Takaful Operations Notes to the Condensed Interim Financial Information (Unaudited) For the Quarter Ended 31 March 2020 Operator's Fund 31 March 2020 31 December 2019 Rupees in thousand (Unaudited) (Audited) Note 8 Property and equipment Opening balance- net book value Addition during the period 8.1 Book value of disposal during the period Depreciation charged during the period Closing balance - net book value Capital work-in-progress 8.1 8.2 8.2 Additions during the period Furniture and fixture Motor vehicles Office equipment Computer and related accessories 16,433 162 12,506 7,219 (646) (646) 15,949 2,000 17,949 (841) (2,451) (3,292) 16,433 1,300 17,733 162 162 534 6,292 260 133 7,219 1,300 700 2,000 3,679 750 (2,379) (750) 1,300 17,650 1,020 20,633 750 2,250 (1,301) (1,301) 17,369 (5,983) (5,983) 17,650 Capital work in progress As at 01 January Additions during the year Transfer to Property and Equipment Transfer to intangibles As at 31 December This represent amount advanced to Analytics (Private) Limited. for development of Web portal for Takaful Operations. 9 Intangible assets Opening balance- net book value Transfer from Capital work-in-progress Addition during the period Less: Book value of disposal during the period Amortization charged during the period Operator's Fund 31 March 2020 Impairment/ provision Rupees in thousand (Unaudited) Cost 10 Carrying value Operator's Fund 31 December 2019 Impairment/ provision Rupees in thousand (Audited) Cost Carrying value Investments in equity securities Available-for-sale-Mutual Fund Meezan Islamic Income Fund [604,139 units (2019: 604,139 units)] 31,048 - Unrealized gain on revaluation 31,048 31,048 - 31,048 2,874 1,910 33,922 32,958 Operator's Fund No. of Certificates 31 March 2020 31 December 2019 11 Face Value Investments in debt securities Held-to-maturity Sukuk certificates [Engro Polymer & Chemicals Limited] [The Hub Power Company Limited (HUBCO)] 500 750 500 750 100,000 100,000 Operator's Fund 31 March 2020 31 December 2019 Rupees in thousand (Unaudited) (Audited) 12 Value of Certificates 31 March 2020 31 December 2019 Rupees in thousand (Unaudited) (Audited) 50,000 75,000 125,000 50,000 75,000 125,000 Participants' Takaful Fund 31 December 2019 31 March 2020 Rupees in thousand (Unaudited) (Audited) Loans and other receivables - Considered good Sales tax recoverable Advance taxes Federal excise duty Accrued income Loan to employees Security deposits Bid money for tenders Advances 582 791 581 4,423 6,377 2,432 1,131 1,555 525 1,088 6,731 4,189 17,218 21,407 1,750 2,848 17,057 21,655 Participants' Takaful Fund 31 March 2020 31 December 2019 Rupees in thousand (Unaudited) (Audited) 13 Takaful/ Re-takaful receivables- Unsecured and considered good Contribution due but unpaid Less: provision for impairment of contribution due but unpaid Amount due from other takaful/ re-takaful operators Less: provision for impairment of due from other takaful/ re-takaful operators 426,520 230,238 426,520 230,238 79,055 31,342 79,055 505,575 31,342 261,580 69
70. Adamjee Insurance Company Limited Window Takaful Operations Notes to the Condensed Interim Financial Information (Unaudited) For the Quarter Ended 31 March 2020 Operator's Fund 31 March 2020 31 December 2019 Rupees in thousand (Unaudited) (Audited) 14 Prepayments Prepaid retakaful contribution ceded Prepaid monitoring charges (Tracking device) - - Operator's Fund 31 March 2020 31 December 2019 Rupees in thousand (Unaudited) (Audited) 15 Participants' Takaful Fund 31 December 2019 31 March 2020 Rupees in thousand (Unaudited) (Audited) 76,920 19,707 96,627 81,686 23,693 105,379 Participants' Takaful Fund 31 December 