atlas re insurance project final
TRANSCRIPT
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PRESENTED TO:
SIR LIAQAT ALI KHAN
PRESENTED BY:
ASAAD BILAL AHMED MI09MBA001
ATIF SATTAR Mi09MBA005
RIZWAN JAVAID Mi09MBA007
MUDASSAR BASHIR Mi09MBA018
HAMAYUN G. DASTIGEER Mi09MBA021
SHAHID HASSAN Mi09MBA028
YASIR QAYYUM Mi09MBA039
SAMMAR ABBAS Mi09MBA046
ADNAN AKHTAR Mi09MBA051
SABIR HUSSAIN Mi09MBA076
ORGANIZATION SELECTED:
INTERNATIONAL GENERAL INSURANCE COMPANY
TOPIC:
REINSURANCE ARRANGEMENTS AT IGI INSURANCE COMPANY
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TABLE OF CONTENT
Acknowledgement
Executive summary 04
Introduction 07
Purpose of reinsurance 08
History of reinsurance 09
Research question 12
Types used in atlas 13
Preferable reinsurance at atlas 18
Financial results 21
Method of claim recoveries 22
Objective of study 25
Methodological notes 26
Study of organization 27
Reinsurance arrangements 29
SECP circular 31 Atlas cover 33
Scope of cover 34
Benefits of cover 37Bibliography 39
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Conclusion 40
ACKNOWLEDGEMENT
I deem it as a great opportunity to offer my heartiest gratitude to my
venerable teacher Mr.Liaquat Ali Khan, Lecturer, Hailey college of
Banking and Finance, University of Punjab for his great efforts to make us
under stand and to conduct this kind of activities of giving the great
opportunity for learning beyond your existing area of scope.
It would obviously be injustice not to mention the name of the people
involved to make this assignment possible and helped their utmost to make
me understand the overall operation of the company as of their best
knowledge.
I am thankful to all Operational Managers (Atlas insurance co Ltd.)
Lahore Region,
for their nice co-operation and proper guidance throughoutmy internship. I will be missing my duties, if I do not express my heartiest
and sincerest sense of gratitude to all of them for providing me grand
exposure to gain multifarious experience, May Allah The Almighty bless my
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parents and well-wishers who are the permanent source of prayers for me
and my successes in this world and after this world.
EXECUTIVE SUMMARY
HISTORY AND DEVELOPMENT OF REINSURANCE
The earliest reinsurances first appeared in transport, especially marine
insurance, at a comparatively late date (14th or 15th centuries). Marine
insurance in antiquity was conducted chiefly by individuals, more or less in
a speculative manner, without a statistical foundation and without
retrospective data on loss experience
Purposes of Reinsurance
Reinsurance achieves to the utmost extent the technical ideal of every
branch of insurance, which is actually to effect
(1) The Atomization
(2) The Distribution
(3) The Homogeneity of Ris
What are their reinsurance arrangements?In the answer of this question we were told that
YES they do get reinsurance for there products that are majorly
o FIRE INSURANCE
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o MARINE INSURANCEo MOTOR INSURANCEo ENGINEERING INSURANCE
Types of reinsurance used at Atlas Insurance?
The types of reinsurance used at Atlas insurance company are
o Facultative reinsuranceo Surplus treaty reinsuranceExcess of loss reinsurance
Preferable Reinsurers of the Atlas Insurance?
The reinsurers that are preferred by the Atlas are followings;
FINANCIALS
2010 2009
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(Rupees in thousand) (Rupees in thousand)
Gross premium 1,024,858 910,738Profit for the year
before tax
327,130 237,194
Taxation:Current 87,590 53,284Deferred (3,110) (5,146)Prior year
deferred(8) -
84,472 48,138
Profit for the year
after tax
242,658 189,056
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HISTORY AND DEVELOPMENT OF
REINSURANCE
Introduction
During the past few years there has been a quickening of interest
internationally in the major aspects of reinsurance history, theory and
practice. The peculiar development of the national and international
economy of the European countries since the World War has apparently
made reinsurance the backbone of the whole of private property insurance.This accounts far the greatly extended literature on the subject in recent
years. Classic doctrines of risk, theorems in the calculus of probabilities,
principles of insurance law, long neglected, are being brought forward by
writers on reinsurance. There is vitality and depth in recent reinsurance
literature which has been lacking in the literature of the direct lines for
many a decade.
