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//. NAtJO~t.LINSURANCE COMPANY LTD. / ~ . · KARACHI

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MINUTES OF THE 50m MEETING OF THE BOARD OF DIRECf()RS OF .NATIONAL INSURANCE COMPANY LIMITED HELD ON MONDAY OCI'OBER 27, 2008 AT 1500 HOURS AT NICL HEAD OFFICE KARACHI.

Directors Present:

1. Mr. Abid Javed Akbar Chairman

2. Mr. Javed Syed

3. Mr. Nessar Ahmed

4. Mr. Syed Hur Riahi Gardezi

5. Mr.Saleemuddin Ahmed

Chairman commenced the meeting with Recitation from Holy Quran and welcomed the

Board Members. Leave of Absence was granted to Mr.Qamar Zaman Ch and

Mr.Danishmand. Company Secretary Mr. Ather Naqvi was in attendance.

Item 1 TO APPROVE AND CONFIRM THE MINUTES OF THE 49m MEETiNG OF THE BOARD OF DIRECTORS OF NATIONAL INSURANCE COMPANY LIMITED HELD ON MAY 19. 2008.

The draft minutes of the 49th meeting of the Board of Directors ofNICL were reviewed by

the Board. Mr.Javed Syed proposed and Syed Hur Riahi Gardezi seconded, the minUtes

were approved and signed by the Chairman as a token of confirmation.

Item 2 TO REVIEW PROGRESS OF IMPLEMENTATION OF DECISIONS OF THE PREVIOUS MEETING OF THE BOARD OF DIRECTORS.

The Board noted the progress in implementation of decisions made in the previous

meetings and expressed its satisfaction.

. . Item 3 REVIEW OF REAL ESTATE PORTFOLIO.

a) The Real Estate Investment exposure of NICL at present is ~.6o/o of the total

investment which is far lower than the parameters prescribed for various typeS of

investment by the Investment Committee of the Board of Directors of NICL held on

Novemher 4, 2006 at 15% for real estate. In view of enhancing the exposure in Real Estate

Investment, NICL management undettook a planned exercise put an advertisement in two

papers DAWN and JANG inviting interest from the public and evaluated the same. A

Committee for the same purpose headed by G.M/Central Zone was later constituted to

expedite the process on July 26, 2008.


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In the 27th meetin8'~fthe Investment Committee of the Board ofDirectors held on·~ber 21, 2008, the opportunity of Real Estate dev~lop~ent of plot available and located at The

Mall Lahore was discussed on recommendations of the In House Investment Committee

held on October 17, 2008 who had done the due diligence by scrutinizing the offer,

assessing the market through consultation with the estate agents at Lahore, comparing

prices by having the evaluation done by certified surveyors.

On recommendations of the Investment Committee, the Members of the Board deliberated

in depth on location, price of land, type of construction, quality of construction, prevailing

sale price per sq.ft., present cost of construction per sq.ft. in ~mparison to A class projects

in Lahore, Karachi Islamabad and the rental value per sq.ft. in the mentioned cities. The

members were quite convinced by the ideal location of the plot which offers immense

opportunity being in the very prestigious area on The Mall in the vicinity of GOR-1. The

plot has an excellent entry from The Mall and side exit on the Club Road.

After detailed discussions, the Members of the. Board of Directors resolved and approved

as follows:

• .. To proceed for purchase at the negotiated price of the discussed piece of land/plot located at The Mall Road Lahore.

• To determine the expression of interest of the project along with identifying the project designer and monitor immediately.

• To develop the said land located at (128 Shahrah-e-Quaid-e-Azam) ~to "A" quality of construction with objective to sell the building to the top class corporate clients in the insurance/financial sector by adopting the pre sale strategy.

• Make over all attempts to increase the Real Estate Investment exposure to 20% within six months as real estate property market is depressed and offers good opportunity to buy.

b) To Discuss the Proposal n:garding Joint Venture with ENSHAA

Mr. Gardezi briefed the Board regarding visit ofNICL delegation to UAE to meet

with the management of ENS.HAJ, UAE for evaluation and assessment of the company

and its projects in UAE. This visit was under taken with the approval and consent of the

Ministry of Commerce/GOP.

