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PRESTIGE ASSURANCE PLC

LAGOS, NIGERIA

REPORT OF THE DIRECTORS

AND

AUDITED FINANCIAL STATEMENTS

FOR THE Y EAR ENDED 31 DECEMBER 2017


REPORT OF THE DIRECTORS AND AUDITED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2017

Contents Page

Corporate Information 3

Results at a Glance 4

Corporate Governance Report 5 - 9

Certificate Pursuant to Section 60(2) of Investment and Securities Act 10

Report of Audit and Compliance Committee 11

Sustainability and Corporate Responsibility Report 12 - 14

Management Discussion and Analysis 15 - 16

Report of the Directors 17 – 19

Statement of Directors’ Responsibilities in Relation to the Preparation of the Financial Statements 20

Independent Auditors’ Report 21 - 24

Summary of Significant Accounting Policies 25 - 51

Statement of Profit or Loss and Other Comprehensive Income 52

Statement of Financial Position 53

Statement of Changes in Equity 54

Statement of Cash Flows 55

Notes to the Financial Statements 56 - 96

Other National Disclosures:

Revenue Accounts 97

Statement of Value Added 98

Five-Year Financial Summary 99 – 100


CORPORATE INFORMATION


Directors

Mr. Hassan T. M. Usman (Nigerian) - Chairman Dr. Balla Swamy (Indian) - Managing Director/CEO Mr. Sarbeswar Sahoo (Indian) - Executive Director Mr. Gopalan Srinivasan (Indian) - Non-Executive Director Mr. Muftau Olakunle Oyegunle (Nigerian) - Non-Executive Director Mr. Gopalan Raghu (Indian) - Non-Executive Director Mr. Hermant G. Rokade (Indian) - Non-Executive Director (Retired 05 May, 2017) Mr. Sibharth Prandan - Non-Executive Director (Appointed 05 May, 2017)

Registered Number 6753

NAICOM Reg. Number 033

Company Secretary Abayomi Odulana FRC/2013/ICSAN/000000003201

Registered Office Ligali Ayodrinde Street

Victoria Island, Lagos P.O.Box 650 Marina, Lagos [email protected] www.prestigeassuranceplc.com

Actuaries Zamara Consulting Actuaries Nigeria Limited

FRC/2017/NAS/000000016912

70 Adetokunbo Ademola Street

Victoria Island Lagos

Registrars First Registrar Nigeria Limited

Plot 2, Abebe Village Road

Iganmu, Lagos

FRC/2013/00000000001946

Auditors Ernst & Young 10th & 13th Floors, UBA House

57, Marina Lagos

Bankers Access Bank Plc Guaranty Trust Bank Plc

Citi Bank Nigeria Limited Heritage Bank Plc First Bank of Nigeria Limited Keystone Bank Limited Stanbic IBTC Bank Limited Bank of India Limited Sterling Bank Plc Union Bank Plc United Bank for Africa Plc Skye Bank Plc Fidelity Bank Plc Providus Bank Limited

Re-insurers African Reinsurance Coporation Aveni Reinsurer

Continental Reinsurance Zep Reinsurer NCA Reinsurer

3


RESULTS AT A GLANCE


2017 2016 ₦’000 ₦’000

Gross premium written 3,808,516 2,614,264

========= =========

Net premium income 1,448,481 1,101,808

Underwriting expenses 1,615,034 1,213,657

Investment income 830,939 417,824

Other operating income 30,774 146,361

Result from operating activities 706,215 350,996

Profit for the year 531,841 221,992

Net assets 7,508,121 6,228,262

Total assets 11,775,553 9,689,587

Basic earnings per share (Kobo) 9.90 4.13

Diluted earnings per share (Kobo) 9.90 4.13

4


CORPORATE GOVERNANCE REPORT


Introduction Prestige Assurance Plc (“the Company”) has remained committed to the principles and practice that promote

Good Corporate Governance. We recognize that sound corporate governance practices are necessary for

effective management and control of the Company’s business with a view to maximizing the Shareholders value

and meeting the expectations of other Stakeholders. In furtherance of the commitment to high ethical conduct,

we regularly review our processes and practices to ensure compliance with the legislative and best practice

changes in the global corporate governance environment.

The Company continues to comply with its Internal Governance Policies and the Code of Corporate Governance

for Public Companies in Nigeria. As an Insurance company, Prestige also complies with the Code of Good

Corporate Governance for the Insurance Industry in Nigeria, issued by the National Insurance Commission in

March 2015. The NAICOM’s Code of Corporate Governance covers a wide range of issues including Board

structure, quality of Board Members, duties of the Board, conduct of the Board of Directors, rights of

Shareholders and Committees of the Board.

Board of Directors The Board of Directors has the ultimate responsibility for the overall functioning of the Company. The

responsibilities of the Board include setting the Company’s strategic objectives and policies, providing

leadership to put them into effect, supervising the management of the business, ensuring implementation of

decisions reached at the Annual General Meeting, ensuring value creation to shareholders and employees,

determination of the terms of reference and procedures of all Board Committees, ensuring maintenance of

ethical standard as well as compliance with the Laws of Nigeria. At the moment, the Board is composed of seven

members including a Non-Executive Chairman, MD/CEO and four Non-Executive Directors and one Executive

Director. The Directors are experienced stakeholders with diverse professional backgrounds in Insurance,

Accounting, Commerce, Management, Information Technology, etc. The Directors are men of impeccable

character and high integrity.

The Company is indeed delighted to have a versatile Board with deep understanding of its responsibilities to

Shareholders, Regulatory Authorities, Government and other Stakeholders. The Board always takes proactive

steps to master and fully appreciate all cultural, legislative, ethical, institutional and all other factors, which

impact our operations and operating environment. This has ensured that a culture of compliance with rules and

regulation is entrenched at all levels of operations within the Company. The meetings of the Board are

scheduled well in advance and highlights from the sub-committees of the Board are circulated to all the

Directors. During the year under review, the Board met on 9 March, 5 May, 18 August and 26 October. Details

of attendance by the Directors at Board meetings are as follows:

S/N DIRECTORS CATEGORY OF DIRECTORSHIP

NUMBER OF MEETINGS

HELD

NUMBER OF MEETINGS

ATTENDED 1 Mr. Hassan T.M Usman Chairman 4 4 2 Dr. Balla Swamy Managing Director/CEO 4 4 3 Mr. Gopalan Srinivasan Non-Executive Director 4 3 4 Mr. Muftau Olakunle Oyegunle Non-Executive Director 4 4 5 Mr. Gopalan Raghu Non-Executive Director 4 4 6 Mr. Sarbeswar Sahoo Executive Director 4 4 7 Mr. Sibharth Prandan Non-Executive Director 3 3

Mr. Sibharth Prandan joined the Board on 5th of May 2017.

5


CORPORATE GOVERNANCE REPORT- CONTINUED


Board Committees The Board performed its functions through a total of four Standing Committees during the period under review.

The Committees have clearly defined responsibilities, scope of authority and procedures for reporting to the

Board. Membership of the Committees is structured to take optimum advantage of the skills and experience of Non-Executive Directors. The following are the standing Committees of the Board during the year under review:

Audit and Compliance Committee The Company established an Audit Committee in compliance with Section 359(6) of the Companies and Allied

Matters Act, CAP C20 Law of the Federation of Nigeria 2004, which comprises of three representatives of

Shareholders (elected annually at the AGM), Two Non-Executive Directors and one Executive Director during

the year under review. The Audit Committee met four times during the year under review - 8 March, 27 April, 27 J uly and 26 October.

Membership and attendance at the meetings are as follows:

S/N MEMBERS NUMBER OF MEETINGS

HELD NUMBER OF MEETINGS

ATTENDED 1 Mrs. Funmi Oyetunji * 1 1 2 Mr. Sarbeswar Sahoo 4 4 3 Engr. Olayiwola Tobun 4 4 4 Mr. Muftau Olakunle Oyegunle 4 4 5 Mr. Gopalan Raghu 4 4 6 Mrs Anike Odusote 4 4

*Mrs. Funmi Oyetunji joined the committee on 18th August 2017.

Investment Committee The Investment Committee comprises of the MD/CEO, 2 Non-executive Directors and one Executive Director.

The Committee meets to review the investment guidelines of the Company, ensure that investments embarked

upon by the Management are in line with Regulatory and Board Guidelines and also considers other

miscellaneous issues. Mr. Gopalan Raghu Chaired the Committee during the year under review. The Committee

met thrice times in the year under review as follows: 23 February, 25 August and 10 November 2017.

S/N MEMBERS NUMBER S OF MEETINGS

HELD NUMBER OF MEETINGS

ATTENDED 1 Mr. Gopala Raghu 3 3 2 Dr. Balla Swamy 3 3 3 Mr. Muftau Olakunle Oyegunle 3 3 4 Mr. Sarbeswar Sahoo 3 3

6




Establishment Committee The Establishment Committee comprises the MD/CEO, Executive Director and two Non-Executive Directors. Mr.

Muftau Olakunle Oyegunle chaired the Committee which primarily considers general staff matters. The

Committee met on 23 February, 27 April and 13 September 2017 as reflected below:

S/N MEMBERS NUMBER MEETINGS HELD NUMBER OF MEETINGS ATTENDED 1 Mr. Muftau Olakunle Oyegunle 3 3 2 Dr. Balla Swamy 3 2 3 Mr. Sarbeswar Sahoo 3 3 4 Mr. Gopalan Raghu 3 3

Risk Management Committee The Risk Management Committee comprises of MD/CEO, 2 Non-executive Directors and Executive Director,

namely Mr. Muftau Olakunle Oyegunle, Mr. Goplan Raghu, Dr. Balla Swamy and Mr. Sarberswar Sahoo. The

Committee’s term of reference is to fundamentally ensure that the Company’s operations comply with the

Enterprise Risk Policy as approved by the Board in line with regulatory requirements. The Committee met on

15 August, 13 September and 10 November 2017.

S/N MEMBERS NUMBER MEETINGS HELD NUMBER OF MEETINGS ATTENDED

1 Mr. Gopalan Raghu 3 3 2 Dr. Balla Swamy 3 3 3 Mr. Muftau Olakunle Oyegunle 3 3 4 Mr. Sarbeswar Sahoo 3 3

Roles of Key Members of the Board The positions of the Chairman of the Board and the Chief Executive Officer are separate and held by different

persons. The Chairman and the Chief Executive Officer are not members of the same extended family.

The Chairman The main responsibility of the Chairman is to lead and manage the Board to ensure that it is administered

effectively and fully discharges its legal and regulatory responsibilities. The Chairman is responsible for

ensuring that Directors receive accurate, timely and clear information to enable the Board to take informed

decisions, monitor effectively and provide advice to promote the success of the Company.

The Chairman also manages the input of Non-executive Directors to promote effective relationships and open

communications, both inside and outside the Boardroom, between Executive and Independent Non-executive

Directors. The Chairman strives to ensure that any differences on the Board are resolved amicably.

The Chief Executive Officer The Board has delegated the responsibility for the day-to-day management of the Company to the Chief

Executive Officer (CEO), who is responsible for leading management, making and implementing operational

decisions. The CEO is responsible to the Board of Directors and ensures that the Company complies strictly with

regulations and policies of both the Board and Regulatory Authorities. The CEO ensures that optimization of

the Company’s resources is achieved at all times and has the overall responsibility for the Company’s financial

performance.

7




The Company Secretary The Company Secretary is a point of reference and support for all Directors. He is responsible to update the

Directors with all requisite information promptly and regularly. The Board may through the Company Secretary

obtain information from external sources, such as consultants and other advisers, if there is a need for outside

expertise, via the Company Secretary or directly. The Company Secretary is further responsible to assist the

Chairman and Chief Executive Officer to formulate an annual Board Plan with the administration of other

strategic issues at the Board level; organize Board meetings and ensure that the minutes of Board meetings

clearly and properly capture Board’s discussions and decisions.

Director Nomination Process The Board agrees upon the criteria for the desired experience and competencies of new Directors. The Board

has power under the Articles of Association to appoint a Director to fill a casual vacancy or as an additional

Director. The criteria for the desired experience and competencies of new Non-executive Directors are agreed

upon by the Board. The balance and mix of appropriate skills and experience of Non-executive Directors is taken

into account when considering a proposed appointment. In reviewing the Board composition, the Board ensures

a mix with representatives from diverse background. The Shareholding of an individual in the Company is not

considered a criterion for the nomination or appointment of a Director. The appointment of Directors is subject

to the approval of NAICOM. The following core values are considered critical in nominating a new director; (i)

Integrity (ii) Professionalism (iii) Career Success (iv)Goodwill (v) Ability to add value to the Organization

Induction and Continuous Training of Board Members.

Training of Board Member On appointment to the Board and to Board Committees, all Directors receive a formal induction tailored to meet

their individual requirements. The New Directors are oriented about the Company and its operations through

the Company Secretary via the provision of the Company’s Articles of Association, relevant statutory books

and regulations and adequate information on operations. The Directors are also given a mandate and terms of

reference to aid in performance of their functions. Management further strives to acquaint the new Directors

with the operations of the Company via trainings/seminars to the extent desired by new Directors to enable

them function in their position. The training and education of Directors on issues pertaining to their oversight

functions is a continuous process, in order to update their knowledge and skills and keep them informed of new

developments in the insurance industry and operating environment.

Annual Board Appraisal The Code of Corporate Governance for the Insurance Industry recognizes the fact that good corporate

governance framework must be anchored on an effective and accountable Board of Directors whose

performance is assessed periodically. The annual appraisal covered all aspects of the Board’s structure,

composition, responsibilities, processes, relationships, individual members’ competencies and respective roles

in Board performance, as well as the Company’s compliance status with the provisions of NAICOM.

The General Meeting of the Company This is the highest decision making body of the Company. The Company is driven by its desire to deliver

significant returns on its shareholders investment. The shareholders have an opportunity to express their

concerns (if any) and opinions on the Company’s financial results and all other issues at the Annual General

Meeting of the Company. The Meetings are conducted in a fair and transparent manner where the regulators

are invited such as The National Insurance Commission, the Securities and Exchange Commission, Corporate

Affairs Commission, the Auditors as well as other Shareholder’s Associations. The Company also dispatches its

annual reports, providing highlights of all the Company’s activities to its shareholders.

8




Protection of Shareholders Rights

The Board ensures the protection of the statutory and general rights of shareholders at all times, particularly

their right to attend and vote at general meetings. All shareholders are treated equally, regardless of volume

of shareholding or social status.

Communication Policy It is the responsibility of Executive Management under the direction of the Board, to ensure that the Board

receives adequate information on a timely basis, about the Company’s businesses and operations at

appropriate intervals and in an appropriate manner, to enable the Board to carry out its responsibilities.

Furthermore, the Board and Management of the Company ensures that communication and dissemination of

information regarding the operations and management of the company to shareholders, stakeholders and the

general public is timely, accurate and continuous, to give a balanced and fair view of the Company’s financial

and non-financial matters. Such information, which is in plain language, readable and understandable, is

available on the Company’s website, www.prestigeassuranceplc.com. In order to reach its overall goal on

information dissemination, the Company is guided by the following Principles, legislation and codes of

corporate governance of the jurisdictions within which it operates. These include the Insurance Act, the

NAICOM Operational Guidelines, the Companies and Allied Matters Act (CAMA) and the codes of Corporate

Governance issued by NAICOM and SEC. The Company operates in a multicultural environment and accordingly

recognizes the need to be sensitive to the cultural peculiarities of its operating environment.

Feedback The Company actively and regularly seeks feedback on its image and communication activities both from the

media as well as from its key target groups. This feedback is used in future activities.

Independent Advice The Board of Directors are at their own discretion and at the Company’s expense required to seek Independent

professional advice when required to enable a Member of the Board effectively perform certain responsibilities.

Insider Trading and Price Sensitive Information The Company is clear in its prohibition of insider trading by its Board, management, Officers and related

persons who are privy to confidential price sensitive information. Such persons are further prohibited from

trading in the Company’s securities where such transactions would amount to insider trading. Directors,

insiders and related parties are prohibited from disposing, selling, buying or transferring their shares in the

Company for a period commencing from the date of receipt of such insider information until such a period when

the information is released to the public or any other period as defined by the Company from time to time.

Code of Professional Conduct for Employees The Company has an internal Code of Professional Conduct, which all members of staff are expected to

subscribe to upon assumption of duties. All members of staff are expected to strive to maintain the highest

standards of ethical conduct and integrity in all aspects of their professional life as contained in the Code of

Professional Conduct which prescribes the common ethical standards, culture and policies of the Group relating

to employee values.

Abayomi Odulana

Company Secretary FRC/2013/ICSAN/000000003201

9


CERTIFICATE PURSUANT TO SECTION 60(2) OF INVESTMENT AND SECURITIES ACT


We, the undersigned, hereby certify the following with regards to our audited financial statements for the year

ended 31 December 2017 that:

(a) We have reviewed the financial statements;

(b) To the best of our knowledge, the financial statements does not contain: · Any untrue statement of a material fact, or · Omit to state a material fact, which would make the statements, misleading in the light of

circumstances under which such financial statements were made;

(c) To the best of our knowledge, the financial statements and other financial information included in the report fairly present in all material respects the financial condition and results of operations of the

Company as at, and for the years presented in the report;

(d) We: are responsible for establishing and maintaining internal controls; have designed such internal controls to ensure that material information relating to the Company is

made known to such officers by others within the entity particularly during the period in which the

periodic reports are being prepared; have evaluated the effectiveness of the Company’s internal controls as of date within 90 days prior

to the report; have presented in the report our conclusions about the effectiveness of our internal controls based

on our evaluation as of that date;

(e) We have disclosed to the auditors of the Company and the Audit Committee: all significant deficiency in the design or operations of internal controls which would adversely affect

the Company’s ability to record, process, summarize and report financial data and have identified for

the Company’s auditors any material weakness in internal controls, and; any fraud, whether or not material, that involves management or other employees who have

significant role in the Company’s internal controls; we have identified in the report whether or not there were significant changes in internal controls or

other factors that could significantly affect internal controls subsequent to the date of our evaluation,

including any corrective actions with regard to significant deficiencies and material weaknesses.

.............................................. ...................................... ......... Dr. Balla Swamy Mr. Emmanuel Oluwadare Managing Director/CEO Chief Financial Officer FRC/2015/CIIN/00000011228 FRC/2013/ICAN/0000003649

9th March 2018

10


REPORT OF AUDIT AND COMPLIANCE COMMITTEE


In accordance with the provision of Section 359 (6) of the Companies and Allied Matters Act, CAP C20, Laws

of the Federation of Nigeria, 2004, we have reviewed the audited financial statements of the Company for the

year ended 31 December 2017 and report as follows:

The accounting and reporting policies of the Company are consistent within legal requirements and agreed

ethical practices, and also in accordance with International Financial Reporting Standard.

The scope and planning of the external audit was adequate.

The Company maintained effective systems of accounting and internal control during the year.

Having reviewed the External Auditors' findings and recommendations on management matters, we are

satisfied with management responses thereon.

Dated this 9th March 2018

MRS. FUNMI OYETUNJ I

CHAIRMAN - AUDIT COMMITTEE

FRC/2018/ICAN/00000017879

Members of the Audit Committee

Mrs. Funmi Oyetunji - Shareholder/Chairman Engr. Olayiwola Tobun - Shareholder Mrs. Olatunbosun Odusote - Shareholder Mr. Muftau Olakunle Oyegunle - Non-Executive Director Mr. Sarbeswar Sahoo - Executive Director Mr. Gopalan Raghu - Non-Executive Director

Abayomi Odulana

Company Secretary FRC/2013/ICSAN/000000003201

11


SUSTAINABILITY AND CORPORATE RESPONSIBILITY REPORT


As Insurance services provider with an obligation to comply with international best practices and Corporate

Governance, Prestige Assurance Plc ensures that its operations comply with international performance

standards and applicable national environmental and social regulations.