Fundamentals
In the most widely accepted sense, reinsurance is understood to be that
practice where an original insurer, for a definite premium, contracts with
another insurer (or insurers) to carry a part or the whole of a risk assumed
by the original insurer. By insurers we mean all persons, partnerships,
corporations, associations, and societies, associations operating as Lloyd's,
inter-insurers or individual underwriters authorized by law to make
contracts of insurance. We may define insurance as an agreement by whichone party, for a consideration, promises to pay money or its equivalent, or
to do an act valuable to the insured, upon the happening of a certain event
or upon the destruction, loss or injury of something in which the other
party has an interest. The insurance business is the business of making and
administering contracts of insurance.
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Risks Carried bythe Insurer
The need for reinsurance arises out of the fact that a first or primitive
insurer bears two distinctly different major risks
(1)
The risk that the events insured against will happen among a number of
homogeneous risks
(2)
The risk that certain events insured against will happen among a
heterogeneous group of risks to one or several insureds entitled by contract
to an exceptional payment in money or its equivalent,
or entitled toexceptional, costly service.
Purposes of Reinsurance
Reinsurance achieves to the utmost extent the technical ideal of every
branch of insurance, which is actually to effect
(1) The Atomization
(2) The Distribution
(3) The Homogeneity of Risk
Reinsurance is becoming more and more the essential element of each of
the related insurance branches. It spreads risks so widely and effectively
that even the largest risk can be accommodated without unduly burdening
any individual.
One of the major purposes of reinsurance is to permit the original insurer
at least to break even on his transactions.
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Historyof Reinsurance
The earliest reinsurances first appeared in transport, especially marine
insurance, at a comparatively late date (14th or 15th centuries). Marine
insurance in antiquity was conducted chiefly by individuals,
more or less ina speculative manner, without a statistical foundation and without
retrospective data on loss experience. Single ships and their cargoes in
ancient times often had a value disproportionately large to other private
holdings, and the whole of the private fortune of an insurer often hung on
the outcome of a single voyage or marine adventure. The perils of the sea
were greater also, considering the rudimentary state of the shipbuilder's
art.
It can readily be understood why marine underwriters wanted someone toshare their risks. After having effected insurances, whether on the ship, on
the cargo or on both, or on the lives of the captain and crew, an underwriter
often would become worried and try to sell parts of his contract to others
and necessarily at a higher rate. At first risks on parts of voyages were
assigned to others, usually the more dangerous parts.
First Recorded Reinsurance Contract
The first reinsurance contract on record relates to the year 1370 , when an
underwriter named Guilano Grillo contracted with Goffredo Benaira and
Martino Saceo to reinsure a ship on part of the voyage from Genoa to the
harbor of Bruges. Grillo offered to retain the risk on the voyage through the
lk~editerranean and to transfer to Benaira and Sacco the risk from Cadiz
through the Bay of Biscay and along the French coast. Other arrangements
of this kind were, no doubt, made in single instances for many years, but
reinsurance contracts in the modem sense of the word were unknown.
As early as the twelfth century, marine insurance began to be transacted
through the so-called "Chambers or Exchanges of Insurance," which had for
their object, first, the promotion of the marine insurance business on a
solid basis and, second, the settling of disputes arising among merchants
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and others concerned in bottomry and respondent contracts. In later years,
these Chambers or Exchanges of Insurance became corporate bodies and
instead of remaining confined to the original function of regulating and
registering insurance made by others, actually undertook an insurance
business themselves. With the establishment and functioning of Lloyd's in1710, there was a marked decline in the transaction of insurance business
through these Chambers or Exchanges.
