13.4.1 Ordinary Shares and Stocks: State Life Insurance Corporation of Pakistan

State Life Insurance Corporation of Pakistan
13.4.1 Ordinary shares and stocks

Pakistan Life Fund
De-listed companies
Adamjee Industries Limited
Adamjee Paper Product Limited
Akbar Textile Mills Limited
Akber Cotton Mills Limited
Allied Textile Mills Limited
Arag Industries Limited
Automotive Equipment Limited
Baluchistan Foundry Limited
Baluchistan Textile Mills Limited
Bankers Equity Limited
Bawany Industries Limited
Chemical Limited
Chemphar Limited
Dost Muhammad Textile Mills Limited
Elmac Engineering Limited
Fullbrite Mills Limited
Ghafar Textile Mills Limited
Gillanders Limited
Grace Industries Limited
H.Sheikh M.H Limited
Karachi Road Transport Corporation
Karachi Pipes Limited
Khairpur Textile Mills Limited
Kohinoor Cotton Mills Limited
Madina Textile Mills Limited
Mohib Textile Mills Limited
Northern Foundries Limited
Nowshera Engineering Limited
Ocean Industries Limited
Pak Chrome Limited
Pak Paper Corporation Limited
R C D Ball Bearing Limited
Refrigerator Manufacturing Limited
Sunshine Cloth Limited
Sun Publication Limited
Synthetic Chemical Limited
Universal Furnace Oil
(Rupees in '000)
2011
Number of shares
Book value
2010
Number of shares
174,597
120,242
39,900
31,360
72,634
23,963
7,800
84,520
27,420
538,995
73,774
19,544
100
14,150
100
100
1,000
10,000
50
46,100
6,800
20,800
6,900
33,468
40,900
375,847
95,050
22,125
2,000
25,477
245,644
58,031
192,546
103,200
2,042
81,500
29,818
2,001
1,045
383
314
792
118
92
421
267
15,415
1,415
195
1
225
1
1
10
100
1
460
416
104
324
204
13,530
1,001
222
552
2,441
371
1,712
1,578
793
294
174,597
120,242
39,900
31,360
72,634
23,963
7,800
84,520
27,420
538,995
73,774
19,544
100
14,150
100
100
1,000
10,000
50
46,100
6,800
20,800
6,900
33,468
40,900
375,847
95,050
22,125
2,000
25,477
245,644
58,031
192,546
103,200
2,042
81,500
-
46,799
Un-listed companies / institutions
Arabian Sea Country Club Limited
Baluchistan Fisheries Limited
Bank of Kashmir
Burma Soap Limited
Industrial Development Bank of Pakistan
Innovative Housing Finance Limited
Mercantile Enterprises Limited
Mercantile Fiber Limited
National Construction Limited
Pak Emerging Venture Limited
People Steel Mills Limited
Schon Refinery Limited
State Bank of Pakistan
Sukkar Commercial Limited
500,000
20,000
10
2,000
78,337
12,673
100
10,200
1
12,500,000
1,998,967
1,456,500
29,458
1,200
5,000
200
20
8,298
14,800
1
99
51,415
19,990
29,130
3,221
12
132,186
66
annual report
2011
Book value
2,001
1,045
383
314
792
118
92
421
267
15,415
1,415
195
1
225
1
1
10
100
1
460
416
104
324
204
13,530
1,001
222
552
2,441
371
1,712
1,578
793
46,505
500,000
20,000
10
2,000
78,337
12,673
100
10,200
1
12,500,000
1,998,967
1,456,500
29,458
1,200
5,000
200
20
8,298
14,800
1
99
51,415
19,990
29,130
3,221
12
132,186
13.4.2 Open end mutual funds

2011
Number of units
Pakistan Life Fund
Unlisted
NIT Equity Market Opportunity Fund
13.5
Book value
(Rupees in '000)
2010
Number of units
Book value
13,269,295
1,012,500
13,773,842
1,125,000
13,269,295
1,012,500
13,773,842
1,125,000
Holding in subsidiary companies

(Rupees in '000)
% of Holding
Alpha Insurance Company Limited*
State Life (Lakie Road)
Properties (Private) Limited**
State Life (Abdullah Haroon Road)
Properties (Private) Limited**
*
**
Number of shares
Net assets value
2011 cost
2010 cost
92.01%
27,934,843
348,185
102,518
102,518
100%
414,916
(10)
12,909
11,242
100%
779,500
2,676
26,182
23,388
350,851
141,609
137,148
Net assets value is as of December 31, 2011

Net assets value is as of June 30, 2011
The investments in State Life (Lackie Road) Properties (Private) Limited and State Life (Abdullah Haroon
Road) Properties (Private) Limited have been carried at cost amounting to Rs. 12.909 million (2010: Rs.
11.242 million) and Rs. 26.182 million (2010: Rs. 23.388 million) respectively. These are wholly owned
subsidiaries of the Corporation. As per the latest audited financial statements of these invested companies,
the net assets value is Rs. -0.010 million (2010: Rs. 0.367 million) and Rs. 2.676 million (2010: Rs.
2.756 million) respectively. No provision for Rs. 36.425 million (Rs. 31.507 million) being the difference
of carrying value of the investments and net assets value of the subsidiaries has been made in the financial
statements, as management is of view that after taking into account the revalued amount of properties
of the subsidiaries that has been carried out by an independent surveyor, net asset value of the subsidiaries
are higher than the carrying amount.
During the year, the Corporation subscribed the right issue offer by the State Life (Lackie Road) Properties
(Private) Limited and State Life (Abdullah Haroon Road) Properties (Private) Limited amounting to Rs.
1.668 million (166,760 shares) and Rs. 2.795 million (279,500 shares) respectively.
13.6
The Corporation has made provision for impairment, on certain equity securities, where the investee
companies were transferred to the default counter in Karachi Stock Exchange (Guarantee) Limited.
Protect What Matters Most
67
13.7
Provision for diminution in value

(Rupees in '000)
Statutory Funds
Shareholders
Fund
Other fixed income securities
Listed equities (default counter)
Unlisted/delisted equities
13.8
Pakistan Life fund
Aggregate
Overseas Life
Fund
Pension Fund
2011
2010
(57,573)
(64,318)
(157,526)
(57,573)
(64,318)
(157,526)
(7,573)
(64,721)
(157,152)
(279,417)
(279,417)
(229,446)
Debentures
Debentures include an amount of Rs. 6.894 million (2010: Rs. 6.894 million) pertaining to those
companies which are in liquidation process since 1974. Further, a court case is in process against the
Colony Textile Mills Limited against debenture loan amounting to Rs. 0.678 million (2010: Rs. 0.678
million). The Corporation had made full provision against these debentures.
13.9
Investments by classification
Held-to-maturity
Government securities
(Rupees in '000)
Aggregate
2011
2010
194,451,365
3,070,803
164,137,999
3,243,081
197,522,168 167,381,080
Available-for-sale
Listed equity securities and mutual fund units
Unlisted equity securities and mutual fund units
838,873
24,071,092
1,191,485
830,549
23,115,973
1,303,691
26,101,450
25,250,213
Holding in subsidiary companies
141,609
137,148
Impairment in the value of equity securities and fixed interest securities
(279,417)
(229,446)
Total Investments - net of provision

