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EXECUTIVE SUMMARY

NJI life was incorporated on 29th June 1995 as a public limited company. Therefore it’s
an eligible person to transact insurance business in Pakistan. NJI life is registered with
SECP and is fulfilling its entire requirement for being a registered insurer.

NJI life is divided into ordinary life, capital redemption, pension fund, and accident and
health business. It has established shareholders fund and statutory fund in respect of each
class.

NJI has been maintaining the paid up capital to an amount that is 627,120,000 and
statutory deposit of Rs.63 million is kept with State bank of Pakistan.

Each statutory fund of the NJI (LIFE) complies with the solvency requirements of the
insurance ordinance, 2000. The auditors in their report clearly stated that the
apportionment of assets, liabilities, revenues and expenses between two or more funds
has been performed in accordance with the advice of the appointed actuary.

In auditor’s report it’s confirmed that company has kept proper books of accounts and as
required by the insurance ordinance 2000 and companies ordinance 1984 and accounting
policies are consistently applied.

The company’s shares are quoted on the Karachi stock exchange and it started its
business on 20th June 1996 and the directors of the company had declared it as going
concern in 2007 and it is unable to meet its liabilities as auditors are satisfied with the
compliance of the company with insurance ordinance.

Policy holder’s liabilities included in the statutory funds are determined based on the
appointed actuary’s valuation conducted as at the balance sheet date.

The agents/intermediaries of NJI (LIFE) are qualified, licensed and skilled as well.

Dividend and appropriation to reserves except appropriations required by the law or


determined by the actuary or allowed by the insurance ordinance 2000 are recognized in
the year in which these are declared.

The NJI life company limited has been complying with all the requirements of the
insurance ordinance 2000 in relation to the matters of insurance ombudsman.

The NJI life insurance company limited has been working in a sound and prudent
management and has complied with all the requirement of insurance ordnance 2000 so no
penalty imposed on it.

NJI life is following the compulsory cession reinsurance requirements. The company
prides itself in its long-standing reinsurance arrangements and relationship with
international renowned reinsurer.
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INTRODUCTION OF NJI LIFE
NJI Life enjoys competitive edge over the players in the market because of the highest
paid-up capital amongst public listed companies in Pakistan, highest ratio of customer
loyalty among all life insurance companies, uniquely designed plans for each individual
customer, complete range of products for individual and corporate customers and backing
of world's largest reinsurance companies.

Research Questions:-

(Hypothesis)
The research which we are going to conduct is to see the compliance of NJI (life) with
Insurance Ordinance 2000, and we are going to see the following sections in respect of
NJI (life) so our research questions upon which we emphasized during this research
project are as following:-

1. What are the classes of life insurance business of NJI?


2. Which persons are eligible to transact insurance business?
3. What is the procedure for the requisition of insurers?
4. What are the grounds on which commission got satisfied to register the insurer?
5. What are the criteria for sound and prudent management?
6. What are the statutory and other funds of NJI (life)?
7. What are the assets, liabilities, revenues & expenses of funds of NJI (life)?
9. What are the restrictions on dividends and bonuses?
10. Who is an appointed actuary of NJI (life)?
11. How the company fulfils the requirements of the capital?
12. What are the not admissible assets of the NJI (life)?
13. What are the reinsurance arrangements of a company?
14. How the company maintains its books and records?
15. How the commission investigates the affairs of NJI?
16. Does company comply on the principals of utmost good faith?
17. Who are the agents and brokers of the NJI (life)?
18. How the company deals with tribunal and insurance ombudsman?
19. Has any penalty imposed on the company for default in complying with or acting in
contravention of this ordinance?
20. How the insurance of public property is being done?

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Objective of Study:-
The following are the objectives of our study:-

1. To know about insurance industry and its compliance with rules framed by the Federal
Government.
2. To broaden our vission in observing the annual reports of different companies.
3. To check how the research project is conducted in actual.

Sources of Data:-

1. Annual Report of NJI (life)


2. www.nji.com.pk

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COMPLIANCE OF NJI LIFE ACCORDING TO
INSURANCE ORDINANCE 2000

Classes of life and non-life insurance business:


According to the Ordinance, following shall be the classes of business into which life
insurance business is divided:

• Ordinary life business


• Capital redemption business
• Pension fund business
• Accident and health business.

