Promptness

involves the ability

to respond to a

situation quickly.

At LIA, we believe

that promptness,

even under the

most pressing

circumstances,

should be

accompanied

by superior

organization,

precision, and

professional

experience to meet

all our clients’ needs.

LIA AR 2010.indd 1 4/8/11 12:01 PM

04

05

08

09

10

11

14

16

17

18

19

38

Chairman’sMessage

Board ofDirectorsand Management

Distributionof Portfolio

FinancialHighlights

Lebanon EconomicReport 2010

Auditors’Report

Statementof FinancialPosition

Statementof Income

Statementof Changesin Shareholders’Equity

Statementof Cash Flows

Notesto the FinancialStatements

Addresses

tableofcontents

LIA AR 2010.indd 2-3 4/8/11 12:01 PM

boaRDofDIRectoRs

H.E. Raymond W. Audi Chairman & General Manager

Mr. Salam N. Hanna General Manager

Dr. Imad I. Itani

Mr. Joseph I. Kesrouani

Mr. Farid F. Lahoud

ManaGeMent

Mr. Salam N. Hanna General Manager

Mr. Antoine H. Bechara Deputy General Manager

Mr. William H. Salem Deputy General Manager

Mr. Georges F. Serhal Technical Manager

Dr. Elie J. Haddad Life Manager

Mr. Zareh B. Basmadjian Business Development Manager

Mr. Fady E. Noujaim Financial Manager

Mr. Halim E. Abou Harb Reinsurance Manager

Mr. Rami G. Haddad Operations Manager

ReInsUReRs

Munich Reinsurance Co.

Gen Re

Scor Global P&C

Caisse Centrale de Réassurance

Allianz

Partner Re

Mapfre Re

Arab Reinsurance Company

banKeR

Bank Audi sal - Audi Saradar Group

leGalaDVIsoRs

Law offices of Ramzi Joreige & Partners

aUDItoRs

Semaan, Gholam & Co.

5

boaRDofDIRectoRsanDManaGeMent

LIA insurance s.a.l enjoyed another year of underwriting and investment results in market conditions that continue to present significant challenges.Our inner conviction is that these results are the outcome of five work strategies:1. LIA’s continued commitment to disciplined underwriting and vigorous risk management. 2. LIA’s commitment to attracting, retaining and nurturing the best talent, across all its divisions. Our experienced risk professionals in the insurance and reinsurance arenas offer our customers the best and prompt services in response to their specific wants and needs. They are the single most important asset in our business and comprise the bedrock of our future growth.3. LIA’s convergence around the wants and needs of our customers. We believe that customer service is not just the responsibility of the front desk, but each and every one of us in the Company. Our customers trust us, not only for risk expertise and service excellence, but also for LIA’s strong financial security.4. LIA’s solid focus on quality is the key determinant of sustainable value addition and long-term success. Quality is the cornerstone of our business and our fundamental strength.5. LIA’s belief in transparency, account-ability and equity, in all facets of our operations, and in every interaction with our diverse set of stakeholders - from shareowners, employees, producers and clients to service providers, government and society.

The following report includes our accounts for the year ended December 31, 2010, along with the independent Auditors’ Report and their notes to the financial statements.

Hereafter, I am happy to share with you highlights of our Company’s performance during last year:• After tax net profits of USD 9.9 Million. An annual growth of 22.5%.• Positive results stem equally from operational and financial activities. • The shareholders Equity rose by 9.15% to stand at USD 66.6 Million.• The solvency rate increased by 12.77% to reach 118.39% about 12 times the ratio requested by local authorities.• Our sister Company in Syria achieved an increase of 39% in

net profit to reach the threshold of USD 2 Million.

The future growth of our Company will be powered by the quality of our human capital, the use of cutting-edge technology, the superiority of our products, our large distribution channel and the highest levels of customer care. We will deploy each of these as strategic drivers to improve service promptness and enhance customer satisfaction at every level.

Indeed, our goal is not to be just bigger but better.

Finally, I would like to express my heart-felt appreciation to all the colleagues at LIA insurance for their professionalism, dedication and commitment, to our Clients, Agents and Brokers for their loyalty and confidence, and to our Reinsurers and Providers for their trust and support.

Raymond W. AudiChairman - General Manager

4

chaIRMan'sMessaGe

LIA AR 2010.indd 4-5 4/8/11 12:01 PM

As traffic incidents

rise, so does the

demand for quick

and reliable

solutions. At LIA,

we recognize the

importance of being

prepared to provide

our clients with the

necessary services at

all times.

MotoRInsURance

LIA AR 2010.indd 6-7 4/8/11 12:01 PM

fInancIalhIGhlIGhts

13,477

15,060

17,145 28,821 46

,443 65

,87187,432

120,291

174,014

212,616242,678

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

lIainsuranceassets

Year

000UsD

lIainsuranceprofits

Year

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

755

589 909

1,7902,670

4,050

5,513

6,702

7,040

8,100

9,913

000UsD

DIstRIbUtIonofpoRtfolIo

GRosspReMIUMs2009In000UsD

GRosspReMIUMs2010In000UsD

Life 27,242 47% Fire 3,319 6% Motor 11,488 20% Medical 5,985 10% Marine 2,075 4% Misc. 7,718 13%

Life 24,413 43% Fire 3,784 7% Motor 11,346 20% Medical 7,268 13% Marine 2,059 4% Misc. 7,267 13%

2009 57,827 2010 56,136

Life

Fire

Motor

MedicalMarine

Mis

c.

47%

6%

20

%10%

4%

13%

Life

FireMo

tor

Medical

Marine

Mis

c.

43%

7%20%

13%

4%

13%

LIA AR 2010.indd 8-9 4/8/11 12:01 PM

10 11

We have audited the accompanying

financial statements of LIA insurance

s.a.l., which comprise the statement

of financial position as at December

31, 2010 and the related statements

of income, comprehensive income,

changes in equity and cash flows for

the year then ended, and a summary

of significant accounting policies and

other explanatory notes.

ManaGeMent'sResponsIbIlItYfoRthefInancIalstateMents

The Management of the Company is

responsible for the preparation and fair

presentation of these financial statements

in accordance with International Financial

Reporting Standards. This responsibility

includes: designing, implementing and

maintaining internal control relevant to

the preparation and fair presentation of

financial statements that are free from

material misstatement, whether due

to fraud or error; selecting and applying

appropriate accounting policies; and

making accounting estimates that are

reasonable in the circumstances.

aUDItoRs'ResponsIbIlItY

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 comply with ethical

requirements and plan and perform the

audit to obtain reasonable assurance

whether the financial statements are

free from material misstatement.