14 SUNDRY RECEIVABLES
Receivable from pension fund

Other receivables
Provision against other receivables
68
annual report
2011
223,485,810 192,538,995
(Rupees in '000)
Aggregate
2011
2010
-
88,133
471,330
(256,226)
289,663
(127,524)
215,104
162,139
215,104
250,272
15
FIXED ASSETS - TANGIBLE
(Rupees in '000)
COST
2011
Furniture and fixtures
As at
January 01,
2011
245,413
DEPRECIATION / IMPAIRMENT
Additions/
(Disposals)
34,442
As at
December 31,
2011
As at
January 01,
2011
Adjustments
Charge for
the year
Additions/
(Disposals)
As at
December 31,
2011
Written down
value as at
December 31,
2011
Depreciation
Rate (%)
272,637
164,792
(6,810)
11,861
169,843
102,794
10
104,250
71,097
(1,252)
3,684
73,529
30,721
10 to 30
388,143
265,387
(30)
41,794
307,151
80,992
30
47,499
35,019
(77)
3,415
38,357
9,142
30
96,597
66,378
(2,619)
6,288
70,047
26,550
20
909,126
602,673
67,042
658,927
250,199
(7,218)
Office equipment
96,034
9,745
349,143
39,388
(1,529)
Computer installations - basic
(388)
Computer installations - peripherals
41,672
5,904
(77)
Vehicles
89,828
9,473
(2,704)
822,090
98,952
(11,916)
(10,788)
(Rupees in '000)
COST
2010
As at
January 01,
2010
DEPRECIATION / IMPAIRMENT
Additions/
(Disposals)
220,840
25,158
Office equipment
84,929
12,783
As at
December 31,
2010
As at
January 01,
2010
Adjustments
Charge for
the year
Additions/
(Disposals)
As at
December 31,
2010
Written down
value as at
December 31,
2010
Depreciation
Rate (%)
245,413
155,214
(422)
10,000
164,792
80,621
10
96,034
68,387
(101)
2,811
71,097
24,937
10 to 30
349,143
235,783
(1,470)
31,074
265,387
83,756
30
41,672
33,186
(872)
2,705
35,019
6,653
30
89,828
68,571
(5,978)
3,785
66,378
23,450
20
822,090
561,141
50,375
602,673
219,417
(585)
(1,678)
296,327
54,335
(1,519)
Computer installations - peripherals
38,416
3,256
-
Vehicles
78,798
17,903
(6,873)
719,310
113,435
(10,655)
(8,843)
69
15.1
Fixed Assets
(Rupees in '000)
Share
Statutory Funds
Holders Fund
Aggregate
Pakistan
Overseas
Pension
Life Fund
Life Fund
Fund
2011
2010

Cost
Accumulated depreciation
Book value
263,013
(164,619)
98,394
9,624
(5,224)
4,400
272,637
(169,843)
102,794
245,413
(164,792)
80,621
Office equipment
Cost
Book value
102,234
(72,198)
30,036
2,016
(1,331)
685
104,250
(73,529)
30,721
96,034
(71,097)
24,937

Cost
Book value
382,589
(302,944)
79,645
5,554
(4,207)
1,347
388,143
(307,151)
80,992
349,143
(265,387)
83,756
Computer installations - peripheral

Cost
Book value
47,499
(38,357)
9,142
47,499
(38,357)
9,142
41,672
(35,019)
6,653
Vehicles
Cost
Book value
92,400
(67,969)
24,431
4,197
(2,078)
2,119
96,597
(70,047)
26,550
89,828
(66,378)
23,450
Grand Total
Cost
Book value
887,735
(646,087)
241,648
21,391
(12,840)
8,551
909,126
(658,927)
250,199
822,090
(602,673)
219,417
16 TAXATION
2011
Current
16.1
265,358
204,000
Profit before tax
785,581
610,878
Tax at the applicable rate at 35% (2010: 35%)
275,391
213,807
(146)
(3,661)
(8,904)
(6,096)
(983)
(50)
265,358
204,000
Relationship between tax expense and accounting profit
Tax effect of capital gain being exempt

Tax effect of dividend income being taxable at lower rate
Others
Tax expense for the year
70
(Rupees in '000)
2010
annual report
2011
16.2
There were no taxable or deductible temporary differences attributable to Shareholder's Fund.

Therefore, no provision for deferred tax has been recognised.
17 EARNINGS PER SHARE - BASIC AND DILUTED

2011
Profit after tax
Rupees in '000'
Weighted average number of ordinary shares
Numbers
Earnings per share - basic and diluted
Rupees
2010
520,223
406,878
11,000,000
11,000,000
47.29
36.99
The Corporation has not issued any instrument which would dilute its basic earnings per share when exercised.
Therefore, there is no dilutive effect on earnings per share.
18 REMUNERATION OF CHAIRMAN AND EXECUTIVE DIRECTORS
(Rupees in '000)
Chairman
Executive Directors
2011
Managerial remuneration
House rent
Utilities
Other perquisites
2011
2010
Total
2011
2010
2010
2,880
1,260
300
72
2,880
1,260
261
376
3,434
1,536
836
6,089
1,812
1,204
1,290
3,487
6,314
2,796
1,136
6,161
4,692
2,464
1,551
3,863
4,512
4,777
11,895
7,793
16,407
12,570
Number of persons
In addition to the above, the chairman and executive directors are also entitled to Corporation maintained
vehicles and mobile phone facility.
19 CASH AND CASH EQUIVALENTS
For the purpose of cash flow statement cash and cash equivalents balances include the following:
(Rupees in '000)
Share
Statutory Funds
Holder's Fund
Cash in hand
Cash in transit
Cash at bank in:
- Current accounts
- PLS accounts
Deposits maturing within 12 months
Pakistan
Life Fund
6,474
196,607
Overseas
Life Fund
-
Aggregate
Pension
Fund
-
2011
2010
6,474
196,607
4,699
80,153
74,594
3,714,291
351,661
24,255,703
393,568
61,462
291,907
3,737
-
4,111,596
413,123
24,622,204
3,832,168
250,117
20,357,410
74,594
28,524,736
746,937
3,737
29,350,004
24,524,547
20 RENTAL INCOME FROM INVESTMENT PROPERTIES

(Rupees in '000)
Statutory Funds
Pakistan
Life Fund
Rent received
Increase in accrued rental income
Less: Investment property
related expenses
Net rental income from
investment property
741,868
-
Overseas
Life Fund
-
Aggregate
2011
2010
741,868
-
704,818
14,391
Pension
Fund
(428,184)
(428,184)
(380,535)
313,684
313,684
338,674
71
21 MOVEMENT IN EQUITY OF STATUTORY FUND

21.1
Policyholders liability
(Rupees in '000)
Statutory Funds
21.2
Overseas
Life Fund
Pension
Fund
Balance as at the beginning of year

Increase during the year
222,856,034
36,507,958
5,023,215
628,873
153,406
662
228,032,655
37,137,493
197,038,990
30,993,665
Balance at the end of year
259,363,992
5,652,088
154,068
265,170,148
228,032,655
2,289,714
83,008
16,152
2,388,874
2,406,295
Surplus allocated in respect of the year
25,300,355
464,839
22,443
25,787,637
19,487,864
Bonuses allocated during the year
(24,500,086)
(266,982)
(24,767,068)
(19,505,285)
3,089,983
280,865
3,409,443
2,388,874
648,727
(648,727)
11,919
(11,919)
660,646
(660,646)
499,350
(499,350)
38,595
Retained earnings on par business

attributable to sharesholders
(Undistributable - Ledger Account B)
Balance at beginning of the year
Surplus allocated in respect of the year
Transfer to distributable profits
21.4
2010
Retained earnings attributable to

policyholders (Ledger Account A)
Balance at the beginning of year
21.3
Aggregate
2011
Pakistan
Life Fund
Retained earnings on par business

attributable to sharesholders
(Distributable-Ledger Account C)
Balance as at beginning of the year
Transfer from undistributable profit
Surplus appropriated to
shareholders' fund
Balance at end of the year
648,727
11,919
660,646
499,350
(648,727)
(11,919)
(660,646)
(499,350)
22 POLICYHOLDERS' LIABILITIES
Gross of Reinsurance
Actuarial liability relating to future events
Provision for outstanding reported claims payable over
a period exceeding 12 months
Provision for incurred but not reported (IBNR) claims
Net of Reinsurance
Actuarial liability relating to future events
Provision for outstanding reported claims payable over
a period exceeding 12 months
Provision for incurred but not reported (IBNR) claims
72
annual report
2011
255,864,181
5,883,512
1,760,090
2,782,366
896
17,438
260,406,637
5,901,846
254,821,536
5,633,754
1,760,090
2,782,366
896
17,438
259,363,992
5,652,088
154,068
261,901,761
226,421,564
1,760,986
2,799,804
1,646,674
2,235,320
154,068
266,462,551
230,303,558
154,068
260,609,358
224,150,661
1,760,986
2,799,804
1,646,674
2,235,320
265,170,148
228,032,655
154,068
23 BRANCH OVERHEADS
(Rupees in '000)
Statutory Funds
Traveling expenses
Balance as at beginning of the year
Printing and stationeries
Medical expenses
Gratuity contribution
Group insurance contribution
Postage and telegram
Utilities
Rent
Prize and awards
Conference and meetings
Repairs and maintenance
Incentive bonuses
Persistency bonuses
Others
Overriding commission of area manager
Pakistan
Life Fund
Overseas
Life Fund
547,487
395,248
9,034
30,672
11,635
14,345
24,817
12,690
21,732
12,124
29,297
2,222
322,635
20,835
-
5,123
215
86
1,351
672
8,522
465
838
6,274
30,285
1,454,773
53,831
Aggregate
2011
2010
552,610
395,463
9,120
32,023
11,635
14,345
25,489
12,690
30,254
12,589
30,135
2,222
328,909
20,835
30,285
385,306
285,684
7,043
25,374
9,961
1,751
22,905
10,112
25,263
13,712
24,935
1,683
268,761
17,403
617
28,005
1,508,604
1,128,515
Pension
Fund
24 AUDITORS' REMUNERATION
(Rupees in '000)
Aggregate
2011
2010
Audit Fee
Business within Pakistan
Riaz Ahmad & Company
Anjum Asim Shahid Rahman
Out of Pocket Expenses