The company is engaged in life insurance, carrying on participating business. In


accordance with the requirements of insurance Ordinance, 2000 the company has
established a shareholder’s fund and following statutory funds in respect of its each class
of life insurance business:

1. Individual life(Unit linked)


2. Conventional Business
3. Group pension
4. Accident and health.

The group pension fund has been closed as of 31st December 2008 after payment of total
liabilities to the policyholders and receipt of approval from the Securities and Exchange
Commission of Pakistan vide letter dated 4 March 2009. The balance assets and other
liabilities have been transferred to the shareholder’s fund accordingly and incorporated in
these financial statements.

Persons eligible to transact insurance business:


According to the ordinance, after the commencement date only

• A public company ; or
• A body corporate incorporated under the laws of Pakistan (not being a private
company or the subsidiary of a private company);
shall start any insurance business in Pakistan.

So NJI being a public listed insurance company is eligible under the insurance ordinance
2000 to transact insurance business in Pakistan.

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Registration of insurer:
According to the insurance ordinance 2000, no person shall after the commencement of
this Ordinance, begin or, after the expiry of six months from the commencement date,
continue, to carry on any insurance business in Pakistan, unless such eligible person has
obtained from the commission a certificate of registration to carry on insurance business
under this Ordinance, and that registration has not been revoked.

In compliance with the Code of Corporate Governance as incorporated in the Listing


Regulations of the stock exchange of Pakistan and Code of Corporate Governance
applicable to listed insurance companies as issued by the SECP, statement of Compliance
with the Code of Corporate Governance is presented.

Insurance Ordinance 2000 requires that every life insurance company shall register itself
with the commission in order to run its business in Pakistan. NJI life insurance Company
limited is complying with this rule of insurance ordinance 2000 and is registered with
SECP and is fulfilling all its requirements for being a registered insurance company.

Commission may register upon satisfaction:

Where an application for registration is received by the Communication, the Commission


may register the insurer as authorized to carry on life insurance business or authorized to
carry on non-life insurance business as the case may be, if the commission is satisfied
that:

a) The provisions of this ordinance relating to minimum paid-up share capital


requirements have been complied with,

b) The provisions of this ordinance relating to minimum solvency requirements have


been complied with,

c) The provisions of this ordinance relating to minimum statutory deposits have been
complied with,

d) The provisions of this ordinance relating to the effecting of reinsurance


arrangements have been complied with,

e) The applicant is, and is likely to continue to be, able to meet its liabilities,

f) The applicant meets, and is likely to continue to meet, criteria for sound and
prudent management,

g) The applicant has appointed an auditor recognized by the Commission as


appropriately qualified to audit the business of life or non-life insurance as the
case may be,

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h) The applicant has, if it proposes to carry on life insurance business, appointed an
actuary as its appointed actuary, and the Commission does not disapprove that
appointment;

i) The applicant is, and is likely to continue to be, able to comply with such other of
the provisions of this Ordinance as are applicable to it; and

j) On the basis of the information provided by the application and any other
information received by the commission, the application ought to be granted.

Company analysis shows the following result as per the compliance under the following
section.

• Paid up share capital of company is Rs.627 million

• In order to minimize the financial exposure arising from large claims, the
Company, in the normal course of business, enters into agreement with
other reinsurer. Reinsurance ceded does 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 obligation under the reinsurance agreements. In order to
manage this risk, the Company obtains reinsurance cover only from
companies with sound financial health

• The auditor of company is KPMG Taseer Hadi & Co.)

• Appointed actuary of company is Nauman A. Cheema. The Board ensures


that the appointed actuary complied with the requirements set out for him
in the code.

Directors have declared that New Jubilee Life Insurance Company Limited has at all
times in the year complied with the provisions of the Ordinance and the rules made there
under relating to paid-up capital, solvency and reinsurance arrangements; an continues to
be in compliance with the provisions of the Ordinance and the rules made there under
relating to paid-up capital, solvency and reinsurance arrangements.

