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					                                               A N N U A L

                                               R   E   P   O   R   T

                                               2       0   0       5




E F U G E N E R A L I N S U R A N C E LT D .
                      E F U Offices




                                                   Mardan
                                                                   2
                                                        1       Abbottabad
                                          Peshawar
                                             2          Islamabad
                                                            2
                                                    3
                                                Rawalpindi

                                                                Sialkot   2

                                            1               2    Gujranwala
                                         Sargodha
                               1                                       14
                           D.I. Khan                    2          Lahore
                                                 Faisalabad

   1                                 1              1
Quetta                 1           Multan       Sahiwal
                   D.G. Khan
                                            1
                                       Bahawalpur
                  1            1
          Goth Machi Rahim Yar Khan

              1
            Sukkur




               1
 23        Hyderabad
Karachi
                                                                 E F U GENERAL I NS URANC E LT D .



Contents




     Company Information                                         3

     Management                                                  4

     Vision and Mission Statements                               7

     Notice of Meeting                                           8

     Report of the Directors                                     12

     Key Financial Data for the Last Six Years                   17

     Statement of Compliance with Code of Corporate Governance   18

     Review Report by Auditors on Corporate Governance           20

     Auditors’ Report                                            21

     Balance Sheet                                               22

     Profit & Loss Account                                       24

     Statement of Changes in Equity                              25

     Statement of Cash Flows                                     26

     Statement of Premiums                                       27

     Statement of Claims                                         28

     Statement of Expenses                                       29

     Statement of Investment Income                              30

     Notes to the Accounts                                       31

     Pattern of Shareholding                                     44

     Offices                                                     45


     Form of Proxy
                                                   E F U GENERAL I NS URANC E LT D .



Company Information


Chairman
Rafique R. Bhimjee

Managing Director & Chief Executive
Saifuddin N. Zoomkawala

Directors
Sultan Ahmad
Abdul Rehman Haji Habib
Jahangir Siddiqui
Wolfram W. Karnowski
Muneer R. Bhimjee
Hasanali Abdullah
Taher G. Sachak

Corporate Secretary
Hasanali Abdullah

Legal Advisor
Mohammad Ali Sayeed

Senior Advisor
S.C. (Hamid) Subjally, A.C.I.I.

Advisors
Akhtar K. Alavi, A.C.I.I.
Naqi Zamin Ali

Audit Committee
Muneer R. Bhimjee
Taher G. Sachak
Abdul Rehman Haji Habib

Rating Agency: JCR-VIS
Insurer Financial Strength Rating:    AA
Outlook                               Stable

Auditors
Gardezi & Co.
Chartered Accountants
Karachi

Website
www.efuinsurance.com

Registered Office
11/4, Shahrah-e-Pehlavi, Peshawar

Main Offices
EFU House
M.A. Jinnah Road, Karachi.

Co-operative Insurance Building
23-Shahrah-e-Quaid-e-Azam, Lahore.




                                               3
                                                                          E F U GENERAL I NS URANC E LT D .



Management


   Managing Director                     Senior Executive Vice Presidents
   Saifuddin N. Zoomkawala               Aftab Hussain Zaidi, M.A., M.B.A.
                                         Bashir Seja
   Joint Managing Director               Darius H. Sidhwa, F.C.I.I
   Hasanali Abdullah, F.C.A.             Khan Muhammad Anwar Pasha
                                         M. Shezad Habib
   Senior Deputy Managing Director       Mahmood Ali Khan, M.A.
                                         Mohammad Iqbal Dada, M.A., A.C.I.I.
   Mahmood Lotia, A.C.I.I.
                                         Mohammad Shoaib Razzak Bramchari
                                         Thomas Leo Fernandez
   Deputy Managing Director
   Qamber Hamid, LL.B., LL.M             Executive Vice Presidents
                                         Abdul Hameed Qureshi, M.Sc.
   Senior Executive Directors
                                         Abdul Sattar Baloch
   Jaffer Dossa                          Abdul Wahid
   Abdul Rehman Khandia, A.C.I.I.        Aftab Fakhruddin, B.E.
   Salman Rashid                         Babar A. Shaikh
                                         Imran Ahmed, M.B.A., A.C.I.I.
   Executive Directors                   Javed Akhtar Shaikh, B.B.A.
   Akbar Awan                            Javed Iqbal Barry, M.B.A., L.L.B., F.C.I.I.
   Iqbal Lodhia                          Jawahar Ali Kassim
   Javid Niaz Khan, M.A., A.C.I.I.       Jehanzeb Karamat
   Nudrat Ali                            Kamran Arshad Inam, B.E.
   S. M. Haider, M.Sc.                   Kauser Ali Zuberi
   Salim Rafik Sidiki, M.A.              Khalid Usman
   Shaukat Saeed Ahmad                   Khozema T. Haider Mota
   Syed Ahmad A. Haq, M.Sc.              Khurram Nasim
                                         M. Mubashirullah Khan
   Deputy Executive Directors            Mir Babar Ali
   Khurram Ali Khan, B.E.                Mohammad Rizwanul Haq
   Syed Mehdi Imam, M.A.                 Muhammad Naeem Hanif
                                         Musakhar-uz-Zaman, B.E.
   Assistant Executive Directors         Ross Masood, M.B.E.
                                         Saleem ullah Tahir
   Altaf Qamruddin Gokal, F.C.A.
                                         Zarrar Ibne Zahoor Bandey
   Austen B. Freitas
   S. M. M. Rizvi




                                     4
                                                                             E F U GEN ER AL IN SU R AN CE LT D.




Senior Vice Presidents                       Assistant Vice Presidents
Abdul Razzak A. Sattar                       Abdul Hameed
Ali Kausar                                   Abdul Majeed
Aslam A. Ghole, F.C.I.S.                     Abdul Mateen Farooqui, M.Sc.
Atta-ur-Rehman Riaz                          Abdul Qadir Memon, M.Sc.
Azharul Hassan Chishti                       Abdul Rasheed
Haji Mohammad Ayub                           Abdul Shakoor Piracha
Liaquat Ali Khan, F.C.I.I.                   Ali Raza
Mahmood Jafri                                Asif Mahmood
Matloob Ali Ansari, A.C.I.I.                 Arshad Ali Khan, A.C.M.A.
Mohammad Arif Bhatti                         Asghar Ali
Mohammad Haji Hashim                         Dr. Ghulam Jaffar, Ph.D
Mohammad Hussain                             Fakhruddin Saifee
Mohammad Sohail                              Farhat Iqbal
Mohammad Younus                              Farman Ali Afridi
Muhammad Arif Khan                           Farrukh Ahmad Qureshi
Muhammad Ilyas Khan, A.C.I.I.                Ghulam Haider, M.Sc.
Muhammad Rashid Akmal, M.B.A.                Inayatullah Chaoudhry
Muhammad Razzaq Chaudhry                     Inayatullah Khalil
Naseeruddin Ahmed                            Irfan Ahmad, A.C.M.A.
Qasim Ali Mohammad                           Javed Iqbal Khan
Rizwan-ul-Haq                                Kaleem Imtiaz
Shaharyar Jalees, M.A.                       M. A. Qayum
Syed Shahid Hussain                          M. Hussain Khatri
Tayyab Hussain Gardezi, M.Sc.                M. Siddique Khan
Yawar Aminuddin                              Malik Firdaus Alam
Zafar Ali Khokhar, M.A.                      Manan Meboob
Zakaria Suleman                              Mohammad Amin Sattar, M.Com
                                             Ms. Menija N. Messman
Vice Presidents                              Muhammad Ashraf Thara, M.B.A
A. Ghaffar A. Kareem                         Muhammad Asif Hussain, A.P.A, A.C.M.A.
Abdul Wahid                                  Muhammad Azhar Ali
Adam Dur Mohd. Baloch                        Muhammad Ilyas
Ali Akbar Zaidy, A.P.A, A.C.A.               Muhammad Salahuddin
Atta-ul-Haq Khan                             Musarrat Zaman Shah
Badar Amin Sissodia                          Nadeem Ahmad Khan
Baqar Aneel Jafari                           Nadir Hussain
Farrukh Aamir Baig                           Omair Javed
Iftikharuddin                                Quaid Johar
Imran-ul-Haq                                 Rana Zafar Iqbal
Irshad Zamir Hashmi                          Rao Abdul Hafeez Khan
Kaiser Ali                                   Riaz Ahmad
Khalid Ashfaq Ahmed                          Rizwan Ahmed, M.B.A.
Mansoor Abbas Abbasi                         S. Anser Shabbir Rizvi, B.E.
Masroor Hussain                              S. M. Aamir Kazmi
Mazhar H. Qureshi                            Saghirul Hasan
Mohammad Kamil Khan, M.A.                    Shahid Abdullah Godil
Mohammad Nasir                               Shahzad Zakaria
Mohammad Pervaiz                             Syed Salahuddin, A.C.I.I.
Muhammad Sohail Nazir, M.Sc., A.C.I.I.       Tayab Nisar, A.C.I.I.
Muhammad Suleman Qasim                       Usman Ali
Pervez Ahmad                                 Waqar Ahmad, M.Sc.
S. M. Shamim                                 Waqar Hasan Qureshi
Shazim Altaf Kothawala                       Wasim Tasawwar
Syed Abdul Quddus                            Zia Mahmood
Syed Abid Raza Rizvi, M.Com                  Zia Ur Rehman
Syed Ahmad Hassan, M.B.A
Zahid Hussain, A.C.I.I.                      Business Consultant
                                             Maqbool Saeed

                                             Chief Medical Officer
                                             Dr. Mohbat Ali Khowaja




                                         5
                                                                    E F U GEN ER AL IN SU R AN CE LT D.




Marketing Executives
Senior Executive Director              Vice Presidents
Jahangir Anwar Shaikh                  Abdul Rasheed Kapadia
                                       Amir Hassan
Executive Director                     Atique H. Patel
Altaf Kothawala                        Ejaz Ahmed
                                       Fakhar-e-Alam
Deputy Executive Directors             Fatima Moiz Shaikh
                                       Ghulam Murtaza Khuru
Abdul Wahab Polani
                                       Irfan Raja Jagirani
Haroon Haji Sattar Dada
                                       Jameel Masood
Syed Kamran Rashid
                                       Malik Akhtar Rafique
Syed Rizwan Hussain
                                       Mian Ikram Ellahi
Senior Executive Vice Presidents       Mohammad Iqbal
                                       Muhammad Rehan Iqbal Booti
Abdullah H. Godil
                                       Muhammad Niamatullah
Agha S. U. Khan
                                       Nighat Sartaj
Akhtar Kothawala
                                       Rashid Habib
Mohd. Khalid Saleem, M.A.
                                       Rizwan Humayun
Mrs. Nargis Mehmood
                                       S. Ashad H. Rizvi
Qamar Saleem
                                       Shahid Younus
Syed Asim Iqbal
                                       Shan-e-Raza Zaidi
Syed Jaweed Envor
                                       Shazia Raheel Razzak
                                       Syed Ansarullah
Executive Vice Presidents
                                       Syed Baqar Hasan, M.A.
Abdul Wahab                            Syed Rizwan Haider
Alamgir Anwar Shaikh                   Syed Shahid Raza
Ali Safder                             Wasim Ahmed
Anis Mehmood
Iftekhar A. Khan                       Assistant Vice Presidents
Muhammad Umer Memon                    Azam Rafique
Rizwan Siddiqui                        Badar H. Qureshi
Syed Ali Zaheer                        Bashir Ahmed Sangi
Syed Amir Aftab                        Farid Khan
                                       H. H. Ansari
Senior Vice Presidents
                                       Hamza Siddiq Godil
Aamir Ali Khan                         Imdadullah Awan
Abootalib Dada                         M. A. Qayyum Khan
Amin Yaqoob                            M. Amer Arif Bhatti
Azmat Maqbool                          M. Anis-ur-Rehman
Faisal Fasih                           M. Ashraf Samana
Faizan Qureshi                         M. Aslam Hayat
Imran Ali Khan                         M. Mushtaq Najam
Kayomarz H. Sethna                     M. Owais Jagirani
Kh. Zulqarnain Rasheed                 M. Saleem Babar
Ms. Kehkashan Sultana                  M. Yousuf Jagirani
Muhammad Asif                          M. Zia-ul-Haq
Muhammad Asif Arif                     Muhammad Javed
Muhammad Azhar Dawra                   Muhammad Sheeraz
Muhammad Farooq                        Muhammad Tayyab Nazir
Muhammad Umer                          Naeemullah Jan
Muneeb Farooq Kothawala                Omer Javid
Talib Abbas Shigri                     Qamer-ul-Hassan Ansari
Yousuf Alvi                            S. Sohail Haider Abidi
                                       Sadia Muneer
                                       Shafaat Hussain Malik
                                       Syed Imran Zaidi
                                       Tanveer Masood
                                       Tariq Jamil
                                       Tauqir Abdullah
                                       Usman Ali Khan




                                   6
                                                                 E F U GEN ER AL IN SU R AN CE LT D.



Vision and Mission Statements




   VISION STATEMENT
   Our vision is to be the first choice company for our
   customers, shareholders and employees. To achieve this
   we will be driven by an obsession to be better than the best in
   a continuous journey, not a destination.

   At EFU first choice means a sustained commitment to meet
   and exceed stakeholder expectations. A will to go the “Extra Mile”
   to delight our customers with products and services
   that exceed their expectations.



   MISSION STATEMENT
   We will manage our affairs through modern technology,
   collective wisdom and institutionalised leadership.
   We will be a respected, cultured and an educated company with
   a strong market position. Together with our customers,
   reinsurers and employees we will achieve world class quality
   standards through continuous quality improvement.
   Achieve zero defects in everything we do.

   We will do good business, with good clients and of the highest
   integrity We will not compromise our principles and we
   will like to be known as a responsible corporate
   citizen aware of our obligation to the Government
   and the society we serve.




                                    7
                                                                                                       E F U GEN ER AL IN SU R AN CE LT D.



     Notice Of Meeting


Notice is hereby given that the 73rd Annual General Meeting of the Shareholders of E F U General Insurance Ltd. will
be held at the Registered Office of the Company at 11/4, Shahrah-e-Pehlavi, Peshawar on Saturday April 29, 2006 at
10:30 a.m. to:

         A.      ORDINARY BUSINESS:
         1.      confirm the minutes of the 72nd Annual General Meeting held on April 29, 2005.
         2.      receive, consider and approve the Audited Financial Statements for the year ended December 31,
                 2005 together with the Directors’ and Auditors’ reports thereon.
         3.      consider and if thought fit to approve the payment of Dividend at the rate of Rs. 3 per share for the
                 year ended December 31, 2005 as recommended by the Board of Directors.
         4.      appoint Auditors for the year 2006 and fix their remuneration.

         B.      SPECIAL BUSINESS:
         5       consider and if thought fit to pass the following Ordinary Resolution with or without modification(s):
                 RESOLVED that a sum of Rs. 200,000,000 out of the free reserves of the Company be capitalised and
                 applied to the issue of 20,000,000 Ordinary Shares of Rs.10/- each and allotted as fully paid up Bonus
                 Shares to the Members, who are registered in the Books of the Company at the close of business on
                 April 18, 2006 in the proportion of two new shares for every three existing Ordinary Shares held and
                 that such new shares shall rank pari passu with the existing Ordinary Shares of the Company.
                 FURTHER RESOLVED that the members’ fractional entitlement to Bonus Shares may be consolidated
                 and sold in the stock market and the net sale proceeds of such fractional entitlements when realized
                 be paid to a charitable institution.
                 That for the purpose of giving effect to the foregoing, the Managing Director/Chief Executive or the
                 Corporate Secretary be and are hereby singly authorised to give such directions as may be necessary
                 and settle any questions or any difficulties that may arise in the distribution of the said new shares or
                 in the payment of the sale proceeds of the fractions.
         6.      consider and if thought fit to pass the following Special Resolution with or without modification(s):
                 RESOLVED that consent of the Company be and is hereby accorded to:
                 a)   invest up to maximum of Rs. 60,000,000 (Rupees sixty million only) in Ordinary shares of proposed
                      Subsidiary Company, EFU General Takaful Ltd.;
                 b)   invest up to maximum of Rs. 30,000,000 (Rupees thirty million only) in Ordinary shares of proposed
                      Associated company, EFU Family Takaful Ltd.;
                 c)   further invest maximum of Rs. 100,000,000 (Rupees one hundred million only) in the shares of
                      EFU Life Assurance Ltd., an associated public limited company.
                 These investments be made from time to time as the Managing Director (Chief Executive) and/or other
                 Attorney(s) of the Company may deem fit.
                 FURTHER RESOLVED that Chief Executive or Corporate Secretary be and are hereby individually
                 authorized to fulfill all legal and corporate formalities for making the above investments.
                 FURTHER RESOLVED that these Special Resolutions be and are hereby passed for the purpose of
                 compliance of Section 208 of the Companies Ordinance, 1984.
         7.      consider and if thought fit to pass the following Special Resolution with or without modification(s):
                 RESOLVED that the Authorised Share Capital of the Company be and is hereby increased from
                 Rs. 500,000,000 to Rs. 1,500,000,000 by the creation of 100,000,000 new shares of Rs.10/- each and
                 the Memorandum and Articles of Association of the Company be amended as under:
                 That the words and figures “Rs. 500,000,000 (Rupees five hundred million) divided into
                 50,000,000 Ordinary Shares of Rs.10/- each” appearing in Clause V of Memorandum of Association
                 and Clause 4 of Articles of Association of the Company be substituted with word and figures
                 “Rs. 1,500,000,000 (Rupees one billion and five hundred million) divided into 150,000,000 Ordinary
                 Shares of Rs.10/- each.
         8.      transact any other matter with the permission of the Chair.
                                                                                           By Order of the Board


                                                                                          HASANALI ABDULLAH
                                                                                          Joint Managing Director
March 22, 2006                                                                            & Corporate Secretary




                                                           8
                                                                                                         E F U GENER AL I NSUR ANCE LTD .




NOTES
1.       A member entitled to attend and vote at the General Meeting is entitled to appoint another member as a proxy
         to attend and vote in respect of him. Form of proxy must be deposited at the Company’s Registered Office
         not later than 48 hours before the time appointed for the meeting.
2.       CDC Account holders are advised to follow the following guidelines of the Securities and Exchange Commission
         of Pakistan.