There is a suggestion of reinsurance practice in the "Antwerp Customs" of
1609. Some mention of reinsurance practice is to be found also in the
"Guidon de la Mer," a code of sea laws in use in France from a very early
date. These marine regulations were consolidated and published at
Bordeaux in 1647, and at Rouen in 1671. The author of the consolidations
was said to have been Cleirac.
With the shift of centers of commerce from the south, south west and west
of Europe to the north, England's foreign trade grew. Marine insurance
followed in its wake. Some underwriters found they could effect
reinsurance with others. Underwriterswere accustomed to assign parts of
risks to others at lower rates, and these reinsurers had hopes of finding
other persons who would take parts of these risks at still lower rates. This
traffic in premium differences was so greatly abused that in 1746 it was
forbidden. (19 Geo. II, c 37, Section 4). Under this statute, reinsurance was
permitted only if the party whose risk was reinsured was insolvent ,
bankrupt or in debt and if the transaction was expressed in the policy to be
a reinsurance. The statute was more or less of a dead letter and was
repealed by 27 and 28 Vict. c 56, Section I on July 25, 1864.
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PROJECT
REINSURENCE
ARRANGEMENTSOF
ATLAS GENERAL
INSURANCE
COMPANY
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Research Questions
The questions that were asked by me and other group members regarding
the reinsurance arrangements of ATLAS GENERAL INSURANCE
COMPANY were as follows;
oWhat are there reinsurance arrangements?
o The type of reinsurance theyuse at ATLAS?
o Preferable reinsurers of ATLAS?
o The comparison of reinsurance ceded and claimrecoveries?
oWhether the companyitself is accepting reinsurancebusiness or not?
oAre the present arrangements adequate or not?
Now below we will discuss all the answers that we get from the sources.
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What are their reinsurance arrangements?
In the answer of this question we were told that
YES they do get reinsurance for there products that are majorly
o FIRE INSURANCEo MARINE INSURANCEo MOTOR INSURANCEo ENGINEERING INSURANCE
But the reinsurance business they place is with international reinsurance
companies not the reinsurance companies in Pakistan. That will beexplained further in next sections of project.
Types of reinsurance used at Atlas Insurance?
The types of reinsurance used at Atlas insurance company are
o Facultative reinsuranceo Surplus treaty reinsuranceo Excess of loss reinsurance
Facultative Reinsurance
It is a type of reinsurance in which
each risk is covered or reinsured
individuallytaking its individual
particulars in mind
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Now we will see that how it is used in Atlas General Insurance Company
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Use at Atlas Insurance
Facultative Reinsurance is used by the company where it is not being
covered by the Treaty reinsurance arrangements of the company.
The risk exceeding the treaty reinsurance is placed under facultative typeoff reinsurance.
It is mostly in fact entirely placed outside the country, The reason behind
this fact is that our Pakistani reinsurance companies are not authorized for
Facultative reinsurance arrangements. So the payments of premiums to
Reinsurance companies are made by the way the way of Remittances in
foreign bank accounts.
Surplus treatyReinsurance
It is a type of reinsurance
in which reinsured could
cede onlythose risks over
a certain size .i.e. that are
surplus to its retention
it is a type it is on reinsureds will that which of the risk is to be placed with
reinsurers and which risk is to be retained with himself means no
reinsurance.
Now we will see how it works at Atlas Insurance.
Use at Atlas Insurance
Surplus treaty reinsurance is used at Atlas mostly for the Property
Insurance. That the risk they think is of higher values or sustains high
degree of risk is placed with reinsurance companies abroad.
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Right now there are a number of Surplus Treaties, which Atlas insurance
has placed with international reinsurance companies and are preceding.
A definite percentage of each risk placed is accepted by Atlas itself and the
rest is demanded or claimed by Reinsurers working abroad. Payment of
premiums is made by the way of foreign currency remittances in foreign
banks.
Excess of Loss
The balance of anyloss which
exceeds that agreed limit will bemet byreinsurers, usually up
to a contractual maximum that
is termed as layer and the
amount retained as deductible
It is basically a Non-Proportional type of Treaty reinsurance. where certain
limit is retained by reinsured itself and over and above amount is to be born
by reinsurers in the form of layers.
