Parsian Insurance Co. Annual Report

Key figures

Description

Year ended

20 March

2004

Year ended

20 March

2005

Year ended

March 20,

2006

Year ended

March 20,

2007

Annual

growth rate

average

Profit and loss information (billion Rials)

Total incomes 225 1180 2275 2523 176.05 Operating profit 17 135 103 160 241.92 Pretax income 98.6 160.3 319 214 42.89

Net profit 94 132 274 174 37.17 Cash dividend 16 110 165 *199.1 219.39 Bonus share 40 - - - -

Balance Sheet Information (Billion Rials) Total assets 469 2482 3784 4300 165.10

Total shareholders’ equity 238 1159 1268 1440 136.65 Registered capital 160 1100 1100 1100 195.83

Share Information (Rials) Earning per share

(Based on of shares at the end

of the year )

616 151 290 195 5.40-

cash dividend per

share (based on the no. of shares at

the end of the year)

100 100 150 * 181 23.56

Contents

• Company’s profile and object of activity

• Perspective,mission and macro goals of the

company

• Board of Directors, Managing Director

• Organizational structure and senior managers

• Portfolio analysis,with fields being divided

• Reinsurance

• Balance sheet

• Profit and loss statement

Company’s Profile Parsian Insurance Company was registered with Tehran

Department for Registration of Companies and Non-commercial

Institutes under Reg. No. 200722 on 29 March 2003 with the

fully paid-in capital of Rls. 160,000,000,000, and it was able to

receive the authorization for its insurance activities for all

insurance fields from Central Insurance of Iran under License

No. 5200 on 19 August 2003. The company started its activity

as a private insurance company, following the first policy issued

on the same date (19 August 2003).

Company’s Subject of Activity Conducting direct insurance operations in all fields, including

life and non-life insurances, acquisition of reinsurance cover

with respect to policies issued, making investments out of the

company’s capital, technical and legal reserves and provisions,

accepting reinsurances from other domestic direct insurance

institutes (including governmental and non-governmental and/or

registered in free zones) in compliance with the measures

specified by Central Insurance of Iran.

Company’s Statement of Mission Establishing a competitive organization, committed to the

society and to be pioneer in rendering distinguished services to

real and legal entities for coverage of risks and compensation of

damages as well as active presence in capital markets and

rendering relevant financial services in order to increase and

develop the target markets in line with gaining the company’s

customers’ satisfaction, and establishing appropriate profit for

the shareholders,

Company’s Statement of Perspective - A company with stable profitability and growth in insurance

industry

- The country’s 2nd top insurance company in all insurances

- A company with use of the state-of-the-art technology for

rendering various services

- Rendering modern services

- Gaining customers’ satisfaction

- A learning organization

- A competitive organization

- An organization with creative and motivated personnel in

order to render more and better services to the customers

Company’s Macro Goals Increasing the return on the shareholders’ investment through:

- Increasing the company’s operating portfolio

- Controlling the company’s operating loss ratio.

- Controlling the trend of operating expenses growth

- Adjusting the combination and diversification of different

fields in the Company’s portfolio

- Increasing the company’s customers’ satisfaction

- Increasing the public information about Parsian Insurance

Company

Board of Directors and the Managing Director In the ordinary general assembly held on 16 June 2005, the

following persons were elected as the current Board of Directors

of Parsian Insurance Company, for a period of two years:

Mr. Abdollah Talebi Mr. Naser Beikzadeh Marzbani

Chairman of the Boardof Directors Vice Chairman of the Boardof Directors

Mr.Hossein KarimkhanZand Mr.Behrouz Bushehri Ms.Shahla Ansari

Managing Director Bound member Bound member

Organizational Structure and Senior Managers of the company

Technical Managers

Insurance of Properties Manager Reinsurance Manager

Mr. Naser Kianvash Mr. Mohammad Fazel

Liability&Engineering Insurance Manager Insurance of Persons Manager

Mr. Lotfollah Panahi Ms. Fetneh Reihanloo

Back-up Managers

Administrative Manager Market Manager

Mr. Fariborz Hatami Mr.Mohammdreza Tamjidi

R & D Manager Public Relations Manager

Mr. Hamed Shafiei Hassanabadi Mr. Aram Rashidi

Legal Manager IT Manager Financial Manager

Mr.Seyed Mahmoud Hassani Mr.Karim Abedi Mr. AmirHamzehShafiei

Organization Chart

Managing Director

Logistic & Economic Deputy Office

Legal Management

Technical Deputy Office

Public Relations Management

IT Management

Financial Management

Market Management

Reinsurance Management

Liability & Engineering Insurance Management

Insurance of Properties Management

Insurance of Persons Management

Administrative Management

R&D Management

Analysis of the Company’s Portfolio,With fields Being Divided

The detailed technical performance of the company is presented in the following tables. Having observed the company’s portfolio combination in the fields of activity, we find that the Company has not limited its insurance activities only to specific insurance fields, but it has covered all the insurance fields. In the insurance of properties field, the company’s performance has witnessed an appropriate growth in industrial and non-industrial fire field. In the insurance of properties field, due to reduction of international transactions, the company’s activity has witnessed a decrease in cargo section. In the insurance of persons portfolio, the company’s performance has witnessed a remarkable growth of 90%.

Field Year ended March 20,

2006 Year ended March 20,

2007

Premium growth

rate No. Amount No. Amount %

Fire Industrial 1,494 92.0 2,190 101.7 10.5%

Non-industrial 6,246 16.0 10,548 24.8 55.0% Residential 32,983 42.0 31,925 41.0 2.4%-

Total fire 40,723 150.0 44,663 167.5 11.7%

Motor-car

Body 121,941 1,146.0 132,323 857.2 25.2%- Third party and

passenger’s accidents

655,040 845.0 730,811 1,043.5 23.5%

Total motor-car 776,981 1,991.0 863,134 1,900.7 -4.5%

Cargo

Transit 1 0.4 48 0.5 25.0% Domestic 204 1.6 434 1.6 0.0%

Export 334 0.7 880 1.7 142.9% Import 3,305 90.3 7,607 66.8 26.0%-

Total cargo 3,844 93.0 8,969 70.6 -24.1%

Persons Medical 33 37.3 1,310 51.0 36.7%

Life 126 12.4 195 45.5 266.9% Accidents 2,693 5.3 18,000 7.9 49.1%

Total persons 2,852 55.0 19,505 104.4 89.8% Combination of insurance of properties fields from properties portfolio Combination of persons fields from persons portfolio

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آتش سوزی اتومبیل باربری

۵١.٠

۴۵.۵

٧.٩

درمان عمر حوادث

Accidents life medical

Cargo motor car fire

51 0

45.5

7 9

1.900.7

7.6167.5

The following tables describe in details the technical performance of the company in such fields as engineering and liability. Some of the issues resulted from analysis and study of the insurance activity and portfolio of the company in the aforementioned two fields are as follows: A remarkable part of the portfolio absorbed in liability insurances are related to such products as service, manufacturing and industrial units employer’s civil liability, Building Constructors Civil Liability, credit and civil liability of the cash and flow funds, for which the most important reason is that these sections are more familiar in the liability insurance market. Excluding the credit insurances ((Rls. 61 billion and Rls. 46 billion in the years ended March 20, 2006 and 2007, respectively, which have witnessed a declining trend due to high risk) the liability insurance portfolio has witnessed almost 94% growth as compared with the year ended March 20, 2006. A significant part of the portfolio absorbed in the engineering field, is related to such products as oil and energy, machinery breakdown, and contractors all-risk insurances. The engineering insurance portfolio has witnessed a growth of 791% as compared to the year ended March 20, 2006. In order to issue the engineering insurances, the company has established good relations with foreign reinsurance companies. The company has also played an effective role in local consortiums, and these factors-in general- have had a remarkable influence on the growth of company’s portfolio in the mentioned field.