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Statements by the Appointed Actuary
(Required under section 52(2)(a) & (b) of the insurance Ordinance, 2000.)

In our opinion:

a) The policyholder liabilities in the balance sheet of the New Jubilee Life Insurance
Company Limited have been determined in accordance with the provisions of the
Insurance Ordinance, 2000; and
b) Each statutory fund of the New Jubilee Life Insurance Company Limited
complies with the solvency requirements of the Insurance Ordinance, 2000.

So by the above information provided in the Annual report of the Company it is


concluded that New Jubilee Life Insurance Company Limited has complied with all the
requirements by the Commission such as solvency requirements, statutory deposits
requirements, reinsurance arrangements, appointment of auditor, appointment of actuary
and such other of the provisions of this Ordinance as are applicable to it.

So by considering all such facts Commission may have registered the New Jubilee Life
Insurance Company Limited as authorized to carry on life insurance business.

Books and records:


As we are seeing the compliance of NJI (LIFE) with insurance ordinance 2000, this is
considered to be an important section of the ordinance. It is required that every insurer
who is doing insurance business in Pakistan and who is incorporated in jurisdiction
outside Pakistan in respect of insurance business transacted by the insurer in Pakistan
shall maintain proper books and records.

NJI (LIFE) has complied with the above mentioned section of the ordinance as the
directors of the company are pleased to confirm that:

1. Proper books of accounts of the company have been maintained which present
fairly its state of affairs in financial terms

2. Accounting policies have been consistently applied in preparation of


financial statements and accounting estimates are based on reasonable and
prudent judgment

3. International accounting standards, as applicable in Pakistan, insurance


ordinance and rules have been followed in preparation of financial statements and
any departure there from has been adequately disclosed.

4. There are no significant doubts upon the company’s ability to continue as a going
concern as it is evident from its records.

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5. For audit of financial statements it is required to obtain an understanding of the
accounting and internal control system sufficient to plan the audit and develop an
effective audit approach and NJI (LIFE) has fully acted upon the above statement.

The auditors in their report also confirmed that the company as required has kept proper
books of accounts by the insurance ordinance 2000, and companies’ ordinance 1984.
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 further in accordance with
accounting policies consistently applied.

Annual statutory accounts of NJI (LIFE) have been drawn in accordance with the
ordinance and the rules made there under.

SECP Investigation:
This section says that if the commission believes upon reasonable grounds that the
insurer is unable to meet its liabilities and there has been contravention of the provisions
of the ordinance, it may investigate the affairs of an insurer and employ an auditor or
actuary or both for assisting it in any such investigation.

After examining the annual reports of NJI (LIFE) deeply, we have come to the
conclusion that this company which was incorporated in Pakistan on 29th June 1995 as a
public limited company under the company’s ordinance 1984 has never contravened any
provisions of the ordinance due to which the Commission has to appoint an actuary or
auditor especially for the investigation purposes.

The company’s shares are quoted on the Karachi stock exchange and it started its
business on 20th June 1996 and the directors of the company had declared it as going
concern in 2007 and it is unable to meet its liabilities as auditors are satisfied with the
compliance of the company with insurance ordinance and actuary in his report said that
each statutory fund of the NJI (LIFE) complies with the solvency requirements of the
insurance ordinance, 2000.

Market conduct:
THE NJI (LIFE) has complied with the provisions of the ordinance regarding market
conduct.

The auditors in their report clearly stated that the apportionment of assets, liabilities,
revenues and expenses between two or more funds has been performed in accordance
with the advice of the appointed actuary.

Market conduct relates to the duty of utmost good faith with which the company has
complied with the statement of ethics and business practices adopted by the Board has

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been signed by all the directors, executives and the employees of the company and it has
been fully complied with. The external auditors have also been given satisfactory rating.

Intermediaries (Agents and brokers):-


According to this section every insurer, shall so far as relates to a contract of insurance
entered into by the insurer through an agent be liable to the policyholders for the acts and
omissions of the agents.