An audit involves performing procedures

to obtain audit evidence about the

amounts and disclosures in the

financial statements. The procedures

selected depend on the auditors’

judgment, including the assessment

of the risks of material misstatement

of the financial statements, whether

due to fraud or error. In making those

risk assessments, the auditor considers

internal control relevant to the entity’s

preparation and fair presentation of the

financial statements in order to design

audit procedures that are appropriate

for the circumstances, but not for

the purpose of expressing an opinion

on the effectiveness of the entity’s

internal control. An audit also includes

evaluating the appropriateness of

accounting policies used and the

reasonableness of accounting estimates

made by the directors, as well as

evaluating the overall presentation of

the financial statements.

We believe that the audit evidence

we have obtained is sufficient and

appropriate to provide a basis for our

audit opinion.

opInIon

In our opinion, the financial statements

present fairly, in all material respects,

the financial position of LIA insurance

s.a.l. as of December 31, 2010 and

its financial performance and its

cash flows for the year then ended

in accordance with International

Financial Reporting Standards.

Semaan, Gholam & Co.

February 10, 2011

Beirut, Lebanon

InDepenDentaUDItoRs'RepoRttotheshaReholDeRsoflIainsurances.a.l.

• The Lebanese economy was able to

relatively maintain in 2010 its four-year

streak of buoyant growth. Although

real sector indicators showed relative

slowdown in the last quarter of the

year within the context of rising

domestic political tensions, the year

as a whole is believed to have ended

with a 7% to 8% real GDP growth, a

favorable performance in a year where

global recovery was still questionable.

• Most real sector indicators confirm

the high annual economic growth in

addition to the relative slowdown of

the last quarter. Among these rises

merchandise at the Port with an annual

growth of 2.3%, cement deliveries with

6.7%, property sales transactions with

12.7%, the number of tourists with

17.1%, the de-taxed purchases with

21.0%, cleared checks with 19.6% and

velocity of money with 2.2%.

• The significant growth in exports

within the context of a smaller growth

in imports has resulted in a decline in

the growth of the trade deficit to 7.5%

in 2010. The export-to-import coverage

ratio improved from 21.5% in 2009 to

23.7% in 2010.

• Lebanon’s structural trade deficit

has been more than fully covered by

financial inflows, thereby resulting in a

balance of payments surplus of US$ 3.3

billion in 2010 (US$ 7.9 billion in 2009),

although financial inflows declined by

18% during the year.

• Gross public debt amounted to LBP

79,278 billion, or US$ 52.6 billion at the

end of 2010, up by a yearly 2.9%. Debt/

GDP is now at 134%, down from 148%

in 2009 and a high of 180% in 2006,

thus improving gradually the country’s

overall risk profile.

• Monetary conditions in Lebanon

were marked in 2010 by moderate net

conversions in favor of the Lebanese

Pound, historical low levels of interest

rates, and new record high level of

the Central Bank’s foreign currency

reserves.

• Amid buoyant economic activity

coupled with relatively tougher bank

operating conditions, banking activity

displayed favorable performance in

2010. Total sector activity, measured

by the aggregate domestic assets of

banks, grew by US$ 13.7 billion in 2010,

yet compared to a growth of US$ 21.0

billion in 2009 and an average growth

of US$ 10.2 billion in the previous five

years.

• Lebanese capital markets’ performances

were mixed in 2010. While the Beirut Stock

Exchange saw drops in prices and was

mainly marked by a sluggish activity with

its turnover ratio standing at a low level,

the Eurobond market witnessed some

improvement in prices and a contraction

in its average spread.

lebanoneconoMIcRepoRt2010*

* Bank Audi sal – Audi Saradar Group. Group Research Department Publications “Lebanon Economic Report” 4th quarter 2010

LIA AR 2010.indd 10-11 4/8/11 12:01 PM

MaRIneInsURance

As businesses

constantly expand

and become more

unique in nature,

so does the

complete range of

our corporate

insurance packages.

That’s why with LIA’s

Marine Insurance it

will be smooth

sailing from here on.

LIA AR 2010.indd 12-13 4/8/11 12:01 PM

lIainsurances.a.l.stateMentoffInancIalposItIon(asatDeceMbeR31,2010)

2010 2009

lIabIlItIes 000lbp 000lbp

Shareholders' equity 100,153,063 92,044,271

Paid up Capital 62,500,000 62,500,000

Authorized Capital 62,500,000 62,500,000

Less: Unpaid Capital - -

Reserves (Legal and General) 20,525,586 15,833,716

Balance carried forward (319,987) -

Profit and loss (Current year result) 14,939,545 12,191,870

Other reserves 2,507,919 1,518,685

Fixed income securities and similar investments 2,507,919 1,518,685

Life Technical reserves 51,106,878 38,076,280

Mathematical reserve 50,425,979 37,513,382

Unearned premium reserves - -

Outstanding claims reserve 578,622 503,892

IBNR (Incurred But Not Reported) reserve 82,445 42,611

Loss adjustment expenses reserve 19,832 16,395

Unit-linked technical reserves 153,324,885 137,051,564

Outstanding claims reserve (unit-linked) - -

Mathematical reserve (unit-linked) 149,476,754 133,540,575

Additional technical reserve (unit-linked) 3,848,131 3,510,989

Non-Life Technical reserves 43,169,625 37,689,750

Unearned premium reserve 31,872,150 28,087,318

Outstanding claims reserve 10,342,648 8,753,717

IBNR (Incurred But Not Reported) reserve 549,632 403,386

Loss adjustment expenses reserve 326,768 274,713

Premium Deficiency Reserve 78,427 170,616

Provision for risks and charges 3,318,033 2,807,637

Debt for funds held under reinsurance treaties 1,258,721 827,405

Liabilities under insurance business 599,977 181,534

Liabilities under direct business

Liabilities under indirect business 599,977 181,534

Liabilities under reinsurance contracts 5,195,997 4,892,639

Other liabilities 7,220,175 6,522,895

Due to Personnel 438,414 1,105,139

Tax due (state, social security, public collectivities) 4,064,422 4,471,261

Amounts due to related parties 1,724,003 161,750

Other creditors 993,336 784,745

Adjustment items 368,699 319,350

Other adjustment items 368,699 319,350

Total Liabilities 365,716,053 320,413,325

Off Balance sheet

Other engagements given 319,583 141,583

Engagements given as guarantee for insurance & reinsurance premium 3,140,812 3,140,812

lIainsurances.a.l.stateMentoffInancIalposItIon(asatDeceMbeR31,2010)

