STATE INSURANCE COMPANY OF MAURITIUS LTD Annual Report 2009.pdf · Manager (Human Resource)...

STATE INSURANCE COMPANY OF MAURITIUS LTD

Annual Report

2009

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Contents

Main business lines 2

Our mission, shared values and objectives 3

Quality Policy 4

Corporate Information 5-6

Directors’ Report 7-20

Certificate from the Company Secretary 21

Auditors’ Report to the Shareholders 22

Balance Sheets 23

Income Statements 24

Statement of changes in equity 25

Cash flow statements 26

Notes to the Financial Statements 27-72

Statutory Disclosures 73


� State Insurance Company of Mauritius Limited

Life Assurance

• Investment and Savings• Child Education Planning • Loan protection • Serious Illness Cover• Personal Pension Plan

General Insurance

• Motor Insurance• Marine Insurance• Crop Insurance• Fire and Allied Perils Insurance• Personal Accident Insurance• All Risks Insurance• Liability Insurance• Travel Insurance• Engineering (Contractors’ All Risks, Plant and Equipment, etc) • Miscellaneous (Money, Fidelity Guarantee, etc)• Directors and Officers Liability Insurance

Pensions and Group Life

• Management of Pension Schemes• Family protection scheme• Group Life schemes• Medical schemes

Loans

• Housing • Multipurpose• Personal • Loan on Deposit• Commercial

Financial Services

• Fund Management in a broad array of financial instruments• Deposit Taking • Unit Trust • Leasing• Trustee Services• Management Services

Actuarial Services

• Actuarial Valuation of Life Assurance & Pension Funds• Advice on investment strategy / funding policy / transfer values / winding up/Distribution of Surplus • New product design and profit testing• Advice on surrenders, paid up values, alterations• Disclosures under IAS 19

Main Business Lines


State Insurance Company of Mauritius Limited �

our MISSION

Dedicated to providing the best in insurance and financial services, with focus on competitive quality products

and excellent levels of customer care

our SHARED VALUES

Our customers: the focus of all our actionsOur employees: the source of our success

Our products and services: competitive and first-class securityCommitment to innovation and teamwork

Assisting the development of the community

our OBJECTIVES

Provide excellent customer serviceMaximise profits and returns to stakeholders

Highly effective staff and agentsIncrease market share

Respond to new customer needsIdentify diversification opportunities

SICOM Group Business Lines



Service

We are committed to service excellence through providing a professional and timely service to our customers while maintaining value adding relationship with all stakeholders.

Meeting Customer Expectations

Our ultimate goal is to meet customer expectations with a diligent and efficient service.

People Development Our people are our most valuable asset and we shall:

• provide them with appropriate training in line with organisational needs and objectives,

• aim at achieving employee satisfaction and encouraging their participation in decision making processes, and

• promote safe, sound and motivating work environment.

Continual Improvement We are committed towards developing and maintaining efficient and reliable processes. We undertake to continually improve / innovate our products and services.

Competitive Products and Services

We will design and deliver competitive products and services to suit the requirements of our customers as well as the market at large.

Compliance and Good Governance

We ensure compliance with relevant laws and regulations and are committed to good governance and effective practices.

Quality Objectives

This Quality Policy will serve as basis for defining SICOM’s Quality Objectives and we will ensure that it is reviewed on a regular basis.

Quality Policy Corporate Information



BOARD OF DIRECTORS

Servansingh T K (Chairman) Bhoojedhur-Obeegadoo K G (Mrs)Chooramun B (Resigned on 13 July 2009)Dhaliah-Utchanah B D (Mrs)Gopee GGunness C (From 22 September 2008 to 28 November 2008)Lim Hoye Yee V (Mrs) (Up to 22 September 2008) Ng Ping Cheun E (Appointed on 30 July 2009)Purryag DSeeyave P S C (Ms) (Appointed on 04 February 2009)Sewpaul A

Company Secretary

Ramdewar N (Mrs)

Quality Policy Corporate Information



Registered OfficeSICOM BuildingSir Célicourt Antelme Street, Port LouisTelephone: (230) 203 8400 Fax: (230) 208 7662Email Address: [email protected] Website: http://www.sicom.mu

Rodrigues Branch OfficeCliderlex Building, Port Mathurin, RodriguesTelephone: 831 0312Fax: 831 0313

Curepipe Branch OfficeN Parsuramen Building, Impasse Pot de Terre,CurepipeTelephone: 675-8319/675-8349Fax: 675-8355

AuditorsKemp Chatteris Deloitte

Consulting ActuariesQED Actuaries & Consultants (Pty) Ltd

Main BankersState Bank of Mauritius LtdMauritius Commercial Bank LtdBarclays Bank PLCHong Kong & Shanghai Banking Corporation LtdSBI International (Mauritius) Ltd

Main ReinsurersSwiss Re Africa Ltd

Main Reinsurance Brokers Cooper Gay & Co LtdReinsurance Solutions (Mauritius) LtdJ B Boda Reinsurance Brokers Private LimitedMarsh Ltd

MANAGEMENT

Managing Director Bhoojedhur – Obeegadoo G Karuna (Mrs)

Senior ManagerSewpaul Anil

Senior ManagerRamdewar Nandita (Mrs)

Senior ManagerChaperon J M C Gilles

Senior ManagerBalgobin Vijay

Manager/Internal AuditorAppadoo Appanah Pritty (Mrs)

Manager (IT)Baguant Chemanlall

Manager (Financial Services)Gopy Dev K

Manager (Life)Koomar Bodun

Manager (Legal)Lee Shing Po Theresa M (Mrs)

Manager (General Insurance)Leung Lam Hing Suzanne H Y K (Mrs)

Manager (Finance)Ramruttun Heman K

Manager (Pensions)Rughoo Rajkamal

Manager (Actuarial)Seeroo Vasoodevsing

Manager (Human Resource)Virginie Mee-oy ( Mrs)

Corporate Information (Continued) Directors’ Report



Corporate Information (Continued) Directors’ Report

The Board of Directors of the State Insurance Company of Mauritius Ltd (SICOM) is pleased to present the twentieth Annual Report together with the audited financial statements of the Group and Company for the year ended 30 June 2009.

ECONOMIC REVIEW

For the financial year ended 30 June 2009, world growth was dampened by a full-blown global financial crisis. The financial crisis that started with the sub-prime mortgage crisis in the United States, resulted in the collapse of many financial institutions and the spill-over effects were transmitted to the whole world thus knocking several big economies into recession. After showing resilience for an initial period, most emerging economies started facing increasing difficulties with demand for their exports falling, investment sinking and cross-border lending drying up. As a result, overseas stock markets performed badly for the financial year ended 30 June 2009, with the MSCI World Index dropping by 31.2%.

The global economic slowdown also impacted on the local economy. The textile industry suffered a cutback of export to advanced countries, while the tourism industry posted a significant drop in its growth. The growth rate for the Mauritian Economy for 2008 stood at 5.3% based on estimates of the Central Statistics Office as at June 2009. The main contributor to this growth was the tertiary sector representing 68.4% of the GDP. The Central Bank adopted a monetary easing stance so as to further support the government’s policy to stimulate the domestic economy, with the Bank Rate decreasing by 36.1% for the financial year ended 30 June 2009. The inflation rate for the financial year ended 30 June 2009 was 6.9% and the local stock market went on a downward trend during the same period with the SEMDEX falling by 23.1%.

FINANCIAL OVERVIEW

The Group and the Company performed relatively well in spite of the global financial crisis due to timely measures taken to buffer the adverse impact of the crisis on our operations. Re-engineering of business lines, improved asset/liability management, cost control and close monitoring of operations were some of the main initiatives taken in the face of the financial crisis.

The Group and the Company have thus ended the financial year under review with satisfactory results. The Company has seen its pretax profit increased from Rs 252.4 million to Rs 290.3 million, representing an increase of 15.0%, while the Group ended its financial year with a pretax profit of Rs 343.7 million compared to Rs 335.2 million last year.

Total Assets and Net Assets Value

Group

Despite a significant drop in the equity prices in the local and overseas markets, the Group’s total assets and net assets value increased by 10.4% and 8.9% to reach Rs 12.5 billion and Rs 10.9 billion respectively as at 30 June 2009.

Assets

Total Assets

Net Asset Value

Financial year

2005 2006 2007 2008 20090

2,000

4,000

6,000

8,000

10,000

12,000

Rs' m



Directors’ Report (Continued) Directors’ Report (Continued)

FINANCIAL OVERVIEW (CONTINUED)

Total Assets and Net Assets Value (Continued)

Company

The total assets and net assets value of the Company increased by 10.0% and 8.7% to reach Rs 9.5 billion and Rs 9.1 billion respectively as at 30 June 2009.

Turnover

Group

The Group has realised an increase of 16.0% in its turnover for the financial year ended 30 June 2009 to stand at Rs 1.5 billion compared to Rs 1.3 billion registered last year.

Turnover

Financial year

2005 2006 2007 2008 2009

0

300

600

900

1,200

1,500

Rs' m

Assets

Financial year

0

2,000

4,000

6,000

8,000

10,000

2005 2006 2007 2008 2009

Rs' m

Total AssetsNet Asset Value





Turnover (Continued)

Company

The Company’s turnover increased by 16.9% for the financial year ended 30 June 2009 to reach Rs 1.4 billion compared to Rs 1.2 billion registered last year.

Revenue

Group

The gross revenue and the net revenue of the Group went up by 14.6% and 12.6% to reach Rs 1.2 billion and Rs 1.0 billion respectively for the financial year ended 30 June 2009.

Turnover

Financial year

0

Rs' m

300

600

900

1,200

1,500

2005 2006 2007 2008 2009

Revenue

Financial yearTotal Assets

Net Asset Value

0

200

400

600

800

1,000

1,200

2005 2006 2007 2008 2009

Rs' m


10 State Insurance Company of Mauritius Limited



Revenue (Continued)

Company

The Company’s gross revenue and the net revenue improved by 20.8% and 18.6% to reach Rs 872 million and Rs 700 million respectively for the financial year ended 30 June 2009.

Profit

Group

The Group’s profit before tax and profit after tax rose from Rs 335 million and Rs 302 million respectively for the financial year ended 30 June 2008 to Rs 343.7 million and Rs 308 million for the financial year ended 30 June 2009.

Revenue

Financial yearGross Revenue

Net Revenue

0

200

400

600

800

1,000

2005 2006 2007 2008 2009

Rs' m

Profit

Profit Before Tax

Profit After Tax

Financial year

0

100

200

300

400

2005 2006 2007 2008 2009

Rs' m


State Insurance Company of Mauritius Limited 11



Profit (Continued)

Company

The profit before tax and profit after tax of the Company moved up from Rs 252 million and Rs 225 million respectively for the financial year ended 30 June 2008 to Rs 290.3 million and Rs 259.6 million for the financial year ended 30 June 2009. This represents a healthy increase of 15.0% in profit before tax and 15.3% in profit after tax for the financial year under review.

Total Equity

Group

The Group’s total equity, which represents the Group’s shareholders’ fund, increased by 12.8% for the financial year ended 30 June 2009 to reach Rs 2.6 billion compared to Rs 2.3 billion for the same period last year.

Total Equity

Financial year

0

500

1,000

1,500

2,000

2,500

3,000

2005 2006 2007 2008 2009

Rs' m

Profit

Financial yearProfit Before Tax

Profit After Tax

0

100

200

300

2005 2006 2007 2008 2009

Rs' m


12 State Insurance Company of Mauritius Limited



Total Equity (Continued)

Company

The total equity of the Company, which represents the Company’s shareholders’ fund, increased by 10.3% for the financial year under review to reach Rs 2.2 billion compared to Rs 2.0 billion for the financial year ended 30 June 2008.

REVIEW OF OPERATIONS

Long-Term Business Review

The financial year ended 30 June 2009 has been, to a large extent, dominated by a climate of uncertainty and pessimistic speculation arising mainly from the outbreak of the global financial crisis. Its effect on the local economy and purchasing power of individuals could not be ascertained. It was an unexpected and unprecedented economic threat whose magnitude and duration was unpredictable. It necessitated prompt actions and preventive measures to be taken so as to minimise its possible impact on our final results. The sustained effort and actions taken to meet this major challenge enabled us to sustain the crisis and we ended the year on a positive note.

Our Life Assurance Business activities maintained a continuous growth during the period ending 30th June 2009. Gross premium income grew by 12% to reach Rs 1.04 billion (Rs 932.4 million – 30 June 2008) and contributions received under our Personal Pension Plans increased by 72% (21.3% - 30 June 2008). The year under review also saw the total bonus paid out to our with-profit policyholders increase by 56 % to reach Rs 172 million (Rs 109.9 million - 30 June 2008), demonstrating the sustained soundness of our Life Fund. Death and disability claims during the year increased by 25% to reach Rs 35.4 million (Rs 28.2 million – 30 June 2008).

The above performances combined with prudent measures taken during the year to face the challenge of the global financial crisis enabled us to maintain a continued growth of our Life Fund. This stood at Rs 5.9 billion as at 30th June 2009 representing an increase of 6% over last year’s figures (Rs 5.5 billion – 30 June 2008).

Constant monitoring of our product portfolio to ensure competitiveness of our products, market-focused actions and systematic empowering of our staff and sales force to better face the challenges of the global financial crisis have been the main drivers of our performance. Continuous tuning of our Customer Loyalty concept to better value our Customers has also contributed substantially.

Last but not least, our sales force has proved once again to be the lifeblood of our success. Their commitment, dedication and responsiveness to adapt rapidly to the new environment have been another major contributing factor to our performance achieved for the year ended 30 June 2009. It was with much pleasure that we hosted our annual Most Performing Salesmen Awards to reward their efforts and to express our recognition of their contribution to our final performance.

Short-Term Business Review

A satisfactory progress has been noted in the results for the year ended 30 June 2009. Thus a gross premium income of Rs 466 million was achieved for the year, representing an increase of 36% over last year’s income of Rs 343 million. Retained premium has

Financial year

Total Equity

0

500

1,000

1,500

2,000

2,500

2005 2006 2007 2008 2009

Rs' m

STATE INSURANCE COMPANY OF MAURITIUS LTDDirectors’ Report (Continued) Directors’ Report (Continued)

REVIEW OF OPERATIONS (CONTINUED)

Short-Term Business Review (Continued)

likewise increased, showing an amount of Rs 264 million compared to Rs 198 million for the previous year. As regards the profit from underwriting operations, there has been a remarkable progression with an amount of Rs 72.9 million generated for the year compared to Rs 44.3 million for the previous year, representing a 65% increase.

An increase in gross premium income has been recorded under all classes of insurance. During the year under review, special attention has been paid to the Motor class of business and with the application of tighter underwriting guidelines and other measures, a marked improvement has been noted in the Motor results. Mauritius has enjoyed a quiet cyclonic season and thus, we have been spared cyclone losses in the Property class, though a few Fire losses have had a negative impact on the Property results. All classes of business have performed well in general.

Transactions during the financial year have been made in the new IT environment and after an adjustment period, the value addition of the new system is emerging quite distinctly.

Pension, Group Life and Medical Schemes and Actuarial Services

As at 30 June 2009, SICOM Group Life Portfolio consisted of 130 schemes covering around 27,000 members. Annual premiums grew by some 21.8 % over the year. As regards Corporate Medical Insurance business, the number of Medical Schemes stood at 61, covering some 7,190 members.

Actuarial services are being currently provided to three main lines of businesses of SICOM, mainly the Pensions, Life Assurance and General Insurance. The need for actuarial services is on the increase, given the increase in technical requirements on all the above lines of activities. It has been important to retain and recruit qualified staff to meet these challenges. The solvency regulations in respect of Life Assurance and General Insurance, and IAS Disclosure requirements for Pension Business are the main areas where actuarial input was most solicited. The world financial crisis has also added pressure on the actuarial resources and skills, given its impact on assets and liabilities of funds at SICOM Ltd. The number of pension valuations has increased from 25 valuations to 35, while the annual valuations for disclosures under IAS 19 have increased from 65 to 67.