          A.      For attending the meeting:
          (i)     In case of individuals, the account holder or sub-account holder and/or the person whose securities
                  are in group account and their registration details are uploaded as per the Regulations, shall authenticate
                  his identity by showing his original National Identity Card (NIC) or original passport at the time of
                  attending the meeting.
          (ii)    In case of corporate entity, the Board of Directors’ resolution/power of attorney with specimen signature
                  of the nominee shall be produced (unless it has been provided earlier) at the time of the meeting.

          B.      For appointing proxies:
          (i)     In case of individuals, the account holder or sub-account holder and/or the person whose securities
                  are in group account and their registration details are uploaded as per the Regulations, shall submit
                  the proxy form as per the above requirement.
          (ii)    The proxy form shall be witnessed by two persons whose names, addresses and NIC numbers shall
                  be mentioned on the form.
          (iii)   Attested copies of NIC or the passport of the beneficial owners and the proxy shall be furnished with
                  the proxy form.
          (iv)    The proxy shall produce his original NIC or original passport at the time of the meeting.
          (v)     In case of corporate entity, the Board of Directors’ resolution/power of attorney with specimen signature
                  shall be submitted (unless it has been provided earlier) alongwith proxy form to the Company.
3.        The Share Transfer Books of the Company will be closed from April 19, 2006 to April 29, 2006 (both days
          inclusive).
4.        Members are requested to communicate to the Company of any change in their addresses.
5.        Statement under section 160 of the Companies Ordinance, 1984 is being sent to all the members.

Statement under section 160 of the Companies Ordinance, 1984 pertaining to the Special business:
1.        This statement sets out the material facts pertaining to the Special business to be transacted at the Annual
          General Meeting of the Company to be held on April 29, 2006.
2.        Item 5 regarding Bonus issue:
          Your Directors have recommended the issue of Bonus Shares in the proportion of two new shares for
          every three existing Ordinary Shares held at the close of business on April 18, 2006. The Directors are
          interested in this business to the extent of their entitlement to Bonus Shares as Members.
3.        Item 6 regarding investments in Subsidiary and associated companies:
          a & b) The concept of Takaful, sharia compliant alternative to conventional insurance is in the phase of
                 rapid expansion worldwide, prominently in the Middle East and Far East Markets.
                  Recently banks have established Islamic Banking Divisions and some new Islamic Banks have emerged
                  in Pakistan, who would be the first customers to obtain insurance from the Takaful Companies and this
                  would provide automatic market for General Takaful business. In addition to General Takaful,
                  there is market for life insurance products under Sharia.
                  The Board of Directors has therefore decided to make investment in EFU General Takaful Ltd. and EFU
                  Family Takaful Ltd. Both the intended companies are being proposed to be established jointly by EFU
                  General Insurance Ltd. and EFU Life Assurance Ltd. which is a step towards introducing Islamic
                  Insurance products in Pakistan. Keeping in view the right strategy, the proposed Takaful Companies
                  would provide ample scope for offering the General and Family Takaful products according to the
                  Sharia.
                  The EFU General Takaful Ltd. (proposed) and EFU Family Takaful Ltd. (proposed) will be managed
                  and operated according to guidelines strictly in compliance with Takaful Rules and monitored by their
                  respective Sharia Boards.
                  Therefore, the approval of the Shareholders is sought for making investment up to Rs. 60 million (out
                  of Rs. 80 million proposed Paid-up Capital) in EFU General Takaful Ltd. (proposed) and
                  Rs. 30 million (out of Rs. 150 million proposed Paid-up Capital) in EFU Family Takaful Ltd. (proposed).



                                                            9
                                                                                            E F U GENER AL I NSUR ANCE LTD .




The information required under SRO No. 865 (1) 2000 is as under:

i)      Name of Investee Company:
        EFU General Takaful Ltd. (Proposed to be incorporated).
ii)     Nature, amount and extent of investment:
        Long-term strategic investment up to Rs. 60 million by subscription towards Ordinary Shares.
iii)    Average market price of the shares intended to be purchased during preceding six months:
        N/A.
iv)     Break-up value of shares intended to be purchased on the basis of last published financial statements:
        N/A.
v)      Price at which shares will be purchased:
        At par value of Rs. 10/- each.
vi)     Earning per share of investee company in last three years:
        N/A.
vii)    Sources of funds from where shares will be purchased:
        Internal generation.
viii)   Period for which Investment will be made:
        Long-term.
ix)     Purpose of Investment:
        Strategic Investment.
x)      Benefits likely to accrue to the Company and the shareholders from the proposed investment:
        Investment of available funds in the investee company.
xi)     Interest of Directors and their relatives in the investee company:
        No Director or Chief Executive has any interest in the proposed investments, except in their capacities
        as “Directors/Chief Executive” and/or shareholders of the Company. Some Directors of EFU General
        Insurance Ltd. are proposed to be appointed as nominee Directors on the Board of EFU General
        Takaful Ltd.
i)      Name of Investee Company:
        EFU Family Takaful Ltd. (Proposed to be incorporated).
ii)     Nature, amount and extent of investment:
        Long-term strategic investment up to Rs. 30 million by subscription towards Ordinary Shares.
iii)    Average market price of the shares intended to be purchased during preceding six months:
        N/A.
iv)     Break-up value of shares intended to be purchased on the basis of last published financial statements:
        N/A.
v)      Price at which shares will be purchased:
        At par value of Rs. 10/- each.
vi)     Earning per share of investee company in last three years:
        N/A.
vii)    Sources of funds from where shares will be purchased:
        Internal generation.
viii)   Period for which Investment will be made:
        Long-term.
ix)     Purpose of Investment:
        Strategic Investment.
x)      Benefits likely to accrue to the Company and the shareholders from the proposed investment:
        Investment of available funds in the investee company.
xi)     Interest of Directors and their relatives in the investee company:
        No Director or Chief Executive has any interest in the proposed investments, except in their capacities



                                                   10
                                                                                                    E F U GENER AL I NSUR ANCE LTD .




             as “Directors/Chief Executive” and/or shareholders of the Company. Some Directors of EFU General
             Insurance Ltd. are proposed to be appointed as nominee Directors on the Board of EFU Family
             Takaful Ltd.
     c)      EFU Life Assurance Ltd. (EFU Life) is the leading life insurance company in the private sector in the
             country. As on December 31, 2005 it had asset base of Rs. 5.97 Billion. Its After tax profit for the years
             2003, 2004 & 2005 have been Rs. 82 million, Rs. 140.8 million and Rs. 195.8 million respectively. EFU
             Life as on December 31, 2005 has Paid-up Capital of Rs. 210 million, General Reserve of
             Rs. 130 million and Accumulated Profit of Rs. 196 million.

     The information required under SRO No. 865 (1) 2000 is as under:
     i)      Name of Investee Company:
             EFU Life Assurance Ltd.
     ii)     Nature, amount and extent of investment:
             Long-term strategic investment up to Rs. 100 million in Ordinary shares of Rs. 10 by way of purchase
             from the Stock Exchange at a price ruling on the date of purchase.
     iii)    Average market price of the shares intended to be purchased during preceding six months:
             Rs. 159.19 (September 16, 2005 to March 15, 2006).
     iv)     Break-up value of shares intended to be purchased on the basis of last published financial statements:
             Rs. 21.20 (September 30, 2005).
     v)      Price at which shares will be purchased:
             Not more than the price quoted on Stock Exchange.
     vi)     Earning per share of investee company in last three years:
             2003     Rs. 5.47
             2004     Rs. 8.54
             2005     Rs. 9.33
     vii)    Sources of funds from where shares will be purchased:
             Internal generation.
     viii)   Period for which Investment will be made:
             Long-term.
     ix)     Purpose of Investment:
             Strategic Investment.
     x)      Benefits likely to accrue to the Company and the shareholders from the proposed investment:
             Better return and capital appreciation.
     xi)     Interest of Directors and their relatives in the investee company:
             No Director or Chief Executive has any interest in the proposed investments, except in their
             capacities as “Directors/Chief Executive” and/or as shareholders of the Company.
4.   Item 7 regarding increase in Authorised Capital:
             The Authorised Share Capital of EFU General Insurance Limited at present is Rs. 500,000,000. In
             order to take care of expansion, it is considered necessary to increase the Authorised Share Capital
             from Rs. 500,000,000 to Rs. 1,500,000,000.




                                                        11
                                                                                                                  E F U GENER AL I NSUR ANCE LTD .



     Report Of The Directors To Members


The Directors of the Company are pleased to present before you the
Seventy Third audited accounts of the Company for the year ended
December 31, 2005.
Your Directors are pleased to report that 2005 was another record
year for the Company with a Written Premium of Rs. 6.64 billion.
It grew by Rs. 1.6 billion (i.e. 32 %) over the previous year and is the
highest annual growth recorded by any company in the Insurance
industry in Pakistan. The Net Premium Revenue increased by
52 % to Rs. 3.9 billion compared to Rs. 2.5 billion in 2004. The overall
claim ratio (i.e. claims as a percentage of net premium revenue) was
70 % as against 60 % in the previous year.
In the past few years your Company has benefited from the expansion
of economic activities in the industrial, services and consumer sectors
of the country. EFU General has established itself as the market
leader in insurance of leased motor cars which continues to grow
rapidly due to aggressive lending by banks and leasing companies.
Motor insurance now represents over 50 % of the Company’s Total
Written Premium. The overall claims ratio rose due to high level of
losses in the fourth quarter of the year.
The Reserve for Un-earned Premium as at December 31, 2005
increased by Rs. 828 M to Rs. 2,398 M from Rs. 1,570 M as on
December 31, 2004.
The Profit after tax for the year was Rs. 506 M compared to Rs. 322 M
last year.
The Department wise performance was as follows:

FIRE & PROPERTY
The Written Premium of this Department increased by 5 % to
Rs. 1,930 M as compared to Rs. 1,834 M in 2004. On account of
increased losses, the Claims ratio on Net Premium Revenue increased
to 56 % in 2005 as against 30 % in 2004. In the last quarter the                     WRITTEN PREMIUM, NET PREMIUM
insurance industry faced a large number of medium sized losses on                        REVENUE & NET CLAIMS
account of cotton and textile risks thus affecting the overall underwriting                            (Rupees in Million)
profits. In addition, the earthquake of 8th October 2005 also
contributed to increased losses to our net account. The Underwriting
Profit was Rs. 52 M compared to Rs. 219 M last year.                          7000


MARINE, AVIATION AND TRANSPORT                                                6000
The Written Premium of this Department increased by 18 % to
Rs. 914 M compared to Rs. 776 M in 2004 but was offset by a large
                                                                              5000
number of losses on account of cotton and sugar inland transits
claims. These losses were higher in the last three months of the year
being the peak of cotton and sugar seasons. The Claims ratio on               4000

Net Premium Revenue was 56 % in 2005 as against 42 % in 2004.
The Underwriting Profit for the year was Rs. 54 M compared to                 3000
Rs. 100 M in 2004.

MOTOR                                                                         2000

The Written Premium of this Department showed a record increase of
55 % to Rs. 3,440 M as compared to Rs. 2,216 M in 2004. The Claims            1000
ratio on Net Premium Revenue was 75 % as against 76 % in 2004 and
as result of increase in business volume, the Underwriting Profit               0
increased to Rs. 184 M compared to Rs. 63 M last year. Your Company                   2000     2001      2002    2003        2004    2005
continues to improve its underwriting strategies and exercises more
control by greater use of IT resources both within the organisation and              Written Premium     Net Premium Revenue        Net Claims

for coordination with clients, surveyors and vehicle garages.
                                                              12
                                                                                                          E F U GENER AL I NSUR ANCE LTD .




OTHERS
The Written Premium of this department increased by 45 % to
Rs. 240 M compared to Rs. 165 M in 2004. The Claims ratio on Net
Premium Revenue was 29 % as against 21 % in 2004. There was
Underwriting Profit of Rs. 26 M compared to Rs. 28 M in 2004.

Other Comments
The after tax profit for the year under report amounted to Rs. 506 M.
Your Board proposes to make the following appropriation:
                                                                    (000)

                                                   Rupees         Rupees

Profit after tax                                                 506 268
Add: Unappropriated profit brought
       forward                                                   162 712
                                                                 668 980
Less: Dividend paid for last year                 63 000
      Bonus Shares issued for last year           90 000         153 000
                                                                 515 980
Less: Transfer to General Reserve                                210 000
Unappropriated Profit carried forward                            305 980

Dividend
Your Directors have pleasure in recommending dividend of Rs. 3 per
share (30 %) and issuance of two Bonus Shares for every three
shares held by the Shareholders whose names appear in the Share
Register of the Company at the close of business on April 18, 2006.

Investment
Your Company invests in equities, TFCs, PIBs and Treasury Bills. You
would be glad to know that the Government of Pakistan has granted
exemption from Income Tax on Capital Gains, a long awaited request
of the insurance industry for which we are grateful to the Government
of Pakistan. In view of this, your Company has increased its investment                  RESERVES & FUNDS
in Equity Portfolio which at book value stood at Rs. 1,457 M as on                             (Rupees in Million)
December 31, 2005 compared to Rs. 863 M as on December 31,
                                                                            6000
2004. The Company has short-term and long-term portfolio strategies
for equity investments. The equity portfolio of your Company showed
excellent performance even after realising capital gains of Rs. 170 M.
                                                                            5000
The market value of investment in equities showed an appreciation of
Rs. 2,497 M as on December 31, 2005 compared to Rs 1,719 M as
on December 31, 2004.
                                                                            4000
Information Technology
Your Company continues to invest in Information Technology to keep
                                                                            3000
its edge over competition. EFU was the first insurance company in
Pakistan in early 1980s to commence computerisation in COBOL
and all in-house programmes have been developed in COBOL
                                                                            2000
environment. In order to embrace emerging technologies in software,
we have placed an order with Microfocus to provide us advanced
versions of COBOL solutions. This strategy is in line with that of
many major Fortune 500 companies as we not only retain our                  1000

investment in software development but do not disturb the day to
day operation of the Company while the system is being upgraded.
                                                                              0
We have recently implemented e-commerce applications. The first                    2000 2001     2002    2003        2004   2005
B2B application e-claims for leased vehicle insurance has been

                                                            13
                                                                                                                  E F U GENER AL I NSUR ANCE LTD .




successfully deployed. EFU General is the first non-life insurance
company in Pakistan to introduce e-commerce. The application has
been successfully introduced in Southern Zone and would be launched
in the second quarter of 2006 in Northern Zone. The second B2B
application of e-certificates for leased vehicle insurance is in the
process of deployment.
EFU has implemented Public Key Infrastructure (PKI) for secured
and encrypted electronic services. For this we have signed an
agreement with NIFT, Certification Authority to provide Digital
Certificates for servicing auto leasing insurance clients all over
Pakistan to ensure authenticated and secured transactions over
internet.
The Auditors in their report have made mention for the policy of
treating leases as operating leases and for accounting of investments
in an associated Company at cost. The details for these items have
been provided in the Notes 17 and 5(i) to the Account. The reason
for treating the lease as operating lease and recording of investments
in associated company at cost is due to specialised nature of taxability
of profits of insurance companies.
As reported last year your Company continues to have JCR-VIS as
its rating agency. JCR-VIS has improved the Financial Strength
Rating to AA and Outlook to ‘Stable’.
You are aware that consequent to the nationalisation of life insurance
business of your Company in 1972 an amount of Rs. 2,856,296 was
receivable from State Life Insurance Corporation of Pakistan representing
the share of surplus of Life Business allocated to the Shareholders of
the Company as per valuation report dated January 9, 1973 for three
years ended December 31, 1971. This report was signed by the
Chairman and the Directors of State Life Insurance Corporation of
Pakistan and the Chairman and Directors of the Company based on
which the amount was incorporated in the accounts for the year ended
December 31, 1972. As the amount was not received, your Company
filed suit in the High Court of Sindh which was dismissed. Subsequently
an appeal was filed before a Bench of High Court of Sindh and the
order of the learned single judge was set aside and the case was                         INVESTMENTS & BANK BALANCE
remanded to the learned Single Judge for decision. Supreme Court of                                    (Rupees in Million)
Pakistan on the appeal by State Life referred the matter to a Bench of
High Court. Our suit has finally been dismissed in 2005 by a Bench of             4000
the High Court of Sindh. As the matter has taken over 30 years and lot
of time and money has been spent, your Directors decided not to spent             3500
more time and money and did not file appeal in the Supreme Court of
Pakistan. The amount of Rs. 2,856,296 has therefore been written off.             3000

Prospects for 2006
                                                                                  2500
The management’s short and long term objectives as in the past will
continue to strongly focus on providing the best service to its client and
intends to keep providing the risk management service at the forefront.           2000

The prospects for 2006 will depend on the overall level of economic
                                                                                  1500
activities in the country and particularly the pace of privitisation and
lending by the banking sector will determine the volume of insurance
business potentially available in the market. Your Company is well                1000
organised to make best use of opportunities available by innovative
marketing strategy, human resource development and greater utilisation            500
of IT resources. At the same time we will continue to follow prudent
underwriting policies to increase the profitability of all classes of business.     0
The management will focus on increasing its human resources and                          2000   2001     2002     2003       2004   2005
provide the tools and knowledge to meet these new challenges. Also

                                                                 14
                                                                             E F U GENER AL I NSUR ANCE LTD .




at the same time keep its objectives in mind of EFU being the first
choice Company for all our stakeholders i.e. clients, employees and
shareholders.
Takaful Rules have been promulgated both for General and Life
businesses. The existing General and Life Insurance companies can
not within the existing companies conduct Takaful business. Your
Directors have therefore decided to establish EFU General Takaful Ltd
jointly with EFU Life Assurance Ltd and the investments shall be Rs. 60
million by EFU General and Rs. 20 million by EFU Life. Similarly EFU
Life has decided to establish EFU Family Takaful Ltd jointly with EFU
General Insurance Ltd and the investments shall be Rs. 30 million by
EFU General Insurance Ltd and Rs. 120 million by EFU Life Assurance
Ltd. Your Directors have proposed Resolutions for adoption at the
Annual General Meeting to be held on April 29, 2006.
EFU Group’s business is growing at accelerated rate for last few years
and the management expects the trend to continue. The qualified
Insurance personnel in the country is not sufficient to meet the growing
needs of the industry. A Human Resource Development Committee
has therefore been formed by the management. A batch of 15 young
graduates of various disciplines have been inducted as Management
Trainees with objective of training them for the specific requirements
of the Group. These persons after training and further qualification would
be placed in suitable management positions. As per future needs new
batches would be inducted.