Field Year ended March 20,

2006 Year ended March 20,

2007

Premium growth

rate No. Amount No. Amount %

Total liability (non-credit) Credit

Total Engineering

749 5.7 5,588 11.1 94.9% 270 61.1 308 46.046 24.6%- 113 10.9 135 97.233 791.0%

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تمام خطر تمام خطر نصبپیمانکاران

ماشین آالتکشاورزی

شکست ماشینبدنه کشتیآالت

فساد کاال در سردخانه

اکتشافات و بیمه نامه هواپیمااستخراج نفت و

گاز

مبلغ پرتفوی

٨۴ ٨۵

Eretion all risk

Contractors all risk

Agricultural machinery

Hull Machinery breakdown

goods corruption in cold storage

Aviation policy

oil and gas exploration and extraction undertaking liability

insurance

2006 2007 -40.0

-20.0

0.0

20.0

40.0

60.0

80.0

100.0 Amount of portfolio

27%

60%

1% 1 0%

2%

مسئولیت مدنی وجوه در صندوق و در گردشمسئولیت مدنی کارفرمایان واحدهای خدماتی،تولیدی و صنعتیمسئولیت مدنی حرفه ای پزشکان و پیراپزشکانمسئولیت مدنی سازندگان ابنیهسایر

- Cash in safe and cash in transit civil liability - Service, manufacturing and industrial units employer’s Civil Liability - Physician and paramedical physician professional civil liability - Building constructor civil liability - Other

60%

27%

10%

2%

1%

Reinsurance

The company’s activity in reinsurance field includes two general parts:

- Reinsurance transfer - Reinsurance acceptance

Reinsurance transfer In the year ended March 20, 2007, the company kept its relations with two major companies of Swiss Re and Munich Re, as two of the best European Companies in the public reinsurance field, and extended its reinsurance contract with them with better conditions than the previous years. Due to the company’s policy in transferring the minimum reinsurance to foreign country in order to control the exit of foreign currencies from the country, the company took measures to keep and develop its relations with Central Insurance of Iran and other local insurance companies inside the country. Reinsurance Acceptance In the year ended March 20, 2007, the company obtained from Central Insurance of Iran , the authorization for acceptance of reinsurances from other domestic insurance companies, under which the Company was able to use this field as a new field of activity in line with diversification of its income resources. Presently, the company has a suitable performance in acceptance of reinsurances from local companies in such fields as engineering, liability, fire, cargo and accidents. Investing Activities According to Bylaw No. 42, approved by Insurance High Council, the insurance companies are authorized to carry out investing activities out of their special value and technical reserves, under full observance of the limits specified in the said bylaw. On the other hand, a remarkable part of the profit of insurance companies relies on the type cash flows are used. Observance of main grounds of investment movements of Parsian Insurance Company in the year ended March 20, 2007, concerning its limited cash flow facilities is outlined as follows:

- The company’s investment in well-known companies listed in Tehran Stock Exchange: due to inappropriate conditions of the capital market in the previous year, the company’s activity in this market was carried out with restrictions and only 21% of the company’s volume of investments has been allocated to this section.

- Investment in properties and real estates, with the goal of using added value resulted from increase of price levels or completion of the buildings and making them ready for sale,

- Investment in participating bonds and depositing investment long term deposits with banks,