The principles of Sustainability are deeply entrenched in Prestige’s core values and system, so sustainability is

in our ‘Modus Operandi’.

We are conscious of the economic, social and environmental impact of our activities; placing importance on

people and our environment, even as we try to make it a better place.

At Prestige, we look at sustainability from a broad horizon and in an all-encompassing way.

In conducting our business, we take into consideration ethical values in our business relationship and at the

same time addressing some of the biggest challenges faced by our society.

Product development has always been at the apex of Prestige’s drive for market share and coverage. We have

opened a new branch in Ikeja, Kaduna, and other branches have been proposed in order to attract patronage

and getting closer to members of the public for opening of Insurance relationship with us.

During the 2017 financial year under review, new accounts were opened for various categories of people and

businesses. The Company has also strived to meet the needs of Clients and making our products more

accessible with the opening of our E business unit further reducing barriers to Insurance services by increasing

number of people with access to these services by providing more digital options.

Also during the Year under review, two new products were introduced in the market namely terrorism, Prestige

salary protection shield and Mediclaim insurance which are already making headway in the industry.

Human Resources Management is important for retaining and attracting the best human resources for

sustainable development.

At Prestige we respect both human and labour Laws in all our business operations and activities.

We belief that social equity needs to be fair and just distribution of economic and environmental resources

should be taken into consideration.

Costs Benefits Analysis (CBA) are tools used to participate in decision-making processes which is thoroughly

integrated into the working conditions of the Company. Health and safety of our employees and clients is of

utmost importance at Prestige. This is that we were at the fore-front of the Eye care treatment with visits to

the Eye Bank of Nigeria, creating awareness about key health issues. We at Prestige are aware that “poor

environmental quality’’ is directly responsible for around 25% of all preventable ill health in the world today,

with diarrheal diseases and acute respiratory infections (ARI), such as pneumonia heading the list. Other

diseases such as malaria, schistosomiasis, other vector-borne diseases, chronic respiratory diseases, childhood

infections are also strongly influenced by adverse environmental conditions.

We encourage our staff to carry out routine health check-ups to ensure that they are in perfect health, as

human capital is vital for our sustainability going forward.

Also, waste production and mismanagement of resources, for example, are both conditions that affect health.

Poor health and a decreasing quality of life dis-empower the most vulnerable set of people.

12


SUSTAINABILITY AND CORPORATE RESPONSIBILITY REPORT- CONTINUED


Corporate Governance on environmental and social life is an important aspect of our commitment to

sustainable practices an Insurance institution. We strive to achieve a high level of corporate governance by

essentially balancing the interest of all our stakeholders. We acknowledge that it is not enough for a company

to be profitable but also strive to demonstrate a global standard practice of corporate governance. Typically,

the board is charged with overseeing corporate governance practices Group wide. One of the tenets of

corporate governance is ensuring that there are clear lines of responsibility, authority and accountability and

making sure appropriate responsibilities and measures are in place.

The Company in 2016, appointed an Executive Director Operation/Risk who in conjunction with the Management staff continued in their efforts to guide, implement and promote the sustainable principles in the

Company.

Environmental and Social Risk Management has been incorporated into our enterprise risk management

framework, especially in the delivery of our core business activity. Our customers in the major sectors are

subject to a Social and Environmental Impact Assessment and Environmental Impact Assessment as requested

for Know Your Customers (KYC).

We have continued in our efforts to reduce the use of paper in our general operations. The use of e-mails,

workflows, portals and other e-channels is encouraged as work tools for members of staff. Information to

customers is sent electronically via text, phone calls and e-mails.

In terms of community support, we have continued to invest in the communities in which we have presence

through our Corporate Social Responsibility efforts.

Capacity Building in this area of sustainability is a work-in-progress at Prestige Assurance Plc. Sustainability is

included and considered in all aspect of the Companies operation. Reporting. Sustainability issues will get

reported to the Board through its Risk Management Committee, which meets quarterly. That way, the Board

will get briefed of progress being made in implementing the sustainability policy to be approved by the Board

as part of its responsibility of setting the sustainability tone from the top.

The implementation of the Sustainability Principles and Policy of the Company remains a work in progress –

progress at ingraining the sustainability culture in the Company as we strive to regain our industry leadership

position in an economically viable, socially relevant and environmentally responsible way.

Corporate Social Responsibility Report Prestige Assurance Plc is committed to the principles and best practices of corporate social responsibility and

prides itself as being a model corporate citizen.

The Company pursues its corporate social responsibility goals through. The Company plays this role by

contributing in strategic areas that are of immense importance to community development: Education,

Environment and Economic Empowerment.

13


SUSTAINABILITY AND CORPORATE RESPONSIBILITY REPORT- CONTINUED


The Company recognizes that doing business in a sustainable manner means doing business in a way that

empowers the present generation of Nigeria without compromising the future.

As in previous years, Prestige Assurance Plc in 2017 continued to intervene in the critical areas of the socio-

economic environment that has the biggest potential to improve the livelihood and long term sustainability of

the Company and Country.

Education Quality education is crucial in developing the manpower needed by the Company to exploit emerging

opportunities and propel the Company to higher levels of development.

The Company is therefore actively involved in a number of educational initiatives and projects with payment of

educational allowance to Staff and the scholarships to children of staff who have exceled in their academic

endeavors.

Environment and economic empowerment The Company has a scheme where-in students are engaged for their industrial attachment programme and

stipends paid to them for the period of engagement.

14


MANAGEMENT DISCUSSION AND ANALYSIS


In accordance with the provision of Section 359 (6) of the Companies and Allied Matters Act, CAP C20, Laws

of the Federation of Nigeria, 2004, Management has reviewed the audited financial statements of the Company

for the year ended 31 December 2017 and report as follows:

The accounting and reporting policies of the Company are consistent within legal requirements and agreed

ethical practices.

The scope and planning of the external audit was adequate.

The Company maintained effective systems of accounting and internal control during the year.

The Nature of the Business

Prestige Assurance Plc is a non–life insurance business with over sixty years’ experience in Nigeria. The

Company’s core areas of business include motor, marine, bond, engineering, fire, aviation, oil and gas and

general accident.

The Company is known for providing expertise knowledge especially in high risk businesses such as aviation,

marine, oil and gas.

Our Company is known by populace for prompt settlement of claims and other support as it may be necessary.

The major bulk of our business comes from brokers market and support from the parent company in form of

referral.

Management Objectives (i) To be in the forefront of risk carrying in Nigerian insurance market, with a penchant for quality

products and efficient service delivery to our esteemed customers.

(ii) To position the Company amongst the best insurance companies in Nigeria.

(iii) To ensure that values are created for the stakeholders.

(iv) To be an ethical company among the listed institution in Nigeria and the world at large.

Our Strategies In order to meet the above objectives, the management of the Company have put the following strategies in

place.

(i) The Company has instituted sound corporate governance in order to drive both the internal process and the business environment.

(ii) Adequate reinsurance has been put in place to absorb the impact of high risk which may likely

occur due to the area of specialisation of the Company.

(iii) Aside from the normal business, the Company also provides add on services such as customer education, policy audit and lease financing.

15


MANAGEMENT DISCUSSION AND ANALYSIS – CONTINUED


Our Strategies – Continued

(iv) The Company engages in training and empowerment of her workforce to meet up with the challenges of modern business.

(v) It is also in the current agenda of the Company to recruit more hands with specialised skills to

compete favourably in the industry.

(vi) The Company has also met up with her civil responsibility and promised to do more to better the interest of stakeholders at large.

Our Resources, Risks and Relationship

Our most valuable resources are our human capital. The staff welfare is paramount to the Company. Non-

human resources are of small relevance without appropriate personnel to drive the system.

Insurance business is a kind of business that is full of risk known as insurable risks.

This is a known risk but which the likelihood and magnitude of the occurrence is not certain.

The Company has put in place a balanced re-insurance policy to absorb the impact of such risks at any time in

future.

Aside from this, the Company is also faced with diverse risks which are financial and non-financial in nature.

Several strategies are already in place to mitigate their negative impact on the business and the Company itself.

Prestige Assurance Plc is a subsidiary of The New India Assurance Company Limited, Mumbai, India. Our parent

company is one of the largest insurance business undertakers across the Afro-Asia continent (except J apan).

The parent company provides support to us in all ramifications which had impact positively in term of skills and

financial status to underwrite high risk businesses rarely underwritten by the local companies.

Financial Results and Prospects For the year ended 31 December 2017, the gross premium income by the Company increased by N837.547million compared with previous year as result of branch expansion and turning in of new product into

the market as part strategy for growing the company.

Underwriting profit for the year went up by N81.321 million when compared with the previous year. Whilst

profit for the year increased by N309.849 million over that of last year.

The total assets of the Company also increased by N2,085.966 million when compared with 31 December

2016. In view of the recent upheavals. We have adopted a more proactive approach to the management of our

capital, liquidity and investments towards endowing our Company with needed financial strength to withstand

any market-related shocks and building an enduring platform for world class products and services.

16


REPORT OF THE DIRECTORS


The Directors hereby submit their report together with the financial statements for the year ended 31

December 2017.

PRINCIPAL ACTIVITIES The principal activities of the Company continue to be insurance business. There were no changes in the

activities of the Company during the year under review.

STATE OF AFFAIRS In the opinion of the Directors, the state of the Company’s affairs is satisfactory.

RESULTS FOR THE YEAR

2017 2016 ₦’000 ₦’000

Profit before income tax expense 697,989 340,394

Income tax expense (166,148) (118,402)

-------------- -------------- Profit for the year 531,841 221,992

======== ========

DIVIDEND Dividend will be declared for the year ended 31 December 2017 (2016: Nil).

DIRECTORS

The names of the Directors as at the date of this report and those who held office during the year are as follows:

Mr. Hassan T. M. Usman (Nigerian) Chairman Dr. Balla Swamy (Indian) Managing Director/CEO Mr. Gopalan Srinivansan (Indian) Non-Executive Director Mr. Hermant .G. Rokade (Indian) Non-Executive Director (Retired 05 May, 2017) Mr. Gopalan Raghu (Indian) Non-Executive Director Mr. Muftau Olakunle Oyegunle (Nigerian) Non-Executive Director Mr. Sarbeswar Sahoo (Indian) Executive Director Mr. SIbharth Prandan Non-Executive Director (Appointed 05 May, 2017)

In accordance with Article 96 of the Company’s Articles of Association, retiring and appointed director during

the year under review have been disclosed above

17


REPORT OF THE DIRECTORS - CONTINUED


Directors’ Interests in Share Capital The interest of the Directors in the issued share capital of the Company as recorded in the registrar of Members

is as follows:

S/N NAMES NO. OF SHARES AS AT 31 DECEMBER

2017 NO. OF SHARES AS AT

31 DECEMBER 2016 1 Mr. Hassan Usman - - 2 Dr. Balla Swamy - - 3 Mr. Gopalan Srinivasan - - 4 Mr. Muftau Olakunle Oyegunle 49,997 49,997 5 Mr. Gopalan Raghu - - 6 Mr. Sibharth Prandan - - 7 Mr. Sarbeswar Sahoo - -

Directors’ Interest in Contracts No Director has given notice for the purpose of Section 277 of the Companies and Allied Matters Act CAP

C20, Laws of the Federation of Nigeria 2004, to the effect that he is a member of a Company which could be

regarded as interested in a contract with the Company.

Major Shareholders As at the date of this report, no person or Company held more than 5%of the Issued Share Capital except:

2017 2016

50k Share % 50k Share % Number Number

The New India Assurance Company Limited, Mumbai 3,732,491,383 69.50 3,732,491,383 69.50

Leadway Assurance Company 616,107,411 11.47 616,107,411 11.47

Employment of Disabled Persons The Company has no employee recorded as disabled. It is however, the Company’s policy to consider persons

for employment bearing in mind the aptitudes and abilities of the applicants concerned and facilities available

to them.

Health and Welfare of Employees The Company subsidizes the medical and transportation expenses of staff and grants them Housing and

Lunch allowances. There is a Group Life Insurance Policy for all categories of staff and gratuity and pension

scheme.

In addition, the Company offers Scholarship in Higher Institutions to the very brilliant children of employees.

18


REPORT OF THE DIRECTORS - CONTINUED


Auditors

Ernst & Young have expressed their willingness to continue as the Company’s auditors in accordance with

Section 357 (2) of the Companies and Allied Matters Act, CAP C20 Laws of the Federation of Nigeria 2004.

Audit Committee The members of the Audit Committee elected at the last Annual General Meeting have met and will, in

accordance with the provisions of the Companies and Allied Matters Act, CAP C20, Law of the Federation of

Nigeria 2004, present their report at this Annual General Meeting.

BY ORDER OF THE BOARD

Abayomi Odulana

Company Secretary

FRC/2013/ICSAN/000000003201

19, Ligali Ayorinde Street Victoria Island, Lagos

Dated: 9th March 2018

19


STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RELATION TO THE PREPARATION OF THE

FINANCIAL STATEMENTS


The Companies and Allied Matters Act, CAP C20 Laws of the Federation of Nigeria 2004, requires the Directors

to prepare financial statements for each financial year that present fairly, in all material respects, the state of

financial affairs of the Company at the end of the year and of its profit or loss and other comprehensive income.

The responsibilities include ensuring that the Company:

a) keeps proper accounting records that disclose, with reasonable accuracy, the financial position of the Company and comply with the requirements of the Companies and Allied Matters Act, CAP C20 Laws

of the Federation of Nigeria 2004;

b) establishes adequate internal controls to safeguard its assets and to prevent and detect fraud and other irregularities; and

c) prepares its financial statements using suitable accounting policies supported by reasonable and

prudent judgments and estimates, and are consistently applied.

The Directors accept responsibility for the preparation and fair presentation of the annual financial statements,

which have been prepared using appropriate accounting policies supported by reasonable and prudent

judgments and estimates, in conformity with International Financial Reporting Standards, and the relevant

provisions of the Companies and Allied Matters Act, CAP C20 Laws of the Federation of Nigeria 2004, the

Insurance Act 2003 and the Financial Reporting Council of Nigeria Act, No. 6, 2011 .

The Directors are of the opinion that the audited financial statements present fairly, in all material respects, the

state of the financial affairs of the Company and of its profit and other comprehensive income. The Directors

further accept responsibility for the maintenance of accounting records that may be relied upon in the preparation

of the audited financial statements, as well as adequate systems of internal financial control.

Nothing has come to the attention of the Directors to indicate that the Company will not remain a going concern

for at least twelve months from the date of this statement.

.............................................. ............................................... Mr. HassanT.M. Usman Dr. Balla Swamy Chairman Managing Director/CEO FRC/2013/IODN/0000003601 FRC/2015/CIIN/00000011228

9th March 2018

20

INDEPENDENT AUDITORS’ REPORT

TO THE MEMBERS OF PRESTIGE ASSURANCE PLC

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Prestige Assurance PLC (“the Company”), which comprise the

statement of financial position as at 31 December 2017, and the statement of profit or loss and other

comprehensive income, the statement of changes in equity and the statement of cash flows for the year then

ended, and notes to the financial statements, including a summary of significant accounting policies and other

explanatory notes.

In our opinion, the financial statements present fairly, in all material respects, the financial position of the

Company as at 31 December 2017, and its financial performance and cash flows for the year then ended in

accordance with International Financial Reporting Standards and the provisions of the Companies and Allied

Matters Act, CAP C20 Laws of the Federation of Nigeria 2004, the Insurance Act 2003, the Financial Reporting

Council Act No. 6, 2011 and the National Insurance Commission guidelines and circulars.

Basis of Opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities

under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial

Statements section of our report. We are independent of the Company in accordance with the International

Ethics Standard Board for Accountants’ Code of Ethics for Professional Accountants (IESBA code) and other

independence requirements applicable to performing the audit of Prestige Assurance Plc. We have fulfilled our

other ethical responsibilities in accordance with the IESBA Code, and in accordance with other ethical

requirements applicable to performing the audit of Prestige Assurance Plc. We believe that the audit evidence

we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit

of the financial statements of the current period. These matters were addressed in the context of our audit of

the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate

opinion on these matters. For each matter below, our description of how our audit addressed the matter is

provided in that context.

We have fulfilled the responsibilities described in the Auditors’ Responsibilities for the Audit of the Financial

Statements section of our report, including in relation to these matter. Accordingly, our audit included the

performance of procedures designed to respond to our assessment of the risks of material misstatement of the

financial statements. The results of our audit procedures, including the procedures performed to address the

matter below, provide the basis for our audit opinion on the accompanying financial statements.

21


TO THE MEMBERS OF PRESTIGE ASSURANCE PLC – Continued

Key Audit Matters- continued

Key Audit Matter

How the matter was addressed in the audit

The Company has insurance contract liabilities of

W e used our actuarial specialist to assist us in

N2.64 billion as at 31 December 2017 performing the audit procedures in the area of representing 63% of the Company’s total reviewing the Company’s Actuarial reports on non-life liabilities. This is an area that involves significant

judgement over uncertain future outcomes and business which included among others:

therefore we considered it a key audit matter for i. Consideration of the appropriateness of our audit. assumptions used in the valuation of the Insurance

Contracts by reference to Company and industry Insurance contract liabilities are disclosed in Note data and expectations. 24 to the financial statements. ii. Consideration of the appropriateness of non-

Consistent with the insurance industry practice,

economic assumptions used in the valuation of the

Insurance Contracts in relation to lapse or extension the Co mp any engages an actuary to test the assumptions by reference to Company specific and adequacy of this valuation of non-life business as industry data. at year end. The complexity of the valuation model s m a y give rise to errors as a result o f Other Key audit procedures included: inadequate/incomplete data or the design or

application of the models. Economic assumptions i. We reviewed and documented management’s

such as interest rates and future inflation rates process for estimating insurance contracts. and actuarial assumptions such as customer ii. Performed file review of specific underwriting behavior and uniform risk occurrence throughout

the period are key inputs used to determine these contracts in order to maximize our understanding of

the business and validate initial loss estimates. liabilities. Significant judgement is applied in iii. Performed subsequent year claim payments to setting these assumptions. confirm the reasonableness of initial loss estimates.

Other Information The Directors are responsible for the other information. The other information comprises the Result at a

Glance, Corporate Governance Report, Report of Audit and Compliance Committee, Sustainability and

Corporate Responsibility Report, Management Discussion and Analysis, Directors’ Report, Revenue Account,

Statement of Value Added and Five Year Financial Summary, which we obtained prior to the date of this report,

and the Annual Report, which is expected to be made available to us after that date. Other information does

not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements

does not cover the other information and we do not express an audit opinion or any form of assurance

conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the

other information and, in doing so, consider whether the other information is materially inconsistent with the

financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work we have performed on the other information obtained prior to the date of this auditors

report, we conclude that there is a material misstatement of this other information, we are required to report

that fact. We have nothing to report in this regard.

22



Directors’ Responsibilities for the Financial Statements The Directors are responsible for the preparation and fair presentation of these financial statements in

accordance with International Financial Reporting Standards and the provisions of the Companies and Allied

Matters Act, CAP C20 Laws of the Federation of Nigeria 2004, the Insurance Act 2003, the Financial Reporting

Council Act No 6, 2011 and the National Insurance Commission guidelines and circulars and for such internal

control as the Directors determine is necessary to enable the preparation of financial statements that are free

from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to

continue as a going concern, disclosing, as applicable, matters related to going concern and using the going

concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations,

or have no realistic alternative but to do so.