Compliance with Code of Corporate Governance
The requirements of the Code of Corporate Governance set out by
the regulatory authorities have been duly complied with. A statement
to this effect is annexed with the report.
The Directors of your Company were elected at the Extra Ordinary
General Meeting held on June 28, 2005 for a term of three years
expiring on July 9, 2008.
The number of meetings attended by each Director is given hereunder:
   Sr.                                             Number of Meetings
   No.     Name of Directors                           attended
   1.      Rafique R. Bhimjee                          5 out of 5
   2.      Saifuddin N. Zoomkawala                     5 out of 5
   3.      Sultan Ahmad                                3 out of 5
   4.      Abdul Rehman Haji Habib                     3 out of 5
   5.      Jahangir Siddiqui                           3 out of 5
   6.      Wolfram W. Karnowski                        1 out of 5
   7.      Muneer R. Bhimjee                           3 out of 5
   8.      Hasanali Abdullah                           5 out of 5
   9.      Taher G. Sachak                             5 out of 5
Leave of absence was granted to Directors who could not attend the
Board meetings.
Statement of Ethics and Business Practices
The Board has adopted the statement of Ethics and Business Practices.
All employees are informed of this statement and are required to
observe these rules of conduct in relation to business and regulations.

Corporate and Financial Reporting Frame Work
   a) The financial statements prepared by the management of the
      Company present fairly its state of affairs, the result of its
      operations, cash flow and changes in equity.
   b) Proper books of accounts have been maintained by the Company.
                                                             15
                                                                                                                          E F U GENER AL I NSUR ANCE LTD .




   c) Appropriate accounting policies have been consistently applied
      in preparation of financial statements.
   d) The International Accounting Standards, as applicable in Pakistan,
      have been followed in preparation of financial statements and
      any departure therefrom has been adequately disclosed.
   e) The system of internal control is sound in design and has been
      effectively implemented and monitored.
   f) There are no significant doubts upon the Company’s ability to
      continue as a going concern.
   g) There has been no material departure from the best practices
      of Corporate Governance, as detailed in the listing regulations.
   h) The Key operating and financial data for the last six years is
      annexed.
   i) The value of investments of provident, gratuity and pension funds
      based on their audited accounts as on December 31, 2005 were
      the following;
          Provident Fund                Rs. 265 million
          Gratuity Fund                 Rs. 130 million
          Pension Fund                  Rs. 103 million
      The value of investments include accrued interest.
    j)   Trading of Shares by Chief Executive, Directors, Chief Financial
         Officer, Company Secretary, their spouses and minor children:
                                                           No. of Shares
         Purchase of Shares
             Wolfram W. Karnowski                              7 500
         Sale of Shares                                                      NIL
    k)   The statement of pattern of shareholding in the Company as at
         December 31, 2005 is included with the Report.
Gardezi & Co. Chartered Accountants retire and being willing to continue
are recommended for re-appointment as Auditors of the Company for                                          TOTAL ASSETS &
the year 2006.                                                                                          TOTAL ADJUSTED ASSETS
                                                                                                                (Rupees in Million)
We would like to thank our valued customers for their continued patronage
and support and to Pakistan Reinsurance Company Limited, to Securities                   10000
and Exchange Commission of Pakistan and to State Bank of Pakistan
for their guidance and assistance.                                                       9000

We are proud to inform that your Company has one of the finest                           8000
reinsurance arrangements backed by the largest Reinsurance Company
in the world as the leader of our reinsurance treaty panel, i.e. Munich                  7000
Reinsurance Company, Germany (A+), followed by Allianz
Aktiengesellschaft, Germany (AA-), Hannover Reinsurance Company,                         6000
Germany (AA-), Mapfre Re Compania De Reassurance, Spain (AA-)
                                                                                         5000
and Mitsui Sumitomo, Japan (AA-) are few to quote.
It is a matter of deep gratification for your Directors to place on record               4000
their appreciation of the efforts made by officers, field force and staff
who had contributed to the growth of the Company and the continued                       3000
success of its operations.
                                                                                         2000

                                                                                         1000

                                                                                            0
HASANALI ABDULLAH        JAHANGIR SIDDIQUI SAIFUDDIN N. ZOOMKAWALA RAFIQUE R. BHIMJEE            2000    2001     2002    2003        2004   2005
      Director                Director    Managing Director & Chief Executive Chairman

                                                                                                         Total Assets    Total Adjusted Assets
Karachi March 18, 2006


                                                                        16
                                                                   E F U GENER AL I NSUR ANCE LTD .



     Key Financial Data for the Last Six Years


                                                                    (Rupees in Million)


                               2005      2004    2003    2002    2001            2000

Written Premium               6 644     5 043    3 944   3 079   2 374          1 979

Net Premium Revenue           3 862     2 536    1 662   1 432   1 293          1 099

Investment & Other Income       445       165     141     107     110              100

Profit before tax               646       474     157      70      23              114

Profit after tax                506       322     106      47      17                69

Shareholders Equity           1 106       663     378     272     251              255

Investments                   2 387     1 559     882     472     295              224

Investment Properties           412       428     446     464     470              381

Cash & Bank Balances          1 193       866     483     339     339              266

Total Assets                  6 335     4 784    3 256   2 182   1 853          1 249




                                          17
                                                                                                  E F U G E NE R AL INS UR ANC E LTD.

     Statement of Compliance with the
     Code of Corporate Governance


This statement is being presented to comply with the Code of Corporate Governance contained in the listing
regulations of Karachi and Lahore Stock Exchanges for the purpose of establishing a framework of good governance,
whereby a listed company is managed in compliance with the best practices of corporate governance.
The Company has applied the principles contained in the Code in the following manner:
 1. The Company encourages representation of independent non-executive Directors on its Board. At present
    the Board includes seven independent non-executive Directors, who were elected on June 28, 2005 for the
    three years’ term effective July 10, 2005.

 2. The Directors have confirmed that none of them is serving as a Director in more than ten listed companies.

 3. All the resident Directors of the Company are registered as taxpayers and none of them has defaulted in
    payment of any loan to a banking company, a DFI or an NBFI or, being a member of a stock exchange, has
    been declared as a defaulter by that stock exchange.

 4. No casual vacancy occurred in the Board during the year.

 5. The Company has prepared a ‘Statement of Ethics and Business Practices’, which has been signed by all
    the directors and employees of the Company.

 6. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of
    the Company. The significant policies in greater detail are being documented. A complete record of
    particulars of significant policies along with the dates on which they were approved or amended has been
    maintained.

 7. All the powers of the Board have been duly exercised and decisions on material transactions have been
    taken by the Board including appointment and determination of remuneration and terms and conditions of
    employment of CEO have been taken by the Board.

 8. The meetings of the Board were presided over by the Chairman and the Board met at least once in every
    quarter. Written notices of the Board meetings, along with agenda and working papers, were circulated at
    least seven days before the meetings. The minutes of the meetings were appropriately recorded and
    circulated.

 9. The management of the Company has submitted a paper to the Board of Directors on August 13, 2005 to
    consider it as an orientation course for its Directors and to apprise them of their duties and responsibilities.

10. There was no new appointment of CFO, Company Secretary or Head of Internal Audit during the year.

11. The Directors’ report for this year has been prepared in compliance with the requirements of the Code and
    fully describes the salient matters required to be disclosed.

12. The financial statements of the Company were duly endorsed by CEO and CFO before approval of the Board.

13. The Directors, CEO and Executives do not hold any interest in the shares of the Company other than that
    disclosed in the pattern of shareholding.

14. The Company has complied with all the corporate and financial reporting requirements of the Code.

15. The Board has formed an Audit Committee. It comprises of three non-executive Directors including the
    Chairman of the Committee.

16. The meetings of the Audit Committee were held at least once every quarter prior to approval of interim and
    final results of the Company and as required by the Code. The terms of reference of the Committee have
    been formed and advised to the Committee for compliance.

17. The Board has an effective team for internal audit. The team is fully conversant with the policies & procedures
    of the Company and is involved in the internal audit function on full time basis.




                                                         18
                                                                                                E F U GENERAL I NS URANC E LT D .




18. The statutory auditors of the Company have confirmed that they have been given a satisfactory rating under
    the quality control review programme of the Institute of Chartered Accountants of Pakistan, that they or any
    of the partners of the firm, their spouses and minor children do not hold shares of the Company and that the
    firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on
    code of ethics as adopted by Institute of Chartered Accountants of Pakistan.

19. The statutory auditors or the persons associated with them have not been appointed to provide other services
    except in accordance with the listing regulations and the auditors have confirmed that they have observed
    IFAC guidelines in this regard.

20. We confirm that all other material principles contained in the Code have been complied with.




HASANALI ABDULLAH          JAHANGIR SIDDIQUI           SAIFUDDIN N. ZOOMKAWALA              RAFIQUE R. BHIMJEE
     Director                   Director             Managing Director & Chief Executive         Chairman



                                                                                              Karachi March 18, 2006




                                                       19
                                                                                                  E F U GENERAL I NS URANC E LT D .

      Review Report to the Members on Statement of Compliance
      with Best Practices of Code of Corporate Governance


We have reviewed the Statement of Compliance with the best practices (the statement) contained in the Code
of Corporate Governance (the Code) prepared by the Board of Directors of EFU General Insurance Ltd to
comply with the Listing Regulation No. 37 of the Karachi Stock Exchange and chapter XIII of the Lahore Stock
Exchange where the Company is listed.

The responsibility for compliance with the Code is that of the Board of Directors of the Company. Our responsibility
is to review, to the extent where such compliance can be objectively verified, whether the Statement reflects
the status of the Company’s compliance with the provisions of the Code and report if it does not. A review is
limited primarily to inquiries of the Company personnel and review of various documents prepared by the
Company to comply with the Code.

As part of our audit of the financial statements we are required to obtain an understanding of the accounting
and internal control system sufficient to plan the audit and develop an effective audit approach. We have not
carried out any special review of the internal control system to enable us to express an opinion as to whether
the Board’s statement on internal control covers all controls and the effectiveness of such internal controls.

Based on our review nothing has come to our attention which causes us to believe that the Statement does
not appropriately reflect the Company’s compliance, in all material respects, with the best practices contained
in the Code as applicable to the Company.




                                                                                            GARDEZI & CO.
                                                                                          Chartered Accountants

Karachi March 18, 2006




                                                         20
                                                                                                    E F U GENERAL I NS URANC E LT D .



     Auditors' Report To The Members


We have audited the annexed financial statements comprising of :
   (i)      Balance sheet;
   (ii)     Profit and loss account;
   (iii)    Statement of changes in equity;
   (iv)     Statement of cash flows;
   (v)      Statement of premiums;
   (vi)     Statement of claims;
   (vii)    Statement of expenses; and
   (viii)   Statement of investment income
of EFU General Insurance Limited as at December 31, 2005 together with the notes forming part thereof, for the
year then ended in which are incorporated the un-audited certified returns from the branches except for four
branches which have been audited by us.
It is the responsibility of the Company’s Board of Directors to establish and maintain a system of internal control
and prepare and present the financial statements in conformity with the approved accounting standards as
applicable in Pakistan and the requirements of the Insurance Ordinance, 2000 (XXXIX of 2000) and the Companies
Ordinance, 1984 (XLVII of 1984). Our responsibility is to express an opinion on these statements based on our audit.
We conducted our audit in accordance with the Auditing Standards as applicable in Pakistan. These standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting policies and significant
estimates made by management, as well as, evaluating the overall financial statements presentation. We believe
that our audit provides a reasonable basis for our opinion .
The Company follows the policy of treating finance leases as operating leases the effect of which has not been
determined as referred to in Note 17.
As more fully explained in note 5(i) to the financial statements the Company’s investments in an associated company
have been accounted for at cost. International Accounting Standards require that such investments be valued
using Equity Method. Had the equity method been used for valuation, the value of investments and corresponding
effect on profit as on January 1, 2005 would have been higher by Rs. 61.6 million and value of investments and
effect on profit as on December 31, 2005 would have been higher by Rs. 113.3 million and Rs. 51.65 million
respectively.
Except for the financial effect of the matters referred to in the preceding paragraph, in our opinion:
   (a) proper books of accounts have been kept by the Company as required by the Insurance Ordinance, 2000
       and the Companies Ordinance, 1984;
   (b) the financial statements together with the notes thereon have been drawn up in conformity with the Insurance
       Ordinance, 2000 and the Companies Ordinance, 1984, and accurately reflect the books and records of
       the Company and are further in accordance with accounting policies consistently applied.
   (c) the financial statements together with the notes thereon present fairly, in all material respects, the state of
       the Company’s affairs as at December 31, 2005 and of the profit, its cash flows and changes in equity for
       the year then ended in accordance with approved accounting standards as applicable in Pakistan, and
       give the information required to be disclosed by the Insurance Ordinance, 2000 and the Companies
       Ordinance, 1984; and
   (d) Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVII of 1980), was deducted
       by the Company and deposited in the Central Zakat Fund established under Section 7 of that Ordinance.



                                                                                                 GARDEZI & CO.
                                                                                             Chartered Accountants

                                                                                                  Karachi March 18, 2006


                                                          21
                                                                                E F U G E NE R AL INS UR ANC E LTD.



      Balance Sheet As At 31 December 2005




                                                          Note           2005                  2004

Share Capital and Reserves
  Authorised
       50 000 000 Ordinary shares of Rs. 10 each                        500 000             500 000

  Paid-up share capital                                   6              300 000            210 000
  Retained earnings                                                      305 980            162 712
  Reserves                                                               500 000            290 000
                                                                         805 980            452 712
  Reserve for exceptional losses                          5 (b)           12 902             12 902
                                                                       1 118 882            675 614
Underwriting provisions
 Provision for outstanding claims (including IBNR)        5 (d)        1 826 554          1 566 221
 Provision for unearned premium-net                       5 (c)        2 398 372          1 569 973
 Commission income unearned                               5 (e)          192 392            181 005
 Total underwriting provisions                                         4 417 318          3 317 199


Deferred liabilities
 Staff retirement benefits                                7               1 114               13 866
 Deferred taxation                                        5 (g)           5 447                  –
                                                                          6 561               13 866
Creditors and Accruals
 Premiums received in advance                                             8 610              29 516
 Amounts due to other insurers/reinsurers                               261 178             332 292
 Accrued expenses                                                        73 087              60 384
 Agent balances                                                         181 925             130 647
 Unearned rentals                                                        23 221              46 047
 Taxation - provision less payments                                      58 613              59 262
 Other creditors                                          9              47 670              32 591
                                                                        654 304             690 739
Other Liabilities
 Other deposits                                                         124 069               74 084
 Unclaimed dividend                                                      13 503               12 091
                                                                        137 572               86 175
Total Liabilities                                                      5 215 755          4 107 979



Total Equity and Liabilities                                           6 334 637          4 783 593


Contingencies and Commitments                             8, 17 & 27




                                                     22
                                                                                                  E F U GENERAL I NS URANC E LT D .




                                                                                                           Rupees ‘000

                                                                       Note               2005                2004

Cash and Bank Deposits
 Cash and other equivalent                                                                 9 788                5 265
 Current and other accounts                                            18                554 206              374 649
 Deposits maturing within 12 months                                                      628 912              486 080
                                                                                       1 192 906              865 994

Loans-secured considered good
 To employees                                                                               5 839                6 321

Investments                                                            10              2 387 155           1 558 963

Investment properties                                                  11                412 375              427 816

Deferred taxation                                                      5 (g)                  –                  6 000

Other Assets
 Premiums due but unpaid - net                                         12                995 344             670 664
 Amounts due from other insurers / reinsurers                                             84 848              37 844
 Salvage recoveries accrued                                                               32 835              25 523
 Premium and claim reserves retained by cedants                                            1 667               1 667
 Accrued investment income                                             13                 29 208              15 737
 Reinsurance recoveries against outstanding claims                                       603 215             809 049
 Deferred commission expense                                           5 (e)             312 097             235 911
 Prepayments                                                           14                 18 446               8 022
 Security deposits                                                                        21 086              21 450
 Other receivables                                                     15                 88 372              26 612
 Amount due from State Life Insurance Corporation of Pakistan                                –                 2 856
                                                                                       2 187 118           1 855 335

Fixed Assets                                                           16
 Tangible
 Land and buildings                                                                          191                  238
 Furniture, fixtures and office equipment                                                 87 949               51 458
 Motor vehicles                                                                           61 104               11 468
                                                                                         149 244               63 164




Total Assets                                                                           6 334 637           4 783 593

                                                  The annexed notes 1 to 31 form an integral part of these accounts.




HASANALI ABDULLAH           JAHANGIR SIDDIQUI        SAIFUDDIN N. ZOOMKAWALA                 RAFIQUE R. BHIMJEE
     Director                    Director          Managing Director & Chief Executive            Chairman




                                                     23
                                                                                                                    E F U GENERAL I NS URANC E LT D .

           Profit And Loss Account
           For The Year Ended 31 December 2005


                                                                                                                                   Rupees ‘000

                                       Note       Fire &       Marine,
                                                 Property     Aviation &                                           Aggregate       Aggregate
                                                 Damage       Transport         Motor     Others       Treaty        2005            2004


Revenue Account
Net Premium Revenue                      19      437 549       543 648        2 749 744    43 488      87 566      3 861 995      2 536 091
Less: Net Claims                                 245 579       307 011        2 064 239    12 733      64 785      2 694 347      1 529 556

Less: Expenses                           20      215 350       100 832         374 940     26 669          –        717 791         538 372

Less: Net Commission                             ( 75 870 )     81 593         126 891    ( 22 009 )   26 985       137 590           47 869

Underwriting result                               52 490        54 212         183 674     26 095      ( 4 204 )    312 267         420 294

Investment Income                                                                                                   372 966         101 731
Rental Income                                                                                                        64 317           55 062
Profit on sale of Fixed assets                                                                                         7 820           7 956
Difference in Exchange                                                                                                 1 035           1 548
General and administration expenses      21                                                                        ( 109 834 )     ( 112 423 )
Amount due from State Life Insurance
 Corporation of Pakistan-written off                                                                                 ( 2 856 )            –

                                                                                                                    333 448           53 874
Profit before tax                                                                                                   645 715         474 168
Provision for Taxation- current                                                                                     128 000         153 000
                        - deferred                                                                                   11 447           ( 1 281 )
                                                                                                                    139 447         151 719
Profit after tax                                                                                                    506 268         322 449


Profit and Loss Appropriation Account
Balance at commencement of year                                                                                     162 712           58 263
Profit after tax for the year                                                                                       506 268         322 449
                                                                                                                    668 980         380 712
Dividend 2004 @ 30 % (2003: @ 20 %) 5 (u)                                                                            63 000           38 000
Issue of bonus shares                    5 (u)                                                                       90 000           20 000
Transfer to General Reserve                                                                                         210 000         160 000
                                                                                                                    363 000         218 000
Balance Unappropriated Profit at end of year                                                                        305 980         162 712

                                                                                                                    Rupees           Rupees
Earnings per share - basic and diluted            Note 26                                                              16.88           10.75


The annexed notes 1 to 31 form an integral part of these accounts.