2019 31 March 2020 Rupees in thousand (Unaudited) (Audited) Cash and Bank Cash and cash equivalents: Policy stamps in hand Current and other accounts: Profit or loss accounts 15.1 150 15.1 106,850 107,000 91,895 91,895 425,411 425,411 68 434,590 434,658 Saving accounts carry expected profit rates ranging from 5% to 11% (2019: 5% to 11%) Participants' Takaful Fund 31 December 2019 31 March 2020 Rupees in thousand (Unaudited) (Audited) 16 Takaful / retakaful payables Due to takaful contract holders Due to other takaful / retakaful operators 3,252 15,264 18,516 Operator's Fund 31 March 2020 31 December 2019 Rupees in thousand (Unaudited) (Audited) 17 Participants' Takaful Fund 31 December 2019 31 March 2020 Rupees in thousand (Unaudited) (Audited) Other Creditors and Accruals Agents Commission payable Federal excise duty Federal insurance fee Sales tax Payables Income tax deducted at source Accrued expenses Others 18 3,311 35,202 38,513 29,054 943 5,334 7,882 9,476 52,689 26,812 937 5,427 7,186 10,666 51,028 7,179 5,043 14,363 9,521 36,106 2,570 11,355 4,937 18,862 Contingencies and commitments There has been no significant change in the contingencies and commitments since the date of preceding published annual financial statements. Participants' Takaful Fund Quarter Ended 31 Quarter Ended 31 March 2020 March 2019 Rupees in thousand (Unaudited) (Unaudited) 19 Net contribution revenue Gross contribution written Less: Wakala fee Contribution net of wakala fee Opening: Unearned contribution revenue Closing: Unearned contribution revenue Contribution earned Re-takaful contribution ceded Add: Prepaid re-takaful contribution ceded opening Less: Prepaid re-takaful contribution ceded closing Re-takaful expense Net contribution 500,052 (142,132) 357,920 377,586 (479,666) 255,840 329,529 (89,933) 239,596 365,389 (397,381) 207,604 66,179 81,686 (76,921) 70,944 184,896 68,349 64,494 (75,264) 57,579 150,025 70
71. Adamjee Insurance Company Limited Window Takaful Operations Notes to the Condensed Interim Financial Information (Unaudited) For the Quarter Ended 31 March 2020 Participants' Takaful Fund Quarter Ended 31 Quarter Ended 31 March 2020 March 2019 Rupees in thousand (Unaudited) (Unaudited) 20 Re-takaful rebate Re-takaful rebate received Add: Unearned re-takaful rebate opening Less: Unearned re-takaful rebate closing Net re-takaful rebate 11,987 15,979 (15,508) 12,458 11,593 12,735 (14,027) 10,301 Participants' Takaful Fund Quarter Ended 31 Quarter Ended 31 March 2020 March 2019 Rupees in thousand (Unaudited) (Unaudited) 21 Net Takaful Claims Claims Paid Add: Outstanding claims including IBNR closing Less: Outstanding claims including IBNR opening Claim expense Less: Re-takaful and other recoveries received Add: Re-takaful and other recoveries in respect of outstanding claims net of impairment (if any) closing Less: Re-takaful and other recoveries in respect of outstanding claims net of impairment opening Re-takaful and other recoveries revenue Net claim expense 184,554 253,192 (257,810) 179,936 134,555 229,570 (220,606) 143,519 45,579 15,432 88,076 76,396 (102,336) (62,534) 31,319 148,617 29,294 114,225 Operator's Fund Quarter Ended 31 Quarter Ended 31 March 2020 March 2019 Rupees in thousand (Unaudited) (Unaudited) 22 Commission Expense Commission paid or payable Add: Deferred commission opening Less: Deferred commission closing Net commission 22,006 41,931 (35,469) 28,468 23,371 39,148 (40,024) 22,495 Quarter Ended 31 Quarter Ended 31 March 2020 March 2019 Rupees in thousand (Unaudited) (Unaudited) 23 Wakala Fee Gross Wakala fee Add: Unearned Wakala fee Opening Less: Unearned Wakala fee Closing Net wakala fee 142,132 139,978 (185,787) 96,323 89,933 134,721 (150,737) 73,917 71