Auditors’ Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free

from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our

opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in

accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from

fraud or error and are considered material if, individually or in the aggregate, they could reasonably be

expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional

skepticism throughout the audit. We also:

- Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is

sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material

misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve

collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the Company’s internal control.

- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

- Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and based

on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that

may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a

material uncertainty exists, we are required to draw attention in our auditors’ report to the related

disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our

conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However,

future events or conditions may cause the Company to cease to continue as a going concern.

- Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a

manner that achieves fair presentation.

23



Auditors’ Responsibilities for the Audit of the Financial Statements - continued

- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial statements. We are responsible for

the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit

and significant audit findings, including any significant deficiencies in internal control that we identify during

our audit.

We also provide the Directors with a statement that we have complied with relevant ethical requirements

regarding independence, and to communicate with them all relationships and other matters that may

reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Directors, we determine those matters that were of most significance

in the audit of the financial statements of the current period and are therefore the key audit matters. W e

describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the

matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in

our report because the adverse consequences of doing so would reasonably be expected to outweigh the public

interest benefits of such communication.

Report on Other Legal and Regulatory Requirements In accordance with the requirement of Schedule 6 of the Companies and Allied Matters Act, CAP C20 Laws of

the Federation of Nigeria 2004 and Section 28(2) of the Insurance Act 2003, we confirm that:

i) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

ii) in our opinion, proper books of account have been kept by the Company, in so far as it appears from our examination of those books;

iii) the Company’s statement of financial position and statement of profit or loss and other comprehensive

income are in agreement with the books of account; iv) in our opinion, the financial statements have been properly prepared in accordance with the relevant

provisions of the Companies and Allied Matters Act, CAP C20 Laws of the Federation of Nigeria 2004 and

Section 28(2) of the Insurance Act 2003 so as to present fairly, in all material respects, the statement of

financial position and statement of profit or loss and other comprehensive income.

Contraventions We are not aware of any penalties incurred in respect of contraventions of the requirement of certain sections

of the National Insurance Commission’s Operational Guidelines 2015 during the financial year.

Dayo Babatunde, FCA

FRC/2013/ICAN/0000000702

For: Ernst & Young Lagos, Nigeria

….. ………….. 2018

24


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. General information

a. The financial statements for the year ended 31 December 2017 were authorized for issue in accordance

with a resolution of the Directors on 9th March 2018. Prestige Assurance Plc was incorporated on 6 J

anuary 1970. The Company is a subsidiary of New India Assurance Limited which was established on 18

August 1918.

Its registered office is located at 19, Ligali Ayorinde Street, Victoria Island, Lagos, Nigeria.

The Company is regulated by the National Insurance Commission of Nigeria (NAICOM).

b. Principal activity

The Company is licensed to carry non-life insurance business. The Company provides cover in all classes

of insurance, basically non-life treaty and facultative insurance, backed by reinsurer in the London and

African reinsurance markets. The products and services by the Company cuts across general accident,

energy, fire, marine, workers compensation, terrorism and bond.

2. Summary of significant accounting policies

2.1 Introduction to summary of accounting policies The principal accounting policies applied in the preparation of these financial statements are set out below.

These policies have been consistently applied to all the years presented, unless otherwise stated.

2.2 Basis of preparation These are the financial statements of Prestige Assurance Plc and is presented in order of liquidity.

2.2.1 Statement of compliance

The financial statements have been prepared in accordance with International Financial Reporting

Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Additional information

required by national regulations, the Company and Allied Matters Act CAP C20 Law of the Federation of

Nigeria 2004, the Financial Reporting Council of Nigeria Act No. 6, 2011, Insurance Act 2003 and its

interpretations issued by the National Insurance Commission in its Insurance Industry Policy Guidelines is

included where appropriate.

The financial statements comprise the statement of financial position, the statement of profit or loss and

other comprehensive income, the statement of changes in equity, the statement of cash flows and the

notes to the financial statements.

2.2.2 Basis of measurements

The financial statements have been prepared in accordance with the going concern principle under the

historical cost convention, except for available-for-sale financial assets, financial assets designed at fair

value through profit or loss, investment properties and land and building which are measured at fair value.

25



2.3 New standards and improvements

These improvements are effective for annual periods beginning on or after 1 J anuary 2017. They include:

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations

Assets (or disposal groups) are generally disposed of either through sale or distribution to owners. The

amendment clarifies that changing from one of these disposal methods to the other would not be

considered a new plan of disposal, rather it is a continuation of the original plan. There is, therefore, no

interruption of the application of the requirements in IFRS 5. This amendment must be applied

prospectively. This does not have impact on Prestige Assurance Plc.

IFRS 7 Financial Instruments: Disclosures

Servicing contracts The amendment clarifies that a servicing contract that includes a fee can constitute continuing

involvement in a financial asset. An entity must assess the nature of the fee and the arrangement against

the guidance for continuing involvement in IFRS 7 in order to assess whether the disclosures are required.

The assessment of which servicing contracts constitute continuing involvement must be done

retrospectively. However, the required disclosures would not need to be provided for any period beginning

before the annual period in which the entity first applies the amendments.

Applicability of the amendments to IFRS 7 to condensed interim financial statements The amendment clarifies that the offsetting disclosure requirements do not apply to condensed interim

financial statements, unless such disclosures provide a significant update to the information reported in

the most recent annual report. This amendment must be applied retrospectively. This amendment does

not have any impact on Prestige Assurance plc

IAS 1 Presentation of financial statements Amendments to IAS 1 to further encourage companies to apply professional judgement in determining

what information to disclose and how to structure it in their financial statements. The amendments do not

have any impact on the Company

Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and

Amortisation The amendments clarify the principle in IAS 16 Property, Plant and Equipment and IAS 38 Intangible

Assets that revenue reflects a pattern of economic benefits that are generated from operating a business

(of which the asset is a part) rather than the economic benefits that are consumed through use of the

asset. As a result, a revenue-based method cannot be used to depreciate property, plant and equipment

and may only be used in very limited circumstances to amortise intangible assets. The amendments are

applied prospectively and do not have any impact on the entity, given that it has not used a revenue-based

method to depreciate its non-current assets.

Amendments to IFRS 10, IFRS 12 and IAS 28 Investment Entities: Applying the Consolidation Exception

The amendments address issues that have arisen in applying the investment entities exception under IFRS

10. The amendments to IFRS 10 clarify that the exemption from presenting consolidated financial

statements applies to a parent entity that is a subsidiary of an investment entity, when the investment

entity measures all of its subsidiaries at fair value. Furthermore, the amendments to IFRS 10 clarify that

only a subsidiary of an investment entity that is not an investment entity itself and that provides support

services to the investment entity is consolidated. All other subsidiaries of an investment entity are

measured at fair value. The amendments to IAS 28 allow the investor, when applying the equity method,

to retain the fair value measurement applied by the investment entity associate or joint venture to its

interests in subsidiaries.

26



2.3 New standards and improvements - continued

The accounting policies adopted in the preparation of the 2017 Interim Financial Statements are consistent

with those followed in the preparation of the Company’s 2016 financial statements.

The nature and impact of each new standard /amendment is described below:

(i) Amendments to IAS 12 – Income Taxes

Amends IAS 12 to clarify accounting treatment for deferred tax assets for unrealised losses on debt

instruments measured at fair value. The amendments clarify that an entity needs to consider whether tax

law restricts the sources of taxable profits against which it may make deductions on the reversal of that

deductible temporary difference. Furthermore, the amendments provide guidance on how an entity should

determine future taxable profits and explains in which circumstances taxable profit may include the

recovery of some assets for more than their carrying amount.The effective date of the 2016 amendments

to IAS 12. Recognition of deferred tax assets for Unrealised Losses was issued on 19 J anuary 2016. The

amendments are effective for annual years beginning on or after 1 J anuary 2017. Earlier application is

permitted.

The Company applied amendments retrospectively, however, their application has no effect on the

Company’s financial statements.

(ii) Amendments to IAS 7 - Statement of Cash Flows

Disclosure Initiative (Amendments to IAS 7), issued in J anuary 2016, added paragraphs 44A–44E. An

entity shall apply those amendments for annual years beginning on or after 1 J anuary 2017. Earlier

application is permitted. Amendment to IAS 7 include disclosures that enable users of Financial Statements

to evaluate changes in liabilities arising from financing activities. The amendment specifies that the

following changes arising from financing activities are disclosed (to the extent necessary): (i) changes from

financing cash flows; (ii) changes arising from obtaining or losing control of subsidiaries or other

businesses; (iii) the effect of changes in foreign exchange rates; (iv) changes in fair values; and (v) other

changes.

The Company is assessing the potential effect of the amendments on its financial statements.

(iii) Annual Improvements 2014-2016 Cycle

These improvements were issued on 8 December 2-16 and ammedments to IFRS 12 are effective for

annual periods beginning on or after 1 J anuary 2017. The improvements ammended the following

standards:

Amendments to IFRS 12 Disclosure of Interests in Other Entities The amendments clarify that the disclosure requirements in IFRS 12, other than those in paragraphs B10–

B16, apply to an entity’s interest in a subsidiary, a joint venture or an associate (or a portion of its interest

in a joint venture or an associate) that is classified (or included in a disposal group that is classified) as held

for sale. These amendments are not expected to have an impact on the Company.

2.4 Significant accounting judgements, estimates and assumptions

The preparation of financial statements in conformity with IFRS requires the use of certain critical

accounting estimates. It also requires management to exercise its judgement in the process of applying its

accounting policies. Changes in assumptions may have a significant impact on the financial statements in

the period the assumptions changed. Management believes that the underlying assumptions are

appropriate and that the financial statements therefore present the financial position and results fairly.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates

are significant to the financial statements are disclosed below:

27



2.4 Significant accounting judgements, estimates and assumptions - continued

J udgements

In the process of applying the Company’s accounting policies, management has made the following

judgement, which has the most significant effect on the amounts recognised in the financial statements:

Estimates and assumptions The key assumptions concerning the future and other key sources of estimation uncertainty at the

reporting 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 described below. The Company based its

assumptions and estimates on parameters available when the financial statements were prepared. Existing

circumstances and assumptions about future developments, however, may change due to market changes

or circumstances arising beyond the control of the Company. Such changes are reflected in the

assumptions when they occur.

Fair value of financial instruments Where the fair values of financial assets recorded on the statement of financial position cannot be verified

from active markets, they are determined using a variety of valuation techniques that include the use of

mathematical models. The inputs to these models are derived from observable market data where possible,

but if this is not available, judgement is required to establish fair value. The judgements include

considerations of liquidity and model inputs such as volatility for discount rates, prepayment rates and

default rate assumptions for asset-backed securities.

Valuation of Non-life insurance contract liabilities: For non-life insurance contract, estimates have to be made for the expected ultimate cost of all future

payments attaching to incurred claims at the reporting date. These include incurred but not reported

("IBNR") claims. Due to the nature of insurance business, ultimate cost of claims is often not established

with certainty until after the reporting date and therefore considerable judgement, experience and

knowledge of the business is required by management in the estimation of amounts due to contract

holders. Actual results may differ resulting in positive or negative change in estimated liabilities.

The ultimate cost of outstanding claims is estimated by using a range of standard actuarial claims

projection techniques, such as Loss ratio method and BCL methods. The BCL method assumes that past

experience is indicative of future experience. i.e claims recorded to date will continue to develop in a similar

manner in the future while Loss ratio method is used for classes with limited claims payments or history

and therefore a BCL method would be inappropriate. The loss ratio method allows for an estimate of the

average ultimate loss ratio which needs to be assumed, it uses the incurred and paid to date loss ratio that

have been experienced to date in previous accident years.

Additional qualitative judgement is required as significant uncertainties remain such as future changes in

inflation, economic conditions, attitude to claiming, foreign exchange rates, judicial decisions and

operational process.

Similar judgements, estimates and assumptions are employed in the assessment of losses attaching to

unearned premium exposures. The methods used are based on time apportionment principles together

with significant judgement to assess the adequacy of theses liabilities and the attached uncertainty. The carrying value at the reporting date of non-life insurance contract liabilities is N2,643,592,000

(2016:N1,799,210,000). Further details on insurance contract liabilities are disclosed in Note 24 to the

financial statements.

Certain acquisition costs related to the sale of new policies are recorded as deferred acquisition costs (DAC)

and are amortised to the profit or loss over time. If the assumptions relating to future profitability of these

policies are not realised, the amortisation of these costs could be accelerated and this may also require

additional impairment write-offs to the profit or loss.

28



2.4 Significant accounting judgements, estimates and assumptions - continued

Deferred tax assets and liabilities

The carrying value at the reporting date of net deferred tax liabilities is N461,856,000

(2016:N467,561,000). Further details on taxes are disclosed in Note 10 to the financial statements.

Valuation of pension benefit obligation The cost of defined benefit pension plans and other post-employments benefits and the present value of

the pension obligation are determined using actuarial valuations. The actuarial valuation involves making

assumptions about discount rates, expected rate of return on assets, future salary increases, mortality

rates and future pension increases. Due to the complexity of the valuation, the underlying assumptions and

its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All

assumptions are reviewed at each reporting date. Details of the key assumptions used in the estimates are

contained in Note 28 to the financial statements.

The carrying value at the reporting date of gratuity benefit obligation is N164,290,000

(2016:N107,646,000).

Valuation of investment properties The Company carries its investment properties at fair value, with changes in fair value being recognised in

profit or loss. The Company engaged an independent valuation specialist to assess fair value as at 31

December 2017. A valuation methodology based on discounted cash flow model was used as there is a lack

of comparable market data because of the nature of the properties.

The determined fair value of the investment properties is most sensitive to the estimated yield as well as

the long-term vacancy rate. The key assumptions used to determine the fair value of the investment

properties are further explained in Note 20 to the financial statements.

The International Financial Reporting Standards and interpretations that are issued, but not yet effective,

up to the date of issuance of the Company’s financial statements are disclosed below. The Company intends

to adopt these standards, if applicable, when they become effective.

(i) IFRS 15 - Revenue from contracts with customers IFRS 15 was issued in May 2014 and establishes a five-step model to account for revenue arising from

contracts with customers. Under IFRS 15, revenue is recognised at an amount that reflects the

consideration to which an entity expects to be entitled in exchange for transferring goods or services to a

customer.

The new revenue standard will supersede all current revenue recognition requirements under IFRS. Either

a full retrospective application or a modified retrospective application is required for annual periods

beginning on or after 1 J anuary 2018. Early adoption is permitted. The Company expects to apply IFRS 15

using the modified retrospective application. Given insurance contracts are scoped out of IFRS 15, the

Company expects the main impact of the new standard to be on the accounting for income from tenancy

contracts on investment properties as well as investment management services. The Company does not

expect the impact to be significant.

29



2.5 Standards and interpretations issued but not yet effective

(i) IFRS 15 - Revenue from contracts with customers

Impact Assessment of IFRS 15

The standard expects on entity to apply a five-step model approach to determine when to recognize

revenue, and at what amount.

By virtue of insurance business especially non-life business, the five steps occurred simultaneously, the

contract are identified, premium are determined and which are paid for on the spot while the Insurer will

assume risk upon such payment.

In line with “no premium no cover” the revenue can only be recognized in our books when payment is

made.

In case of Brokers business, Insurance can only offer such service upon received of credit note which is

almost certain that the broker must remit the cash within 30 days.

In conclusion, insurance contract is out of scope of IFRS 15 therefore, no significant impact is expected on

our financial statements either qualitative or quantitative as contained in the standard.

(iii) IFRS 9 - Financial Instruments IFRS 9, published in J uly 2014, replaces the existing guidance in IAS 39 Financial Instruments: Recognition

and Measurement. IFRS 9 includes revised guidance on the classification and measurement of financial

instruments, including a new expected credit loss model for calculating impairment on financial assets, and

the new general hedge accounting requirements. It also carries forward the guidance on recognition and

derecognition of financial instruments from IAS 39. IFRS 9 is effective for annual reporting years beginning

on or after 1 J anuary 2018, with early adoption permitted. Except for hedge accounting, retrospective

application is required but providing comparative information is not compulsory. For hedge accounting, the

requirements are generally applied prospectively, with some limited exceptions.

During 2017, the Company performed a high-level impact assessment of all three aspects of IFRS 9. This

preliminary assessment is based on currently available information and may be subject to changes arising

from further detailed analyses or additional reasonable and supportable information being made available

to the Company in the future. Overall, the Company expects no significant impact on its statement of

financial position and equity, except for the effect of applying the impairment requirements of IFRS 9.

Loans as well as trade receivables are held to collect contractual cash flows and are expected to give rise

to cash flows representing solely payments of principal and interest. The Company analysed the contractual

cash flow characteristics of those instruments and concluded that they meet the criteria for amortised cost

measurement under IFRS 9. Therefore, reclassification for these instruments is not required.

(b) Impairment IFRS 9 requires the Company to record expected credit losses on all of its debt securities, loans and

receivables, either on a 12-month or lifetime basis. The Company will apply the simplified approach and

record lifetime expected losses on all loans and receivables. The Company has determined that, due to the

unsecured nature of its loans and receivables, the loss allowance will increase with corresponding related

decrease in the deferred tax liability.

30



2.5 Standards and interpretations issued but not yet effective - continued

(iii) IFRS 9 - Financial Instruments -continued

(c) Hedge accounting The Company determined that there are no existing hedge relationships that are currently designated in

effective hedging relationships. Though, this will continue to qualify for hedge accounting under IFRS 9.

As IFRS 9 does not change the general principles of how an entity accounts for effective hedges, applying

the hedging requirements of IFRS 9 will not have a significant impact on Company’s financial statements.

(d) Other adjustments In addition to the adjustments described above, on adoption of IFRS 9, other items of the primary financial

statements such as deferred taxes, assets held for sale and liabilities associated with them, will be adjusted

as necessary. The exchange differences on translation of financial instrument will also be adjusted.

Impact assessment of IFRS 9 IFRS 9 specifies how an entity should classify and measure financial assets, financial liabilities, and some

contracts to buy or sell non-financial items.

Any entity could have significant changes to its financial reporting as the result of this standard.

Possible consequences of IFRS 9 include:

- More Income statement volatility. IFRS 9 raises the risk that more assets will have to be measured at fair value with changes in fair value recognized in profit or loss as they arise.

- Earlier recognition of impairment losses on receivables and loans, including trade receivables with start proving for possible future.

- Significant new disclosure requirements

Comparing IFRS 9 and IAS 39 classification and measurement categories

Classification and Measurement in Financial Statements under IAS 39

Classification

Measurement

Loan and receivables

Amortized Cost

Held for Trading Financial

Asset

FVPL

Available – For –Sale FVOCI Held to maturity Amortized Cost

Under IFRS9. The Financial Assets, will now be classified thus;

1. Amortized Cost – This will covers loan and receivables, and Held to maturity Financial assets 2. Fair value through profit and loss (FVTPL) – This will covers held for trading and derivatives financial

instruments 3. Fair value other comprehensive income, no recycling (FVOCI) This will covers available for sale. Change

in fair value are recognized in OCI and are never recycled to profit or loss, even if the asset is sold or

impaired.

31




Impairment of financial assets. IFRS 9 eliminates impairment assessment requirements in equity instrument since it will only be measured

at FVPL or FVOCI without recycling of fair value changes to profit and loss.

Loan and receivables will now be measured using the “expected credit loss” model. This is done by

calculating the allowance for credit losses by considering on a discounted basis the cash shortfalls it would

incur in various default scenarios for prescribed future periods and multiplying the shortfalls by the

probability of each scenario occurring .