Loans

In order to mitigate the effect of recession, we adopted a new marketing strategy with competitive rates of interest which yielded positive results in the amount of loans granted during this financial year. We sustained a positive growth in the amount of loans sanctioned under our Housing Loan Scheme, which was Rs 299 million for the period under review as compared to Rs 280 million during the same period for last year, representing a net increase of 6.79% for this type of loan. As at 30 June 2009, our balance of loan portfolio under our Housing, Multi Purpose, Commercial and Personal Loan Schemes stood at Rs 2.21 billion.

Investment

The total assets managed by the SICOM Group stood at Rs 26.8 billion as at 30 June 2009 as compared to Rs 25.8 billion last year. At Company level 12 different funds are managed with each fund having its own investment and asset allocation strategy based on the fund’s objective, liabilities and time horizon.

Total Assets Under Management

Financial year

0

10

20

30

2005 2006 2007 2008 2009

Rs' bn

State Insurance Company of Mauritius Limited 13


1� State Insurance Company of Mauritius Limited

Directors’Report (Continued) Directors’ Report (Continued)

REVIEW OF OPERATIONS (CONTINUED)

The adverse impact of the global economic downturn was limited to the equity portion of our diversified investment portfolios. Apart from our investment approach that hinges on both quantitative analysis and market judgment to produce consistent investment returns, our different portfolios have moreover been structured to have the right balance between return generation and principal preservation. Indeed, our strategic asset allocation has served us well during the current turbulent times in the preservation of principal and the reduction of downside risks. Financial markets might remain erratic in the coming months with the financial crisis still impacting on the global economy. Thus, we will maintain our prudent stance and constantly monitor our investment portfolios and market conditions.

Group’s investment allocation

Regulatory environment

In February of this year, the Financial Services Commission (FSC) launched the Risk Based Supervision Framework (RBSF). The RBSF adopts a pro-active approach essentially based on the risk profiling of licensees. The net outcome of the framework is to classify each licensed financial service provider in risk categories reflecting various levels of supervisory concerns and consequent need for focused supervisory attention and allocation of resources.Under the RBSF, licensees are required to submit data/information to the FSC as part of the risk rating and assessment. This requirement includes the submission of information through online questionnaires and forms. The RBSF has been implemented on the 1st July 2009.

Human Resource Development

In line with our strategic journey of continuous improvement, a Human Resource Development (HRD) Function was set up in September 2008. The HRD Function forms part of our existing Integrated Management System and was created with the objective to equip Individuals and Teams with the Desire, Attitude, Knowledge, Skills and Competencies required to undertake current and future tasks. The HRD Function has started building a Competency Framework as one of its milestones.

SUBSIDIARY COMPANIES

The profit before tax of SICOM Financial Services Ltd (SFSL) increased by 8.8% to reach Rs 33.3 million for the financial year under review, as compared to Rs 30.6 million for the same period last year. The total deposits of the Company increased from Rs 2.5 billion last year to reach Rs 2.6 billion as at 30 June 2009. The leasing activities of SFSL performed well for the year under review, with the amount of lease disbursed increasing by 44.2% to reach Rs 40.0 million. SICOM Financial Services Ltd also manages two Unit Trusts, namely SICOM General Fund and SICOM Overseas Diversified Fund, which outperformed their benchmarks for the financial year ended 30 June 2009.

SICOM Management Ltd recorded a profit before tax of USD 1.4 million for the financial year ended 30 June 2009, as compared to USD 1.7 million for the financial year ended 30 June 2008 due to lower management fees received from SICOM Global Fund Limited on account of the sharp drop in global financial markets and lower interest rates for the financial year under review. The strong US Dollar, declining asset prices and the drastic fall in interest rates that resulted from the global financial crisis has had a negative impact on the performance of SICOM Global Fund Ltd. However, the Fund performed better than its benchmark for the financial year ended 30 June 2009.

2009

Loans11.49%

Subsidiaries & Overseas Securities

24.63%

Fixed Income Securities46.14%

Local Equity16.94%

Others0.80%


CORPORATE GOVERNANCE REPORT 2009 (CONTINUED)

3. MAJOR SHAREHOLDERS

As at 30 June 2009, the following Shareholders held more than 5% of the ordinary share capital of the Company:

• Development Bank of Mauritius Ltd• Sugar Insurance Fund Board• State Bank of Mauritius Ltd• State Investment Corporation Ltd• Port Louis Fund Ltd• National Investment Trust Ltd

4. DIVIDEND POLICY

The Company’s objective is to provide value to its shareholders through an optimum return on equity. Dividends are proposed and paid after taking into consideration the profit after taxation, projects, technical provisions and appropriations to statutory and other reserves for ongoing operational activities. Dividends are only authorised and paid out if the Company shall, upon the distribution being made, satisfy the Solvency Test.

5. THE BOARD OF DIRECTORS

(a) Role of the Board

Company Law requires the Directors to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Company and of the profit of the Company for that period. In preparing those financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2001. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Board of Directors of SICOM has the overall responsibility for ensuring that the Company complies with the standards of good corporate governance.

The Board of Directors met four times during the year.

(b) Election of Directors

The Directors of the Company are elected every year at the Annual Meeting of Shareholders.



STATE INSURANCE COMPANY OF MAURITIUS LTDDirectors’Report (Continued) Directors’ Report (Continued)


6. BOARD COMMITTEES

In compliance with the principles of good governance, the Board of Directors has set up three Board Committees, namely:

• Investment Committee

• Risk and Audit Committee

• Corporate Governance Committee

Investment Committee

The members of the Investment Committee are Mr T K Servansingh (Chairman), Mrs K G Bhoojedhur-Obeegadoo, Mr G Gopee and Mrs B D Dhaliah-Utchanah.

The Investment Committee of SICOM lays down and reviews on a regular basis the investment strategy of the different funds under our management, that is, the Committee has the objective of selecting investments and investment products to yield superior returns within a preset risk management structure. It also takes key investment decisions and ensures that investments are in all respect reasonable and proper.

Moreover, the Committee monitors and reviews the performance of our different portfolios.

During the year, the Investment Committee met eight times.

Risk and Audit Committee

The Risk and Audit Committee consists of four non-executive Directors, namely, Messrs G Gopee (Chairman), T K Servansingh, B Chooramun, and D Purryag.

The Risk and Audit Committee operates under a formally approved Charter, which clearly spells out the roles and responsibilities of the Committee members. Its main tasks are to maintain and, where necessary, review the effectiveness of internal controls in the Group in the light of the findings of the external and internal auditors and review the financial statements.

During the year, the Risk and Audit Committee met on three occasions.

Corporate Governance Committee

The members of the Corporate Governance Committee are Mr T K Servansingh (Chairman), Mrs K G Bhoojedhur-Obeegadoo, Mr B Chooramun and Ms S C P Seeyave.

The Corporate Governance Committee operates under an approved mandate, which includes the nomination of Directors, determination of the Company’s general policy on Directors fees, executive and senior management remuneration and consideration of other important staff-related matters.

During the year, the Corporate Governance Committee met once.

7. DIRECTORS REMUNERATION

For the financial year 2008/09, the executive directors and the non-executive directors received emoluments amounting to Rs 8,397,999 and Rs 2,132,666, respectively from the company.

Emoluments of Rs 1,787,550 and Rs 1,541,050 were received by executive directors and the non-executive directors respectively from subsidiaries for the financial year 2008/09.

State Insurance Company of Mauritius Limited 1�



8. REMUNERATION POLICY

We are an equal opportunity employer and we are committed to attracting and retaining the best people. We believe that our people are the source of our success and aim at motivating and compensating them by providing a competitive salary package and related benefits.

Priority in recruitment is given to existing employees within the company and selection is based on the principle of meritocracy.

We also welcome external candidates for job openings at all levels of the organization, especially when and where specific skills and expertise are being sought.

The individual performance is regularly and objectively measured in line with agreed objectives with the aim of promoting a performance culture while ensuring individual growth and development.

9. RELATED PARTY TRANSACTIONS

The related party transactions are disclosed in Note 36 to the Accounts.

10. CONSTITUTION

The Constitution of the Company does not provide any ownership restriction or pre-emption rights except for what is provided by the Companies Act 2001.

11. SHAREHOLDERS’ AGREEMENTS / THIRD PARTY MANAGEMENT AGREEMENTS

There were no such agreements during the year under review.

12. INTERNAL AUDIT

The SICOM group operates in multi-segments of the financial sector. Due to the nature and complexity of transactions involved and the degree of compliance required, the Group is continuously being assessed and evaluated to ensure effective controls are in place and all legal issues, regulatory and statutory frameworks are taken on-board to ensure efficient and effective operations.

The Internal Audit function has the overall responsibility of providing independent, objective assurance and consulting activity designed to add value and improve the Group’s operations.

The scope of work of the auditing function is to enable the Group accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of its risk management, control, information systems and governance processes.

Information Systems (IS) reviews are also carried out and undertakes examination of IS environment to assess for proper safeguarding

of assets, maintenance of data integrity, value delivery through effective achievement of organizational goals and proper resource management. These reviews may also be performed in conjunction with operational and financial reviews.

Our risk-based approach to auditing enables us to direct audit resources towards high-risk areas. This includes enterprise-wide activities and processes that cuts across several departments and services. Audit planning is also carried out in such a way to ensure alignment of audit objectives with organizational objectives.

Quality Assurance

The first annual Surveillance Audit for the SICOM Group, following the award of its new 3-year ISO 9001:2000 certificate, was carried out successfully in March 2009, with recommendation from the external auditors that the Quality Management System certification be continued.





12. INTERNAL AUDIT (CONTINUED)

Quality Assurance (Continued)

The Quality Management System is being maintained and continually improved, through its dedicated and motivated workforce, with main focus on the clients, the people and other stakeholders.

The Quality Assurance function is continuously being exposed to new challenges, and projects are undertaken with the prime objective of improving the organisation’s processes and practices aiming at maximizing shareholder’s value.

The Quality Policy of the Company is set out on page 4.

13. RISK MANAGEMENT

The main focus of SICOM’s risk management framework is to establish a culture of risk management throughout the company to handle the risks associated with growth and a rapidly changing business environment.

The SICOM Group’s risk management philosophy embraces the overall systematic approach to analyzing risk and implementing risk controls.

The prime objective of the current risk management framework is to identify, analyze and taking the appropriate steps to reduce or eliminate the exposures to loss faced by the Group, including, but not limited to, reputation risk, technology risk, compliance risk, operational risk, business continuity and physical risk which could influence the achievement of the Group’s objectives.

The financial risks of the Group are listed in Note 4 to the financial statements.

14. SOCIAL RESPONSIBILITY ROLE

The Company is fully conscious of its role as a social partner in the Community. During the year under review, the Company has actively participated in various activities, including safety, health, education and environmental and has sponsored several events.

15. HEALTH AND SAFETY POLICY

Our policy is to provide and maintain safe and healthy working conditions, equipment and systems of work for all our employees, and to provide such information, training and supervision as they need for this purpose.

16. CODE OF CONDUCT

The Company is committed to ethical practices in the conduct of its business and its Code of Conduct sets out standards of business behaviour for its employees.

17. DONATIONS

The donations of the Group and Company are listed under Statutory Disclosures.


State Insurance Company of Mauritius Limited 1�


ACKNOWLEDGEMENT

The Board would like to extend its appreciation for the valuable contribution made by Mr B Chooramun, outgoing Director, towards the affairs of the Board and welcomes Mr E Ng Ping Chuen who recently joined the Board of State Insurance Company of Mauritius Ltd.

The Board would like to pay tribute to late Mr C Gunness, Director of the Company, who passed away in November last year.

The Board of Directors expresses its deep appreciation of the support given to all the stakeholders of the SICOM Group by the Government of Mauritius, the Financial Services Commission, the Bank of Mauritius, Reinsurers, Reinsurance Brokers, Investment Managers, Bankers, Assurance Salesmen and Stockbrokers.

The Board of Directors is also thankful to its customers and shareholders for their loyalty and trust and would like to thank Management and staff for their dedicated effort and commitment to the Group.

For and on behalf of the Board of Directors

Date: 25 September 2009

T.K ServansinghChairman

Bhoojedhur-Obeegadoo K G (Mrs)Director

Directors’Report (Continued) Secretary’s Certificate

�0 State Insurance Company of Mauritius Limited

STATE INSURANCE COMPANY OF MAURITIUS LTDDirectors’Report (Continued) Secretary’s Certificate

I certify to the best of my knowledge and belief that for the year ended 30 June 2009, the Company has filed with the Registrar of Companies, all such returns as are required of the Company under the Companies Act 2001.

N Ramdewar (Mrs)Company SecretaryState Insurance Company of Mauritius Ltd

Port Louis

Date: 25 September 2009

State Insurance Company of Mauritius Limited �1

STATE INSURANCE COMPANY OF MAURITIUS LTDAuditors’ Report to the Shareholders ofState Insurance Company of Mauritius Ltd

This report is made solely to the company’s shareholders, as a body, in accordance with section 205 of the Companies Act 2001. Our audit work has been undertaken so that we might state to the company’s shareholders those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s shareholders as a body, for our audit work, for this report, or for the opinions we have formed.

Report on the Financial Statements

We have audited the financial statements of State Insurance Company of Mauritius Ltd on pages 23 to 72 which comprise the balance sheets as at 30 June 2009 and the income statements, statements of changes in equity and cash flow statements for the year then ended and a summary of significant accounting policies and other explanatory notes.

Directors’ responsibilities for the financial statements

The directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in compliance with the requirements of the Companies Act 2001. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements on pages 23 to 72 give a true and fair view of the financial position of the group and of the company as at 30 June 2009, and of its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and comply with the requirements of the Companies Act 2001 and the Financial Reporting Act 2004.

Report on other legal requirements

Companies Act 2001

• we have no relationship with, or interests in, the company other than in our capacities as auditors.• we have obtained all information and explanations that we have required; and• in our opinion, proper accounting records have been kept by the company as far as appears from our examination of those records.

Insurance Act 2005

The financial statements have been prepared in the manner and meet the requirements specified by the Financial Services Commission

Chartered Accountants L. Yeung Sik Yuen, ACA25 September 2009

�� State Insurance Company of Mauritius Limited

Financial StatementsYear Ended

30 June 2009


Group Company Note 2009 2008 2009 2008 Rs’000 Rs’000 Rs’000 Rs’000

NON-CURRENT ASSETS Property, plant and equipment 6 215,682 216,943 215,682 216,943 Intangible assets 7 17,118 17,711 17,118 17,711 Statutory deposits 8 23,855 23,855 23,855 23,855 Investments in subsidiaries 9 - - 1,420,557 1,420,557 Other assets 10 5,751,359 4,853,070 3,799,188 3,048,750 Investment properties 11 32,000 55,632 32,000 55,632 Fixed deposits 12 827,435 650,655 49,828 49,828 Finance lease receivables 13 46,590 23,234 - - Mortgage and other loans 14 1,493,041 1,453,139 1,493,041 1,453,139 Retirement benefit obligations 25 7,160 - 7,160 - Deferred tax assets 20 2,054 - - -

8,416,294 7,294,239 7,058,429 6,286,415

CURRENT ASSETS Other assets 10 685,304 1,058,032 637,421 881,216 Finance lease receivables 13 12,951 5,216 - - Mortgage and other loans 14 173,098 149,456 173,098 149,456 Accounts receivable 15 654,515 454,550 439,825 324,652 Short-term deposits 16 1,951,412 1,899,836 615,689 581,955 Reinsurance assets 17 316,767 179,288 316,767 179,288 Bank and cash balances 320,153 317,659 277,696 255,393

4,114,200 4,064,037 2,460,496 2,371,960

CURRENT LIABILITIES Borrowings 18 13,550 10,600 32,325 27,290 Accounts payable 19 549,515 315,251 325,755 169,045 Taxation 20 27,091 59,404 24,498 53,317 Bank overdraft - 5,752 - 5,607 Deposits 21 1,008,298 925,943 - -

1,598,454 1,316,950 382,578 255,259

NET CURRENT ASSETS 2,515,746 2,747,087 2,077,918 2,116,701

10,932,040 10,041,326 9,136,347 8,403,116

CAPITAL AND RESERVES Stated capital 22 70,000 70,000 70,000 70,000 Reserves 23 2,566,078 2,266,649 2,116,157 1,912,343

EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 2,636,078 2,336,649 2,186,157 1,982,343 MINORITY INTEREST 3,631 3,342 - - TOTAL EQUITY 2,639,709 2,339,991 2,186,157 1,982,343 TECHNICAL PROVISIONSLong term insurance Funds 24 6,101,452 5,734,881 5,853,271 5,498,395 Outstanding claims and IBNR 17 302,664 221,315 302,664 221,315 Gross unearned premiums 17 228,635 126,485 228,635 126,485

6,632,751 6,082,681 6,384,570 5,846,195

NON-CURRENT LIABILITIES Borrowings 18 29,950 16,150 555,635 560,610 Retirement benefit obligations 25 - 6,520 - 6,520 Long term deposits 21 1,619,645 1,588,536 - - Deferred taxation 20 9,985 7,448 9,985 7,448

1,659,580 1,618,654 565,620 574,578 10,932,040 10,041,326 9,136,347 8,403,116

Approved by the Board of Directors and authorised for issue on 25 September 2009.