72. Operator 's Fund Quarter Ended 31 Quarter Ended 31 March 2020 March 2019 Rupees in thousand (Unaudited) (Unaudited) Note 24 Management Expenses 21,893 646 1,301 634 344 823 4,866 495 186 550 10 3,016 34,764 Employee benefit cost Depreciation Amortization Advertisement and sales promotion Rent, rates and taxes Communication Legal and professional charges - business related Travelling and conveyance expenses Shared expenses Entertainment Printing, stationery and postage Annual supervision fee SECP Bank charges Others Operator's Fund Quarter Ended 31 Quarter Ended 31 March 2020 March 2019 Rupees in thousand (Unaudited) (Unaudited) 25 - - Operator's Fund Quarter Ended 31 Quarter Ended 31 March 2020 March 2019 Rupees in thousand (Unaudited) (Unaudited) 4,489 4,489 1,196 1,196 Participants' Takaful Fund Quarter Ended 31 Quarter Ended 31 March 2020 March 2019 Rupees in thousand (Unaudited) (Unaudited) Other income Profit on bank deposits 27 Participants' Takaful Fund Quarter Ended 31 Quarter Ended 31 March 2020 March 2019 Rupees in thousand (Unaudited) (Unaudited) Investment income Profit on Sukuks 26 18,070 610 1,032 1,164 768 367 123 572 3,521 377 184 371 9 2,114 29,282 2,557 2,557 5,247 5,247 11,482 11,482 6,383 6,383 Transactions with related parties The Operator has related party relationship with its associates, subsidiary company, employee retirement benefit plans, key management personnel and other parties. All transactions involving related parties arising in the normal course of business are conducted at commercial terms and conditions. Balances and transactions with related party are disclosed in relevant notes to this financial statements. Quarter Ended 31 Quarter Ended 31 March 2020 March 2019 Rupees in thousand (Unaudited) (Unaudited) i) Transactions Subsidiary Company Contribution underwritten Contribution received Claims paid 1,522 1,635 589 884 915 - 65,219 73,508 16,047 5,101 59,153 68,746 10,091 840 93 57 11,779 21,672 301 227,389 16,955 9,303 298 77,185 Other related parties Contribution underwritten Contribution received Claims paid Income on bank deposits ii) Period end balances Subsidiary Company Balances payable Other related parties Balances receivable Balances payable Contribution received in advance Cash and bank balances 72
73. Adamjee Insurance Company Limited Window Takaful Operations Notes to the Condensed Interim Financial Information (Unaudited) For the Quarter Ended 31 March 2020 28 Segment Information Each class of business has been identified as reportable segment. Class of business wise revenue and results have been disclosed in the profit and loss account prepared in accordance with the requirements of the Insurance Ordinance, 2000. The following is a schedule of class of business wise assets and liabilities. Participants' Takaful Fund Quarter Ended 31 March 2020 (Unaudited) Fire and Property Damage Marine, Aviation and Transport Motor Accident & Health Miscellaneous Total Rupees in thousand Participants' Takaful Fund Contribution receivable (inclusive of Federal Excise Duty, Federal Insurance Fee and Administrative Surcharge) Less : Federal Excise Duty Federal Insurance Fee Gross Direct Written Contribution (inclusive of Administrative Surcharge) Facultative inward contribution Gross Contribution Written Wakala fee Contribution net of wakala fee Contribution earned Takaful contribution ceded to retakaful Net takaful contribution Re-takaful rebate Net underwriting income Takaful claims Re-takaful and other recoveries Net claims Contribution deficiency reserve Direct expense Net takaful claims and expenses (Deficit) / Surplus