If there are more than one layers then all of these layers may be accepted by
the same reinsurers or may be by different reinsurers
Use at Atlas Insurance
It is used at Atlas Insurance for placing the risk or reinsurance relating the
Motor risks. It is also placed outside the country not in Pakistan.
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Preferable Reinsurers of the Atlas Insurance?
The reinsurers that are preferred by the Atlas are followings;
Now we will discuss all of these one by one;
Swiss Reinsurance Company
They are a leading and highly diversified re/insurance company. Theirinnovative products and services are tailored to meet the preciserequirements of Property & Casualty and Life & Health clients. As a pioneerin insurance-based capital market solutions, They combine financialstrength and unparalleled expertise to create tangible client benefits.
Ratings As a reinsurer Swiss re is the one of the leading reinsurers of theworld. Due to their quality services its rating as reinsurer isA.
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Atlass Reason for Preference
When we went in to the fact that why is Swiss re beingpreferred by the Atlas Insurance, The reason we came to know was it is oneof the top 5 worlds best reinsurers.Their customer relationship, claim history, financial strength, and manyother facts are perfectly matching with the Atlas Insurance.Thats why it is one of the major choices of Atlas Insurance.
Hannover Ruckversicherung AG
Hannover Re,
with a gross premium of around EUR 11 billion,
is the third-largest reinsurer in the world.
It transacts all lines of non-life and life and health reinsurance and has a
network of subsidiaries, branches and representative offices on all five
continents with a total staff of roughly 2,200.
Ratings
The rating agencies most relevant to the insurance industry have awarded
Hannover Re very strong insurer financial strength ratings (Standard &Poor's AA- "VeryStrong" and A.M. Best A "Excellent").
Atlass Reason for preference
Atlas Insurance prefer the Hannover Re for the following reasons
o Strong market positioning - one of the leading reinsures worldwideo Top rating (S&P: AA-; A.M. Best: A) ensures attractive new businesso Approved strategy: volume is vanity, profit is sanityo Strong risk management both qualitative and quantitative
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Tokio Marine & Fire Insurance Company
It is one of the well known reinsurers of the world
and specially Japan. Its basic specialization is in Fire and Marine
reinsurance. So Atlas prefer it in any such kind of Reinsurance required.
Ratings
It is renowned reinsurer so is granted higher ratings by rating agencies
relating to insurance industry. The ratings granted to it isA.
Atlass Reason ofPreference
Now the point comes that why it is preferred by Atlas so the answer for thisquestion is that Atlas itself is basically an Japanese Group of companies.
Thats why it has preferred to work with Japanese reinsurer. Other facts are
there too. That is its financial stability, Better strategy, Ratings worldwide,
and many others.
Thats why it is one of the major choices of Atlas Insurance.
Sompo Japan Insurance Incorporation
It is one of the leading reinsurers of the world. Having an extended
network of branches. That means they have extended business and
products. Now Sompo Japan and Nipponkoa Insurance have established
the Joint Holding Company, NKSJ Holdings, Inc.
Ratings
Its Ratings according to rating agencies of Insurance industry isA.
Atlass Reason ofPreference
The point is one because of their Japanese Incorporation, their
status in market, ratings.
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The comparison of Reinsurance ceded & Claim
Recovery?
AS per the answer of this question we were told that from the reinsurers as
are described above Claims recovery has not been a matter of dispute ever.
The reason is their good relationship and the market status of
both of these organizations Comparison of reinsurance ceded
& claim recovery
Financial results
Followingis the overall performance of the company for the year endedDecember 31,2010:
2010
(Rupees in thousand)
2009
(Rupees in thousand)
Gross premium 1,024,858 910,738Profit for the yearbefore tax
327,130 237,194
Taxation:Current 87,590 53,284Deferred (3,110) (5,146)Prior year
deferred(8) -
84,472 48,138
Profit for the yearafter tax
242,658 189,056
Un-appropriatedprofit broughtforward
560 1,284
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Profit available
for appropriation
243,218 190,340
*Appropriations:Transferred togeneral reserve
(21,000) (22,000)
Proposed bonusshare @20% (2009 :@ 10%)
(73,823) (33,556)
Proposed cashdividend @ 40%(2009 : @ 40%)
(147,646) (134,224)
(242,469) (189,780)
Unappropriated
balance carried
forward
749 560
NOTE:After analyzing previousyears accounts anddoingcomparisonofit with
current year .It has been extracted that revenue income isincreasing and
there isdecline inclaim ratio, where ascommission and expensesshowing
increasing trend .Over allunderwriting result issignificant.