Servansingh T K Bhoojedhur-Obeegadoo K G (Mrs) Chairman Director

State Insurance Company of Mauritius Limited ��

Balance Sheetsat 30 June 2009



Group Company Note 2009 2008 2009 2008 Rs’000 Rs’000 Rs’000 Rs’000

GROSS REVENUE - Short Term Business 26 1,155,825 1,008,484 872,068 722,149

Underwriting Surplus 27 75,318 44,516 75,318 44,516 Investment and Other Income 28 673,323 666,066 396,407 368,028 Share of surplus transferred from Life Assurance Fund 29 20,577 38,000 20,577 38,000

769,218 748,582 492,302 450,544 Administrative and Other Expenses 30 (422,461) (410,468) (133,365) (127,634)

Results of Operating Activities 346,757 338,114 358,937 322,910 Finance Costs 31 (3,076) (2,924) (68,666) (70,465)

PROFIT BEFORE TAXATION 343,681 335,190 290,271 252,445 TAXATION 20 (35,728) (32,831) (30,695) (27,346)

PROFIT AFTER TAXATION 307,953 302,359 259,576 225,099

Attributable to: Equity holders of the Parent 307,636 302,095 259,576 225,099 Minority Interest 317 264 - -

307,953 302,359 259,576 225,099

Income Statementsfor the year ended 30 June 2009


Attributable Insured Properties Investments to Equity Stated Retained Medical Revaluation Revaluation Other Contingencies Translation Holders Minority Capital Earnings Scheme Reserve Reserve Reserve* Reserve** Reserve Of Parent Interest Total Note Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000GROUPBalance at 1 July 2007 70,000 1,743,109 21,217 101,186 84,638 2,964 40,523 31,756 2,095,393 2,605 2,097,998 Transfer from statutory reserve fund - 27,035 - - - - - - 27,035 - 27,035 Transfer from/(to) reserve - (3,571) - - (5,471) 3,971 - - (5,071) - (5,071)Revaluation adjustment - - - 1,340 (12,967) - - - (11,627) - (11,627)Exchange movement on retranslation of subsidiaries - - - - - - - (47,426) (47,426) - (47,426)

Net income & expense recognised directly in equity 70,000 1,766,573 21,217 102,526 66,200 6,935 40,523 (15,670) 2,058,304 2,605 2,060,909 Increase in share capital - - - - - - - - - 500 500 Profit for the year - 302,095 - - - - - - 302,095 264 302,359

Total recognised income & expense for the year 70,000 2,068,668 21,217 102,526 66,200 6,935 40,523 (15,670) 2,360,399 3,369 2,363,768 Dividend 34 - (23,750) - - - - - - (23,750) (27) (23,777)

Balance at 30 June 2008 70,000 2,044,918 21,217 102,526 66,200 6,935 40,523 (15,670) 2,336,649 3,342 2,339,991

Balance at 1 July 2008 70,000 2,044,918 21,217 102,526 66,200 6,935 40,523 (15,670) 2,336,649 3,342 2,339,991 Transfer from/(to) reserve - (4,319) - - (8,705) 4,319 - - (8,705) - (8,705)Revaluation adjustment - - - - (38,493) - - - (38,493) - (38,493)Exchange movement on retranslation of subsidiaries - - - - - - - 65,241 65,241 - 65,241

Net income & expense recognised directly in equity 70,000 2,040,599 21,217 102,526 19,002 11,254 40,523 49,571 2,354,692 3,342 2,358,034 Profit for the year - 307,636 - - - - - - 307,636 317 307,953

Total recognised income & expense for the year 70,000 2,348,235 21,217 102,526 19,002 11,254 40,523 49,571 2,662,328 3,659 2,665,987 Dividend 34 - (26,250) - - - - - - (26,250) (28) (26,278)

Balance at 30 June 2009 70,000 2,321,985 21,217 102,526 19,002 11,254 40,523 49,571 2,636,078 3,631 2,639,709

COMPANYBalance at 1 July 2007 70,000 1,432,653 21,217 101,186 44,389 - 40,523 - 1,709,968 - 1,709,968 Transfer from statutory reserve fund - 27,035 - - - - - - 27,035 - 27,035 Transfer from reserve - - - - (4,545) - - - (4,545) - (4,545)Revaluation adjustment - - - 1,340 47,196 - - - 48,536 - 48,536

Net income & expense recognised directly in equity 70,000 1,459,688 21,217 102,526 87,040 - 40,523 - 1,780,994 - 1,780,994 Profit for the year - 225,099 - - - - - - 225,099 - 225,099

Total recognised income & expense for the year 70,000 1,684,787 21,217 102,526 87,040 - 40,523 - 2,006,093 - 2,006,093 Dividend 34 - (23,750) - - - - - - (23,750) - (23,750)

Balance at 30 June 2008 70,000 1,661,037 21,217 102,526 87,040 - 40,523 - 1,982,343 - 1,982,343 Balance at 1 July 2008 70,000 1,661,037 21,217 102,526 87,040 - 40,523 - 1,982,343 - 1,982,343 Transfer from reserve - - - - (7,780) - - - (7,780) - (7,780)Revaluation adjustment - - - - (21,732) - - - (21,732) - (21,732)

Net income & expense recognised directly in equity 70,000 1,661,037 21,217 102,526 57,528 - 40,523 - 1,952,831 - 1,952,831 Profit for the year - 259,576 - - - - - - 259,576 - 259,576

Total recognised income & expense for the year 70,000 1,920,613 21,217 102,526 57,528 - 40,523 - 2,212,407 - 2,212,407 Dividend 34 - (26,250) - - - - - - (26,250) - (26,250)

Balance at 30 June 2009 70,000 1,894,363 21,217 102,526 57,528 - 40,523 - 2,186,157 - 2,186,157

* Other reserve consists of a transfer from the net profit after tax of SICOM Financials Services Ltd as per Section 21 of the Banking Act 2004.** The contingencies reserve was to cater for any under-provision arising from the general insurance risk, including future losses or other unforseeable risk.

STATE INSURANCE COMPANY OF MAURITIUS LDStatement of Changes in Equityfor the year ended 30 June 2009


Group Company 2009 2008 2009 2008 Rs’000 Rs’000 Rs’000 Rs’000

CASH FLOWS FROM OPERATING ACTIVITIESProfit before taxation 343,681 335,190 290,271 252,445

Adjustments for: Exchange differences 146,108 (99,941) - - Depreciation 12,877 13,364 12,877 13,364 Amortisation of intangibles 3,399 2,332 3,399 2,332 Surplus on revaluation of property 199 (2,185) 199 (2,185)Retirement benefit obligations (13,678) (5,380) (13,678) (5,380)(Gain)/Loss on disposal of property, plant and equipment (83) 1,603 (83) 1,603 Profit on disposal of investments and investment properties (3,622) (37,665) (3,718) (37,305)Investment income (435,884) (417,722) (183,996) (176,650)Interest on loan 274,508 269,570 68,666 70,465 Management Fees 1,910 1,486 - - Net surplus - Life Assurance Fund 527,123 591,291 561,012 559,191 - Medisave Fund 78 36 78 36 - Personal Pension Plan Fund 43,072 26,643 43,072 26,643 - Insured Pension Scheme Fund 5,163 2,986 5,163 2,986

OPERATING CASH FLOWS BEFORE WORKING CAPITAL CHANGES 904,851 681,608 783,262 707,545

Increase in accounts receivable (132,301) (53,885) (132,273) (54,104)Increase in reinsurance assets (137,479) (28,286) (137,479) (28,286)Increase in accounts payable 156,944 44,610 156,307 49,436 Increase in insurance liabilities 183,498 56,766 183,498 56,766

CASH GENERATED FROM OPERATIONS 975,513 700,813 853,315 731,357 Interest paid (196,612) (274,035) (68,265) (70,765)Interest and dividend received 347,014 363,996 185,532 158,321 Income tax paid (94,578) (76,633) (85,107) (72,789)Dividend paid (26,250) (23,750) (26,250) (23,750)

NET CASH GENERATED FROM OPERATING ACTIVITIES 1,005,087 690,391 859,225 722,374

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (12,020) (20,572) (12,020) (20,572)Purchase of intangible (2,806) (12,240) (2,806) (12,240)Proceeds from sale of property, plant and equipment and Investments 22,625 66,340 15,244 65,436 Deposit takings 113,464 290,630 - - Net investments (1,019,734) 92,743 (734,515) (149,853)Net loans (63,544) (130,816) (63,544) (130,816)

NET CASH GENERATED FROM/ (USED IN) FINANCING ACTIVITIES (962,015) 286,085 (797,641) (248,045)

CASH FLOWS FROM FINANCING ACTIVITIES Issue of shares - 500 - - Loan received 28,500 - 28,500 - Loan repaid (11,750) (12,300) (28,440) (27,118)

NET CASH (USED IN)/GENERATED FROM FINANCING ACTIVITIES 16,750 (11,800) 60 (27,118)

Net increase in cash and cash equivalents 59,822 964,676 61,644 447,211 CASH AND CASH EQUIVALENTS AT 1 JULY 2,211,743 1,247,067 831,741 384,530

CASH AND CASH EQUIVALENTS AT 30 JUNE 2,271,565 2,211,743 893,385 831,741

CASH AND CASH EQUIVALENTSBank and cash balances 320,153 317,659 277,696 255,393 Short term deposits 1,951,412 1,899,836 615,689 581,955 Bank overdraft - (5,752) - (5,607)

2,271,565 2,211,743 893,385 831,741


Notes to the Financial Statementsfor the year ended 30 June 2009

Cash Flow Statementsfor the year ended 30 June 2009

STATE INSURANCE COMPANY OF MAURITIUS LTDNotes to the Financial Statementsfor the year ended 30 June 2009

Cash Flow Statementsfor the year ended 30 June 2009


1. GENERAL INFORMATION

State Insurance Company of Mauritius Ltd is a public Company incorporated in Mauritius. Its registered office is situated at Sir Celicourt Antelme Street, Port-Louis, Mauritius. The Company is mainly engaged in long term and general insurance business whilst its subsidiaries carry out depository, investment and management activities.

2. SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of financial statements are set out below:

2.1 Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS). The financial statements are prepared under the historical cost basis, as modified by the revaluation of buildings, investment properties and certain available-for-sale investments.

In the current year, the Group and Company have adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board (“IASB”) and the International Financial Reporting Interpretations Committee (“IFRIC”) of the IASB that are relevant to its operations and effective for accounting periods beginning on 1 July 2008. The adoption of these new and revised Standards and Interpretations has not resulted in changes to the company’s accounting policies.

At the date of authorisation of these financial statements, the following Standards and Interpretations were issued but effective on annual periods beginning on or after the respective dates as indicated:

IAS 1 Presentation of Financial Statements - Comprehensive revision including requiring a statement of comprehensive income (effective 1 January 2009)IAS 1 Presentation of Financial Statements - Amendments relating to disclosure of puttable instruments and obligations arising on liquidation (effective 1 January 2009)IAS 1 Presentation of Financial Statements - Amendments resulting from May 2008 Annual Improvements to IFRSs (effective 1 January 2009)IAS 1 Presentation of Financial Statements - Amendments resulting from April 2009 Annual Improvements to IFRSs (effective 1 January 2010)IAS 7 Statement of Cash Flows – Amendments resulting from April 2009 Annual Improvements to IFRSs (effective 1 January 2010)IAS 16 Property, Plant and Equipment - Amendments resulting from May 2008 Annual Improvements to IFRSs (effective 1 January 2009)IAS 17 Leases - Amendments resulting from April 2009 Annual Improvements to IFRSs (effective 1 January 2010)IAS 19 Employee Benefits - Amendments resulting from May 2008 Annual Improvements to IFRSs (effective 1 January 2009) IAS 20 Government Grants and Disclosure of Government Assistance - Amendments resulting from May 2008 Annual Improvements to IFRSs (effective 1 January 2009) IAS 23 Borrowing Costs - Comprehensive revision to prohibit immediate expensing (effective 1 January 2009) IAS 23 Borrowing Costs - Amendments resulting from May 2008 Annual Improvements to IFRSs (effective 1 January 2009)IAS 27 Consolidated and Separate Financial Statements - Consequential amendments arising from amendments to IFRS 3 (effective 1 July 2009)IAS 27 Consolidated and Separate Financial Statements - Amendment relating to cost of an investment on first-time adoption (effective 1 January 2009)IAS 27 Consolidated and Separate Financial Statements - Amendments resulting from May 2008 Annual Improvements to IFRS s (effective 1 January 2009)IAS 28 Investments in Associates - Consequential amendments arising from amendments to IFRS 3 (effective 1 July 2009)IAS 28 Investments in Associates - Amendments resulting from May 2008 Annual Improvements to IFRSs (effective 1 January 2009)IAS 29 Financial Reporting in Hyperinflationary Economies - Amendments resulting from May 2008 Annual Improvements to IFRSs (effective 1 January 2009)



2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.1 Basis of preparation (Continued)

IAS 31 Interests in Joint Ventures - Consequential amendments arising from amendments to IFRS 3 (effective 1 July 2009) IAS 31 Interests in Joint Ventures - Amendments resulting from May 2008 Annual Improvements to IFRSs (effective 1 January 2009)IAS 32 Financial Instruments - Presentation - Amendments relating to puttable instruments and obligations arising on liquidation (effective 1 January 2009)IAS 36 Impairment of Assets - Amendments resulting from May 2008 Annual Improvements to IFRSs (effective 1 January 2009)IAS 36 Impairment of Assets - Amendments resulting from April 2009 Annual Improvements to IFRSs (effective 1 January 2010)IAS 38 Intangible Assets - Amendments resulting from May 2008 Annual Improvements to IFRSs (effective 1 January 2009)IAS 38 Intangible Assets - Amendments resulting from April 2009 Annual Improvements to IFRSs (effective 1 July 2009)IAS 39 Financial Instruments: Recognition and Measurement - Amendments: resulting from May 2008 Annual Improvements to IFRSs (effective 1 January 2009) IAS 39 Financial Instruments: Recognition and Measurement - Amendments for eligible hedged items (effective 1 July 2009)IAS 39 Financial Instruments: Recognition and Measurement – Amendments for embedded derivatives when reclassifying financial instruments (effective 1 July 2009)IAS 39 Financial Instruments: Recognition and Measurement – Amendments resulting from April 2009 Annual Improvements to IFRSs (effective 1 July 2010)IAS 40 Investment Property - Amendments resulting from May 2008 Annual Improvements to IFRSs (effective 1 January 2009) IAS 41 Agriculture - Amendments resulting from May 2008 Annual Improvements to IFRSs (effective 1 January 2009)IFRS 1 First-time Adoption of International Financial Reporting Standards - Amendment relating to cost of an investment on first-time adoption (effective 1 January 2009).IFRS 2 Share-Based Payment - Amendment relating to vesting conditions and cancellations (effective 1 January 2009)IFRS 2 Share-Based Payment - Amendment resulting from April 2009 Annual Improvements to IFRSs (effective 1 July 2009)IFRS 2 Share-Based Payment - Amendments relating to group cash-settled share-based payment transactions (effective 1 January 2010)IFRS 3 Business Combinations - Comprehensive revision on applying the acquisition method (effective 1 July 2009)IFRS 5 Non-current Assets Held for Sale and Discontinued Operations - Amendments resulting from May 2008 Annual Improvements to IFRSs (effective 1 July 2009)IFRS 5 Non-current Assets Held for Sale and Discontinued Operations - Amendments resulting from April 2009 Annual Improvements to IFRSs (effective 1st January 2010)IFRS 7 Financial Instruments : Disclosures – Amendments enhancing disclosures about fair value and liquidity risk (effective 1 January 2009)IFRS 8 Operating segments (effective 1 January 2009)IFRS 8 Operating segments - Amendments resulting from April 2009 Annual Improvements to IFRSs (effective 1st January 2010)IFRIC 15 Agreements for the construction of Real Estate (effective 1 January 2009) IFRIC 16 Hedges of a Net Investment in a Foreign Operation (effective 1 October 2008)IFRIC 17 Distribution of non Cash Assets to Owners (effective 1 July 2009)IFRIC 18 Transfers of assets from Customers (effective 1 July 2009)

The Board of Directors anticipates that the adoption of the relevant Standards and interpretations on the above effective dates in future periods will have no material impact on the financial statements of the Group and Company.

