MARYAM MIRZAKHANI - Iranian re › wp-content › uploads › 2016 › 04 › ...Bank Sarmayeh: 9.77% Sepehr-e-Saderat Financial Group : 3.92% Teachers Investment Funds: 3.91% Saman

2016

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Iranian ladyThe first woman to win Fields MedalEver-Shining Star of Mathematics World

MARYAM MIRZAKHANI

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Annual Report 2016

Contents

Managing Director's Message

Company Profile

Board of Directors

Shareholders of Iranian Re

An overview of Iran’s Insurance Industry

Senior Management Team

Strategic Objectives

Company Events

Our Professional Services

Profit and Loss Statement

Balance Sheet

Key Financial Figures

Contact Information

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I am very pleased to present the annual performance report of Iranian Reinsurance Company (Iranian Re) for the fiscal year ended 21st of December 2016. During its seven years of operation, Iranian Re has proved itself as a dynamic and professional Reinsurance Company in the market. We have thoroughly expanded our business presence and gained a remarkable position in the local market by rendering quality reinsurance services to our clients.In October 2016, the General Assembly approved the board’s proposal to further increase the company’s paid-up capital, by 24.3 percent, from IRR 2,010 billion to IRR 2,500 billion. The capital increase was fully sourced within a few months and was registered in March 2017.After six consecutive years of high growth in “Assumed Reinsurance Premiums” we experienced a low growth. In the Year 2016, our gross written reinsurance premiums amounted to IRR 563.6 billion showing a low increase of 3 percent over preceding year. From this amount, IRR 31.4 billion was allocated to acquire reinsurance protection leaving amount of IRR 532.2 billion as net retained reinsurance premiums for the year.Iranian Re delivered sound financial results both in its underwriting and investment activities in 2016.

Managing Director's Message

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Annual Report 2016

Despite a low increase in the gross reinsurance premiums of the year, the gross underwriting result amounted to IRR 194,479 million showing an increase of 13.8 percent over the preceding year. Total investment income of the company was IRR 408,960 million showing 2.7 percent decrease over the preceding year. The net profit of the year amounted to IRR 503,481 million showing 2.2 percent decrease over the preceding year due to higher administrative expenses and lower investment income of the year which still shows satisfactory results, taking into account prevailing conditions of the insurance industry.The company’s earnings per Share for the year 2016 is IRR 250 compared to IRR 256 of the preceding year. Iranian Re’s Shares are traded at the first market of Iran Fara Bourse which is the second main market for securities and other financial instruments in Iran. Our industry is still facing challenges of detariffication and rate competition. We, at Iranian Reinsurance Company, will continue our constructive cooperation with all players in the insurance industry to strengthen our business relations and improve our insurance market environment. Our plan for 2017 is to further improve our underwrit-ing and investment activities and arrive at IRR 600,000

millions of Gross Reinsurance Premiums and IRR 426,000 millions of investment income. I take this opportunity to express my sincere gratitude to all Iranian insurers and reinsurers for the great confidence they have shown in us. We expect continued support from all our clients and firmly believe that our further mutually beneficial cooperation will be based on transparency, reliability and trust.Our accomplishments and successes are indebted to the constant and dedicated efforts of our management team and staff. I highly appreciate their remarkable contributions and wish them all the bests.

SincerelyMohammad Asoudeh

Iranian Re delivered sound financial results both in its underwriting and investment activities in 2016.

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Company Profile

Iranian Reinsurance Company (Iranian Re) was incorporated in Tehran, Iran on 13 March 2010 and commenced its operation on 16 March 2010, after obtaining its operation License from the Iranian Insurance Supervisory Authority, “Bimeh Markazi Iran”.Iranian Re is proud to be the first Public Joint Stock Reinsurance Company in Islamic Republic of Iran, totally financed by private sector.The Company is registered under the authorization of the Establishment Law of Non-Governmental Insurance Institutions as well as the Iranian Stock Exchange Regulations.The main objective of Iranian Re is set to meet the increasing demand of reinsurance protection by a fairly growing number of domestic Insurance companies, and also insurance and reinsurance companies of the region.The paid-up capital of Iranian Re is IRR 2,500 billion. The initial paid-up capital of the company was IRR 767.5