Method of Claim Recoveries
On studying the organizations working wecame to know that the premiums are paid by the way of foreign
remittances, into the foreign currency accounts of the reinsurers.
Now the method by which the Claim is received, the claim is settled after a
decided period of time, By the way of settlement of accounts. That means
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the accounts maintained are exchanged after a fix period of time showing
debit or credit balance. Which means either the payment is to be made or it
is to be received.
The major point of discussion was the comparison of business ceded and
the claim recoveries for each class of business. That is explained as under
For Motor insurance where the frequency of accident is higher the business
ceded is almost equitable to the claim recoveries.
For Marine insurance that is mostly ceded with Tokio Marine & Fire
Insurance Company, its frequency is quite low. Business ceded is of higher
value but claims are not frequent. But it is taken to prevent the company,
because although it is of low frequency the loss is sever.
For Fire Insurance the claims are frequent as it is of high frequency, So
accordingly is business ceded. For this Class of business only huge risks are
presented before reinsurer.
For Engineering Insurance claims are not frequent but are sever. So
business are ceded but recoveries frequency is low.
Is Atlas itself accepting Reinsurance or not?
As the question arise that either company itself issue reinsurance or not,
The answer of this question that we get was Atlas Insurance is itself a
Captive Insurance Company of Atlas Group of companies.
So, basically it is formed to cover the risks of its parent group of companies.
As far as the question of reinsurance arise so its answer is
YES they accept Reinsurance business but not at higher level so they may
be known as Reinsurers .
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Are present arrangements adequate?
As the Atlas has maintained its reinsurance arrangements with lead
reinsurers of the world so it maintaining a very strong reinsurance
arrangements that is according to the needs of the time that have graded
Atlas as a leading insurer of Pakistan.
As far as improvements are concerned, always there is a room for
improvements. But still Atlas is a Competing Insurer of Pakistan.
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OBJECTIVES OF STUDY
All the study that we have made was made to know about following facts;
o The Requirements for Reinsurance
o Reinsurance arrangements mostlyused
oReinsurance arrangements of Atlas
o Reinsurers Preferred
o Reasons for Preference
o Pakistani Reinsurance Industry
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Methodological Notes
Following given are the methods and sources by which we get our data
regarding this project;
Source of Data
The sources by which we collected Data
o Personal Visitso Official website ofATLAS INSURANCE
COMPANY
Limitation of Data
Reinsurance is a topic that is spread widely, it was not possible for us to
cover the topic completely. We have limited our data up to following points
Types of Reinsurance being used at Atlas
Their Preferred Reinsurers
Claim recovery related each class of business at Atlas Insurance
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ORGANIZATION OF STUDY
The Atlas Insurance Limited (Formerly Muslim Insurance Co.Ltd) was founded in 1934 by Dr. Sir Mohammad Iqbal and is the
oldest insurance company in Pakistan. Atlas Insurance made steady
progress and became one of the leading company in the field of life
insurance in the country. Unfortunately, it came under Government
appointed management from 1961 to 1979. In the mean time, the life
business was nationalized in 1972 and the company lost major
segment of its business. Later in the year 2006, the name of the
company has been changed from Muslim Insurance Company Ltd. to
Atlas Insurance Limited.
Atlas Insurance Limited (AIL) is providing efficient service to its
Clients and also paying good dividends to its shareholders regularly.
The equity of the company has grown from Rs. 1.6m in 1979 to Rs.