Notes to the Financial Statements (Continued)for the year ended 30 June 2009


STATE INSURANCE COMPANY OF MAURITIUS LTDNotes to the Financial Statements (Continued)for the year ended 30 June 2009




2.2 Investments in subsidiaries

• Separate financial statements

Investments in subsidiaries are carried at cost. The carrying amount is reduced if there is any impairment in the value of investments.

• Consolidated financial statements

The Group financial statements include the results of the Company and its subsidiaries. The results of subsidiaries acquired or disposed of during the year are included in the consolidated financial statements from the date of their acquisition or up to date of disposal as appropriate. All intragroup transactions, balances, income and expenses are eliminated on consolidation.

The consolidated financial statements have been prepared in accordance with the purchase method. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the Income Statement.

2.3 Investments in associates

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

Investments in associates are accounted for at cost in the Company’s accounts and under the equity method of accounting in the Group’s accounts. Under the equity method, investments in associates are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Group’s share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group’s interest in that associate are not recognised.

Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in Income Statement.

2.4 Property, plant and equipment

Buildings held for use in the production or supply of goods or services or for administrative purposes, are stated in the balance sheet at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair values at the balance sheet date.

Any revaluation increase is credited to properties revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in profit or loss, in which case the increase is credited to the Income Statement to the extent of the decrease previously charged.

A decrease in carrying amount arising on revaluation is charged to Income Statement to the extent that it exceeds the balance, if any, held in properties revaluation reserve relating to a previous revaluation of that asset.

Depreciation on revalued buildings is charged to Income Statement. On the subsequent disposal or retirement of a revalued property, the attributable revaluation surplus remaining in the properties revaluation reserve is transferred directly to retained profits.




2.4 Property, plant and equipment (Continued)

Land is not depreciated.

With the exception of buildings, other assets are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Depreciation is calculated to write off the cost or revalued amount of the assets on a straight line basis over their estimated useful lives as follows: -

Buildings - 1% - 10%Furniture and fittings - 10%Office equipment - 10%Computer equipment - 12.5% - 25%Motor vehicles - 20% - 25%

The assets residual values and useful lives are reviewed and adjusted if appropriate at each balance sheet date.

2.5 Revenue recognition

Premium written on General Insurance Business is accounted for when the policies incept while premium on Life Business is accounted for on the accrual basis except for individual life where premium is recorded in the accounting period when the premium is received.

Provision for unearned premium has been made in respect of the General Insurance Business and Group Temporary Assurance Business and represent the proportion of premium written in the year which relate to the unexpired terms of policies in force at the balance sheet date, calculated on the basis of the 365th method.

Investment income comprises dividend, interest and rent receivable for the year. Dividend is accounted for when declared. Interest and rental income are recognised on an accrual basis.

Management fees and commissions are accounted on an accrual basis.

2.6 Foreign currencies

In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency are recorded at the rates of exchange prevailing on the dates of the transactions. Monetary assets and liabilities denominated in such currencies are retranslated at the rates prevailing on the balance sheet date. Profits and losses arising on exchange are included in the net profit or loss for the period.

For the purpose of presenting consolidated financial statements the assets and liabilities of subsidiaries denominated in foreign currencies are translated into Mauritian rupees at closing rate of exchange. Income and expense items are translated at the average rates of exchange for the year. Gains and losses on translation are taken to translation reserve.

2.7 Financial assets

Investments are recognised and derecognised on trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, plus transaction costs, except for those financial assets classified as at fair value through profit or loss, which initially are measured at fair value.

Financial assets are classified into the following specified categories: financial assets at fair value through profit or loss (FVTPL), “held-to-maturity” investments, “available-for-sale” (AFS) financial assets and “Loans and receivables”.

The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

Except where stated separately, the carrying amounts of the Group’s and Company’s financial assets approximate their fair values.







2.7 Financial assets (Continued)

Effective interest method

The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial asset, or, where appropriate, a shorter period. Income is recognised on an effective interest basis for debt instruments other than those financial assets designated as at FVTPL.

Financial assets at FVTPL

Financial assets are classified as at FVTPL where the financial asset is either held for trading or it is designated as at FVTPL.

A financial asset is classified as held for trading if:

• It has been acquired principally for the purpose of selling in the near future; or

• It is a part of an identified portfolio of financial instruments that the Group and the Company manage together and have a recent actual pattern of short-term profit-taking; or

• It is a derivative that is not designated and effective as a hedging instrument.

A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if:

• Such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

• The financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or investment strategy, and information about the grouping is provided internally in that basis; or

• It forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments; Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL.

• Financial assets at FVTPL are stated at fair value, with any resultant gain or loss recognized in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset.

Held-to-maturity investments

Debentures with fixed or determinable payments and fixed maturity dates that the Group has the positive intent and ability to hold to maturity are classified as held-to-maturity investments. Held-to-maturity investments are recorded at amortised cost using the effective interest method less any impairment, with revenue recognised on an effective yield basis.

AFS financial assets

Listed and quoted securities and units are classified as being AFS and are stated at fair value. Gains and losses arising from changes in fair value are recognised directly in equity in the investments revaluation reserve until the security is disposed of or is determined to be impaired at which time the cumulative gain or loss previously recognised in equity is included in the income statement for the period. Impairment losses recognised in the Income Statement for securities classified as available-for-sale are not subsequently reversed through Income Statement.




2.7 Financial assets (Continued)

Unquoted available for sale investments

Unquoted available for sale investments for which reliable fair values cannot be obtained are stated at cost. Investments of the company in unquoted available for sale investments are generally in the form of ordinary shares. The fair value of these financial instruments cannot be measured reliably as there is no specific market for the exchange/sale of these instruments.

Hypothetically, if the financial instruments would have to be disposed then a willing buyer would have to be found to purchase the financial instruments through an appropriate investment disposal mechanism.

Loans & receivables

Trade receivables, mortgage and other loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

2.8 Financial liabilities

a) Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

b) Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs.

c) Financial liabilities

Financial liabilities are classified as either financial liabilities ‘at Fair Value Through Profit or Loss (FVTPL)’ or ‘other financial liabilities’.

Financial liabilities are classified as at FVTPL where the financial liability is either held for trading (HFT) or it is designated as at FVTPL.

A financial liability is classified as held for trading if:

• it has been incurred principally for the purpose of repurchasing in the near future; or

• it is a part of an identified portfolio of financial instruments that the company manages together and has a recent actual pattern of short-term profit-taking; or

• it is a derivative that is not designated and effective as a hedging instrument.

A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:

• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

• the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Company’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or







2.8 Financial liabilities (Continued)

c) Financial liabilities (Continued)

• it forms part of a contract containing one or more embedded derivatives, and IAS 39 Financial Instruments: Recognition and Measurement permits the entire combined contract (asset or liability) to be designated as at FVTPL.

Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in Income Statement. The net gain or loss recognised in Income Statement incorporates any interest paid on the financial liability.

d) Other financial liabilities

Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs. Subsequently they are measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.

e) Derecognition of financial liabilities

The Group and Company derecognise financial liabilities when, and only when, the Group’s and Company’s obligations are discharged, cancelled or they expire.

2.9 Deferred taxation

Deferred taxation is provided on the comprehensive basis using the liability method. Deferred tax liabilities are recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Deferred tax assets are recognised for all deductible temporary differences to the extent that it is possible that taxable profit will be available against which the deductible temporary differences can be utilised.

The principal temporary difference arises from depreciation on property, plant and equipment and retirement benefit obligations liability.

2.10 Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand and short terms deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amount of cash and which are subject to an insignificant risk of change in value.

2.11 Retirement benefit obligations

(i) Defined Contribution Contributions to defined contribution retirement benefit plans are recognized as an expense when employees have

rendered service entitling them to contributions.




2.11 Retirement benefit obligations (Continued)

(ii) Defined Benefit

For defined benefit retirement plans, the cost of providing benefits is determined using the projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date. Actuarial gains and losses that exceed 10 per cent of the greater of the present value of the Group’s defined obligation and the fair value of plan assets as at the end of the prior year are amortised over the expected average remaining working lives of the participating employees. Past service cost is recognized immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight-line basis over the average period until the benefits become vested.

The retirement benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognised actuarial gains and losses and unrecognised past service cost, and as reduced by the fair value of plan assets. Any asset resulting from this calculation is limited to unrecognised actuarial losses and past service cost, plus the present value of available refunds and reductions in future contributions to the plan.

(iii) State plan and Defined Contribution Plan

Pension Scheme and defined contribution pension plan are expensed to the Income Statement in the period in which they fall due.

2.12 Provisions

Provisions are recognised when the Group and Company have a present obligation as a result of a past event, and it is probable that the Group and Company will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate.

2.13 Impairment of financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.

For unlisted shares classified as AFS, a significant or prolonged decline in the fair value of the security below its cost is considered to be objective evidence of impairment.

For all other financial assets, including redeemable notes classified as AFS and finance lease receivables, objective evidence of impairment could include:

• Significant financial difficulty of the issuer or counter party; or • Default or delinquency in interest or principal payments; or • It becoming probable that the borrower will enter bankruptcy or financial re-organisation.

For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit of 60 days, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.







2.13 Impairment of financial assets (Continued)

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables and mortgage loans where the carrying amount is reduced through the use of an allowance account. When a trade receivable and mortgage loan is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in Income Statement.

With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognized impairment loss is reversed through Income Statement to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

In respect of AFS equity securities, impairment losses previously recognised through Income Statement are not reversed through Income Statement. Any increase in fair value subsequent to an impairment loss is recognized directly in equity.

2.14 Leases – the subsidiary is the lessor

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.

Amount due from lessees under finance leases are recorded as receivables at the amount of the group’s net investment in the leases.

Finance lease income is allocated to the accounting period so as to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the leases.

2.15 Investment properties

Properties held to earn rentals and/or for capital appreciation, are stated at its fair value at the Balance Sheet date. Gains or losses arising from changes in the fair value of investment property are included in profit or loss for the period in which they arise.

2.16 Foreclosed properties

Foreclosed properties represent seized assets acquired through auction at the Master’s Bar as a result of default by clients. Foreclosed properties are valued at their deemed cost less any impairment. Any realised gains or losses of foreclosed properties are taken in the income statement. No depreciation is charged on foreclosed properties.

2.17 Intangible Assets – Computer Software

Computer software that is not considered to form an integral part of any hardware equipment is recorded as intangible assets. The software is capitalised at cost and amortised over its estimated useful lives of 2 to 13 years.

2.18 Insurance contracts

(i) Insurance contracts – classification

Insurance contracts are those contracts that transfer significant insurance risk at the inception of the contract. Such contracts remain insurance contracts until all rights and obligations are extinguished or expire. Investment contracts are those contracts that transfer financial risk with no significant insurance risk. Some insurance contracts contain a Discretionary Participating Feature (DPF). This feature entitles the holder to receive, as a supplement to guaranteed benefits, additional benefits or bonuses.

The Company considers that virtually all its short term and long term products are insurance contracts.




2.18 Insurance contracts (Continued)

(i) Insurance contracts – classification (Continued)

Insurance contracts issued by the Company are classified within the following main categories:

(a) Short term insurance contracts

Short term insurance contracts are in respect of the following classes of business: motor, accident & health, engineering, liability, property, transportation, guarantee and miscellaneous. These contracts provide compensation following damage to or loss of property, goods, equipment, losses and expenses incurred, sickness and loss of earnings resulting from the occurrence of the events insured against.

(b) Long-term insurance contracts with fixed and guaranteed terms

These contracts insure events associated with human life (i.e death or survival) over a long duration. A liability for contractual benefits that are expected to be incurred in future is recorded once the first premium under such a contract has been recognised. The liability is based on assumptions as to mortality, persistency, maintenance expenses and investment income that are established at each valuation date based on an analysis of recent experience modified by expectation of future trends. The best estimate assumptions are adjusted to include a margin for prudence.

(c) Long-term insurance contracts without fixed terms and with DPF These contracts contain a DPF which entitles the contract holder in supplement to a guaranteed amount, a

contractual right to receive additional profit or bonuses. The size of the profit or bonuses as well as the timing of the payments are however at the discretion of the Company. The Company has an obligation to eventually pay to contract holder up to 90% of the DPF eligible surplus (ie, all interest and realised gains and losses arising from the assets backing these contracts). Any portion of the DPF eligible surplus that is not declared as a profit or bonus is retained as a liability under the Life Assurance Fund, until declared and credited to contract holders in future periods.

(ii) Reinsurance contracts

Reinsurance contracts entered into by the Company are either of proportional or non- proportional type. Under a proportional treaty, the premiums and claims are apportioned between the Company and the reinsurer in agreed proportions. Proportional reinsurance may be either in the form of a quota share whereby the proportion of each risk reinsured is fixed, or in the form of surplus whereby the Company can retain a part of a risk within a fixed limit, and the reinsurer accepts part of the risk as a multiple of the Company’s retention. Under the non- proportional type of reinsurance, the Company uses the Excess of Loss treaty whereby in consideration for a premium, the reinsurer agrees to pay claims in excess of a specified amount (the retention), up to a specified maximum amount.

The Company reinsures either on a treaty basis, with all risks falling within the treaty terms, conditions and limits being reinsured automatically, or on a facultative basis. Under facultative reinsurance, risks are offered to the reinsurer or an individual basis and can be accepted or rejected by the reinsurer.

Short-term balances due from reinsurers are classified within trade and other receivables and amounts that are dependent on the expected claims and benefits arising under the related reinsurance contracts are classified under reinsurance assets. Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding claims provisions or settled claims associated with the reinsured policies and in accordance with the relevant reinsurance contract.

Reinsurance liabilities are primarily premiums payable for reinsurance contracts and are recognised as an expense when due.








(ii) Reinsurance contracts (Continued)

Impairment of reinsurance assets

If reinsurance asset is impaired, the Company reduces the carrying amount accordingly and recognises that impairment loss in the Income Statement. A reinsurance asset is impaired if there is objective evidence, as a result of an event that occurred after initial recognition of the reinsurance asset, that the Company may not receive all amounts due to it under the terms of the contract and the event has a reliably measurable impact on the amounts that the Company will receive from the reinsurer.

(iii) Claims expenses and outstanding claims provisions – short term insurance

Outstanding claims provisions are based on the ultimate costs of all claims incurred but not settled at the balance sheet date, whether reported or not (IBNR). Notified claims are only recognised when the Company considers that it has a contractual liability to settle the claims. Claims expenses are charged to Income Statement as incurred based on the estimated liability for compensation owed to contract holders or third parties.

There are often reporting delays between the occurrence of the insured event and the time it is actually reported to the Company, particularly in respect of liability business, the ultimate cost of which cannot be known with certainty at balance sheet date. Following the identification and notification of the insured loss, there may still be uncertainty as to the magnitude and timing of the settlement of the claim. Outstanding claims provisions are not discounted and include an allowance for expected future recoveries. Recoveries include non-insurance assets that have been acquired by exercising rights to sell, to salvage or subrogate under the terms of the insurance contracts.