HASANALI ABDULLAH                      JAHANGIR SIDDIQUI                SAIFUDDIN N. ZOOMKAWALA                     RAFIQUE R. BHIMJEE
     Director                               Director                  Managing Director & Chief Executive                Chairman

Karachi March 18, 2006


                                                                         24
                                                                                                          E F U GENERAL I NS URANC E LT D .

     Statement of Changes in Equity
     For The Year Ended 31 December 2005


                                                                                                                                Rupees ‘000


                                                                     Share     General     Unappropriated
                                                                     Capital   Reserve         Profit                 Total


Balance as at January 1, 2004 - restated                             190 000    130 000            58 263          378 263

Issue of bonus shares                                                 20 000                      ( 20 000 )                –

Dividend declared for the year 2003                                                               ( 38 000 )        ( 38 000 )

Profit for the year                                                                               322 449           322 449

Transfer to General Reserve                                                      160 000         (160 000 )                 –

Balance as at December 31, 2004                                      210 000     290 000          162 712           662 712

Issue of bonus shares                                                 90 000                      ( 90 000 )                –

Dividend declared for the year 2004                                                               ( 63 000 )        ( 63 000 )

Profit for the year                                                                               506 268           506 268

Transfer to General Reserve                                                      210 000         ( 210 000 )                –

Balance as at December 31, 2005                                      300 000     500 000          305 980         1 105 980




The annexed notes 1 to 31 form an integral part of these accounts.




HASANALI ABDULLAH               JAHANGIR SIDDIQUI            SAIFUDDIN N. ZOOMKAWALA                  RAFIQUE R. BHIMJEE
     Director                        Director              Managing Director & Chief Executive             Chairman



                                                                                                        Karachi March 18, 2006




                                                             25
                                                                                                        E F U GEN ER AL IN SU R AN CE LT D.

      Statement of Cash Flows
      For The Year Ended 31 December 2005


                                                                                                                  Rupees ‘000

                                                                                        2005                       2004
Operating Cash Flows
a) Underwriting activities
   Premiums received                                                                  6 199 200                  4 738 853
   Reinsurance premiums paid                                                        ( 2 025 119 )              ( 2 008 226 )
   Claims paid                                                                      ( 3 299 777 )              ( 1 950 064 )
   Reinsurance and other recoveries received                                          1 137 803                    742 313
   Commissions paid                                                                   ( 547 742 )                ( 434 698 )
   Commissions received                                                                 396 632                    390 618
   Net cash flow from underwriting activities                                         1 860 997                  1 478 796
b) Other operating activities
   Income tax (paid) /refunds                                                         ( 128 649 )                    56 201
   General management expenses paid                                                   ( 681 759 )                ( 522 658 )
   Other operating payments                                                             ( 89 618 )                 ( 95 512 )
   Other operating receipts                                                                 1 035                      1 548
   Loans advanced                                                                         ( 2 046 )                  ( 1 395 )
   Loan repayments received                                                                 2 528                      2 634
   Other payments on operating assets                                                   ( 68 963 )                 ( 16 218 )
   Other receipts in respect of operating assets                                          44 158                     48 152
   Net cash flow from other operating activities                                      ( 923 314 )                ( 527 248 )
Total cash flow from all operating activities                                           937 683                    951 548
Investment activities
   Profit / Return received                                                              49 053                      22 810
   Dividends received                                                                   139 212                      73 435
   Rentals received                                                                      41 492                      71 389
   Payments for investments                                                         ( 1 924 886 )                ( 918 825 )
   Proceeds from disposal of investments                                              1 267 924                    243 175
   Fixed capital expenditure                                                          ( 131 835 )                  ( 34 156 )
   Proceeds from disposal of fixed assets                                                 9 857                      10 829
Total cash flow from Investing activities                                             ( 549 183 )                ( 531 343 )
Financing activities
   Dividends paid                                                                      ( 61 588 )                  ( 36 920 )
Net cash inflow from all activities                                                     326 912                    383 285
Cash at the beginning of the year                                                       865 994                    482 709
Cash at the end of the year                                                           1 192 906                    865 994
Reconciliation to Profit and Loss Account
   Operating cash flows                                                                 937 683                    951 548
   Depreciation expense                                                                 ( 59 154 )                 ( 41 166 )
   Investment and rental income                                                         437 284                    156 793
   Profit on disposal of fixed assets                                                      7 820                      7 956
   Increase in assets other than cash                                                   312 480                    413 764
   (Increase) in liabilities other than running finance                             ( 1 129 845 )              ( 1 166 446 )
Profit after taxation                                                                   506 268                    322 449
Definition of cash
  Cash for the purposes of the Statement of Cash Flows consists of:
  Cash and other equivalents                                                              9 788                      5 265
  Current and other accounts                                                            554 206                    374 649
  Deposits maturing within 12 months                                                    628 912                    486 080
                                                                                      1 192 906                    865 994
The annexed notes 1 to 31 form an integral part of these accounts.


HASANALI ABDULLAH               JAHANGIR SIDDIQUI            SAIFUDDIN N. ZOOMKAWALA                  RAFIQUE R. BHIMJEE
     Director                        Director              Managing Director & Chief Executive             Chairman

Karachi March 18, 2006
                                                             26
                                                                                                                        E F U GEN ER AL IN SU R AN CE LT D.

           Statement of Premiums
           For The Year Ended 31 December 2005


                                                                                                                                        Rupees ‘000


                                                   Premiums                                     Reinsurance
                                                                                                                                     Net
                                                                                            Prepaid Reinsurance                    Premium
           Class                    Written Unearned Premium Reserve Earned     Reinsurance   Premium ceded Reinsurance            Revenue
                                              Opening     Closing                 ceded     Opening Closing expense             2005      2004

Direct and Facultative

  Fire and Property Damage         1 929 635   890 487   931 122   1 889 000   1 460 238   696 094   704 881   1 451 451      437 549       447 749

  Marine, Aviation and Transport    914 186    390 110   468 206    836 090     296 497    144 019   148 074    292 442       543 648       433 241

  Motor                            3 440 470 1 201 042 1 771 123   2 870 389      9 520    116 012     4 887    120 645 2 749 744          1 573 075

  Miscellaneous                     239 588     84 827   119 950    204 465     187 751     67 053    93 827    160 977        43 488          36 350

           Total                   6 523 879 2 566 466 3 290 401   5 799 944   1 954 006 1 023 178   951 669   2 025 515 3 774 429            2 490 415


Treaty                              120 521     26 685    59 640     87 566         –         –         –           –          87 566        45 676

           Grand Total             6 644 400 2 593 151 3 350 041   5 887 510   1 954 006 1 023 178   951 669   2 025 515 3 861 995         2 536 091




The annexed notes 1 to 31 form an integral part of these accounts.




HASANALI ABDULLAH                       JAHANGIR SIDDIQUI               SAIFUDDIN N. ZOOMKAWALA                         RAFIQUE R. BHIMJEE
     Director                                Director                 Managing Director & Chief Executive                    Chairman



                                                                                                                           Karachi March 18, 2006




                                                                        27
                                                                                                                                E F U GEN ER AL IN SU R AN CE LT D.

           Statement of Claims
           For The Year Ended 31 December 2005


                                                                                                                                                Rupees ‘000


                                                     Claims                                          Reinsurance
                                                                                   Reinsurance Reinsurance and other Reinsurance              Net
                                                                                     and other recoveries in respect of and other            claims
           Class                     Paid          Outstanding           Claims     recoveries   outstanding claims     recoveries          expense
                                               Opening    Closing       expense     received     Opening     Closing    revenue         2005           2004

Direct and Facultative

  Fire and Property Damage         1 076 549   668 094    575 305       983 760      905 834    604 374     436 721     738 181       245 579       133 720

  Marine, Aviation and Transport    253 160    214 014    297 752       336 898       42 550      64 631     51 968      29 887       307 011       182 781

  Motor                            1 903 505   545 954    798 105      2 155 656     124 719      59 188     25 886      91 417 2 064 239         1 191 660

  Miscellaneous                      59 252     98 710    104 842        65 384       44 867      80 856     88 640      52 651        12 733          7 809

           Total                   3 292 466 1 526 772 1 776 004       3 541 698   1 117 970    809 049     603 215    912 136 2 629 562          1 515 970

  Treaty                             53 684     39 449        50 550     64 785           –          –           –          –          64 785         13 586

           Grand Total             3 346 150 1 566 221 1 826 554       3 606 483   1 117 970    809 049     603 215    912 136 2 694 347 1 529 556



The annexed notes 1 to 31 form an integral part of these accounts.




HASANALI ABDULLAH                       JAHANGIR SIDDIQUI                   SAIFUDDIN N. ZOOMKAWALA                          RAFIQUE R. BHIMJEE
     Director                                Director                     Managing Director & Chief Executive                     Chairman



Karachi March 18, 2006




                                                                            28
                                                                                                                              E F U GEN ER AL IN SU R AN CE LT D.

           Statement of Expenses
           For The Year Ended 31 December 2005


                                                                                                                                              Rupees ‘000




                                                                                                                                            Net
                                                       Commission                          Other                   Commission           underwriting
           Class                                           Deferred              Net     Management Underwriting      from                expense
                                   Paid or payable     Opening      Closing    expense    expenses      expense     reinsurers      2005           2004


Direct and Facultative

  Fire and Property Damage           231 000          90 278     113 089      208 189     215 350     423 539       284 059        139 480         95 183

  Marine, Aviation and Transport     120 642          51 304      60 926      111 020     100 832     211 852        29 427        182 425        150 745

  Motor                              182 610          80 601     104 827      158 384     374 940     533 324        31 493        501 831        318 819

  Miscellaneous                        22 155          7 521      11 419       18 257      26 669      44 926        40 266           4 660            365

           Total                     556 407         229 704     290 261      495 850     717 791    1 213 641      385 245        828 396        565 112

Treaty                                 42 614          6 207      21 836       26 985         –        26 985           –           26 985         21 129

           Grand Total               599 021         235 911     312 097      522 835     717 791    1 240 626      385 245        855 381       586 241



Note: Commission from reinsurers is arrived at taking impact of opening and closing unearned commission.


The annexed notes 1 to 31 form an integral part of these accounts.




HASANALI ABDULLAH                         JAHANGIR SIDDIQUI                     SAIFUDDIN N. ZOOMKAWALA                       RAFIQUE R. BHIMJEE
     Director                                  Director                       Managing Director & Chief Executive                  Chairman



                                                                                                                                 Karachi March 18, 2006




                                                                               29
                                                                                                          E F U GENER AL I NSUR ANCE LTD .

      Statement of Investment Income
      For The Year Ended 31 December 2005


                                                                                                                    Rupees ‘000


                                                                                                   2005               2004
Income from Trading Investments
  Gain on Sale of Trading Investments                                                             112 959                 –
  Dividend Income                                                                                   7 093                 –
                                                                                                  120 052                 –
Income from Non-Trading Investments
  Held to maturity
    Return on Government Securities                                                                52 678            19 953
    Return on Other Fixed Income Securities and Deposits                                           33 257            12 353
    Amortisation of premium relative to par                                                   ( 21 410 )             ( 3 697 )
                                                                                                   64 525            28 609
  Available for sale
    Dividend Income                                                                               131 205            72 590
Gain on Sale of Non-Trading Investments                                                            57 493              1 375
                                                                                                  253 223           102 574
Gain on Revaluation of Trading Investments                                                            779                 –
Less: Investment Related Expenses                                                                   1 088                843
Net Investment Income                                                                             372 966           101 731



The annexed notes 1 to 31 form an integral part of these accounts.




HASANALI ABDULLAH               JAHANGIR SIDDIQUI             SAIFUDDIN N. ZOOMKAWALA                 RAFIQUE R. BHIMJEE
     Director                        Director               Managing Director & Chief Executive            Chairman



Karachi March 18, 2006




                                                             30
                                                                                                        E F U GENER AL I NSUR ANCE LTD .

      Notes To The Accounts
      For The Year Ended 31 December 2005


1.     Status and Nature of Business
       The Company was incorporated as a Public Limited Company on September 2, 1932. The shares of the company
       are quoted on Karachi and Lahore Stock Exchanges and is engaged in general insurance business comprising
       of fire & property, marine, motor, etc. The Registered office of the company is situated in Peshawar and operates
       through 55 (including KEPZ Branch) branches in Pakistan and one branch in Jeddah, Saudi Arabia.

       The Principal place of business is located at EFU House, M.A. Jinnah Road, Karachi.

2.     Basis of Presentation
       These financial statements have been prepared in accordance with the format prescribed under Insurance
       Rules 2002.

3.     Statement of Compliance
       These financial statements have been prepared in accordance with approved accounting standards as
       applicable in Pakistan and the requirements of the Companies Ordinance, 1984, the Insurance Ordinance,
       2000 and SEC (Insurance) Rules 2002. Approved accounting standards comprise of such International
       Accounting Standards as notified under the provisions of the Companies Ordinance, 1984. Where the
       requirements of the Companies Ordinance, 1984, the Insurance Ordinance, 2000 and the SEC (Insurance)
       Rules 2002 or directives issued by the Securities and Exchange Commission of Pakistan differ with requirements
       of these standards, the requirements of the Companies Ordinance, 1984, the Insurance Ordinance, 2000, the
       SEC (Insurance) Rules 2002 and the requirements of the said directives take precedence.

3.1    Standards, interpretations and amendments to published approved accounting standards that are not yet
       effective
       Following amendments to existing standards have been published that are mandatory for the Company’s
       accounting periods beginning on or after January 1, 2006 or later periods:
       i. IAS 19 (Amendments) – Employee Benefits                      effective from January 1, 2006
       ii. IAS 1 Presentation of Financial Statements
            – Capital Disclosures                                      effective from January 1, 2007
       Adoption of the above amendments may only impact the extent of disclosures presented in the financial
       statements.

4.     Basis of Measurement
       These financial statements have been prepared on the basis of historical cost convention, except held for
       trading investments which are stated at fair value.
       The preparation of financial statements in conformity with approved accounting standards requires management
       to make judgments, estimates and assumptions that effect the application of policies and reported amounts
       of assets and liabilities, income and expenses. The estimates and associated assumptions are based on
       historical experience and various other factors that are believed to be reasonable under the circumstances,
       the result of which form the basis of making the judgements about carrying values of assets and liabilities that
       are not readily apparent form the other sources.
       Actual results may differ from these estimates. The estimates and underlying assumption are reviewed on an
       ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised
       if the revision affects only that period, or in the revision and future periods if the revision affects both current
       and future periods.
       Judgements made by management in the application of approved accounting standards that have significant
       effect on the financial statements and estimates with a risk of material adjustment in the next year are:
       (a) Provision for un-earned premiums                            (see note 5 (c))
       (b) Outstanding claims                                          (see note 5 (d))
       (c) Employees’ retirement benefits                              (see notes 5 (f) & 7)
       (d) Taxation                                                    (see notes 5 (g) & 8)




                                                            31
                                                                                                   E F U GENER AL I NSUR ANCE LTD .




5.   Significant Accounting Policies
     (a)   Underwriting result
           Underwriting result is calculated by deducting from Gross Premium of each class of business, reinsurance
           cost incurred, claims, commission, allocable expenses of management and provision for un-earned
           premium.

     (b)   Reserve for exceptional losses
           The Reserve for Exceptional Losses was created prior to 1979 and was charged to income in accordance
           with the provisions of the repealed Income Tax Act, 1922 and has been so retained to date.

     (c)   Provision for un-earned premiums
           In accordance with the requirements of the Insurance Rules 2002, the liability for unearned premiums
           has been calculated by applying 1/24th method.

           Furthermore, the Insurance Rules 2002 require the company to establish premium deficiency reserve
           to meet expected future liability, after reinsurance, from claims and other expenses, including reinsurance
           expense, commission and other underwriting expenses, expected to be incurred after balance sheet
           date in respect of policies in that class of business in force at balance sheet date. During the year,
           management has reviewed the results of each class of business and considers that no additional reserve
           is required to be created other than already accounted for unearned premiums.

     (d)   Outstanding claims
           The liability in respect of outstanding claims is based on certified returns of the branches and represents
           the estimates of the claims intimated or assessed before the end of the accounting year less anticipated
           recoveries and estimates of claims incurred but not reported (IBNR) by the year-end. During the year
           management has carried out an exercise whereby all claims incurred before 31 December 2004 but
           reported upto December 31, 2005 were aggregated and the ratio of such claims to outstanding claims
           has been applied to outstanding claims at December 31, 2005 to arrive at liability for IBNR.

     (e)   Revenue recognition
           Premium
           Premiums received / receivable under a policy are recognized at the time of issuance of policy. Similarly,
           reinsurance premium is recorded at the time the reinsurance is ceded.
           Return on investments
           Return on investments and profit and loss sharing accounts are recognised on a time proportion basis.
           Dividend income is recognized when right to receive such dividend is established. Profit or loss on sale
           of investments is recognized at the time of sale.
           Claims
           Claims are considered to be incurred at the time when claims are lodged with the company. However,
           claims incurred but not reported at year end are determined as mentioned in Note 5(d).
           Acquisition cost
           Commission due on Direct, Facultative and treaty business and on Re-insurance cessions are recognised
           in accordance with the policy of recognizing premium revenue.

