NJI Newsletter (FORWARD)
 
 Editor’s Note
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 Industry News

Industry Improvements envisaged by new Chairman of the Insurance Association of Pakistan

“TAHIR AHMED, PRESIDENT & MANAGING DIRECTOR, NEW JUBILEE INSURANCE has been elected unopposed as Chairman of the Insurance Association of Pakistan for the period 2009-10.” Announced the Business Recorder newspaper. Re-election to the position after two years, demonstrates the esteem in which the industry holds our Managing Director for his knowedge and drive.

For interest of our readers we give some background to the Insurance Association of Pakistan. It was inaugurated on 9th February 1948 and has been a forum for exchange of information, knowledge, experience and statistics among its members.

36 general and life insurance companies, both national and foreign, are members of the IAP and between them wrote gross premium of Rs 33.27 billion in 2007. The premium income of the companies vary and larger companies pay more towards the Association’s expenses, but each company has only one vote. The activities of the Association are directed through Executive and Technical Committees, and members to these committees are elected for one year term of office.

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Mr Tahir Ahmed is enthusiastically looking foward to his current tenure and has certain initiatives in mind which he was happy to share with our readers. He added that the fraternity among the members enabled initiatives taken by a chairman to be seen to fruition by succeeding chairman or even chairmen.

Mr Ahmed and his Executive Committee intend to work on the following improvements:

Current practice of panel of insurance companies and risk limits set by banks places smaller insurance companies at a disadvantage. Pakistan Bankers’ Association (PBA) and the State Bank will be approached to convince them to implement and follow Section 86 of Insurance Ordinance according to which banks can not arbitrarily list acceptable/unacceptable insurers. With the support of SECP, the IAP intends to impress upon PBA to formulate and disclose the criteria of acceptable insurers which should be consistently and uniformly applied by the banks.

Current policy wordings in use in Pakistan are not in line with those used internationally. To bring them in sync, technical committee for Fire will study these in-depth and come up with recomendations within couple of months, so that by early 2010 the new wordings are in use by all insurers in Pakistan.

Outstanding premium position needs to be given serious thought and the committee will work on its remedy.

Bancassurance rules need to be framed so that both banks and insurance companies enjoy mutually beneficial arrangement. Once in place, it will give a filip to this channel of distribution which has a huge potential for reaching the common man. Current insurance penetration can improve if bancassurance works satisfactorily. Also, the ultimate benefit wiil reach the customer.

Motor Third Party Liability to be properly implemented. Considerable work was done in this area when Mr Tahir Ahmed was the IAP Chairman in 2007-08. The present committee will need to push these through the rlevant regulatory body in the government. The implementation of this policy will be of personal satisfaction to Mr Tahir Ahmed who strongly feels that it is the social responsibility of the insurance industry to provide protection to innocent victims of road accident whose family is left poorer or even devasted by these incidents, for which there is no practical recourse for them at present.

Providing Health Insurance to its employees to be mandatory for all employers. This is the practice in many of our neighbouring countries, and Pakistan will equally benefit when it is implemented. It will also improve the image of insurance industry and render social service.

Opening of Takkaful Windows in General Insurance companies. Once again paper work for this is complete and the executive committee of the IAP will pursue with relevant government department for its formal approval. It will also bring on board those customers who may at present have reservation towards conventional insurance.

We wish the Chairman and his Executive Committee success in their endeavours, with support and contribution of Technical Committee members.

NJI’s representatives on the Technical Committees are: JEVP Brendan T D’Lima, Chairman, Marine Committee JEVP Mohammad Safdar, Chairman, Fire Committee JEVP Azfar Arshad, Member, Accident Committee.

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 Cover Story

‘CNBC Special’ Prograammes on Insurance


NJI SPONSORED FOUR INSURANCE RELATED EPISODES ON CNBC in July / August 2009. The aim was to increase awareness regarding the insurance industry of Pakistan. Our participants successfully enlightened the audiences with what NJI is offering, the different covers available and played a vital role in increasing the awareness ` of insurance services among masses.

The ‘CNBC Special’ program comprised four episodes, each of which highlighted important topics such as Terrorism, Agriculture, Health and Crime & Liabilities.

In the first episode our MD, Mr Tahir Ahmed alongside Mr. Asif Qadir; CEO-Engro Polymer & Chemicals Ltd. discussed the impact of terrorism on the Pakistani business community. They shed light on how terrorist attacks are affecting our Pakistani market and how terrorism insurance cover is vital to the concept of a going concern. There was a general consensus that terrorism insurance is the need of the day and can help lessen the financial impact of any unfortunate event. Different types and levels of terrorism covers were also discussed.