The company is engaged in life insurance, carrying on non-participating business in


accordance with the requirements of the insurance ordinance 2000 the company has
established a shareholders’ fund and following statutory funds in respect of its each life
insurance business:-

1: INDIVIDUAL LIFE (unit linked)


2: CONVENTIONAL BUSINESS
3: GROUP PENSION
4: ACCIDENT AND HEALTH

All the business of the NJI (life) takes place through number of the agents. Actually there
is not a single agent for the insurance companies, but numbers of agents are employed
usually. The agents of NJI (LIFE) are qualified, licensed and skilled as well.

Directors of the NJI (life) said that based on our review nothing has come to our
attention, which causes us to believe that the statement of compliance does not
appropriately reflect the company’s compliance, in all material respects with the best
practices contained in the code of corporate governance as applicable to the company.

Appointed Actuary
Insurance Ordinance 2000 requires that every life insurance company shall appoint an
actuary as an appointed actuary. Nji Life Company limited is complying with this rule of
insurance ordinance 2000 and has appointed actuary named as Nauman A. Cheema who
is responsible to perform all such duties which is assigned to him under the Insurance
Ordinance 2000. The appointed actuary has been complying with the requirements set out
for him in the Code of Corporate Governance.

Criteria for sound and prudent management:


Insurance Ordinance 2000 prescribes the criteria for sound and prudent management of
an insurer or applicant for the registration as a person authorized to carry on the insurance
business. Nji Life Company limited is following the criteria for sound and prudent
management as;

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• Is doing business with integrity, due care and the professional skills which is
appropriate for the life insurance business.

• The company is not doing anything which is against the interest of the policy
holder and potential policy holders and serves them in the best possible manner.

• Accounting and other records has been prudently managed and has been
complying with the requirement of Insurance Ordinance 2000.

• The financial statement prepared by the management of the company present


fairly its state of affairs, the result of its operations, cash flows and changes in
equity.

• Proper books of accounts of the company have been maintained.

• Accounting policies has been consistently applied in preparation of financial


statements and accounting estimates are based on reasonable and prudent
judgment.

• International Accounting Standards, as applicable in Pakistan, the requirements of


Insurance Ordinance 2000 and Rules, and Companies Ordinance 1984 have been
followed in preparation of financial statements and any departure there from has
been adequately disclosed.

• The company has been following prudent policy for managing all its investment.

• The system of internal control is in place and is being continuously reviewed by


the internal audit. The process of review will continue and weakness in controls,
if any, will be removed.

• The company has complied with all corporate and financial reporting
requirements of the Code of Corporate Governance with the best practices of
Corporate Governance.

• There is no significant doubt upon the company’s ability to continue as a going


concern.

• There has been no material departure from the best practices of corporate
governance as detailed in the listing regulations of the stock exchange of Pakistan.

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Statutory fund of Company:
Insurance Ordinance 2000 requires that an insurer carrying on the business of life
insurance shall at all times maintain at least one statutory fund in respect of its life
insurance business. NJI Life Company limited has been complying with this rule of
ordinance and is carrying on four classes of life insurance business so they maintain
the four statutory funds.

1. Nji, consisting of provision of individual life unit linked business, is maintaining


the statutory find exclusively for that business.

2. Nji, consisting of provision of conventional business, is maintaining the statutory


find exclusively for that business.

3. Nji, consisting of provision of group pension business, is maintaining the


statutory find exclusively for that business.

4. Nji, consisting of provision of accident and health business, is maintaining the


statutory find exclusively for that business.

The Board of Director decided to discontinue the group pension business due to the
limited market potential and accordingly Securities and Exchange Commission of
Pakistan (SECP) and the valued policyholders have been informed. The group pension
fund has been closed as at the 31st December 2008 after payment of the total liabilities to
the policyholders and receipt of approval from the Securities and Exchange Commission
of Pakistan (SECP) vide letter dated 4 March 2009. The balance assets and other
liabilities have been transferred to the shareholder’s fund accordingly and incorporated in
financial statement.

Shareholder’s funds
Insurance Ordinance 2000 requires that an insurer carrying on the business of life
insurance and having the share capital shall maintain a share holder’s fund. Complying
with the rule of Insurance Ordinance 2000, Nji life insurance Company limited has been
maintaining the shareholder’s fund.