PARSIAN INSURANCE COMPANY

BALANCE SHEET As At March 20, 2007

(Restated ) Note March 20, 2007 March 20, 2007 March 20, 2006 Rials Rials Rials

Capital resources used Tangible fixed assets 4 168,922,884,757 140,038,275,314 Intangible fixed assets 5 1,875,201,116 1,461,002,349 170,798,085,873 141,499,277,663 Long-term investments 6 557,414,145,626 752,966,200,446 Expenses transferred to next periods 7 276,129,760,841 303,478,418,014 1,056,444,618,460 Current Assets: Accounts and notes receivable 8 90,019,110,268 69,137,741,355 Domestic and foreign insurance companies 9 97,099,871,257 11,321,701,638 Policy holders and agents 10 2,822,500,178,664 2,329,953,628,070 Stamp inventory 11 66,265,000 94,215,000 Short-term investments 12 175,489,939,685 115,736,544,353 Cash balance 13 110,901,586,808 60,752,312,180 3,296,076,951,682 2,586,996,142,596 Current liabilities: Other accounts and notes payable 14 (118,878,819,099) (58,440,359,178) Domestic insurance companies 15 (156,939,198,193) (252,128,958,632) Foreign insurance companies 16 (41,278,872,181) (47,043,290,829) Deposit of the reinsurers 17 (28,784,521,326) (24,652,408,484) Policy holders and agents 18 (102,548,128,556) (121,210,470,211) Dividends payable 19 (12,300,000,000) (216,760,301,000) Provision for taxation 20 (40,025,377,200) (47,757,321,993) (500,754,916,555) (767,993,110,327) Net current assets (liabilities) 2,795,322,035,127 1,819,003,032,269) Insurance reserves: Life insurance technical reserves 21 (7,503,182,882) (3,148,556,423) Non-life insurance technical reserves 21 (857,631,291,536) (551,535,118,223) (865,134,474,418) (554,683,674,646) Total of capital resources used 2,934,529,553,049 2,462,263,253,746 Capital resources Shareholders’ equity Capital (1,100 million registered shares of Rls. 1,000 each) 22 1,100,000,000,000 1,100,000,000,000

Statutory reserve 23 79,179,237,031 57,778099,551 Capital reserve 24 37,588,349,656 28,889,049,776 Retained profit 223,575,230,682 79,689,670,445 Total shareholders’ equity 1,440,342,817,369 1,266,356,819,772 Coming years premium 25 1,488,758,734,318 1,194,721,357,494 Coming years income 26 3,148,335,400 303,936,000 Provision for employees severance pay 27 2,279,665,962 881,140,480 1,494,186,735,680 1,195,906,433,974 Total of capital resources 2,934,529,553,049 2,462,263,253,

PARSIAN INSURANCE COMPANY

PROFIT & LOSS STATEMENT FOR THE FISCAL YEAR ENDED MARCH 20, 2007

(Resubmitted) Note Year ended March 20th 2007 Year ended March

20, 2006 Rials Rials Rials

Premium 28 2,007,088,740,648 1,616,889,690,057 Commission on reinsurance premium and commission on participation in benefits

28 147,288,733,525 134,070,298,710

Reinsurers’ share of loss 28 314,655,400,981 378,034,365,025 2,469,032,875,154 2,128,994,353,792 Less: Compulsory and facultative Reinsurance premium

28 713,026,540,710 673,602,109,089

Commission & Stamp 28 179,569,473,377 140,895,593,602 Expert’s fees and Indemnity 28 1,030,644,706,596 923,665,372,353 Profit from reinsurance deposit transferred

28 797,501,179 273,750,688

Body Injuries Indemnity Payment Fund’s share

28 5,421,396,674 5,679,716,318

(1,929,459,618,536) (1,744,116,542,050) Technical reserves of life and non-life insurances at the beginning of the period

21 554,683,674,646 303,907,432,499

Technical reserves of life and non-life insurances at the end of the year

21 (865,134,474,418) (554,683,674,646)

(310,450,799,772) (250,776,242,147) Gross profit (loss) from insurance transactions

229,122,456,846 134,101,569,595

Administrative & general expenses 29 (68,936,040,744) (31,040,984,879) Operating profit (loss) 160,186,416,102 103,060,584,716 Income from investments 30 53,909,865,997 140,091,549,485 Net of other incomes and expenses 31 (84,907,302) 75,699,683,330 Net profit and loss prior to tax 214,011,374,797 318,851,817,531 Less: tax (40,025,377,200) (44,690,067,012) Net profit 173,985,997,597 274,161,750,519

Movement of retained profit Retained profit at the beginning of the year

81,424,213,468 15,387,452,905

Annual adjustments 32 (1,734,543,023) 4,702,782,674 Retained profit at the beginning of the year after adjustments

79,689,670,445 20,090,235,579

Allocatable profit 253,675,668,042 294,251,986,098 Appropriation of Profit: Statutory reserve 21,401,137,480 31,885,181,753 Capital reserve 8,699,299,880 15,942,590,877 Approved Reward to the board of directors

- 1,734,543,023

Dividend proposed - 165,000,000,000 (30,100,437,360) (214,562,315,653) Retained profit (loss) at the end of the period

223,575,230,682 79,689,670,445