The company shall applies 12months ECLS unless a significant increase in credit risk occurs, then lifetime

ECLS unless the increase reverses.

Quantitative implication of adoption of IFRS 9 Subsequent to adoption of IFRS9, the following lined term in financial statements, as per 2017 may require re-measurement thus as follows:

NO CLASSIFICATION BALANCE AS

AT 31ST DECEMBER,

2017(N’000)

1ST J ANUARY,

2018 (N’000)

IMPACT

1 FVTPL 259,006.00 259,006.00 NO ADJ USTMENT REQUIRED

2 FVOCI 1,878,385.00 1,878,385.00 NO ADJ USTMENT REQUIRED

3. AMORTISED

COST

i STAFF LOAN & ADVANCES

49,527.00 49,527.00 NO ADJ USTMENT REQUIRED

ii OTHER LOANS 52,260.00 52,260.00 FULLY IMPAIRED BASED ON EXPECTED

CREDIT LOSS MODEL SINCE IT HAS REMAINS

OUTSTANDING MORE THAN 2 YEARS.

iii CORPORATE

BONDS 115,287.00 115,287.00 THIS MAY SUBJ ECTED

TO IMPAIRMENT UPON

DEFAULT

ESPECTICIALLY DANA BOND.

iv FGN & STATE BONDS

732,065.00 732,065.00 NO DEFAULT IS EXPECTED THEREFORE

NO IMPAIRMENT IS REQUIRED.

v TREASURY BILL 1,565,000.00 1,565,000.00 NO DEFAULT IS EXPECTED, THEREFORE NO IMPAIRMENT IS REQIURED

32




(iv) IFRS 17 - Insurance Contracts

In May 2017, the IASB issued IFRS 17 Insurance Contracts (IFRS 17), a comprehensive new accounting

standard for insurance contracts covering recognition and measurement, presentation and disclosure.

Once effective, IFRS 17 will replace IFRS 4 Insurance Contracts (IFRS 4) that was issued in 2005. IFRS 17

applies to all types of insurance contracts (i.e., life, non-life, direct insurance and re-insurance), regardless

of the type of entities that issue them, as well as to certain guarantees and financial instruments with

discretionary participation features. A few scope exceptions will apply. The overall objective of IFRS 17 is

to provide an accounting model for insurance contracts that is more useful and consistent for insurers. In

contrast to the requirements in IFRS 4, which are largely based on grandfathering previous local accounting

policies, IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting

aspects. The core of IFRS 17 is the general model, supplemented by: · A specific adaptation for contracts with direct participation features (the variable fee approach) · A simplified approach (the premium allocation approach) mainly for short-duration contracts.

IFRS 17 is effective for reporting periods beginning on or after 1 January 2021, with comparative figures

required. Early application is permitted, provided the entity also applies IFRS 9 and IFRS 15 on or before

the date it first applies IFRS 17. The standard is generally expected to have an impact on the financial

statements of insurance businesses. The Company is not early adopting the standard.

The Company intends to start a project to implement IFRS 17 and will perform a high-level impact

assessment of IFRS 17. The Company expects that the new standard will result in an important change to

the accounting policies for insurance contract liabilities of the Company and is likely to have a significant

impact on profit and total equity together with presentation and disclosure.

(v) IFRS 16 – Leases This is a new standard introduced by IASB to replace existing standard IAS 17 - Leases. IFRS 16 is effective

for annual periods beginning on or after 1 J anuary 2019. Early application is permitted, but not before an

entity applies IFRS 15.

IFRS 16 requires lessees to account for all leases under a single on-balance sheet model in a similar way to

finance leases under IAS 17. The standard includes two recognition exemptions for lessees – leases of ’low-

value’ assets (e.g. personal computers) and short-term leases (i.e. leases with a lease term of 12 months

or less). At the commencement date of a lease, a lessee will recognise a liability to make lease payments (i.e. the lease liability) and an asset representing the right to use the underlying asset during the lease term (i.e. the right-of-use asset).

Lessees will be required to separately recognise the interest expense on the lease liability and the

depreciation expense on the right-of-use asset. Lessees will be required to remeasure the lease liability

upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments

resulting from a change in an index or rate used to determine those payments). The lessee will generally

recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset.

Lessor accounting substantially carries forward the lessor accounting requirements in IAS 17. Accordingly,

a lessor continues to classify its leases as operating leases or finance leases, and to account for those two

types of leases differently.The Company is yet to perform the impact assessment of the standard but does

not expect the impact to be significant.

33




(v) Amendments to IAS 40 Transfers of Investment Property

The amendments clarify when an entity should transfer property, including property under construction or

development into, or out of investment property. The amendments state that a change in use occurs when

the property meets, or ceases to meet, the definition of investment property and there is evidence of the

change in use. A mere change in management’s intentions for the use of a property does not provide

evidence of a change in use. Entities should apply the amendments prospectively to changes in use that

occur on or after the beginning of the annual reporting per iod in which the entity first applies the

amendments. An entity should reassess the classification of property held at that date and, if applicable,

reclassify property to reflect the conditions that exist at that date. Retrospective application in accordance

with IAS 8 is only permitted if it is without the use of hindsight. Effective for annual periods beginning on

or after 1 J anuary 2018. Early application of the amendments is permitted and must be disclosed. The

Company will apply amendments when they become effective. However, since Company’s current practice

is in line with the clarifications issued, the Company does not expect any effect on its financial statements.

2.6 Annual improvements 2014-2016 Cycle

These improvements were issued on 8 December 2016 and ammedments to IFRS 1 and IAS 28 are

effective for annual periods beginning on or after 1 J anuary 2018. The improvements ammended the

following standards:

IFRS 1 First-time Adoption of International Financial Reporting Sandards The short-term exemptions in paragraphs E3–E7 of IFRS 1 were deleted, because they have now served

their intended purpose. This amendment is not applicable to the Company.

IAS 28 Investments in Associates and J oint Ventures The amendments clarify that the election to measure at fair value through profit or loss an investment in

an associate or a joint venture that is held by an entity that is a venture capital organisation, or other

qualifying entity, is available for each investment in an associate or joint venture on an investment-by-

investment basis, upon initial recognition. These amendments are not expected to have an impact on the

Company.

(vii) Amendments to IFRS 4 - Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts

The amendments address concerns arising from implementing the new financial instruments standard, IFRS

9, before implementing IFRS 17 Insurance Contracts, which replaces IFRS 4. The amendments introduce

two options for entities issuing insurance contracts: a temporary exemption from applying IFRS 9 and an

overlay approach. The temporary exemption is first applied for reporting periods beginning on or after 1

J anuary 2018. An entity may elect the overlay approach when it first applies IFRS 9 and apply that

approach retrospectively to financial assets designated on transition to IFRS 9. The entity restates

comparative information reflecting the overlay approach if, and only if, the entity restates comparative

information when applying IFRS 9. The Company is currently assessing the impact. See note b(iii) above.

(viii) IFRIC Interpretation 22 Foreign Currency Transactions and Advance Consideration The Interpretation clarifies that, in determining the spot exchange rate to use on initial recognition of the

related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-

monetary liability relating to advance consideration, the date of the transaction is the date on which an

entity initially recognises the non-monetary asset or non-monetary liability arising from the advance

consideration. If there are multiple payments or receipts in advance, then the entity must determine the

transaction date for each payment or receipt of advance consideration. Entities may apply the amendments

On a fully retrospective basis. Alternatively, an entity may apply the Interpretation prospectively to all

assets, expenses and income in its scope that are initially recognised on or after:

34



2.6 Annual improvements 2014-2016 Cycle – Continued

(i) The beginning of the reporting period in which the entity first applies the interpretation

Or (ii) The beginning of a prior reporting period presented as comparative information in the financial

statements of the reporting period in which the entity first applies the interpretation.

The Interpretation is effective for annual periods beginning on or after 1 J anuary 2018. Early application

of interpretation is permitted and must be disclosed. However, since the Company’s current practice is in

line with the Interpretation, the does does not expect any effect on its financial statements.

(ix) IFRIC Interpretation 23 Uncertainty over Income Tax Treatment The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that

affects the application of IAS 12 and does not apply to taxes or levies outside the scope of IAS 12, nor does

it specifically include requirements relating to interest and penalties associated with uncertain tax

treatments. The interpretation specifically addresses the following:

Ø Whether an entity considers uncertain tax treatments separately Ø The assumptions an entity makes about examination of tax treatments by taxation authorities. Ø How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits

and tax. Ø How an entity considers changes in facts and circumstances.

An entity must determine whether to consider each uncertain tax treatment separately or together with

one or more other uncertain tax treatments. T he approach that better predicts the resolution o f the

uncertainty should be followed. The interpretation is effective for annual reporting periods beginning on or

after 1 J anuary 2019, but certain transition reliefs are available. The Company does not expect any effect

on its financial statements.

(x) Amendments to IFRS 2- Classification and Measurement of Share-based Payment Transactions The IASB issued amendments to IFRS 2 Share-based Payment that address three main areas: the effects

of vesting conditions on the measurement of a cash-settled share-based payment transaction; the

classification of a share-based payment transaction with net settlement features for withholding tax

obligations; and accounting where a modification to the terms and conditions of a share-based payment

transaction changes its classification from cash settled to equity settled. On adoption, entities are required to apply the amendments without restating prior periods, but

retrospective application is permitted if elected for all three amendments and other criteria are met. The

amendments are effective for annual periods beginning on or after 1 J anuary 2018, with early application

permitted. The Company is assessing the potential effect of the amendments on its financial statements.

(xi) Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its

Associate or J oint Venture

The amendments address the conflict between IFRS 10 and IAS 28 in dealing with the loss of control of a

subsidiary that is sold or contributed to an associate or joint venture. The amendments clarify that a full

gain or loss is recognised when a transfer to an associate or joint venture involves a business as defined in

IFRS 3 Business Combinations. Any gain or loss resulting from the sale or contribution of assets that does

not constitute a business, however, is recognised only to the extent of unrelated investors’ interests in the

associate or joint venture. The amendments are intended to eliminate diversity in practice and give

preparers a consistent set of principles to apply for such transactions. However, the application of the

definition of a business is judgemental and entities need to consider the definition carefully in such

transactions. Amendments must be applied prospectively and early application is permitted and must be

disclosed. These amendments have no impact on the Company.

35



2.7 Regulatory authority and financial reporting

The Company is regulated by the National Insurance Commission (NAICOM) under the National Insurance

Act of Nigeria. The Act specifies certain provisions which have impact on financial reporting as follows:

i. Section 20 (1a) provides that provisions for unexpired risks shall be calculated on a time apportionment basis of the risks accepted in the year;

ii. Section 20 (1b) which requires the provision of 10 percent for outstanding claims in respect of claims incurred but not reported at the end of the year under review. See note 3(m)(vi) on accounting policy

for outstanding claims; iii. Sections 21 (1a) and 22 (1b) require maintenance of contingency reserves for general and life

businesses respectively at specified rates as set out under note (23) and note 3(t) to cover

fluctuations in securities and variation in statistical estimates; iv. Section 22 (1a) requires the maintenance of a general reserve known as life fund which shall be

credited with an amount equal to the net liabilities on policies in force at the time of the actuarial

valuation as set out under note 15(b). The valuation is done annually by the Company, using

independent experts; v. Section 24 requires the maintenance of a margin of solvency to be calculated in accordance with the

Act as set out under note 49.1; vi. Section 10(3) requires insurance companies in Nigeria to deposit 10 percent of the minimum paid-up

share capital with the Central Bank of Nigeria as set out under note 14; vii. Section 25 (1) requires an insurance company operating in Nigeria to invest and hold invested in

Nigeria assets equivalent to not less than the amount of policy holders' funds in such accounts of the

insurer. See note 51 for assets allocation that covers policy holders' funds.

The Financial Reporting Council of Nigeria Act No. 6, 2011 which requires the adoption of IFRS by all listed

and significant public interest entities provides that in matters of financial reporting, if there is any

inconsistency between the Financial Reporting Council of Nigeria Act No. 6, 2011 and other Acts which are

listed in section 59(1) of the Financial Reporting Council of Nigeria Act No. 6, 2011, the Financial Reporting

Council of Nigeria Act No. 6, 2011 shall prevail. The Financial Reporting Council of Nigeria acting under the

provisions of the Financial Reporting Council of Nigeria Act No. 6, 2011 has promulgated IFRS as the

national financial reporting framework for Nigeria. Consequently, the following provision of the National

Insurance Act, 2003 which conflict with the provisions of IFRS have not been adopted:

i) Section 22(1a) which requires additional 25 percent of net premium to general reserve fund. See note

3(m)(ii) on accounting policy for unexpired risk and unearned premium.

Reporting period The Statement of Financial Position has been prepared as of 31 December 2017, while the other primary

financial statements have been prepared for the nine months ended 31 December 2017, with comparative

figures for the preceding period.

· Significant financial difficulty of the issuer or debtor; · A breach of contract, such as a default or delinquency in payments; · It becoming probable that the issuer or debtor will enter bankruptcy or other financial reorganisation; · The disappearance of an active market for that financial asset because of financial difficulties; or · Observable data indicating that there is a measurable decrease in the estimated future cash flow from

a group of financial assets since the initial recognition of those assets, although the decrease cannot

yet be identified with the individual financial assets in the Company.

36



2.8 Foreign currency translation

(a) Functional and presentation currency Items included in the financial statements are measured using the currency of the primary economic

environment in which the entity operates (‘the functional currency’). The financial statements are

presented in Nigerian Naira which is the Company’s functional and presentation currency.

(b) Transactions and balances Foreign currency transactions are transactions denominated, or that require settlement, in a foreign

currency and these are translated into the functional currency spot rate prevailing at the dates of the

transactions.

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency

spot rate of exchange prevailing at the reporting date. Foreign exchange gains and losses resulting from

the retranslation and settlement of these items are recognised in profit or loss.

2.9 Cash and cash equivalents

For the purposes of the statement of cash flows, cash comprises cash balances and deposits with banks

net of overdraft. Cash equivalents comprise highly liquid investments (including money market funds) that

are readily convertible to known amounts of cash and which are subject to insignificant risk of changes in

value with original maturities of three months or less being used by the Company in the management of its short-term commitments. Cash and cash equivalents are carried at amortised cost in the statement of

financial position.

2.10. Financial assets

The Company classifies its financial assets into the following categories: financial assets sets as Held at fair

value through profit or loss (or held for trading), held-to-maturity, Available-for-sale and loans and

receivables. The classification is determined by management at initial recognition and depends on the

purpose for which the investments were acquired.

a. Financial assets at fair value through profit of loss A financial asset is classified at fair value through profit or loss if it is classified as held for trading or is

designated at fair value through profit or loss upon initial recognition. The entity has no assets classified

as held-for-trading at the end of the year. The entity has designated certain financial assets upon initial

recognition at fair value through profit or loss (fair value option). This designation cannot subsequently be

changed. Financial assets are designated at fair value through profit or loss if the Company manages such

investments and makes purchase and sale decisions based on their fair value in accordance with the

Company’s documented risk management or investment strategy. The investments are carried at fair

value, with gains or losses arising from changes in this value recognized in the statement of profit or loss

in the period in which they arise. Composition/details are disclosed in notes.

b. Held-to-maturity. The Company classifies financial assets as held to maturity when the Company has positive intent and

ability to hold the securities to maturity. Held-to-maturity investments are recognized initially at fair value

plus any directly attributable transaction costs. Subsequent to initial recognition, held-to-maturity

investments are measured at amortized cost using the effective interest method, less any impairment

losses. Interest on held-to- maturity investments is included in the profit or loss and are reported as

‘investment income’.

37



2.10 Financial assets – continued

c. Available-for-sale financial assets Available-for-sale financial assets are non-derivative financial assets that are classified as available-for-

sale or are not classified in any of the two preceding categories which may be sold in response to the need

for liquidity or changes in interest rates, exchange rates or equity prices. These investments are initially

recognised at fair value. After initial measurement, available-for-sale financial assets are subsequently

measured at fair value. Fair value gains and losses are reported as a separate component in other

comprehensive income until the investment is derecognised o r the investment is determined to be

impaired. On derecognition or impairment, the cumulative fair value gains and losses previously reported

in equity are transferred to profit or loss.

d. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not

quoted in an active market other than: · those that the Company intends to sell in the short term which are reclassified as fair value through profit

or loss and those that the Company upon initial recognition designates at fair value through profit or loss. · those that the Company upon initial recognition designates as Available for Sale · those for which the holder may not recover substantially all of its initial investment other than because

of credit risk. They include:

(i) Trade receivables Trade receivables are non-derivative financial assets with fixed or determinable payments that are not

quoted in an active market. They are mainly receivables arising from insurance contracts. Trade

receivables are recognised initially at fair value plus any directly attributable transaction costs. Subsequent

to initial recognition, trade receivables are measured at amortized cost less any impairment losses. They

include receivables from Brokers and Co-insurance companies.

(ii) Other receivables Other receivables are made up of amounts due from parties which are not directly linked to insurance or

investment contracts. Other receivables are stated after deductions of amount considered bad or doubtful

of recovery. When a debt is deemed not collectible, it is written-off against the related provision or directly

to the profit and loss account to the extent not previously provided for. Any subsequent recovery of written-off debts is credited to the profit and loss account.

e. Impairment of financial assets

(i) Financial assets carried at amortised cost The Company assesses at each end of the reporting period whether there is objective evidence that a

financial asset or group of financial assets is impaired. A financial asset or group of financial assets is

impaired and impairment losses are incurred only if there is objective evidence of impairment as a result

of one or more events that have occurred after the initial recognition of the asset (a ‘loss event’) and that

loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of

financial assets that can be reliably estimated. Objective evidence that a financial asset or group of assets

is impaired includes observable data that comes to the attention of the Company from the following events: Default or delinquency by a debtor; Restructuring of an amount due to the Company on terms that the Company would not consider

favourable; Indications that a debtor or issuer will enter bankruptcy; The disappearance of an active market for the security because of financial difficulties; and Observable data indicating that there is a measurable decrease in the estimated future cash flow

from a group of financial assets since the initial recognition of those assets, although the decrease

cannot yet be identified with the individual financial assets in the group.

38




The Company first assesses whether objective evidence of impairment exists individually for financial

assets that are individually significant. If the Company determines that no objective evidence of impairment

exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group

of financial assets with similar credit risk characteristics and collectively assesses them for impairment.

Assets that are individually assessed for impairment and for which an impairment loss is or continues to be

recognised are not included in a collective assessment of impairment. If there is objective evidence that an

impairment loss has been incurred on loans and receivables or held-to-maturity investments carried at

amortised cost, the amount of the loss is measured as the difference between the asset’s carrying amount

and the present value of estimated future cash flows (excluding future credit losses that have been

incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the

asset is reduced, and the amount of the loss is recognised in the statement of profit of loss. If a held-to-

maturity investment or a loan has a variable interest rate, the discount rate for measuring any impairment

loss is the original effective interest rate determined under contract. As is practically expedient, the

Company may measure impairment on the basis of an instrument’s fair value using an observable market

price.

For the purpose of a collective evaluation of impairment, financial assets are grouped on the basis of similar

credit risk characteristics. Those characteristics are relevant to the estimation of future cash flows for

groups of such assets by being indicative of the issuer’s ability to pay all amounts due under the contractual

terms of the debt instrument being evaluated. If in a subsequent period, the amount of the impairment

loss decreases and the decrease can be related objectively to an event occurring after the impairment was

recognised, the previously recognised impairment loss is reversed by adjusting the assets. The amount of

the reversal is recognised in the statement of profit or loss.