     (f)   Employees’ retirement benefits
           The company’s retirement benefit plans comprise of a provident fund for all the eligible employees, a
           funded pension scheme for eligible officers and a funded gratuity scheme for the eligible employees
           who have completed the minimum qualifying period of service. The provident fund is a defined contribution
           plan. The other two plans are defined benefit plans. The pension plan is a career average salary plan
           and the gratuity plan is a final salary plan. The actuarial valuation of both the schemes is carried out
           on a yearly basis using the Projected Unit Credit Method and contributions to the schemes are made
           accordingly. The latest actuarial valuation, at December 31, 2005 uses a discount rate of 10.8%, salary
           and pension increases to average 8.7% and 5.5% respectively per annum in the long term and return
           on assets will equal the discount rate.

           Actuarial gains and losses are recognized in profit and loss account in the year they arise.


                                                        32
                                                                                               E F U GENER AL I NSUR ANCE LTD .




(g)   Taxation
      Current taxation
      Provision for current taxation is based on taxable income at current rates of taxation after taking into
      account tax credits and rebates available, if any.

      Deferred taxation
      Deferred tax is recognised using the balance sheet liability method for all temporary differences between
      the amounts attributed to assets and liabilities for financial reporting purposes and the amounts used
      for taxation purposes. The amount of deferred tax recognized is based on the expected manner of
      realisation or settlement of the carrying amount of assets and liabilities using tax rates enacted at the
      balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future
      taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced
      to the extent that it is no longer probable that the related tax benefit will be realised.

(h)   Creditors, Accruals and Provisions
      Liabilities for creditors and other amount payable are carried at cost which is the fair value of the
      consideration to be paid in future for goods and / or services. Provisions are recognised when the
      Company has a legal or constructive obligation as a result of a past event, and it is probable that outflow
      of resources embodying economic benefits will be required to settle the obligation and a reliable estimate
      can be made of the amount of obligation.

(i)   Investments
      All investments are initially recognised at cost being the fair value of the consideration given and include
      transaction costs. All purchases and sales of investments that require delivery within the time frame
      established by regulations or market convention are accounted for at the trade date. Trade date is the
      date when the company commits to purchase or sell the investments.
      The above investments are classified into the following categories:
      –   Held-for-trading
      –   Available-for-sale
      –   Held-to-maturity
      Investments which are acquired with the intention to trade by taking advantage of short term market/interest
      rate movements are considered as held for trading. Subsequent to initial recognition, these are stated
      at fair values with any resulting gains or losses recognized directly in the profit and loss account.
      Investments which are intended to be held for an undefined period of time but may be sold in response
      to the need for liquidity or changes in interest rates are considered as available for sale. Investments
      with fixed or determinable payments and fixed maturity, where management has both the positive intent
      and the ability to hold to maturity are classified as held to maturity. Subsequent to initial recognition
      these are valued at amortised cost. Amortised cost is calculated by taking into account any discount
      or premium on acquisitions by using effective interest rate method.
      The company continues to follow its policy of valuing investments classified as available for sale at lower
      of cost or market value determined on an aggregate portfolio basis at the balance sheet date. The
      Securities and Exchange Commission of Pakistan vide its letter SC/MF/D/179/2002 dated 16 October
      2002 has granted exemption from adoption of IAS -39 to insurance companies due to tax implications.
      Had the company adopted IAS-39 and valued investments available for sale (including investments
      in associates) at fair value, the investments as at December 31, 2005 would have been higher by
      Rs. 2 560 million (2004: Rs. 1 719 million) with consequent increase in equity by the same amount.

      Available for sale Investments include investment in an Associated company, EFU Life Assurance Limited
      carried at a value of Rs. 60 million (2004: Rs. 60 million) at cost. International Accounting Standard IAS
      – 28 (revised) Investment in Associate effective for the financial periods beginning on or after 1 January
      2005 requires that an investment in associate shall be accounted for under the equity method. The
      Company considers that accounting for these investment at a value above cost would result in
      complications similar to those related to the adoption of International Accounting Standard IAS–39




                                                    33
                                                                                                E F U GENER AL I NSUR ANCE LTD .




      “Financial Instrument – Recognition and Measurement”. Had this investment been valued using equity
      method, their carrying value would have been higher by approximately Rs. 113 million (2004: Rs. 62
      million) with consequent increase in the equity by the same amount.
(j)   Investment properties
      The Investment Properties are accounted for under the cost model where land is not depreciated and
      building is depreciated @ 5% annually using the straight line method.
(k)   Fixed assets
      Fixed assets are stated at cost less accumulated depreciation calculated on the straight line basis using
      the following rates:
      Office Premises                                                                                  5%
      Furniture, Fixtures and Office Equipments                                                       10%
      Vehicles                                                                                        20%
      Computers                                                                                       30%

      Normal repairs and maintenance are charged to income currently.
      Gains or losses on disposal of fixed assets are included in income currently.
      Rental for Vehicles, Computers and Equipments under operating leases are charged to income currently.
(l)   Expenses of management
      Expenses of Management have been allocated to various revenue accounts on equitable basis.
(m)   Compensated absences
      The liability towards compensated absences accumulated by the employees is provided when the
      leaves are accumulated.
(n)   Loans, advances, deposits, prepayments and other receivables.
      Known bad debts are written off while provisions are made for debts considered doubtful.
(o)   Foreign currencies
      Revenue transactions in foreign currencies are converted into rupees at the rates ruling on the date of
      the transactions as quoted by State Bank of Pakistan. Income and expense amounts relating to foreign
      branches have been translated to Pakistan Rupees at the average of the rates of exchange applicable
      at the end of each quarter. Assets and Liabilities in foreign currencies are translated into rupees at the
      rates of exchange prevailing on the Balance Sheet date. Exchange gains or losses are taken into income
      currently.
(p)   Cash and Cash Equivalents
      For the purpose of Cash Flow Statement, Cash and Cash Equivalents include Cash at Bank in Current
      and Saving Accounts, Cash and Stamps in hand and Bank Deposits.
(q)   Impairment
      The carrying amounts of the Company’s assets are reviewed on an ongoing basis to determine whether
      there is any indication of impairment. If such an indication exists, the recoverable amount of the assets
      is determined and impairment losses are recognised in the Profit & Loss Account.
(r)   Off-setting
      Assets and Liabilities are off-set and the net amount is reported in the financial statements only when
      there is legally enforceable right to set-off the recognised amount and the Company intends either to
      settle on a net basis or realise the assets and settle the liabilities simultaneously.
(s)   Financial Assets and liabilities
      Assets and liabilities are initially measures at cost, which is the fair value of the consideration given and
      received respectively. These financial assets and liabilities are subsequently measured at fair / market
      value, amortised cost or cost, as the case may be.
      Gains or losses on derecognition are taken to profit and loss account or revenue account, as the case
      may be.
                                                    34
                                                                                                       E F U GENER AL I NSUR ANCE LTD .




     (t)     Segment reporting
             The company has four primary business segments for reporting purposes namely, fire & property, marine,
             motor, and miscellaneous.
             The fire insurance segment provides insurance covers against damages caused by fire, riot and strike,
             explosion, earthquake, atmospheric damage, flood, electric fluctuation and engineering losses.
             Marine insurance segment provides coverage against cargo risk, war risk and damages occurring in
             inland transit.
             Motor insurance provides comprehensive vehicle coverage and indemnity against third party loss.
             Miscellaneous insurance provides cover against burglary, loss of cash in safe and cash in transit,
             personal accident, money and other coverages.
             Assets, liabilities and capital expenditures that are directly attributable to segments have been assigned
             to them while the carrying amount of certain assets used jointly by two or more segments have been
             allocated to segments on a reasonable basis. Those assets and liabilities which can not be allocated
             to a particular segment on a reasonable basis are reported as unallocated corporate assets and liabilities.
     (u)     Dividend and bonus shares
             Dividend to shareholders is recognised as liability in the period in which it is declared. Similarly, reserve
             for issue of bonus shares is recognised in the year in which such issue is declared.
     (v)     Zakat deductible compulsorily under the Zakat and Ushr Ordinance 1980 is accounted for in the year
             of deduction.
6.   Share Capital
     Issued, subscribed and paid-up                                                                         Rupees ‘000

            Number of Shares
           2005            2004                                                             2005                  2004
                                         Ordinary shares of Rs. 10 each,
           250 000        250 000        fully paid in cash.                                 2 500                2 500
                                         Ordinary shares of Rs. 10 each,
     29 750 000        20 750 000        issued as fully paid bonus shares.               297 500              207 500
     30 000 000        21 000 000                                                         300 000              210 000


7.   Staff Retirement Benefits                                                                               Rupees ‘000
                                                                                         Gratuity              Pension
     Charged for defined benefit plans
     Current service cost                                                                    6 406                1 445
     Interest cost                                                                         10 808                 7 052
     Expected return on plan assets                                                      ( 10 137 )             ( 8 082 )
     Past service cost                                                                          –               19 676
     Recognition of gains                                                                  ( 5 963 )            ( 8 718 )
     Employee contributions                                                                     –               ( 1 248 )
     Expense                                                                                1 114               10 125
     Movement in amount payable to the defined benefit plan
     Provision at beginning of year                                                      ( 13 866 )             10 124
     Expense                                                                               ( 1 114 )          ( 10 125 )
     Company contributions                                                                 13 866                  312
     Balance at end of year                                                               ( 1 114 )                 311
     Reconciliation of amount payable to defined benefit plans
     Fair value of plan assets                                                           127 227              104 390
     Obligation                                                                        ( 128 341 )          ( 104 079 )
     Asset/ (Provision)                                                                   ( 1 114 )                 311

     Actual return on plan assets                                                         16 158                19 520

                                                           35
                                                                                                  E F U GENER AL I NSUR ANCE LTD .




8.     Taxation
8.1.   The income tax assessments of the Company have been finalized upto and including Tax Year 2005 (Financial
       year ending 31 December 2004). The appeals relating to assessment years 1962-63 to 1975-76 have been
       decided in Company’s favour. However, the department has filed references with the Supreme Court of Pakistan
       and with the High Court of Sindh for assessment years 1962-63 to 1971-72. Consequently there is a contingent
       tax liability of Rs. 5.33 million which may arise if the reference petitions are decided against the Company.

       Appeal for the Accounting year 2003 is pending before the Commissioner of Income Tax (Appeals) and there
       could arise contingent tax liability of Rs. 2 million if the matter is decided against the company.

       The Tax Department has filed appeals with Income Tax Appellate Tribunal in respect of Assessment years
       1999-2000 to 2002-2003. In case appeals are decided against the company additional tax liability of Rs. 135
       million may arise.

       No provision has been made in these financial statements for the above contingencies, as the management,
       based on tax advisor’s opinion, considers that it has good arguable cases and there is remote possibility of
       reversal of the appellate decision.

8.2    Reconciliation of tax charge                                                    2005                 2004
                                                                                         %                   %

       Applicable tax rate                                                             35.00                35.00
       Less: Tax effect of amount that are deductible for tax purpose                   0.14                ( 2.22 )
             Tax effect of amounts tax at reduced rates                                 6.43                  4.59
             Tax effect of income exempt from tax                                       8.41                   –
             Tax effect of rebates and tax credit                                       0.19                  0.36
                                                                                       19.83                32.27
       Add: Deferred tax effect                                                         1.77                ( 0.27 )
       Average effective tax rate charged on income                                    21.60                32.00

9.     Other Creditors                                                                                 Rupees ‘000

                                                                                       2005                 2004

       Federal Insurance Fee                                                           5 194                5 004
       Federal Excise Duty                                                            30 302               23 414
       Sundry Creditors                                                                5 746                1 460
       Others                                                                          6 428                2 713

                                                                                      47 670               32 591

10.    Investments                                                                                     Rupees ‘000

                                                                                       2005                 2004

       Held for Trading – at Market Value
              Shares of Listed Companies                                              32 252                    –
       Available for Sale
              Preference Shares of Companies - Listed                                 20 000              20 000
              Equity Investment in Associated undertaking - Listed                    60 384              60 384
              Shares of other Listed Companies                                     1 344 634             782 533
                                                                                   1 425 018             862 917
       (a)   Market value of quoted ordinary shares (including investment in
             associated undertaking) and preference shares carried at cost
             amounted to Rs. 3 985 million (2004: Rs. 2 582 million).
       (b)   Investments in EFU Life Assurance Limited represent 39% of the
             issued Capital of that company.


                                                         36
                                                                                                                 E F U G E NE R AL INS UR ANC E LTD.




       Held to Maturity Investments                                                                                       Rupees ‘000

                                                           Maturity          Profit          Profit
               Name of Investment                           Year            Rate %          Payment           2005            2004

       Government Securities
        6 Months Treasury Bills                               2006             8.14         On Maturity       48 050              –
        1 Year Treasury Bills                                 2006      8.60 – 8.79         On Maturity      122 881          96 870
       10 Years Federal Investment Bonds                      2005            15.00         Half Yearly           –              350
        3 Years Pakistan Investment Bonds                     2006             7.00         Half Yearly       50 460          52 679
        5 Years Pakistan Investment Bonds                     2007    10.00 – 11.00         Half Yearly      288 166         302 925
       10 Years Pakistan Investment Bonds              2011 – 2013     9.00 – 14.00         Half Yearly      148 536         152 066
                                                                                                             658 093         604 890
       Market value of Government Securities
       carried at amortised cost amounted to
       Rs. 632 million (2004: Rs. 597 million).

       Term Finance Certificates (TFCs):
       Shakarganj Mills Ltd                                  2005              15.25        Half Yearly           –               835
       Union Leasing Ltd                                     2005              14.50        Half Yearly           –             5 187
       Atlas Investment Bank Ltd                             2005              15.00        Half Yearly           –             4 476
       Spell Telecommunications (Pvt) Ltd                    2005              15.00        On Maturity           –            10 000
       Pakistan Mobile Communications Ltd                    2006              11.60        Half Yearly       75 000               –
       Dawood Leasing Company Ltd                            2006              13.50        Half Yearly       15 343               –
       First Dawood Investment Bank Ltd                      2007              12.25        Half Yearly        9 728           10 495
       Jahangir Siddiqui & Co. Ltd                           2008               7.50        Half Yearly        9 990            9 994
       Union Bank Ltd                                        2008              11.00        Half Yearly       11 150               –
       Pakistan Mobile Communications Ltd                    2008              10.39        Half Yearly       38 265           38 448
       Jahangir Siddiqui & Co. Ltd - 3rd Issue               2010              11.50        Half Yearly        7 650               –
       Azgard Nine Ltd                                       2012              11.50        Half Yearly       20 000               –
       Askari Commercial Bank Ltd                            2013              10.31        Half Yearly       50 464               –
       United Bank Ltd                                       2013               9.50        Half Yearly       24 202           11 721
       Askari Commercial Bank Ltd- 2nd Issue                 2013              10.78        Half Yearly       10 000               –
                                                                                                             271 792           91 156

                                                                                                            2 387 155      1 558 963

       Market value of Term Finance Certificates
       carried at amortised cost amounted to
       Rs. 268 million (2004: Rs. 90 million).


11.    Investment Properties                                                                                              Rupees ‘000

                                                                                                                           Written
                                             Cost                                            Depreciation                Down Value

                                As at 01            As at 31             Rate     As at 01                 As at 31        As at 31
                                January            December               %       January      For the    December        December
                                 2005    Additions   2005                          2005         Year        2005            2005

       Leasehold Land            48 006            –        48 006                     –              –          –            48 006

       Buildings                468 980          8 429     477 409         5       89 170       23 870      113 040         364 369
                   2005         516 986          8 429     525 415                 89 170       23 870      113 040         412 375

                   2004         511 582          5 404     516 986                 65 721       23 449       89 170         427 816


11.1   The market value of land and buildings is estimated at Rs. 1 470 million (2004: Rs. 1 381 million). The valuations
       have been carried out by independent valuers.


                                                                 37
                                                                                                                E F U GENERAL I NS URANC E LT D .




                                                                                                                        Rupees ‘000

                                                                                                      2005                  2004
12.   Premium due but unpaid - net
      Considered good                                                                              995 344                670 664
      Considered doubtful                                                                            1 093                  1 093
                                                                                                   996 437                671 757
      Less: Provision for doubtful balances                                                          1 093                  1 093
                                                                                                   995 344               670 664

13.   Accrued Investment Income
      Return accrued on Fixed Income securities                                                      22 682                  9 805
      Dividend Income                                                                                 3 172                  4 085
      Others                                                                                          3 354                  1 847
                                                                                                     29 208                 15 737

14.   Prepayments
      Prepaid Rent                                                                                    8 686                  6 816
      Group health insurance premium                                                                    511                     –
      Others                                                                                          9 249                  1 206
                                                                                                     18 446                  8 022

15.   Other Receivables
      Advances to employees                                                                              81                    196
      EFU pension fund                                                                                  311                 10 124
      For shares disposal                                                                            72 827                     35
      Others                                                                                         15 153                 16 257
                                                                                                     88 372                 26 612

16.   Fixed Assets
                                                                                                                          Written
                                             Cost                                          Depreciation                 Down Value
                        As at 01               Sales/        As at 31 Rate   As at 01             Sales/     As at 31     As at 31
                        January                Adjust-      December %       January    For the   Adjust-   December     December
                         2005    Additions      ment          2005            2005       Year      ment       2005         2005
      Furniture and
      Fixtures          143 696    36 732           1 588   178 840   10      99 898    11 854     1 572      110 180        68 660

      Equipments         21 964     5 254            287     26 931   10      14 864     1 742        81       16 525        10 406

      Computers           3 848    12 411             21     16 238   30       3 288     4 088        21        7 355          8 883

      Office Premises      928        –               –        928      5       690         47        –          737             191

      Vehicles           63 218    69 006       11 924      120 300   20      51 750    17 555    10 109       59 196        61 104

             2005       233 654   123 403       13 820      343 237          170 490    35 286    11 783      193 993       149 244

             2004       219 008    28 752       14 106      233 654          164 010    17 712    11 232      170 490        63 164




                                                                 38
                                                                                                       E F U GENERAL I NS URANC E LT D .




