Financial Highlights

MELLAT INSURANCE CO. ANNUAL GENERAL ASSEMBLY MEETING

The Annual General Assembly Meeting of Mellat Insurance Co. was held on Monday July 17, 2006 In the presence of the majority of share­holders of the company.

Headed by Mr.Abdolhossein Sabet, Messrs Dr.Panahian and Qarizadeh were appointed as legal observers and Mr. Salahinejad was introduced as the Secretary of the meeting.

Other members Of the Board of Directors was comprised of Dr. Hadjarian the Managing Director of Mellat Insurance Company, Mr. Masnavi Deputy of managing director, and Mr. Hosseini as represented by Bimeh Markazi.

After hearing reports of the Board and legal inspector of the company presented by the man­aging director, the following deci­sions were approved by company's shareholders.

1- Approval of financial statement of the company closing on March 21, 2006

2- Allocation of worth IRLs.75 prof­it for each share of the' company

3- Selection of Fater Auditing Institute as the legal inspector of the company

4- Introduction of Persian "Ettela'at" Daily and Sarmayeh Daily as widely circulated paper for publishing upcoming newsletters and bulletins of the com­pany.

As the largest private insurance company in the country, Mellat Insurance Co. was established with the initial capital of approximately $ 130 Million USD. The company is regarded as the first holder of rein­surance certificate in country's private sector insurance industry as well.

Mellat Insurance enjoys vast and active sales agencies across the country. By taking advantage of the world most modern insurance technology, bene­fiting from expert and experienced manpower, the company has taken giant strides towards offering quality services in insurance industry of the country.

Highlights of Activities of Mellat Insurance Co.

1- Issuance of Insurance Policy By the expansion of activities of Mellat Investment Co. in 2005, the number of  issued insur­ance policies has been remarkably increased.

The senior official of the company put the number of issued insurance policies in 2005 at 45,006, showing 1.700% increase as com­pared with its preceding year, 2004 corroborating to issuance of 2,484 insurance Policies.

Witnessing such high increase was due to the issuance of various types of auto insurance policies which accounted for 94% of total number of insurance policies issued by the company.

It should be mentioned that the company also gained remarkable growth in its other insurance policies.

In the fiscal year closing on March 21, 2006, the company enjoyed remarkable increase in issuance of fire, transport, engineering and liabili­ty and medical insurance as well as accident insurance policies as much as 227%, 82%, 832%, 236% and 659% respectively. As the first private insurance entity, Mellat Insurance Co. managed to issue reinsurance policies as of the second six-month of the year 2005. In the said period,' the company managed to issue 35 reinsur­ance policies for both state-run and private companies inside the count­ry.

It is projected that issuance of reinsurance policies will not only bring about profit but also will expand scope of activities of the company in future.

By the growth in the number of issued insurance policies and expansion of scope of activities, premium amount of insurance has enjoyed remarkable growth in the year 2005. The insurance premium hit 223,520 million IRLs in 2005 from 89.986 million IRLs in 2004, showing 148 percent growth.

The fire insurance premium, by 130% growth, hit 65,781 million IRLs in a way that transport premium by 76% growth, amounted to 17,054 million IRLs.

The Marine and Aviation insurance premium accounted for 37,073 million IRLs in a way that Auto insurance policies in the first year of company's activity in auto body and third- party bodily insurance hit 27,300 million IRLs and 41,046 million IRLs respectively.

The rest of company's insurance premium earmarked for reinsurance, engineering and liability fields.

 Hereunder is market share of each company's insurance policies in the year 2005.

* Fire Insurance 29%

* Cargo Insurance 7.6%

* Marine and Aviation 16%

     * Auto Insurance 34.1%

2- Paid Indemnity and Damage Coefficient

The senior official put the indemnity rate paid to the insured in 2005 at 39,545 million IRLs, showing 226% growth as compared with the corresponding figure of the previ­ous year, 2004.

Issuance of insurance policy in the field of fire, as much as 67%; accounted for the highest rate of company's performance in the above-mentioned period.

In 2005, a large conflagration happened at Zamyad Car Manufacturing Company which is considered as one large scale calamities occurred in recent decade.

Payment of indemnity in the fields of auto and life accounted for 6% and 2% respectively,

With due observance to the said subjects, total coefficient of portfolio attracted in 2005 shows 28% growth from 14.5% in 2004.

In the mentioned; period, medical and accident insurance accounted for the highest payment of indemnity as much as above 80% and life and fire insurance stood at the second and third rank as much as 74% and 46% respectively. Payment of indemnity in the field of auto accounted for the lowest insurance coverage.

Thanks to the commissioning of auto insurance policy, it is supposed that the company will enjoy remarkable growth in the coming years.

 3- Reinsurance Operations

The reinsurance policy issued by Mellat Insurance Co. in 2005 topped 102,097 million IRLs from 62,930 million IRLs in 2004, showing 62% growth.

Hereunder is reinsurance premium of company's issued insurance policies in various fields:

* Fire Insurance 36%

* Cargo Insurance 6%

* Marine and Aviation 34%

* Life Insurance 4%

* Health care Insurance 2%

* Accident Insurance 1 %

* Liability and Engineering Insurance 1%

* Auto Insurance 17%

 Reorganization of Sales Network and Agencies

 The necessary preliminaries were adopted for reorganization of sales network and appointing real and legal agencies started in January 2005. Incessant follows up made in 2005 and as of September 2005, real insurance representatives were dispatched to the insurance market of the country. Shortly after, Mellat Insurance Co. opened its affiliated sales agencies.

