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NATIONAL INSURANCE COMPANY LTD. • · ) KARACHI

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MINUTES OF THE 56TH MEETING OF THE BOARD OF DIRECTORS OF NATIONAL INSURANCE COMPANY LIMITED HELD ON THURSDAY APRIL 30,2009 AT 1000 HOURS AT HEAD OFFICE KARACHI.

Directors Present:

1. Mr. Muhammad Ayyaz Niazi Chairman

2. Mr. Javed Syed

3. Mr. Amin Dada

4. Mr. Syed Hur Riahi Gardezi

5. Syed Naveed Hassan Zaidi

The meeting commenced with Recitation from Holy Quran. Chairman welcomed newly

appointed Directors Mr. Amin Dada and Syed Naveed Hassan Zaidi and congratulated

them on the trust reposed in their abilities by the Government of Pakistan. He gave brief

introduction about each Director and stated that their experience and brilliant past would

enable NICL to achieve new heights of success. The Chairman also paid rich tributes to

the outgoing Directors and advised Board Secretary to send a letter of appreciation for the

valuable contributions made by the outgoing Directors namely Mr.Danishmand, Mr.

Nessar Ahmad and Mr. Saleemuddin Ahmed during their association with the Company' s

Board. Leave of absence was granted to Mr.Qamar Zaman Ch. Mr.M.Zahoor ED (F&IT),

and the Company Secretary Mr.Ather Naqvi were in attendance.

Item 1 TO APPROVE AND CONFIRM THE MINUTES OF THE SSm MEETING OF THE BOARD OF DIRECTORS OF NATIONAL INSURANCE COMPANY LIMITED HELD ON APRIL 09, 2009.

The draft minutes of the 55111 meeting of the Board of Directors ofNICL were reviewed by

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

minutes were confirmed and approved.

Item 2 TO REVIEW IMPLEMENT A TJON OF DECISIONS OF THE PREVIOUS MEETING OF THE BOARD OF DIRECTORS.

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

meetings and expressed its satisfaction.

Board appreciated the efforts of the Chairman for bringing an increase of about 80% in the

rent ofNIC Building Islamabad negotiated with SECP.


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Item 3 TO APPROVE THE PROPOSAL PRINCIPIALLY AGREED BY THE BOARD IN ITS 55 tR MEETING REVIEWED/RECOMMENDED BY THE INVESTMENT COMMITTEE TO INVEST IN KARACHI FINANCIAL TOWERS.

In March 2008 the representatives of ENSHAA PSC UAE visited NICL to join hands for

Real Estate development in Pakistan. In the mean while, ENSHAA NLC Development

(Pvt.) Ltd. approached NICL and made presentation m May 2008 through its

representatives for sale of office floors in Real Estate located at 1.1. Chundrigar Road

Karachi by the name of Karachi Financial Towers. The Board was seriously considering to

invest in the Karachi Financial Towers for investment purposes.

Afterwards ENSHAA NLC once again offered NICL its proposal for sale of office floors

in Karachi Financial Towers on April 07, 2009 (copy attached) which was discussed by the

Board in its 55th Meeting held on April 9, 2009. In view of the present market depressed

prices in Real Estate in Karachi and abroad, the Board principally gave unanimous

approval and desired to go ahead and negotiate with the purpose to enhance Real Estate

Investment portfolio of NICL. Board also desired that the offer should be discussed and

negotiated by the Investment Committee of the Board of Directors with its

recommendations to the Board for final approval on the price.

Investment Committee of the Board of Directors in its 301h Meeting held on April 21, 2009

discussed and negotiated the proposal of Investment in KFT and desired ENSHAA NLC to

revise/negotiate payment schedule and to maintain the secrecy of discount offered to NICL

along with its terms and conditions.

Investment Committee of the Board of Directors in its 31st Meeting held on April 29, 2009

reviewed the revised negotiated proposal dated April 23, 2009 (copy attached) for sale of

office floors in KFT. Committee discussed and reviewed the payment plan and Discount

Guarantee and desired ENSHAA NLC to club the last three payments i.e. structure

reaching top level 5%, completion of curtain wall 5% and final payment on possession

10% so that 20% is paid on completion!handover.

The Investment Committee recommended to the Board of Directors for the approval of the

proposal to purchase I invest into office floors in KFT subject to combine the last three

payments as final on possession.