NJI Kashtkar, our crop insurance product, was the topic of the second episode. The salient features of the crop insurance framework were explained by Mr. Azfar Arshad, JEVP-Operations & Mr. Mohammad Ashraf Khan; Director, Agriculture Credit Division, State Bank of Pakistan. The social benefits were also highlighted alongside the calamity distribution and its implications.

Health Insurance was next in line; the importance & benefits of health insurance were discussed by Mr. Mohammad Afzaluddin; Head of Health Insurance Division & Mr. Mohammad Noor; Director-Tax Payroll, Lakson Group of Companies. The price related issues and service standards were also talked about.

Financial & Professional Insurance was the topic of the last episode. Mr. Uzair Mirza, JEVP- Operations represented NJI along with Mr. Imran Khalil; CFO, KASB Funds. The main topics discussed were, crime & liability insurances, banker’s blanket, computer crimes, professional indemnity and the benefits that are derived from such covers.

The series of CNBC Special episodes got a very positive feedback from the audiences and we plan to carry out similar activities / awareness programs, which help improve our services and cater to a larger market.

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 Topical Report

Hydropower Plants - Part I

WORLDWIDE, HYDROPOWER PLANTS PRODUCE ABOUT 24 PERCENT OF THE WORLD’S ELECTRICITY and supply more than 1 billion people with power. The world’s hydropower plants out put a combined total of 675,000 megawatts, the energy equivalent of 3.6 billion barrels of oil, according to the National Renewable Energy Laboratory.

We will take a look at how falling water creates energy and the hydrologic cycle that creates the water flow essential for hydropower. But, before looking at operation of an hydropower plant, it is important to understand Hydrologic Cycle.

Hydrologic Cycle
Hydropower plants take advantage of a naturally occurring, continuous process — the process that causes rain to fall and rivers to rise. Every day, our planet loses a small amount of water through the atmosphere, as ultraviolet rays break water molecules apart.

At any one time, the world’s total volume of water is in many different forms. It can be liquid, as in oceans, rivers and rain; solid, as in glaciers; or gaseous, as in the invisible water vapor in the air.

Water changes states as it is moved around the planet by wind currents. Wind currents are generated by the heating activity of the sun. Air-current cycles are created by the sun shining more on the equator than on other areas of the planet.

Air-current cycles drive the earth’s water supply through a cycle of its own, called the hydrologic cycle. As the sun heats liquid water, the water evaporates into vapor in the air. The sun heats the air, causing the air to rise in the atmosphere. The air is colder higher up, so as the water vapor rises, it cools, condensing into droplets. When enough droplets accumulate in one area, the droplets may become heavy enough to fall back to Earth as precipitation.

The hydrologic cycle is important to hydropower plants because they depend on water flow. If there is a lack of rain near the plant, water won’t collect upstream. With no water collecting up stream, less water flows through the hydropower plant and less electricity is generated.

Hydropower plants harness water’s energy and use simple mechanics to convert that energy into electricity. Hydropower plants are actually based on a rather simple concept — water flowing through a dam turns a turbine, which turns a generator.

Here are the basic components of a conventional hydropower plant:

Dam - The dam is usually built on a large river that has a drop in elevation, so as to use the forces of gravity to aid in the process of creating electricity. A dam is built to trap water, usually in a valley where there is an existing lake. An artificial storage reservoir is formed by constructing a dam across a river. Notice that the dam is much thicker at the bottom than at the top, because the pressure of the water increases with depth.

The area behind the dam where water is stored is called the reservoir. The water stored there possesses gravitational potential energy. The water is in a stored position above the rest of the dam facility so as to allow gravity to carry the water down to the turbines. Because this higher altitude is different than where the water would naturally be, the water is considered to be at an altered equilibrium. This results in gravitational potential energy or, “the stored energy of position possessed by an object.” The water has the potential to do work because of the position it is in.

Intake - Gravity will force the water to fall to a lower position through the intake and the control gate. They are built on the inside of the dam. When the gate is opened, the water from the reservoir goes through the intake and becomes translational kinetic energy as it falls through the next main part of the system: the penstock. Translational kinetic energy is the energy due to motion from one location to another. The water is falling (moving) from the reservoir towards the turbines through the penstock.

The intake includes the head works which are the structures at the intake of conduits, tunnels or flumes. These structures include blooms, screens or trash - racks, sluices to divert and prevent entry of debris and ice into the turbines. Booms prevent the ice and floating logs from going in to the intake by diverting them to a bypass chute. Screens or trash-racks are fitted directly at the intake to prevent the debris from going into the take. Debris cleaning devices should also be fitted on the trash-racks. Intake structures can be classified into high pressure intakes used in case of large storage reservoirs and low pressure intakes used in case of small ponds. The use of providing these structures at the intake is, water only enters and flows through the penstock which strikes the turbine.