Riaz Ahmad & Company
Anjum Asim Shahid Rahman
Business Outside Pakistan

Audit Fee
Sajjad Hyder & Company
Out of Pocket Expenses
900
900
900
900
1,800
1,800
500
500
500
500
1,000
1,000
2,800
2,800
938
234
607
156
1,172
763
3,972
3,563
73
25 INVESTMENT INCOME - Others

An amount of Rs. 252.133 million (2010: Rs. 97.533 million) appearing under Overseas Life Fund represents the
resultant effect of translation of income, expenses, assets and liabilities of overseas operations business to Pak Rupees.
26 PROVISION FOR IMPAIRMENT IN SHARES AND FIXED INCOME SECURITIES
This includes provision against investments in shares of certain companies in default counter and unlisted companies
and provision against investments in Certificate Of Investments (COIs) of First Dawood Investment Bank Limited.
27 FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
27.1
Financial risk management, objectives and policies

The Corporation is exposed to variety of financial risks: market risk (comprising interest rate risk, currency
risk, and other price risk), credit risk and liquidity risk in relation to the financial statements on its balance
sheet. The Corporations risk management program is geared to ensure the survival of the Corporation as a
going concern in the face of all sources of significant identifiable financial risks. It focuses on the unpredictability
of financial markets and seeks to minimize potential adverse effects on the Corporation's financial performance.
Management has the overall responsibility for establishment and oversight of the Corporation's risk
management framework and is responsible for developing risk management policies and its monitoring.
27.2
Market risk
Market risk is the risk of adverse financial impact as a consequence of market movements of prices of financial
instruments and securities. Such price movements can arise due to variation of market interest rates, currency
exchange rates, industry profitability and other economic factors.
The Corporations investments are primarily in long term Government bonds. In addition, the Corporation
also has a significant exposure to the equity market and invests some funds in corporate term finance
certificates. Funds awaiting long term investment are kept in short duration fixed deposits with banks.
27.2.1 Interest rate risk

Interest rate risk is the risk that the value of future cash flows of a financial instrument will fluctuate because
of changes in market interest rates. The Corporation is exposed to interest rate risk since it issues insurance
policies which are long term in nature. These policies are essentially backed by long term Government bonds
and cash at bank.
It is the policy of the Corporation to match the average duration of its investments in Government bonds with
the average duration of its policyholders liabilities as much as possible but this is not always possible due
to market limitations. This is because sufficient quantities of Government bonds of longer durations are not
available in the market. As a result some mismatch in the average duration of the Corporations liabilities
and assets is possible.
Interest rate risk exposures from options and guarantees embedded in insurance liabilities
The Corporations deposit administration pension contracts have certain guarantees that transfer interest rate
risk to the Corporation. These guarantees include a minimum guaranteed investment return of 0.375% per
month on the pension funds being managed by the Corporation. The pensions liabilities of the Corporation
are a very insignificant proportion of overall liabilities of the Corporation and historically investment return
earned on the assets backing these liabilities has never been below the amount of the guaranteed return.
74
annual report
2011
27.2.2 Currency risk

Currency risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because
of changes in foreign exchange rates. This risk arises if there is a currency mismatch between the assets and
liabilities.
All assets and liabilities of the Corporation within Pakistan are in Pakistan rupees. This business is therefore
not exposed to any currency risk.
The Corporations Overseas Life Fund undertakes business in US Dollars and UAE Dirhams. It is policy
of the Corporation to ensure the maximum possible currency matching between its assets and liabilities in
each currency. Historically, UAE Dirham has remained pegged to US Dollar, hence any inadvertent
mismatch between these two currencies is not expected to entail any significant currency risk.
Carrying amounts of the Corporations foreign currency denominated assets and liabilities are as follows:
(Rupees in '000)
2011
Assets
Liabilities
2010
UAE Dirhams
US Dollars
UAE Dirhams
61,638,812
61,638,812
83,676,322
83,676,322
52,012,248
47,365,368
US Dollars
39,939,408
15,691,187
27.2.3 Other price risk

Other price risk is the risk that equity prices can fluctuate due to speculative investment activity, variations
in the profit outlook of industries, interest rates prevailing in the market and general market sentiment,
whether those changes are caused by factors specific to the individual financial instrument or its issuer,
or factors affecting all similar financial instruments traded in the market.
The Corporation's listed securities are exposed to market price risk arising from uncertainties about the
future value of investment securities. The Corporation limits market risk by maintaining a diversified
portfolio and by continuous monitoring of developments in equity. In addition, the Corporation actively
monitors the key factors that affect stock market.
27.3
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligation resulting in financial
loss to the Corporation. The key areas of exposure to credit risk for the Corporation are in relation to its
investment portfolio, reinsurance program and to a lesser extent amounts due from policyholders and
intermediaries.
The Corporation has adopted a policy of only dealing with creditworthy counterparties and obtaining
sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The
Corporation only transacts with entities that are rated the equivalent to investment grade and above.
This information is supplied by independent rating agencies where available and if not available the
Corporation uses other publicly available financial information and its own trading records to rate its major
policyholders and reinsurers.
The Corporations exposure and credit ratings of its counterparties are continuously monitored and the
aggregate value of transactions concluded is spread amongst approved counterparties.
Receivables consist of a large number of policyholders, spread across diverse industries and geographical
areas. The Corporation extends policy loans to its policyholders. These loans are entirely backed by the
cash values of their policies.
75
The Corporation does not have any significant credit risk exposure to any single counterparty or any group
of counterparties. Concentration of credit did not exceed 5% of gross monetary assets at any time during
the year. The credit risk on liquid funds is limited because the counterparties are banks with high creditratings. The Corporation does not invest in derivative financial instruments.
The carrying amount of financial assets represents the maximum credit exposure, as specified below:
Note
Bank deposits
Loans
Investments
Premium due but unpaid
Amount due from other insurers / reinsurers
Agents balances
Investment income due but outstanding
Accrued investment income
Sundry receivables
Others
Total
10
13
14
(Rupees in '000)
2011
2010
30,222,602
23,018,300
29,313,862
6,865,373
156,212
208
325,501
3,905,504
215,104
30,524
25,437,238
19,463,011
28,630,442
5,392,682
98,411
211
157,206
3,048,806
250,272
26,368
94,053,190
82,504,647
Provision is made for receivables against premium due but unpaid in accordance with the Corporation's
policies. The remaining past due balances were not impaired as they relate to a number of policyholders
from whom there is no history of default.
2011
(Rupees in '000)
2010
The age analysis of premium due but unpaid:

Up to 1 year
1-2 years
2-3 years
Over 3 years
76
annual report
2011
6,582,133
65,445
201,926
15,869
6,865,373
5,315,330
51,038
11,175
15,139
5,392,682
The credit quality of the Corporation's bank balances can be assessed with reference to external credit
ratings as follows:
(Rupees in '000)
Bank
Askari Commercial Bank Limited
Bank Alfalah Limited
MCB Bank Limited
Habib Bank Limited
National Bank of Pakistan
United Bank Limited
The Bank of Punjab
Habib Metropolitan Bank Limited
KASB Bank Limited
Kenya Commercial Bank
Bank of Ceylon - Srilanka
Al Baraka Bank (Pakistan) Limited
Grindlays Bank Limited - Srilanka
Allied Bank of Pakistan
Soneri Bank Limited
Faysal Bank Limited
Summit Bank Limited
Standard Chartered Bank Limited
Others
Rating
Long term
Short term
AA
AA
AA+
AA+
AAA
AA+
AAAA+
BBB
A
AA
AAAA
A
AAA
-
A1+
A1+
A1+
A-1+
A-1+
A-1+
A1+
A1+
A3
AA(lka)
A2
A1+
A1+
A1+
A2
A1+
-
Rating
agency
PACRA
PACRA
PACRA
JCR-VIS
JCR-VIS
JCR-VIS
PACRA
PACRA
PACRA
Fitch Ratings
PACRA
PACRA
PACRA
PACRA
JCR VIS
PACRA
-
2011
2010
234,123
725,751
2,623,380
7,697,099
4,033,843
10,388,529
16
1
45
712
86
556,932
162
958,553
509,548
900,196
200,000
25,000
1,368,626
1,558,886
311,666
1,050,000
7,643,595
4,000,015
8,554,448
20,885
1
43
712
86
495,050
162
687,397
1,114,292
30,222,602
25,437,238
The credit quality of the Corporation's investments in Term Finance Certificates can be assessed with
reference to external credit ratings as follows:
Term Finance Certificates:
Orix Leasing Pakistan Limited
Pakistan Mobile Communication Limited
Engro Chemical Pakistan Limited
Pak Arab Fertilizer Limited
AA+
A+
AA
AA
PACRA
PACRA
PACRA
JCR VIS
33,668
314,228
201,560
167,216
101,319
379,861
201,734
211,069
716,672
893,983
The credit quality of amount due from other insurers and reinsurers can be assessed with reference
to external credit ratings as follows:
Note
2011
(Rupees in '000)
2010
Amount due from other insurers/reinsurers