2010 2009

assets 000lbp 000lbp

Intangible assets 183,932 193,891

Investments 172,014,046 148,584,954

Investments in subsidiaries and associates 6,130,289 6,124,278

Fixed income securities and similar investments 43,748,693 26,570,479

Equity and similar investments 3,064,531 587,634

Mutual funds 576,593 511,086

Funds held under reinsurance treaties 104,213 53,691

Cash and Cash equivalents 10,243,588 69,846,141

Blocked bank deposits and deposits with maturity of more than 3 months 105,428,446 43,814,736

Bank deposits with maturity of more than 3 months 102,287,634 40,673,924

Bank deposits blocked in favor of MOET (Guarantees) 3,140,812 3,140,812

Accrued investment income 2,717,693 1,076,909

Capitalization & Unit-linked contracts investments 153,324,885 137,051,564

Equity and similar investments 1,453,808 2,426,136

Fixed income securities and similar investments 21,874,121 19,760,915

Cash and similar investments 129,996,956 114,864,513

Reinsurance share in technical reserves (Life) 3,019,928 1,846,319

Reinsurance Share in Premiums reserves 2,771,283 1,687,691

Reinsurance Share in Claims reserves 248,645 158,628

Reinsurance share in technical reserves (Non-Life) 12,389,120 11,303,656

Reinsurance Share in Premiums reserves 7,612,926 6,894,276

Reinsurance Share in Claims reserves 4,776,194 4,409,380

Receivable under insurance business: 13,646,564 12,454,559

Premium receivable (direct business) 5,260,579 4,843,865

Premiums receivable from intermediaries (indirect business) 8,385,985 7,610,694

Receivable under reinsurance contracts 128,429 113,675

Other amounts receivable under reinsurance contracts 128,429 113,675

Other assets 4,343,657 2,737,303

Non-investment properties 3,929,267 2,355,441

Operating fixed assets 414,390 381,862

Other receivables 943,153 1,096,712

Amounts due from related parties 150,750

Other amounts receivables 943,153 945,962

Adjustment items 5,722,339 5,030,692

Deferred acquisition costs 5,611,436 4,659,158

Other Adjustment Items 110,903 371,534

Total Assets 365,716,053 320,413,325

LIA AR 2010.indd 14-15 4/8/11 12:01 PM

17

lIainsurances.a.l.stateMentofchanGesInshaReholDeRs'eqUItY

pRofIt

leGal GeneRal caRRIeD faIRValUe

total capItal ReseRVe ReseRVe foRwaRD chanGes

000lbp 000lbp 000lbp 000lbp 000lbp 000lbp

Balance at January 1, 2009 82,499,241 62,500,000 2,676,627 7,547,661 10,609,428 (834,475)

Transfer to reserves - - 1,060,943 4,548,485 (5,609,428) -

Distribution of dividends (5,000,000) - - - (5,000,000) -

Comprehensive income for the

year 2009 - Profit 14,545,030 - - - 12,191,870 2,353,160

Balance at December 31, 2009 92,044,271 62,500,000 3,737,570 12,096,146 12,191,870 1,518,685

Transfer to reserves - - 1,219,187 3,472,683 (4,691,870) -

Distribution of dividends (7,500,000) - - - (7,500,000) -

Adjustment related to prior year

on premium deficiency reserve (319,987) - - - (319,987) -

Comprehensive income for the

year 2010 - Profit 15,928,779 - - - 14,939,545 989,234

Balance at December 31, 2010 100,153,063 62,500,000 4,956,757 15,568,829 14,619,558 2,507,919

lIainsurances.a.l.stateMentofIncoMe(foRtheYeaR2010)

2010 2009

000lbp 000lbp

Gross premiums 84,597,440 87,144,648

Reinsurers' share of gross premiums (20,680,243) (18,135,707)

Net premiums 63,917,197 69,008,941

Claims (25,378,566) (20,616,626)

Reinsurers' share of claims 8,092,470 6,558,169

Policy acquisition cost 952,279 1,898,456

Change in technical reserve net of reinsurance (23,988,657) (35,628,747)

Net underwriting result 23,594,722 21,220,193

Commission income 3,780,635 3,430,522

Investment income 3,352,192 2,120,019

Finance income (net) 5,800,912 5,676,703

Other income 95,514 88,065

Administrative expenses (8,119,170) (8,907,933)

Commission expense (9,112,805) (8,619,979)

Amortization and depreciation expenses (245,300) (133,049)

Provision for termination indemnity (232,937) (221,656)

Investment expense (125,809) (8,202)

Loss on exchange (net) (238,067) (33,951)

Other expenses (2,284,795) (755,292)

Profit before tax 16,265,092 13,855,440

Income tax expense (1,325,547) (1,663,570)

Profit for the year 14,939,545 12,191,870

lIainsurances.a.l.stateMentofcoMpRehensIVeIncoMe(foRtheYeaR2010)

2010 2009

000lbp 000lbp

Profit for the year 14,939,545 12,191,870

Other comprehensive income:

Gain on available for sale investments 989,234 2,353,160

Comprehensive income – Profit 15,928,779 14,545,030

LIA AR 2010.indd 16-17 4/8/11 12:01 PM

19

notestothefInancIalstateMents

thecoMpanYCompagnie d’Assurances et de

Réassurances du Liban et du Monde

Arabe s.a.l. has been constituted in

the year 1975 and registered at the

Commercial Registry in Beirut under

No.34092.

By virtue of the decision of the

Extraordinary General Assembly

Meeting held on October 23, 2008, the

Company’s name has been changed to

“LIA insurance s.a.l.”.

The Company is governed mainly by its

bylaws, the commercial law and the

law relating to insurance operations.

sIGnIfIcant accoUntInGpolIcIes

Basis of preparationThe financial statements have

been prepared in accordance with

International Financial Reporting

Standards, the Lebanese Code of

Commerce and applicable requirements

of the Lebanese Insurance Law No. 94

dated June 28, 1999.

The financial statements of the

Company have been prepared on an

historical cost convention modified to

include the measurement at fair value

of available for sale investments and

investments held to cover unit-linked

liabilities.

The financial statements are denominated

in Lebanese Lira (LBP).

Changes in accounting policiesThe accounting policies adopted are

consistent with those of the previous

financial year, except for the following

new and amended IFRS effective as of

January 1, 2010:

• IAS 39 Financial Instruments: recognition

and Measurement – Eligible Hedged Items

effective July 1, 2009.

• Improvements to IFRSs (April 2009),

the effective date of each amendment

is included in the IFRS affected.

Adoption of these revised standards

and interpretations did not have

any material effect on the financial

performance or position of the

Company. They did, however, give

rise to additional disclosures in some

occasions.