The penstock is a long shaft that carries the water towards the turbines where the kinetic energy becomes mechanical energy. The force of the water is used to turn the turbines that turn the generator shaft. The turning of this shaft is known as rotational kinetic energy because the energy of the moving water is used to rotate the generator shaft. The work that is done by the water to turn the turbines is mechanical energy. This energy powers the generators, which is very important part of the hydroelectric power plant; since they convert the energy of water into electricity. Most plants contain several generators to maximize electricity production.

(To be continued in next issue)

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 Branch Performance
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 An Interview

 

Mr Atiq Anwar Mahmudi, Executive Director-Finance

YOU HAVE HAD WIDE AND VARIED WORK EXPERIENCE IN THE COUNTRY AND OVERESEAS. WOULD YOU SHARE SOME OF ITS HIGHLIGHTS WITH OUR READERS.

My work life started in 1973 with Peoples Steel Mills, the first special alloy steel plant setup by Valikas in Pakistan, which had provided extensive training to Engineers in Japan. I too got good grounding working with this company.

Thereafter, I worked for House Building Finance Corporation as Manager, Accounts and gained experience of computerized accounting on main frame computers at that time when only few banks and companies had computers.

In 1978 a job offer of operational auditor for ARAMCO - the largest oil company of Saudi Arabia came my way and being an unattached bachelor I took up the position. The company had employees of various nationalities and Chartered Accountants from UK, USA, India, Philippine, Sri Lanka, Pakistan and Canada. I enjoyed living in Saudi Arabia in a multicultural environment and working with Chartered Accountants of different nationalities. I found that the American auditors follow rather simplistic audit approach, whereas, we Pakistanis being more street-smart, probe transactions in different manners. In spite of it all, after three years I was home sick and eager to return home.

On my return, the then MD of NJI Mr. Yamin Farooqui offered me the job of CFO which I accepted and worked happily between 1981-86, However, the travel-bug had got into me, and once again I got a job offer from Riyadh Refinery, a project of Ministry of Petroleum and Minerals in Saudi Arabia who contacted me for internal audit position. This time I moved with my wife and two children to Riyadh. At the Refinery, I gained valuable insight into two internationally recognized accounting and material recording systems i.e. ABAPS (Accounts, Budget and Payment System), and FSS (Facility Support System) which were in the implementation phase there at that time.But, once again after 3 years I was restless to return home and despite the request by the Head of Internal Audit of the Ministry, who tried to retain me by offering salary raise and even was willing to give visa to my parents so that they could live with me in Riyadh, my mind was made up to return home.

Back in Karachi, I joined an Audit firm as Managing Partner, and the firm became Atiq, Faizi & Co. After some years my third and last call for overseas attachment came! This time it was from Petrolube, again a project of Ministry of Petroleum and Minerals in Jeddah for establishment and operation of its internal audit department. During my attachment I performed Umrah nearly every weekend because Makkah was only an hour’s drive from my home and also went to Madina on numerous occasions. As usual the urge to return home set in and I was home again in 1997. When in Karachi I met the then MD of NJI Mr. Masood Noorani who offered me to join NJI again and I am here since then.

ALSO AT NJI YOU HAVE MADE VARIED CONTRIBUTION. WHICH AMONG THESE GAVE YOU GREAT SATISFACTION?
I have enjoyed working with NJI for two main reasons: professional management of the company and advisory role of the Board. During my attachment with the company, amongst varied contributions, I enjoyed the establishment of internal audit department as well as providing assistance to the management in the development of policy and procedure manuals of various departments of the company for conducting audits.

Moreover, I have also properly structured the IT department of the company and in joint venture with Sidat Hyder Morshid Associates got the fully integrated General Insurance System developed and implemented in the company. It was a challenging and exciting experience for me as I opted for this as against off-the-shelve purchase of Insurance system software from the international market, which were very costly and could not be implemented without customisation.

In 2000, NJI decided to have the company rated by PACRA (Pakistan Accredited Credit Rating Agency) in which I played the key role in getting the company rated. Initially PACRA gave us a lower rating but after lot of discussions on their analysis they moved our rating a notch up to “A+” and subsequently to “AA”, which we are now maintaining for the last 7 years. JCR-VIS (Japan Credit Rating-Vital Information Services) commenced rating NJI from 2003 and Alhamdo Lillah, they have continued to rate us “AA”.