(i) Trade receivables These are initially recognised at fair value and subsequently measured at amortised cost less provision for

impairment. A provision for impairment is made when there is objective evidence (such as the probability

of insolvency, significant financial difficulties on the part of the counterparty or default or significant delay

in payment - over 30 days) that the Company will not be able to collect the entire amount due under the

original terms of the invoice. Allowances for impairment are made based on “incurred loss model” which

consider premiums outstanding and not received within one month subsequent to the year-end as lost,

given default for each customer and probability of default for the sectors in which the customer belongs.

The amount of such a provision being the difference between the carrying amount and the present value

of the future expected cash flows associated with the impaired receivable. For amounts due from policy

holders and reinsurers, which are reported net, such provisions are recorded in a separate impairment

account with the loss being recognised in statement of profit or loss. On confirmation that the amounts

receivable will not be collectable, the gross carrying value of the asset is written off against the associated

provision. Any subsequent recoveries are credited to the statement of profit or loss in the period the

recoveries are made.

39




(ii) Assets classified as available-for-sale The Company assesses at each date of the statement of financial position whether there is objective

evidence that a financial asset or a group of financial assets is impaired. In the case of equity investments

classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its

cost is an objective evidence of impairment resulting in the recognition of an impairment loss. In this

respect, a decline of 20%or more is regarded as significant, and a period of 1 year or longer is considered

to be prolonged. If any such quantitative evidence exists for available-for-sale financial assets, the asset is

considered for impairment, taking qualitative evidence into account. The cumulative loss – measured as

the difference between the acquisition cost and the current fair value, less any impairment loss on those

financial assets previously recognised in profit or loss – is removed from equity and recognised in the

statement of profit or loss. Impairment losses recognised in the istatement of profit or loss on equity instruments are not reversed

through the profit or los. If in a subsequent period the fair value of a debt instrument classified as available

for sale increases and the increase can be objectively related to an event occurring after the impairment

loss was recognised in profit or loss, the impairment loss is reversed through the profit or loss.

(f) Derecognition of financial instruments The Company derecognises a financial asset when the contractual rights to the cash flows from the asset

expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction

in which substantially all the risks and rewards of ownership of the financial asset are transferred, or has

assumed an obligation to pay those cash flows to one or more recipients, subject to certain criteria.

Impaired debts are derecognised when they are assessed as uncollectible

(g) Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the statement of financial posistion

only when there is a legally enforceable right to offset the recognised amounts and there is an intention to

settle on a net basis, or to realise the asset and settle the liability simultaneously.

2.11 Impairment of non-financial assets

The carrying amounts of the Company’s non-financial assets other than deferred tax assets are reviewed

at each reporting date to determine whether there is any indication of impairment. If any such indication

exists, then the asset’s recoverable amount is estimated.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its

recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash

flows that are largely independent from other assets and groups. Impairment losses are recognised in profit

or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the

carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other

assets in the unit (group of units) on a pro rata basis.

40



2.11 Impairment of non-financial assets -continued

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair

value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their

present value using a pre-tax discount rate that reflects current market assessments of the time value of

money and the risks specific to the asset. Impairment losses recognised in prior periods are assessed at

each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss

is reversed if there has been a change in the estimates used to determine the recoverable amount.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the

carrying amount that would have been determined, net of depreciation or amortisation, if no impairment

loss had been recognised. Reversals of impairment losses are recognised in profit or loss.

2.12 Reinsurance receivables

Reinsurance assets consist of short-term balances due from reinsurers, as well as longer term receivables

that are dependent on the expected claims and benefits arising under the related reinsurance contracts.

Amounts recoverable from or due to reinsurers are measured consistently with the amounts associated

with the reinsurance contracts and in compliance with the terms of each reinsurance contract.

The reinsurers' share of unearned premiums (i.e. the reinsurance assets) are recognised as an asset using

principles consistent with the Company's method for determining unearned premium liability. The amount

reflected on the statement of financial position is on a gross basis to indicate the extent of credit risk

related to the reinsurance and its obligations to policy holders.

The Company assesses its reinsurance assets for impairment at each statement of financial position date.

If there is objective evidence that the reinsurance asset is impaired, the Company reduces the carrying

amount of the reinsurance asset to its recoverable amount and recognises that impairment loss in the

profit or loss. The Company gathers the objective evidence that a reinsurance asset is impaired using the

same process adopted for financial assets held at amortised cost.

2.13 Deferred acquisition costs (DAC)

Commissions and other acquisition costs that are related to securing new contracts and renewing existing

contracts are capitalised as Deferred Acquisition Costs (DAC) if they are separately identifiable, can be

measured reliably and it is probable that they will be recovered. All other costs are recognised as expenses

when incurred. The DAC is subsequently amortised over the life of the contracts in line with premium

revenue using assumptions consistent with those used in calculating unearned premium. It is calculated by

applying to the acquisition expenses the ratio of unearned premium to written premium. The DAC asset is

tested for impairment annually and written down when it is not expected to be fully recovered.

2.14 Finance lease

Finance lease are recognised when the company transfers substantially all the risks and rewards of

ownership of the leased assets to the leasee. Investment in finance lease at commencement is initially

recorded as an asset and a liability at the lower of the fair value of the asset and the present value of the

minimum lease payments (discounted at the interest rate implicit in the lease, if practicable, or else at the

entity's incremental borrowing rate. The finance lease is recorded as a receivable, at an amount equal to

the net investment in the lease.

Interest income on investment in finance lease is recognised in the profit or loss as investment income in

the period the interest is due receivable. An investment in finance lease is impaired if the carrying amount

of the investment exceeds its recoverable or net realisable amount.

41



2.15 Investment property

Investment property is property (land or a building or part of a building or both) held (by the owner or by

the lessee under a finance lease) to earn rentals or for capital appreciation or both. Investment property,

including interest in leasehold land, is initially recognised at cost. Subsequently, investment property is

carried at fair value at the reporting date determined by annual valuations carried out by external

registered valuers. Gains or losses arising from changes in the fair value are included in determining the

profit or loss for the year to which they relate.

Subsequent expenditure on investment property where such expenditure increases the future economic

value in excess of the original assessed standard of performance is added to the carrying amount of the

investment property. All other subsequent expenditure is recognised as expense in the year in which it is

incurred.

Investment properties are derecognised when either they have been disposed of or when the investment

property is permanently withdrawn from use and no future economic benefit is expected from its disposal.

On disposal of an investment property, the difference between the disposal proceeds and the carrying

amount is charged or credited to comprehensive income.

Transfers are made to or from investment property only when there is a change in use. For a transfer from

investment property to owner occupied property, the deemed cost for subsequent accounting is the fair

value at the date of change in use. If an owner occupied property becomes an investment property, the

Company accounts for such property in accordance with the policy stated under property, plant and

equipment up to the date of the change in use.

2.16 Intangible assets

Intangible assets comprise computer software purchased from third parties. They are measured at cost

less accumulated amortisation and accumulated impairment losses. Purchased computer software are

capitalised on the basis of the costs incurred to acquire and bring into use the specific software. These

costs are amortised on straight line basis over the useful life of the asset.

Expenditure that is reliably measurable and meets the definition of an assets is capitalized.

Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful life of the

software, from the date that it is available for use. The estimated useful life of software is 10years. The

residual values and useful lives are reviewed at the end of each reporting period and adjusted, if

appropriate. An Intangible asset’s carrying amount is written down immediately to its recoverable amount

if the asset’s carrying amount is greater than its estimated recoverable amount.

The estimated useful lives for the current and comparative period are as follows:

Computer software 10 years

42



2.17 Property, plant and equipment

(a) Recognition and measurement

All property, plant and equipment is initially recorded at cost. They are subsequently stated at cost less

accumulated depreciation and impairment losses. Historical costs includes expenditure that is directly

attributable to the acquisition of the assets. An assets is recognized when it is probable that the economic

benefits associated with the item flow to the entity and cost can be reliably measured.

(b) Subsequent costs The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount

of the item if it is probable that the future economic benefits embodied within the part will flow to the

Company and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant

and equipment are recognised in profit or loss as incurred.

(c) Depreciation Depreciation is recognised in the statement of profit or loss on a straight-line basis over the estimated

useful lives of each item of property, plant and equipment. Leased assets are depreciated over the shorter

of the lease term and their useful lives. Depreciation begins when an asset is available for use and ceases

at the earlier of the date that the asset is derecognised or classified as held for sale in accordance with

IFRS 5, Non-current Assets Held for Sale and Discontinued Operations.

Land is not depreciated. Depreciation on other assets is calculated using the straight-line method to

allocate their cost or re-valued amounts over their estimated useful lives.

The estimated useful lives for the current and comparative period are as follows:

Plant and machinery 12.5%

Leasehold land and buildings 2%of cost/valuation Furniture, fittings and office equipment 10% Computer equipment 33 1/3% Motor vehicles 25% Assets under lease Over the period of lease

The assets’ residual values and useful lives are reviewed at the end of each reporting period and adjusted,

if appropriate. An asset’s carrying amount is written down immediately to its recoverable amount if the

asset’s carrying amount is greater than its estimated recoverable amount.

(d) Revaluation of land and building Property, plant & equipment are initially recorded at cost. Land and building are subsequently carried at

revalued amount being the fair value at the date of revaluation less any subsequent accumulated

depreciation and subsequent accumulated impairment losses. Revaluations are made with sufficient

regularity such that the carrying amount does not differ materially from that which would be determined

using fair value at the end of the reporting period.

When a property is revalued, any increase in its carrying amount (as a result of revaluation) is transferred

to a revaluation reserve, except to the extent that it reverses a revaluation decrease of the same property

previously recognised as an expense in the of profit or loss.

When the value of a property is decreased as a result of a revaluation, the decrease is charged against any

related credit balance in the revaluation reserve in respect of that property. However, to the extent that it

exceeds any surplus, it is recognised as an expense in the statement of profit or loss.

43



2.17 Property, plant and equipment – continued

When revalued assets are being depreciated, part of the surplus is being realized as the asset is used. The

amount of the surplus realized is the difference between the depreciation charged on the revalued amount

and the lower depreciation which would be charged to property revaluation reserve and accumulated losses

but not through profit or loss.

(e) De-recognition An item of property, plant and equipment is derecognised on disposal or when no future economic benefits

are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as

the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit

or loss in the year the asset is derecognised.

2.18 Statutory deposit

Statutory deposit represents a fixed deposit with the Central Bank of Nigeria in accordance with section

10(3) of the Insurance Act, 2003. The deposit is recognised at the cost in the statement of financial

position being 10% of the statutory minimum capital requirement of N3 billion for General insurance

business. Interest income on the deposit is recognised in the statement of profit or loss in the period the

interest is earned.

2.19 Insurance contracts and insurance contract liabilities

In accordance with IFRS 4 insurance contracts, the Company has continued to apply the accounting policies

it applied in accordance with Nigerian GAAP. These contracts are accident, workmen’s compensation,

motor, marine and aviation and fire insurance.

Insurance contracts protect the Company’s customers against the risk of harm from unforeseen events to

their properties resulting from their legitimate activities. The typical protection offered is designed for

employers who become legally liable to pay compensation to injured employees (employers’ liability) and

for individual and business customers who become liable to pay compensation to a third party for bodily

harm or property damage (public liability).

Property insurance contracts mainly compensate the Company’s customers for damage suffered to their

properties or for the value of property lost.

Others forms of Insurance contracts include but are not limited to workmen’s compensation, motor, marine

and aviation insurance.

Claims and loss adjustment expenses are charged to income as incurred based on the estimated liability

for compensation owed to contract holders or third parties damaged by the contract holders. They include

direct and indirect claims settlement costs arising from events that have occurred up to the end of the

reporting period even if they have not yet been reported to the Company i.e. Claims incurred but not

reported (IBNR) which is actuarial valuation. The Company does not discount its liabilities for unpaid claims

other than for workmen compensation claims. Liabilities for unpaid claims are estimated using the impute

of assessments of provision reported to the Company and analysis for the claims incurred but not reported

(IBNR).

44



2.19 Insurance contracts and insurance contract liabilities - continued

Reinsurance contracts held

The Company holds the under-noted reinsurance contracts: · Treaty Reinsurance Outward is usually between the Company and Reinsurers. · Facultative Reinsurance Outward is usually between the Company and other insurance companies or

between the Company and Reinsurers. · Facultative reinsurance inwards is usually between the Company and other insurance Companies or

between the Company and Reinsurers.

Premiums due to the reinsurers are paid and all claims and recoveries due from reinsurers are received.

Contracts entered into by the Company with reinsurers under which the Company is compensated for

losses on one or more contracts issued by the Company and that meet the classification requirements for

insurance contracts are classified as reinsurance contracts held. Contracts that do not meet these

classification requirements are classified as financial assets.

The benefits to which the Company is entitled under its reinsurance contracts held are recognized as

reinsurance assets. These assets consist of short-term balances due from reinsurers, as well as long term

receivables that are dependent on the expected claims and benefits arising under the related reinsured

insurance contracts. Amounts recoverable from or due to reinsurers are measured consistently with the

amount associated with the reinsured insurance contracts and in accordance with the terms of each

reinsurance contract. Reinsurance liabilities are primarily premiums payable for reinsurance contracts and

are recognized as an expense when due.

The Company’s Insurance liabilities or balances arising from insurance contracts primarily include those

insurance contract liabilities that were valued by the Actuary. These include unearned premiums reserve

and outstanding claim reserve.

(i) Unearned premium reserve Unearned premium provision is calculated using a time - apportionment basis, in particular, the 365ths

method.

(ii) Outstanding claims reserve Individual loss estimates are provided on each claim reported. In addition, provisions are made for

adjustment expenses, changes in reported claims and for claims incurred but not reported (IBNR), based

on past experience and business in force.

The reserve for outstanding claims is maintained at the total amount of outstanding claims incurred and

reported plus claims incurred but not reported ("IBNR") as at the reporting date. The IBNR is based on the

liability adequacy test carried out by an Actuary.

(iii) Liability adequacy test At the end of each reporting period, liability adequacy tests are performed by an Actuary to ensure the

adequacy of the contract liabilities net of related D AC assets. In performing these tests, current best

estimates of future contractual cash flows and claims handling and administration expenses, as well as

investment income from the assets backing such liabilities, are used. Any deficiency is immediately charged

to profit or loss initially by writing off DAC and by subsequently establishing a provision for losses arising

from liability adequacy tests.

The provisions of the Insurance Act,CAP I17 LFN 2004 require an actuarial valuation for life reserves only

however, IFRS 4 requires a liability adequacy test for both life and non-life insurance reserves. The

provision of section 59 of the Financial Reporting Council Act No.6, 2011 gives superiority to the provisions

of IFRS and since it results in a more conservative reserving than the provision of the Insurance Act, CAP

I17 LFN 2004, it supports the Company's prudential concerns.

45



2.19 Insurance contracts and insurance contract liabilities - continued

(iv) Salvage and subrogation reimbursements

Some insurance contracts permit the Company to sell (usually damaged) property acquired in settling a

claim (for example, salvage). The Company may also have the right to pursue third parties for payment of

some or all costs (for example, subrogation). Estimates of salvage recoveries are included as an allowance

in the measurement of the insurance liability for claims, and salvage property is recognized in other assets

when the liability is settled. The allowance is the amount that can reasonably be recovered from the

disposal of the property.

Subrogation reimbursements are also considered as an allowance in the measurement of the insurance

liability for claims and are recognized in other assets when the liability is settled. The allowance is the

assessment of the amount that can be recovered from the action against the liable third party.

2.20 Trade payables

Trade payables (i.e insurance payables) are recognised when due and measured on initial recognition at

fair value less directly attributable transaction costs. Subsequent to initial recognition, they are measured

at amortised cost using the effective interest rate method. Trade payables include payables to agents and

brokers, payables to reinsurance companies, payables to coinsurance companies and commission payable.

The fair value of a non-interest bearing liability is its discounted repayment amount. Trade payables are

derecognised when the obligation under the liability is settled, cancelled or expired.

2.21 Provisions and other payables

Provision is recognised if, as a result of a past event, the Company has a present legal or constructive

obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be

required to settle the obligation.

Provisions are measured at the best of estimate of the expenditure required to settle the obligation at the

end of the reporting period. The provisions are reviewed at the end of the reporting period and adjusted to

reflect the current best estimate.

Other payables are recognised initially at fair value and subsequently measured at amortised cost using

effective interest method.

2.22 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are

subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and

the redemption value is recognised in the statement of profit or loss over the period of the borrowings

using the eff ective interest method.

46



2.23 Retirement obligations and employee benefits

The Company operates the following contribution and benefit schemes for its employees:

Defined benefit gratuity scheme

The Company has a defined benefit gratuity scheme for management and non-management staff. Under

this scheme, a specified amount as determined by actuarial valuation is contributed by the Company and

charged to the statement of profit or loss over the service life of each employee.

The Company recognizes the following changes in the net defined benefit obligation under ‘’the employee

benefit expense’’. Service costs comprising current service costs, past services costs, gains and losses on

curtailment and non-routine settlements.

Employees are entitled to gratuity after completing a minimum of five continuous full years of service. The

gratuity obligation is calculated annually by Independent Actuaries using the projected unit credit method.

The present value of the gratuity obligation is determined by discounting the estimated future cash

outflows using market yields on high quality corporate bonds. The liability recognized in the statement of

financial position in respect of defined benefit gratuity plan is the present value of the defined benefit

obligation at the reporting date less the fair value of plan assets. Actuarial gains or losses arising from the

valuation are credited or charged to statement of profit or loss and other comprehensive income in the

financial year in which they arise.

Re-measurement arising from actuarial gains and losses are immediately recognized in the statement of

financial position with corresponding debit or credit recognized in the retained earnings through OCI in

periods in which they occur. Re-measurement are not reclassified in subsequent periods. Past service costs

are recognized in the profit or loss on the earlier of:

The date of plan amendment or curtailment and; The date that the Group recognizes related restructuring costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset using the

rate at the beginning of the period. The Company recognizes the following changes in the net defined

benefit obligation under ‘’the employee benefit expense’’. Service costs comprising current service costs,

past services costs, gains and losses on curtailment and non-routine settlements.

Defined contribution pension scheme The Company operates a defined contributory pension scheme for eligible employees. The Company and

employees contribute 10%and 8%respectively of the employees' Basic, Housing and Transport allowances

in line with the provisions of the Pension Reform Act 2014. The Company pays the contributions to a

pension fund administrator. The Company has no further payment obligations once the contributions have

been paid. The contributions are recognised as employee benefits expense when they are due. Prepaid

contributions are recognised as an asset to the extent that a cash refund or a reduction in the future

payments is available.

Short-term benefits Wages, salaries, paid annual leave, bonuses and non-monetary benefits are recognised as employee benefit

expenses when the associated services are rendered by the employees of the Company.

47



2.24 Income taxes- Company income tax and deferred tax liabilities

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the of profit

or loss except to the extent that it relates to items recognised directly in equity, in which case it is

recognised in equity or in other comprehensive income. Current income tax is the estimated income tax

payable on taxable income for the year, using tax rates enacted or substantively enacted at reporting date,

and any adjustment to tax payable in respect of previous years.

The tax currently payable is based on taxable results for the year. Taxable results differs from results as

reported in the profit or loss because it includes not only items of income or expense that are taxable or

deductible in other years but it further excludes items that are never taxable or deductible. Management

periodically evaluates positions taken in tax returns with respect to situations in which applicable tax

regulation is subject to interpretation and establishes provisions where appropriate.

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability differs

from its tax base. Deferred taxes are recognized using the balance sheet liability method, providing for

temporary differences between the carrying amounts of assets and liabilities for financial reporting

purposes and the amounts used for taxation purposes (tax bases of the assets or liability). The amount of

deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount

of assets and liabilities using tax rates that are expected to apply in the year when the asset is realised or

the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted

at the reporting date.

Deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be

available against which the asset can be utilised. Deferred tax assets are reviewed at each reporting date

and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Additional income taxes that arise from the distribution of dividends are recognised at the same time as

the liability to pay the related dividend is recognised.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset

current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities

relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable

entities where there is an intention to settle the balances on a net basis. The tax effects of carry-forwards

of unused losses or unused tax credits are recognised as an asset when it is probable that future taxable

profits will be available against which these losses can be utilised.

2.25 Share capital and share premium

Shares are classified as equity when there is no obligation to transfer cash or other assets. Any amounts

received over and above the par value of the shares issued are classified as ‘share premium’ in equity.

Incremental costs directly attributable to the issue of equity instruments are shown in equity as a deduction

from the proceeds, net of tax.

2.26 Dividend on ordinary shares

Dividends on the Company’s ordinary shares are recognised in equity in the period in which they are paid

or, if earlier, approved by the Company’s shareholders. Dividends for the year that are declared after the

reporting date are dealt with in the subsequent events note.

2.27 Statutory Contingency reserve

In compliance with Section 21 (2) of Insurance Act, CAP I17 LFN 2004, the contingency reserve is credited

with the greater of 3% of gross premium written, or 20% of the net profits. This shall accumulate until it

reaches the amount of greater of minimum paid-up capital or 50 percent of net premium.

48



2.28 Retained earnings/accumulated losses

This reserve represents amount set aside out of the profits of the Company which shall at the discretion of

the Directors be applicable for meeting contingencies, repairs or maintenance of any works connected with

the business of the Company, for equalising dividends, for special dividend or bonus, or such other

purposes for which the profits of the Company may lawfully be applied.

2.29 Available-for-sale reserve

The available-for-sale reserve comprises the cumulative net change in the fair value of the group’s available-for-sale investments. Net fair value movements are recycled to profit or losss if an underlying available-for-sale investment is either derecognized or impaired.

2.30 Property revaluation reserve

Subsequent to initial recognition, an item of property, plant and equipment may be revalued to fair value.

However, if such item is revalued, the whole class of asset to which that asset belongs has to be revalued.

The revaluation surplus is recognized in equity, unless it reverses a decrease in the fair value of the same

asset which was previously recognized as an expense, in which case it is recognized in profit or loss. A

subsequent decrease in the fair value is charged against this reserve to the extent that there is a credit

balance relating to the same asset, with the balance being recognized in profit or loss.

2.31 Gratuity valuation reserve

The gratuity valuation reserve comprises the cumulative net change in the re-measurement gain/(loss) on

defined benefit plans.

2.32 Contingent assets and liabilities

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed

only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the

control of the Company. A contingent liability is a possible obligation that arises from past events and

whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain

future events not wholly within the control of the company or the company has a present obligation as a

result of past events but is not recognized because it is not likely that an outflow of resources will be

required to settle the obligation; or the amount cannot be reliably estimated.

Contingent liabilities and contingent assets are never recognized rather they are disclosed in the financial

statements when they arise.

2.33 Premium and unearned premium

Premiums written comprise the premium on contracts incepting in the financial year. Premiums written

are stated gross of commission payable to agents and exclusive of taxes levied on premiums. The Company

earns premium income evenly over the term of the insurance policy generally using the pro rata method.

The portion of the premium related to the unexpired portion of the policy at the end of the fiscal year is

reflected in unearned premium.

49



2.34 Reinsurance expenses

Reinsurance costs represent outward premium paid to reinsurance companies less the unexpired portion

as at the end of the accounting year.

2.35 Fees and commission income

Insurance and investment contract policyholders are charged for policy administration services,

investment management services, surrenders and other contract fees. These fees are recognised as

revenue over the period in which the related services are performed. If the fees are for services provided

in future periods, then they are deferred and recognised over those future periods.

2.36 Claims expense

Claims incurred consist of claims and claims handling expenses paid during the financial year together with

the movement in the provision for outstanding claims. (See policy for reserve for outstanding claims

above)The gross provision for claims represents the estimated liability arising from claims in current and

preceding financial years which have not yet given rise to claims paid. The provision includes an allowance

for claims management and handling expenses.

The gross provision for claims is estimated based on current information and the ultimate liability may vary

as a result of subsequent information and events and may result in significant adjustments to the amounts

provided. Adjustments to the amounts of claims provision for prior years are reflected in profit or loss in

the financial period in which adjustments are made, and disclosed separately if material.

2.37 Acquisition costs and maintenance expenses

Acquisition costs represent commissions payable and other expenses related to the acquisition of

insurance contract revenues written during the financial year. Deferred acquisition costs represent the

proportion of acquisition costs incurred which corresponds to the unearned premium provision (See policy

for Deferred Acquisition Cost above). Examples of these costs include, but are not limited to, commission

expense, supervisory levy, superintending fees and other technical expenses. Maintenance expenses are

those incurred in servicing existing policies/contract.

2.38 Investment income

This includes interest income and dividend income. Interest income is recognised in profit or loss as it

accrues and is calculated by using the effective interest rate method. Fees and commissions that are an

integral part of the effective yield of the financial asset or liability are recognised as an adjustment to the

effective interest rate of the instrument. Dividend income for equities is recognised when the right to

receive payment is established, this is the ex-dividend date for equity securities.

50



2.39 Management expenses

Management expenses are expenses other than claims, investment expenses, employee benefits, expenses

for marketing and administration and underwriting expenses. They include wages, professional fee,

depreciation expenses and other non-operating expenses. Other Operating expenses are accounted for on

accrual basis and recognized in the statement of profit or loss upon utilization of the service or at the date

of their origin.

Finance income and expenses Finance income and expense for all interest-bearing financial instruments are recognised within 'finance

income' and 'finance costs' in the profit or loss using the effective interest method. The effective interest

method is a method of calculating the amortised cost of a financial asset or liability (or group of assets and

liabilities) and of allocating the finance income or finance costs over the relevant period. The effective

interest rate is the rate that exactly discounts the expected future cash payments or receipts through the

expected life of the financial instrument, or when appropriate, a shorter period, to the net carrying amount

of the instrument.

The application of the method has the effect of recognising income (and expense) receivable (or payable)

on the instrument evenly in proportion to the amount outstanding over the period to maturity or

repayment. In calculating effective interest, the Group estimates cash flows considering all contractual

terms redemption, are included in the calculation to the extent that they can be measured and are

considered to be an integral part of the effective interest rate.

Cash flows arising from the direct and incremental costs of issuing financial instruments are also taken into

account in the calculation. Where it is not possible to otherwise estimate reliably the cash flows or the

expected life of a financial instrument, effective interest is calculated by reference to the payments or

receipts specified in the contract, and the full contractual term. Once a financial asset or a group of similar

financial assets has been written down as a result of an impairment loss, interest income is recognised

using the rate of interest used to discount the future cash flows for the purpose of measuring the

impairment loss.

2.40 Income tax expense

Income tax expense comprises current income tax, education tax levy, information technology tax and

deferred tax. (See policy on taxation above).

2.41 Earnings per share

The Company presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated

by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average

number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit

or loss attributable to ordinary shareholders and the weighted average number of ordinary shares

outstanding for the effects of all dilutive potential ordinary shares.

51

Prestige Assurance Plc Statement of Profit or Loss and Other Comprehensive Income

For the year ended 31 December 2017 2 0 1 7 2 0 1 6

=N='000 =N='000 Gross premium written 3 , 8 0 8 ,5 1 6 2 , 6 1 4 ,2 6 4

Gross premium income 1 3 , 3 8 5 ,0 7 8 2 , 5 4 7 ,5 3 1 Reinsurance expenses 2 (1 ,936 ,59 7) (1 ,445 ,723)

Net premium income 1 , 4 4 8 ,4 8 1 1 , 1 0 1 ,8 0 8

Fees and commission income 5 0 1 , 9 4 8 3 6 5 ,9 2 3 Net underwriting income 1 , 9 5 0 ,4 2 9 1 , 4 6 7 ,7 3 1

Claims expenses 3 6 5 5 , 7 3 5 4 2 9 ,7 9 0 Acquisition expenses 4 4 8 3 , 5 9 6 3 6 9 ,3 4 9 Maintenance expenses 5 4 7 5 , 7 0 3 4 1 4 ,5 1 8 Underwriting expenses 1 , 6 1 5 ,0 3 4 1 , 2 1 3 ,6 5 7

Underwriting profit 3 3 5 , 3 9 5 2 5 4 ,0 7 4 Investment income 6 8 3 0 , 9 3 9 4 1 7 ,8 2 4 Net fair value gain/(loss) on financial assets 1 4.1 4 0 ,6 0 2 (18 ,433) Net fair value gain/(loss) on investment property 20 1 5 2 , 4 3 8 (13 ,436)

1 , 3 5 9 ,3 7 4 6 4 0 ,0 2 9

Other operating income 7 3 0 ,7 7 4 1 4 6 ,3 6 1 1 , 3 9 0 ,1 4 8 7 8 6 ,3 9 0

Management expenses 8 (683 ,9 33) (435 ,394)

Results from operating activities 7 0 6 , 2 1 5 3 5 0 ,9 9 6

Finance costs (8 ,226) (10 ,602)

Profit before income tax expense 6 9 7 , 9 8 9 3 4 0 ,3 9 4 Income tax expense 9 (166 ,1 48) (118 ,402)

Profit for the year 5 3 1 , 8 4 1 2 2 1 ,9 9 2

Other comprehensive income:

Items within OCI that may be reclassified to

Profit or loss or in subsequent period net of tax:

Net Gain on valuation of Available-for-sale financial assets 11.1 7 7 9 , 4 1 3 1 7 7 ,0 5 4 Items within OCI that will not be reclassified to

profit/loss in subsequent periods net of tax: Re-measurement (loss)/gain on defined benefit plan 1 1.2 (23,274) 1 9 ,6 38 Loss on revaluation of land and buildings (8 ,121) - Total other comprehensive income for the year, net of tax 7 4 8 , 0 1 8 1 9 6 ,6 9 2

Total comprehensive income for the year, net of tax 1 , 2 7 9 ,8 5 9 4 1 8 ,6 8 4

Baic earnings per ordinary share (kobo) 12 9 .90 4.13 Diluted earnings per ordinary share (kobo) 9 .90 4.13

See accompanying summary of significant accounting policies and notes to the financial statements which form

an integral part of these financial statements.

52

Prestige Assurance Plc

Statement of Financial Position As at 31 December 2017 31 December 31 December

2017 2016 Assets =N='000 =N='000 Cash and cash equivalents 13 1,010 ,492 862,680 Financial assets: - Fair value through profit or loss 14.1 259,006 495,841 - Held-to-maturity 14.2 2,420 ,199 1,622 ,105 - Available-for-sale 14.3 1,878 ,385 1,098 ,213 - Loans and receivables 14.4 49,527 97,199

Trade receivables 15 6,517 7,931 Other assets 16 57,076 51,982 Reinsurance assets 17 1,705 ,937 1,339 ,406 Deferred acquisition costs 18 154,149 92,839 Finance lease receivables 19 184,030 132,943 Investment property 20 2,439 ,002 2,286 ,564 Intangible assets 21 44,475 9,162 Property, plant and equipment 22 1,266 ,758 1,292 ,722 Statutory deposit 23 300,000 300,000

Total assets 11,775 ,553 9,689 ,587

Liabilities Insurance contract liabilities 24 2,643 ,592 1,799 ,210 Trade payables 25 467,266 241,066 Other liabilities 26 295,978 565,557 Borrowings 27 72,078 152,335 Retirement benefits obligation 28 164,290 107,646 Current income tax payable 9 162,372 127,950 Deferred tax liabilities 10 461,856 467,561

Total liabilities 4,267 ,432 3,461 ,325

Equity Share capital 29 2,685 ,216 2,685 ,216 Share premium 30 1,127 ,599 1,127 ,599 Statutory contingency reserve 31 1,867 ,906 1,753 ,651 Retained earnings/(accumulated losses) 32 (347,325) (776,511) Gratuity valuation reserve 33.1 (13,433) 9,841 Available-for-sale reserve 33.2 1,450 ,955 671,542 Property revaluation reserve 33.3 737,203 756,924 Total equity 7,508 ,121 6,228 ,262 Total liabilities and equity 11,775 ,553 9,689 ,587

These financial statements were approved by the Board of Directors and authorized for issue on 9 t h M a r c h 2018 and signed on its

behalf by:

--------------------------------------------- --------------------------------------------- ----------------------------------------------- Mr. Hassan T. M. Usman Dr. Balla Swamy Emmanuel Oluwadare Chairman Managing Director/CEO Chief Financial Officer FRC/2013/IODN/0000003601 FRC/2015/CIIN/00000011288 FRC/2013/ICAN/00000003649

See accompanying summary of significant accounting policies and notes to the financial statements which form an integral part

of these financial statements.

53

Prestige Assurance Plc Statement of Changes in Equity For the year ended 31 December 2017

Notes

Share capital

(Note 29)

Share

premium

(Note 30)

Statutory

Contingency reserve

(Note 31)

Accumulated

losses (Note 32)

Gratuity

valuation reserve (Note

33.1)

Available-for-

sale reserve (Note 33.2)

Property

revaluation reserve

(Note 33.3)

Total equity

=N='000 =N='000 =N='000 =N='000 =N='000 =N='000 =N='000 =N='000

As at 1 J anuary 2017 2,685,216 1,127,599 1,753,651 (776,511) 9,841 671,542 756,924 6,228,262 Profit for the year - - - 531,841 531,841 Other comprehensive income net of tax - - - (23,274) 779,413 (8,121) 748,018 Transfer to statutory cont ingency reserve - - 114,255 (114,255) - - - - Reduction in accumulated losses - - - 11,600 - - (11,600) - At 31 December 2017 2,685,216 1,127,599 1,867,906 (347,325) (13,433) 1,450,955 737,203 7,508,121

As at 1 J anuary 2016 restated 2,685,216 1,127,599 1,675,223 (945,069) (9,797) 494,488 781,918 5,809,578 Profit for the year - - - 221,992 - - - 221,992 Other comprehensive income - - - - 19,638 177,054 - 196,692 Transfer of contingency reserve - - 78,428 (78,428) - - - - Transfer to accumulated losses - - - 24,994 - - (24,994) - At 31 December 2016 2,685,216 1,127,599 1,753,651 (776,511) 9,841 671,542 756,924 6,228,262

See accompanying summary of significant accounting policies and notes to the financial statements which form an integral part of these financial statements.

54

Prestige Assurance Plc Statement of Cash Flows For the year ended 31 December 2017

2017 2016 Notes =N='000 =N='000

Cash flows from operating activities Premiums received from policy holders 3,809,930 2,609,056 Commissions received 501,948 365,923 Commission paid (544,906) (375,058) Reinsurance premium paid (2,118,235) (1,429,607) Claims paid 3 (1,333,405) (1,896,206) Claims recoverable from re-insurers 3 927,416 1,333,188 Other operating cash payments 34.2 (1,129,920) (315,612) Other operating cash receipt 26,015 118,252 Cash flows (used in)/generated from operating activities 138,843 409,936 Income tax paid 9 (123,976) (145,651) Benefits paid 28 (14,894) (35,634) Net cash (used in)/from operating activities 34.1 (27) 228,651

(27)

Cash flows from investing activities Purchase of property, plant and equipment 22 (37,833) (18,799) Purchase of intangible assets 21 (41,000) (598) Proceeds from disposal of property, plant and equipment 1,924 589 Proceeds on disposal of held-for-trading assets 402,606 - Purchase of available-for-sale financial assets 14.3 - (100,972) Purchase of held-to-maturity financial assets 14.2 (1,002,321) (1,002,321) Proceeds on redemption of held-to-maturity financial assets 203,227 78,124 Interest received 561,918 324,385 Dividends received 130,635 93,439 Net cash from/(used in) investing activities 219,156 (626,153)

Cash flows from financing activities Repayments of borrowings during the year 27 (154,225) (68,255) Net cash used in financing activities (154,225) (68,255)

Net increase/(decrease) in cash and cash equivalents 64,904 (464,757) Cash and cash equivalents at beginning of year 856,344 1,293,162 Effects of exchange rate changes on cash and cash equivalents 17,166 27,939

Cash and cash equivalents at end of year 35 938,414 856,344

938,414 856,344

See accompanying summary of significant accounting policies and notes to the financial statements which form an

integral part of these financial statements.

Prestige Assurance Plc Notes to the financial statements

2017 2016 =N='000 =N='000

1 Gross premium income

Gross premium written 3,808,516 2,614,264 Changes in unearned income (423,438) (66,733)

3,385,078 2,547,531

2 Reinsurance expenses

Outward reinsurance 2,118,235 1,429,607 Decrease in prepaid reinsurance (181,638) 16,116

1,936,597 1,445,723

3 Claims expenses

Claims paid during the year (Note 24.2) 1,333,405 1,896,206 Increase/(decrease) in outstanding claims 420,944 (1,464,650) Cliams Incurred in the current accident year (Note 24.2) 1,754,349 431,556 Change in re-insurance assets (Note 17) (171,198) 1,331,422 Reinsurance claims recoveries (927,416) (1,333,188)

655,735 429,790

4 Acquisition expenses

At 1 J anuary 92,839 87,130 Commission for the year (Note 18) 544,906 375,058 Gross commission 637,745 462,188 At 31 December (154,149) (92,839)

483,596 369,349

5 Maintenance expenses

Wages and salaries - Technical Staff 211,269 186,433 Travelling 68,935 54,657 Entertainment & hotel expenses 42,139 25,037 Motor running expenses 23,480 15,293 Pension cost 18,533 31,851 Postage, telephone & telegrams 10,719 8,545 Leave encashment 7,684 8,409 Balance carried forward 382,759 330,225

56


Notes to the financial statements - continued 2017 2016

5 Maintainance expenses- continued =N='000 =N='000

Balance brought forward 382,759 330,225

Medical 28,145 25,442 Staff training 7,660 16,349 Insurance levy 14,957 16,420 Risk inspection survey 17,454 8,083 Conveyance 12,684 7,456 Industrial Training Fund 4,000 7,242 Staff welfare 8,044 3,301

475,703 414,518

6 Investment income

Interest income 539,569 290,883 Dividend income 130,635 93,439 Finance lease income 35,566 33,502 Profit on sale of shares 125,169 -

830,939 417,824

7 Other operating income

Net foreign exchange gain 3,709 27,939 Recovery of bad debt previously written off (Note 7.1) 609 108,634 Profit on disposal of property, plant and equipment 1,050 170 Sundry income (Note 7.2) 25,406 9,618

30,774 146,361

7.1

7.2

This relates to amount received on debts which had previously been written off in prior years

before the implementation of "no premium no cover". This relates to amount received on claims which had previously been written off in prior years

now recovered.

