PRESS RELEASE

Financial Highlights

Overall operating revenue for the year was at USD196,964,904 (an increase of 18.7% compared to the previous year).

The Company recorded a Gross Premium Income of USD183,681,517 compared to the previous year’s figure of USD155,111,729. Premium income from the overseas business represented 75.7% of the Company’s overall premium volume (inclusive of the business derived from Lloyd’s).

Net Claims Incurred in 2007 was at USD95,260,534, representing an increase of 22.6% compared to the Net Claims Incurred in 2006 of USD77,718,772. After providing for the Net Claims Incurred and the Net Commission, Labuan Re posted an Underwriting Profit before management expenses and exchange difference of USD14,914,782.

The Company’s Net Investment Income was also higher compared to 2006, i.e. at USD13,283,387 compared to USD10,824,192 in the previous year.

Overall, Net Profit After Tax for the year was at USD22,480,777 (2006: 21,276,058). The better performance resulted in the Company’s Return on Equity to increase to 15% from the 14.2% recorded in 2006.

The Company’s Capital Adequacy Ratio at the end of the year (measured by the solvency margin surplus) was at 582.6%. This amount has decreased from the 590.1% recorded at December 31st, 2006 due to the increase in the required margin.

The Company paid an interim dividend of 5% in December 2007 and a final dividend of 2.5% will be proposed for adoption at the Annual General Meeting.

Performance Review

Underwriting results were mainly underpinned by the performance of the Company’s Overseas and Malaysian business portfolios. The main underwriting profit contributors (in terms of business class) were Miscellaneous class, followed by Motor. The operational results were aided by favourable exchange rates and profit contribution from Lloyd’s. However, an increase in the frequency of medium-sized claims and higher claim cost per incident had led to the increase in the Net Claims Incurred.

During the year, the reinsurance market conditions softened in the non-catastrophe exposed markets. In its efforts to maintain the quality of its portfolio of business, the Company continued to exercise its strict underwriting discipline in the selection and acceptance of business.

The investment return, on the other hand, was mainly contributed by the interest income from cash deposits (with an average yield of 5.25%) and the realized gains from the equity portfolio investment (arising from the favourable equity market performance, especially during the first half of the year). The weakening of the US Dollar during the year also contributed to the positive investment return from investment assets denominated in the non-US Dollar currencies.

Development of the Retakaful Business

Malaysia is aiming to enhance its inter-linkages with the global Islamic financial markets. The efforts are not limited to developing the financial infrastructure of the Takaful industry, but also to implementing measures and initiatives that will fortify Malaysia’s position as an Islamic Financial Centre.

With the establishment of the Retakaful Division in 2006, the Company has adopted a wakalah operating model and developed its own Retakaful wordings for both treaties and facultative businesses. The Division currently writes Retakaful business from eleven countries, predominantly from Malaysia which is the largest takaful market in the world to-date.

Financial Strength Rating

A.M. Best Company had on October 25th, 2007 affirmed Labuan Re’s financial strength rating of A- (Excellent). Similarly, Fitch Ratings had affirmed an ‘A–’ Insurer Financial Strength rating to Labuan Re on December 18th, 2007. Both ratings reflect Labuan Re’s solid capitalization, strong shareholders’ commitment and increased diversification of risk.

Lloyd’s Participation

Labuan Re’s participation in the quota-share treaty arrangement with the Chaucer Syndicates at Lloyd’s was increased to GBP37.595 million in 2007 (2006: GBP34.75 million).

Participation at Lloyd’s was further enhanced by the performance of our associate company, ACAL Holdings Pte Ltd, based in Singapore. ACAL Holdings Pte Ltd is a capital provider of Lloyd’s Syndicate 1965. In 2007, ACAL had declared and paid an interim dividend of 3%.

Beginning from the Underwriting Year 2008, Labuan Re’s participation in the Chaucer Syndicates would be reduced on a gradual basis, at the latter’s request. The reduction of capacity in the Underwriting Year 2008 was however, offset by a new capacity of GBP10 million in a syndicate managed by Argenta Syndicate Management.

Bahrain Office

The Bahrain Branch continued to register premium growth with premium volume increasing from USD21,482, 638 in 2006 to USD23,038,161 in 2007, mainly due to the depreciation of the US Dollar. Nevertheless, the underwriting results in Bahrain had deteriorated from 2006 due to worse than expected claims experience.