A or above
27.4
156,212
98,411
Liquidity risk
Liquidity risk is the risk that the Corporation cannot meet its obligations associated with financial liabilities
as they fall due.
The Corporation has adopted an appropriate liquidity risk management framework for the management of
the Corporations liquidity requirements. The Corporation manages liquidity risk by maintaining banking
facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and
matching the maturity profiles of assets and liabilities. The Corporation is exposed to liquidity risk arising from
clients on its insurance and investment contracts. The Corporation maintains adequate liquid reserves to meet
any eventuality arising from a catastrophe.
77
Liquidity management ensures that the Corporation has sufficient access to funds necessary to cover insurance
claims, surrenders, withdrawals and maturing liabilities. In practice, most of the Corporations assets are
marketable securities which could be converted into cash when required.
The table below gives a break up of the Corporations assets and liabilities with respect to asset-liability
matching allocated to various classes of policyholder liabilities:
(Rupees in '000)
Share
Statutory Funds
Holders Fund
Pakistan
Life Fund
Overseas
Life Fund
Aggregate
2011
2010
838,873
-
830,549
-
716,672
196,747,923
893,983
166,479,524
24,006,774
1,175,568
23,051,252
1,283,687
23,018,300
19,463,011
Pension
Fund
Debt securities
Available for Sale
Listed Securities
Un Listed Securities
Held to Maturity
Listed Securities
1,286,053
716,672
192,360,587
838,873
2,929,205
172,078
Equity securities
Available for Sale
Listed Securities
24,006,774
1,175,568
Loans and Receivables

Loans
405,258
22,087,181
525,861
Reinsurance Assets
Cash and bank deposits
Other Assets
74,594
265,199
156,212
28,526,536
16,043,769
1,820,816
281,726
3,737
30,464
156,212
30,425,683
16,621,158
98,411
25,522,090
13,855,542
2,031,104
285,073,299
6,396,481
206,279
293,707,163
251,478,049
Total Assets
78
Liabilities
Fixed Term
Whole of Life
245,913,653
4,824,956
5,392,995
215,602
251,306,648
5,040,558
216,384,607
4,738,455
Short Term Insurance Contracts

Riders
4,925,443
3,624,956
43,491
4,925,443
3,668,447
3,711,073
2,968,105
Annuities
Granted Investment Contracts
Others
2,031,104
74,984
25,709,307
744,393
154,068
52,211
74,984
154,068
28,537,015
77,009
153,406
23,445,394
TOTAL
2,031,104
285,073,299
6,396,481
206,279
293,707,163
251,478,049
annual report
2011
The following are the contractual maturities of financial liabilities other than policyholder liabilities,
including estimated interest payments on an undiscounted cash flow basis:
(Rupees in '000)
2011
Carrying
amount
Financial liabilities
Amounts due to other insurers / reinsurers
Amount due to agents
Accrued expenses
Others
Contractual
cash flow
Upto one year
More than
one year
230,458
2,904,371
1,692,396
2,115,396
230,458
2,904,371
1,692,396
2,115,396
230,458
2,904,371
1,692,396
2,115,396
6,942,621
6,942,621
6,942,621
(Rupees in '000)
2010
Carrying
amount
Financial liabilities
Amounts due to other insurers / reinsurers
Accrued expenses
Others
27.5
Contractual
cash flow
Upto one year
More than
one year
128,045
2,330,317
1,393,998
1,659,034
128,045
2,330,317
1,393,998
1,659,034
128,045
2,330,317
1,393,998
1,659,034
5,511,394
5,511,394
5,511,394
Fair value
The fair values of all major financial assets are estimated to be not significantly different from their carrying
values except for the following:
(Rupees in '000)
2011
Carrying
Fair
value
value
Government securities
Listed equity securities
184,041,241 178,434,751
716,672
695,095
24,071,092 46,216,069
28 CAPITAL RISK MANAGEMENT

The Corporation manages its capital to ensure that it remains financially solvent while maintaining adequate financial
strength to sustain business growth. It also complies with the minimum capital requirements of the SECP. The capital
structure of the Corporation consists of equity attributable to the Government which is the sole shareholder of the
Corporation and retained earnings.
The Corporation is also subject to capital requirements of United Arab Emirates (UAE) where it maintains a branch
office that issues insurance contracts. The Corporation complies fully with the minimum capital requirements
imposed by insurance supervisory authority in UAE. The UAE Cabinet has issued cabinet resolution No. 42 of 2009
which came into force on January 31, 2010, requiring the insurance companies to increase their minimum paidup share capital to AED 100 million within three years from the date of this resolution. The Corporation has taken
up this matter with Ministry of Finance through Ministry of Commerce for enhancing the capital. Ministry of Finance
advised the Corporation to approach the UAE Government for seeking permission to raise the required paid up
share capital by the end of December 2014.
79
In pursuance of this requirement, the Corporation is seeking approval from Ministry of Commerce for increase in
the Authorized Capital from Rs. 1,500 million to Rs. 3,000 million and paid up capital from Rs. 1,100 million to
Rs. 2,500 million.
The paid up capital of the Corporation is currently Rs. 1,100 million.
There were no changes made to the capital base nor to the objectives, policies and processes for managing capital.
Further details are given in the table below:
(Rupees in '000)
2011
2010
Retained earnings
Capital resources on a regulatory basis
520,223
1,100,000
406,878
1,100,000
Shareholders equity
1,620,223
1,506,878
29 INSURANCE RISK
29.1
Insurance contracts
29.1.1 Classification
The Corporation maintains three statutory funds which are as follows:
- Pakistan Life Fund
- Overseas Life Fund
- Pension Fund
Within the Pakistan Life Fund the business can be further classified as individual life conventional business,
individual universal life business, group insurance business and a small amount of annuity business.
Most of the new individual life conventional policies written by the Corporation contain a discretionary
participation feature (DPF).
The Overseas Life Fund entirely consists of individual life conventional business. Most of the new business
written under the overseas life fund contains a DPF.
The Pension Fund consists of funds on account of group pension deposit administration contracts.
Considering all the three statutory funds together, the bulk of Corporation business consists of individual
life conventional policies. Most of the remaining business consists of group insurance business. Individual
universal life business and pension fund business are relatively less significant classes of business in terms
of weight of their policy liabilities. The Corporation also offers some supplementary benefits attached in
the form of riders to the individual life policies and the group life contracts. Each of these classes of business
are described in greater detail below:
29.1.2 Contract details and measurement
The insurance contracts offered by the Corporation are described below:
29.1.2.1 Individual life policies
Individual life conventional products
These are long term contracts with level annual premiums. These plans generally provide for some death
benefit on death during the currency of the policy and a survival benefit either on the happening of certain
contingencies or on the maturity of the policy. The premiums are payable only in the life time of the
policyholder. In case of term insurance products there is no survival benefit.
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annual report
2011
Universal life policies

