Pakistan Reinsurance Company Limited
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Notes to the Financial Statements for Nine Months upto the 3rd Qtr. ended Sept 30, 2003 (Unaudited) 1. The Company and its Operations 1.1. Pakistan Reinsurance Co. Ltd. (the company) was incorporated on March 30, 2000 under the Companies Ordinance 1984. The object of the company is the development of insurance and reinsurance business in Pakistan and to carry on reinsurance business. The registered office of the company is located at PIC Towers, 32-A, Lalazar Drive, M.T. Khan Road, Karachi. The company is listed on Karachi and Lahore Stock Exchanges. 1.2. The company exposed to the risk from discontinuation of compulsory cession, which would be effective from January 01, 2004 as per the Insurance Ordinance, 2000.In order to mitigate the impact of discontinuation of compulsory cession, the company has started adopting necessary measures to be prepared for independently undertaking reinsurance business as per its strategy to continue to operate profitably in the year 2004 and bring to bear its past association as well as its expertise to make further strides. In view of the above, the management does not foresee any problem arising as a result of the above factor. These accounts have accordingly been prepared on going concern basis. 2. Basis of preparation These financial statements have been prepared in accordance with the requirements of S.R.O 938 issued by the Securities and Exchange Commission of Pakistan, in December, 2002, the insurance Ordinance 2000, the requirements of Companies Ordinance, 1984 and approved accounting standards as applicable in Pakistan and un-audited but subject to limited scope review by the external auditors and are being submitted to the shareholders. 3. Significant Accounting Policies The Accounting policies and methods of computation followed in the preparation of half yearly statement are same as those published in the annual financial statement for the year ended December 31, 2003. 4. Statement of compliance Approved accounting standards comprise of such International Accounting Standard as notified under the provisions of the Company Ordinance, 1984. Wherever the requirements of the Companies Ordinance, 2000 or directive issued by the Securities and Exchange Commission of Pakistan differ with the requirement of these standard, the requirement of the Insurance Ordinance, 2000 the Company Ordinance, 1984 or the requirements of the said directives take precedence. 5. Premium Deficiency Reserve In order to comply with the Securities and Exchange Commission of Pakistan (Insurance) Rules, 2002, commencing for the current year, a premium deficiency reserve is to be maintained. The company has not yet provided for any premium deficiency reserve, as setting up of the premium deficiency reserve has been deferred by the Securities and Exchange Commission of Pakistan, vide its letter No.ID-SEC/IAP/01/2003, dated February 27, 2003. 6. Corresponding Figures Corresponding figures have been restated wherever necessary for the purpose of comparison. 7. Contingencies In addition to the contingent liabilities of the company disclosed in its last annual balance sheet, which remained unchanged, the company is defending a counter suit filed subsequent to the balance sheet date by Ajax Industries Ltd., against ICP led consortium, which includes PRCL. The suit is for Rs.183 million (PRCL's approximate share Rs.15 million) filed in the High Court of Sindh (Banking). The company is jointly contesting the suit and is seeking leave to defend. In the opinion of the legal advisor of the company, no liability in this respect is expected to arise out of the above proceedings and hence no provision has been made in these financial statements. 8. Comments Comments under operating lease for Vehicles (Nine number) and amount of Rs. 5,936,400/= was payable (36 installments) which after payment of two installments are outstanding at Rs. 5,605,332/= as at 30-09-2003. The further payments which will become due are as under.
9. Date of Authorization for Issue The board of Directors of the company has these financial statements for issue on October 22, 2003. 10. All figures have been rounded off to the nearest thousand of rupees
Karachi, October 22, 2003
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