IGI Holdings Limited (also referred to as "IGI Holdings" or "the Company") is a public limited company that was incorporated in 1953 under the Companies Ordinance, 1984. The company is listed and quoted on the Pakistan Stock Exchange (PSX), which is one of the primary stock exchanges in Pakistan. Under the ‘Scheme of Amalgamation of IGI Investment Bank Limited with and into IGI Insurance Limited. IGI Investment Bank Limited was amalgamated with and into the Company with effect from December 31, 2016. The proposal for amalgamation and the scheme of amalgamation were approved by the shareholders of both the Companies in meetings held on February 22, 2017 and the Honorable Sindh High Court, through its order dated December 16, 2017, under Companies Ordinance, 1984 sanctioned the amalgamation of IGI Investment Bank Limited with and into IGI Insurance Limited.

IGI Holdings Limited is classified as a financial services holding company and is part of the Packages Group, a major business conglomerate in Pakistan. The company has an investment portfolio valued at ~PKR 16 billion as of 9MCY24. This portfolio is spread across various entities engaged in the following sectors: i)Life insurance ii)Non-life insurance iii)Brokerage services and iv) Investment holding. The financial performance of IGI Holdings is significantly influenced by the dividends it receives from its investments in these subsidiaries and associated companies. These dividends contribute substantially to IGI Holdings' overall profitability.

Major ownership of IGI Holdings (~63%) vests with Packages Group through sponsors (~24.36%) and associated entities (~38.24%) as of 9MCY24. Of the remaining stake ~8.29% is held by Financial Institutions, Banks, Insurance Companies, Modarabas & Mutual Funds and the rest ~29% is free floated.

Ownership of the Company is seen as stable as majority ownership vests with the sponsors. This implies a stable and controlled ownership structure, largely due to the sponsors holding the majority stake. This stability is beneficial for the company’s long-term strategy and operational continuity.

IGI Holdings and Packages Group are ranked amongst the leading industrial groups of the country with diversified interests in paper and paperboard, packaging, food, personal care, financial services, and real estate sectors. Strong affiliation and technical track record with international JVs have added to the success of companies within the Group.

Major shareholding of the sponsors is consolidated in two main companies; IGI Holdings and Packages Limited. These two companies have a collective asset base of PKR ~369bln, equity base of PKR ~149bln and turnover of PKR 64bln as at 9MCY24. These figures reflect the substantial financial strength and operational scale of the two companies, representing their pivotal role in the business landscape.

The Board of IGI Holdings consists of seven members, including four non-executive directors, two independent directors, and the Chief Executive Officer. The majority of the Board members have longstanding associations with the Group and its affiliated companies. The composition of the Board, with an appropriate size and the presence of independent oversight, reflects a well-established governance structure.

The BoD consists of seasoned professionals with significant experience. The Board's Chairman, Syed Babar Ali, is the key individual in the development of the Group. As an entrepreneur and industrialist, Syed Babar Ali envisioned and set up Packages Limited (Pakistan’s largest paper & board mill), Milkpak Limited–now Nestlé Pakistan Limited (the largest food processing company in Pakistan); Tetra Pak Pakistan Limited, IGI Insurance Company Limited, Tri-Pack Films Limited, and IGI Investment Bank. He is Chairman of Hoechst, Siemens Pakistan Engineering Company Limited, and Coca-Cola Beverages Pakistan Limited. He believes in the joint venture philosophy and most of his businesses are joint ventures with major multinationals. As an educationist, he led the establishment of the Lahore University of of Management Sciences (LUMS) in 1985 of which he is the first Pro-Chancellor. Other members of board also has diverse experience. This diversity in experience further strengthens the governance framework, ensuring that the Board is equipped to address a wide range of challenges and opportunities.

The governance structure of IGI Holdings is strengthened by the establishment of two key committees within the Board of Directors (BoD), namely the HR & Remuneration Compensation Committee and the Audit Committee. These committees are integral to overseeing and ensuring that the Company’s operations align with best practices, legal requirements, and strategic objectives. Audit committee consists of 2 members and a chairperson who is also an independent director. HR & Remuneration Compensation Committee comprises 3 members, along with a chairperson.

IGI Holdings’ External Auditors are A.F. Ferguson & Co. The firm is QCR rated and in SBP’s panel of auditors in the “A ‘category and have expressed un qualified opinion on the financial statements of CY23.

IGI Holdings employs a streamlined organizational structure, which is organized into fundamental functional divisions. The subsidiaries operate independently, each with its own Chief Executive Officer (CEO), Chief Financial Officer (CFO), and support functions, allowing for efficient management and decision-making at the subsidiary level. The Legal function is centralized across both the subsidiaries and the parent company, ensuring consistency in legal matters and adherence to company-wide policies and regulations. On the other hand, the IT function is centralized at the Group level, facilitating a unified approach to technology, systems, and digital infrastructure across the entire organization. This centralized IT structure helps streamline processes, ensures standardization, and leverages economies of scale for the Group's technological needs.