Under these plans a certain amount is set aside from the premium for expenses and meeting the mortality
cost and the remainder of the premium is invested to earn some investment return. Investment return is
allocated to these products on an annual basis keeping in view the investment earnings of the Pakistan
Life Fund.
Term insurance policies
A few products of the Corporation are term insurance providing benefits only in case of death benefits.
Under these policies no benefit is due if the policyholder survived in the duration of the policy. The
Corporation sells both level term insurance and decreasing term insurance also known as mortgage
protection plans.
Annuities
The Corporation also has a small number of individual and group annuities on its books. Under these
contracts a periodic income benefit is payable to the insured life for as long as annuitant is alive.
Supplementary riders
The Corporation offers various types of supplementary riders. Some of these riders offer additional life
coverage, in some cases they offer accidental death and disability benefits. The benefits can take various
forms such as lump sum payment or an income benefit or waiver of premiums due under the host policy
contract.
Insured event
Under the individual life insurance policies in most cases the insured event is either death or survival until
the maturity date of the policy, except in case of term insurance where there is no maturity benefit. Under
the annuity policies the Corporation is exposed to the risk of longevity. In this case the insured event is
survival of the life insured for a long duration, exceeding the period normally expected under standard
mortality tables.
In case of supplementary rider the insured event is either death or just accidental death or disability whether
accidental or natural or both.
Distribution channel
The individual life business of the Corporation is sold through its dedicated sales force which is present
all over the country. This field force is organised under a three tier system consisting of sales representatives,
sales offices and sales managers. Each sales sector headed by a sector head is further grouped under nearly
700 area offices, more than a thousand sector offices, 26 zones and 4 regional offices in addition to one
zone for the Gulf Region. The Gulf zone has its own marketing team of sector heads, area managers and
sales force.
The individual life policyholders of the Corporation come from all strata of society, with greater representation
of the rural areas due to wider outreach of its field force. In most cases the new policyholders are below
age of 56.
81
29.1.2.2 Group life policies

Basic coverage
The group life policies are generally one year renewable term insurance contracts. In most cases they
provide group coverage to the employees of an employer. Some times the coverage is tied up with loans
extended by the employer for house building or purchase of motor vehicles or other household items. In
some cases group policies are issued to lending agencies such as banks to provide group coverage to their
borrowers. There are also a small number of group endowment policies which provide benefits identical
to individual life policies but under the umbrella of a group contract.
Supplementary coverage
In many cases the group policies also provide supplementary coverage which may include accidental or
natural disability benefits and additional accidental death benefit. These riders also take the form of one
year renewable term insurance policies.
Insured event
Under the group life insurance policies in most cases the insured event is either death due to any cause.
In case of supplementary coverage the insured event can include accidental death or disability or natural
disability.
Distribution channel
The group insurance business is sold through four group and pension zones of the Corporation. Each zone
has its own marketing force consisting of sector heads who are full time salaried employees of the
Corporation, however, some of the group business is also procured through individual life field force of
the Corporation.
Most of the lives covered under the group insurance consist of industrial and office workers, civil servants
and employees of Corporations, banks, other financial institutions, army, navy etc.
29.1.2.3 Pension business
The pension portfolio of the Corporation consists of group deposit administration pension contracts. These
are long-term contracts providing pension benefits to the employees of the policyholder. Under these
contracts, the Corporation does not retain any insurance risk apart from a nominal investment return
guarantee. The services offered by the Corporation include benefit administration, funding advice and
investment of the funds.
These contracts do not transfer any significant insurance risk from the policyholders to the Corporation.
These are therefore by nature similar to investment contracts.
The distribution channel employed for the pension business is the same as for the group insurance business.
The target market for this business is also similar to the target market for group insurance business.
29.1.3 Reserving method
29.1.3.1 Individual life policies
The Corporation values its individual life policy liabilities by a modified net level premium method. Under
this method the Corporations future obligations in respect of guaranteed sums assured and declared
bonuses are discounted using a conservative interest basis. The policy liabilities are calculated by deducting
from this amount the discounted value of future net premiums receivable under the valued policies, using
a conservative basis for calculating the net premiums.
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annual report
2011
29.1.3.2 Universal life policies

For universal life policies the amount of reserve is equal to the actual accumulated value of the portion
of premiums invested in the Pakistan Life Fund after accounting for the investment return allocated to these
policies.
29.1.3.3 Group life policies
Group life business consists of short duration one year renewable term insurance policies. The Corporation
holds an unearned premium reserve for that portion of the premium which has not yet accrued on the
balance sheet date.
The Corporation also holds a premium deficiency reserve for this block of business. This reserve is
calculated on the basis of the unearned premium reserve. The amount of this reserve reflects the view of
the Appointed Actuary regarding the eventual loss ratio expected under group insurance contracts
duly accounting for the IBNR provisions. This reserve is equal to 30% of the unearned premium reserved.
29.1.3.4 Supplementary riders
For the supplementary riders attached to individual life policies the Corporation holds a reserve
equal to one full year's premium due under these policies. On the other hand the supplementary riders
attached to the group life policies are valued in the same way as the group life policies themselves.
29.1.3.5 Pension plans
The Corporation holds a reserve equal to the market value of the assets backing the pension business
statutory fund. Classification of the Government bonds held by this statutory fund as Held to Maturity
means that they are valued on an IRR basis, which is currently more than their market value. The additional
valuation arising from the adoption of IRR valuation is being held as a separately identifiable reserve within
the pension statutory fund.
29.2
Reserves for outstanding claims

The Corporation holds a reserve for all claims which have been reported but are still outstanding on the
balance sheet date. Another estimated reserve is kept within the actuarial liability for claims which has been
incurred but has not yet been reported. The pattern of time lag in reporting of claims observed in previous
years is used as a means of estimating as accurately as possible the liability expected to arise from the incurred
but not reported claims using the chain ladder method of estimation.
29.3
Liability adequacy test

The adequacy of liability held by the Corporation has been tested using an alternative reserving method
based upon realistic estimates of future mortality, expenses, lapses and investment return. Based upon the
results of this test the Appointed Actuary considers that the liability being kept by the Corporation is
adequate.
29.4
Reinsurance contracts held

The Corporation reinsures its Pakistan business under a surplus treaty arrangement. Under this arrangement
any insurance risk on a particular life which exceeds the retention is automatically ceded to the reinsurer.
The retention level is fixed by the Corporation at a level which it considers that it can safely hold on its
own account.
83
There is a similar surplus treaty arrangement for reinsurance of the Corporations Gulf business. The retention
level of the Gulf business is fixed by the Corporation which it deems to be safe for that business.
Under both these treaties the re-insurer is not under an obligation to reinsure certain high sum assured
cases which exceed the obligatory limit of the re-insurer as specified in the respective treaty. Such cases
are reinsured by the Corporation on a facultative basis.
The reinsurers of the Corporation are highly rated companies with a sound credit record.
Primarily, reinsurance assets are amounts due from reinsurers with respect to recoveries under claims and
profit commission. Reinsurance recoveries are measured according to the terms and conditions of the
reinsurance contracts.
Reinsurance liabilities consist of amounts due to reinsurers on account of reinsurance premiums due which
are measured according to the terms of the arrangements.
The Corporation assesses impairment on its reinsurance assets on a regular basis to identify any losses in
recoveries. As of now, the Corporation's all reinsurance assets are due from re-insurers with a credit rating
of A or above. The reinsurers maintain a sound credit history and hence no impairment provision is
required for now.
29.5
Accounting estimates and judgments and process used for deciding assumptions
29.5.1 Mortality and disability

