Financial Report English




QR. 31249



AUDITORS' REPORT



To The Shareholders
Doha Insurance Company - Q.S.C.
Doha – Qatar



We have audited the accompanying balance sheet of Doha Insurance Company - Q.S.C., as of 31 December 2004 and the related statements of income, changes in shareholders' equity and cash flows for the year then ended . These financial statements are the responsibility of the company's management. 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 plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.


In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Doha Insurance Company - Q.S.C., as of 31 December 2004 , and the results of its operations, changes in its shareholders' equity and its cash flows for the year then ended in accordance with International Financial Reporting Standards.


Furthermore, in our opinion the financial statements provide the information required by the Qatar Commercial Companies' Law No. 5 of 2002 and the Company's Articles of Association. We are also of the opinion that proper books of account were maintained by the Company and the contents of the directors' report are in agreement with the Company's financial statements. To the best of our knowledge and belief and according to the information given to us, no contraventions of the Law or the Company's Articles of Association, were committed during the year which would materially affect the Company's activities or its financial position.


		For Deloitte & Touche



Doha – Qatar		Samer Jaghoub
January 16, 2005		License No. 88

Doha Insurance Company - Q. S. C.
__________________________________________________________________________________
BALANCE SHEET
31 December 2004

		*2004*	*2003*
	Note	QR	QR

ASSETS

Cash and bank balances	3	54,490,077	42,358,563
Investments	4	124,675,202	104,807,778
Accounts receivable	5	22,685,564	7,084,966
Reinsurance balances receivable	6	6,607,905	2,894,997
Investment properties	7	29,320,915	30,360,786
Property and equipment	8	7,779,172	8,986,483
Other assets	9	1,230,559	1,666,110
		------------------	------------------

TOTAL ASSETS		246,789,394	198,159,683
		==========	==========
LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES

Insurance reserves	10	17,882,235	13,376,687
Bank term loan	11	5,988,615	7,555,900
Accounts payable		635,386	258,021
Reinsurance balances payable		19,869,055	3,986,488
Other liabilities and provisions	12	6,415,362	3,404,197

TOTAL LIABILITIES		50,790,653	28,581,293

SHAREHOLDERS' EQUITY
Share capital	1	127,240,000	127,240,000
Legal reserve	13	5,915,642	3,152,571
Proposed cash dividend	14	15,268,800	10,179,200
Fair value reserve		29,867,806	19,248,962
Retained earnings		17,706,493	9,757,657

TOTAL SHAREHOLDERS' EQUITY		195,998,741	169,578,390

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		246,789,394	198,159,683
		===========	===========


These financial statements were authorized for issue by the Board of Directors on January 21, 2004 .




Sheikh Nawaf Bin Nasser Bin Khaled Al-Thani		Bassam Hussein
Chairman		General Manager

Doha Insurance Company - Q. S. C.
__________________________________________________________________________________
STATEMENT OF INCOME
Year ended 31 December 2004

		*2004*	*2003*
	Note	QR	QR

INCOME

Net insurance revenue	16	10,798,153	5,865,238
Investment income		8,248,408	5,855,350
Interest income		851,060	1,248,628
Income from sale of investments		17,534,604	8,912,997
Income from investment properties		3,268,800	1,449,700
Other income		267,429	53,379

Total income		40,968,454	23,385,292

EXPENSES

Salaries and other staff costs		(6,034,627)	(4,826,899
Depreciation of investment properties	7	(1,046,371)	(534,573)
Depreciation of property and equipment	8	(1,347,900)	(1,311,916)
Provision for doubtful debts	5	(1,500,000)	--
General and administrative expenses	17	(3,408,849)	(2,415,656)

Total expenses		(13,337,747)	(9,089,044)

NET INCOME FOR THE YEAR		27,630,707	14,296,248



Earnings Per Share		2.17	1.12
		---------------------	-------------------

Weighted Average Number of Shares		12,724,000	12,724,000
		============	===========

Doha Insurance Company - Q. S. C.
__________________________________________________________________________________
STATEMENT OF CASH FLOWS
Year ended 31 December 2004