The Company has a team of experienced individuals that has been associated with Packages Group for a long time and have significant experience in the insurance and financial sector. Mr. Syed Hyder Ali, the CEO, has diversified national and international insurance-related and holds directorship in several companies. He is also a Chief Executive and Managing Director, at Packages Ltd. Mr. Ali has wide and varied professional working experience spanning over many years in paper production, conversion and packaging. Mr. Ali serves on the Board of a number of companies like Bulleh Shah Packaging (Private) Limited, IGI General Insurance Limited, Nestlé Pakistan Limited, Packages Lanka (Pvt) Limited, Hoechst, Tetra Pak Pakistan Limited, Tri-Pack Films Limited and International Steel Limited. He is a member of the Board of Governors/Directors of WWF- Pakistan, Babar Ali Foundation (BAF), National Management Foundation (NMF), Ali Institute of Education (AIE), Pakistan Centre for Philanthropy (PCP), and Pakistan Business Council (PBC). Mr. Syed Awais Amjad-FCA, serves as Chief Financial Officer, has an overall experience of over a decade. He is also the CFO of IGI General Insurance Limited.

The management holds quarterly meetings in which performance data is solicited from the subsidiaries and consolidated for review and discussion among the Chief Executive Officers (CEOs). The Company takes the lead in the oversight and control of its subsidiaries, ensuring that strategic goals are met and operational efficiency is maintained. This oversight process is continuously evolving and is expected to strengthen over time, with improvements in governance, performance monitoring, and risk management across the subsidiaries. The Company leads the oversight and control process of its subsidiaries.

IGI Holding has setup its own internal audit function, which is also responsible for the identification, assessment and reporting of all types of risks due to business operations of IGI Holdings and its subsidiaries. Internal audit is headed by Mr. Feroze Polani. The reports for each subsidiary are presented to the Board Audit Committee and the BoD for discussion.

For investment decision-making, the Company has an investment team at Group level. It is headed by Mr. Waqas Munir, Group's Chief Investments Officer. He is a chartered accountant by qualification, from A.F Fergusons. He is associated with the Group since 2006. His team consists of 3 chartered accountants and a CFA charter holder.

The Company follows a prudent investment policy, focusing exclusively on the financial services sector. Its investments encompass life and general insurance, brokerage, and investment companies. To maintain financial stability, the Company preserves liquidity through robust dividend income and by holding listed securities via its subsidiaries. This strategic approach ensures consistent cash flow while managing risk and maintaining a strong position in its core industry.

The Group's investment team collaborates closely with the other companies within the Group, receiving regular updates on their performance. These updates are then consolidated and presented to the Board of Directors (BoD) on a quarterly basis, ensuring that the BoD is well-informed about the performance and strategic direction of each subsidiary. This process facilitates effective decision-making and enhances the Group’s overall governance and oversight.

The Company’s investment portfolio consists of investment in an investment holding company (IGI Investments (Pvt) Ltd.) at ~78%. ~21% of the investment book consists of insurance companies (IGI General Insurance Ltd and IGI Life Insurance Ltd.) while the remaining 1% consists of investments in a brokerage company IGI Finex Securities Ltd as at 9MCY24.

The Company holds two kinds of investments on its books: Core and Strategic investments. Core investments include three wholly-owned subsidiaries: IGI Investments Limited, IGI General Insurance Limited, and IGI Finex Securities Limited. Strategic investment includes IGI Life Insurance Limited, a listed concern. IGI Holdings holds ~ 83% of shares of this company, while ~ 11% are floated free in the stock market. All four investments are profit-generating investments. The revenue and profits are as follows: - IGI General Insurance Limited (IGI General Insurance), a Public limited company, incorporated in November 2016 and was formed to facilitate the transfer of general insurance segment of IGI Insurance Limited to the Company. During the current period, IGI General achieved gross written premium (including Takaful contribution) of Rs 12,407 million as compared to Rs 11,463 million during the corresponding period of last year mainly due to value driven increased cased by inflation. IGI General has earned profit after tax of Rs 768 million during the current period compared to Rs 471 million in the corresponding period of last year. IGI Investments (Pvt.) Ltd: As per the restructuring, major investments of IGI Holdings have been transferred to IGI Investments as of January 31, 2017. Income stream of IGI Investments is primarily derived from dividend income from these investments. Income stream of IGI Investments is primarily based on dividend income from its investment portfolio, accordingly, its income pattern follows dividend distribution pattern of its investments. During the current period, IGI Investments has earned dividend income of Rs 697 million compared to Rs 1,036 million in the corresponding period. IGI Investments has reported profit after tax of Rs 612 million compared to Rs 2,523 million in the corresponding period, mainly due to decrease in share of profit from its associates. IGI Finex Securities Limited (IGI Finex), a Public limited company, was acquired in 2006. Initially the Company incurred business losses and faced challenges owing to management challenges. During the current period, IGI Securities has generated operating revenues of Rs 196 million compared to Rs 84 million in the corresponding period. It also earned markup income of Rs 253 million during the period as compared to Rs 327 million in corresponding period of 2023. IGI Securities reported profit after tax of Rs 164 million during the period as compared to profit after tax of Rs 190 million. the increase was due to interest income earned through saving deposits and high securities market exposure. IGI Life Insurance Limited (IGI Life), a quoted public company, listed on the Pakistan Stock Exchange, started its operations in 1995. The company is engaged in life insurance, carrying on both participating and non-participating business. With its head office in Karachi, the company operates through three business Hubs – South, Central and North – with a total of 22 branches boasting a vast network of agents in excess of 700. During the period, IGI Life wrote gross premium/contribution of Rs 10,058 million compared to Rs 5,566 million driven by significant performance in single premium policies. IGI Life has reported profit after tax of Rs 184 million as compared to Rs 100 million.