57

Prestige Assurance Plc Notes to the financial statements - continued

2017 2016 8 Management expenses =N='000 =N='000

Wages and salaries - Adminstrative Staff 172,857 160,399 Office expenses 117,044 43,858 VAT on commission 67,511 13,862 Professional fees 58,691 35,165 Impairment of other loans 52,260 - Depreciation (Note 22) 51,323 53,502 Administration expenses 43,024 38,775 Productivity bonus 34,899 17,020 Printing expenses 15,371 8,336 Insurance 13,810 11,064 Advertisement and publicity 11,814 4,987 Subscriptions 11,176 14,560 Audit fees 10,000 8,500 Directors expenses 8,828 6,549 Bank charges 6,366 4,453 Residential rent, rates and other expenses 3,271 12,776 Amortisation (Note 21) 5,688 1,588

683,933 435,394

9 Taxation

Per statement of profit or loss : Minimum tax 152,329 117,605 Education tax 6,069 10,210 Current income tax expense 158,398 127,815 Deferred tax expense (Note 10.1) 7,750 (9,413) Income tax expense 166,148 118,402

Per statement of financial position:

Current income tax payable At 1 J anuary 127,950 145,786 Charged to profit or loss 158,398 127,815 Payments during the year (123,976) (145,651)

162,372 127,950

58


2017 2016 9 Taxation - continued =N='000 =N='000

Reconciliation of tax charge Profit before income tax expense 697,989 340,394 Tax at Nigerian's statutory income tax rate of 30% 209,397 102,118

Non-deductible expenses 96,268 385,020 Tax exempt income (267,427) (381,632) Education tax levy 6,069 10,210 Tax rate differential on fair value gains (30,488) 2,686 Impact of minimum tax 152,329 - At effective income tax rate of 24%(2015:35%) 166,148 118,402

0 (118,402)

10 Deferred taxation Deferred income tax (assets)/liabilities are attributable to the following items:

2017 2016 Deferred tax liabilities =N='000 =N='000 Accelerated depreciation 369,056 380,030 Fair value gains on investment properties 135,069 119,826

504,125 499,856 Deferred tax assets Employee benefits (42,269) (32,295)

(42,269) (32,295)

Net 461,856 467,561

10.1 Movements in temporary differences during the year: As at 1 J anuary 467,561 468,559 Recognised in profit or loss on: Accelerated depreciation (7,494) (8,282) Fair value gains on investment properties 15,244 (1,343) Employee benefits - 212 Total recognised in profit or loss 7,750 (9,413) Recognised in other comprehensive income on: Revaluation loss on property plant and equipment (3,480) - Employee benefits (9,975) 8,415 Total recognised in other comprehensive income on: (13,455) 8,415

At 31 December 461,856 467,561

59


2017 2016 11 Other comprehensive income/(loss): =N='000 =N='000

11.1 Net gain on available-for-sale assets

Fair value gain on available-for-sale financial assets (Note 14.3) 779,413 177,054 779,413 177,054

11.2 Remeasurement (loss)/gain on defined benefit plan

Actuarial (loss)/gain - Assumption (Note 28) (26,074) 16,725 Actuarial (loss)/gain - Experience (Note 28) (7,175) 11,328

(33,249) 28,053 Income tax effect (Note 10.1) 9,975 (8,415)

(23,274) 19,638

11.3 Revaluation loss on land and buildings Arising during the year (Note 22) (11,601) - Income tax effect (Note 10.1) 3,480 -

(8,121) -

Other comprehensive income for the year, net of tax 748,018 196,692

12 Earnings per share (EPS)

Basic EPS amounts are calculated by dividing the profit for the year attributable to ordinary shareholders

by the weighted average number of ordinary shares outstanding during the year.

The following reflects the income and share data used in the basic

earnings per share computations: 2017 2016

Net profit attributable to ordinary shareholders (=N='000) 531,841 221,992

Weighted average number of shares for the year ('000) 5,370,432 5,370,432

Baic earnings per ordinary share (kobo) 9.90 4.13 Diluted earnings per ordinary share (kobo) 9.90 4.13

Except in prior year, there have been no other transactions involving ordinary shares or potential ordinary

shares between the reporting date and the date of completion of these financial statements.

60


2017 2016 13 Cash and cash equivalents =N='000 =N='000

Balances with local banks 115,169 355,326 Balances in foreign banks 3,094 45,981 Deposits and placements with local banks 892,229 156,024

Bankers acceptances - 305,349 1,010,492 862,680

14 Financial assets

Fair value through profit or loss (Note 14.1) 259,006 495,841 Held-to-maturity (Note 14.2) 2,420,199 1,622,105 Available-for-sale (Note 14.3) 1,878,385 1,098,213

Loans and receivables (Note 14.4) 49,527 97,199 4,607,117 3,313,358

14.1 Movement of the fair value through profit or loss

At 1 J anuary 495,841 514,274 Net fair value gain/(loss) 40,602 (18,433) Disposal during the year (Note 14.1.1) (277,437) - At 31 December 259,006 495,841

14.1.1 Disposal of fair value through profit or loss during the year

Proceed from disposal during the year 402,606 - Loss on disposal during the year 21 - Gain on disposal during the year (125,190) -

Cost of disposed during the year 277,437 -

14.2 Movement of the Held-to-maturity financial assets: At 1 J anuary 1,622,105 698,908 Additions during the year 614,312 862,998 Interest during the year 387,009 138,323

2,623,426 1,700,229 Redemption during the year (203,227) (78,124) At 31 December 2,420,199 1,622,105

- 14.3 Movement of available-for-sale financial assets

At 1 J anuary 1,098,213 820,187 Additions - 100,972

1,098,213 921,159 Net fair value gains (Note 11.1) 779,413 177,054 At 31 December 1,878,385 1,098,213

Available-for-sale financial assets comprise unquoted investments in: Leadway Pensure PFA Limited 1,629,613 844,436 Leadway Protea Hotel Limited 173,018 178,023 Other available-for-sale investments 75,754 75,754

1,878,385 1,098,213

61

Balance with local banks Balances with foreign banks Placement with local banks

Held for trading Held to maturity -Available-for-sale

-Available-for-sale

Prestige Assurance Plc Notes to the financial statements - continued 2017 2016

14.4 Loans and receivables =N='000 =N='000

Staff loans and advances 49,527 44,939 Other loans 52,260 52,260

Acc Impairment of other loans (52,260) - Staff loans and advances 49,527 97,199

Included in other loans is an amount granted to the former executive director and the former CFO that has

remained outstaning for a period of two years. These amount have been fully impaired in current year.

2017 2016 =N='000 =N='000

Analysis of investment securities Equity 2,137,391 1,594,054 Debt 2,469,726 1,719,304

4,607,117 3,313,358

Held-to-maturity FGN Bond 2,249,737 1,492,898 Corporate bond 170,462 129,207

2,420,199 1,622,105 Held-for-trading Quoted equities 259,006 495,841

Available-for-sale: Unquoted equity 1,878,385 1,098,213

Total 4,557,590 3,216,159

15 Trade receivables

Due from brokers 6,517 7,931

16 Other assets

Prepayments

50,902 35,392

Accrued interest - 15,658 WHT receivable 6,174 932 Other receivables 10,629 10,629 Impairment on other receivables (Note 16.1) (10,629) (10,629)

57,076 51,982

16.1 Impairment loss on other receivables relates to amount advanced to Company's staff cooperative for purchase of land.

62

staff loans and advances

staff loans and advances


2017 2016 17 Reinsurance assets =N='000 =N='000

Reinsurance share of claims expenses paid 243,360 275,659 Reinsurance debtors 132,975 - Reinsurance share of outstanding claims expenses 825,610 755,088

Impairment of claims recoverable (22,372) (36,067) Total outstanding claims recoverable 1,179,573 994,680 Reinsurance share of unearned premium 526,364 344,726

1,705,937 1,339,406

Movement on outstanding claims recoverable:

Outstanding claims recoverable: Balance at beginning 1,030,747 2,362,169 Change during the year (Note 3) 171,198 (1,331,422) Balance at end of the year 1,201,945 1,030,747

Impairment of claims recoverable (Note 17.1) (22,372) (36,067) 1,179,573 994,680

17.1 Impairment of claims recoverable

At 1 J anuary 36,067 36,067 Recovered during the year (13,695) - At 31 December 22,372 36,067

18 Deferred acquisition costs

At 1 J anuary 92,839 87,130 Commission paid during the year (Note 4) 544,906 375,058 Amortised to profit or loss (Note 4) (483,596) (369,349) At 31 December 154,149 92,839

19 Finance lease receivables

At 1 J anuary 132,943 129,070 Additions during the year 159,458 112,244 Repayment during the year (108,371) (108,371)

184,030 132,943

2017 =N='000 =N='000

The present value of the lease obligations are as follows:

Minimum payments

Present value

of payments

Not later than one year 148,422 148,422 Later than one year, not later than five years 35,608 35,608 Later than five years - - Total minimum lease payments 184,030 184,030 Less amount reprsenting finance charges (28,566) - Present value of minimum lease payments 155,464 184,030

63

Reinusrance debtors Claims recoverable from reinsurer

Prepaid reinsurance


19 Finance lease receivables- continued

2016

=N='000 =N='000

The present value of the lease obligations are as follows: Minimum

payments Present value

of payments

Not later than one year 118,739 118,739 Later than one year, not later than five years 14,204 14,204 Later than five years - - Total minimum lease payments 132,943 132,943 Less amount reprsenting finance charges (11,726) - Present value of minimum lease payments 121,217 132,943

The Company enter into finance lease arangement to finance certain motor vehicles with lease term of

maximum of twenty four months repayment period.

2017 2016 20 Investment property =N='000 =N='000

At 1 J anuary 2,286,564 2,300,000 Fair value gains/(loss) 152,438 (13,436) At 31 December 2,439,002 2,286,564

Investment properties are stated at fair value, which has been determined based on valuations performed

by J C Obasi & Co, a professional firm of Estate Surveyors and Valuers who are accredited independent

valuers, a s at 31 Dec emb er 2017 and 2016. These valuers are specialists in valuing these types of

investment properties. The fair value of the properties has not been determined on transactions

observable in the market because of the nature of the property and the lack of comparable data. Instead,

a valuation model , based on discounted cash f lows, in accordance with that r ecommended b y the

International Valuation Standards Committee has been applied. Valuations are performed on an annual

basis and the fair value gains and losses are recorded within the profit or loss.

The Company enters into operating leases for all of its investment properties. However, the property is

yet to be occup ied a nd the rental income expected to arise f rom the proper ty annual ly is

=N=228,200,000 which is expected to be included in other income. Direct operating expenses arising in

respect of such properties during the year are included in administrative expenses.

There are no restrictions on the realisability of investment property or the remittance of income and

proceeds of disposal. The Company has no contractual obligations to purchase, construct or develop

investment property or for repairs or enhancement.

2017 2016 =N='000 =N='000

Rental Income derived from investment properties - - Direct operating expenses (including repairs & maintenance)

generating income

Loss arising from investment properties carried at fair value

(1,555) (5,295) (1,555) (5,295)

64


20 Investment property - continued

The fair value disclosure on

investment properties is as

Quoted

prices in active

Fair value measurement using

Significant Significant observable unobservable

inputs inputs

Level 1 Level 2 Level 3 Total Date of valuation - 31 December 2017 =N='000 =N='000 =N='000 =N='000

Investment properties - - 2,439,002 2,439,002

The fair value disclosure on investment properties is as Fair value measurement using

Quoted

prices in active

market

Significant

observable

inputs

Significant

unobservable

inputs

Level 1 Level 2 Level 3 Total Date of valuation - 31 December 2016 =N='000 =N='000 =N='000 =N='000

Investment properties - - 2,286,564 2,286,564

Description of valuation techniques used and key inputs to valuation on investment properties

Office building Valuation technique Significant unobservable inputs

Estimated

Range (weighted average) =50,000 - =N=80,000

Income capitalization using

DCF Analysis rental per

square meter Average annual growth

=N=70,000

6%

Average annual 1.4% Discount rate (equated yield) 8.88%- 8.96%(9.20%)

Under the DCF method, fair value is estimated using assumptions regarding the benefits and liabilities of

ownership over the asset’s life including an exit or terminal value. This method involves the projection of a

series of cash flows on a real property interest. To this projected cash flow series, a market-derived discount

rate is applied to establish the present value of the income stream associated with the asset. The exit yield is

normally separately determined and differs from the discount rate.

65


20 Investment property - continued

The duration of the cash flows and the specific timing of inflows and outflows are determined by events such

as rent reviews, lease renewal and related re-letting, redevelopment, or refurbishment. The appropriate

duration is typically driven by market behaviour that is a characteristic of the class of real property. Periodic

cash flow is typically estimated as gross income less vacancy, non-recoverable expenses, collection losses,

lease incentives, maintenance cost, agent and commission costs and other operating and management

expenses. The series of periodic net operating income, along with an estimate of the terminal value

anticipated at the end of the projection period, is then discounted.

Location of investment property Valuation technique Significant unobservable input

No. 19B Ligali Ayorinde Street, Victoria Island Lagos

21 Intangible assets

The valuation was based on

the market va lue of the

property, with reference to to

the investment/income approach method of valuation. The method looks

only to a property’s future

income as may reasonably be

anticipated during the estimated economic life of the

property. Further value analysis was carried out using

market market comparison

method approach as check.

It is a purposely built office building on 7 floors

with a mezzanine floor. The 7 story office

building has office and parking spaces inside

the underground. The parking lot can take

about 43 vehicles at a time. The site is rec tangular in shape and appears

firm, level and well drained. It is fenced round

in block walls with a double leaf metal entrance

gate. The site area is approximately 1054sqm.

Computer software Total

Cost: =N='000 =N='000 At 1 J anuary 2016 15,280 15,280 Additions 598 598 At 31 December 2016 15,878 15,878 Additions 41,000 41,000 At 31 December 2017 56,878 56,878

Accumulated amortisation and impairment: At 1 J anuary 2016 5,128 5,128 Amortisation 1,588 1,588 At 31 December 2016 6,716 6,716 Amortisation 5,687 5,687 At 31 December 2017 12,403 12,403

Carrying amount: At 31 December 2017 44,475 44,475 At 31 December 2016 9,162 9,162

66


22 Property, plant and equipment

Plant & machinery

Leasehold

Land & building

Furniture &

fittings

Computer equipment

Motor

vehicles

Assets on

lease

Total

=N='000 =N='000 =N='000 =N='000 =N='000 =N='000 =N='000 Cost/Valuation: At 1 J anuary 2016 33,443 1 ,256 ,300 50,694 87,189 131 ,698 758 ,432 2,317,756 Additions 903 - 1,940 1,651 14,305 - 18,799 Disposals - - (1,285) - - - (1,285) At 31 December 2016 34,346 1 ,256 ,300 51,349 88,840 146 ,003 758 ,432 2,335,270 Additions 354 - 3,844 1,356 32,280 - 37,833 Revaluation - (47,660) - - - - (47,660) Disposals - - (1,467) - (8,695) - (10,162) At 31 December 2017 34,700 1 ,208 ,640 53,726 90,196 169 ,588 758 ,432 2,315,281

Accumulated depreciation: At 1 J anuary 2016 24,349 - 36,014 85,554 85,563 758 ,432 989,912 Charge for the year 2,302 17,840 3,411 2,931 27,018 - 53,502 Disposals - - (866) - - - (866) At 31 December 2016 26,651 17,840 38,559 88,485 112 ,581 758 ,432 1,042,548 Charge for the year 2,261 18,219 2,517 1,002 27,323 51,323 Tranfers to revaluation reserve (36,059) - - - - (36,059) Disposal - - (593) (8,695) - (9,288) At 31 December 2017 28,912 - 40,483 89,487 131 ,209 758 ,432 1,048,523

Net book value:

At 31 December 2017 5,788 1 ,208 ,640 13,243 709 38,379 - 1,266,758

At 31 December 2016 7,695 1 ,238 ,460 12,790 355 33,422 - 1,292,722

67


22 Property, plant and equipment- continued

Land and building is stated at fair value, which has been determined based on valuations performed by Messrs J .C Obasi & Co.

FRC/2013/NIESV/00000002148 w h o are accredited independent valuers, as at 31 December 2017. These valuers are specialists in valuing

these type of proper ty. The fair value of the proper ty has not been determined on transactions observable in the market because of the

nature of the property and the lack of comparable data. Instead, a valuation model based on discounted cash flows in accordance with that

recommended by the International Valuation Standards Committee has been applied.

The Head office building is used to secure the Company's borrowings.

The Head office building was constructed at a cost of N94,130,000 and the property in nature is a leasehold property. In 2009, the property

was revalued to N600,000 ,000 a nd a further revaluat ion on the proper ty wa s carried out on 3 1 Dec emb er 2013 in an open market b y

reference to the investment method of valuation and used the market comparison method as a check. Changes in revaluation are recognised

in property revaluation reserve. The earned portion for 2016 financial year was transferred f rom property revaluation reserve to

accumulated losses.

The Company's property located at flat C, Niger Towers, 51/55 Glover Road Ikoyi Lagos was acquired under a lease agreement with UACN

Property Development Company in 2005. the lease period is 42 years and Prestige Assurance Plc is allowed to sub-lease it for another term

after expiration of the current term. The cost of this building at the date of acquisition wa s N71,246,000 and has been valued in an open

market as at 31 December 2013 by reference to the investment method of valuation and used the market comparison method as a check.

The fair value disclosure on investment properties is as follows: Quoted

prices in

active market

Fair value measurement using

Significant Significant observable unobservable inputs inputs

Level 1 Level 2 Level 3 Total ₦ '000 ₦ '000 ₦ '000 ₦ '000

Property value at 31 December 2017 - - 2 ,439 ,002 2,439,002

Property value at 31 December 2016 - - 2 ,286 ,564 2,286,564

68


2 017 2016 23 Statutory deposit =N='000 =N='000

At 31 December 3 00,000 300,000

Statutory deposit represents the amount deposited with the Central Ban k of Nigeria in accordance wi th

Section 9(1) and Section 10(3) of the Insurance Act 2003. This is restricted cash as management does not

have access to the balances in its day to day activities. Statutory deposits are measured at cost.

24 Insurance contract liabilities 2 017 2016

=N='000 =N='000

Unearned Premium (Note 24.1) 1,100 ,232 676,794 Outstanding Claims (Note 24.2) 1,543 ,360 1,122 ,416

Total insurance liabilities 2,643 ,592 1,799 ,210

24.1 Reserve for Unearned Premium

At 1 J anuary 6 76,794 610,061 Premium written in the year (Note 1) 3,808 ,516 2,614 ,264 Premium earned during the year (Note 1) (3 ,385,078) (2,547,531) At 31 December 1,100 ,232 676,794

24.2 Reserve for Outstanding Claims

At 1 J anuary 1,122 ,416 2,587 ,066 Incurred in the current accident year (Note 3) 1,754 ,349 431,556

Claims paidPaid during the year (Note 3) (1 ,333,405) (1,896,206) At 31 December 1,543 ,360 1,122 ,416

24.3 Analysis of Insurance Contract Liabilities

2017 2016 Gross Reinsurance Net Gross Reinsurance Net

=N='000 =N='000 =N='000 =N='000 =N='000 =N='000

Outstanding Claims 1,123 ,128 582,757 540,371 722,671 536,812 19,732 IBNR 420,232 242,853 177,379 399,745 218,276 181,469 Total oustanding claims 1,543 ,360 825,610 717,750 1,122 ,416 755,088 201,201 Unearned premium 1,100 ,232 526,364 573,868 676,794 344,726 332,068 Total 2,643 ,592 1,351 ,974 1,291 ,618 1,799 ,210 1,099 ,814 533,269

69

Unearned premium reserve Oustanding claims reserve


2017 2016 25 Trade payables =N='000 =N='000

Due to agents 16,217 13,868 Due to brokers 8,085 10,511

Due to direct insured 84,771 71,020 Due to reinsurers 42,550 19,993 Due to insurance companies 172,680 42,989

Unexpired commission received 142,963 82,685 467,266 241,066

26 Other liabilities

IT FUND Industrial Training fund 3,815 7,211 Insurance levy 14,823 16,000 Profit sharingProvision for productivity bonus (Note 26.2) 46,938 18,880

Other payables (Note 26.1) 63,920 73,842 WHT tax Withholding tax 557 596

Related party payable (Note 36) 165,737 442,776 VAT VAT 188 6,252

295,978 565,557

26.1 Other payables comprises of amount yet to be presented for payment on Dana Air claims. Also

included here are amounts owed various suppliers.