		*2004*	*2003*
	Note	QR	QR

OPERATING ACTIVITIES

Net income for the year		27,630,707	14,296,248
Adjustments for:
Depreciation of property and equipment		1,347,900	1,311,916
Depreciation of investment properties		1,046,371	534,573
Net movement in insurance reserves		4,505,548	4,580,067
Provision for doubtful debts		1,500,000	--
Provision for employees' terminal benefits		207,402	155,070
Loss on sale of property and equipment		17,699	--

Operating Income Before Changes in Operating Assets
and Liabilities		36,255,627	20,877,874
Accounts receivable		(17,100,598)	(2,037,017)
Reinsurance balances receivable		(3,712,908)	(960,822)
Other assets		435,551	(285,067)
Accounts payable		377,365	(1,299,518)
Reinsurance balances payable		15,882,567	1,813,735
Other liabilities and provisions		1,179,613	1,487,358
Employees' terminal benefits paid		(25,850)	(6,909)

Net cash from operating activities		33,291,367	19,589,634


INVESTING ACTIVITIES
Net cash movement in investments		(9,248,580)	(5,529,307)
Purchase of property and equipment		(164,488)	(249,430)
Purchase of investment properties		(6,500)	(30,895,359)
Proceed from sale of property land and equipment		6,200	--
Net cash used in investing activities		(9,413,368)	(36,674,096)


FINANCING ACTIVITIES
Bank term loan received		(1,567,285)	7,555,900
Dividends paid		(10,179,200)	(6,362,000)

Net Cash from (Used in) Financing Activities		(11,746,485)	1,193,900

Net Decrease in Cash and Cash Equivalent		12,131,514	(15,890,562)

Cash and cash equivalents at the beginning of the year		42,358,563	58,249,125

Cash and Cash Equivalents at the End of the Year		54,490,077	42,358,563
		===========	===========

Doha Insurance Company - Q. S. C.
___________________________________________________________________________________________________


STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Year Ended 31 December 2004


					Proposed
		Share	Legal	Fair Value	cash	Retained
		Capital	reserve	reserve	dividend	earnings	Total
	Note	QR	QR	QR	QR	QR	QR

Balance as on January 1, 2003		127,240,000	1,722,946	5,754,867	6,362,000	7,670,234	148,750,047
Cash dividends for 2002 paid		--	--	--	(6,362,000)	--	(6,362,000)
Net income for the year		--	--	--	--	14,296,248	14,296,248
Transfer to legal reserve		--	1,429,625	--	--	(1,429,625)	--
Net movement in cumulative changes in fair value		--	--	13,494,095	--	--	13,494,095
Proposed cash dividends	14	--	--	--	10,179,200	(10,179,200)	--
Director's remuneration	15	--	--	--		(600,000)	(600,000)
		--------------	-------------	-------------	--------------	---------------	--------------

Balance as on December 31, 2003		127,240,000	3,152,571	19,248,962	10,179,200	9,757,657	169,578,390
Cash dividends for 2003 paid		--	--	--	(10,179,200)	--	(19,179,200)
Net income for the year		--	--	--	--	27,630,707	27,630,707
Transfer to legal reserve		--	2,763,071	--	--	(2,763,071)	--
Net movement in cumulative changes in fair value		--	--	10,618,844	--	--	10,618,844
Proposed cash dividends	14	--	--	--	15,268,800	(15,268,800)	--
Directors' remuneration	15	--	--	--	--	(1,650,000)	(1,650,000)
		--------------	-------------	-------------	--------------	---------------	--------------

Balance as of December 31, 2004		127,240,000	5,915,642	29,867,806	15,268,800	17,706,493	195,998,741
		=========	========	=======	========	=========	========

NOTES TO THE FINANCIAL STATEMENTS

31 December 2004

1. ACTIVITIES

Doha Insurance Company is a public shareholding company governed by the Amiri Decree No. 3 of 1999 promulgated on October 2, 1999 and is incorporated following the general assembly meeting held on July 4, 2000 , the first day of operation for the Company.

The Company's issued and fully paid capital is stated at QR. 127,240,000 divided into 12,724,000 shares of QR. 10 each.

The Company is engaged in the business of insurance and reinsurance.

2. SIGNIFICANT ACCOUNTING POLICIES

a) Basis of preparation:

The financial statements have been prepared in accordance with International Financial Reporting

Standards (IFRS).

b) Accounting convention

The financial statements are prepared under the historical cost basis except for the

measurement at fair value of available for sale investments.

c) Cash and cash equivalents

For the purpose of the cash flow statement, cash and cash equivalents consist of cash on hand,

bank balances and short term deposits with banks maturing within 3 months.

d) Investments

Major investment categories include marketable equity securities, bonds and funds.