970.5 million in 2007. Investments at cost have grown from 3.4m to
over Rs. 920m. In 1996 the company paid one of the largest single
claim in the country of over Rs. 380.0m which speaks of the inherent
strength of the company and the satisfactory re-insurancearrangements.
The company enjoys full support and backing of the Atlas
Group and has re-insurance arrangements with world
renowned re-insurers like Swiss-Re, Hannover-Re, Tokio
Marine & Nichido Fire Insurance, Sompo Japan Inc.
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AIL was also assigned a Financial Performance Rating of 7 on a
scale of 1-9 bythe world renowned Credit Rating Agency, A.M.
Best Companyof New Jersey,USA.
To provide prompt and efficient service to clients AIL hasdeveloped a branch network all over the country. It has also
developed team of professionals always striving to excel in
service.
In line with the Atlas Group philosophyand commitment, Atlas
Insurance is being managed in accordance with good
international practices and entrepreneurial norms and customs
as followed bythe reputable international insurers.
Atlas Insurance is a financiallysound and a professionally
managed companyand has been awarded the "KSE Top 25
Companies Award 2005", the onlyinsurance companyselected for
this prestigious award.
The companywas also adjusted as one of the "Top 5 companies"
in the financial sector bya joint committee of the Institute of
Chartered Accountants ofPakistan (ICAP) and the Institute of
Cost & Management Accountants ofPakistan (ICMAP) and was
awarded the "Best Corporate Report Awards for the year 2003, 2006 &
2007.
The Pakistan Credit Rating Agency(PACRA) an affiliate of Fitch
Ratings Ltd, London, has upgraded Atlas Insurance Financial
Strength (IFS) rating "A+".The rating denotes strong capacitytomeet policyholder and contract obligations, while the risk
factors are moderate, and the impact of adverse and economic
factors is expected to be small.
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SUMMARY OF REINSURANCE ARRANGEMENTS FOR THE
YEAR
XYZ COMPANY
Rupeesin Million
Cover Type of Treaty (Per Risk Basis
)
Retention andNo. of Lines
(Surplus )
Reinsurer Rating
Name Share
Fire
Fire Fire 1stsurplus
Treaty
RetentionNo. of Lines
Treaty
Capacity(Inc.Ret)
Rs.20.0020.00
Rs.420.00
Swiss-ReHannover -Re
B.E.S.T-Re
PRCLBroker
Malaysian Re
Labunan -Re
45.0030.00
7.50
7.50
5.00
5.00
AA
A-
AA
A-
A-
Fire
2ndsurplus
Treaty
Retention
No. of Lines
Treaty
Capacity
Rs.250.00
PRCL
Broker
B.E.S.T-Re
Malaysian Re
Labunan -ReAfrica -Re
35.00
25.00
17.00
12.5010.00
AA
A-
A-
A-A-
Fire 3rd
surplus
Treaty
RetentionNo. of Lines
Treaty
Capacity
Rs.600.00
BrokerB.E.S.T-Re
PRCL
95.00
5.00
A-
AA
Total Capacity Non Group Companies Rs. 1,270.00
Marine
1stsurplus
Treaty
RetentionNo. of Lines
TreatyCapacity(Inc.Ret)
Rs.10.00
30.00Rs.310.00
Swiss-ReHannover -Re
B.E.S.T-ReMalaysian RePRCL
45.0030.00
12.505.007.50
AA
A-A-AA
2ndsurplus
Treaty
RetentionNo. of Lines
Treaty Rs.150.00
BrokerB.E.S.T-Re
PRCL
95.005.00 A-
AA
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Capacity
Total Capacity Marine Rs. 460.00
TerrorismQuotaShare
Treaty
RetentionTreaty
Capacity(Inc.