16.1 Sale of Fixed Assets                                          Rupees ‘000
Mode of                        Original   Accumulated     Book        Sale
Disposal                        Cost      Depreciation    Value     Proceeds        Sold to
Vehicle
Negotiation                       51           41          10         175        Shamim Akhtar, Lahore
                                  68           55          13         100        Ahmad Nawaz Jagirani, Karachi
                                  71           57          14         300        Parvin Akhtar, Karachi
                                  71           57          14         250        Sohail Rashid, Karachi
                                  48           38          10         175        Abdul Qayum Khan, Karachi
                                  48           38          10         125        Abdul Hameed Qureshi, Karachi
                                  48           38          10         110        Hasan Reyaz, Karachi
                                  36           29           7         125        Ashraf Jehan, Karachi
                                  28           22           6          75        Muhammad Fahimuddin, Karachi
                                  49           39          10         180        Zahida Ejaz Malik, Islamabad
                                  28           22           6         100        Muhammad Zahid Alvi, Karachi
                                  52           42          10          60        Shahina Rizwan, Karachi
                                  28           23           5          55        Noor Islam, Karachi
                                  28           23           5         110        Shagufta Nasrin, Karachi
                                  59           36          23         300        Syed Farhat Abbas Jaffery, Karachi
                                  71           43          28         200        Haroon Dada, Karachi
                                  35           21          14         150        Amreen, Karachi
                                  60           24          36          50        Muhammad Sohail, Karachi
                                  68           27          41          50        Sohail Mustafa, Karachi
                                 109           44          65          60        Nasim Afaq Ahmed, Karachi
                                  43           17          26         100        Jawahar Ali, Karachi
                                  51           10          41         150        Talib Abbas, Karachi
                                  51           10          41         150        Syed Aamir Aftab, Karachi
                                  67           13          54         125        Mumtaz Lakhani, Karachi
                                  86           17          69         200        M. Naeem M. Hanif, Karachi
                                  68           14          54         200        Syed Asim Iqbal, Karachi
                                  74           15          59         250        Muhammad Aiman Khan, Karachi
                                  81           16          65         100        Shahin Altaf, Karachi
                                 100           40          60         100        Tahir Masood, Lahore
                                  71           27          44         376        Javed Akhtar Sheikh, Karachi
                                 249          149         100         125        Najam Riaz, Peshawar
                                  77           –           77         300        Faisal Fasih, Karachi
                                 170           –          170         200        M. Bashir Hussain, Karachi
                                 170           –          170         200        Zakaria Suleman, Karachi
                                 227           –          227         250        Aslam A. Ghole, Karachi
                                 117           –          117         400        Shaukat Saeed Ahmad, Lahore
                                 113             8        105         134        Insurance Claim
Written down value
Below Rs. 5 000                9 052         9 052         –         3 358       Various
Furniture, Fixture
& Office Equipments
Negotiation                      106           45          61          75        Gemco, Karachi
                                 266          250          16          19        Abid, Karachi
                                 179           36         143         179        Insurance Claim
Written down value
Below Rs. 5 000                1 346         1 345             1      116
                              13 820       11 783        2 037       9 857


17.    Commitments
17.1   Commitments under operating leases for Equipments, Vehicles and Computers amounts to Rs. 106 million
       and the period in which these payments will become due are:
                                                                                                              Rupees ‘000

                                                                                              2005                2004
              Year to December 31, 2005                                                           –               49 371
              Year to December 31, 2006                                                       48 673              41 629
              Year to December 31, 2007                                                       37 768              30 532
              Year to December 31, 2008                                                       18 437              11 638
              Year to December 31, 2009                                                        1 349                  –
                                                                                           106 227               133 170



                                                           39
                                                                                                                            E F U GENERAL I NS URANC E LT D .




18.   Cash and Bank Balances
      Current and other account balances include cheques in hand amounting to Rs. 19.79 million
      (2004: Rs. 10.77 million)
                                                                                                                                       Rupees ‘000

                                                                                                             2005                       2004
19.   Net premium revenue
      Premium revenue (net of reinsurers)                                                                 3 736 544                2 488 121
      Administrative surcharge                                                                              125 451                   47 970
                                                                                                          3 861 995                2 536 091

20.   Management Expenses
      Salaries, wages and benefits                                                                           448 707                   332 545
      Rent, rates and taxes                                                                                   20 644                    16 955
      Telephone                                                                                               20 729                    19 151
      Postage & telegrams                                                                                      6 875                     4 923
      Gas and electricity                                                                                     14 764                    14 235
      Printing and stationery                                                                                 19 544                    17 703
      Traveling and entertainment                                                                             40 990                    23 287
      Depreciation                                                                                            35 285                    17 717
      Repairs furniture, equipment and computer                                                                7 393                     8 579
      Legal and professional charges                                                                             498                       775
      Publicity                                                                                               25 318                    13 071
      Other expenses                                                                                          77 044                    69 431
                                                                                                             717 791                   538 372

21.   General and Administration Expenses
      Bonus                                                                                                   53 732                    41 779
      Gratuity                                                                                                 1 114                    13 866
      Depreciation                                                                                            23 870                    23 449
      Property management expenses                                                                            26 321                    27 186
      Donation                                                                                                 4 518                     5 446
      Zakat                                                                                                      279                       697
                                                                                                             109 834                   112 423

22.   Remuneration of Chief Executive, Directors and Executives
      The aggregate amount charged in the accounts for remuneration, including all benefits, to the Chief Executive,
      Directors and Executives of the Company are as follows:
                                                                                                                                   Rupees ‘000
                                                                       2005                                          2004
                                                    Chief                                          Chief
                                                  Executive   Directors    Executives   Total    Executive   Directors Executives Total

      Managerial Remuneration (Including Bonus)    9 495       5 588           54 918   70 001    7 406        4 703         29 040      41 149
      Utilities                                      153         328            2 493    2 974      170         344            1 361       1 875
      Medical expenses                               270         212            1 326    1 808      259         446            1 382       2 087
      Leave passage                                  –           276            1 696    1 972      328          –             1 458       1 786
      Total                                        9 918       6 404           60 433   76 755    8 163        5 493         33 241      46 897
      Number of persons                                  1         3              35       39         1              3            22           26

      In addition, the Chief Executive, Directors and certain Executives are provided with free use of Company cars
      and certain items of household furniture and fixtures in accordance with their entitlements. The Chief Executive
      is not given any rent allowance but is provided with maintained furnished accommodation.

                                                                          40
                                                                                                                                                                          E F U GEN ER AL IN SU R AN CE LT D.




23.         Segment Reporting                                                                                                                                                  Rupees ‘000

                          Fire Insurance Business Marine, Aviation & Transport                      Motor                      Others               Treaty Business                   Total
                             2005          2004       2005               2004            2005               2004        2005             2004        2005        2004         2005             2004

Segmented Assets            994 982      1 005 775    257 350            246 846         172 051            171 189    583 788          350 642     21 836        6 207     2 030 007     1 780 659
Unallocated Assets                –            –             –                  –               –               –              –            –            –           –      4 304 630     3 002 934

Total Assets                994 982      1 005 775    257 350            246 846         172 051            171 189    583 788          350 642     21 836        6 207     6 334 637     4 783 593


Segmented Liabilities 1 213 891          1 268 210    719 979            582 225       2 595 625         1 696 192     229 346          198 458    110 190       64 569     4 869 031     3 809 654
Unallocated Liabilities           –            –             –                  –               –               –              –            –            –           –       346 724          298 325

Total Liabilities         1 213 891      1 268 210    719 979            582 225       2 595 625         1 696 192     229 346          198 458    110 190       64 569     5 215 755     4 107 979


Capital Expenditure                                                                                                                                                          123 403           28 752

                                                        External Premium                                     Carrying amount
                                                      less reinsurance by                                     of Segmented
                          Location                   Geographical Segments                                        Assets                           Capital Expenditure

                                                      2005               2004                               2005        2004                         2005        2004

                          Pakistan                   3 856 919        2 531 108                          6 231 923    4 652 243                     123 403      28 752
                          EPZ                            5 076            3 810                             19 525       45 708                          –           –
                          Saudi Arabia                      –             1 173                             83 189       85 642                          –           –

                          Total                      3 861 995        2 536 091                          6 334 637    4 783 593                     123 403      28 752




24.         Financial Instruments and related disclosures
             (a)      Liquidity Risk
                      Liquidity risk is the risk that the Company will be unable to meets it funding requirements. To guard against this
                      risk, assets are managed with liquidity in mind maintaining a healthy balance of cash and cash equivalents and
                      readily marketable securities. The maturity profile is monitored to ensure that adequate liquidity is maintained.

             (b)      Mark-up Rate Risk Exposures
                      The company’s exposure to markup rate risk, based on the earlier of contractual repricing or maturity date as at
                      December 31, 2005 is as follows:
                                                                                                                                                                                   Rupees ‘000
                                                                            Interest/Mark-up bearing                                     Non-Interest/Mark-up bearing
                                                             Effective              Maturity         Maturity          Sub               Maturity       Maturity            Sub
                                                                 yield               Upto             after            Total               upto          after             Total               Total
                                                                  %             one year            one year                             one year one year
Financial Assets
Deposit accounts with banks                 4.25                                     628 912                           628 912                                                  –             628 912
Current accounts with banks                 2.25                                     179 782                           179 782             374 424                         374 424            554 206
Cash and stamps in hand                                                                                                        –                9 788                        9 788              9 788
Investments                               17.75                                      339 229          590 656          929 885           1 457 270                        1 457 270     2 387 155
Loans to employees                         4.00                                        1 685                4 154         5 839                                                 –               5 839
Premiums due but unpaid-net                                                                                                    –           995 344                         995 344            995 344
Amount due from other insurers/reinsurers                                                                                      –            84 848                          84 848             84 848
Salvage recoveries accrued                                                                                                     –            32 835                          32 835             32 835
Premium and claim reserves retained by cedants                                                                                 –                1 667                        1 667              1 667
Accrued investment income                                                                                                       –           29 208                          29 208             29 208
Reinsurance recoveries against outstanding claims                                                                               –          603 215                         603 215            603 215
Security deposits                                                                                                               –           21 086                          21 086             21 086
Other receivables                                                                                                               –           88 372                          88 372             88 372

                                                                                    1 149 608          594 810        1 744 418          3 698 057               –        3 698 057     5 442 475
Financial Liabilities
Provision for outstanding claims (including IBNR)                                                                               –        1 826 554                        1 826 554      1 826 554
Amount due to other insurers/reinsurers                                                                                         –          261 178                         261 178            261 178
Accrued expenses                                                                                                                –           73 087                          73 087             73 087
Agent balances                                                                                                                  –          181 925                         181 925            181 925
Other creditors                                                                                                                 –           47 670                          47 670             47 670
Other deposits                                                                                                                  –          124 069                         124 069            124 069
Un-claimed dividends                                                                                                            –           13 503                          13 503             13 503
                                                                                            –                  –                –        2 527 986               –        2 527 986      2 527 986




                                                                                                    41
                                                                                                                  E F U GEN ER AL IN SU R AN CE LT D.




      (c).   Market Risk
             Market risk is the risk that the value of financial instruments will fluctuate as a result of change in market prices,
             whether those changes are caused by factors specific to the individual security, or factors affecting all securities
             traded in the market.
             The Company is exposed to market risk with respect to its investments.
             The Company limits markets risk by maintaining a diversified portfolio and by continues monitoring of developments
             in government securities, equity and term finance certificate (TFCs) markets. In addition, the company actively
             monitors the key factors that affect the underlying value of these securities.

      (d).   Credit Risk
             Credit risk is the risk, which arises with the possibility that one party to a financial instrument will fail to discharge
             its obligation and cause the other party to incur a financial loss.
             Concentration of credit risk arises when a number of counterparties have a similar type of business activities.
             As a result, any change in economic, political or other conditions would effect their ability to meet contractual
             obligations in similar manner.
             The Company is exposed to credit risk on premiums receivable from group clients and claim recoveries from
             insurer and investment in term finance certificates. The management monitors exposure to credit risk through
             regular review of credit exposure, assessing credit worthiness of counterparties and prudent estimates of provision
             for doubtful debts.
             Due to the nature of financial assets, the company believes it is not exposed to any major concentration of credit
             risk.

      (e).   Reinsurance Risk
             Reinsurance ceded do not relieve the Company from its obligations to policy holders and as a result the company
             remains liable for the portion of outstanding claims reinsured to the extent that reinsurer fails to meet the obligations
             under the reinsurance agreements.
             In Common with other insurance companies, in order to minimize the financial exposure arising from large claims,
             the Company, in the normal course of business, enters into agreement with other reinsurers.
             In order to manage the risk the Company obtains reinsurance cover only from companies with sound
             financial health.

      (f).   Fair Value
             The fair value of all major financial assets are estimated to be not significantly different from their carrying
             values except for quoted investments (held for trading), detail of which are given in note No. 10 to these
             financial statements.

25.   Auditors’ Remuneration                                                                                              Rupees ‘000
                                                                                                      2005                     2004

      Audit fee (Gardezi & Co.)                                                                          200                      200
      Branches and other Certification (Gardezi & Co.)                                                   100                      100
      Audit of Accounts of Provident Fund, Gratuity and
       Pension Funds (Hyder Bhimji & Co.)                                                                 15                        15
      Out of Pocket Expenses (Taseer Hadi Khalid & Co.)                                                    –                        38

                                                                                                         315                      353

26.   Basic and diluted earnings per shares                                                                               Rupees ‘000
                                                                                                      2005                     2004
      Profit for the year                                                                           506 268                 322 449
      Weighted average number of ordinary shares                      (Numbers ‘000)                 30 000                   30 000

      Earnings per share                                              Rupees                          16.88                    10.75



                                                                 42
                                                                                                    E F U GEN ER AL IN SU R AN CE LT D.




27.   Proposed Dividends
      The Board of Directors at their meeting held on March 18, 2006 have proposed payment of Dividend of
      Rs. 3 per share amounting to Rs. 90 million for approval of the members at the Annual General Meeting to
      be held on April 29, 2006.
      These financial statements do not reflect the proposed dividend as payable, which will be accounted for in
      the statement of changes in equity as an appropriation from the unappropriated profit in the year ending
      December 31, 2006.

28.   Transactions with Associated Undertakings
      Related parties comprise of associated companies, entities under common control, entities with common
      directors, major shareholders, directors, key management personnel and employee retirement benefit funds.
      The transaction with these related parties are carried out at arm’s length prices determined under “comparable
      uncontrolled price method”. The transactions and balances with related parties, other than remuneration under
      the terms of employment or those disclosed elsewhere, are as follows:
                                                                                                         Rupees in ‘000

                                                                                       2005                     2004

      Premium written                                                                 137 635                   69 569
      Rent received                                                                       693                      693
      Premium paid                                                                      3 547                    3 268
      Commission paid                                                                  41 966                   11 638
      Travelling expenses paid                                                             70                       16
      Claims Paid                                                                      58 811                   17 832
      Dividend paid                                                                    22 228                   13 407
      Dividend received                                                                 9 657                    5 852
      Bonus Shares issued                                                               6 139                    1 364
      Bonus Share received                                                             17 557                    5 852
      Contribution to Provident, Gratuity and Pension Funds                            22 813                   18 987
      Others                                                                               –                        79
      Balance receivable                                                                7 343                   10 020
      Balance payable                                                                  12 109                       –

29.   Number of employees as at December 31, 2005 was 1,195 (2004: 1,096)

30.   General
      Figures have been rounded off to the nearest thousands.

31.   These accounts were authorized for issue by the Board of Directors in their meeting held on March 18, 2006.




HASANALI ABDULLAH          JAHANGIR SIDDIQUI            SAIFUDDIN N. ZOOMKAWALA                 RAFIQUE R. BHIMJEE
     Director                   Director              Managing Director & Chief Executive            Chairman



                                                                                                  Karachi March 18, 2006




                                                         43
                                                                                                                       E F U GEN ER AL IN SU R AN CE LT D.



Pattern Of Shareholding As At 31 December 2005


      Number of                                           Shareholdings
     Shareholders                          From                                            To                       Shares held
            260                                 1                                          100                              11 431
            216                              10 1                                          500                              63 795
            103                              50 1                                      1   000                              79 487
            252                             1 001                                      5   000                             629 210
             76                             5 001                                     10   000                             558 945
             36                            10 001                                     15   000                             442 158
             16                            15 001                                     20   000                             288 118
             12                            20 001                                     25   000                             273 100
              9                            25 001                                     30   000                             247 371
              5                            30 001                                     35   000                             159 700
              4                            35 001                                     40   000                             153 346
              4                            40 001                                     45   000                             169 305
              2                            45 001                                     50   000                              93 752
              2                            50 001                                     55   000                             100 815
             10                            55 001                                     60   000                             597 038
              3                            60 001                                     65   000                             188 517
              1                            65 001                                     70   000                              68 442
              2                            70 001                                     75   000                             143 148
              2                            75 001                                     80   000                             154 799
              3                            85 001                                     90   000                             263 002
              1                           100 001                                    105   000                             103 821
              2                           105 001                                    110   000                             213 175
              1                           110 001                                    115   000                             114 097
              3                           115 001                                    120   000                             360 000
              1                           130 001                                    135   000                             131 274
              1                           135 001                                    140   000                             139 040
              1                           145 001                                    150   000                             145 802
              1                           150 001                                    155   000                             151 407
              1                           160 001                                    165   000                             163 880
              1                           165 001                                    170   000                             165 950
              1                           170 001                                    175   000                             173 917
              2                           190 001                                    195   000                             381 587
              1                           200 001                                    205   000                             201 597
              1                           205 001                                    210   000                             208 859
              1                           210 001                                    215   000                             212 002
              1                           305 001                                    310   000                             309 631
              1                           315 001                                    320   000                             315 054
              1                           375 001                                    380   000                             377 524
              1                           525 001                                    530   000                             527 694
              1                           595 001                                    600   000                             598 043
              1                           610 001                                    615   000                             614 950
              1                           710 001                                    715   000                             710 588
              1                           940 001                                    945   000                             945 000
              1                       1   095 001                                1   100   000                         1   097 655
              1                       1   625 001                                1   630   000                         1   628 061
              1                       1   880 001                                1   885   000                         1   881 140
              1                       2   025 001                                2   030   000                         2   029 246
              1                       2   420 001                                2   425   000                         2   420 949
              1                       2   485 001                                2   490   000                         2   486 991
              1                       2   860 001                                2   865   000                         2   862 747
              1                       3   640 001                                3   645   000                         3   642 840
          1 053                                                Total                                                  30   000 000

 Categories of Shareholders                                            Number                    Shares Held               Percentage
 Associated Companies, Undertakings and Related Parties                     2                       1 127 655                         3.76
 NIT & ICP                                                                  -                              -                            -
 CEO, Directors, their spouses and minor children                          12                       5 710 454                        19.03
 Executives                                                                13                         340 336                         1.13
 Public sector companies & corporations                                     1                         710 588                         2.37
 Joint Stock companies                                                     25                       3 248 898                        10.83
 Banks, Development Finance Institutions,                                  20                       2 283 916                         7.61
   Non-Banking Finance Institutions, Insurance Co.
   Modaraba and Mutual Funds
 Foreign investors (repatriable basis)                                      1                       1   881   140                     6.27
 Charitable Institutions                                                    2                       3   654   840                    12.18
 Administrator of Abandoned Properties                                      1                       1   628   061                     5.43
 Individuals/Others                                                       976                       9   414   112                    31.39
 Total                                                                   1 053                     30 000 000                    100.00

Information as required under the Code of Corporate Governance
 Categories of Shareholders                                                                  Shareholders                  Shares Held
 Associated Companies, Undertakings and Related Parties
  EFU Life Assurance Limited                                                                                   1              1 097 655
  Trustees EFU Staff Provident Fund (Pakistan)                                                                 1                 30 000
 NIT & ICP                                                                                                     -                     -
 CEO, Directors, their spouses and minor children
  Rafique R. Bhimjee                                                                                           1              2 486   991
  Saifuddin N. Zoomkawala                                                                                      1                 87   561
  Sultan Ahmad                                                                                                 1                103   821
  Abdul Rehman Haji Habib                                                                                      1                  3   542
  Jahangir Siddiqui                                                                                            1                  2   630
  Wolfram W. Karnowski                                                                                         1                 50   673
  Muneer R. Bhimjee                                                                                            1              2 420   949
  Hasanali Abdullah                                                                                            1                151   407
  Taher G. Sachak                                                                                              1                  1   247
  Mrs. Naila Bhimjee W/o. Rafique R. Bhimjee                                                                   1                201   597
  Mrs. Lulua Saifuddin W/o. Saifuddin N. Zoomkawala                                                            1                190   232
  Mrs. Onaiza Ahmad W/o. Sultan Ahmad                                                                          1                  9   804
 Shareholders holding 10% or more voting interest
  Ebrahim Alibhai Foundation                                                                                   1              3 642 840

                                                              44
                                                                                         E F U GENER AL I NSUR ANCE LTD .