before investment income 43,322 (5,595) (373) 13,802 (1,754) (119) 226,417 (27,438) (1,570) 223,647 (884) (2,206) 38,006 (4,901) (328) 545,194 (40,572) (4,596) 37,354 26 37,380 (10,466) 26,914 31,882 (35,393) (3,511) 7,011 3,500 11,929 11,929 (4,175) 7,754 8,564 (10,201) (1,637) 2,183 546 197,409 197,409 (64,158) 133,251 124,173 (8,682) 115,491 115,491 220,557 220,557 (55,139) 165,418 75,098 75,098 75,098 32,777 32,777 (8,194) 24,583 16,123 (16,668) (545) 3,264 2,719 500,026 26 500,052 (142,132) 357,920 255,840 (70,944) 184,896 12,458 197,354 (10,675) 265 (10,410) (1,017) 814 (203) (120,465) 30,551 (89,914) 519 (311) 208 (181) (10,591) (43) (246) (14,941) (104,855) (48,298) (48,298) (787) (49,085) (179,936) 31,319 (148,617) (16,095) (164,712) (7,091) 300 10,636 26,013 2,784 (143) 65 Other Income Investment income Mudarib Fee Surplus transferred to Balance of PTF 32,642 4,489 11,482 (898) 47,715 Corporate Segment assets Corporate Unallocated assets Total assets 112,217 112,217 17,541 17,541 243,395 243,395 222,992 222,992 74,425 74,425 670,570 591,525 1,262,095 Corporate Segment liabilities Corporate Unallocated liabilities Total liabilities 109,131 109,131 10,806 10,806 462,378 462,378 309,628 309,628 58,585 58,585 950,528 182,566 1,133,094 73
74. Quarter Ended 31 March 2019 (Unaudited) Fire and Property Damage Marine, Aviation and Transport Motor Accident & Health Miscellaneous Total Rupees in thousand Participants' Takaful Fund Contribution receivable (inclusive of Federal Excise Duty, Federal Insurance Fee and Administrative Surcharge) Less : Federal Excise Duty Federal Insurance Fee Gross Direct Written Contribution (inclusive of Administrative Surcharge) Facultative inward contribution Gross Contribution Written Wakala fee Contribution net of wakala fee Contribution earned Retakaful expense Net contribution revenue Net rebate on re-takaful Net underwriting income 46,561 (6,368) (398) 10,375 (1,419) (89) 255,772 (34,978) (2,186) 40,806 (5,580) (349) 31,856 (4,356) (272) 385,370 (52,701) (3,294) 39,795 154 39,949 (11,185) 28,764 26,457 (30,238) (3,781) 5,991 2,210 8,867 8,867 (3,104) 5,763 6,065 (7,286) (1,221) 1,544 323 218,608 218,608 (60,118) 158,490 124,157 (4,339) 119,818 119,818 34,877 34,877 (8,719) 26,158 37,553 37,553 37,553 27,228 27,228 (6,807) 20,421 13,372 (15,716) (2,344) 2,766 422 329,375 154 329,529 (89,933) 239,596 207,604 (57,579) 150,025 10,301 160,326 Takaful claims Re-takaful and other recoveries Net claims Contribution deficiency reserve Direct expense Net takaful claims and expenses (7,125) 6,189 (936) (181) (1,117) (3,462) 2,751 (711) (20) (731) (74,848) 11,126 (63,722) (11,670) (75,392) (47,774) (47,774) (77) (47,851) (10,310) 9,228 (1,082) (60) (1,142) (143,519) 29,294 (114,225) (12,008) (126,233) Surplus / (Deficit) before investment income 1,093 (408) 44,426 (10,298) (720) 34,093 Other Income Investment income Mudarib Fee Surplus transferred to Balance of PTF 6,383 1,196 41,672 31 December 2019 (Audited) Fire and Property Damage Marine, Aviation and Transport Motor Accident & Health Miscellaneous Total Rupees in thousand Corporate Segment assets Corporate Unallocated assets Total assets 168,093 168,093 14,798 14,798 259,075 259,075 65,903 65,903 77,713 77,713 585,582 605,006 1,190,588 Corporate Segment liabilities Corporate Unallocated liabilities Total liabilities 160,639 160,639 12,411 12,411 526,003 526,003 172,859 172,859 72,068 72,068 943,980 165,324 1,109,304 74