The Members of the Board discussed the proposed investment opportunity from

Enshaa. The salient points of the opportunity are summarized below:

• Incorporate a joint venture company in Pakistan namely, Enshaa Pakistan Limited (EPL), in which both the National Insurance Company (NIC) and Enshaa PSC to have equal shareholding. · ·


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• The new company, EPL, to have an intereSt (total 51%) in their existing project in J;>alqstan, the Karachi F~cial Towers (Kf1)

• EPL will develop other projects in Pakistan including opportunities for joint. development of the land bank held by NIC. · ·

• EPL to undertake refurbishing of the hotel in Lahont.owned by NIC and.amm.ge a. hotel operator like ·that of:Amarila, Singapore, either as a joint veri~ witld~Pt ·or otherwise. · ·

The Board after discussion decided as under:

1. It was agreed in principle to join hands with Ensha'.a, PSC. Therefore, the proposal

of E~haa, regarding the joint venture company by the name of EnslJSa Pakistan,

would be acceptable.

2. In view of the present economic scenario prevailing in the country, it was decided

to proceed with the investment projects in phases. The. refurbishment ·and operation

of the international Services Hotel in Lahore could be taken· up as the first project

of the JV company, EPL.

3. Simultaneously, the initial ground work. for the development of other projects will

. also commence. Among these priority will be given to development of projects on

the existing real estate and land bank held by NIC, Shahdin building being one of

the priority.

4. It was also decided to defer the decision for joining with Enshaa in. its existing

project, KFf. This can be taken up later as the economic situation clears subject to

necessary due diligence.

c) To Discuss the Plot of Land at Islamabad

Plot of land of 800 kanals on Islamabad Highway, 20 km from Zero Point was

briefly explained to the Board Members who advised GM(Investment) to. bring this agenda

in the next BOD meeting.

Item 4 TO DISCUSS THE EOBI ARREARS

Members of the Board examined the depl3D.d of EOBI arrears. Mr.Nessar Ahmed and

Mr.Gardezi were of the opinion that NICL does not fall in the purview of getting registered

under section 47 ofEOBI rules. Members also discussed in detail the applicability ofEOBI . . . . .

rules to the Insurance Companies having ~nsion and medical, benefits plans for their

employees.


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Members of the Board advised the ED(CS) to 8scertain from the State Life Insurance

Corporation and Pakistan Reinsurance Company Limited as to whether they are also

making such contnoution to EOBI. The m,atter then be referred to the ~ for decision.

Item 5 TO APPRISE THE BOARD ON THE RECOMMENDATIONS OF HUMAN RESOURCE COMMITTEE.

a) Presentation ofBR Audit

GM (HR. & Admn) briefed the Members of the Board about the recommendations received

from MIS Access Consulting (Pvt) Ltd. (HR. Auditor) on the instructions of Human

Resource Committee of the Board of Directors which are based on evaluation of following

character traits of personnel:

i) Planning, Organizing & Controlling. ii) Problem Solving & Decision Making. iii) Motivation and Stress Management. iv) Negotiations and As:;ertiveness. v) Interpersonal Skills & Team Work. vi) Leadership, Coachin.g, Mentoring & Counseling. vii) Communications an<i. Writing. viii) Self Awareness & SelfDevelopmenl ix) Performance Management.

Keeping in view the auditor's assessment, the Management proposed the Board as an

operational measure that those employees who secured 100% marks may be assigned

additional responsibility of newly introduced products of Crop & Micro ~· They

will be given a promotion on acting charge basis to be formalized in light of their

performance in near future. They will simuitaneously look after their existing assignments

as well till such time new business generates enough work.

Members of the Board approved to the proposal of the Management with immediate effect.

b) Selection of Chief Operating Officer

It was discussed at length that over a -period of last 2Y2 years NICL bas taken quite

a few initiatives for whose effective follow up there is a need for a comprehe~ive

interaction with the private sector for which any officer of NICL is neither trained

nor competent to do so. Great need is felt to provide a second layer of leadership

next to Chief Executive to coordinate activities to ensure effective synergies. It was

therefore proposed and unanimously accepted by the Board that a post of Chief

Operating Officer be created and a suitable person from the market be identified

and recruited. It was brought to the knowledge of the Board that a person of such

proven record of success could not be located through press advertisement and it

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would be more appropriate to approach head hunters for the same. It was discussed

and felt that M/s Karim M~lar & Associates of Karachi a ·reputable. iiame ~

management and executive search consultants should be approached to locate and

recommend appropriate person for considerat;ion of the Board.

c) Personnel Requirement of Board Seeretariat.

Members of the Board reviewed the recommendations of Human Resource

Committee of the Board of Directors held on August, 8, 2008.