Ret)
(90/10)
Rs.10.00Rs.100.00
Retention
Hannover -Re
PRCL
10.00
75.0015.00
N.A
AAA
Total Capacity Terrorism Rs. 100.00
Engineering 1stsurplus
Treaty
Retention
No. of LinesTreaty
Capacity(Inc.Ret)
Rs.6.00
100.00
Rs.606.00
PRCL
Broker
B.E.S.T-ReMalaysian
ReLabunan -
Re
Africa Re
Kuwait
ReArab- Re
33.00
15.0015.00
11.005.0010.00
10
AA
A-A-
A-A-BBB
BB
2ndsurplus
Treaty
RetentionNo. of Lines
Treaty
Capacity
Rs.600.00
Al WastInsurance
Broker
B.E.S.T-Re
PRCL
95.00
5.00
A-
AA
Total Capacity Engineering Rs. 1,206.00
Misc.
GeneralAccident
Treaty
RetentionNo. of Lines
Treaty
Capacity(Inc.Ret)
Rs.5.0030.00
Rs.155.00
Hannover ReB.E.S.T-Re
PRCL
62.0032.50
5.00
AA-
AA
All Lines
SurplusTreaty
Retention
No. of LinesTreaty
Capacity
Rs.200.00
Broker
B.E.S.T-RePRCL
95.005.00
A-AA
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Total Capacity General Accident Treaty Rs.
355.00
Travel
Quota
Share
Treaty
Ratio (80/20) Retention
Broker
Various LloydsSyndicates
20.00
80.00
N-A
A
Motor
Excessof
LossTreaty
1st Layer : 1.00 M Xs
0.75 M2nd Layer : 8.250 M
Xs 1.750 M
Hannover Re
PRCLB.E.S.T-Re
Malaysian Re
70.00
5.0015.00
10.00
A
N.AA-
A-
Wherther Companyitself accepting reinsurance ,claim handling process ,
reinsurance premium reserves andline slip
SECURITIES AND EXCHANGE COMMISSION OF
PAKISTAN
Circular No. 17 of 2006SECP/ID/06/2006 December 4, 2006
Subject: REINSURANCE TREATY ARRANGEMENTS
FOR THE YEAR 2007This is advised to all the insurers that for the Reinsurance Treaty Arrangements forthe year 2007, at least 50% of total reinsurance treaty arrangement must be placed
only with
reinsurers having at least A rating by Standard & Poors or equivalent rating by
other
reputable international rating agencies. Remaining part of the treaty arrangement
may be
placed with reinsurers having at least BBB rating by Standard & Poors or
equivalent
rating by other reputable international rating agencies. No part of reinsurancetreaty
arrangement can be placed with reinsurers with below BBB rating by Standard
& Poors or
equivalent rating by other reputable international rating agencies.
The requirement of rating given above shall, however, not apply to Pakistan
Reinsurance Company Limited being a state-owned reinsurance company.
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It may please be noted that the Commission shall not entertain the requests to issue
any reinsurance capacity certificate.
All the insurers are advised to submit the documentary evidence in respect of their
reinsurance treaty arrangements made for the year 2007 to the Commission latest
by January
31, 2007 pursuant to section 41 of the Insurance Ordinance, 2000 read with Rule
15 of the
Securities and Exchange Commission of Pakistans (Insurance) Rules, 2002.
The documentary evidence in order to comply with the above said provisions shall
include certified copies of the reinsurance treaties, letter from reinsurers
confirming
continuance of agreement for year 2007,statement under Rule 15, evidence of the
rating
declared by reputable international rating agencies and a certificate on soundness
andadequacy of the reinsurance arrangement from a senior level officer or committee
which is
responsible for conducting the management and business of the insurer.
The Commission may call for any further evidence or investigate into the affairs of
the insurers to ensure full compliance of the aforesaid provisions of the law in
letter and spirit
and in case of any contravention thereof may initiate necessary action against the
insurer
under the Insurance Ordinance, 2000 and Rules made thereunder.