All investments are initially recognised at cost, being the fair value of the consideration given

including acquisition charges associated with the investment.

The accounting policies for investments are as follows:

(i) Available for sale

After initial recognition, investments which are classified “available for sale” are remeasured at

fair value. The unrealised gains and losses on remeasurement to fair value are reported as a

separate component of equity until the investment is sold, collected or otherwise disposed of,

or the investment is determined to be impaired, at which time the cumulative gain or loss

previously reported in equity is included in the statement of income for the year.

(ii) Held to maturity investment

Held to maturity investment are measured at amortized cost less provision for

impairment in value.

(iii) Fair values

Fair values of investments quoted on recognised stock exchanges are determined by reference

to their bid prices at the close of business at the balance sheet date.

NOTES TO THE FINANCIAL STATEMENTS

31 December 2004

e) Accounts receivable and reinsurance balances receivable

Accounts receivable and reinsurance balances receivable are stated net of provision for doubtful

debts.

f) Property and equipment and investment properties

Property and equipment and investment properties are stated at cost less accumulated

depreciation. Depreciation is provided on a straight line basis on all property and equipment

and investment properties, other than freehold land which is determined to have an indefinite

life. The rates of depreciation are based upon the following estimated useful lives:

• Investment properties - 20 years

• Building - 10 years

• Furniture, fixtures and equipment - 3 to 5 years

• Motor vehicles - 5 years

g) Impairment

An assessment is made at each balance sheet date to determine whether there is objective

evidence that an asset or group of assets may be impaired. If such evidence exists, the

estimated recoverable amount of that asset is determined and an impairment loss is recognized

for the difference between the recoverable amount and the carrying amount. Impairment

losses are recognized in the statement of income.

h) Premium income

Premium income represents total amounts invoiced during the year. Where the company

carries no financial exposure to insurance risk, i.e. the full amount is re-insured, the

premium received is netted off against the premium paid, and the net amount is reported

as income.

i) Reserve for unexpired risks

The reserve for unexpired risk represents the estimated portion of net premium income

after deduction of the reinsurance share which relates to periods of insurance subsequent

to the balance sheet date. The reserve is calculated at 40 percent of the net premium for all

insurance classes except for marine insurance which is calculated at 25 percent.

j) Commission earned and paid

Commissions earned and paid are recognized at the time policies are written.

k) Provision for outstanding claims

Provision for outstanding claims is recognized at the date the claims are known and covers

the liability for loss and loss adjustment expenses based on loss reports from independent

adjusters and management best estimate. The method for making such estimates and for

establishing the resulting liability are continually reviewed.

l) Technical reserve

This reserve is established to meet claims incurred but not reported at the balance sheet

date based on management estimates and prior experience.

m) Interest income

Interest income is recognised on a time apportionment basis taking account of the principal

invested and the interest rate applicable.

NOTES TO THE FINANCIAL STATEMENTS

31 December 2004

n) Dividend income

Dividend income is recognised when received.

o) Employee's terminal benefits

Provision is made for amounts payable in respect of employee terminal benefits based on

Qatar Labour Law and is calculated using the employee's salary and period of service at the

balance sheet date.

p) Foreign currencies

Foreign currency transactions are recorded in Qatari Riyals at the rates of exchange prevailing

at the date of each transaction. Monetary assets and liabilities denominated in foreign

currencies are translated to Qatari Riyals at the rate of exchange prevailing at the year end. The

resultant exchange differences are included in the statement of income.

3 CASH AND BANK BALANCES

	2004	2003
	QR	QR

Cash on hand	172,385	161,863
Current accounts with banks	17,949,224	16,910,324
Term deposits with banks	36,368,468	25,286,376

Total	54,490,077	42,358,563
	========	========

4 INVESTMENTS

The carrying amounts of investments at 31 December were as follows:

	2004	2003
	QR	QR

Held to maturity investments:
Qatari Government bills in US Dollar with fixed interest rate	--	12,002,755
Ras Laffan bills in US Dollar with fixed interest rate	29,885,604	30,133,082

Total	29,885,604	42,135,837

Available for sale investments:
Quoted shares	89,583,394	59,850,941
Unquoted funds	5,206,204	2,821,000

Total	94,789,598	62,671,941

Total investments	124,675,202	104,807,778
	=========	========

The market value of held to maturity investments amounted to QR. 34,761,719 as of December 31, 2004 (2003: QR 50,291,260). The Ras Laffan bills in US Dollar are held by the bank as security against term loans provided to the Company (Refer Note 11).