The Company’s dividend stream has been mainly dependent on the performance of IGI General Insurance and IGI Investments for the past three years. IGI Life Insurance has become profitable after incurring losses for the last three years; however, it may take some time before providing dividend income. Lastly, while IGI Finex is profitable, the current strategy is to invest in the company rather than giving out dividend income. During 9MCY24, the Company's topline stood at PKR ~1.1bln (9MCY23: PKR 1bln). However, dividends from IGI Investments (Pvt.) Ltd posted a dip and stood at PKR 580mln in 9MCY24 (9MCY23: PKR 700mln). However, dividends from IGI General Insurance posted a surge and declared PKR 570mln during 9MCY24 (9MCY23: PKR 385mln). No dividend was received from IGI Life Insurance or IGI Finex during the period.

The Company's total operating cash flow witnessed a slight increase, reaching PKR 1,026 million during 9MCY24, compared to PKR 1,014 million in the same period of 9MCY23. This increase in cash flow was primarily driven by higher dividend income, which bolstered the company’s cash position. Finance costs showed a significant reduction, dropping to PKR 107 million in 9MCY24 from PKR 179 million in 9MCY23. The decrease in finance costs was attributed to lower markup rates, which positively impacted the company’s interest obligations and resulted in a reduction in financing expenses. The interest coverage ratio saw a remarkable improvement, increasing to 9.6x in 9MCY24, compared to 5.7x in the corresponding period of 2023. This indicates a stronger ability of the company to meet its interest payments from its operating income, reflecting improved financial health and a better cushion against potential fluctuations in interest rates or earnings. Additionally, the debt payback ratio decreased to 0.8x in 9MCY24 from 1.3x in 9MCY23. This reduction was largely due to the favorable impact of the lower interest rates on the company’s debt servicing. A lower debt payback ratio typically indicates that the company has less pressure to repay its debt, improving its liquidity and financial flexibility.

The Company maintains a low-leveraged capital structure, with a leverage ratio of ~3.4% as of the end 9MCY24, a notable improvement from 6.2% at the same point in 9MCY23. This low leverage is indicative of the company's cautious approach to debt financing and its focus on maintaining financial stability. The Company’s debt composition primarily consists of short-term borrowings and minimal related party borrowings. As of 9MCY24, the Company’s short-term borrowings stood at PKR 544 million, a decrease from PKR 968 million in 9MCY23. This reduction in borrowings reflects the Company’s efforts to manage its debt levels effectively, possibly by repaying short-term liabilities or optimizing working capital needs. The loan-to-value (LTV) ratio also saw a decrease during 9MCY24, standing at ~3.9%, compared to ~6.9% in 9MCY23. This improvement in the LTV ratio indicates that the market value of investments remained the same, however the relative decrease in borrowings led to a lower LTV ratio, highlighting the Company's enhanced equity position and reduced debt exposure relative to its investment base.

The Company's financial strength is significantly supported by its sponsors. These key stakeholders play a crucial role in bolstering the company's financial stability and growth. On a consolidated level, the Company's shareholder's equity stood at PKR 60 billion as of 9MCY24, an increase from PKR 58 billion in 9MCY23. This growth in equity reflects the Company’s ability to generate retained earnings, improve its financial position, and enhance shareholder value over the period. The Company’s total assets also showed an increase, rising to PKR 126 billion in 9MCY24, compared to PKR 113 billion in 9MCY23. This growth in total assets suggests a positive expansion in the Company’s business operations, potentially driven by higher investments, acquisitions, or increased asset values. Furthermore, the Company’s total consolidated debt saw a decrease, standing at PKR 2.4 billion in 9MCY24, down from PKR 2.7 billion in 9MCY23. This reduction in debt indicates the Company's effective management of liabilities, potentially through debt repayments. The lower debt level enhances the company’s financial flexibility and positions it well for future growth.