Assets, liabilities, revenues and expenses of


Statutory fund:
All assets, liabilities, revenues and expenses of life insurer shall be referable to one or
more funds of the insurer according to the rule of Insurance Ordinance 2000.

The Nji life insurance Company limited maintains the statutory fund in respect of each
class of life insurance business. Assets, liabilities, revenues and expenses of the company
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are referable to respective statutory funds; however, where there are not referable to
statutory funds, these are allocated to the shareholder’s fund.
The apportionment of assets, liabilities, revenue and expenses, whenever required,
between two or more funds has been performed on a fair and equitable basis in
accordance with the written advice of appointed actuary.

Policy holder’s liabilities included in the statutory funds are determined based on the
appointed actuary’s valuation conducted as at the balance sheet date, in accordance with
the section 50 of the Insurance Ordinance 2000.

Dividend
The board is unable to recommend the payment of a dividend due to the loss suffered in
year 2008 while the board had declared the cash dividend of 5% (Rs 0.50 per share),
subject to approval of the shareholders of the company in the annual general meeting in
year 2007. This was the second consecutive dividend of 5% in the company’s twelve year
history.

Dividend and appropriation to reserves except appropriations required by the law or


determined by the actuary or allowed by the insurance ordinance 2000 are recognized in
the year in which these are declared.

Requirement as to Capital

In order to comply with the ordinance section no 38 for the maximum amount of the paid
up capital for life insurance business is eighty million rupees whereas NJI has been
maintaining the paid up capital to an amount that is 627,120,000 which could be seen
from the excerpt taken from its balance sheet as at on 2008.

Requirement as to Statutory Deposit:


The company NJI has deposited 10& 20 years Pakistan Investment Bonds amounting to
Rs.63 million in 2008 which were amounted to Rs.5 million in the year 2007 with the
state bank of Pakistan as per the compliance under the following section.

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2007 2008
5 million 63 million

According to the insurance ordinance 2000 the amount of the statutory deposit has to be
at least 10 million. In 2007 companies’ government securities market value decreased
due to the recession in the market economy that’s why company deposit with the state
bank decreased to 5 million.

Solvency Requirements:
Admissible Assets

According to the Insurance Ordinance 2000 the NJI life insurance company maintains the
following admissible assets which can be accounted for its solvency.

1. Government Securities

Investments in government securities, fair/market value are determined by reference to


quotations obtained from Reuters page (PKRV). For investments in quoted marketable
securities, other than term finance certificates, fair/market value is determined by
reference to stock exchange quoted market price at the close of the business an balance
sheet date. The fair/market value of the term finance certificates are determined by the
average rates quoted by brokers. Apart from these government securities NJI life also
maintain other fixed income securities details of which are as per following.

2. Other Investments

NJI life has following three other investments.

2008 2007 (Rupees in ‘000’)

Close ended mutual funds 1449 796761


Open ended mutual funds 2031512 3481067
Deferred taxes 6000 -

3. Statutory Deposit

NJI life has maintained a statutory deposit as the requirement under the law details of
which are given before. The statutory deposit amount is also calculated under the
admissible assets according to the ordinance.

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4. Current Assets

Details of the NJI life current assets are as follows.

2008 2007 (Rupees in ‘000’)

Cash and bank deposits 2992 1548


Current and other accounts 255005 350517
Deposits maturing within 12 months 3000000 1757000
Unsecured advances to employees 3257997 2109065

5. Other Assets

These assets are considered as the actionable claims denominated and payable in Pakistan
currency according to the ordinance.

2008 2007 (Rupees in ‘000’)

Premiums due but unpaid 95895 72462


Investment income due but outstanding - -
Investment income accrued 1948 3429
Amount due from reinsurers 53179 43911
Taxation 17757 23874
Prepayments 39061 11684
Sundry receivables 15536 8178
Inter fund receivables 5630 -

LIABILITIES
The liabilities of NJI life under the contracts of life insurance issued by it in Pakistan are
following.