NATIONAL INSURANCE COMPANY LTD. KARACHI

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Members of the board discussed in depth the ENSHAA NLC sale proposal of office floors

in KFT and the recommendations of the Investment Committee in detail. Board

appreciated the negotiation skills of the Committee regarding Discount guarantee, payment

schedule linked to the scope of work and terms of payment.

After the detailed summary, Board unanimously approved to invest Rs.2,162,688,051 and

to proceed for the proposed offer of ENSHAA NLC dated April 30, 2009 for sale of office

floors of Karachi Financial Towers.

Item 4 TO DISCUSS THE IMPLEMENTATION OF VOULANTRY RETIREMENT SCHEME/100% COMMUTATION FOR UNIONIZED STAFF.

Deferred.

Item 5 TO DISCUSS THE PAY REVISION OF REGULAR OFFICERS OF NICL.

, ..... The salary structure of NICL Regular Officers was last revised on July 01, 2006 allowing

15% increase in pay, whereas the salary structure of the Unionized Staff has been

revised/enhanced three times in the years 2005, 2007 and 2009 through CBA agreements.

This created a big gap between salaries of officers and unionized staff. As a result of huge

disparity the salary of unionized staff is higher than officers of many cadres. So much so

that even when they become eligible for promotion to officer's cadre, they do not accept

the same to avoid monetary loss, as a routine.

In view of the above, the management ofNICL constituted a Committee for revision of the

Pay Scales of regular officers to remove anomaly created between the salary of Officers - and staff. The Ministry of Commerce also advised NICL to remove this anomaly and to

make officers' pay scales attractive for the unionized staff so that they do not forgo

promotion to the officers' cadre. Following revised pay scales were recommended by the

Committee to remove anomaly between salary of officers and unionized staff with effect

form 01.01.2009:

DESIGNATION EXISTING PAY RECOMMENDED PAY SCALES SCALE

W.E.F. 01-01-2009 DEPARTMENTAL OFFICER 8050-635-23925 14975-1180-

' ASSIST ANT MANAGER 9200-690-26450 17115-1285-DEPUTY MANAGER 10350-800-30350 19255-1490 MANAGER 13800-865-35425 25670-1610-

~ CHIEF MANAGER 14950-920-37950 27810-1710-GENERAL MANGER 16100-1035-41975 29950-1925- CIWlJ.W(S

EXECUTIVE DIRECTOR 20700-1265-46000* 38505-2355-INITIALS

~

*(20 stages)


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The Committee also proposed revision in the allowances of regular officers as under:

Allowances Existi~ Revised House Rent 45% of minimum of_Q_ay scale 45% of pay Utility 10% of basic_Q_ay 12.5% of basic pay Children Education NIL School going child Rs: 800/-

Upto Intermediate Rs: 1000/-& equivalent College going child. -Above intermediate Rs: 1200/-CollegeL_Universi!Y_ & h_!g_her

House Furnishing B) ED/CFO/Co.Secretary Rs: 30000 Rs: 45,000/-C) GM/CM Rs:20000 Rs: 30,000/-D) Manager Rs: 10000 Rs: 15,000/-E) Deputy Manager and below Nil Rs: 10,000/-

Once on each promotion Membership of Club Manager and above Co~orate MembershjQ_ House Maintenance 7. 5% of basic pay 10% Of_j)_ay Winter Allowance Rs: 500/- Rs: 1000[-

Board discussed the anomaly which created a huge monetary gap between the pay scales of

unionized staff and regular officers and realized that it is the basic reason of forgoing -...-promotions by the unionized staff when they become eligible for promotion to the officers

cadre.

After detailed deliberations, the Board expressed that the revision of pay scales of regular

officers has become overdue and unanimously resolved to approve the above

recommendations of the Committee regarding revision of pay scales and allowances of

regular officers of NICL to rectify the anomaly and the disparity of salary of unionized

staff and regular officers with effect from 01.01.2009. Board also advised to incorporate

the provision of increase in the Budget for quarter Jan- March 2009.

Item 6 TO RATIFY PROMOTION OF MR. MUHAMMAD ZAHOOR AS AN EXECUTIVE DIRECTOR.

Board discussed Mr. Muhammad Zahoor's profile and the job description in detail and

appreciated the management for the sdection as Executive Director Finance and

unanimously ratified his promotion.