The principal effects of these changes

are as follows:

IAS 39 Financial Instruments: Recognition

and Measurement – Eligible Hedged

Items

This amendment was issued in July

2008 and is effective for financial years

beginning on or after July 1, 2009. It

addresses the designation of a one-

sided risk in a hedged item, and the

designation of inflation as a hedged

risk or portion in particular situations.

The Company has concluded that the

amendment will have no impact on the

financial position or performance of

the Company, as the Company has not

entered into any such hedges.

Listed below are standards and

interpretations that have been issued,

but have no significant impacts on the

financial statements:

• IFRS 1 First Adoption of International

Financial Reporting Standards (Revised)

• IFRS 2 Share-based Payment (Revised)

• IAS 39 Financial Instruments: Recognition

and Measurement – Eligible Hedged

Items

Adoption of these revised standards and

interpretations did not have any material

effect on the financial performance

or position of the Company. They

did however give rise to additional

disclosures.

Improvements to IFRSsThe IASB issued Improvements to

IFRSs, and a series of amendments to

its IAS standards. The amendments

lIainsurances.a.l.stateMentofcashflows(asatDeceMbeR31,2010)

2010 2009

000lbp 000lbpOperating ActivitiesResult for the year (before tax) 16,265,092 13,855,440Adjustments: Provision for risks and charges 1,387,798 752,609 Provision for doubtful receivables 481,101 179,366 Amortization and depreciation 245,300 133,049 Loss on disposal of property, plant and equipment - 39,415 Unrealized (gain) on revaluation of trading investments (269,950) (277,550) Unrealized loss (gain) on revaluation of fair value through profit or loss investments 106,454 (20,531)Banks deposits matured related to prior year 40,673,924 10,612,847Banks deposits maturing over three months (102,287,634) (40,673,924)Increase in technical provisions 16,251,402 18,975,267Increase in unit linked technical provisions 337,141 352,544Increase in capitalization technical reserve 15,936,179 22,974,585Increase in receivable under insurance business (1,673,106) (2,344,992)(Increase) decrease in receivable under reinsurance contracts (14,755) 381,339Increase in other receivables and prepayments (538,088) (1,148,401)Increase (decrease) in liabilities under insurance business 418,443 (553,604)Increase in liabilities under reinsurance contracts 303,357 464,996Increase in debts for funds held under reinsurance treaties 431,315 176,090Increase in other liabilities 1,083,676 950,515Tax paid (1,662,593) (1,174,798)Payments of termination indemnity (877,402) (19,884)Decrease in provision for risks - (52,745)Cash (used in) from operating activities (13,402,345) 23,581,633

Investing ActivitiesDeposit for constitution of a subsidiary - 26,352,518Investment in equity shares and similar securities (18,573,898) (10,433,675)Increase in funds held under insurance treaties (50,522) (53,691)Increase in accrued investment income (1,640,784) (381,157)Acquisition of property, plant and equipment (1,797,402) (2,496,645)Acquisition of intangible assets (44,295) (89,440)Increase in capitalization investment contracts (15,936,179) (22,974,585)Increase in unit linked investment contracts (337,142) (352,545)Cash used in investing activities (38,380,221) (10,429,220)

Financing ActivitiesAdjustment related to prior year on premium deficiency reserve (319,987) -Dividends paid (7,500,000) (5,000,000)Cash used in financing activities (7,819,987) (5,000,000)

(Decrease) Increase In Cash And Cash Equivalents (59,602,553) 8,152,413

Cash And Cash EquivalentsAt beginning of year 69,846,141 61,693,728At end of year 10,243,588 69,846,141

LIA AR 2010.indd 18-19 4/8/11 12:01 PM

20 21

• The designation eliminates or

significantly reduces the inconsistent

treatment that would otherwise arise

from measuring the financial assets or

liabilities or recognizing gains or losses

on them on a different basis; or

• The assets and liabilities are part of

a group of financial assets, financial

liabilities or both which are managed

and their performance evaluated on

a fair value basis, in accordance with

a documented risk management or

investment strategy; or

• The financial instrument contains

an embedded derivative, unless

the embedded derivative does not

significantly modify the cash flows or

it is clear, with little or no analysis, that

it would not be separately recorded.

Financial assets and financial liabilities

at fair value through profit or loss are

recorded in the statement of financial

position at fair value. Changes in fair

value are recorded in the income

statement.

Available for sale investmentsInvestments designated as available for

sale investments are initially recorded

at cost and subsequently measured at

fair value, unless this cannot be reliably

measured. Changes in fair value are

reported as a separate component of

equity. On derecognition or impairment

the cumulative gain or loss previously

reported in equity is included in the

income statement for the period.

Cash and cash equivalents For the purpose of the Statement of

Cash Flows, cash and cash equivalents

consist of cash in hand, bank balances,

and short-term deposits with original

maturities of three months or less, net

of outstanding bank overdrafts.

Investments held to cover unit-linked liabilitiesInvestments held to cover unit-

linked liabilities represent assets

associated with certain contracts,

for which the investment risk lies

predominantly with the contract

holder. The assets are quoted funds

carried at fair value, based on quoted

market prices. These investments are

classified as “Investments at fair value

through income statement” upon

initial recognition and remeasured

at fair value with all changes in fair

value being recorded in the income

statement. Investment income realized

and unrealized investment gains and

losses are reported in the income

statement together with the changes in

the provision for unit-linked liabilities.

Impairment and uncollectibility of financial assetsAn assessment is made at each

statement of financial position date to

determine whether there is objective

evidence that a specific financial asset

may be impaired. If such evidence exists,

any impairment loss is recognized in

the income statement. Impairment is

determined as follows:

For assets carried at fair value,

impairment is the difference between

cost and fair value, less any impairment

loss previously recognized in the

income statement;

For assets carried at cost, impairment

is the difference between carrying

value and the present value of future

cash flows discounted at the current

market rate of return for a similar

financial asset;

For assets carried at amortized cost,

impairment is the difference between

carrying amount and the present value

of future cash flows discounted at the

original effective interest rate.

Derecognition of financial instrumentsThe derecognition of a financial

instrument takes place when the

Company no longer controls the

contractual rights that comprise the

have not been adopted as they become

effective for annual periods on or

after either July 1, 2010 or January 1,

2011. The amendments listed below,

are considered to have a reasonable

possible impact on the Company:

• IFRS 3 Business Combinations

• IFRS 7 Financial Instruments: Disclosures

• IAS 1 Presentation of Financial Statements

• IAS 27 Consolidated and Separate

Financial Statements

• IFRIC 13 Customer Loyalty Programmes

The Company however, expects no

impact from the adoption of the

amendments on its financial position

or performance.