(iv) Liability adequacy test

Short-term insurance

At each balance sheet date, a liability adequacy test is performed to ensure the adequacy of the contract liabilities. In performing the test, current best estimates of future contractual cash flows (including claims handling and administration expenses) and expected investment returns on assets backing such liabilities, are used. Any deficiency is immediately charged to Income Statement and a provision is established for losses arising from liability adequacy test (the unexpired risk provision).

Long-term insurance

The Company’s Actuary reviews the adequacy of insurance liabilities for long term contracts on an annual basis and ensures that provisions made by the Company are adequate.

2.19 Comparative Figures

Comparative figures have been regrouped or restated, where necessary, to conform to the current year’s presentation.

3. MANAGEMENT OF RISKS

The Group’s and the Company’s activities expose it to a variety of insurance risks. A description of the significant risk factors is given below together with the risk management policies applicable.

3.1 Insurance risk

Insurance risk is transferred when an insurer agrees to compensate a policyholder if a specified uncertain future event (other than a change in a financial variable) adversely affects the policyholder. By the very nature of an insurance contract, the risk is random and therefore unpredictable.





3. MANAGEMENT OF RISKS (CONTINUED)

3.1 Insurance risk (Continued)

The main risk that the Group and Company face under its insurance contracts is that the actual claims and benefit payments exceed the carrying amount of the insurance liabilities. This may occur if the frequency or severity of claims and benefits are greater than estimated.

Experience shows that the larger the portfolio of similar insurance contracts, the smaller the relative variability about the expected outcome will be. In addition, a more diversified portfolio is less likely to be affected across the board by a change in any subset of the portfolio. The Group and Company have developed its insurance underwriting strategy so as to diversify the type of insurance risks accepted and within each of these categories to achieve a sufficiently large population of risks to reduce the variability of the expected outcome.

Factors that aggravate insurance risk include lack of risk diversification in terms of type and amount of risk, accumulation of risk and type of industry covered.

3.1.1 Insurance liabilities

(a) Short-term insurance

The frequency and severity of claims can be affected by several factors. The most significant claims result from accident, liability claims awarded by the Court, fire and allied perils and their consequences. Inflation is also a significant factor due to the long period typically required to settle some claims.

The Group’s and Company’s underwriting strategy attempts to ensure that the underwritten risks are well diversified in type, amount of risk and industry. The Group and Company have underwriting limits by type of risks and by industry. Performance of individual insurance policies are reviewed by Management and the Group and Company reserve the right not to renew individual policies. It can impose deductibles and has the right to reject the payment of a fraudulent claim. Where relevant, the Group and Company may pursue third parties for payment of some or all liabilities (subrogation). Claims development and provisioning levels are closely monitored.

The reinsurance arrangements of the Company include proportional, excess of loss and catastrophe coverage and as such, the maximum loss that the Group & Company may suffer in any one year is predetermined.

(b) Long-term insurance

For long-term insurance contracts, where the insured event is death, the most significant factors that could impact on insurance claims are diseases like heart problems, diabetes, high blood pressures or changes in lifestyle, resulting in higher and earlier claims being submitted to the Group and Company. For contracts where survival is the insured risk, the most significant factor is continued improvement in medical science and social conditions that would increase longevity. The liabilities in terms of insurance contracts are based on recommendations of the Group’s and Company’s Actuary.




3.1.2 Concentration of insurance risk


The following table discloses the concentration of outstanding claims by class of business, gross and net of reinsurance.

Outstanding Claims

The Group and Company manage these risks through its underwriting strategy, adequate reinsurance arrangements and proactive claims handling.

(b) Long-term Insurance

The table below presents the concentration of insured benefits across bands of insured benefits per individual life assured.


Motor 140,347 52,191 118,905 33,336

Property 18,905 2,838 7,855 1,460

Transport 58,913 5,155 8,875 2,691

Engineering 13,196 3,677 22,793 2,174

Guarantee - - - -

Accident & Health 10,942 1,403 7,997 958

Liability 27,590 9,214 31,055 11,048

Miscellaneous 7,331 706 7,585 609

Incurred But Not Reported (IBNR) 25,440 25,440 16,250 16,250

302,664 100,624 221,315 68,526

2009 2008

Gross Net Gross Net Class of Business Rs’000 Rs’000 Rs’000 Rs’000

0 -100 836,835 6 836,835 8

100 – 200 2,922,091 20 2,838,794 28

200 – 300 2,331,694 16 2,026,914 20

300 – 400 1,822,795 12 1,488,559 16

400 + 6,868,077 46 2,842,400 28

Total 14,781,492 100 10,033,502 100

Total Benefits Insured

Benefits assured per life assured as at 30 June 2009 Before Reinsurance After Reinsurance (Retained)

Rs ‘000 Rs ‘000 % Rs ‘000 %






3.1.2 Concentration of insurance risk (Continued)

(b) Long-term Insurance (Continued)

The following table for annuity insurance contracts illustrates the concentration of risk based on bands that group these contracts in relation to the amount payable per annum as if the annuity were in payment as at 30 June 2009. The Group and Company do not hold any reinsurance contracts against the liabilities carried for these contracts.

With regards to Group Assurances the Total Sum Assured is Rs 9,278,480,101 and the Sum Assured retained is Rs 4,332,984,333.

3.1.3 Sources of uncertainty


Most claims on short term insurance contracts are payable on a claims-occurrence basis. Under claims occurrence basis, the Group and Company are liable for insured events that occur during the term of the contract, even if the loss is discovered after the end of the contract term. As a result, liability claims may be settled over a long period of time and a larger element of the claims provision relates to incurred but not reported claims (IBNR).

The estimated costs of claims include direct expenses to be incurred in settling claims, net of subrogation and salvage recoveries. The Group and Company ensure that claims provisions are determined using the best information available of claims settlement patterns, court awards and forecast inflation. Estimation techniques also involve obtaining corroborative evidence from as wide a range of sources as possible and combining these to form the best overall estimates. However, given the uncertainty in determining claims provisions, it is likely that the final claim settlement will differ from the original liability estimate.


The Group and Company manage long term insurance risks through its underwriting strategy and reinsurance arrangements. Management ensures that risks underwritten are well diversified in terms of type of risk and the level of insured benefits. Medical selection is included in the Group’s and Company’s underwriting procedures, with premiums, varied to reflect the health condition and family medical history of the applicant. Insurance risk may also be affected by the contract holder’s behaviour whereby he/she may decide to amend terms or terminate the contract or exercise a guaranteed annuity option.

The Group and Company have a predetermined retention limit on any single life insured and the Group and Company reinsure the excess of the insured benefit above the retention limit.

0 -10 389 1

10 -20 1,985 2

20 – 50 12,934 17

50 – 100 21,770 29

100 – 150 12,768 17

More than 150 25,456 34

Total 75,302 100

Annuity payable per annum per life insured as at 30 June 2009 Total annuities payable per annum

Rs ‘000 Rs ‘000 %





3.1.3 Sources of uncertainty (Continued)

(c) Financial Crisis – Unquoted Investments

Unquoted investments

Determining whether unquoted investments are impaired requires an estimation of the value in use of the investments. In considering the value in use, available financial and other information have been taken into consideration. The actual results could however differ from the estimates.

3.1.4 Claims development table

The development of insurance liabilities provides a measure of the Company’s ability to estimate the ultimate value of claims. The table below illustrates how the estimates of total claims outstanding for each year have changed at successive year-ends and reconciles the cumulative claims to the amount appearing in the balance sheet.

Net Incremental Claims Paid:

Accident period

After 1st year

of accident 26,833 28,161 29,402 35,302 40,626 62,324 72,851 90,426 145,590 139,997 671,512

After 2nd year

of accident 2,013 2,316 7,920 6,219 7,151 13,359 12,136 18,700 27,013 96,827

After 3rd year

of accident 270 618 825 451 2,102 (287) (138) (787) 3,054

After 4th year

of accident 1,019 (106) (695) 701 293 124 360 1,696

After 5th year

of accident 599 (125) 221 1,100 (196) (417) 1,182

After 6th year

of accident 801 (118) 576 1,013 407 2,679

After 7th year

of accident 631 182 788 3,234 4,835

After 8th year

of accident (501) 171 381 51

After 9th year

of accident 531 639 1,170

After 10th year

of accident 654 654

Ultimate Claims 4,763 35,107 33,094 41,656 48,429 55,539 78,409 88,736 111,471 180,532 207,932 885,668

Claims Incurred

to date 4,763 35,107 33,094 41,656 48,429 55,539 77,978 88,623 109,659 177,136 188,244 860,228

Current claims

paid to date 1,384 32,849 31,737 39,419 48,020 50,383 75,103 85,209 108,340 172,603 139,997 785,044

IBNR - - - - - - 431 113 1,812 3,396 19,688 25,440

Outstanding

Reported

Claims 3,379 2,257 1,356 2,237 409 5,156 2,877 3,414 1,319 4,533 48,247 75,184

Net Liability 3,379 2,257 1,356 2,237 409 5,156 3,308 3,527 3,131 7,929 67,935 100,624

PRIOR 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Total

Rs000 Rs000 Rs000 Rs000 Rs000 Rs000 Rs000 Rs000 Rs000 Rs000 Rs000 Rs000





4. FINANCIAL RISKS

The Group and the Company are exposed to financial risks through its financial assets, financial liabilities, reinsurance assets and insurance liabilities. In particular, the key financial risk is that proceeds from financial assets are not sufficient to fund the obligations arising from insurance and investment contracts.

The main risks to which the Group and the Company are exposed are as follows:

4.1 Foreign currency risk

The Group and Company’s financial assets which are exposed to foreign currency risks consist mainly of deposits and overseas investment. Management monitors the Group and Company’s currency position on a regular basis. The carrying amount of the Group’s and Company’s foreign currency denominated financial assets at the reporting date is as follows:

Concentration of assets under:

Financial Assets


USD 1,188,107 1,061,103 21,032 8,511 GBP 295,393 341,840 6,017 14,407 EUR 196,685 224,411 650 39,837 AUD 144,066 133,227 26,200 24,006 NZD 18,331 17,113 18,331 17,113 ZAR - 6 - 6 1,842,582 1,777,700 72,230 103,880

Consequently the Group and Company are exposed to risks that the exchange rate relative to these currencies may change in a manner which has an effect on the reported value of that portion of the Group’s and Company’s assets which is denominated in currencies other than the Mauritian Rupee.

The following table details the Group’s and Company’s sensitivity to a 5% and 10% increase/decrease of the Rupee against the USD, GBP, EUR, AUD, NZD and ZAR.


Increase/decrease of 5% in rate of exchange rate

Increase/Decrease in net assets 92,129 88,885 3,612 5,194

Increase/decrease of 10% in rate of exchange rate





4. FINANCIAL RISKS (CONTINUED)

4.1 Foreign currency risk (Continued)

Liabilities

The Group and Company undertake transactions that are mostly denominated in Mauritian Rupees, hence, minimising the exposures to exchange rate risk. As the exposure of the Group and Company to exchange rate fluctuation is minimal, no sensitivity analysis disclosures have been made in the financial statements.

4.2 Credit risk

The Group and Company provide secured advances to clients and there is credit risk that a counter party will default on its contractual obligations resulting in financial loss to the Group and Company. The Group’s and the Company’s policy is to deal with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. Appraisals are systematically carried out for any application and we also have a credit committee which continuously monitors and controls the Group’s and Company exposure to credit risk.

The Group and Company do not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics.

The carrying amount of mortgage loans recorded in the Financial Statements, which is net of impairment losses, represents the Group’s and Company’s maximum exposure to credit risk without taking account of the value of any collateral obtained.

When financial assets are impaired by credit losses, the Group and Company record the impairment in a separate account rather than directly reducing the carrying amount of the assets.

Mortgage loans advanced by the Group and Company are financial assets resulting from commitment of the borrower to repay the amount borrowed on a specific date or dates, or on demand usually with interest. IAS 39 prescribes that an asset is impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment as a result of event that occurred after the initial recognition of the asset and that loss event has impacted on the estimated future cash flows of the asset. In the recovery process objective evidence of impairment is recognized at the stage of seizure and sale where the borrower is assumed to have significant financial difficulty to settle his debts.

Since there is objective evidence of impairment at the seizure and sale stages, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced through an allowance account and the amount of the loss is recognized in the Income Statement.

4.3 Interest rate risk

The Group and the Company are exposed to interest rate fluctuations on the international and domestic markets. The Group and the Company monitor closely interest rate trends and related impact on investment income for performance evaluation and better management.



4.3 Interest rate risk (Continued)

The interest rate profile of the Group and the Company was:

Group Company 2009 2008 2009 2008 % % % %

Financial assets

Treasury bills - 11.70 - 11.70 Treasury notes 6.00 - 12.15 7.50 - 12.15 6.00 - 12.15 7.50 -12.15 MDLS 7.56 - 10.25 7.56 - 10.25 7.56 - 10.25 7.56 - 10.25 Bonds 7.00 - 12.90 8.00 - 12.90 7.00 - 12.90 8.00 - 12.90 Debentures - 10.00 - 10.00 Mortgage & other loans 4.0 - 14.00 3.00 - 14.00 4.0 - 14.00 3.0 - 14.00 Net Investment in finance leases 11.00 - 13.00 11.00 - 13.00 - - Term deposits (excluding foreign currency deposits) 5.00 - 16.60 7.85 - 16.60 5.00 - 11.70 7.85 - 11.70 Foreign currency term deposits USD 1.02 - 2.25 2.54 - 2.72 1.87 2.59 GBP 1.57 - 1.63 5.68 - 5.84 1.63 5.68 EUR 1.44 - 1.71 4.64 - 4.87 - 4.75 - 4.76 AUD 3.43 - 3.53 7.17 - 7.96 3.43 - 3.53 7.17 - 7.80 NZD 2.17 - 3.02 8.40 - 8.60 2.17 - 3.02 8.40 - 8.60

Foreign currency call deposits USD 0.10 0.4 0.10 0.4

GBP 0.25 0.9 0.25 0.9 EUR 0.25 0.5 0.25 0.5 Local Call deposits 4.50 - 5.00 7.00 4.50 - 5.00 7.00

Financial liabilities

HFT Financial liabilities 6.15-14.50 6.65 - 14.50 - - Loans 9.00 9.00-12.00 9.00 9.00-12.00

The following table details the Group and Company’s sensitivity to a 5% and 10% increase/decrease of the rate of interest of financial assets


Increase/decrease of 5% in interest rate

Increase/Decrease in net assets 469 517 374 298

Increase/Decrease in income 469 517 374 298

Increase/decrease of 10% in interest rate

Increase/Decrease in net assets 938 1,035 747 597

Increase/Decrease in income 938 1,035 747 597








4.3 Interest rate risk (Continued)

The increase or decrease in the interest rate sensitivity is due to fluctuations in foreign currency and local currency call deposits at 30 June 2009 as compared to 30 June 2008.

The interest rate sensitivity analysis excludes

Government securities, foreign currency term deposits and local currency fixed deposits which have fixed interest rates and will not be affected by fluctuations in the level of interest rates.

The following table details the Group’s and Company’s sensitivity to a 50 basis points and 100 basis points increase/decrease of the rate of interest on mortgage loans which are subject to floating rate of interest.

Group & Company 2009 2008 Rs’000 Rs’000

Increase/decrease of 50 basis points

Increase/decrease in net assets 4,061 3,803 Increase/decrease in income 4,061 3,803 Increase/decrease of 100 basis points

Increase/decrease in net assets 8,122 7,606

Increase/decrease in income 8,122 7,606

4.4 Liquidity risk

The Group and the Company are exposed to daily payments of benefits to clients and to repayment of financial liabilities.

The Group’s and Company’s liquidity position are monitored on a regular basis. The Group and the Company manage liquidity risk by maintaining adequate reserves and banking facilities by continuously monitoring forecast and actual cash flows and matching profiles of financial assets.

The table below summarises the Group and Company trading liabilities at fair values, categorised by the earlier of contractual re-pricing or maturity dates.