NOTES TO THE FINANCIAL STATEMENTS

31 December 2004

5 ACCOUNTS RECEIVABLE

	2004	2003
	QR	QR

Accounts receivable	24,185,564	7,084,966
Less: Provision for doubtful debts	(1,500,000)	--
	-------------------	---------------------

Net	22,685,564	7,084,966
	===========	============

Accounts receivable comprise a large number of customers mainly within Qatar . Two companies accounted for more 60% of receivable as of 31 December 2004 (Three companies accounted for more 65% as of 31 December 2003).

Accounts receivable are stated net of any required provision and are short term in nature, their fair value approximates carrying value.

6 REINSURANCE BALANCES RECEIVABLE

Reinsurance balances receivable comprise a number of reinsurance companies in the Qatar and Gulf countries. Two companies accounted for more than 63% of reinsurance balances receivable as of 31 December 2004 (one company more than 40% as of 31 December 2003).

As reinsurance balances receivable are short term in nature, their fair value approximates the carrying value.

7 INVESTMENT PROPERTIES

	2004	2003
	QR	QR

At cost	30,901,859	30,895,359
Less: Accumulated depreciation	(1,580,944)	(534,573)
	-------------------	-------------------

Net carrying value	29,320,915	30,360,786
	===========	============

The fair value of investment properties is determined on the basis of management's estimates of the market value, which in the opinion of management is more than the carrying amount.

Doha Insurance Company - Q. S. C.

_____________________________________________________________________________________________________________

NOTES TO THE FINANCIAL STATEMENTS

31 December 2004

8 PROPERTY AND EQUIPMENT

Wooden

Fixture and

Motor

Office

Land

Buildings

furniture

Computers

vehicles

Equipment

Total

QR.

Cost:

1 January 2004

2,350,000

7,288,262

73,495

1,440,962

960,401

464,876

114,859

12,692,855

Additions

79,130

4,923

80,435

164,488

Disposal

(29,840)

-------------

---------------

-------------

---------------

31 December 2004

2,350,000

7,367,392

43,655

1,445,885

1,040,836

464,876

114,859

12,827,503

Depreciation:

1 January 2004

2,180,915

17,253

791,003

478,822

183,834

54,545

3,706,372

Charge for the year

733,464

4,865

288,549

205,076

92,975

22,971

1,347,900

Disposal

(5,941)

-------------

---------------

-------------

---------------

31 December 2004

2,914,379

16,177

1,079,552

683,898

276,809

77,516

5,048,331

-------------

---------------

-------------

---------------

Net book values:

31 December 2004

2,350,000

4,453,013

27,478

366,333

356,938

188,067

37,343

7,779,172

=========

========

=======

========

31 December 2003

2,350,000

5,107,347

56,242

649,959

481,579

281,042

60,314

8,986,483

========

=========

========

=========

Depreciation Rate

10%

20%

20%-30%

20%

• The value of the land was estimated by the Company's management.

NOTES TO THE FINANCIAL STATEMENTS

31 December 2004

9. OTHER ASSETS

	2004	2003
	QR	QR

Accrued interest	817,395	867,038
Prepaid expenses	77,397	275,205
Refundable deposits and other debit balances	335,767	523,867

Total	1,230,559	1,666,110
	=======	=======

10 INSURANCE RESERVES

	2004	2003
	QR	QR

Reserve for unexpired risks	9,777,764	8,438,690
Reserve for outstanding claims	5,933,585	3,121,891
Technical reserve	2,170,886	1,816,106

Total	17,882,235	13,376,687
	========	=======

11 BANK TERM LOAN

	2004	2003
	QR	QR

Bank term loan – current portion	1,566,060	1,566,060
Bank term loan – non-current portion	4,422,555	5,989,840
	-----------------	-----------------

Total	5,988,615	7,555,900
	=========	============

The above loan of US $ 2,060,000 is repayable in 5 years in half yearly installments of US $ 215,000 each. The loan carry interest at six months Libor plus 1% p.a. (Refer Note 4).