International Financial Reporting Standards issued but not yet effectiveIFRS 9 Financial Instruments: Classification

and Measurement.

IFRS 9 as issued reflects the first phase

of the IASBs work on the replacement

of IAS 39 and applies to classification

and measurement of financial assets

and liabilities as defined in IAS 39. The

standard is effective for annual periods

beginning on or after January 1, 2013. In

subsequent phases, the Board will address

impairments and hedged accounting. The

completion of this project is expected in

mid 2011. The adoption of the first phase

of IFRS 9 will primarily have an effect

on the classification and measurement

of the Company’s financial assets. The

Company is currently assessing the

impact of adopting IFRS 9, however,

the impact of adoption depends on the

assets held by the Company at the date

of adoption which became compulsory

beginning January 2011 for the Audi group

of companies as per Banking Control

Commission circular No.265 addressed

to the banking sector in Lebanon.

Intangible assetsIntangible assets include the value of

computer software. Intangible assets

acquired separately are measured on

initial recognition at cost.

Intangible assets with limited duration

are amortized over the useful economic

life. The amortization period and the

amortization method for an intangible

asset with a limited useful life are

reviewed at least at each financial year-

end. Changes in the expected useful life

or the expected pattern of consumption

of future economic benefits embodied

in the asset are accounted for by

changing the amortization period or

method, as appropriate, and treated as

changes in accounting estimates.

Amortization is calculated using the

straight-line method at a rate of 20%

per annum to write down the cost

of intangible assets to their residual

values over their estimated useful lives.

Investment securitiesThese are classified as follows:

• Held for trading

• Fair value through profit or loss

• Available for sale

Investment securities are recognized

and derecognized on a trade date

basis, when the Company becomes or

ceases to be a party to the contractual

provision of the instrument. All

investment securities are initially

recorded at cost, being the fair value of

the consideration given and including

acquisition charges.

Trading investmentsThese are initially recognized at cost

and subsequently remeasured at

fair value. All related realized and

unrealized gains or losses are included

in the income statement.

Fair value through profit or lossFinancial assets and financial

liabilities classified in this category are

designated on initial recognition when

the following criteria are met:

LIA AR 2010.indd 20-21 4/8/11 12:01 PM

22 23

Legal reserveIn accordance with the requirements

of the Lebanese Commercial Law, the

Company has to appropriate 10% of its

annual net income to a legal reserve

account until it reaches one third of the

capital. This reserve is not available for

the distribution of dividends.

Product classificationThe Company issues life insurance

contracts which are linked to

investment contracts. Where contracts

contain both an investment component

and an insurance component and the

cash flows from the two components

are distinct, the underlying amounts

are unbundled. Any premiums relating

to the insurance component are

accounted for through the income

statement and the remaining element

is accounted through the statement of

financial position.

The underwriting result is determined

after taking into account, inter alia,

unearned premiums and outstanding

claims:

Unearned premiums represent that

portion of the premiums written in the

period up to the statement of financial

position date which is attributable to

subsequent periods and are calculated

at the following percentage of total

premiums:

• Marine business : 25%

• Other business : on prorata temporis

basis on taxable premium

Outstanding claims represent claims

arising from accidents prior to the

statement of financial position date

but not settled.

Provision for outstanding claims

has been set up by the respective

departments of the Company in respect

of reported claims but not settled.

Reserves related to the life branch

are approved by an actuary on all life

policies in force at year end.

In accordance with the requirements

of decree No.13145 dated September

2, 2004 which was amended by decree

N°2442 dated July 9, 2009, insurance

companies are required to take

additional technical reserves detailed

and computed as follows:

Premium deficiency reserve (Non-life)Premium deficiency reserve should be

taken into account when unearned

premiums reserves are insufficient to

cover expected losses and expenses. It

is applicable to all non-life branches.

Provision for claims incurred but not reported (IBNR)The computation of IBNR should be

based on claims incurred but not

reported in the current year only when

closing period is at least three months

after the financial statements are

established;

If the closing period is too close to the

date of the financial statements, the

provision of IBNR should be based on

historical data as follows:

The average number of IBNR claims

over three years multiplied by the

average cost of claims paid.

In order to apply another estimation

method, the approval of the Insurance

Control Commission should be

obtained.

Loss adjustment expense reserveThis reserve represents 3% of the sum

of incurred but not reported reserve

(IBNR) and outstanding claims for the

year.

financial instrument, which is normally

the case when the instrument is sold,

or all the cash flows attributable to the

instrument are passed through to an

independent third party.

Premiums receivablePremiums receivable, included in the

statement of financial position, are

stated at original invoice amount

less a provision for any uncollectible

amounts computed in accordance

with Circular N° 248/1/ET issued by the

Ministry of Economy and Trade. An

estimate for doubtful debts is made

when collection of the full amount

is no longer probable. Bad debts are

written off as incurred.

Allowance for doubtful receivablesThe allowance for doubtful receivables

is established by charges to expense

based upon management’s evaluation

of these receivables, current domestic

and international economic conditions,

past receivable losses and other factors

and circular N° 248/1/ET issued by the

Ministry of Economy and Trade on

which insurance companies have to

provide a provision for their receivables

based on the time intervals for the

issued and uncollected policies. Losses

on receivables provided for are charged

to the allowance; recoveries are included

in current operations.

Property, plant and equipmentProperty, plant and equipment are

stated at cost after deduction of

accumulated depreciation and any

impairment in value.

Depreciation is calculated on a straight

line basis over the estimated useful life

of the assets concerned.

The following annual depreciation

rates have been adopted:

%

Buildings 5

General installations 6

Computers and peripherals 20

Vehicles 10

Office equipment 8

Furniture 8

The carrying values of property, plant

and equipment are reviewed for

impairment when events or changes

in circumstances indicate the carrying

value may not be recoverable. If any

such indication exists and where the

carrying values exceed the estimated

recoverable amount, the assets are

written down to their recoverable

amount, being the higher of their fair

value less costs to sell and their value

in use.

Expenditure incurred to replace a

component of an item of property

and equipment that is accounted

for separately is capitalized and the

carrying amount of the component

that is replaced is written off. Other

subsequent expenditure is capitalized

only when it increases future

economic benefits of the related item

of property, plant and equipment. All

other expenditure is recognized in the

income statement as the expense is

incurred.

Deferred acquisition costThose direct and indirect costs incurred

during the financial period arising from

the writing or renewing of insurance

contracts are deferred to the extent

that these costs are recoverable out of

future premiums. All other acquisition

costs are recognized as an expense

when incurred.

Subsequent to initial recognition, these

costs are amortized on a straight-line

basis based on the term of expected

future premiums. Amortization is

recorded in the income statement.