billion which has been increased in four stages, in the past six years, to the current amount. The last capital increase was registered in March 2017, when the company increased its capital from IRR 2,010 billion to IRR 2,500 billion. Iranian Re intends to assist local insurers in managing their risks more effectively, utilizing all the existing potentials and establishing a constructive and long term relationship with the International Reinsurance Markets.Iranian Re enjoys experienced and well-trained staff with high education background and a highly qualified management team, well-known in the Iranian Insurance Industry.We are eagerly looking forward to having good and fruitful business relationships based on mutual interest and trust with all our partners in the Local and International Markets.

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Annual Report 2016

Board of Directors

Dr. RASOUL SAADIChairman

HOJJAT POUSTINCHIExecutive Member

MOHAMMAD ASOUDEHVice Chairman & Managing Director

MOHAMMAD MIHANYARExecutive Member

Dr. MOJTABA KOBARINon-Executive Member

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Shareholders of Iranian Re

Iranian Re Shareholders Structure As at 21st December 2016

Shareholders Stake

Pasargad Financial Group including Bank Pasargad 19.60%

Bank Sarmayeh 9.77%

Sepehr-e-Saderat Financial Group 3.92%

Teachers Investment Funds 3.91%

Saman Majd Investment Co. 3.91%

Sam Group Co. 3.91%

Hamghadam Co. 3.91%

Sam Electronic Co. 3.91%

Saba Capital Development and Management Co. 3.63%

Pasargad Insurance Company 6.17%

Dana Insurance Company 2.93%

Moallem Insurance Company 2.93%

Alborz Insurance Company 1.99%

Parsian Insurance Company 1.09%

Mellat Insurance Company 0.55%

Novin Insurance Company 0.54%

Mihan Insurance Company 0.49%

Karafarin Insurance Company 0.25%

Arman Insurance Company 0.15%

Iran Moein Insurance Company 0.06%

Other companies 9.57%

Individuals (4,010 people) 16.81%

Total 100.00%

Iranian Re has more than 4,000 shareholders. Two well-known Iranian private banks, namely Bank Pasargad and Bank Sarmayeh, and 11 insurance companies are amongst the major shareholders. The following table shows structure and major shareholders of the company.

4000shareholders

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Annual Report 2016

Currently one state owned and 27 private direct insurance companies as well as two reinsurance companies are providing insurance and reinsurance services in the Iranian market. The Act for Establishment of Non-Governmental Insurance Institutions that was approved in 2001 paved the way for presence of private insurance companies in the industry.Iran's Insurance Industry is regulated and supervised by Bimeh Markazi Iran (Central Insurance of Iran) which is an independent institution established in the form of State Owned Company. Bimeh Markazi Iran is also empowered to carry out compulsory and non-compulsory reinsurance business. According to the Law, the gradual reduction of Compulsory Reinsurance is in process. Present-ly all direct insurance companies are obliged to cede 15 percent of their non-life business and 25 percent of their life business to Bimeh Markazi Iran.In the year 2015 the total direct insurance premiums written in the market amounted to USD 7.5 billion, of which 88 percent is produced in non–life and 12 percent in the life insurance.Insurance Penetration Ratio in Iran is about 2.04 which is far below the world average mainly because of low penetration of life insurance.The volume of non-compulsory reinsurance of the market in the year

37,800

628

1,043

Agents

Brokers

Branches

An overview of Iran’s Insurance Industry

2015 is reported to be IRR 9,008 billion which is mainly ceded to local market. This sector of the market will show a considerable growth when the plan to reduce and lift the compulsory reinsurance is fully executed.Insurance companies render their services through 1,043 branches and a network of agents and brokers. At the end of the year 2015, there were about 37,800 Insurance Agents and 628 Insurance Brokers active in the industry. The agents may only represent one insurance company while brokers can take their business to different insurance companies.