12 OTHER LIABILITIES AND PROVISIONS

	2004	2003
	QR	QR

Accrued salaries and expenses	76,515	143,021
Provision for leave pay and air tickets	370,758	325,505
Provision for employees terminal benefits	586,590	405,038
Provision for employees' bonus	876,410	442,710
Dividend payable	2,291,814	746,828
Advance income from properties	532,500	532,500
Directors' remuneration	1,650,000	600,000
Other credit balances	30,775	208,595
	-----------------	-----------------

Total	6,415,362	3,404,197
	=========	============

13 LEGAL RESERVE

As per the Company's Articles of Association and the provision of Qatar Commercial Companies' Law No. 5 of 2002, an amount equivalent to 10% of the net income for the year is transferred annually to the legal reserve until it equals 50% of the capital. This reserve is not available for distribution except in circumstances stipulated in the companies' Law.

14 PROPOSED DIVIDEND

The Board of Directors decided in its meeting held on January 21, 2004 to propose to the forthcoming General Assembly to approve the distribution of cash dividend for the year 2003 at 8% of share capital.

Doha Insurance Company - Q. S. C.


15 DIRECTORS' REMUNERATION

The Board of directors proposed the distribution of QR. 1,650,000 as a remuneration to board members for the year 2004 (2003: QR. 600,000).

16 NET INSURANCE REVENUE
	Marine and Aviation		Motor		Fire and general		Total
	2004	2003	2004	2003	2004	2003	2004	2003
	QR.	QR.	QR.	QR.	QR.	QR.	QR.	QR.

Revenue:

Premium	17,027,622	3,190,087	18,127,674	15,286,278	47,900,264	25,484,420	83,055,560	43,960,785

Less : Reinsurers' share	(16,332,680)	(3,028,774)	(1,987,172)	(660,245)	(43,026,863)	(22,110,717)	(61,346,715)	(25,799,736)

Net premium	694,942	161,313	16,140,502	14,626,033	4,873,401	3,373,703	21,708,845	18,161,049

Reinsurance commissions – net	1,365,286	491,665	(49,141)	(217,267)	4,059,050	2,688,877	5,375,195	2,963,275

Total revenues	2,060,228	652,978	16,091,361	14,408,766	8,932,451	6,062,580	27,084,040	21,124,324

Movements in insurance reserves	(466,725)	(70,910)	(2,950,539)	(4,476,083)	(1,088,285)	(806,792)	(4,505,549)	(5,353,785)

Claims:
Claims paid	(532,090)	(348,285)	(11,161,650)	(8,984,722)	(3,312,374)	(8,539,214)	(15,006,114)	(17,872,221)
Less : Reinsurers' share	485,311	311,836	11,008	17,634	2,729,457	7,637,450	3,225,776	7,966,920

Net claims	(46,779)	(36,449)	(11,150,642)	(8,967,088)	(582,917)	(901,764)	(11,780,338)	(9,905,301)

Net insurance revenue	1,546,724	545,619	1,990,180	965,595	7,261,249	4,354,024	10,798,153	5,865,238
	========	========	=========	========	=========	=========	=========	=========

NOTES TO THE FINANCIAL STATEMENTS

31 December 2004

17 General and Administrative Expenses

	2004	2003
	QR	QR

Advertisement and business promotion	1,331,514	670,025
Bank interest	160,501	52,350
Business travel	228,773	178,220
Government fees	160,752	122,216
Printing and stationery	164,315	89,411
Rent, maintenance and office expenses	533,901	386,532
Legal and consultation fees	176,533	126,925
Miscellaneous expenses	652,560	789,977
	-----------------	-----------------

Total	3,408,849	2,415,656
	=========	============

18 EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the net income for the year by the adjusted weighted average number of ordinary shares outstanding during the year as follows:

	2004	2003
	QR	QR

Net income for the year	27,630,707	14,296,248

Adjusted weighted average number of shares	12,724,000	12,724,000

Adjusted Earnings per share	2.17	1.12

19 CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS

	2004	2003
	QR	QR

Bank guarantees	585,728	468,964

20 SEGMENT INFORMATION

Primary Segment information

For management purposes, the company is organised into three business segments, marine, motor and fire & general. These segments are the basis on which the company reports its primary segment information. Other operations of the company comprise investment and cash management for the company's own account. There are no transactions between segments.