2008 2007 (Rupees in ‘000’)

Outstanding claims 237881 200768


Advance premiums 148944 103527
Amount due to reinsurers 24714 2756
Amount due to agents 64920 24412
Accrued expenses 60490 60700
Creditors and accruals 53511 9876
Inter fund payables 5630 -
596090 402039

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Valuation of assets and liabilities:
Fixed assets

Tangible assets

These are stated at cost less accumulated depreciation and impairment loss, if any.
Depreciation is charged using the straight line method. Depreciation on additions and
disposals during the year is charged from one month of addition to the month of disposal.
When part of an item of asset have different useful live, they are accounted for as
separate items in fixed assets.

Subsequent costs are included in the assets carrying amount or recognized as separate
asset, as appropriate, only when it is probable that future economic benefits associated
with the item will flow to the company and the cost of the item can be measured reliably.
All other expenses are charged to income during the financial year in which they are
incurred.

The assets residual value and useful lives are reviewed at each balance sheet date and
adjusted if appropriate. Gains and losses on disposal of fixed assets are taken into profit
and loss account. Capital work in progress is stated at cost less impairment losses, if any.

Intangible assets

These represent assets with finite life and are stated at cost less accumulated amortization
and impairment losses(if any). Amortization is charged over the estimated useful life of
the asset applying the straight line method at the rate specified in the financial statements.

Revenue recognition
Premiums

Individual life - unit linked

 First year premium are recognized once the related policies are issued against
receipt of premium.
 Renewal premiums are recognized once the related policies are renewed against
receipt f premium
 Single premiums are recognized once the related policies are issued against the
receipt of premium.

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Conventional business

Individual life conventional first year and renewal premiums are recognized once the
related policies are issued/renewed against receipt of premium.
Group life premiums are recognized as and when due. In respect of certain group policies
the company continues to provide insurance cover even if the premium is received after
the grace period.

Group pension

Group pension premiums have been recognized upon receipt.

Accident and health

Accident and health premiums are recognized as and when due. In respect of certain
group policies the company provides cover even if the premium is received after the
grace period.

Reinsurance premiums

Reinsurance premiums are recognized at the same time when the premium income is
recognized. It is measured in line with the terms and conditions of reinsurance treaty.

Markup/Interest

This income on bank deposit is recognized on time proportion basis using effective
interest rate method. Interest on fixed income securities is recognized on time proportion
basis using effective interest rate method.

Dividends

Dividend income is recognized when company’s right to receive dividend is established.

Acquisition cost

These are cost incurred in acquiring insurance policies, maintaining such policies and
include without limitation all forms of remuneration paid to insurance agents.
Commission and other expenses are recognized as expense at the earlier of financial year
in which they become due and payable, except that commission and other expenses
which are directly referable to the acquisition or renewal of specific contracts are
recognized not later than the period in which they refer is recognized as revenue.

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Claims

Claims expense

Claims are recognized earlier of the policy ceases to participate in the earnings of the
fund or the date insured event occurs. Liability for outstanding claims is recognized in
respect of all claims “incurred but not reported”(IBNR) is included in policyholder’s
liabilities.
Claim recoveries

Claim recoveries are referable from reinsurer at the same time as the claims which give
rise to the right of recovery and are measured at the amount excepted to be recovered.

Experience refund of premiums

These are payable to policyholder included in outstanding claims. Experience refund of


premium from reinsurers is included in the reinsurer recoveries of claims.

Foreign currencies

Monetary assets and liabilities in foreign currencies are translated at the rates prevailing
at the balance sheet date. Foreign currency transactions are recorded using the rates
prevailing at the date of transaction. Exchange gain and losses on translation are included
in income directly.

Premium due but unpaid

These are initially recognized at fair value. Provision for impairment on premium
receivables is established when there is objective evidence that the company will not be
able to collect all amounts due according to original terms of receivables. Receivables are
also analyzed as per their aging and accordingly provision is maintained on a systematic
basis.

Impairment

The carrying amount of assets are reviewed at each balance sheet date to determine
whether there is any indication of impairment of any asset or group of assets. If such
indication exists, the recoverable amount of the asset is estimated. An impairment loss is
recognized whenever the carrying amount of an asset exceeds its recoverable amount.
Impairment losses are recognized in profit and loss/ revenue account, as appropriate.