LIA AR 2010.indd 22-23 4/8/11 12:01 PM

24 25

premiums written relating to the

unexpired period of coverage. The

change in the provision for unearned

premiums is taken to the income

statement in order that revenue is

recognized over the period of risk.

Claims Claims, comprising amounts payable

to contract holders and third parties

and related loss adjustment expenses,

net of salvage and other recoveries, are

charged to income as incurred. Claims

comprise the estimated amounts

payable, in respect of claims reported

to the Company and those not reported

at the statement of financial position

date.

The Company generally estimates its

claims based on previous experience.

Independent loss adjusters normally

estimate property claims. In addition

a provision based on management’s

judgment and the Company’s prior

experience is maintained for the cost

of settling claims incurred but not

reported at the statement of financial

position date. Any difference between

the provisions at the statement of

financial position date and settlements

and provisions for the following year is

included in the underwriting account

for that year.

Commissions earned and paidCommissions earned from ceded

premiums are recognized at the time

policies are reinsured.

Commissions paid are expensed over

the terms of the policies to which

they relate using the prorata temporis

method for non-marine business and

25% of commissions paid for marine

business.

Interest revenueInterest revenue is recognized as the

interest accrues using the effective

interest method.

Dividend revenueDividend revenue is recognized when right

to receive the payment is established.

Judgments In the process of applying the Company’s

accounting policies, management has

made the following judgments, apart

from those involving estimations, which

have the most significant effect on the

amounts recognized in the financial

statements.

Insurance contracts and investment contracts Material judgment is required in

determining the liabilities and in the

choice of assumption relating to insurance

contracts and investment contracts. Such

assumption is determined as appropriate

and prudent estimated at the date of

valuation and no credit is taken for

possible beneficial effects of voluntary

withdrawals.

Investment return The weighted average rate of return

is derived based on assumptions

consistent with the long term asset

allocation strategy as set out in

the product descriptions given to

customers.

Discount rateDiscount rates are related to the time value

of money. Discount rate assumptions

are based on current observed rates in

the market adjusted for default risk. The

discount rate assumptions are varied

depending on the assets assumed to

back the life insurance provisions. The

assumptions are revised at each reporting

date.

An independent actuarial valuation of

insurance contracts and investment

contracts is carried out on an annual

basis.

Mathematical reserveThe mathematical reserve is determined

by actuarial valuation of future policy

benefits. Actuarial assumptions include

a margin for adverse deviation and

generally take account of the type

of policy, year of issue and policy

duration. Mortality and withdrawal rate

assumptions are based on experience,

adjustments to the reserve is made in

the income statement.

Unit-linked technical reserveThe provision for unit-linked technical

reserve is calculated on the basis of a

prudent prospective actuarial valuation

method through the use of prospective

discounted cash flow techniques or the

current unit fund price.

The actuarial valuation includes a

provision for participation which is

the amount the Company expects to

pay investment contract holders in

addition to their guaranteed returns.

Reinsurance contracts heldIn order to minimize financial exposure

from large claims, the Company enters

into agreements with other parties for

reinsurance purposes. Claims receivable

from reinsurers are estimated in a

manner consistent with the claim

liability and in accordance with the

reinsurance contract. These amounts

are shown as part of “reinsurers’

share of technical provisions” in the

statement of financial position until

the claim is paid by the Company.

At each reporting date, the Company

assesses whether there is any

indication that a reinsurance asset

may be impaired. Where an indicator

of impairment exists, the Company

marks a formal estimate of recoverable

amount. Where the carrying amount

of a reinsurance asset exceeds its

recoverable amount the asset is

considered impaired and is written

down to its recoverable amount.

Income taxInsurance companies in Lebanon are

subject to the lump sum tax profit

system which calculates profit based

on issued premiums at rates fixed by

the Ministry of Finance as follows:

%

Branch

Life 5

Investment 10

Hospitalization 5

Accident (motor, workmen

and GTP)

6

Fire 12

Marine 7

Other branches 10

Other income is distributed on a

weighted average basis of premiums

issued during the current year and

added to taxable income.

Income tax is currently fixed at 15%.

Dividend declared is subject to a 10%

tax.

Provision for termination indemnityEnd of service indemnity subscriptions

paid and due to the National Social

Security Fund (N.S.S.F.) are calculated

on the basis of 8.5% of the staff salaries.

The final termination indemnities due

to employees after completing 20 years

of service or at the retirement age or

if the employee leaves the Company

permanently, are calculated on the last

salary times the number of years of

service; the Company is liable to pay

to the N.S.S.F. the difference between

the total indemnity due to employees

and the subscriptions paid (calculated

at the rate of 8%).

Premiums earnedPremiums are taken into income over

the terms of the policies to which they

relate on a prorata basis. Unearned

premiums represent the portion of

LIA AR 2010.indd 24-25 4/8/11 12:01 PM

26

aDDItIons tRansfeR balanceat balanceat

2010 2010 31.12.2010 31.12.2009

000lbp 000lbp 000lbp 000lbp

Cost

Computer software 9,569 202,002 1,075,711 864,139

Advances on acquisition 34,725 (202,002) - 167,277

44,295 - 1,075,711 1,031,416

Amortization

Computer software 54,253 - 891,779 837,526

Net Value

At December 31, 2010 183,932

At December 31, 2009 193,891

IntanGIbleassets

2010 2009

000lbp 000lbp

Investments in subsidiaries 1,576,631 1,576,631

Investments in associates 4,553,658 4,547,648

6,130,289 6,124,278

InVestMentsInsUbsIDIaRIesanDassocIates

2010 2009

000lbp 000lbp

Trading 1,552,725 -

Fair value through profit or loss 136,650 238,396

Available for sale 42,059,318 26,332,084

43,748,692 26,570,479

fIxeDIncoMesecURItIesanDsIMIlaRInVestMents

Estimation uncertainty The key assumptions concerning

the future and other key sources

of estimation uncertainty at the

statement of financial position date,

that have a significant risk of causing

a material adjustment to the carrying

amounts of assets and liabilities within

the next financial year are discussed

below.

Provision for outstanding claimsConsiderable judgment by management

is required in the estimation of amounts

due to contract holders arising from

claims made under insurance contracts.

Such estimates are necessarily based on

significant assumptions about several

factors involving varying, and possible

on significant, degrees judgment and

uncertainty and actual results may

differ from management’s estimates

resulting future changes is estimated

liabilities. The Company generally

estimates its claims based on previous

experience. Claims requiring court

decisions are estimated individually.

Management reviews in provisions for

claims incurred, and claims incurred

but not reported on monthly basis.