      Offices


SOUTHERN ZONE                                        ATIQUE H. PATEL
4th Floor EFU House                                  Vice President (Development)
M.A. Jinnah Road Karachi
2311626 - 2311610                                    SYED ANSARULLAH
2313471-90. Fax: 2313608                             Vice President (Development)

JAFFER DOSSA                                         AZAM RAFIQUE
Senior Executive Director/Zonal Head                 Asstt. Vice President (Development)

SALIM RAFIK SIDIKI, M.A.                             MUHAMMAD JAWED
Executive Director                                   Asstt. Vice President (Development)
Public Relation/Marketing/Corporate Clients          SYED IMRAN ZAIDI
MUHAMMAD SULEMAN KASSAM                              Asstt. Vice President (Development)
Vice President                                       ADEEL AHMED
SYED ABDUL QUDDUS                                    Chief Manager (Development)
Vice President                                       FAISAL MAHMOOD JAFFERY
SAGIRUL HASAN                                        Chief Manager (Development)
Asstt. Vice President                                MOHAMMED SHAMIM SIDDIQUI
                                                     Chief Manager (Development)
ZIA MAHMOOD
Asstt. Vice President                                SYED IFTIKHAR H. ZAIDI
                                                     Chief Manager (Development)
Central Division
206, Kashif Centre, Karachi                          SYED RASHID ALI
Shahrah-e-Faisal                                     Chief Manager (Development)
5653907-9 - 5670145-6
5678812. Fax: 5676560 - 5211982                      WASIF MUBEEN
                                                     Chief Manager (Development)
SYED SALMAN RASHID
Senior Executive Director                            NADEEM SHEIKH
                                                     Dy. Chief Manager (Development)
ABDUL SATTAR BALOCH
Executive Vice President                             RAJA JAMIL AHMED
                                                     Manager (Development)
ABDUL RASHID
Asstt. Vice President                                TAUSEEF HUSSAIN KHAN
                                                     Manager (Development)
KALIM IMTIAZ
Asstt. Vice President                                City Branch
                                                     4th Floor Lakhani Centre, Karachi
M. ASHRAF THARA                                      I.I. Chundrigar Road
Asstt. Vice President                                2637711-4. Fax: 2634181
NADIR HUSSAIN                                        ALI KAUSAR
Asstt. Vice President                                Senior Vice President
OMAIR JAVED                                          ABDUL MATEEN FAROOQUI
Asstt. Vice President                                Asstt. Vice President
RIZWAN HUSSAIN                                       M. ABRAR KHAN
Deputy Executive Director (Development)              Dy. Chief Manager (Development)
SYED KAMRAN RASHID                                   ABDUL HAKEEM SIDDIQUI
Deputy Executive Director (Development)              Manager (Development)
SYED JAWEED ENVOR                                    MANECK B. JAVAT
Senior Executive Vice President (Development)        Manager (Development)
RIZWAN SIDDIQUI                                      M. YOUSUF IQBAL
Executive Vice President (Development)               Manager (Development)
AMIR HASSAN                                          SYED SARDAR HUSSAIN
Vice President (Development)                         Manager (Development)



                                                45
                                                                                      E F U GENER AL I NSUR ANCE LTD .




Clifton Division                                     Corporate Division
311 & 312 Clifton Centre                             8th Floor Business Plaza
Block 5, Clifton, Karachi                            Mumtaz Hasan Road
5873151-3 - 5837031-3 - 5873338-9                    Off I.I. Chundrigar Road, Karachi
Fax: 5873136 - 5836860                               2425898 - 2428965-9 - 2428198 - 2424510
NUDRAT ALI                                           2428090 - 2425783. Fax: 2428119 - 2428290
Executive Director                                   ABDUL REHMAN KHANDIA, A.C.I.I
KHOZEMA T. HAIDER MOTA                               Senior Executive Director
Executive Vice President
                                                     MATLOOB ALI ANSARI, A.C.I.I
YAWAR AMINUDDIN                                      Senior Vice President
Senior Vice President
                                                     ABDUL WAHID
ABDUL HAMEED                                         Vice President
Asstt. Vice President
                                                     S. M. SHAMIM
ALI RAZA                                             Vice President
Asstt. Vice President
                                                     ABDUL MAJEED
RIAZ AHMED                                           Asstt. Vice President
Asstt. Vice President
                                                     M.A. QAYUM
WASEEM TASSAWAR                                      Asstt. Vice President
Asstt. Vice President
                                                     MOHD. KHALID SALEEM, M.A.
AGHA S. U. KHAN
Senior Executive Vice President (Development)        Senior Executive Vice President (Development)

MOHAMMAD UMER, M.A.                                  QAMAR SALEEM
Senior Vice President (Development)                  Senior Executive Vice President (Development)

GHULAM MURTAZA KHURO                                 IMRAN ALI KHAN
Vice President (Development)                         Senior Vice President (Development)

AKHTAR HAYAT KHAN                                    HAMZA SIDDIQ GODIL
Chief Manager (Development)                          Vice President (Development)
SYED RAEES AHMAD                                     JAMEEL MASOOD
Chief Manager (Development)                          Vice President (Development)
SAIFUR REHMAN                                        MOHAMMAD REHAN IQBAL BOOTI
Dy. Chief Manager (Development)                      Vice President (Development)
HASAN SAJJAD RIZVI                                   RIZWAN HUMAYUN
Manager (Development)                                Vice President (Development)
SHAHZAD ALI                                          TANVEER MASOOD
Manager (Development)
                                                     Asstt. Vice President (Development)
Continental Branch
211 Beaumont Plaza                                   MRS. SADIA MUNEER
Beaumont Road, Karachi                               Asstt. Vice President (Development)
5653623-24 - 5653612 - 5685331                       QAMAR AZIZ
5684338 - 5653792. Fax: 5684080
                                                     Deputy Chief Manager (Development)
MOHAMMAD YOUNUS
Senior Vice President                                ALI MOHAMMAD MEMON
                                                     Manager (Development)
ANIS-UR-REHMAN
Asstt. Vice President (Development)                  MOHAMMAD MUSSARRAT HUSSAIN
                                                     Manager Development
M. ASHRAF SAMANA
Asstt.Vice President (Development)                   SHAHID AZIZ
                                                     Manager (Development)
SULTAN AHMED SIDDIQUI
Chief Manager (Development)                          MRS. ZOHRA USMAN RAJKOTI
                                                     Manager (Development)
S. NAQI ALI
Chief Manager (Development)

                                                46
                                                                                   E F U GENER AL I NSUR ANCE LTD .




Corporate Division ( J. P. Unit )                Export Processing Zone Branch
8th Floor Business Plaza                         Extension Landhi Industrial Area, Karachi
Mumtaz Hasan Road                                5082095
Off I.I. Chundrigar Road, Karachi
2428070 - 2401911-3. Fax: 2401914                SALMAN RASHID
                                                 Senior Executive Director
JAHANGIR ANWAR SHAIKH
Senior Executive Director (Development)          Jinnah Division
                                                 2nd Floor, EFU House, M.A. Jinnah Road, Karachi
ALAMGIR ANWAR SHAIKH                             2313471-90 - 2311742-3 - 2312328 - 2313854-55
Executive Vice President (Development)           2314783-84. Fax: 2311668
SYED SAAD JAFRI                                  MUHAMMAD IQBAL LODHIA
Chief Manager (Development)                      Executive Director
AFZAL H. MUGHAL                                  ABDUL RAZZAK SATTAR
Manager (Development)                            Senior Vice President
ASIF ELAHI                                       IRSHAD ZAMIR HASHMI
Manager (Development)                            Vice President
FAISAL HASAN                                     ASGHAR ALI
Manager (Development)                            Astt. Vice President
MANSOOR AHMED                                    ZIA-UL-REHMAN
Manager (Development)                            Asstt. Vice President
MINA ALAMGIR                                     AAMIR ALI KHAN
Manager (Development)                            Senior Vice President (Development)
Cosmopolitan Branch                              MUHAMMAD ASIF
Japan Plaza, M. A. Jinnah Road, Karachi          Senior Vice President (Development)
2765385 - 2765390 - 2721518. Fax: 2723594
                                                 MUHAMMAD ASIF ARIF
A. GHAFFAR A. KARIM                              Senior Vice President (Development)
Vice President
                                                 MUHAMMAD SHEERAZ
WAQAR QURESHI                                    Asstt. Vice President (Development)
Asstt. Vice President
                                                 JAVED ASLAM AWAN
AJMAL FAROOQI                                    Chief Manager (Development)
Manager (Development)
                                                 SYED ATHAR ALI
SYED ALI HAIDER RIZVI                            Chief Manager (Development)
Manager (Development)
                                                 MRS. TANVEER KHURSHID
SYED IRFAN AKHTAR                                Chief Manager (Development)
Manager (Development)
                                                 WALI MOHAMMAD BAIG
Denso Hall Branch                                Chief Manager (Development)
2nd Floor Azzaineb Court
Campbell Street, Karachi                         ARIF FAROOQ
2629891 - 2629893 - 2629895 - 2624882-3          Dy. Chief Manager (Development)
Fax: 2629835
                                                 FARHAN
MUHAMMAD NAEEM HANIF                             Deputy Chief Manager (Development)
Executive Vice President
                                                 MUHAMMAD ARFEEN
MRS. RUKHSANA                                    Dy. Chief Manager (Development)
Chief Manager (Development)
                                                 SYED NISAR AHMED
ABDUL AZIZ                                       Dy. Chief Manager (Development)
Manager (Development)
                                                 SHAHID NAQVI
MUHAMMAD IMRAN NAEEM                             Manager (Development)
Manager (Development)
                                                 S. M. AHSAN
                                                 Manager (Development)

                                            47
                                                                                  E F U GENER AL I NSUR ANCE LTD .




K.I.T.E. Branch                                ASIF MAHMOOD
Aiwan-e-Sanat. St. 4/3, Sector-23              Asstt. Vice President
Korangi Industrial Area, Karachi
5051188 - 5050079-80 - 5068445                 MUHAMMED SALAHUDDIN
Fax: 5050056                                   Asstt. Vice President

KAUSER ALI ZUBERI                              TAUQIR ABDULLAH
Executive Vice President                       Asstt. Vice President (Development)

HAMEED-US-SALAM                                Mehran Branch
Manager (Development)                          6th Floor, EFU House
                                               M. A. Jinnah Road, Karachi
IQBAL HUSSAIN KHAN                             2200483 - 2200484 - 2200486
Manager (Development)                          Fax: 2200489
OMAR MAQSOOD                                   ABDUL WAHID
Manager (Development)                          Executive Vice President
RASHID A. ISLAM                                Metropolitan Branch
Manager (Development)                          6th Floor, E F U House
                                               M.A. Jinnah Road Karachi
TAHIR ALI ZUBERI                               2313471-90 - 2202897 - 2202903
Manager (Development)                          Fax: 2201450
Karachi Branch                                 MUHAMMAD IQBAL DADA, M. A., A.C.I.I.
2nd Floor Dock Labour Board Building           Senior Executive Vice President
West Wharf, Karachi
2313943-4 - 2312320 - 2316152-3                KHAN MOHAMMED ANWAR PASHA
2200884-5. Fax: 2313945                        Senior Executive Vice President
MIR BABAR ALI                                  MUSAKHAR-UZ-ZAMAN
Executive Vice President                       Executive Vice President
KAISER ALI                                     SHAZIM ALTAF KOTHAWALA
Vice President                                 Vice President
HAROON HAJI SATTAR DADA                        SHAHID A. GODIL
Deputy Executive Director (Development)        Asstt. Vice President
S. ASHAD H. RIZVI                              SHAHZAD ZAKRIA
Vice President (Development)                   Asstt. Vice President
SYED BAQAR HASAN, M.A.                         FAKHRUDDIN SAIFEE
Vice President (Development)                   Asstt. Vice President
FARID KHAN                                     ALTAF KOTHAWALA
Asstt. Vice President (Development)            Executive Director (Development)
MRS. ZOHRA HAROON DADA                         ABDULLAH H. GODIL
Chief Manager (Development)                    Senior Executive Vice President (Development)
RASHID UMER BURNEY                             IFTIKHAR A. KHAN
Manager (Development)                          Executive Vice President (Development)
SIRAJ AHMED ALVI                               MUHAMMAD UMER MEMON
Manager (Development)                          Executive Vice President (Development)
Kehkashan Branch                               ABOOTALIB DADA
612-613, The Forum, Block - 9                  Senior Vice President (Development)
Clifton, Karachi
5361582-84 - 5361585                           AMIN YAQOOB
Fax: 5361586                                   Senior Vice President (Development)
AUSTEN B. FREITAS                              FAIZAN QURESHI
Assistant Executive Director                   Senior Vice President (Development)
MOHAMMAD ARIF KHAN                             KAHKASHAN SULTANA
Senior Vice President                          Senior Vice President (Development)

                                          48
                                                                                 E F U GENER AL I NSUR ANCE LTD .




KAYOMARZ H. SETHNA                            IFTIKHAR ALAM
Senior Vice President (Development)           Manager Development

MOHAMMAD AZHAR DAWRA                          S. KASHIF ALI
Senior Vice President (Development)           Manager (Development)

MUNEEB FAROOQ KOTHAWALA                       TAHIR RAFIQ
Senior Vice President (Development)           Manager (Development)

Ms. SHAZIA RAHIL                              Saddar Branch
Vice President (Development)                  2nd Floor, Hajra Mansion
                                              Zebunnisa Street
Ms. FATIMA MOIZ SHEIKH                        Saddar, Karachi
Vice President (Development)                  5220436-38 - 5220434 - 5220435
                                              Fax: 5220439
MUHAMMAD SHAKIL
Manager (Development)                         BASHIR SEJA
                                              Senior Executive Vice President
New Plaza Branch
6th Floor, EFU House                          YOUSUF ALVI
M. A. Jinnah Road, Karachi                    Senior Vice President (Development)
2200480 - 2200490 - 2200733 - 2201564
2313471-90. Fax : 2203380                     ABDUL RASHEED KAPADIA
                                              Vice President (Development)
S. M. M. RIZVI
                                              M. AMIN ABDUL GHANI
Asstt. Executive Director
                                              Chief Manager (Development)
SYED ALI ZAHEER
                                              Shahrah-e-Liaquat Branch
Executive Vice President (Development)        406 & 462 State Life Bldg. No. 4
KHAWAJA ZULQARNAIN RASHID                     Shahrah-e-Liaquat, Karachi
Senior Vice President (Development)           2410342 - 2411760
                                              Fax: 2424959
MUHAMMAD NIAMATULLAH
                                              MOHAMMAD HUSSAIN
Vice President (Development)
                                              Senior Vice President
IRFAN KHAN IRTIZA                             ABDUL WAHAB POLANI
Manager Development                           Deputy Executive Director (Development)
Port View Branch                              WALEED POLANI
517 EFU House                                 Chief Manager (Development)
M. A. Jinnah Road Karachi
2201957 - 2201958 - 2201959 - 2201960         S.I.T.E. Division
2313471-90. Ext.: 283                         Shopping Centre, Manghopir Road
                                              S.I.T.E., Karachi
KHALID USMAN                                  2574062-3 - 2578529 - 2563528
Executive Vice President                      2577868-9. Fax: 2570927
ABDUL WAHAB                                   S. M. HAIDER, M.Sc.
Executive Vice President (Development)        Executive Director

Rizvia Society Branch                         FARRUKH AAMIR BEG
101-103 Rizvia Market Chowrangi               Vice President
Nazimabad, Karachi
                                              KHALID ASHFAQ AHMED
6686608 - 6688250-51. Fax: 6686449
                                              Vice President
MAZHAR H. QURESHI                             SYED SALAHUDDIN, A.C.I.I.
Vice President                                Asstt. Vice President
WAQAR AHMED                                   SYED ASIM IQBAL
Asstt. Vice President                         Senior Executive Vice President (Development)
SHAMSUZ ZAMAN                                 ALI SAFDER
Deputy Chief Manager (Development)            Executive Vice President (Development)
BABAR ZEESHAN                                 SYED AMIR AFTAB
Manager Development                           Executive Vice President (Development)
                                         49
                                                                                    E F U GENER AL I NSUR ANCE LTD .