75. Operator 's Fund Quarter Ended 31 March 2020 (Unaudited) Fire and Property Damage Marine, Aviation and Transport Motor Accident & Health Miscellaneous Total Rupees in thousand Operator's Fund Wakala fee income Less : Commission expense Management expenses 96,323 (28,468) (34,764) 33,091 898 (770) 2,557 35,776 12,398 (6,676) (8,153) (2,431) 4,612 (1,895) (2,314) 403 48,908 (14,520) (17,731) 16,657 25,032 (2,859) (3,491) 18,682 5,373 (2,518) (3,075) (220) Corporate Segment assets Corporate Unallocated assets Total assets 20,287 20,287 3,467 3,467 74,965 74,965 66,456 66,456 13,324 13,324 178,500 329,077 507,577 Corporate Segment liabilities Corporate Unallocated liabilities Total liabilities 17,952 17,952 183 183 106,329 106,329 52,292 52,292 9,031 9,031 185,787 65,333 251,120 Mudarib's share of PTF investment income Investment income Direct Expenses Other Income Profit before tax Quarter Ended 31 March 2019 (Unaudited) Fire and Property Damage Marine, Aviation and Transport Motor Accident & Health Miscellaneous Total Rupees in thousand Operator's Fund Wakala fee income Less : Commission expense Management expenses 10,289 (4,866) (6,334) (911) 3,267 (1,443) (1,879) (55) 43,423 (12,141) (15,803) 15,479 12,517 (2,599) (3,383) 6,535 4,421 (1,446) (1,883) 1,092 Mudarib's share of PTF investment income Investment income Direct Expenses Other Income Profit before tax 73,917 (22,495) (29,282) 22,140 (953) 5,247 26,434 31 December 2019 (Audited) Fire and Property Damage Marine, Aviation and Transport Motor Accident & Health Miscellaneous Total Rupees in thousand Corporate Segment assets Corporate Unallocated assets Total assets 21,854 21,854 2,216 2,216 63,741 63,741 16,738 16,738 8,315 8,315 112,864 313,427 426,291 Corporate Segment liabilities Corporate Unallocated liabilities Total liabilities 19,884 19,884 620 620 91,079 91,079 22,185 22,185 6,211 6,211 139,979 55,893 195,872 75
76. Adamjee Insurance Company Limited Window Takaful Operations Notes to the Condensed Interim Financial Information (Unaudited) For the Quarter Ended 31 March 2020 29 Fair values of financial instruments Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Underlying the definition of fair value is the presumption that the company is a going concern and there is no intention or requirement to curtail materially the scale of its operations or to undertake a transaction on adverse terms. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. IFRS 13 'Fair Value Measurement' requires the company to classify fair value measurements and fair value hierarchy that reflects the significance of the inputs used in making the measurements of fair value hierarchy has the following levels: - Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) Inputs other than quoted prices included within level 1 that are observable for the asset either directly (that is, derived from prices) (Level 2) Inputs for the asset or liability that are not based on observable market data (that is, unadjusted) inputs (Level 3) Transfer between levels of the fair value hierarchy are recognised at the end of the reporting period during which the changes have occurred. Participants' Takaful Fund 31 March 2020 (Unaudited) Available-forsale Loans and receivables Carrying amount Cash and cash equivalents Fair value Other financial liabilities Note Total Level 1 Level 2 Level 3 Total Rupees in thousand Financial assets not measured at fair value Investments - Debt Securities Loan and other receivables Takaful / re-takaful receivables Retakaful recoveries against outstanding claims Salvage recoveries accrued Cash and bank deposits 11 12 13 15 125,000 - 21,407 505,575 56,820 31,256 - 425,411 - 125,000 21,407 505,575 56,820 31,256 425,411 - - - - 125,000 615,058 425,411 - 1,165,469 - - - - Financial liabilities not measured at fair value Outstanding claims including IBNR Takaful / retakaful payables Wakala and mudarib fee payable Other creditors and accruals 21 17 - - - 253,192 18,516 143,031 9,521 253,192 18,516 143,031 9,521 - - - - - - - 424,260 424,260 - - - - 76