Due to nature of its business the Corporation is exposed to the risk of mortality. The reserving basis utilizes
a conservative estimate of mortality. The Corporation carries out a continuous mortality investigation of
its individual life and group life business to assess the actual level of mortality experienced by it. The results
of this study are utilized to ascertain the safety margin built into its reserving basis and the mortality level
to be utilized for testing the adequacy of its liability.
The Corporation also has a small exposure to disability risk covered by some of its supplementary contracts.
The Corporation constantly monitors its disability experience and an investigation is carried out whenever
it feels that there is an adequate data for arriving at credible results.
29.5.2 Investment income
Due to long term nature of its individual life policies the Corporation is exposed to the risk of adverse
fluctuation of interest rates. In particular a long term declining trend in the interest rates can produce a
financial strain for the Corporation. To some extent this risk is mitigated by the Corporations policy to
match the duration of its assets with the duration of its liabilities, whenever this is possible. The reserving
basis employed by the Corporation for valuing its liabilities contains adequate safeguards to counter any
residual interest rate risk.
The past trend in returns available on Government bonds and the relationship of these returns to other
financial variables such as inflation rate and short term interest rates is constantly analysed to form an
opinion regarding the investment returns expected to be earned in the future on a medium term and long
term basis. These estimates are utilized in testing the adequacy of liabilities on a realistic basis.
29.5.3 Expenses
The Corporation is also exposed to the risk of management expenses being beyond the permissible limits
or increase in expenses at a pace faster than expected. The Corporation carries out an annual expense
analysis to keep track of its expenses. The results of this study are utilized in the estimation of liability under
realistic assumptions to ensure the adequacy of the reserves being held.
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annual report
2011
29.6
Frequency and severity of claims
29.6.1 Frequency
Since the Corporation covers a large number of lives from diverse backgrounds, which are geographically
spread all over the country, the frequency of claims is normally expected to remain relatively stable over
time due to the law of large numbers. However, the frequency can be affected in case there is a variation
in the mortality rates experienced by the group of lives insured by the Corporation. An unusual catastrophic
event such as a disease epidemic, flash floods or a major earthquake can produce a sudden spike in the
frequency.
29.6.2 Severity
To some extent the Corporation is protected from isolated large claims because the liability for any
claim exceeding its retention level is automatically passed on to the reinsurer under the existing
treaty arrangements. However, there is also the risk of a large number of small claims occurring due to a
catastrophic event. Exposure to catastrophic events is also dependent upon the concentration of risk.
The Corporation is represented by 26 zones which are spread out all over the country. However, as the
population of the country is concentrated more in the Punjab and Sindh provinces, the business distribution
of the Corporation naturally reflects the same pattern. Nearly 86 % of the Corporations business emanates
from these two provinces.
In addition, there is also some concentration of risk due to the nature of group business. These policies
are typically issued to an employer for coverage of all the persons in their employment. Normally, the
employees of an employer are distributed over one or more establishments maintained by the employers
business. This produces local concentration of risk wherever such establishments happen to exist.
Furthermore, a large number of such establishments can exist in a small geographical area such as an
industrial zone or the business district of a major city.
29.6.3 Claims development
The development of claims against insurance contracts issued is not disclosed as uncertainty as to the
timing and amount of claims is usually resolved within a period of one year.
29.7
Sources of uncertainty in estimation of future benefit payments and premium receipts

There are many theoretical reasons giving rise to uncertainty in estimation of future benefit payments and
premium receipts.
Generally, mortality rates for a large segment of the population are quite stable from year to year but
mortality is dependent upon a number of factors. Unhygienic living conditions, inadequate health care
facilities, prevalence of general stress in society or emergence of epidemic disease are some socio-economic
reasons which may give rise to an adverse trend in mortality rates.
Life insurance also serves as a channel for savings. However, in times of economic recession the savings
rate can fall. This can reflect upon the Corporation in the form of lower new business growth and higher
lapse rates of existing policies.
85
29.8
Management of insurance risk

The insurance law has laid down some minimum criteria for insurance risk management, which is mandatory
for all insurers. This includes guidance regarding minimum capital requirement for insurers, requirement
to submit a financial condition report on an annual basis, minimum reserving basis for the financial
condition report, minimum solvency requirements and requirement to match the currency of assets and
liabilities. Also the law lays down certain restrictions on the assets that may be counted as admissible
assets, prescribes guidelines for valuation of assets and liabilities, prescribes reinsurance arrangements and
prescribes guidelines for investment of funds.
The Corporation's strategy for management of insurance risk meets the minimum standards laid down by
the law in addition to certain other practices which are Corporation specific.
29.8.1 Financial risk

29.8.1.1 Interest risk
The Corporation values its liabilities at the rate of 3.75% per annum, which is a requirement prescribed
by the SECP. However, the actual return earned by the Corporation is much more than this. This large gap
between the valuation discount rate and the market rate ensures that there is an adequate margin for the
Corporation to absorb any impact of adverse fluctuation in the interest rates.
As a further security mechanism, all the guaranteed liabilities of the Corporation are fully backed by the
combined value of cash in hand, Government bonds and policy loans. The first two of these asset classes
are by definition risk free. Also the policy loans are fully backed by the cash values of the underlying
policies. Hence this asset class also does not carry any default risk.
The practice of valuing the assets Held to Maturity by the IRR method precludes any possibility of sudden
changes in the investment return for which credit is taken in the accounts. This stability in the returns adds
another layer of security against interest risk.
29.8.1.2 Expense risk
This is that the actual expenses of the Corporation are more than the provision in its premium rates. To
ensure that adequate reserves are kept for the risk of expense overrun the net premiums used by the
Corporation in its actuarial valuation are suitably reduced to give due allowance for the higher expense
ratio of the Corporation.
29.8.1.3 Mortality risk
The mortality used in the reserving basis is the mortality prescribed by the SECP, which is the EFU 196166 table. Due to advances in health care technology the current mortality levels are significantly lower
than the mortality rates of this table. Hence the reserving basis has adequate margins for absorbing the
impact of adverse fluctuation in mortality.
29.8.1.4 Surrenders risk
The reserving basis used by the Corporation does not assume any surrenders. However the Corporation
ensures that the reserves kept by it for each policy is more than its surrender value. This ensures that the
Corporation does not suffer any adverse impact in case any policies are surrendered.
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annual report
2011
29.8.1.5 Inflation risk

To a certain extent some inflation risk is already built into the reserving basis, since the average premium
size and the average sum assured per policy tends to increase in line with inflation. Also at each actuarial
valuation date the Appointed Actuary reviews the special provisions required to be kept as described under
the heading Expense risk, keeping in view the expense level of the Corporation on the valuation date. This
provides a mechanism of adjusting for any unanticipated movements in the inflation rate.
29.8.1.6 Catastrophe risk
The business of the Corporation is spread all over the country. However the insurance penetration rate in
the country is still very low. This means for any localized segment of the population only a small proportion
of the people would be covered under life insurance. The proportion covered by the Corporation policies
is expected to be even smaller. As a result any localized catastrophic event is not expected to have any
significant impact on the Corporation.
The situation is a bit different on the group insurance side where there is a higher concentration of risk
because by its very nature this business often covers a large number of persons located within a restricted
geographical area, such as a building or a factory premises.
This risk is somewhat mitigated due to the presence of reinsurance cover for the individual and group
policies. In addition the premium rates of the Corporation are designed to adequately cater for this risk.
Premium deficiency reserve held by the Corporation for its group business provides an extra layer of security
against this risk.
29.8.1.7 Currency risk
The Corporation deals in only one currency within Pakistan. Hence this risk is non-existent for the Pakistan
Life Fund.
In case of the Gulf business the Corporation writes business in UAE Dirhams and US Dollars. The exchange
rate parity between these two currencies is relatively stable. Also there is a high degree of matching between
the assets and liabilities in these two currencies.
29.8.2 Credit risk and asset risk
Management of credit risk and asset risk deals with risks emanating from the assets side of the balance
sheet.
Management of this risk has already been adequately explained under the heading Financial risk
management objectives and policies. Hence no further explanation is deemed to be necessary.
29.8.3 Operational risk or pricing risk
The Corporation utilizes industry recognized underwriting practices to ensure that only standard risks are
written on standard rates. Any sub standard risks identified during the underwriting process are charged
suitable extra premiums. This ensures fair and equitable treatment between various risk categories and
helps in keeping its standard rates competitive by the insurance industry standards.
This practice also protects the Corporation against the risk of large number of sub-standard impaired lives
accumulating on its policy portfolio, since extra premium is automatically charged commensurating with
such risk.
For lives which are otherwise uninsurable, the Corporation offers a special product line known as the nondeclinature scheme. Individuals who are unable to obtain insurance cover due to their poor state of health
can choose to obtain cover under this scheme, which by passes normal underwriting in return for a suitable
extra premium.
87
29.9
Sensitivity analysis
Mortality rates and the discounting factor are the two most significant variables which can have an impact
on the policyholder liabilities. The Corporation has tested the sensitivity of its liabilities to both these
variables which is as follows:
Variable
Increase in mortality
Decrease in mortality
Increase in discount rate
Decrease in discount rate
Quantum of Change
10%
10%
0.5% addition in rate
0.5% reduction in rate
% change in liability
0.27%
(0.27%)
(4.42%)
4.69%
According to the Life Insurance (Nationalization) Order, 1972, any increase or decrease in the actuarial
surplus is shared by the policyholders and the Government as the sole shareholder in the ratio of 97.5%
and 2.5% respectively.
30 SEGMENT REPORTING
Class of Business wise assets, liabilities and operating results has been disclosed in the Balance Sheet, Profit and
Loss account and Revenue account prepared in accordance with the requirements of the Insurance Ordinance,
2000 and the SEC (Insurance) Rules, 2002.
31 RELATED PARTY TRANSACTIONS
The Corporation has related party relationships with provident fund, pension fund scheme, gratuity fund, state
owned profit oriented entities and its key management personnel.
Accrual of liability in respect of the funds are made annually. Remuneration to key management personnel are
determined in accordance with the terms of their employment / appointment. Certain key management personnel
are also provided with free use of the Corporation maintained vehicles and post retirement benefits in accordance
with their entitlement under the terms of their employment.
The related parties also comprise subsidiaries, directors, key management personnel and employees benefits funds.
The Corporation in the normal course of business carries out transactions with various related parties. Amounts due
from and to related parties, amounts due from chairman and executives directors are disclosed in the relevant notes.
Terms and conditions of transactions with related parties
Transactions with related parties are made at normal market prices. There have been no guarantees provided or
received for any related party receivables or payables.
88
annual report
2011
Other material transactions and balances with related parties are given below:
(Rupees in '000)
Aggregate
2011
2010
Profit oriented state-controlled entities-common ownership
Premiums
449,762
369,220
Claims
180,346
285,376
1,508
2,383
Rental income received
1,954
2,303
Right shares received at par
4,463
Profit commission
Subsidiaries
Cash received from sale of shares
18,569
Staff retirement fund