Group At 30 June 2009

1 to 3 3 months 1 to 5 >5 Non Interest months to 1 year years years bearing Total Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

Financial Liabilities Borrowings 3,850 9,700 29,950 - - 43,500 Insurance liabilities - - - - 531,299 531,299 Other Financial liabilities 388,655 680,224 1,782,656 - 6,427,375 9,278,910 Total Liabilities 392,505 689,924 1,812,606 - 6,958,674 9,853,709





4.4 Liquidity risk (Continued)

Company At 30 June 2009


Financial Liabilities Borrowings 8,339 23,986 131,637 423,998 - 587,960 Insurance liabilities - - - - 531,299 531,299 Other Financial liabilities 1,115 - - - 6,177,911 6,179,026

Total Liabilities 9,454 23,986 131,637 423,998 6,709,210 7,298,285

Group At 30 June 2008


Financial Liabilities Borrowings 3,350 7,250 16,150 - - 26,750 Insurance liabilities - - - - 347,800 347,800 Other Financial liabilities 310,108 664,932 430,635 1,254,500 5,916,708 8,576,883 Total Liabilities 313,458 672,182 446,785 1,254,500 6,264,508 8,951,433

Company At 30 June 2008


Financial Liabilities Borrowings 7,340 19,950 106,538 454,072 - 587,900 Insurance liabilities - - - - 347,800 347,800 Other Financial liabilities 714 - - - 5,678,853 5,679,567

Total Liabilities 8,054 19,950 106,538 454,072 6,026,653 6,615,267

4.5 Market price risk

The Group and the Company have invested in securities quoted on the Stock Exchange of Mauritius and has also invested in overseas securities.

All quoted securities present a risk of loss of capital. The Group’s and Company’s quoted securities investments are susceptible to market price risk arising from uncertainties about future prices of the financial instruments. This risk is moderated, inter alia, through a careful selection of securities, investment diversification and by having investment limits. The maximum risk resulting from securities investments is determined by the fair value of the financial instruments. The Group’s overall market positions are monitored on a regular basis.



4.5 Market price risk (Continued)

The following table details the Group’s and Company’s sensitivity to a 5% and 10% increase/decrease in the prices of securities.


Equities 1,741,708 2,034,576 844,448 1,092,019

Increase/decrease of 5% in the prices of securities


Increase/decrease of 10% in the prices of securities


4.6 Reinsurers’ default

The Group and Company are exposed to the possibility of default by its reinsurers for their share of insurance liabilities and refunds in respect of claims already paid. Management monitors the financial strength of its reinsurers.

4.7 Capital Risk Management

The Group and Company manage its capital to ensure that entities in the group will be able to continue as a going concern and also comply with applicable laws and regulations.

The Company is required to maintain a minimum capital requirement under the Insurance Act 2005 and rules made by the Financial Services Commission.

Under the Insurance (General Insurance Business Solvency) Rules 2007, the minimum capital requirement for general business is the sum of capital required for balance sheet as per rule 6, capital required for investment above concentration limit as per rule 7, capital required for policy liabilities as per rule 8, capital required for catastrophes as per Rule 9 and capital required for reinsurance ceded under rule 10.

Under the Insurance (Long-Term Insurance Business Solvency) Rules 2007, the minimum capital requirement for long-term business is determined by the actuary, which is the higher of:

(a) a stress test requirement determined in accordance with guidelines issued by the Financial Services Commission to ensure that the company remains solvent; or

(b) the higher of:(i) an amount of Rs 25 million; or(ii) an amount representing 13 weeks’ operating expenses, with operating expenses as defined and reported in the

annual statutory return submitted to the Commission.

For the year ended 30 June 2009, the Company has satisfied the minimum capital requirement.

The subsidiary is required to maintain a minimum capital requirement under the Banking Act 2004. The capital structure of the subsidiary consists of issued share capital, reserves and retained earnings. The subsidiary has to comply with the Banking Act 2004 in respect of both its share capital and reserves.






4.8 Categories of Financial Instruments:

2009 2008 2009 2008 Rs’000 Rs’000 Rs’000 Rs’000

Financial assets

Held-to -maturity investments 5,534,100 4,365,248 2,669,696 1,844,919 Loans and receivables 4,503,779 4,354,729 3,835,735 3,697,426 Available-for -sale financial assets 1,829,897 2,095,971 932,637 1,153,373 Reinsurance assets 316,767 179,288 316,767 179,288

12,184,543 10,995,236 7,754,835 6,875,006

Financial liabilities

At amortised cost 3,220,958 2,862,232 913,715 762,552

5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING ACCOUNTING ESTIMATES

Estimates and judgements are continuously evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

5.1 Critical accounting estimates and assumptions

The Group and the Company make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

5.2 Insurance contracts

The uncertainty inherent in the financial statements of the Company arises in respect of insurance liabilities, which include liabilities for unearned premiums, outstanding claims provision (including IBNR) and Life Assurance Fund. In addition to the inherent uncertainty when estimating liabilities, there is also uncertainty as regards the eventual outcome of claims. As a result, the Company applies estimation techniques to determine the appropriate provisions.


(i) Claims provision

Outstanding claims provision is determined based upon knowledge of events, terms and conditions of relevant policies, on interpretation of circumstances as well as previous claims experience. Similar cases, historical claims payment trends, judicial decisions and economic conditions are also relevant and are taken into consideration.

(ii) Sensitivity analysis

The Company adopted actuarial techniques to estimate the required levels of provisions, taking into account the characteristics of the business class and risks involved.



5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING ACCOUNTING ESTIMATES (CONTINUED)



Estimates of future benefit payments under long-term insurance contracts are provided for, based on estimates made by the Company’s Actuary. Estimates are made as to the expected number of deaths for each of the years in which the Company is exposed to risk. Estimates are based on standard industry mortality tables that reflect recent historical mortality experience, adjusted where appropriate, to reflect the Country’s and Company’s own experience.

For long-term insurance contracts with fixed and guaranteed terms and with DPF, estimates of future deaths, voluntary terminations, investment returns and administration expenses are made at each valuation date and form the assumptions used for calculating the liabilities. A margin for risk and uncertainty is added to these assumptions. Assumptions are reconsidered each year based on the most recent operating experience and estimates of future experience and are used to recalculate the liabilities.

Sensitivity analysis

The following table presents the sensitivity of the value of insurance liabilities disclosed, to movements in assumptions used in the estimation of insurance liabilities.

The table below indicates the level of the respective variable that will trigger an adjustment and then indicates the liability adjustment required as a result of a further deterioration in the variable.

Life –GPV Sensitivities test

5.3 Held-to-maturity investments

The Group and Company apply International Accounting Standard (IAS) 39 - “Recognition and Measurement” on classifying non-derivative financial assets with fixed or determinable payments and fixed maturity as held-to-maturity. This classifica-tion requires significant judgement. In making this judgement, the Group and Company evaluate its intention and ability to hold such investments to maturity.

If the Group and Company fail to keep these investment to maturity other than for specific circumstances explained in IAS 39, it will be required to reclassify the whole class as available-for-sale. The investments would therefore be measured at fair value not amortised cost.

5.4 Impairment of available-for-sale financial assets

The Group and Company follow the guidance of IAS 39 on determining when an investment is other-than-temporarily impaired. This determination requires significant judgement. In making this judgement, the Group and Company evaluate, among other factors, the duration and extent to which the fair value of an investment is less than its cost, and the financial health of and near-term business outlook for the investee.

Variables Liability (Rs 000) % Difference

Actual reserve 6,070,107 -

Interest Rate less 15% 6,591,112 8.58

Mortality plus 10% 6,106,426 0.60

Lapse plus 25% 6,116,397 0.76

Expenses plus 10% 6,105,245 0.58




6. PROPERTY, PLANT AND EQUIPMENT

Group & Company

Buildings on Leasehold Furniture Office Computer Motor

Land & Fittings Equipment Equipment Vehicles Total Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

COST OR VALUATION

At 1 July 2007 165,000 37,114 26,925 20,294 26,655 275,988 Additions 3,592 2,160 4,580 3,715 6,525 20,572 Disposals/scrapped - (14) (124) (1,517) (7,599) (9,254)

At 30 June 2008 168,592 39,260 31,381 22,492 25,581 287,306 Additions 3,378 1,282 302 2,235 4,823 12,020 Disposals/scrapped - - (5) (1,379) (1,350) (2,734)

At 30 June 2009 171,970 40,542 31,678 23,348 29,054 296,592

ACCUMULATED DEPRECIATION

At 1 July 2007 - 20,100 22,808 10,649 7,495 61,052 Charge for the year Life Fund 1,215 1,049 347 1,396 1,205 5,212 General Fund 1,901 1,641 542 2,184 1,884 8,152 Disposals/scrapped - (10) (104) (1,517) (2,422) (4,053)

At 30 June 2008 3,116 22,780 23,593 12,712 8,162 70,363 Charge for the year Life Fund 1,365 1,123 425 1,326 782 5,022 General Fund 2,135 1,756 666 2,075 1,224 7,855 Disposals/scrapped - - (1) (1,379) (950) (2,330)

At 30 June 2009 6,616 25,659 24,683 14,734 9,218 80,910

CARRYING AMOUNT

At 30 June 2009 165,354 14,883 6,995 8,614 19,836 215,682

At 30 June 2008 165,476 16,480 7,788 9,780 17,419 216,943

The buildings were revalued in June 2007 by Mr Y Bissessur MSc FRICS, MMIS, Chartered Valuation Surveyor, at Rs 165 million based on the open market value. The surplus on revaluation has been credited to revaluation reserve and adjusted for deferred taxation.

Had the buildings been accounted at historical cost less accumulated depreciation, the carrying amount would have been Rs 74 million (June 2008 - Rs 72.3 million).



7. INTANGIBLE ASSETS

Group & Company

Computer Software 2009 2008 Rs’000 Rs’000

COSTAt 1 July 34,420 22,262 Additions 2,806 12,240 Disposals/scrapped (3,788) (82)

At 30 June 33,438 34,420

AMORTISATIONAt 1 July 16,709 14,459 Charge for the year Life Fund 1,326 909 General Fund 2,073 1,423 Disposals/scrapped (3,788) (82)

At 30 June 16,320 16,709

CARRYING AMOUNT 17,118 17,711

8. STATUTORY DEPOSITS

In compliance with the Insurance Act 2005, statutory deposits represent investments in Mauritius Government Securities and earn interest at rates varying between 8.75% - 10% (2008: 8.75% - 10%) per annum and have a remaining maturity of 3 to 4 years.

9. INVESTMENTS IN SUBSIDIARIES

Company 2009 2008 Rs’000 Rs’000

(a) Unquoted investments at cost At 1 July 1,420,557 1,169,370 Addition - 251,187

As 30 June 1,420,557 1,420,557

(b) Details of investments:

Name of subsidiaries Country of % Classes of incorporation Holding Activity shares & operation 2009 & 2008

SICOM Financial Services Limited Depository, investment Ordinary Mauritius 99 business and leasing activities

SICOM Management Limited Investment and management Ordinary Mauritius 100 SICOM Global Fund Limited (see below) Investment in overseas securities Management Mauritius 100

In addition to the Management Shares, the Company also owns 100% of the General Funds and the General Insurance Funds Participating Preference Shares in the General Fund and General Insurance Fund Portfolio of SICOM Global Fund Limited.



10. OTHER ASSETS


Non current

(a) Investment in securities 5,727,187 4,853,070 3,775,016 3,048,750

(b) Foreclosed properties 24,172 - 24,172 -

5,751,359 4,853,070 3,799,188 3,048,750 Current

Investment in securities 685,304 1,058,032 637,421 881,216

6,436,663 5,911,102 4,436,609 3,929,966

Analysed as follows:

GROUP

Non Current

(a) Investment in securities

Loans and Held-to- Available- receivables maturity for-sale Total Rs’000 Rs’000 Rs’000 Rs’000

At 1 July 2008 1,173,950 1,583,149 2,095,971 4,853,070 Additions 658,176 1,147,926 37,311 1,843,413 Disposals/Redemptions - - (38,877) (38,877)Transfer to Current Assets (541,610) (115,305) - (656,915)Interest/Gain receivable adjustment (2,231) 17,407 - 15,176 Decrease in fair value - - (288,680) (288,680)

At 30 June 2009 1,288,285 2,633,177 1,805,725 5,727,187

(b) Foreclosed properties

2009 Rs’000

At 1 July 2008 - Transfer from Investment Properties 25,632 Additions 1,150 Disposals (2,610)

At 30 June 2009 24,172

Foreclosed properties are stated at deemed cost less any impairment.






10. OTHER ASSETS (CONTINUED)

GROUP (CONTINUED)

Current

Investment in securities

Loans and Held-to- receivables maturity Total Rs’000 Rs’000 Rs’000

At 1 July 2008 826,424 231,608 1,058,032 Disposals/Redemptions (809,187) (225,881) (1,035,068)Transfer from Non Current Assets 541,610 115,305 656,915 Interest/Gain receivable adjustment 4,381 1,044 5,425

At 30 June 2009 563,228 122,076 685,304

Company

Non Current

(a) Investment in securities

Loans and Held-to- Available- receivables maturity for-sale Total Rs’000 Rs’000 Rs’000 Rs’000

At 1 July 2008 874,509 1,020,868 1,153,373 3,048,750 Additions 608,210 964,950 19,349 1,592,509 Disposals/Redemptions - - (29,655) (29,655)Transfer to Current Assets (521,198) (89,336) - (610,534)Interest/Gain receivable adjustment (3,248) 11,796 - 8,548 Decrease in fair value - - (234,602) (234,602)

At 30 June 2009 958,273 1,908,278 908,465 3,775,016

(b) Foreclosed properties

2009 Rs’000

At 1 July 2008 - Transfer from Investment Properties 25,632 Additions 1,150 Disposals (2,610)

At 30 June 2009 24,172



10. OTHER ASSETS (CONTINUED)

(b) Foreclosed properties (Continued)

Current

Investment in securities

Loans and Held-to- receivables maturity Total Rs’000 Rs’000 Rs’000

At 1 July 2008 688,948 192,268 881,216 Disposals/Redemptions (675,004) (186,339) (861,343)Transfer from Non Current Assets 521,198 89,336 610,534 Interest/Gain receivable adjustment 6,378 636 7,014

At 30 June 2009 541,520 95,901 637,421

Loans and receivables comprise of Treasury Notes with interest of 6.00% - 12.15% per annum and maturity dates varying between 2009 - 2013.

Held-to-maturity investments comprise of Mauritius Government Securities, Government of Mauritius Bonds, with interest ranging from 7.00% - 12.90% per annum and maturity dates varying between 2009 - 2029.

Available-for-sale securities comprise of listed and quoted securities (Rs 749,107,000) and unquoted securities (Rs 1,056,618,000).

The fair value is based on the Stock Exchange and brokers’ statement prices at close of business on balance sheet date.Unquoted available-for-sale investments, for which reliable fair values cannot be obtained, have been stated at cost. The directors are of the opinion that these investments have not been impaired.

11. INVESTMENT PROPERTIES


At 1 July 55,632 49,242 Transfer to Other Assets [Note 10 (b)] (25,632) - Additions - 2,312 Disposals - (440) Fair value gain 2,000 4,518

At 30 June 32,000 55,632

The investment properties are held for capital appreciation and have generated rental income of Rs 214,010 for the year (2008: Rs 226 943). There are no direct operating expenses in respect of investment properties.

The fair value of the investment properties has been arrived on the basis of valuations carried on 30 June 2009 during the year by Mr Y Bissessur MSc, FRICS, MMIS, Chartered Valuation Surveyor, on the open market value basis.




12. FIXED DEPOSITS


Maturing- in the second year 284,855 - 30,828 -- in the third year 307,800 284,855 19,000 30,828 - in the fourth year 58,000 307,800 - 19,000 - in the fifth year 176,780 58,000 - -

827,435 650,655 49,828 49,828

The deposits earn interest at rates varying between 9.00 % -16.60 % (2008: 10.1% -16.6%) per annum.

13. FINANCE LEASE RECEIVABLES

The Group enters into finance lease arrangements for inter-alia motor vehicles and equipment for an average term of 3 to 7 years. Finance leases are secured by the assets under lease.