Foreign currenciesTransactions in foreign currencies are

recorded at the exchange rate ruling at

the date of the transaction. Monetary

assets and liabilities denominated in

foreign currencies are retranslated

at the rate of exchange ruling at the

statement of financial position date.

All differences are taken to the income

statement.

Fair valuesFor investments traded in organized

markets, fair value is determined by

reference to quoted market bid prices.

The fair value of interest-bearing items

is estimated based on discounted cash

flows using interest rates for items with

similar terms and risk characteristics.

For unquoted equity investments, fair

value is determined by reference to the

market value of a similar investment

or is based on the expected discounted

cash flows.

Capital managementThe primary objective of the Company

while managing its capital, is to make

sure that it maintains adequate ratios

to support its business, and maximize

shareholder value.

The Company manages its capital

structure and makes adjustments

to it in light of changes in business

conditions. No changes were made

in the objectives, policies or process

during the years ended December 31,

2010 and December 31, 2009. Capital

includes shareholders’ equity and is

measured at LBP.100,153,062,671 at

December 31, 2010 (LBP.92,044,270,856

at December 31, 2009).

LIA AR 2010.indd 26-27 4/8/11 12:01 PM

2010 2009

000lbp 000lbp

Balance at January 1 4,659,158 2,760,702

Acquisition cost related to premiums matured in the year (2,952,252) (2,046,271)

Acquisition cost related to premiums maturing next years 3,904,530 3,944,727

Balance at December 31 5,611,436 4,659,158

DefeRReDacqUIsItIoncost

aDDItIons balanceat balanceat

2010 31.12.2010 31.12.2009

000lbp 000lbp 000lbp

Cost

Buildings 1,697,228 4,052,669 2,355,441

General installations 24,391 846,916 822,525

Equipment and furniture 29,327 641,217 611,891

Vehicles 1,884 79,733 77,849

Computer and peripherals 44,572 709,847 665,276

Financial deposits - 3,816 3,816

1,797,402 6,334,200 4,536,798

Depreciation

Buildings 123,402 123,402 -

General installations 21,814 624,634 602,820

Equipment and furniture 17,296 537,065 519,768

Vehicles 2,408 70,200 67,792

Computers and peripherals 26,126 635,241 609,115

191,047 1,990,542 1,799,495

Net Value

At December 31, 2010 4,343,657

At December 31, 2009 2,737,303

pRopeRtY,plantanDeqUIpMent

2010 2009

000lbp 000lbp

Cash on hand 659,980 383,016

Banks deposits:

Current deposits 2,897,175 3,350,800

Term deposits with original maturities of three months or less 6,686,433 66,112,325

10,243,588 69,846,141

cashanDcasheqUIValents

2010 2009

000lbp 000lbp

Technical Investments 3,140,812 3,140,812

Term deposits 102,287,634 40,673,924

105,428,446 43,814,736

blocKeDbanKDeposItsanDDeposItswIthMatURItYofMoRethan3Months

2010 2009

000lbp 000lbp

Premium receivables from brokers and clients 17,507,754 15,849,047

Provision for doubtful receivables (3,861,190) (3,394,488)

13,646,564 12,454,559

ReceIVableUnDeRInsURancebUsIness

LIA AR 2010.indd 28-29 4/8/11 12:01 PM

2010 2009

000lbp 000lbp

Salaries and related benefits 5,064,089 5,198,719

Marketing and advertising 95,178 461,640

Taxes and stamps 856,478 893,397

Business promotions and social aids 89,246 85,011

Services rendered 639,512 571,773

Professional fees 155,397 211,786

Office supplies 240,397 283,353

Telephone and telecommunications 266,607 259,312

Travel and transportation 101,159 174,794

Repairs and maintenance 201,160 213,896

Insurance 16,480 20,644

Rent and related charges 45,256 229,751

Office cleaning 30,695 29,961

Utilities 105,019 101,399

Reception, hotel and entertainment 98,369 76,787

Attendance fees 67,815 45,210

Miscellaneous 46,314 50,496

8,119,170 8,907,932

aDMInIstRatIVeexpenses

capItalsolVencYRatIo

As per the insurance Company

law dated June 28,1999 insurance

companies have to keep a minimum

capital solvency ratio of 10% calculated

on the basis of written premiums net

of cancellations.

The Company has a capital solvency

ratio of 118.39% for the year 2010

compared to 105.62% for the year 2009,

calculated as follows:

2010 2009

000lbp 000lbp

Total equity 100,153,063 92,044,271

Written premiums net of cancellations 84,597,440 87,144,648

=118.39% =105.62%

coMpanY's 2010 2010 2009

shaRe ReInsUReRs’ total total

000lbp shaRe000lbp 000lbp 000lbp

Mathematical reserve 47,654,697 2,771,283 50,425,979 37,513,381

IBNR 28,985 53,460 82,445 42,611

Loss adjustment expense reserve 12,590 7,242 19,832 16,395

Outstanding claims 390,679 187,943 578,622 503,892

48,086,951 3,019,928 51,106,878 38,076,280

Other branches

Unearned premium reserve 24,259,224 7,612,926 31,872,150 28,087,318

IBNR 215,129 334,503 549,632 403,386

Loss adjustment expense reserve 187,655 139,113 326,768 274,713

Premium deficiency reserve 78,427 - 78,427 170,616

Outstanding claims 6,040,070 4,302,578 10,342,648 8,753,717

30,780,505 12,389,120 43,169,625 37,689,750

78,867,456 15,409,048 94,276,503 75,766,030

technIcalReseRVe

2010 2009

000lbp 000lbp

Provision for risks 2,407,227 1,252,366

Provision for termination indemnity 910,806 1,555,271

3,318,033 2,807,637

pRoVIsIonfoRRIsKsanDchaRGes

LIA AR 2010.indd 30-31 4/8/11 12:01 PM

statement of financial position.

The following policies and procedures

are in place to mitigate the Company’s

exposure to credit risk:

• The Company only enters into

insurance and reinsurance contracts

with recognized credit worthy third

parties. It is the Company’s policy

that all customers who wish to trade

on credit terms are subject to credit

verification procedures. In addition,

receivables from insurance and

reinsurance contracts are monitored

on an ongoing basis in order to reduce

the Company’s exposure to bad debts.

• The Company seeks to limit credit

risk with respect to agents and brokers

by setting credit limits for individual

agents and brokers and monitoring

outstanding receivables.

• The Company’s bond portfolio is

managed by the investment officer in

accordance with the investment policy

established by the board of directors.

• The Company’s bank balances

are maintained with a range of

international and local banks in

accordance with limits set by the board

of directors.