Contribution to provident fund
52,503
Contribution made directly by Corporation to pension fund
45,438
Contribution to funded gratuity
74,313
47,621
512,677
329,063
3,616
3,655
886
707
4,502
4,362
Expense charged for pension fund
47,146
-
32 NUMBER OF EMPLOYEES
The number of employees as at December 31 are:
Permanent employees
Area managers
33 DATE OF AUTHORISATION FOR ISSUE

These financial statements were approved and authorized for issue on April 30, 2012 by the Board of Directors of
the Corporation.
Shahid Aziz Siddiqi

Chairman
Farooq Hadi
Director
Wazir Ali Khoja

Director
Yasmeen Saud
Executive Director (Finance and Accounts)
89
(Rupees in '000)
2010
Exposed to yield / interest rate risk
Note
Effective
yield /Markup rate %
Maturity upto
one year
Maturity
Maturity from
Maturity from
from three
one to two year two to three year to four year
Maturity
from four
to five year
Over five year
Sub total
Non - interest
bearing
financial
instruments
Total
Financial Assets
Fixed rate instruments
Cash and others
Current and other accounts
10
Deposits
Loans secured against life insurance
policies
84,852
84,852
4,082,285
4,082,285
5-13.85
20,357,410
997,543
12
1,048,115
895,662
952,832
714,624
819,435
59,655
53,170
51,873
50,577
44,093
11
Loan secured against other assets
6-10
Unsecured loans
Investments
13
8-13.75
Premiums due but not paid
31,442,290
-
16,326,207
-
5,277,711
-
2,900,330
-
291,924
-
14,625,964
100,182,539
-
21,354,953
21,354,953
19,056,632
19,056,632
259,368
156,421,001
259,368
147,011
147,011
24,311,588
180,732,589
5,392,682
5,392,682
98,411
Amount due from other insurers /

reinsurers
98,411
Agents balances
211
211
157,206
157,206
Investment income accrued
3,048,806
3,048,806
250,272
250,272
Other current assets
Sundry receivables
26,368
26,368
Floating rate instruments
Term finance certificates and

government debts
14
13
KIBOR+2.85
Total Financial Assets
772,217
2,241,525
8,422,683
53,679,687
20,514,107
14,705,099
3,665,531
369,981
1,525,433
114,808,503
11,806,406
208,898,360
11,806,406
37,599,692
246,498,052
Financial Liabilities
Balance of Statutory Funds
Outstanding claims
230,421,529
230,421,529
9,220,065
9,220,065
Amount due to other insurers/

reinsurers
128,045
128,045
2,330,317
2,330,317
Accrued expenses
1,393,998
1,393,998
Others creditors
1,659,034
1,659,034
245,152,988
245,152,988
(207,553,296)
1,345,064
Total Financial Liabilities
On balance sheet gap
90
annual report
53,679,687
2011
20,514,107
14,705,099
3,665,531
1,525,433
114,808,503
208,898,360
(Rupees in '000)
2011
Exposed to yield / interest rate risk
Note
Effective
yield /Markup rate %
Maturity upto
one year
Maturity
Maturity from
Maturity from
from three
one to two year two to three year to four year
Maturity
from four
to five year
Over five year
Sub total
Non - interest
bearing
financial
instruments
Total
Financial Assets
Cash and others
10
Current and other accounts

Deposits
Loans secured against life insurance
policies
11
Loan secured against other assets

Unsecured loans
Investments
203,081
203,081
4,524,719
4,524,719
0.5 - 13.85
24,622,204
1,075,679
12.50
1,067,279
847,950
960,964
1,206,484
1,080,747
6-10
61,685
54,979
53,638
52,298
45,593
13
Premiums due but not paid
4.7-16.2
-
23,753,711
-
8,397,388
-
11,783,491
-
678,714
-
23,083,678
-
17,432,492
127,700,830
-
25,697,883
25,697,883
22,595,916
22,595,916
268,193
195,397,812
268,193
154,192
154,192
25,124,769
220,522,581
6,865,373
6,865,373
156,212
Amount due from other insurers / reinsurers
156,212
Agents balances
208
208
325,501
325,501
Investment income accrued

Sundry receivables
14
Other current assets
3,905,504
3,905,504
215,104
215,104
30,524
30,524
Floating rate instruments

Term finance certificates
13
Total Financial Assets
Kibor + 1 to
2.85
2,280,226
481,444
201,560
51,785,105
10,857,440
12,999,653
1,937,496
24,210,018
145,133,322
2,963,230
246,923,034
2,963,230
41,505,187
288,428,221
268,579,591
268,579,591
10,351,610
Financial Liabilities
Balance of Statutory Funds
Outstanding claims
10,351,610
Amount due to other insurers/reinsurers
230,458
230,458
2,904,371
2,904,371
Accrued expenses
1,692,396
1,692,396
Others creditors
2,115,396
2,115,396
285,873,822
285,873,822
246,923,034 (244,368,635)
2,554,399
Total Financial Liabilities

On balance sheet gap
51,785,105
10,857,440
12,999,653
1,937,496
24,210,018
145,133,322
91
Statement by the Appointed Actuary
Form LM
required under Section 52(2) (a) & (b) of the Insurance Ordinance, 2000
In my opinion,
a.
The policyholders liabilities included in the balance sheet of State Life Insurance Corporation of Pakistan has
been determined in accordance with the provisions of the Insurance Ordinance, 2000; and
b. Each statutory fund of the State Life Insurance Corporation of Pakistan complies with the solvency requirements
of the Insurance Ordinance, 2000.
(Shujaat Siddiqui)
Appointed Actuary
92
annual report
2011
Statement of Directors
Form LN
(As per requirement of Section 46(6) and Section 52(2) (c)

of the Insurance Ordinance, 2000)
Section 46 (6)
a.
In our opinion the annual statutory accounts of the State Life Insurance Corporation of Pakistan set out in the
forms attached to the statement have been drawn up in accordance with the Insurance Ordinance, 2000, and
the Insurance Rules, 2002: and
b. State Life Insurance Corporation of Pakistan has at all times in the year complied with the provisions of the
Insurance Ordinance, 2000, and the Insurance Rules, 2002, made there under relating to paid-up capital,
solvency and re-insurance arrangements; and
c.
As at December 31, 2011 State Life Insurance Corporation of Pakistan continues to be in compliance with the
provisions of the Insurance Ordinance, 2000, and the Insurance Rules, 2002, made there under relating to
paid-up capital, solvency and reinsurance arrangement.
Section 52 (2) (c)

In our opinion, each statutory fund of the State Life Insurance Corporation of Pakistan complies with the
solvency requirements of the Insurance ordinance, 2000.
Shahid Aziz Siddiqi

Chairman
Farooq Hadi
Director
Wazir Ali Khoja

Director
Yasmeen Saud
Executive Director (Finance and Accounts)
93
Progress at a Glance since Inception