"" Item 7 TO APPROVE THE INVESTMENT PORTFOLIO AS AT APRIL 292 2009.

kt_ Board discussed NICL's Investment Portfolio as at April 29, 2009 and February 12, 2009 ~

along with Investment limits set by the Board as well as Finance Division. The two recent IHinALS

investments ofRs.800 million through term deposit with Atlas Bank and Rs.2 billion as a 3

year Principal protected note were implemented and unanimously approved by the Board.


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ED(F&IT) explained the investment mix, working balances, foreign currency rate of

return and the changes took place between February 12, 2009 and April 29, 2009.

TIME

The Board highly appreciated the present exposure of Investment as at April 29, 2009 and

unanimously approved the Investment Portfolio.

Item 8. TO REVIEW THE PAYMENT OF OUTSTANDING ADVERTISING BILLS.

Board reviewed and discussed the outstanding bills of M/s lnterglobe Communication on

account of Brochure and newspaper advertisement regarding launching of Crop Insurance

amounting to Rs.799,346/-

After detailed deliberations, Board decided that the procedural formalities may be carefully

looked into detail and an approval may be obtained from the previous Chairman who

incurred these expenses.

Item 9 TO APPROVE THE PAYMENT OF EOBI CONTRIBUTIONS.

After an in depth review, Board desired a detailed presentation by Law Department

regarding the Employees Old Age Benefits Institution dues.

Item 10. TO DISCUSS THE PENSIONERS REQUEST.

Board discussed in depth, the decision of MOC and MOF regarding increase in pension

and the last increase by NICL. Chairman was of the opinion to get a clear cut direction

from the MOC and MOF regarding disbursement of pension at Government rates to NICL

pensioners.

After some discussion, Board unanimously decided to initiate the process till such time the

agenda may be deferred.

Itemll TO DISCUSS THE PERFORMANCE OF UNDERWRITING DEPARTMENT.

Mr.ljaz Ahmed Mealu ED (Operations), presented the salient features of NICL' s

Operations Department as follows:


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• Organization Chart

• Functions

• Committees

• Planning & Strategy

• Business Information

• Reinsurance

He explained briefly the functions of Underwriting, Reinsurance, General Average, Claim

settlement, Surveyors Monitoring and dealing with Ministry. A detailed briefing was also

made to the Board regarding functions of Claim and Rating Committees, Future Plans and

Strategy.

Members of the Board also discussed the reinsurance arrangements, the role of Insurance

Brokers and the options of approaching reinsurers directly or through brokers. Mr.Mealue

explained the criteria for selection of the brokers and reasons for dealing with one broker

due to its tried and tested reliability and credentials.

While discussing insurance of Neelam Jehlum power project the Board advised Mr. ljaz

Mealu to again approach W APDA authorities. Syed Naveed Hassan Zaidi offered to use

his good offices in getting insurance of this project.

Item 12. PRESENTATION ON CROP INSURANCE.

Mr.S.K.Ahmed Consultant, presented following salient features of Agri Credit insurance

scheme ofNICL:

• Introduction

• Insurance ofNBP Agri Credit to Borrowers

• Details of Cover provided to NBP

• Rates

• Insurance of Bank of Khyber Agri Credit to Borrowers

• Additional coverage with production loan

• Exclusion

• Reinsurance

• Bank wise Projection, Disbursement of Agri Credit

• Bank wise Projection, No. of Borrowers


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He informed that so far premium payments on account of Rabi season have been received

as under:

(i) NBP

(ii) Bank of Khyber

Rs.l 0, 403,000/

Rs.61 , 448/-

He expressed that another amount of Rs.32,000,000/- is expected to be received very soon.

Board desired that amount of premium due from above banks for Rabi season

disbursement of Agri loan should be reconciled and also emphasized that full fledged

marketing efforts should be made to capture the Agri-Loan insurance cover of the other

banks as well.

The Board also inquired regarding Agri credit loan insurance arrangements with ZBTL.

Mr. S.K. Ahmed informed that in spite ofNJCL's competitive terms and conditions, ZTBL

arranged their insurance with a private insurer i.e.Adamjee Insurance Company Ltd. which

is in violation of the relevant statutes. Board desired that the matter should be taken up

with the concerned Government authorities and a letter should also be written ZTBL in this

regard.