We can see from the above statement that NJI is following the section 34 of insurance
ordinance in order of valuation of assets and liabilities.

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Net admissible assets of Life insurer:

Individual Conventional Group Accident 2008 2007


life unit business pension & health
linked
Income 1599161 582148 12304 232873 2426486 3475063
Expenses 1839620 514707 153813 168584 2676724 1720353
Deficit (240459) 67441 (141509) 64289 (250238) 1754710
Add 44777740 179772 70574 156253 48843389 3256229
policyholders
liabilities at
the
beginning of
the year
Less 4189511 197104 - 88786 4475401 4884339
policyholders
liabilities at
the end of
the year
Surplus 47770 50109 14744 46077 158700 126600

As per the insurance ordinance 2000 section 35 a life insurer shall at all times maintain in
its shareholders’ fund a surplus of admissible assets in Pakistan over liabilities in
Pakistan of not less than the required minimum amount.

From the above table we can see that all the statutory funds are showing surplus. But the
requirement that each statutory fund assets must be at least 75 million is not fulfilled in
some cases.

Reinsurance arrangements:
NJI life is following the compulsory cession reinsurance requirements. The company
prides itself in its long-standing reinsurance arrangements and relationship with
international renowned reinsurers such as Swiss Re, Munich Re, Lloyds, Hannover Re
and Mitsui Smitomo Re. The company is also supported by internationally acclaimed
reinsurance brokers including AON Group, Willis, Marsh and UIB.

Insurance ombudsman
The Insurance Ombudsman was established to assist consumers with issues related to
insurance availability; claims processing; coverage questions and other matters related to
insurance consumer education and assistance.

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The Federal government appoints an insurance ombudsman after the commencement of
insurance ordinance 2000. According to insurance ordinance 2000, insurance
ombudsman shall be natural person having high integrity and ability and impeachable
insurance or legal credentials and shall not at the date of his appointment be more than
seventy years of age. He shall not be a shareholder of insurance company.

The Nji life company limited has been complying with all the requirements of the
insurance ordinance 2000 in relation to the matters of insurance ombudsman.

Penalty for default in complying with or acting in


contravention of insurance ordinance, 2000:

According to the insurance ordinance 2000, those insurers who don’t comply with or act
in contravention of any requirement of ordinance, penalty will impose on them. The
penalty will be in shape of fine which may extend to one million rupees and in case of
continuing default, additional fine of ten thousand rupees for every day will also impose
on insurer during which default continues.

The Nji life insurance company limited has been working in a sound and prudent manner
and has complied with all the requirement of insurance ordnance 2000 so no penalty
imposed on it.

Insurance of public property:


According to the insurance ordinance 2000, Public property means any property,
moveable of immovable, which belongs to federal government, provincial government,
local authority or statutory corporation and federal government, provincial government,
local authority or statutory corporation holds a controlling financial share in it.

This section of insurance ordinance 2000 applies to direct non life insurance of public
property so requirements of this section don’t apply on the Nji life insurance company
limited.

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Data Analysis:-
After collecting the data from the above mentioned sources we analyzed it and our
analysis shows that the company i.e. NJI (life) has compiled with the requirements of
insurance ordinance 2000 in respect of above mentioned section .Due to this compliance
the company is doing respectable life insurance business in Pakistan and it is considered
to be one of the best companies in Pakistan. Based on the premium the companies get to
process their claims when they arise, NJI (life) is ranked number 3 in this regard The
Company truly believes in the trained and hardworking employees so that the compliance
with the Insurance Ordinance 2000 and the rules framed there under, is insured. The
analysis is based on our observation of data collected by us from the above mentioned
sources and it depicts the positive picture of the company & its compliance with
insurance ordinance 2000 and the rules framed.

Results and interpretation:-


We have started our research project with the understanding of the annual reports of NJI
(LIFE), which depicts a very good picture of the affairs of the company. The company is
doing its business in accordance with the insurance ordinance and the rules framed there
under.

The annual reports show the positive remarks about the affairs of the company.

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