Hereunder are the highlights of activities 'carried out in the year 2005;

* Embarking on employment of experienced insurance personnel for installment of them in affiliated sales Agencies.

* Embarking on admittance of active representatives across the country through registration both in person or through Internet site of the company.

After conducting evaluation procedures the company managed to employ experienced manpower coupled with increasing productivity in line with most objectives of the company.

In year 2005, 88 applicants accepted at the entrance examination of the Bimeh Markazi Iran , with the aim of establishing affiliated sales agencies, 52 of whom were presented Insurance codename.

In the said period, the company established 59 active insurance Agencies at 29 provinces of the country, 43 of which started their activities with authorized certificates.

It should be mentioned that other eight agencies received their authorized certificates and started their activities as of March 2006.

Reorganization of indemnity Payment network

The senior official of the company said that Reorganization and training services, equipping various departments with necessary software and hardware systems, commissioning Evaluation Network for auto indemnity Payment were considered as one of the most difficult projects experienced by the management of the company in 2005.

In the said period, the company managed to set up 100 indemnity payment centers, 77 auto indemnity centers with the coopera­tion of Its shareholders,

It is worth mentioning that Mellat Insurance Co. enjoys at least one insurance indem­nity payment center at various provinces of the country.

All these centers have been equipped with modern Information Technology Systems and can connect themselves easily with Central Office for facilitation of pay­ment of indemnity.

If damages and indemnities are approved, the affiliated branches will embark on payment of related indemnity as soon as possible.

 Reorganization of "IT" Systems

 With the aim of increasing capa­bility of insurance software and adoption of strategies for reduction of redundant costs as well as offer­ing quality insurance backup servic­es to its affiliated agencies, the com­pany has embarked on drawing up special software package system which will be implemented in the very near future,

The company intends to run spe­cific software program for its various insurance policies such as fire, cargo, auto, etc, implementation of which are underway.

Generally speaking, Mellat Insurance Co. follows up defining necessary software pro­grams seriously with the aim of pro­moting quality of Insurance activities.

 Investment

Investment is regarded as one of the most important activities of insurance companies in a way that large portion of incomes will be collected through embarking on investment activities.

Thanks to its financial resources Mellat Insurance gained remarkable profit as much as 101,849 million IRLs in 2005 as a result of making investment in various projects, showing 8% growth as compared with the preceding year 2004.

From 1011,849 million IRLs profit gained by Mellat Insurance Co. in 2005, 58% of which related to making Investment at stocks of Tehran Stock Exchange companies, 37% related to offering participation bonds and 9% of Which related to cash profit gained through participat­ing at non-stock companies and the rest of profit gained through making deposit at various banks in the country.

Financial Results

With due observance to the expansion of scope of activities of Mellat Insurance Co. as mentioned in the above here the finan­cial results of the company closing March 21, 2006 are :

The premium rate of insurance policies issued by the Company in 2004 stood at 223,520 million IRLs, showing 148% growth as compared with the year 2004 with 89,986 million IRLs.

As a result of such trend growth, Mellat Insurance Co. got the lion's share of insurance Industry in 2005

In the said period the total incomes earned by the company stood at 264,395 million IRLs from 109,884 million IRLs in 2004, showing 140% growth.

It is to be noted that profit gained as a result of Insurance activities topped as much as 62,823 million IRLs in 2005 from 113.422 million IRLs in 2004.

In the aforesaid period, insurance costs Increased up by 145,752 million IRLs, showing 93% growth as compared with the previous year 1383 (2004).

The company paid great indemnity for vast conflagration occurred at Zamyad Auto Manufacturing Company as mentioned in the above.

Accelerating in payment of indemnity to the insured has been put at the top agenda of Mellat insurance company. It is a matter of happiness to say that the company managed to adopt right management system in this field in 2005.

The Mellat Insurance investments incomes amounted to 101,849 million IRLs in 2005 from 94,496 million IRLs in 2004, showing meager 1.5% growth.

Future Programs of Mellat Insurance Company

The followings are the most important future programs of the company:

• Development of sales network and increasing the number of affiliated agencies up to 200 at all provinces of the country.

• Development of portfolio share of company's sales agencies at all types of insurance policies.

• Expansion of auto indemnity evaluation centers up to 150 across the province.

• Development and increasing the number of Evaluation indemnity payment center in the field of medical and healthcare services.

• Employing experienced manpower with the aim of increasing quality of insurance services.

• Participating in investment procedure especially in the construction sector.

• Designing new insurance coverage products

• Preparing preliminary ground for entering TSE, etc.

According to its financial statements, the company's profit, after tax deduction, in 2005 stood at 108,416,629,991 IRLs in a way that preferential dividend amounted to 111,453,025,478 IRLs.

The Board of Directors proposed that preferential dividend, after deduction of legal reserve, stood at 90 billion IRLs, in a way that 75 IRLs profit should be divided for each share of the company.

With computation of the aforementioned figures, cum profit at the end of the year 2005 will be increased up to 5,190,530,979 IRLs.