While discussing the Re-insurance arrangements of the crop insurance, the Board observed

that in case NICL's Agri Credit insurance portfolio is not hit by heavy losses, NICL should

consider reduction of reinsurance cost by way of establishing gradually an

Agri Credit Fund.

One of the Members of the Board pointed out total amount of allocated disbursement

which would be Rs.2.80 billion for year 2009 and would be approaching to Rs.5 .10 billion

up to the year 20 II and expressed that NICL being pioneer in the field of Agri Credit

Insurance should plan to acquire major chunk of the portfolio.

Item 13. TO DISCUSS THE LITIGATION CASES.

Deferred.

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Item 14 ANY OTHER MATTER WITH THE APPROVAL OF THE CHAIRMAN.

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TIME

A) TO APPOINT THE MEMBERS ON THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS.

Due to reconstitution of the Board of Directors of NICL, it was unanimously resolved that

the fresh composition of the Audit Committee of the Board of Directors would be as under:

1. Syed Hur Riahi Gardezi Convenor

2. Mr.Javed Syed

3. Syed Naveed Hassan Zaidi

4. Mr.Amin Dada

B) TO ENHANCE THE PERCENTAGE RATIO OF THE REAL ESTATE INVESTMENT.

The Investment Committee of the Board of Directors in its 31 51 meeting held on April 29,

2009 decided to enhance the Real Estate Investment percentage ratio to 40% of the total

Investment Portfolio and recommended to the Board of Directors for its approval.

Board after detailed deliberation and in v1ew of enhancing the exposure in present

depressed Real Estate Market for buyers and unanimously resolved and approved to

enhance the Real Estate Investment ratio to 40%.

Board also discussed on the basis of legal opinions sought by the Board, it transpires that

the Public Procurement Regulatory Authority Ordinance, 2002 and the Public Procurement

Rules, 2004 are not applicable on the purchase of immovable property/real estate/land by a

procuring agency.

The Board therefore decided that although the PPRA Rules do not govern the purchase of

immovable property/real estate/land by NICL, yet, in order to ensure transparency, the

Company' s Management may apply the said Rules mutatis mutandis at its discretion

keeping in mind the interest of the Company and commercial viability.


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NATIONAL INSURANCE COMPANY LTD. A. KARACHI ~

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C) TO APPROVE CHANGES ON THE BOARD OF DIRECTORS OF CIVIC CENTERS COMPANY LTD.

Board discussed the fresh composition of CCC's Board of Directors and resolved to

appoint Mr. Javed Syed as Director on the Board of Directors of Civic Centres Company

(Pvt.) Ltd and to retire Mr. Saleemuddin Ahmed and Mr. Ather Naqvi.

-/ The new Board of Directors of Civic Centres Company (Pvt) Ltd. so constituted would be

as under:

I . Mr.Muhammad Ayyaz Niazi Chairman

2. Mr.Ashiq Hussain Memon

3. Syed Hur Rihai Gardezi

4. Mr.Javed Syed

D) TO CONSIDER DISBURSEMENT OF BONUS FOR THE FINANCIAL YEAR ENDED DECEMBER 31, 2008 TO THE EMPLOYEES OF NICL

Board in its 55 111 meeting held on April 09, 2009 had approved Bonus equal to five basic

pay to the employees ofNICL.

Board also discussed disbursement of Bonus to the employees in view of the circular

U.O.No.F.4 (3) Exp-III/2007,204 dated March 27, 2007 issued by Government of

Pakistan, Financial Division (Expenditure Wing) which clearly states that Board of

Directors of those autonomous bodies/corporations which established under Companies

Ordinance 1984 can incur expenditure with the approval of their Board of Directors

without seeking approval of Finance Division if it does not put any impact on the federal

budget. The same procedure is also adopted by the State Life Insurance Corporation and

Pakistan Reinsurance Company Ltd. for disbursement of Bonus which is disbursed to the

employees as soon as it is approved by their respective Board of Directors.

Keeping in view the above, the Board unanimously approved and resolved that the bonus

already approved in the 55th meeting of the Board of Directors be disbursed to the eligible

employees ofNICL without reference to the Ministry of Commerce and Finance Division.

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

4rA t' -Muhammad Ayyaz Niazi Chairman.

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