FAISAL FASIH                                      ANIS MEHMOOD
Senior Vice President (Development)               Executive Vice President (Development)
TALIB ABBAS SHIGRI                                AZMAT MAQBOOL, M.B.A.
Senior Vice President (Development)               Senior President (Development)

IRFAN RAJA JAGIRANI                               H. H. ANSARI
Vice President                                    Asstt. Vice President (Development)
(Protocol & Business Development)
                                                  M. A. QAYYUM KHAN
SYED SHAHID RAZA                                  Asstt. Vice President (Development)
Vice President (Development)
                                                  SYED AZHAR ABBAS
WASIM AHMED                                       Chief Manager (Development)
Vice President (Development)
                                                  FAISAL AYUB
MOHAMMAD ZIAUL HAQ                                Manager (Development)
Asstt. Vice President (Development)
                                                  MUHAMMAD SALIM
M. BADAR H. QURESHI                               Manager (Development)
Asstt. Vice President (Development)
                                                  S. SHAHID MAHMOOD
M. OWAIS JAGIRANI                                 Manager (Development)
Asstt. Vice President (Development)
                                                  Tower Branch
M. YOUSUF JAGIRANI                                5th Floor Dock Labour Board Building
Asstt. Vice President (Development)               West Wharf, Karachi
                                                  2203555 - 2204021. Fax: 2205028
SYED SOHAIL HYDER ABIDI
Asstt. Vice President (Development)               MUHAMMAD SHOAIB RAZAK BRAMCHARI
                                                  Senior Executive Vice President
SYED ABID RAZA
Chief Manager (Development)                       MUHAMMAD RASHID AKMAL, M.B.A.
                                                  Senior Vice President
MURTAZA ISPAHANI
Dy. Chief Manager (Development)                   HYDERABAD
                                                  Hyderabad Branch
MS. MAHJABEEN JAFFAR                              Al-Falah Chambers, Jinnah Road
Manager (Development)                             611397 - 631088. Fax: 615816

M. YASIR H. CHAUDHARY                             MOHAMMAD AMIN SATTAR, M.Com
Manager (Development)                             Asstt. Vice President

MUZAFAR ALI                                       BASHER A. KHASKHELY
Manager (Development)                             Chief Manager (Development)

SYED MOJIZ HASSAN                                 SUKKUR (Sub-Office)
Manager (Development)                             9, Glamour Centre, 1st Floor
                                                  Mission Road, Sukkur
SYED QAMAR RAZA                                   P.O. Box No. 179
Manager (Development)                             23936. Fax: 26512
SYED SALEEM HUSSAIN SHAH                          MOHAMMAD AMEEN MEMON
Manager (Development)                             Manager
Tariq Road Branch                                 MULTAN
964 - 5 C Commercial Area                         Multan Division
Allama Iqbal Road, P.E.C.H.S., Karachi            Rajput Commercial Centre
4525552 - 4535991 - 4547478 - 4522730             Tareen Road
Fax: 4545584                                      513723 - 580773
                                                  Fax: 573343 - 580772
JAVED IQBAL BARRY, M.B.A., LL.B., F.C.I.I
Executive Vice President                          M. SHEHZAD HABIB
                                                  Senior Executive Vice President
ADAM DUR MOHAMMAD BALOCH
Vice President                                    MUHAMMAD AZHAR ALI
                                                  Asstt. Vice President
MRS. NARGIS MEHMOOD
Sr. Executive Vice President (Development)
                                             50
                                                                           E F U GENER AL I NSUR ANCE LTD .




RASHID HABIB                               CHISTIAN (Sub-Office)
Vice President (Development)               105 - E, Chistian
                                           53989
SHAHID YOUNUS
Vice President (Development)               SHAHID IQBAL
                                           Chief Manager (Development)
MUSHTAQ NAJAM BUTT
Asstt. Vice President (Development)        LAYYAH (Sub-Office)
                                           Opposite Bank of Punjab
ALI HASNAIN SHAH                           Chowbara Road, Layyah
Chief Manager (Development)
                                           AMJAD ALI
HAMID ALI JANJUA                           Development Officer
Deputy Chief Manager (Development)
                                           QUETTA (Sub-Office)
HAMMAD AKHTAR SHEIKH                       42 - Regal Plaza
Deputy Chief Manager (Development)         Circular Road
                                           822926. Fax: 837732
AGHA KASHIF HUSSAIN KHAN
Manager (Development)                      NORTHERN ZONE
                                           Co-operative Insurance Building
MALIK RASHID AZIZ
                                           23 Shahrah-e-Quaid-e-Azam, Lahore
Manager (Development)
                                           7352028 - 7353566 - 7312166 - 7312196
D. G. Khan (Sub-Office)                    7244178 - 7243290. Fax: 7357966 - 7229604
House No. 59, Street No.2
                                           QAMBER HAMID, LL.B, LL.M.
Block-Z, Model Town
                                           Deputy Managing Director/Zonal Head
69360 - 61895
                                           ATTA-UR-REHMAN RIAZ
BASHIR AHMAD SANGHI
                                           Senior Vice President
Asstt. Vice President (Development)
                                           ZAHID HUSSAIN A.C.I.I
CHICHAWATNI (Sub-Office)
                                           Vice President
44 Railway Road
2386 - 610474                              LAHORE
                                           PUNJAB REGION
JAVED IQBAL CHEEMA
                                           Mak Plaza, 130-E/1, Main Boulevard
Chief Manager (Development)
                                           Gulberg III, Lahore
VEHARI (Sub-Office)                        5750763. Fax: 5756764
56-B Grain Market
                                           SHAUKAT SAEED AHMAD
62900. Fax: 62900                          Executive Director
TARIQ JAMEEL                               Al - Falah Branch
Asstt. Vice President (Development)        306-7 Al-Falah Building
RAHIM YAR KHAN (Sub-Office)                Shahrah-e-Quaid-e-Azam, Lahore
7-Shaheen Market                           6312519 - 6361081-82. Fax: 6312518
Shahi Road                                 ATTA-UL-HAQ KHAN
73794. Fax: 77194                          Vice President
MIAN ABDUL RAZZAK RAZA                     MOHAMMAD IQBAL
Chief Manager (Development)                Vice President (Development)
BAHAWALPUR (Sub-Office)                    MUHAMMAD SALIM MALIK
Circular Road                              Vice President (Development)
884624 - 886371
Fax: 884624                                MRS. GHAZALA AMBREEN
                                           Manager (Development)
MALIK AKHTAR RAFIQUE
Vice President (Development)               SHAHID RAZA KAZMI
                                           Manager (Development)
M. ASLAM HAYAT
Asstt. Vice President (Development)




                                      51
                                                                                   E F U GENER AL I NSUR ANCE LTD .




Anarkali Branch                                  MIAN IKRAM ELLAHI
Upper Floor, Al-Sarwar Building                  Vice President (Development)
Bank Square, Lahore
7351173. Fax: 7350614                            MUHAMMAD AMIN QURESHI
                                                 Chief Manager (Development)
MUHAMMAD RAZZAQ CHAUDHRY
Senior Vice President                            Gulberg Branch
                                                 Mak Plaza, 103 E - 1 Main Boulevard
Al Hamd Branch                                   Gulberg III, Lahore
Murtaza Shopping Centre                          5879242 - 5757428 - 5750763. Fax: 5756764
Moon Market, Allama Iqbal Town, Lahore
5419273 - 5418687. Fax: 5419268                  JAVED AKHTAR SHEIKH, B.B.A.
                                                 Executive Vice President
SALEEMULLAH TAHIR
Executive Vice President                         MUHAMMAD FAROOQ
                                                 Senior Vice President (Development)
MUBASHIR SALEEM
Manager (Development)                            QAMER-UL-HASSAN ANSARI
                                                 Asstt. Vice President (Development)
Bank Square Branch
Al - Khush Building, Bank Square, Lahore         Ichhra Branch
7323081 - 7323640. Fax: 7314244                  204, Latif Center
                                                 101 Ferozepur Road, Lahore
BABAR A. SHEIKH                                  7533731-32. Fax: 7585814
Executive Vice President
                                                 JAVAID IQBAL KHAN
Canal Branch                                     Asstt. Vice President
137-Habitat Flat Shadman II
Near Cricket House, Lahore                       MIAN SIKANDER SHIRAZ
7520991 - 7594908 - 7585180                      Manager (Development)
Fax: 7520992                                     Lahore Division
IFTIKHAR UDDIN                                   Co-operative Insurance Building
Vice President                                   23 Shahrah-e-Quaid-e-Azam, Lahore
                                                 7312166 - 7243290 - 7244178 - 7350616
SHAN-E-RAZA ZAIDI                                7312196 - 7323130 - 7353566. Fax: 7357966
Vice President (Development)
                                                 LIAQUAT ALI KHAN FCII
M. SALEEM BABAR                                  Senior Vice President
Asstt. Vice President (Development)
                                                 USMAN ALI
City Branch                                      Asstt. Vice President
Al - Sarwar Building, Bank Square, Lahore
7352934 - 7352938. Fax: 7352941                  FAKHAR-E-ALAM
                                                 Vice President (Development)
ZARRAR IBN ZAHOOR BANDEY
Executive Vice President                         MUHAMMAD TAYYAB NAZIR
                                                 Asstt. Vice President (Development)
Eden Centre Branch
Room No. 201                                     ASHLEY ARSHAD
Eden Centre, Jail Road, Lahore                   Manager (Development)
7576029 - 7551059. Fax: 7570068
                                                 Leeds Centre Branch
ROSS MASOOD, M.B.E.                              Room No. 15, 2nd Floor, Leeds Centre
Executive Vice President                         11-E/2, Main Boulevard, Gulberg III, Lahore
                                                 5788055-57. Fax: 5784058 - 5874374
MUHAMMAD LATIF BHATTI
Chief Manager (Development)                      AZHARUL HASSAN CHISHTI
                                                 Senior Vice President
MUHAMMAD QASIM BUTT
Manager (Development)                            Model Branch
                                                 EFU House, 6 - D Jail Road, Lahore
Egerton Road Branch
                                                 5715616-18. Fax: 5715619
Venus Plaza, 7 - E, Egerton Road
Egerton & Davis Road Crossing, Lahore            TAYYAB HUSSAIN GARDEZI, M.Sc.
6365826 - 6306454 - 6302695. Fax: 6302705        Senior Vice President
MUHAMMAD RIZWAN-UL-HAQ
Executive Vice President

                                            52
                                                                                           E F U GENER AL I NSUR ANCE LTD .




New Garden Town Branch                                City Branch
Flat No. 2 R.B. 1st Floor                             Ex-Sky Lark Building, Kutchery Road, Sialkot
Awami Complex, Usman Block, Lahore                    4292270. Fax: 4292280
5833759 - 5834721. Fax: 5881671
                                                      IMRAN-UL-HAQ
MOHAMMAD SOHAIL                                       Vice President
Senior Vice President
                                                      SARGODHA
MUHAMMAD AZAM                                         Sargodha Branch
Manager (Development)                                 1st Floor, Improvement Trust Plaza
                                                      26, Fatima Jinnah Road
FAISALABAD                                            3721381 - 3728253. Fax: 3729023
Faisalabad Branch
Ahmed Plaza, Bilal Road, Faisalabad                   ABDUL SHAKOOR PARACHA
2610363 - 2610368 - 2610566 - 2625001                 Asstt. Vice President
Fax: 2611667                                          Sahiwal Branch
MAHMOOD ALI KHAN, M.A.                                15, Sattar Complex, Stadium Road
Senior Executive Vice President                       4220522 - 4462998. Fax: 4220622

USMAN ALI KHAN                                        INAYATULLAH CHAUDHRY
                                                      Asstt. Vice President
Asstt. Vice President (Development)
                                                      ISLAMABAD REGION
ASRAR AHMED
                                                      2nd Floor, Ferozsons Building, 32 Saddar Road
Manager (Development)
                                                      Rawalpindi Cantt., Rawalpindi
City Branch                                           5514323 - 5563065 - 5562024 - 2271372
16 Chenab Market, Susan Road                          5516085. Fax: 5565406
Madina Town, Faisalabad                               AKBAR AWAN
8732902 - 8734649 - 8714642. Fax: 8733402             Executive Director/Regional Head
DR. GHULAM JAFFAR, Ph.D                               Bank Road Branch
Asstt. Vice President                                 2nd Floor, Ferozsons Building, 32 Saddar
GUJRANWALA                                            Road Rawalpindi Cantt., Rawalpindi
                                                      5584563. Fax: 5516882
Gujranwala Branch
3rd Floor, Din Plaza, G.T. Road, Gujranwala           MALIK FIRDAUS ALAM
845883-84. Fax: 840883                                Asstt. Vice President
MOHAMMAD ARIF BHATTI                                  SHEHZAD AKHTAR
Senior Vice President                                 Manager (Development)
AMIR ARIF BHATTI                                      Islamabad Branch
Asstt. Vice President (Development)                   1st Floor, Muhammad Gulistan Khan House
                                                      82 East Fazle Haq Road
G. T. Road Branch                                     Blue Area, Islamabad
2nd Floor, Zaheer Plaza, G.T. Road, Gujranwala        2875018 - 2875084 - 2271373 - 2823868
859290 - 253224. Fax: 859190                          Fax: 2271374
HAJI MOHAMMAD AYUB                                    RIZWANUL HAQ
Senior Vice President                                 Senior Vice President & Branch Head
QASIM AYUB                                            EJAZ AHMED
Manager (Development)                                 Vice President (Development)
SIALKOT                                               IMDADULLAH AWAN
Sialkot Branch                                        Asstt. Vice President (Development)
1st Floor, Riaz Plaza, Paris Road, Sialkot
267001-3. Fax: 267583                                 ZAKA ULLAH KHAN
                                                      Chief Manager (Development)
TARIQ NAEEM BAJWA
Branch Manager                                        MISS AZRA QURESHI
                                                      Manager (Development)
MUHAMMAD NAEEM AHSAN
Manager (Development)                                 MOIN-UR-REHMAN
                                                      Manager (Development)
                                                      QAZI ALTAF
                                                      Manager (Development)
                                                 53
                                                                                      E F U GENER AL I NSUR ANCE LTD .




Markaz Branch                                        Peshawar Division
1st Floor, Muhammad Gulistan Khan House              11/4, Shahrah-e-Pehlavi, Peshawar
82 East Fazle Haq Road                               5272185 - 5275487 - 5278476 - 5284384
Blue Area, Islamabad                                 Fax: 5271709
2271375. Fax: 2271376
                                                     SYED MUHAMMAD AAMIR KAZMI
NASEERUDDIN AHMED                                    Asstt. Vice President
Senior Vice President
                                                     OMER JAVID
CH. SAJJID MAHMOOD                                   Asstt. Vice President (Development)
Manager (Development)
                                                     MANSOOR AHMAD KASHIF PARACHA
Murree Road Branch                                   Chief Manager (Development)
2nd Floor, Ferozsons Building
32 Saddar Road                                       Jamrud Road Branch
Rawalpindi Cantt., Rawalpindi                        7 -10, Upper Ground Floor
5794684. Fax: 5794685                                Azam Tower, Jamrud Road, Peshawar
                                                     5846120 - 5850190. Fax: 5846121
AGHA ALI KHAN
Branch Manager                                       FARMAN AI AFRIDI B.E.
                                                     Asstt. Vice President
SYED ZEESHAN ABBAS ABEDI
Manager (Development)                                NAEEM ULLAH JAN
                                                     Asstt. Vice President (Development)
Rawalpindi Division
2nd Floor, Ferozsons Building, 32 Saddar Road        MARDAN
Rawalpindi Cantt., Rawalpindi                        Mardan Branch
5794634 - 5563065 - 5562024 - 5516085                3 Cantonment Plaza, Bank Road
Fax: 5565406                                         862294. Fax: 866096

ZAFAR ALI KHOKHAR, M.A.                              INAYATULLAH KHALIL
Senior Vice President                                Asstt. Vice President

SHAFAAT HUSSAIN MALIK                                ARSHAD IQBAL
Asstt. Vice President (Development)                  Chief Manager (Development)

ABBOTTABAD                                           DERA ISMAIL KHAN (Sub-Office)
106 Iqbal Shopping Complex                           3rd Floor State Life Building
Mall Road, 336371                                    Circular Road, D.I. Khan
                                                     9280192
KAMRAN SAMI
Officer Incharge                                     ABDUL QAYYUM KAKAR
                                                     Manager (Development)
GOTH MACHI
Goth Machi Branch                                    ABBOTTABAD (Sub-Office)
6, Commercial Area (F.F.C.)                          Al-Asif Plaza
Distt. Rahim Yar Khan                                Mansehra Road
5873001-9 - 5786420-9 Ext.: 5154                     334186
Fax: 5786410                                         IJAZ ALI
ALTAF HUSSAIN                                        Officer Incharge
Officer Incharge
PESHAWAR REGION
11/4, Shahrah-e-Pehlavi
5272185 - 5275487 - 5278476 - 5284384
Fax: 5271709
SYED AFTAB HUSSAIN ZAIDI, M.A., M.B.A.
Senior Executive Vice President
& Regional Head




                                                54
        E F U GENERAL INSURANCE LIMITED
                                    Form Of Proxy


I/We

of

being a member of E F U GENERAL INSURANCE LIMITED hereby appoint

Mr.

of

or failing him

of

as my/our proxy in my/our absence to attend and vote for me/us and on my/our
behalf at the 73rd Annual General Meeting of the Company to be held on Saturday
April 29, 2006 at 10:30 a.m. and at any adjournment thereof.


Signed this                 day of April 2006.

WITNESSES:
1. Signature:
                                                                             Revenue
   Name:                                                                      Stamp
   Address:

     NIC Or                                                          Signature of Member(s)
     Passport No:


2. Signature:                                            Shareholder's Folio No.
   Name:                                                 and/or CDC
   Address:                                              Participant I.D.No.
                                                         and Sub Account No.
     NIC Or
     Passport No:

Important:
This form of Proxy, duly completed, must be deposited at the Company's Registered Office
at 11/4, Shahrah-e-Pehlavi, Peshawar, not later than 48 hours before the time appointed
for the meeting.

CDC Shareholders and their Proxies are each requested to attach attested photocopy of
their National Identity Card or Passport with this proxy form before submission to the
Company.

CDC Shareholders or their Proxies are requested to bring with them their Original National
Identity Card or Passport alongwith the Participant's ID number and their account number
at the time of attending the Annual General Meeting in order to facilitate their identification.

				
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