Group 2009 2008 Rs’000 Rs’000

Gross investment in finance leases:- - within one year 19,549 8,440 - in the second to fifth years inclusive 55,569 26,986 - more than five years 1,216 2,683

76,334 38,109 Unearned finance income (16,191) (9,372)

60,143 28,737 Provision for credit losses (602) (287)

Net investment in finance leases 59,541 28,450

Analysed as:- - Current finance lease receivables 12,951 5,216 - Non-current finance lease receivables 46,590 23,234

59,541 28,450

Group 2009 2008 Rs’000 Rs’000

Movement during the year:-At 1 July 28,737 3,156 Leases granted during the year 39,973 27,719

Capital repayment during the year (8,567) (2,138)

At 30 June 60,143 28,737

Before granting lease to clients, the Group has an appraisal process to assess the potential client’s credit quality and reliability.Upon satisfactory appraisal and submission of all necessary documents, the lease is granted.





13. FINANCE LEASE RECEIVABLES (CONTINUED)

Group 2009 2008 Rs’000 Rs’000

Remanining term to maturity Within 3 months 3,272 1,275 Over 3 to 12 months 9,810 3,993 Over 1 to 2 years 14,079 5,673 Over 2 to 5 years 31,834 15,478 More than 5 years 1,148 2,318

60,143 28,737

The group does not have any past due debt as at 30 June 2009. The Group considers that the carrying amount of the finance lease approximates their fair value. Credit concentration of risk by industry sectors Total credit facilities extended by the Group classified by industry sectors:

Group 2009 2008 Rs’000 Rs’000

Manufacturing 1,100 1,300 Tourism 6,645 - Transport 5,947 593 Construction 13,021 4,440 Personal 31,844 20,782 Others 1,586 1,622

60,143 28,737

Provision for credit losses

Group 2009 2008 Rs’000 Rs’000

At 1 July 287 - Movement during the year 315 287 At 30 June 602 287

The above portfolio provision is estimated at 1% of the total outstanding lease amount as at 30 June 2009.

Interest rate profile The interest rate inherent in the finance leases is fixed at the contract date for the entire lease term. The average effective interest

rate contacted is 11.77% (2008: 11.98%) per annum.

Unguaranteed residual value of assets leased under finance leases at balance sheet date are estimated at Rs 813,946 (2008: Rs380,879).







14. MORTGAGE AND OTHER LOANS


Housing, Commercial & Multipurpose 1,307,441 1,294,457 Provision for impairment losses (10,791) (13,259)

1,296,650 1,281,198 Organisations 174,513 158,302 Others 194,976 163,095

1,666,139 1,602,595

Analysed as:- Current 173,098 149,456 Non-current 1,493,041 1,453,139

1,666,139 1,602,595

Reconciliation of changes in the impairment account resulting from credit losses during the year is as follows:-


Balance at beginning 21,366 20,319 Movement during the year (5,063) 1,047

Balance at end 16,303 21,366

Analysed as:- Capital 10,791 13,259 Interest 5,512 8,107

16,303 21,366

The following table provides information regarding the carrying value of financial assets that have been impaired and the ageing of financial assets that are past due but not impaired.

Group & Company

Neither past Carrying due nor amount at impaired Past due but not impaired Impaired year end 1m -3m 3m - 1yr >1Yr Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

30 June 2009 Housing, Commercial & Multipurpose 1,248,639 6,498 5,855 6,823 28,835 1,296,650 Organisations 174,513 - - - - 174,513 Others 181,275 2,080 2,989 8,632 - 194,976

1,604,427 8,578 8,844 15,455 28,835 1,666,139





14. MORTGAGE AND OTHER LOANS (CONTINUED)

Group & Company (Continued)

Neither past Carrying due nor amount at impaired Past due but not impaired Impaired year end 1m -3m 3m - 1yr >1Yr Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

30 June 2008 Housing, Commercial & Multipurpose 1,233,505 6,657 3,874 5,542 31,620 1,281,198 Organisations 157,437 865 - - - 158,302 Others 153,733 2,328 1,871 5,163 - 163,095

1,544,675 9,850 5,745 10,705 31,620 1,602,595

The loans are secured and bear interest at rates varying between 4% - 14.% (2008: 3% - 14%) per annum and have repayment terms varying between one year to thirty years.

Undrawn commitments in respect of mortgage loans for the year under review amounts to Rs 97.8 million (2008: Rs 90 million)

15. ACCOUNTS RECEIVABLE


Premium 182,839 105,342 182,839 105,342 Provision for impairment losses (12,930) (6,369) (12,930) (6,369)

169,909 98,973 169,909 98,973 Other premium 15,729 5,614 15,729 5,614 Amounts due from reinsurers 48,309 34,791 48,309 34,791

Other receivables and prepayments 426,080 323,279 211,390 193,381 Provision for impairment losses ( Note 14) (5,512) (8,107) (5,512) (8,107)

420,568 315,172 205,878 185,274

654,515 454,550 439,825 324,652

Reconciliation of changes in the impairment account resulting from unpaid premium during the year is as follows:


Balance at beginning 6,369 5,566 6,369 5,566 Movement during the year 6,561 803 6,561 803

Balance at end 12,930 6,369 12,930 6,369




15. ACCOUNTS RECEIVABLE (CONTINUED)


Analysis of the age of premiums that are past due.

< 3 months 137,606 73,035 137,606 73,035 >3 months<6 months 10,819 12,011 10,819 12,011 >6 months<1 year 15,535 7,504 15,535 7,504 > 1year 5,949 6,423 5,949 6,423

169,909 98,973 169,909 98,973

16. SHORT-TERM DEPOSITS

Short-term deposits comprise of fixed deposits and overseas call deposits with banks with interest rates ranging from 0.10% - 9.60% (2008: 0.40% - 11.50%) per annum. The fixed deposits have maturity dates varying from 2009 - 2010. The foreign currency deposits are held in a basket of major currencies traded.

17. INSURANCE LIABILITIES AND REINSURANCE ASSETS


Short term insurance Gross

Claims reported 277,224 205,065 Claims incurred but not reported (IBNR) 25,440 16,250

302,664 221,315 Unearned premiums 228,635 126,485 Total gross insurance liabilities 531,299 347,800

Recoverable from reinsurers Claims reported 202,040 152,789 Unearned premiums 114,727 26,499

Total Reinsurers’ Share of insurance liabilities 316,767 179,288

Net Claims reported 75,184 52,276

Claims incurred but not reported (IBNR) 25,440 16,250

100,624 68,526 Unearned premiums 113,908 99,986

Total net insurance liabilities 214,532 168,512


17. INSURANCE LIABILITIES AND REINSURANCE ASSETS (CONTINUED)

CLAIMS OUTSTANDING

Group & Company Gross Reinsurance Net Rs’000 Rs’000 Rs’000

Notified Claims 205,065 152,789 52,276 Incurred but not reported 16,250 - 16,250

At 1 July 2008 221,315 152,789 68,526 Cash paid for claims settled during the year (139,448) (33,837) (105,611)Increase in Liabilities 220,797 83,088 137,709

At 30 June 2009 302,664 202,040 100,624

Analysed into:Notified Claims 277,224 202,040 75,184 Incurred but not reported 25,440 - 25,440

302,664 202,040 100,624

18. BORROWINGS


9% unsecured loan Repayable by instalments - within one year 13,550 10,600 13,550 10,600 - in the second year 11,800 7,850 11,800 7,850 - in the third year 7,900 6,100 7,900 6,100 - in the fourth year 5,700 2,200 5,700 2,200 - in the fifth year 4,550 - 4,550 - - after five years - - - -

Total 43,500 26,750 43,500 26,750

10.25-12% unsecured loan Repayable by instalments - within one year - - 18,775 16,690 - in the second year - - 21,121 18,775 - in the third year - - 23,761 21,121 - in the fourth year - - 26,731 23,761 - in the fifth year - - 30,073 26,731 - after five years - - 423,999 454,072

- - 544,460 561,150

Analysed as follows: Current 13,550 10,600 32,325 27,290 Non-current 29,950 16,150 555,635 560,610 43,500 26,750 587,960 587,900







19. ACCOUNTS PAYABLE


Amount due to reinsurers 172,702 58,408 172,702 58,408Other payables and accruals 376,813 256,843 153,053 110,637

549,515 315,251 325,755 169,045

The above amounts payable are interest free, unsecured and are expected to be settled within 1 year.

20. TAXATION

(a) Income Tax

Income tax is calculated at the rate of 15% (2008 - 15%) on the profit for the year as adjusted for income tax purposes.


Balance SheetCurrent tax liabilities- General Fund 20,668 32,132 18,075 26,589 - Life Fund 7,259 27,933 7,259 27,389 - Insured Pension Fund (72) (465) (72) (465)- Personal Pension Plan (764) (196) (764) (196)

27,091 59,404 24,498 53,317

Income Statement(i) General Fund - Current tax expense 32,990 32,132 27,946 26,589 - Tax adjustment 269 - 269 - - (Over)/Under provision in respect of previous year (68) 352 (57) 410

33,191 32,484 28,158 26,999 - Deferred tax charge 2,537 347 2,537 347

35,728 32,831 30,695 27,346

(ii) Life Fund - Current tax expense 26,074 27,933 27,493 27,389 - Tax adjustment (9) - (9) - - Under provision in respect of previous year - 967 - 967

26,065 28,900 27,484 28,356

(iii) Insured Pension Fund - Current tax expense 242 (465) 242 (465) - Under provision in respect of previous year - 2 - 2

242 (463) 242 (463)


20. TAXATION

(a) Income Tax (Continued)


Income Statement (Continued)

(iv) Personal Pension Plan - Current tax expense 245 (196) 245 (196) Under provision in respect of previous year 159 19 159 19

404 (177) 404 (177)

(b) Tax Reconciliation


Profit before taxation 343,681 335,190 290,271 252,445

% % % %

Applicable Tax Rate 15 15 15 15Tax effect of : - Exempt income and other relief (2.85) (3.61) (2.74) (3.73)- Expenses not deductible for tax purposes 0.01 0.22 - 0.05 - Expenses entitled to 200% deduction (0.05) (0.05) (0.06) (0.07)- Investment tax credit (0.71) (1.59) - - - Movement in unexpired risks (1.35) 0.18 (1.60) 0.24 - Assets not eligible for capital allowances 0.10 0.10 0.12 0.14 - Tax adjustment 0.08 - 0.09 -- (Over)/Under provision in previous year (0.02) 0.10 (0.02) 0.16 - Underprovision in deferred tax 0.02 - 0.02 -- Effect of reduction in tax rates on deferred tax - (0.44) - (0.58)- Surplus on Insured Medical (0.12) (0.09) (0.15) (0.12)- Life Fund’s tax liability 7.51 8.43 9.38 10.98 - Insured Pension Fund 0.07 (0.14) 0.08 (0.18)- Personal Pension Plan 0.12 (0.06) 0.14 (0.08)- Tax rate differentials 0.05 (0.16) - -- Consolidated adjustments 0.31 0.33 - -

Effective Tax Rate 18.17 18.22 20.26 21.81

(c) Deferred Taxation


At 1 July 7,448 8,441 7,448 8,441 - Deferred tax expense 2,537 347 2,537 347 - Deferred tax debited to property revaluation reserve - (1,340) - (1,340)

At 30 June 9,985 7,448 9,985 7,448





20. TAXATION

(d) Deferred Tax Liabilities


Accelerated tax depreciation 6,232 5,747 6,232 5,747 Retirement benefit obligations 1,074 (978) 1,074 (978)Revaluation of building 2,679 2,679 2,679 2,679

Deferred Tax Liabilities 9,985 7,448 9,985 7,448

(e) Deferred Tax Assets

Tax losses of subsidiary 2,054 - - -

One of the Company’s subsidiaries has accumulated tax losses. Deferred tax asset has been recognised thereon at the rate of 3%. Tax losses will expire within 5 years.

21. DEPOSITS

Group 2009 2008 Rs’000 Rs’000

Time deposits with remaining terms to maturity: - Within one year 1,008,298 925,943

- In the second to fifth years inclusive 1,619,645 1,588,536

2,627,943 2,514,479

The deposits bear interest ranging from 6.15 % to 14.50% (2008 : 6.65 % to 14.50 %) per annum.

22. STATED CAPITAL


250,000 Ordinary shares of Rs 100 each 25,000 25,000 Share Premium 45,000 45,000

70,000 70,000





23. RESERVES


Retained earnings 2,321,985 2,044,918 1,894,363 1,661,037Insured Medical Scheme 21,217 21,217 21,217 21,217Properties revaluation reserve 102,526 102,526 102,526 102,526Investments revaluation reserve 19,002 66,200 57,528 87,040Contingencies reserve 40,523 40,523 40,523 40,523Translation reserve 49,571 (15,670) - - Other reserves 11,254 6,935 - -

2,566,078 2,266,649 2,116,157 1,912,343

24. LONG TERM INSURANCE BUSINESS FUNDS


Long term Insurance Funds (Note 32) 6,101,452 5,734,881 5,853,271 5,498,395

25. RETIREMENT BENEFIT OBLIGATIONS

(a) Defined Benefit Plan

The Pension Plan is a final salary defined benefit plan for employees. The assets of the plan are invested in Funds managed by the State Insurance Company of Mauritius Ltd.

2009 2008 2007 2006 Rs’000 Rs’000 Rs’000 Rs’000

Amounts recognised in the Balance Sheets: Present value of funded obligations 189,277 164,702 193,896 177,263 Fair value of plan assets (218,423) (223,943) (184,383) (151,945)

(29,146) (59,241) 9,513 25,318 Unrecognised actuarial gain (34,094) 7,243 2,386 (15,219) Unrecognised past service cost 56,080 58,518 - - (Asset)/Liability recognised in the Balance Sheets (7,160) 6,520 11,899 10,099

Reconciliation of the present value of defined benefit obligation

Present value of obligation at start of year 164,702 193,896 177,263 156,127 Current service cost 9,836 8,980 10,821 10,523 Past service cost - (60,956) - - Interest cost 17,060 20,238 18,612 16,393 Benefits paid (4,525) (2,315) (1,840) (3,751) Liability gain/(loss) 2,204 4,859 (10,960) (2,029)

Present value of obligation at end of year 189,277 164,702 193,896 177,263





25. RETIREMENT BENEFIT OBLIGATIONS (CONTINUED)

(a) Defined Benefit Plan (Continued)

2009 2008 2007 2006 Rs’000 Rs’000 Rs’000 Rs’000

Reconciliation of fair value of plan assetsFair value of plan assets at start of year 223,943 184,383 151,945 128,504 Expected return on plan assets 25,090 20,781 17,230 14,527 Employer contributions 13,048 11,378 9,643 9,320 Benefits paid (4,525) (2,315) (1,840) (3,564)Asset (loss)/gain (39,133) 9,716 7,405 3,158

Fair value of plan assets at end of year 218,423 223,943 184,383 151,945

The major categories of plan assets, and the expected rate of return at the balance sheet date for each category, is as follows:

Group and Company

2009 2008 2007 2006 % % % %

Distribution of plan assets at end of yearLoans, Government securities and cash 64.4% 54.0% 63.5% 66.0%Local equities & debenture stocks 21.0% 30.3% 17.6% 15.8%Overseas bonds and equities 13.6% 14.8% 17.9% 17.0%Property 1.0% 0.9% 1.0% 1.1%Debenture stocks 0.0% 0.0% 0.0% 0.1%

Total 100.0% 100.0% 100.0% 100%

The overall expected rate of return on plan assets is determined by reference to market yields on bonds and expected yields differences on other types of assets held based on historical return trends.

The actual return on plan assets was Rs -14,042,871 (2008: Rs 30,496,363).

The breakdown of the assets above corresponds to the actual allocation of the monies managed by the State Insurance Company of Mauritius Ltd.

The history of experience adjustments is as follows:

Group and Company

2009 2008 2007 2006 Rs’000 Rs’000 Rs’000 Rs’000

Present value of defined benefit obligation (189,277) (164,702) (193,896) (177,263) Fair value of plan assets 218,423 223,943 184,383 (151,945) Gain/deficit 29,146 59,241 (9,513) (25,318) Experience (loss)/gain on plan liabilities (10,919) 4,859 (10,960) (2,029) Experience (loss)/gain on plan assets (39,133) 9,716 7,405 3,158

The State Insurance Company of Mauritius Ltd is expected to contribute Rs 13,424,184 to the defined benefit plan during the next financial year.