(Rupees in millions)
1973
1975
1978
1980
1983
1985
1988
1990
1993
1996
1997
1998
First Year Premium (Net)
48
50
80
110
228
341
678
846
918
1,698
1,490
1,306
Renewal Premium (Net)
219
244
305
365
606
847
1,515
2,267
3,284
4,694
4,364
4,413
50
61
114
164
294
347
880
642
930
1,266
1,413
1,244
Total Premium (Net)
317
354
500
638
1,128
1,535
3,073
3,755
5,132
7,658
7,266
6,964
Investment Income
81
122
221
279
562
767
1,323
1,906
3,675
5,984
5,901
5,996
Total Income
391
504
727
920
1,690
2,307
4,406
5,674
8,814
13,650
13,177
12,976
Total Outgo
292
307
427
593
1,005
1,342
2,597
2,877
4,138
7,355
7,477
8,451
1,494
1,735
2,494
3,111
4,660
6,422
11,327
16,321
28,333
45,582
51,010
55,460
10
10
14
14
14
14
15
15
13
12
Overall Expense Ratio (%)
33
33
31
34
34
36
34
35
34
43
43
54
Renewal Expense Ratio(%)
26
27
26
30
28
25
26
22
26
35
39
56
1,401
1,766
2,512
3,155
4,691
6,367
11,140
15,980
27,601
43,084
48,289
54,017
141
191
271
375
596
796
1,560
1,565
2,391
4,097
4,341
4,715
357,413
379,083
397,158
413,231
489,366
599,423
945,258
1,297,879
1,681,946
2,087,919
2,092,404 2,033,388
1,500,000 2,340,472 2,585,775 2,802,279
3,003,387
3,767,266
4,308,986
4,250,232
4,341,011
4,198,974 4,456,347
77,542
117,726
145,626
311,306
440,762
489,772 539,751
Group Premium (Net)

Pension Premium
Life Fund
Yield on Life Fund (%)
Investment Portfolio
Policy Benefits
No. of Policies in Force
(Individual Life)
No. of Lives Covered
(Group Life)
Total Business in Force
17,899
(Sum Assured and Bonuses)
94
annual report
2011
17,952
30,055
45,847
62,277
(Rupees in millions)
Annual
Compound
2011 Growth
Rates
(1973-2011)
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
1,275
1,041
1,124
1,350
1,797
2,348
2,806
3,327
3,854
5,159
7,196
9,647
11,990
16%
4,312
4,538
4,565
5,489
5,790
6,655
8,454
9,785
12,054
13,993
17,634
22,287
28,144
14%
1,251
1,102
1,249
1,518
2,281
1,997
2,548
2,866
2,796
3,532
3,514
3,676
4,645
13%
13
15
12
14
14
11
23
29
33
0%
6,838
6,681
6,945
8,364
9,881
11,014
13,820
15,992
18,717
22,695
28,367
35,639
44,812
14%
8,406
7,873
8,492
11,200
10,202
13,610
13,106
14,924
17,505
19,133
21,545
27,434
31,175
17%
15,286
14,592
15,436
19,564
20,082
24,624
26,926
30,915
36,222
41,828
49,914
63,073
75,988
15%
8,060
8,745
8,342
8,165
9,938
11,544
12,673
15,393
17,049
20,779
27,356
31,489
37,122
14%
62,484
68,127
75,343
86,211
95,957
108,808
122,775
137,960
156,737
177,459
199,445
230,422
268,580
15%
15
13
13
15
12
14
12
12
13
12
12
14
13
46
54
40
38
39
41
36
41
33
35
41
40
39
45
57
37
34
35
34
28
34
11
19
18
17
59,933
64,829
74,029
86,203
96,415
110,488
124,984
142,159
161,966
182,874
205,804
235,935
275,110
15%
4,904
5,136
5,572
5,005
6,123
7,063
7,654
8,912
10,783
12,779
15,724
17,072
19,420
14%
1,963,723
1,878,139
1,806,476
1,801,919
1,849,125
1,926,254
2,044,015
2,183,783
2,348,791
2,568,698
2,895,354
3,317,192
3,774,293
7%
3,501,163
3,259,618
3,295,387
3,443,916
3,632,688
3,898,333
3,731,002
3,915,529
4,061,865
3,879,686
3,754,296
3,835,712
6,043,553
656,776
499,136
506,245
629,011
816,210
947,239
1,040,556
1,143,770
1,289,079
1,602,159
1,674,745
2,013,298
2,690,594
15%
95
State Life Offices in Pakistan and U.A.E.

Regional Office (South)
State Life Building # 2,
10th Floor, Wallace Road
Karachi.
Tel. 021-99217035-36
Regional Office (Central)

66-C/1, Gulberg-III,
Lahore.
Tel. 042-99205121-22
Regional Office (North)

Bulund Markaz Plaza, 33-E,
4th Floor, Blue Area, Islamabad.
Tel. 051-9204935-47
Regional Office (Multan)

4th Floor, State Life Building,
Chowk Nawan Shaher,
Abdali Road.
Tel. 061-9200670-770
Karachi South
11th Floor, Wallace Road
Karachi.
Tel. 021-99217023-24
Lahore Central
State Life Square,
4- Lytton Road,
Lahore,
Tel. 042-99210269-70
Rawalpindi
The Mall.
Tel. 051-9270315-1351
Multan
State Life Building,
Chowk Nawan Shaher,
Abdali Road.
Tel. 061-9200676-801
Karachi Central
Al-Farhan Towers,
Plot # D-15, Block-H,
N. Nazimabad, Karachi.
Tel. 021-99260011-13
Lahore Western
State Life Square,
4- Lytton Road,
Lahore,
Tel. 042-99211711-642
Peshawar
State Life Building ,
34-The Mall.
Tel. 091-9212312-314
Sahiwal
Sattar Complex,
Stadium Road.
Tel. 040-9200022-23
Karachi Eastern
Jason Trade Centre,
7th Floor, 39-A-1,
PECHS, Sharah-e-Faisal,
Karachi.
Tel. 021-34539180-8095
Faisalabad
Liaquat Road.
Tel. 041-9200390-636
Abbottabad
Farooqabad Plaza,
Mansehra Road.
Tel. 0992-'380924 -381090
Rahim Yar Khan

2nd Floor Iqbal Complex,
Model Town.
Tel. 068-9230027-28
Hyderabad
Thandi Sarak.
Tel. 022-9200622-352
Sargodha
40 Civil Lines,
Green Plaza College Road.
Tel. 048-9230311-319
Mirpur (AK)
Barry Mian Plaza,
Kotli Road.
Tel. 05827-927465-435106
Dera Ghazi Khan

1st Floor, Dubai Trade Center,
Jampur Road.
Tel. 064-2470612-9239130
Quetta
2nd Floor,
PIA Building, Hali Road.
Tel. 081-9201520/30
Gujranwala
Din Plaza, G.T. Road.
Tel. 055-9200282-285
Swat
Dean Plaza Opp. Central Hospital,
P.O.Box # 4, Saidu Sharif.
Tel. 0946-9240060
Bahawalpur
Circular Road,
Al-Karim Plaza, 2nd Floor.
Tel. 062-9255171-72
Sukkur
Minara Road.
Tel. 071-9310501-525
Sialkot
Paris Road.
Tel. 052-9250101-111
Gujrat
5th Floor,
G.T. Road.
Tel. 053-9260242
G&P Peshawar
34 - The Mall,
Peshawar.
Tel. 091-9211596
Mirpurkhas
M.A. Jinnah Road,
Near D.C. Office,
Islamabad.
Tel. 0233-9290205
Real Estate
33-E, Blue Area,
Islamabad.
Tel. 051-9205329-6162
Islamabad
4th Floor, 33-E, Blue Area,
Jinnah Avenue, Islamabad.
Tel. 051-9206017
G&P Karachi
Wallace Road,
Karachi.
Tel. 021-99217060-97
Larkana
Qaid-e-Awam Road.
Tel. 074-9410800-01
Real Estate
State Life Building ,
15-A, Davis Road,
Lahore.
Tel. 042-9200396
G&P Rawalpindi
Kashmir Road,
Rawalpindi.
Tel. 051-9272598
G&P Lahore
15-A, Davis Road,
Lahore.
Tel. 042-99200355-58
Gulf
P.O. Box # 11276,
Dubai, U.A.E.
Tel. 0097142729061
Fax 0097142729051
96
annual report
2011
State Life
The Only
Insurance
Corporation
in Pakistan
with a
AAA Rating
The AAA Rating from PACRA reflects our exceptionally

strong capacity to meet contractual obligations with our
policyholders. It also denotes the leading position of State
Life amongst insurance companies in Pakistan. Our
extensive distribution network, good management,
comprehensive information systems and growing business
volumes are the basis for the ever-growing confidence
that our policyholders repose in us.
State Lifes senior management extends its gratitude to
its policyholders for their unshakable trust and appreciates
the hard work and dedication of its employees, officers
and marketing force.
State Lifes Insurance Policy

A Lasting Tradition for Every Generation
www.statelife.com.pk
Zindagi ke anmol rishton ko

lazawaal banaye
For further details, contact our sales representatives or visit www.statelife.com.pk

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