The ~oard resolved and approved that Mr.Jamil Ahmed (DM) be assigned as a

Deputy Secretary to the Board in the Manager cadre of. NICL and transferred to

Company Secretariat It was also advised that MrJamil Ahmed be also nominated

to undertake courses regarding company secretarial work and good corporate

governance.

Members of the Board also resolved and approved that the Board Secretary be paid

special allowance ofRs.5,000/- per month from the date of assuming the charge of

the Company Secretary.

Item 6. REVIEW OF CHIEF EXECUTIVE'S REMUNERATION.

The matter of review of remuneration of the Chief. Executive Officer of NICL ~ ~~

up by the Board. It was noted with ·satisfa..."tion tfuit the current Chief Executive, Who was

appointed as Chairman/Board of Directors and Chief Executive of NICL vide notification

dated December 29, 2005 which was effective from December 27, 2005 has performed

extremely well s~ce then and has many achievements to his credit NICL has extended its

activities manifold, has introduced many innovative products, has completely overhauled

its investment portfolio and has an excellent balance sheet for the last three years. During

the year he has also been promoted to the position of Federal Secretary to the Government

of Pakistan in BPS-22.

The Company Secretary pointed out that in terms of Section 84 of the Articles of

Association ofNICL, the remuneration of. the CEO is required to be fixed by the Board of

Directors from time to time. A letter of the Finmice Division d8ted March 27, 2007 which

defines the powers of Governing Boards of companies established under the Companies

Ordinance, 1984. The guidelines are given below:

"3(i) Government established/owned companies under the Companies Ordinance may use full powers to the extent given in the Companies Ordinance provi<,ied their decision do not impact the Federal Budget in any way."

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It was informed that Board has previously in' its 35th meeting held on May 17, 2006 approved provision of following compensation package to the incumbent Ch8irman. This is in line with what was given to the previous Chief Executive and was also admissible then to the officers ofMP-1 scale:

l. House Rent Allowance Rs.70,000/- per month.

2. Utilities Rs.8,000/- per month.

3. 1600 cc Pakistan assembled car for official and private use with petrol limit of340 litres per month.

4. Leave, Gratuity and other terms as per government rules."

1bis compensation package has since been revised and increased through Government of

Pakistan, Finance Division, Regulations Wmg O.M. No.F.3(7)R.4/98-Vol.II/07(A) dated

11th April, 2007 as under:

Existing Revised

1. Basic Pay 160,000 - 240,000

2. House Rent 70,000 105,000

3. Utilities 8,000 12,000

The Board unanimously approved that the revised package may be allowed to the Chief

Executive accordingly from the date of its announcement

Item 7 ANY OTHER MA'ITER WITH APPROVAL OF CHAIR.

1.

2.

TO BRIEF THE PROGRESS ON CROP INSURANCE.

EO/Insurance Mr. ljaz Mealu gave a detailed briefing on the update of the

NICJ;..'s program and replied to members' queries ./e their satisfaetioa. It was

explained that the scheme is as per normal parameters being exercised globally

and according to those laid down by the State Bank task force. NICL will be

liable for the risk of 3000/o of the premium received and the premium rate

would be 1.5% of the exposure loan of the bank. This scheme will cover natmal

calamity but in case of National Bank the cover has been extended to theft,

canal breach, fire as well as a goodwill gesture National Bank of Pakistan has

been a partner right from beginning.

It was also explained and informed to the board that NICL will be responsible

for the first 90"/o of the loss and the reinsurers for the balance 210%. Since ·

NICL staff has no experience of dealing with the private sector, has no concept

or skill of marketing a broad based product with several policy holders, has

been handling a liraited number of accounts with no proper or effective

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I~AIIUNAL IN~UKAN\;t: \;UMt"'ANY Ll U. KARACHI

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monitoring of business. NICL management is considering to share this business

with the companies of the private sector as well.

3. It was also explained· to the Board that an alert and vigilant monitoring

arrangement is required to be developed with the Agri Credit branch of

National Bank of Pakistan which would ensure real time transfer of data

confirming payment of premium by the loanee and his antecedents.

EO/Insurance, CM/Aamer Iqbal and ACM/Ali Asghar are working on the same

in association with ED/IT who has recently been appointed.

4. The Board appreciated the efforts of the management specially the faet that

NICL is now in a position to pioneer this product in the local industry. Board

expressed satisfaction with the mechanics of the scheme and took note of the

weakness of NICL personnel in marketing this product. Management was

advised to develop training program for NICL staff in the field of underwriting,

monitoring of business and the resolution of claims.

. . There being no other business, the meeting concluded with a vote of thanks.

Abidq:~ Chairman

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