On January 1, 2003 New Jubilee alongwith AKFED acquired the Pakistan Operations of Commercial Union Assurance of UK– both Life and non-Life business, in which I was directly involved. This is was the first acquisition of a foreign insurance company’s operation in Pakistan by a local company. I think this was the most satisfying contribution that I have made because it gave me the opportunity to work on the legal, commercial, accounting, regulatory and management aspects of the acquisition. In the beginning of 2002 we conducted the legal and accounting due diligence of both the operations and by end of the year agreements were finalized and signed. Then there was the actual physical movement and merger of non-life operation of CU with NJI under the names of Commercial Units-I, II and III respectively, as well as, the recruitment of CU employees which was a difficult task and took some time before the issues got resolved.

Since last six years, we have a proper budgetary system in place which includes the setting up of a Budget Section within Finance Department. NJI prepares budget, plans and forecast, regularly in line with the international requirements, which also gives me great satisfaction.

IN YOUR OPINON WHAT ACCOUNTING MEASURES AND SYSTEMS WILL MAKE THE INSURANCE INDUSTRY OF OUR COUNTRY STRONGER

In my opinion the insurance companies need strong fully integrated web based Accounting and Insurance systems which can provide prompt and accurate information to the management from anywhere in the world for taking decisions.

Moreover, the adoption of International Accounting and Financial Reporting Standards, particularly the International Financial Reporting Standard (IFRS-4) will improve the quality of our accounts and disclosures on insurance contracts. This will be a milestone for the insurance industry.

TO AN ASPIRING YOUNG PERSON AIMING TO BE A CFO, WHAT WOULD YOU ADVISE
A person aspiring to be a CFO should first of all have the required professional qualification and experience in the business context and above all be a man of integrity. He should be able to meet the accounting and regulatory requirements, provide guidance / advise to the management for business decisions, ensure complete transparency of accounts of the company and face challenges that are ahead to a CFO.

WHAT QUALITIES IN A PERSON DO YOU ADMIRE
Integrity, transparency and clarity of mind are the qualities in a person that I really admire the most.

WHAT DOES HAPPINESS MEAN TO YOU
Personally I will be happy when there is complete peace and justice in our country and also when our people are honest, courteous and progressive.

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 NJI Family

Hajj Ballotting
HAJJ BALLOTING FOR THE YEAR 2009 was conducted by our managing director, Mr Tahir Ahmed, at Head Office in the presence of staff members, with the following result:

1st Choice: Mr Asif Ali, Joint Senior Vice President, Bank Square Branch, Lahore
2nd Choice: Mr Yar Gul, General Worker,
Lahore Zonal Office
The second choice is considered in case of the first one being unable to avail.

New Branch

NJI ARE PLEASED TO ANNOUNCE OPENING OF A BRANCH at the Export Processing Zone, on Plot No.9, Sector B-II, in the Landhi Industrial Area, Ext. Mehran Highway, Karachi.

Mr M Siddique Memon will head the branch.

President’s Pride of Performance Award

NJI IS PLEASED TO INFORM that Mr Sultan Ahmed, Senior Journalist and Columnist of “DAWN” father of Mr Azam Sultan Ahmed Head of Clifton Branch, was conferred President’s Pride of Performance Award in the field of Journalism from Sindh Province on Pakistan Independence Day. This is a civil award for excellence in one’s respective profession. Mr Sultan Ahmed has been a journalist since the creation of Pakistan and in fact started his innings from the Governor eneral’s House (now Sindh Governor’s House) in Karachi by attending the first press conference of the Quaid-i-Azam Muhammad Ali Jinnah after the creation of Pakistan in 1947.

Why Planning is Important?
Why????

ONE NIGHT 4 COLLEGE STUDENTS were playing till late night and could not study for the test which was scheduled for the next day. In the morning they thought of a plan. They made themselves look as dirty with grease and dirt and went to the Dean and said that they had gone out to a wedding the previous night and on their return the tyre of their car burst and they had to push the car all the way back and that they were in no condition to appear for the test. So the Dean said they could have the re-test after 3 days. They thanked him and said they would be ready by
that time.

On the third day they appeared before the Dean. The Dean said that as this was a Special Condition Test, all four were required to sit in separate classrooms for the test. They all agreed as they had prepared well in the last 3 days.

The Test consisted of 2 questions with a total of 100 marks.

Q.1. Your Name........ ..... (2 MARKS)
Q.2. Which tyre burst? (98 MARKS)
a) Front Left
b) Front Right
c) Back Left
d) Back Right.....!! !
(True story from LUMS Lahore, Batch 1992)


(Contributed by M Saqib Jamil, AM-Operations)

 

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NJI Newsletter (FORWARD)
Quarter 3 (July-Sep 2009)
Quarter 2 (April-June 2009)
Quarter 1 (Jan-Mar 2009)

Quarter 4 (Oct-Dec 2008)

 
 
 
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