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Senior Management Team

Seyed Morteza Hashemi Director of Information Technology

Vali Javidi Director of Investment

Seyed Mohammad AsoodehManaging Director

Hojjat PoustinchiHead of Technical Steering Committee

Mohammad MihanyarDeputy Managing Director, Reinsurance

Naser Laghaee Director of Administration

Farangis Jahandar Director of Finance

Nooshin Khataei Senior Advisor to the Managing Director, Reinsurance

Back Row (Left to Right) Front Row (Left to Right)

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Annual Report 2016

Strategic ObjectivesOur Vision

To become a Capable and Professional Leading Reinsurance Company in the Local and Regional Markets and a Recognized Reinsurer in the International Markets.

Overall Objectives

To Create Value and make reasonable and steady Profit;A proper, reasonable and steady profit can be obtained by creating a homogeneous portfolio of Reinsurance Business together with effective investment of financial resources.

Social and National Responsibility; Besides pursuing the interests of Shareholders, Iranian Re has the responsibility to participate and perform an effective role in development of Insurance Industry as well as economic growth of the country.

Strategic Goals

The overall objectives can be met by pursuing and implementing the Strategic Goals of the Company as set below:

Effective participa-tion in increasing the Capacity as well as Retention of the Local Insurance Market

Being recognized as a well reputable Rein-surance Company in the emerging markets of the Region

Gaining a Proper Market Share in the Local Reinsurance Market

Building an effective and constructive busi-ness relationship with Regional and Interna-tional Insurance and Reinsurance Markets

Efficient and Optimum Investment of Finan-cial Resources

Farangis Jahandar Director of Finance

Nooshin Khataei Senior Advisor to the Managing Director, Reinsurance

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Company Events

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Annual Report 2016

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On 15 March 2017 the Annual General Assembly approves 2016 Financial Statements.

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On 23 October 2016 Extraordinary General Assembly approves capital increase from IRR 2,010 billion to IRR 2,500 billion.

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3Iranian Re was ranked first in Total Productivity Index among Iranian insurance companies in IMI-100 ranking conducted by Iranian Industrial Management Institute for the financial year 2015.

National Productivity Award

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Our Professional Services

Iranian Re has the skill, experience and technical know-how to support its clients in all aspects of reinsurance.We provide a wide range of services in designing, structuring and implementing risk transfer programs in all different insurance lines. Our main objective is “to Provide a Secure and High Quality Coverage as well as the best Cost Effective Solutions” for our clients, matching their particular needs.

Iranian Re offers a wide range of expertise and various reinsurance consulting services to help our clients adapt to the changing insurance market, improve the efficiency and effectiveness of their reinsurance operations and boost their businesses

in the short-term while positioning themselves for long-term success.Every facultative offer, regardless of the volume of risk, is a joyful task for Iranian Re’s team.Our technical team has the experience in analyzing statistics and structuring the Proportional and Non- Proportional Treaties, by focusing on our clients’ needs.Iranian Re is a proactive company, with the power to move quickly and easily to a different product mix in order to shape what our clients want or demand and to respond accordingly.

Iranian Re, together with the rest of Insurance Industry, strongly supports the efficient Risk Management.

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Annual Report 2016

Our main objective is “to provide a Secure and High Quality Coverage as well as the best Cost Effective Solutions” for our clients.

WHAT WE OFFER

TECHNICAL CONSULTANCYFACULTATIVETREATY

Excess of Loss

Quota Share

Surplus Marine(Cargo &

Hull)

Energy (Onshore & Offshore)

Engineering Aviation LiabilityFire & Allied Perils

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Gross Reinsurance PremiumsAmounts (Millions of IRR)

Class2014 2015 2016

Amount Amount Share Growth Amount Share Growth

Fire 103,348 226,048 41.0% 119% 217,050 38.5% -4 %

Marine Cargo 33,414 39,499 7.0% 18% 33,860 6.0% -14%

Marine Hull 34,741 32,170 6.0% -7 % 10,517 1.9% -67%

Aviation 21,373 16,394 3.0% -23% 1,488 0.3% -91%

Engineering 47,558 49,050 9.0% 3% 61,212 10.9% 25%

Oil & Energy 130,875 146,507 27.0% 12% 196,974 34.9% 34%

Others 28,306 39,762 7.0% 40% 42,498 7.5% 7%

Total 399,614 549,430 100.0% 37% 563,599 100.0% 3%

Paid Reinsurance LossesAmounts (Millions of IRR)