25. RETIREMENT BENEFIT OBLIGATIONS (CONTINUED)

(a) Defined Benefit Plan (Continued)

Amounts recognised in the Income Statements: Group and Company

2009 2008 2007 2006 Rs’000 Rs’000 Rs’000 Rs’000

Current service cost 9,836 8,980 10,821 10,523 Past service cost (2,438) (2,438) - - Interest cost 17,060 20,238 18,612 16,393 Expected return on plan assets (25,090) (20,781) (17,230) (14,527) Actuarial (gain)/loss recognised - - (760) 262

Total included in staff costs (note 30) (632) 5,999 11,443 12,651

Actual return on plan assets 14,043 30,496 22,795 17,685

Movements in the liability recognised in the Balance Sheets:

Group and Company

2009 2008 2007 2006 Rs’000 Rs’000 Rs’000 Rs’000

At 1 July 6,520 11,899 10,099 6,768 Adjustment - - - - Total expenses as above (632) 5,999 11,443 12,651 Contributions paid (13,048) (11,378) (9,643) (9,320)

At 30 June (7,160) 6,520 11,899 10,099

Group and Company

2009 2008 2007 2006 2005 % % % % %

Principal actuarial assumptions used:

Discount rate 10.00 10.50 10.50 10.50 10.50 Expected rate of return on plan assets 10.00 11.00 11.00 11.00 11.00 Future long term salary increases 8.00 8.50 8.50 8.50 8.50 Future pension increases 4.00 6.00 6.00 6.00 6.00

(b) Defined contribution plan

Group and Company

2009 2008 2007 2006 2005 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

National pension scheme contributions charged for employees on a contractual basis 196 300 324 224 191





26. GROSS REVENUE Group Company 2009 2008 2009 2008 Rs’000 Rs’000 Rs’000 Rs’000

Short-Term BusinessGross insurance premiums 587,017 394,197 587,017 394,197 Less: Unearned premium (102,150) (35,409) (102,150) (35,409)

484,867 358,788 484,867 358,788 Gross commission income 6,680 8,096 6,680 8,096 Management fees( Note 28) 230,612 216,521 196,525 178,615 Investment income(Note 28) 433,666 425,079 183,996 176,650

1,155,825 1,008,484 872,068 722,149

Long-Term Business Gross insurance premiums/Contributions 1,081,500 961,574 1,081,500 961,574 Gross commission income 16,193 12,655 16,193 12,655 Investment income 389,690 356,484 376,397 336,675

1,487,383 1,330,713 1,474,090 1,310,904

Total Gross Revenue 2,643,208 2,339,197 2,346,158 2,033,053

27. GENERAL BUSINESS REVENUE ACCOUNT Group & Company 2009 2008 Rs’000 Rs’000

Gross premiums 587,017 394,197 Premium ceded to reinsurers (290,076) (147,500)Movement in unearned premium (13,921) (32,569)

Net earned premiums 283,020 214,128

Gross claims paid 310,054 238,858Claims recovered from reinsurers (126,647) (57,061)Movement in outstanding claims 30,975 (4,089)

Net claims incurred 214,382 177,708

Commissions receivable from reinsurers 39,594 34,173Commissions paid to agents and brokerage fees (32,914) (26,077)

6,680 8,096

Underwriting surplus 75,318 44,516


28. INVESTMENT AND OTHER INCOME


Management fees 230,612 216,521 196,525 178,615 Gain on revaluation of investment property 2,000 3,429 2,000 3,429 Gain on sale of investments 3,540 6,464 3,424 6,105 Investment income 433,666 425,079 183,996 176,650 Exchange (loss)/gain (12,551) 1,865 2,267 (3,880)Other income 16,056 12,708 8,195 7,109

673,323 666,066 396,407 368,028

29. SHARE OF SURPLUS TRANSFERRED FROM LIFE ASSURANCE FUND

Following an actuarial valuation of the Life Assurance Fund as at 30 June 2009, a surplus of Rs 20.577 million (2008: Rs 38 million) has been transferred to the Shareholders Fund during the year.

30. ADMINISTRATIVE AND OTHER EXPENSES


Staff costs 96,468 94,241 93,501 92,321 Depreciation 7,855 9,574 7,855 9,574 Amortisation 2,073 - 2,073 -Interest to depositors 278,441 274,004 - -Others 37,624 32,649 29,936 25,739

422,461 410,468 133,365 127,634

31. FINANCE COSTS


Interest payable on loans from fellow subsidiary - - 65,590 67,541 Interest payable on other loans 3,076 2,924 3,076 2,924

3,076 2,924 68,666 70,465



�� State Insurance Company of Mauritius Limited State Insurance Company of Mauritius Limited ��


32. LIFE ASSURANCE FUND-GROUP

Non-Linked Linked Total Non-Linked Linked Total Note 2009 2009 2009 2008 2008 2008 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

INCOMEGross premium 1,017,527 69,486 1,087,013 907,193 54,382 961,575 Less: Reinsurances (74,008) - (74,008) (75,165) - (75,165)

Net premium 943,519 69,486 1,013,005 832,028 54,382 886,410

Commission 16,192 - 16,192 12,655 - 12,655 Investment and other income 341,273 19,826 361,099 357,593 16,817 374,410 Gain on sale of investments 81 2 83 32,089 201 32,290

1,301,065 89,314 1,390,379 1,234,365 71,400 1,305,765

EXPENDITUREBonus 172,048 - 172,048 109,952 - 109,952 Commission 52,359 3,697 56,056 45,378 2,538 47,916 Cash benefits 68 1,223 1,291 55 2,504 2,559 Family income benefits 1,249 - 1,249 2,520 50 2,570 Management fees 11,446 4,695 16,141 12,155 2,725 14,880 Maturity claims 96,372 - 96,372 61,139 - 61,139 Medical expenses 640 - 640 567 14 581 Provision for loan losses 642 3 645 637 3 640 Surrenders 51,216 4,177 55,393 53,117 4,771 57,888 Survival Benefits 274,548 - 274,548 242,566 - 242,566 Other costs 569 5,880 6,449 815 5,735 6,550 Gross death and disablement claims 59,986 453 60,439 48,508 1,450 49,958 Claims recovered from reinsurers (23,833) - (23,833) (21,621) - (21,621)Net claims 36,153 453 36,606 26,887 1,450 28,337 Management expenses 76,929 - 76,929 71,230 - 71,230

774,239 20,128 794,367 627,018 19,790 646,808

SURPLUS BEFORE TAXATION 526,826 69,186 596,012 607,347 51,610 658,957 TAXATION 20 (25,432) (1,279) (26,711) (27,199) (1,061) (28,260)

SURPLUS AFTER TAXATION 501,394 67,907 569,301 580,148 50,549 630,697

FUND AT 1 JULY 2008 5,512,328 222,553 5,734,881 4,938,537 170,196 5,108,733 (DECREASE)/INCREASE IN FAIR VALUE OF AVAILABLE- FOR-SALE SECURITIES (258,822) (3,889) (262,711) 83,801 2,052 85,853

TRANSLATION RESERVE 80,206 352 80,558 (52,158) (244) (52,402)

SHARE OF SURPLUS TO SHAREHOLDERS (20,577) - (20,577) (38,000) - (38,000)

FUND AT 30 JUNE 5,814,529 286,923 6,101,452 5,512,328 222,553 5,734,881

Group Life Fund includes the results of Life Fund’s investment in SICOM Global Fund Ltd. SICOM owns 100% of the Life Participating Preference Shares in the Life Portfolio of SICOM Global Fund Ltd.





32. LIFE ASSURANCE FUND-COMPANY (CONTINUED)

Non-Linked Linked Total Non-Linked Linked Total Note 2009 2009 2009 2008 2008 2008 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000 Rs’000

INCOMEGross premium 1,017,527 69,486 1,087,013 907,193 54,382 961,575 Less: Reinsurances (74,008) - (74,008) (75,165) - (75,165)

Net premium 943,519 69,486 1,013,005 832,028 54,382 886,410 Commission 16,192 - 16,192 12,655 - 12,655 Investment and other income 363,356 19,923 383,279 313,487 16,611 330,098 Gain on sale of investments 292 3 295 32,089 201 32,290

1,323,359 89,412 1,412,771 1,190,259 71,194 1,261,453

EXPENDITUREBonus 172,048 - 172,048 109,952 - 109,952 Commission 52,359 3,697 56,056 45,378 2,538 47,916 Cash benefits 68 1,223 1,291 55 2,504 2,559 Family income benefits 1,249 - 1,249 2,520 50 2,570 Management fees - 4,644 4,644 - 2,669 2,669 Maturity claims 96,372 - 96,372 61,139 - 61,139 Medical expenses 640 - 640 567 14 581 Provision for loan losses 642 3 645 637 3 640 Surrenders 51,216 4,177 55,393 53,117 4,771 57,888 Survival Benefits 274,548 - 274,548 242,566 - 242,566 Other costs 569 5,880 6,449 815 5,735 6,550 Gross death and disablement claims 59,985 453 60,438 48,508 1,449 49,957 Claims recovered from reinsurers (23,833) - (23,833) (21,621) - (21,621)Net claims 36,152 453 36,605 26,887 1,449 28,336 Management expenses 76,929 - 76,929 71,230 - 71,230

762,792 20,077 782,869 614,863 19,733 634,596

SURPLUS BEFORE TAXATION 560,567 69,335 629,902 575,396 51,461 626,857 TAXATION 20 (26,845) (1,285) (28,130) (26,655) (1,061) (27,716)

SURPLUS AFTER TAXATION 533,722 68,050 601,772 548,741 50,400 599,141

FUND AT 1 JULY 2008 5,274,826 223,569 5,498,395 4,483,137 170,196 4,653,333 (DECREASE)/INCREASE IN FAIR VALUE OF AVAILABLE- FOR-SALE SECURITIES (222,589) (3,730) (226,319) 280,948 2,973 283,921

SHARE OF SURPLUS TO SHAREHOLDERS (20,577) - (20,577) (38,000) - (38,000)

FUND AT 30 JUNE 5,565,382 287,889 5,853,271 5,274,826 223,569 5,498,395

33. MANAGED FUNDS

The Managed Pension Fund and the Managed Medical Fund with net assets amounting to Rs 13.6 billion (June 2008 - Rs 13.7 billion) and to Rs 3.7 million (June 2008 - Rs 3.1 million) respectively at 30 June 2009 have been excluded from the Company’s accounts as the assets backing these funds do not belong to the Company.In the same way, the Group accounts exclude the net assets of the Managed Pension Fund amounting to Rs 14.3 billion as at 30 June 2009 (June 2008 - Rs 14.4 billion) and Managed Medical Fund amounting to Rs 3.7 million (June 2008 - Rs 3.1 million).



�0 State Insurance Company of Mauritius Limited State Insurance Company of Mauritius Limited �1


34. DIVIDEND PAID


Final ordinary dividend 26,250 23,750 26,250 23,750

The Board of Directors has, by resolution dated 22 September 2008, recommended and authorised payment of a dividend of Rs 105 per share.

35. COMMITMENTS

(a) Capital Commitments

Capital expenditure contracted for at the balance sheet date, but not yet incurred is as follows:


Property, plant and equipment - -

(b) Operating lease commitments


Minimum lease payments under operating lease recognised as an expense in the year 900 1,475

At the Balance Sheet date, the Group and Company have outstanding commitments under non-cancellable operating leases, which fall due as follows:

- Within 1 year 900 900

- In the second to fifth years inclusive 3,600 3,600

- After five years 1,800 2,700

6,300 7,200

Operating lease payments represent rentals payable by the Group for its leasehold land (lease terms of ten years with fixed rentals)



�0 State Insurance Company of Mauritius Limited State Insurance Company of Mauritius Limited �1


36. RELATED PARTY TRANSACTIONS

(a) Transactions with related parties Group Company 2009 2008 2009 2008 Rs’000 Rs’000 Rs’000 Rs’000

(i) Shareholders (a) Sales of services 50,122 33,817 50,122 33,817

(b) Deposits renewed/taken 300,000 398,269 180,000 398,269 (c) Matured securities 125,890 365,269 125,890 355,269 (d) Interest/dividend receivable 58,515 84,405 42,048 56,783

(ii) Subsidiary (a) Loans refunded to Fellow Subsidiary - - 16,690 14,818

(b) Interest paid - - 65,590 67,541 (c) Sales of services - - 2,736 2,690 (d) Dividend receivable - - 7,013 7,384

(iii) Key management personnel (including directors) (a) Loans disbursed 7,267 12,918 7,267 12,918 (b) Loans refunded 7,858 6,105 7,858 6,105 (c) Interest receivable 2,020 1,468 2,020 1,468 (d) Premium receivable 9,261 1,436 9,137 1,319 (e) Compensation : Salaries and other short term benefits 37,345 33,972 34,016 31,209 Post-employment benefits - 1,560 - 1,560

(b) Outstanding balances with related parties

(i) Shareholders(a) Deposits 244,000 294,890 124,000 174,890(b) Bank balances 183,062 281,603 140,605 219,482(c) Interest/dividend due 18,539 23,450 18,209 22,932(d) Premium due 3,712 9 3,712 9

The deposits are for a duration of 3 months to 5 years and with rate of interest ranging from 5% to 11.70% per annum. Bank balances are in respect of call deposits with rate of interest of 4.50% per annum.

(ii) Subsidiary(a) Loans from fellow subsidiary - - 544,460 561,150(b) Amount due from fellow subsidiaries - - 7,092 7,529

The unsecured loans bear interest at rates in the range of 10.25% to 12% with monthly capital repayments.

(iii) Key management personnel (including directors) (a) Loans 25,906 26,790 25,906 26,790 (b) Accrued interest on loans 31 23 18 23 (c) Premium due 24 14 24 14

The loans to key management personnel (including Directors) are secured by way of a fixed charge or a mortgage on an immovable property with rate of interest ranging from 3% to 12%.


Statutory Disclosures (pursuant to Section 221 of the Companies Act 2001)

for the year ended 30 June 2009



Statutory Disclosures (pursuant to Section 221 of the Companies Act 2001)

for the year ended 30 June 2009


Principal Activities

The Company is mainly engaged in long term and general insurance business whilst its subsidiaries carry out depository, investment and

management activities.

Directors

The Directors of State Insurance Company of Mauritius Ltd and its subsidiaries as at 30th June 2009 are as follows:

State Insurance Company of Mauritius Ltd SICOM Financial Services LtdServansingh T K (Chairman) Chooramun B (Chairman)Bhoojedhur-Obeegadoo K G (Mrs) Bhoojedhur-Obeegadoo K G (Mrs)Chooramun B Chellapermal RDhaliah-Utchanah B D (Mrs) Dabee D KGopee G Gopee GGunness C (From 22 Sept 2008 to 28 Nov 2008) Ramdewar N (Mrs)Lim Hoye Yee V (Mrs) (Up to 22 Sept 2008) Servansingh T KPurryag D Seeyave P (Ms) Sewpaul A

SICOM Global Fund Ltd SICOM Management LtdServansingh T K (Chairman) Servansingh T K (Chairman)Bhoojedhur-Obeegadoo K G (Mrs) Bhoojedhur-Obeegadoo K G (Mrs)Chooramun B Chooramun B Ramdewar N (Mrs) Ramdewar N (Mrs)

Directors’ Service ContractsThere are no service contracts between the Company and the Directors.

Directors’ EmolumentsThe remuneration and benefits of Directors are set out in the table below:

The Company Subsidiaries 2009 2008 2009 2008 Rs’000 Rs’000 Rs’000 Rs’000

Full-Time 8,398 7,980 1,788 1,634Part-Time 2,133 1,627 1,541 1,130

Audit FeesExternal auditor’s remuneration is as follows:

The Company Subsidiaries 2009 2008 2009 2008 Rs’000 Rs’000 Rs’000 Rs’000

Audit Fees 863 672 659 479Taxation Fees 58 40 30 27

DonationsDonations amounted to Rs 25,000 for the Group and Company for the year ended 30 June 2009 (30 June 2008– Rs 15,999).

STATE INSURANCE COMPANY OF MAURITIUS LTD Annual Report 2009.pdf · Manager (Human Resource)...

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