(Shoaib Soofi)
Director
Distribution:
Chief Executives (All Insurance Organizations)
Chairman (Insurance Association of Pakistan)
President (Institute of Chartered Accountants of Pakistan)
President (Institute of Cost and Management Accountants of Pakistan)
President (Pakistan Society of Actuaries)
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ATLAS COVER
y A.T.L.A.S. is able to provide:y a tailor made package of insurance protectiony combined with specialist support servicesy and expert claims managementy backed by Lloyds security-y Brit Insurance Lloyds Syndicate 2987y for the following operators:y Freight Forwarders / Air Freighty Forwardersy NVOCsy Multimodal Transport Operatorsy Road Transport Operatorsy Ship Agentsy Chartering and/or Ship Brokersy Ship and/or Crew Managersy Marine & Non-Marine Terminal Operatorsy Port Authoritiesy Stevedoresy Warehouse Keepers
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y Container Freight Stations/ Depot Operatorsy Container Storage Facilitiesy Container Operatorsy Vessel Operators (Physical damage toy containers)
SCOPE OF COVER
Cargo Insurance
y Cover for loss or damage to cargo including airy freight and incidental storage worldwide.
.
Physical Damage to Equipment
Insurance protection for owned and/or leased
equipment.
y All Risk or Total Loss only.y The Insured Equipments Contributions toy General Average and/or Salvage.y Equipment includes cargo handling and carrying
equipment.
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Third partyLiability
y Legal liability against claims from third partiesfor damage to property or injury, death and/or
disease.
y Consequential losses arising from the above.Liability for Cargo
y Legal liability for damage to or loss of cargoarising out of any unforeseen circumstance.
y Consequential losses arising out of damage tocargo.
Professional Liability
y Legal liability for financial loss arising fromnegligent acts, errors or omissions.
Liability towards Authorities
y Fines penalties and duties imposed, arising frombut not limited to breach of import/export
regulations and short or over delivery of cargo.
Costs and expenses
y Costs and expenses, including legal fees andsurvey fees.
y The costs of disposal of damaged cargo and/orequipment.
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y General Average Guarantees or Salvage BondsInsuranceprotection for owned and/or leased
equipment.
y All Risk or Total Loss only.y The Insured Equipments Contributions to
General Average and/or Salvage.
y Equipment includes cargo handling and carryingequipment.
Third party Liability
y Legal liability against claims from third partiesfor damage to property or injury, death and/or
disease.
y Consequential losses arising from the above.Liability for Cargo
y Legal liability for damage to or loss of cargoarising out of any unforeseen circumstance.
y Consequential losses arising out of damage tocargo.
Professional Liability
y Legal liability for financial loss arising fromnegligent acts, errors or omissions.
Liability towards Authorities
y Fines penalties and duties imposed, arising from
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but not limited to breach of import/export
regulations and short or over delivery of cargo.
Costs and expenses
y Costs and expenses, including legal fees andsurvey fees.
y The costs of disposal of damaged cargo and/orequipment.
y General Average Guarantees or Salvage Bonds
BENIFTS OF COVER
Claims Management
A.T.L.A.S. is able to provide:
y An experienced and professional multilingual proactive claimsservice managed
from Antwerp Belgium with key support
offices in Spain, Singapore, Dubai, USA,
Brazil
y Centralisation of Claims Managementy 24 hour immediate response availabilityy Comprehensive global network of specialisty Claims Correspondents, Surveyors &
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Lawyers.
Additional Support Services.
y Review and guidance on appropriate transportdocumentation, Standard Trading Conditions
B/Ls and related contracts
y On-Site risk assessment of Terminal andWarehouse operations
y Employee training workshops and corporatey seminarsy Specialist project or project cargo consultancyy Risk Management practical guidance on
ways to reduce your risk exposures
Claims are like water rolling down the hill side,
they follow the path ofleast resistance. Any operator in the
Logistics Industry is an integral part of the transport chain and is thus
exposed not only to mistakes or accidents
caused by their own operations, but also to those arising in other parts of
the transport chain.
In this growing litigious age, legal liability insurance should be
considered by any professional logistics operator
as an essential element in their business plan.
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CONCLUSION
The nut shell of this project is that atlas co Ltd obtaining reinsurance
mostly from foreign reinsurer which is costly.It should consider local
reinsurance companies for reinsurer arrangements .
Atlas insurance has good rating in market ,as it is one of the stable in
insurance companies.
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BIBILOGRAPHY
www.atlasinsurance.com.pk
www.seop.pk.com
www.fks.com
www.atlas-insurancecover.com