77. Participants ' Takaful Fund 31 December 2019 (Audited) Available-forsale Loans and receivables Carrying amount Cash and cash equivalents Fair value Other financial liabilities Note Total Level 1 Level 2 Level 3 Total Rupees in thousand Financial assets not measured at fair value Investments - Debt Securities Loan and other receivables Takaful / re-takaful receivables Retakaful recoveries against outstanding claims Salvage recoveries accrued Cash and bank deposits 11 12 13 15 125,000 125,000 21,655 261,580 88,706 13,631 385,572 434,658 434,658 - 125,000 21,655 261,580 88,706 13,631 434,658 - - - - 945,230 - - - - Financial liabilities not measured at fair value Outstanding claims including IBNR Takaful / retakaful payables Wakala and mudarib fee payable Other creditors and accruals 21 17 - - - 257,810 38,513 70,933 4,937 257,810 38,513 70,933 4,937 - - - - - - - 372,193 372,193 - - - - 77
78. Operator 's Takaful Fund 31 March 2020 (Unaudited) Available-forsale Loans and receivables Carrying amount Cash and cash equivalents Fair value Other financial liabilities Note Total Level 1 Level 2 Level 3 Total Rupees in thousand Financial assets measured at fair value Investments - Equity Securities 10 33,922 12 - 1,954 143,031 - 33,922 144,985 - - - 33,922 107,000 - 1,954 143,031 107,000 107,000 - 285,907 33,922 - - 33,922 - - - - - 33,922 Financial assets not measured at fair value Loan and other receivables Wakala and mudarib fee receivable Cash and bank deposits 15 33,922 Financial liabilities not measured at fair value Other creditors and accruals 17 - - - 46,412 46,412 - - - - - - - 46,412 46,412 - - - - Operator's Takaful Fund 31 December 2019 (Audited) Available-forsale Loans and receivables Carrying amount Cash and cash equivalents Fair value Other financial liabilities Note Total Level 1 Level 2 Level 3 Total Rupees in thousand Financial assets measured at fair value Investments - Equity Securities 10 32,958 12 32,958 - - - 32,958 - 3,211 70,933 91,895 32,958 - - 32,958 - - - - 32,958 Financial assets not measured at fair value Loan and other receivables Wakala and mudarib fee receivable Cash and bank deposits 15 3,211 70,933 74,144 91,895 91,895 198,997 32,958 Financial liabilities not measured at fair value Other creditors and accruals 17 - - - 44,664 44,664 - - - - - - - 44,664 44,664 - - - - 78
79. Adamjee Insurance Company Limited Window Takaful Operations Notes to the Condensed Interim Financial Information (Unaudited) For the Quarter Ended 31 March 2020 31 March 2020 31 December 2019 Rupees in thousand (Unaudited) (Audited) 30 31 Movement in Investment - Available for sale Opening balance Additions Disposals (sales and redemptions) Fair value on gains (excluding net realized gain) Closing balance 32,958 - 29,930 1,144 - 964 33,922 1,884 32,958 Subsequent events - non adjusting event There are no significant events that need to be disclosed for the period ended 31 March 2020. 32 Date of authorization for issue This condensed financial information was authorized for issue on 22 May 2020 by the Board of Directors of the Operator. 33 General 33.1 Corresponding figures have been rearranged and reclassified for better presentation, where considered necessary. 33.2 Figures have been rounded off to the nearest thousand rupees unless other wise stated. __________ Chairman __________ Director __________ Director _________________________ Chief Financial Officer _____________________ Managing Director & Chief Executive Officer 79