The data with respect to segment information is as disclosed in Note 16 to the financial statements.

NOTES TO THE FINANCIAL STATEMENTS

31 December 2004

Secondary segment information

The company operates in the State of Qatar only.

21 INTEREST RATE RISK

The Company's interest rate risk based on contractual arrangements at December 31, 2003 was as follows:

	Up to 6	6 Months	1 to 5	Over 5		Effective
	Months	To 1 Year	Years	Years	Total	Interest Rate%

Bank balances	54,490,077	--	--	--	54,490,077	2.80
Bonds	--	--	--	29,885,604	29,885,604	8.29
	-------------	-----------	-------------	-------------	--------------

Total	54,490,077	--	--	29,885,604	84,375,681

22 RELATED PARTY TRANSACTIONS

These represent transactions with related parties, i.e. shareholders and directors of the Company and companies in which they are principal owners. Pricing policies and terms of these transactions are approved by the Company's management and are negotiated under normal commercial terms.

23 FINANCIL INSTRUMENTS AND RISK MANAGEMENT

Financial instruments consist of financial assets and financial liabilities

The financial assets of the Company include cash and bank balances, accounts receivable

and investments.

The financial liabilities of the Company include bank term loan, provisions and payables.

Accounting policies for financial assets and liabilities are set our in Note 2.

a) Currency risk

Currency risk is the risk that the value of financial instrument will fluctuate due

to changes in foreign rates. The Company has deposits and investments in Qatari Riyals

and United States Dollars. The Qatari Riyals is effectively pegged to the United States

Dollar thus minimizing the currency rate risks.

b) Credit risk

Credit risk is the risk that one party to a financial instrument will fail to discharge an

obligation and cause the other party to incur a financial loss. Balances with banks

represent term deposits, current and savings accounts placed with banks of repute. Credit

risk on receivable is limited as these are shown after reviewing their recoverability.

Management seeks to minimized credit risk with respect to insurance and reinsurance

companies by only ceding business to companies with good credit ratings.

c) Liquidity risk

Liquidity risk also referred to as funding risk, is the risk that an enterprise will encounter

difficulty in raising funds to meet commitments associated with financial instruments.

Liquidity risk may result from an inability to sell a financial assets quickly at close to its

fair value. Liquidity requirements are monitored on a periodical basis and the management

ensures that sufficient funds are available to meet any future commitments.

d) Fair value of financial instruments

Fair value is the amount for which an asset could be exchanged or a liability settled

between knowledgeable, willing parties in an arm's length transaction. Differences can

therefore arise between the book values under the historical cost method and fair value

estimates. The fair values of the Company's cash, receivables, payables and investments

held to maturity are not materially different from their carrying values. Available-for-sale

investments are stated at their fair value as disclosed in Not 4 to the financial statements.

NOTES TO THE FINANCIAL STATEMENTS

31 December 2004

e.) Interest rate risk

The company invests in securities and has deposits that are subject to interest rate risk.

Interest rate risk to the company is the risk of changes in market interest rates reducing the

overall return on its interest bearing securities. The company limits interest rate risk by

monitoring changes in interest rates in the currencies in which its cash and investments

are denominated.

f) Market Risk

Market risk is the risk that the value of a financial instrument will fluctuate as a result of

changes in market prices, whether those changes are caused by factors specific to the

individual security, or its issuer, or factors affecting all securities traded in the market.

The Company limits market risk by maintaining a diversified portfolio and by continous

monitoring of developments in international and local equity and bond markets. In addition,

the Company actively monitors the key factors that affect stock and bond market

movements, including analysis of the operational and financial performance of investees.

g) Reinsurance risk

The company, in the normal course of business, enters into re-insurance arrangements with

other parties in order to minimise financial exposure arising from large claims.

The company evaluates the financial condition of its reinsurers and monitors concentrations

credit risk arising from similar geographic regions, activities or economic characteristics

of the reinsurers.

24 COMPARATIVE AMOUNTS

Certain of prior year amounts have been reclassified in order to conform with current year’s

presentation.