Class2014 2015 2016

Amount Share Amount Share Amount Share

Fire 19,755 31.8% 57,228 44.6% 51,376 37.6%

Marine Cargo 4,278 6.9% 9,466 7.4% 3,904 2.9%

Marine Hull 6,617 10.6% 2,397 1.9% 26,840 19.6%

Aviation 8,305 13.4% 7,592 5.9% 276 0.2%

Engineering 7,202 11.6% 11,213 8.7% 13,692 10.0%

Oil & Energy 3,546 5.7% 34,867 27.2% 23,378 17.1%

Others 12,459 20.0% 5,424 4.2% 17,226 12.6%

Total 62,162 100.0% 128,187 100.0% 136,692 100.0%

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Annual Report 2016

Gross Reinsurance Premium 2016

Paid Reinsurance Losses 2016

37.6%17.1%

10%

12.6%

2.9%

19.6%

38.5%

34.9%

0.3%

7.5%

6%

10.9% 1.9%

0.2%

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Iranian Reinsurance CompanyProfit and Loss Statement

for the years ended 21st December 2015 and 2016

( in Thousands of IRR.)

2015 2016

Assumed Reinsurance Premiums 549,430,028 563,599,418

Earned Premiums 495,347,988 541,720,750

Ceded Reinsurance Premium Expenses (24,446,400 ) (30,555,178 )

Net Reinsurance Premium Earned 470,901,588 511,165,572

Incurred Losses (203,785,479 ) (257,864,413 )

Reinsurers' Share of Incurred Losses 2,048,268 35,923,757

Net Incurred Losses (201,737,211 ) (221,940,656 )

Commission Expenses (137,590,779 ) (140,737,208 )

Commission Income 212,264 253,513

Net Other Underwriting Expenses (12,897,001 ) (13,697,235 )

Investments Income Derived from Technical Provisions 51,866,229 59,435,744

Gross Underwriting Results 170,755,091 194,479,730

Investments Income Derived from Shareholders' Funds 368,657,249 349,524,611

Administrative and General Expenses (35,971,443 ) (52,357,597 )

Other Income and Expenses 38,317,638 38,904,671

Pre-Tax Net Profit 541,758,534 530,551,416

Tax ( 26,989,500) ( 27,069,601)

Net Profit 514,769,034 503,481,814

Earnings Per Share (Iranian Rial) 256.00 250.38

Iranian Re's fiscal year ends on 21st December every year

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Annual Report 2016Iranian Reinsurance Com

panyBalance Sheet

Assets21 Dec. 2015

21 Dec. 2016Liabilities & Shareholders’ Equity

21 Dec. 201521 Dec. 2016

Cash & Cash Equivalents

13,523,424 20,990,433

Am

ounts Due to Reinsurers

924,741 21,829,557

Short- Term Investm

ents1,735,043,854

2,301,009,007 O

ther Payable Accounts16,460,110

5,213,086

Am

ounts Due from

Reinsurers149,680,340

222,347,471 D

ividend Payable4,674,870

386,915,792

Other Receivables

159,686,458 145,639,138

Provision for Income Tax

29,660,712 26,862,795

Reinsurers’ Share of Technical Provisions19,101,869

53,521,809 Provision for U

nearned Premium

s151,516,934

173,395,601

Provision for Outstanding Losses

289,144,077 410,316,179

Non-Current Receivables

6,935,356 6,731,810

Other Technical Provisions

47,418,014 63,375,516

Long-Term Investm

ents1,106,511,189

1,105,511,189 D

eferred Premium

Income

17,711,229 37,711,057

Tangible Assets

122,134,457 126,580,786

Employees’ Term

ination Benefits4,408,298

6,130,212

Intangible Assets

491,997 491,997

Total Liabilities561,918,985

1,131,749,795

Other A

ssets4,053,573

6,473,086

Shareholders’ Equity:

Capital: 100 percent Paid-U

p2,010,850,000

2,010,850,000

Capital Raising(in process)

-991,585

Legal Reserve

98,959,000 124,134,000

Capital Reserve

137,918,000 188,268,000

Foreign Currency Exchange Reserve

57,014,646 57,014,646

Accum

ulated Profit450,501,886

476,288,700

Total Shareholders’ Equity

2,755,243,532 2,857,546,931

Total Assets3,317,162,517

3,989,296,726 Total Liabilities & Shareholders’ Equity

3,317,162,517 3,989,296,726

( in Thousands of IRR)

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Net Investment Income(Million IRR)

Gross Reinsurance Premiums(Million IRR)

500,000

600,000

20162015

20142013

300,000

400,000

200,000

100,000

0

500,000

600,000

20162015

20142013

300,000

400,000

200,000

100,000

0

500,000

20162015

20142013

300,000

400,000

200,000

100,000

0

Net Profit After Tax(Million IRR)

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Annual Report 2016

3,000,000

20162015

20142013

2,000,000

1,000,000

0

3,000,000

4,000,000

20162015

20142013

2,000,000

1,000,000

0

Total Assets(Million IRR)

Shareholders’ Equity(Million IRR)

3,500,000

3,000,000

20162015

20142013

2,000,000

2,500,000

1,500,000

1,000,000

500,000

0

600,000

800,000

20162015

20142013

400,000

200,000

0

Total Investment(Million IRR)

Technical Provision(Million IRR)

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Iranian Reinsurance CompanyKey Financial Figures and Ratios

Amounts converted to US Dollars

2013 2014 2015 2016

Gross Reinsurance Premium Written 12,013,658 14,776,966 18,242,579 17,437,561

Gross Reinsurance Premium Earned 11,576,326 14,209,896 16,446,908 16,760,643

Net Reinsurance Premium Written 9,264,462 13,116,422 17,261,053 16,465,456

Net Reinsurance Premium Earned 8,668,893 12,432,548 15,635,221 15,815,278

Gross Losses Incurred 4,399,022 6,580,372 6,766,220 7,978,231

Net Losses Incurred 3,937,747 6,519,528 6,698,227 6,866,765

Pre-Tax Operating Income 19,134,107 15,196,809 17,987,864 16,415,068

Net Investment Income 18,484,942 12,015,180 13,962,531 12,653,086

Other Income -127,364 2,127,830 1,272,249 1,203,697

Total Revenue 27,026,471 26,575,557 30,870,001 29,672,062

Net Technical Expenses Incurred 3,011,889 4,245,609 6,183,907 6,390,226

Net Profit After Tax 18,986,058 14,413,249 17,091,739 15,577,544

Total Investments 86,058,622 88,169,545 94,347,400 105,396,498

Total Assets 100,154,711 102,195,947 110,138,887 123,427,391

Technical Provisions 912,667 12,657,730 16,205,558 20,020,646

Paid Capital 57,647,778 56,761,454 66,765,721 62,214,969

Shareholders' Equity 85,782,756 85,785,231 91,481,623 88,411,463

Return on Revenue (%) 70.80 57.18 58.27 55.32

Return on Equity (%) 18.53 15.98 20.95 18.45

Retrocession Utilisation (%) 22.88 11.24 5.38 5.57

Loss Ratio-Net of Reinsurance Ceded (%) 45.42 52.44 42.84 43.42

Loss Ratio-Gross (%) 38.00 46.31 41.14 47.60

Combined Ratio (%) 80.17 86.59 82.39 83.82

Amounts of Iranian Rials equal to 1 USD 22,500 27,043 30,118 32,321

No. 5 Zayandeh-Roud St.

North Shirazi Ave. Mollasadra Ave. Tehran – Iran.

Postal Code: 1991634491

Tel : (+98) (21) 8862 8611 - 16

Fax : (+98) (21) 8862 8617

www.iranianre.com

[email protected]

Contact Information