• There are no significant concentrations

of credit risk within the Company.

lIqUIDItYRIsKLiquidity risk is the risk that the

Company will not be able to meet

its commitments associated with

insurance contracts and financial

liabilities as they fall due.

Liquidity requirements are monitored

on a monthly basis and management

ensures that sufficient liquid funds are

available to meet any commitments as

they arise.

foReIGncURRencYRIsKForeign currency risk is the risk that

the value of a financial instrument will

fluctuate due to changes in foreign

exchange rates. Substantially most of

the Company’s assets and liabilities

are denominated in US Dollar. The

Lebanese Lira has, in recent years,

remained stable against the US Dollar

at the rate of 1 US Dollar = 1,507.50

Lebanese Lira.

InteRestRateRIsKInterest rate risk is the risk that the

value or future cash flows of a financial

instrument will fluctuate because

of changes in market interest rates.

Floating rate instruments expose the

Company to cash flow interest risk,

whereas fixed interest rate instruments

expose the Company to fair value

interest risk.

The Company is exposed to interest

rate risk on certain of its investments

and cash and cash equivalents. The

Company limits interest rate risk by

monitoring changes in interest rates

in the currencies in which its cash

and interest bearing investments and

borrowings are denominated.

pRIceRIsKEquity price risk is the risk that the fair

value of future cash flows of a financial

instrument will fluctuate because of

changes in market prices (other than

those arising from interest rate risk or

currency risk), whether those changes

are caused by factors specific to the

individual financial instrument or its

issuer, or factors affecting all similar

financial instruments traded in the

market.

The Company’s equity price risk

exposure relates to financial assets

whose values will fluctuate as a result

of changes in market prices.

The Company’s equity investments

comprise securities quoted on the

European and American Stock Exchange

and a small number of unquoted

securities.

33

RIsKManaGeMent

32

The risks faced by the Company and

the way these risks are mitigated by

management are summarized below

InsURanceRIsKInsurance risk is the risk that actual

claims payable to contract holders

in respect of insured events exceed

the carrying amount of insurance

liabilities. This could occur because

the frequency or amounts of claims are

more than expected. The Company only

issues short term insurance contracts

in connection with medical, property

and motor (collectively known as fire

and accident), marine cargo, workmen

compensation, public liability and life.

fReqUencYanDaMoUntsofclaIMsThe frequency and amounts of claims

can be affected by several factors.

The Company underwrites mainly fire

and accident and marine risks. These

are regarded as short-term insurance

contracts as claims are normally

advised and settled within one year

of the insured event taking place. This

helps to mitigate insurance risk.

ReInsURanceRIsKIn common with other insurance

companies and in order to minimize

financial exposure arising from

large claims, the Company, in the

normal course of business, enters

into agreements with other parties

for reinsurance purposes. Such

reinsurance arrangements provide

for greater diversification of business,

allow management to control exposure

to potential losses arising from large

risks, and provide additional capacity

for growth.

To minimize its exposure to significant

losses from reinsurer insolvencies,

the Company evaluates the financial

condition of its reinsurers.

Reinsurance ceded contracts do

not relieve the Company from its

obligations to policyholders and as

a result the Company remains liable

for the portion of outstanding claims

reinsured to the extent that the

reinsurer fails to meet the obligations

under the reinsurance agreements.

ReGUlatoRY fRaMewoRKRIsKThe operations of the Company

are subject to local regulatory

requirements within Lebanon. Such

regulations not only prescribe approval

and monitoring of activities but also

impose certain restrictive provisions

e.g. capital adequacy to minimize the

risk of default and insolvency on the

part of the insurance companies and

to enable them to meet unforeseen

liabilities as these arise.

fInancIalRIsKThe Company’s principal financial

instruments are investments, receivables

arising from insurance and reinsurance

contracts and cash and cash equivalents.

The Company does not enter into

derivative transactions.

The main risks arising from the

Company’s financial instruments are

interest rate risk, foreign currency

risk, credit risk, market price risk and

liquidity risk. The board reviews and

agrees policies for managing each of

these risks and they are summarized

below.

cReDItRIsKCredit 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. For all classes of financial assets

held by the Company, the maximum

exposure to credit risk to the Company

is the carrying value as disclosed in the

LIA AR 2010.indd 32-33 4/8/11 12:01 PM

34 3534

capItalManaGeMentCapital requirements are set and

regulated by the Lebanese Ministry

of Economy and Trade. These

requirements are put in place to ensure

sufficient solvency margins. Further

objectives are set by the Company

to maintain a strong credit rating

and healthy capital ratios in order to

support its business objectives and

maximize shareholders’ value.

The Company manages its capital

requirements by assessing shortfalls

between reported and required capital

levels on a regular basis. Adjustments to

current capital levels are made in light

or changes in market conditions and

risk characteristics of the Company’s

activities. In order to maintain or adjust

the capital structure, the Company

may adjust the amount of dividends to

shareholders or issue capital securities.

The Company fully complied with

the externally imposed capital

requirements during the reported

financial periods and no changes were

made to its objectives, policies and

processes from the previous year.

faIRValUesoffInancIalInstRUMentsFinancial instruments are composed

of financial assets, liabilities and

derivatives.

Financial assets include investments

and receivables. Financial liabilities

include payables. The Company has

no derivatives. The fair values of the

financial assets and liabilities are not

materially different from their carrying

values at the statement of financial

position date.

LIA AR 2010.indd 34-35 4/8/11 12:01 PM

Because there's no

place like home,

LIA is dedicated to

making sure that

you and your

family always stay

well protected

against any possible

financial burden

such as theft, fire

damage, natural

disaster, and other

events that could

disrupt the lifestyle

your family is

accustomed to.

hoMeInsURance

LIA AR 2010.indd 36-37 4/8/11 12:01 PM

Tel: (961-1) 255 640 Fax: (961-1) 255 659

P.O.Box: 11-1439Beirut, Lebanon

E-mail: contactus@lialebanon.com

Mar Elias Street - Boubis Bldg.Tel: (961-1) 301 718 - 704 953 - 704 954

Fax: (961-1) 704 955

Riad El Solh Blvd. - Bank Audi Bldg.Tel: (961-7) 722 321Fax: (961-7) 722 321

Tell, Kayal Street - Al Charek Bldg.Tel: (961-6) 435 503 - 624 006

Fax: (961-6) 435 503

Val de ZoukTel: (961-9) 211 112 - 211 114

Fax: (961-9) 210 757

Zahle Blvd. - Manara CenterTel: (961-8) 804 974Fax: (961-8) 804 974

Mallat Center 3Tel: (961-5) 452 708 - 452 943 - 456 402

Fax: (961-5) 456 402

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