26.2 Movement in Provision for productivity bonus At 1 january 18,880 1,860 Additions 34,899 17,020 Paid in the year (6,841) - At 31 December 46,938 18,880

27 Borrowings 2017 2016 =N='000 =N='000

Balance as at beginning of the year 145,999 203,652 Interest accrued 8,226 10,602 Repayments during the year (154,225) (68,255) Balance as at end of the year (Note 36) - 145,999 Overdrafts 72,078 6,336

72,078 152,335

The New India Assurance Company Limited granted a loan of N500,000,000 to the Company for the

completion of itss seven storey building. The loan was granted at a fixed rate of 8%per annum. The

loan is for a period of 2 years with a moratorium period of a year. Repayment of principal and

interest commenced on J uly 2014 and its expected to be repaid quarterly. In 2017 financial year,

the loan was fully repaid to the parent company.

28 Retirement benefits obligation The Group operates a defined benefit staff gratuity plan where qualifying employees receive a lump

sum payment based on the number of years served after an initial qualifying period of five years and

gross salary on date of retirement.

70

DUE TO DIRECT BUSINESS DUE TO REINSURANCE COMPANIES (TREATY BUSINESSES) DUE TO INSURANCE

Payable to parent company


28 Retirement benefits obligation- continued

The most recent actuarial valuations of the present value of the defined benefit obligation were

carried out at 31 December 2017 by HR Nigeria Limited. The present value of the defined benefit

obligation, and the related current service cost and past service cost, were measured us ing the

Projected Unit Credit Method.

The amount included in the statement of financial position arising from the entity's obligation in respect of its defined

benefit plans is as follows.

2017 2016

=N='000 =N='000

Balance at the beginning of the year 107,646 136,408 Current service cost 20,813 19,094 Interest cost 17,476 15,831 Benefits paid (14,894) (35,634) Actuarial loss/(gain) 33,249 (28,053)

164,290 107,646

The principal assumptions used for the purposes of the actuarial valuations were as follows.

Discount rate 14% 16% Rate of salary increase 13% 13% Rate of inflation 12% 12%

2017 2016

The amounts recognised in profit or loss =N='000 =N='000 Current service cost 20,813 19,094 Interest cost 17,476 15,831 Total, included in staff costs 38,289 34,925

The amounts recognised in other comprehensive income Actuarial (loss)/gains- change in assumption (Note 11.2) (26,074) 16,725 Actuarial (loss)/gains - experience adjustment (Note 11.2) (7,175) 11,328 Re-measurement (gain)/ loss on net defined benefit plans (33,249) 28,053

The plan is unfunded.

Sensitivity analysis Reasonable possible changes at reporting date to one of the relevant actuarial assumptions holding

other assumptions constant, would have affected the defined benefit obligation by the amount

shown below. Defined benefit obligation

Increase Decrease =N='000 =N='000

Discount rate (1%movement) 165 (165) Salary increase rate (1%movment) - - Mortality rate (1%movement) 0.04 0.04 The analysis does not take account of the full distribution of cashflow expected under the plan , it

does provide an approximation of sensitivity of the assumption shown.

71


28 Retirement benefits obligation- continued 2017 2016

=N='000 =N='000 The following payments are estimated contributions to the

defined benefit plan obligation in future years: Within the next 12 months (next annual reporting period) 16,927 14,719 Between 2 and 5 years 35,005 30,439 Between 5 and 10 years 67,461 58,662 Beyond 10 years 110,619 96,190 Total expected payments 230,012 200,010

Average duration of the defined benefit obligation at the end of the reporting period is 24.3 years

(2015: 23.3 years)

29 Share capital

Authorised 6,000,000 Ordinary shares of 50k each 3,000,000 3,000,000

Issued and fully paid 5,320,432,000 Ordinary shares of 50k each 2,685,216 2,685,216

30 Share premium At 31 December 1,127,599 1,127,599

Premiums from the issue of shares are reported in share premium.

31 Statutory contingency reserve

At 1 J anuary 1,753,651 1,675,223 Transfer from reatained earnings 114,255 78,428 At 31 December 1,867,906 1,753,651

This is maintained in compliance with Sections 21(1) and (2) and 22(16) of Insurance Act CAP I17,

LFN 2004 as indicated in the accounting policy number 2.26.

72


32 Accumulated losses 2017 2016

=N='000 =N='000 At 1 J anuary restated (776,511) (945,069) Transfer to statutory contingency reserve (114,255) (78,428) Transfer from property revaluation reserve 11,600 24,994 Profit for the year 531,841 221,992 At 31 December (347,325) (776,511)

Retained earnings/accumulated loss comprise the undistributed profits or loss from previous years,

which have not been reclassified to other reserves noted below.

33 Other reserves

33.1 Gratutiy valuation reserve 2017 2016 =N='000 =N='000

At 1 J anuary 9,841 (9,797) Actuarial (loss)/gain during the year (23,274) 19,638 At 31 December (13,433) 9,841

This comprise of the cumulative actuarial (loss)/gain on change in assumption and experience

adjustment

2017 2016 33.2 Available-for-sale reserve =N='000 =N='000

At 1 J anuary restated 671,542 494,488 Gains on valuation during the year 779,413 177,054 At 31 December 1,450,955 671,542

The fair value available-for-sale reserve shows the effects f rom the fair value measurement of

financial instruments of the category available-for-sale. Any gains or losses are not recognised in the

profit or loss until the asset has been sold or impaired. 2017 2016

33.3 Property revaluation reserve =N='000 =N='000 At 1 J anuary restated 756,924 781,918 Arising during the year (8,121) - Transfer to accumulated losses (11,600) (24,994)

737,203 756,924

This comprise cumulative fair value changes on valuation of leasehold land & building net of deffered

tax asset/liabilities

73


34.1 2017 2016

cash (used in)/from operating activities =N='000 =N='000 Profit before tax income tax expense 697,989 340,394 Adjustments to reconcile net income to

net cash provided by operating activities: Depreciation of property, plant and equipment 51,323 53,502 Amortisation of intangible assets 5,687 1,588 Profit on disposal of property, plant and equipment (1,050) (170) Investment income (830,939) (417,824) Fair value loss on held for trading financial assets (40,602) 18,433 (Gain)/loss on investment properties (152,438) 13,436 Exchange gains (3,709) (27,939) Interest costs on retirement benefit obligations 38,289 34,925 Finance cost 8,226 10,602 Changes in assets and liabilities Increase/(decrease) in trade receivables 1,414 (5,208) Decrease in other assets and receivables 42,578 28,669 (Increase)/decrease in reinsurance assets (366,531) 1,347,538 Increase in deferred acquisition costs (61,310) (5,709) Increase in finance lease assets (51,087) (3,873) Increase in unearned premium 423,438 66,733 Increase in claims provision 420,944 (1,464,650) Increase/(decrease) in trade payables 226,200 (38,478) Decrease/increasse in other liabilities (269,579) 457,967 Income tax paid (123,976) (145,651) Benefits paid (14,894) (35,634) Net cash (used in)/generated from operating activities (27) 228,651

34.2 Reconciliation of other operating cash payments 2017 2016

=N='000 =N='000 Auditors' remuneration (10,000) (8,500) Other expenses (1,054,336) (751,397) Change in other assets and receivables (22,205) 24,796 Change in trade payables and other liabilities (43,379) 419,489

(1,129,920) (315,612)

35 Cash and cash equivalents for purposes of the statement

of cash flows Bank and cash balances 118,263 401,307 Deposits and placements 892,229 156,024 Bankers acceptances - 305,349 Overdrafts (Note 27) (72,078) (6,336)

938,414 856,344

74

Reconciliation of profit before income tax expense to net


36 Related party transactions

Compensation of key management personnel Key management personnel of the Company includes all directors, executives and non-executive, and

senior management. The summary of compensation of key management personnel for the year is as follows:

2017 2016

Short-term employee benefits: =N='000 =N='000 Salaries and allowances 42,228 24,660

Long-term employee benefits: Post employment pension benefits - -

42,228 24,660 The number of directors who received fees and other

emoluments (excluding pension contributions and certain benefit) in the following ranges was: Number Number Below =N=1,000,000 2 2 =N=1,000,001 - =N=4,000,000 1 1 =N=4,000,001 - =N=7,000,000 - - =N=7,000,001 and above 2 2

5 5 Employees The following are the number of persons in employment of

the Company as at 31 December 2017:Number

Executive Directors 2 2 Management (Managers & above) 9 10 Senior staff 40 33 Junior Staff 29 29

80 74

Staff cost =N='000 =N='000 Salaries and allowances 409,234 346,832 Staff pension 18,534 31,851 Staff gratuity 53,184 34,925

480,952 413,608

The number of employees of the Company, other than Directors, who received emoluments in the

following ranges (excluding pension contribtions and certain benefits) were: 2017 2016

Emolument range Number Number N500,000 - N1,000,000 - - N1,000,001 - N1,500,000 - - N1,500,001 - N2,000,000 - - N2,000,001 - N2,500,000 - - N2,500,001 - N3,000,000 - - N3,000,001 - Above 9 6

9 6

75


Notes to the financial statements - continued

36 Related party transactions -continued 2017 2016

Balances with related parties Amount due to related parties are as follows: =N='000 =N='000

Payable to: New India Assurance Company Limited (Note 26) 165,737 442,776

Borrowings from: New India Assurance Company Limited (Note 27) - 145,999

Outstanding balances for intercompany payables relates to expenses settled on behalf of the

Company by the parent company as at the year-end. Intercompany outstanding balances, except for

those on borrowings, are unsecured and interest free and settlement is expected occurs in cash.

37 Contingencies and commitments

a Legal proceedings and regulations

The Company operates in the insurance industry and is subject to legal proceeding in the normal

course of business. While it is not practicable to forecast or determine the final results of all pending

or threatened legal proceedings, management does not believe that such proceedings (including

litigation) will have a material effect on its results and financial position.

The Company is also subject to insurance solvency regulations in all the territories where it operates

and has complied with all these solvency regulations. There are no contingencies associated with the

Company's compliance or lack of compliance with such regulations.

b Compliance with Insurance regulations The Company contravened certain Sections of Securities Exchange Commission (SEC) Act. Details of the contravention and penalty is as follows:

2017 2016 =N='000 =N='000

Late filling of annual returns to Securities and Exchange

Commission (SEC), this relates to previous years (2008 - 2010).

c Capital commitments and operating lease

- 10,675

The Company has no capital commitments and operating lease at the reporting date.

38 Events after the reporting period

There were no events after the reporting period which could have a material effect on the financial

position of the Company as at 31 December 2017 and on its profit and other comprehensive income

for the year then ended.

76


39 Asset and Liability Management

Asset and Liability Management (ALM) attempts to address financial risks the Company is exposed to

which includes interest rate risks, foreign currency risks, equity price risks and credit risks. The major

financial risk is that in the long run its investment proceeds are not sufficient to fund the obligations

arising from its insurance contracts. A L M ensures that specific assets of the company is allocated to

cover reinsurance and liabilities of the company.

The Company manages these positions within an ALM framework that has been developed to achieve long-term investment returns in excess of its obligations under insurance and investment contracts.

The notes below show how the company has managed its financial risks.

Shareholders Insurance funds ' funds 2017

ASSETS =N='000 =N='000 =N='000

Cash and cash equivalents 1,010,492 - 1,010,492 Financial assets: -Fair value through profit or loss 259,006 - 259,006 -Held-to-maturity - 2,420,199 2,420,199 -Available-for-sale - 1,878,385 1,878,385 -Loans and receivables - 49,527 49,527 Trade receivables 6,517 - 6,517 Other asstes - 57,076 57,076 Reinsurance assets 1,705,937 - 1,705,937 Deferred acquisition costs - 154,149 154,149 Finance lease receivables - 184,030 184,030 Investment property - 2,439,002 2,439,002 Intangible assets - 44,475 44,475 Property, plant and equipment - 1,266,758 1,266,758 Statutory deposit - 300,000 300,000

2,981,952 8,793,601 11,775,553 LIABILITIES Insurance contract liabilities 2,643,592 - 2,643,592 Trade payables - 467,266 467,266 Provisions and other liabilities - 295,978 295,978 Borrowings - 72,078 72,078 Retirement benefits obligation - 164,290 164,290 Current income tax payable - 162,372 162,372 Deferred tax liabilities - 461,856 461,856

2,643,592 1,623,840 4,267,432

Gap 338,360 7,169,761 7,508,121

77


39 Asset and Liability Management- continued

Insurance funds

Shareholders

' funds 2016

ASSETS =N='000 =N='000 =N='000

Cash and cash equivalents 862,680 - 862,680 Financial assets: -Held-for-trading 495,841 - 495,841 -Held-to-maturity - 1,622,105 1,622,105 -Available-for-sale - 1,098,213 1,098,213 -Loans and receivables - 97,199 97,199 Trade receivables 7,931 - 7,931 Other receivables and prepayments - 51,982 51,982 Reinsurance assets 1,339,406 - 1,339,406 Deferred acquisition costs - 92,839 92,839 Finance lease receivables - 132,943 132,943 Investment properties - 2,286,564 2,286,564 Intangible assets - 9,162 9,162

Property, plant and equipment - 1,292,722 1,292,722 Statutory deposit - 300,000 300,000

2,705,858 6,983,729 9,689,587 LIABILITIES Insurance contract liabilities 1,799,210 - 1,799,210 Trade payables - 241,066 241,066 Provisions and other payables - 565,557 565,557 Borrowings - 152,335 152,335 Retirement benefits obligation - 107,646 107,646 Current income tax liabilities - 127,950 127,950 Deferred tax liability - 467,561 467,561

1,799,210 1,662,115 3,461,325

Gap 906,648 5,321,614 6,228,262

78


40 Management of insurance and financial risk

The Company issues contracts that transfers insurance risk. This section summarises the main risks

linked to short-term insurance business and the way they are managed.

a Insurance risk The risk under any one insurance contract i s the possibili ty that the insured event occurs and the

uncertainty of the amount of the resulting claim. By the very nature of an insurance contract, this risk

is fortuitous and therefore unexpected and unpredictable.

For a portfolio of insurance contracts where the theory of probability is applied to pricing and

provisioning, the principal risk that the Company faces under its insurance contracts is that the actual

claims and indemnity payments exceed the carrying amount of the insurance liabilities.

The Company has developed its insurance underwriting strategy to diversify the type of insurance risks

accepted and within each of these categories to achieve a sufficiently large population of risks to reduce

the variability of the expected outcome.

ii Frequency and severity of claims The frequency and severity of claims can be affected by several factors the most significant resulting

from events like fire and allied perils and their consequences and liability claims. Inflation is another

factor that may affect claims payments.

Underwriting measures are in place to enforce appropriate risk selection criteria or not to renew an

insurance contract if the perceived level of risk is very high.

The reinsurance arrangements for proportional and non-proportional treaties are such that the

Company is adequately protected and would only suffer predetermined amounts.

iii Concentration of insurance risk The following table discloses the concentration of claims by class of business gross and net of

reinsurance.

31 December 2017 Outstanding claims No. of claims Gross Net

Class of Business =N='000 =N='000 Accident 67 176,899 155,672 Fire 101 968,539 347,166 Workmen's compensation 32 30,757 27,140 Motor 80 31,579 30,105 Marine and Aviation 33 113,668 60,320 Engineering 18 31,968 2,964 Oil and Gas 29 22,075 10,506 Bonds 1 61,670 61,670 Goods in transit 53 106,205 22,207

414 1,543,360 717,750

79


Notes to the financial statements - continued

40 Management of insurance and financial risk- continued

31 December 2016

Outstanding claims No. of claims Gross Net

Class of Business =N='000 =N='000

Accident 47 100,207 64,591 Fire 88 608,546 38,103 Workmen's compensation 53 34,301 34,301 Motor 49 58,327 40,171 Marine and Aviation 47 271,459 11,197 Engineering 6 14,900 5,226 Oil and Gas 30 32,568 6,558 Bonds - 2,108 1,054

320 1,122,416 201,201

The Company manages insurance risks through the underwriting strategy, adequate reinsurance

arrangements and proactive claims handling. The underwriting strategy attempts to ensure that the

underwritten risks are well diversified in terms of type and amount of risk and class of business.

iv Sources of uncertainty in the estimation of future claim payments

Claims are payable on a claims-occurrence basis. The Company is liable for all insured events that

occurred during the term of the contract, even if the loss is discovered after the end of the contract

term. As a result, liability claims are settled over a long period of t ime and a larger element of the

claims provision relates to incurred but not reported claims (IBNR). There are several variables that

affect the amount and timing of cash flows from these contracts. These mainly relate to the inherent

risks of the business activities carried out b y individual contract holders and the risk management

procedures they adopted. The compensation paid on these contracts is the monetary awards granted.

The Company claims are short tail and are settled within a short t ime and the Company's estimation

processes reflect with a higher degree of certainty all the factors that influence the amount and timing.

The Compa ny takes all reasonable steps to ensure that it has appropriate information regarding its

claims exposures. However, given the uncertainty establishing claims provisions, it is likely that the

final outcome will prove to be different from the original liability established. The liability for these

contracts comprise a provision for IBNR and a provision for reported claims not yet paid at the balance

sheet date. The Company has ensured that liabilities on the balance sheet at year end for existing

claims whether reported or not, are adequate.

The Company has in place a series of quota-share and excess of loss covers in each of the last five years

to cover for losses on these contracts.

80



Claims Paid Triangulations as at 31 December 2017

Fire Development Accident Period

2011

2012

2013

2014

2015

2016

2017

0 1 2 3 4 5 6 - - - 388,972,319

644,884,584 811,991,121 439,513,249 414,642,981 305,550,573 300,822,400 416,513,894 429,237,886 443,046,037

222,930,345 247,178,667 611,269,973 622,335,785 967,429,478 804,871,392 328,213,527 382,836,487 310,361,573

274,145,428

608,081,429

983,952,017

240,924,778

608,081,429 241,506,474

General Accident Development Accident Period

2011

2012

2013

2014

2015

2016

2017

0 1 2 3 4 5 6 - - - 176,181,521

330,992,390 359,962,727 136,418,348 88,295,210

77,583,461 83,618,499 54,027,155 59,520,850

116,604,256

47,769,830 54,833,906 205,642,427 186,757,589 318,605,700 227,127,890

53,615,927 78,868,971 90,679,635

52,876,888

166,395,434

245,657,571

41,366,841

166,145,434 43,020,636

Good-in--Transit Development Accident Period

2011

2012

2013

2014

2015

2016

2017

0 1 2 3 4 5 6 - - - 41,564,602

66,123,133 62,229,723 99,605,265 88,683,943 61,677,246 54,065,181 75,640,532 107,521,983

187,628,221

2,528,871 2,341,371 32,800,363 30,050,363 56,223,460 56,223,460 82,123,527 82,123,527 51,978,764

1,541,371

32,050,363

56,223,460

1,441,371

28,050,363 1,441,371



Bond

Development Accident Period

2011

2012

2013

2014

2015

2016

2017

0 1 2 3 4 5 6 - - - - - - - - - - - 100,150,000 -

- - - - - - - - -

- - -

- -

-

Mediclaim


2011

2012

2013

2014

2015

2016

2017

0 1 2 3 4 5 6 - - - - - - - - - - - - -

- - - - - - - - -

- - -

- -

-

Terrorism Development Accident Period

2011

2012

2013

2014

2015

2016

2017

0 1 2 3 4 5 6 - - - - - - - - - - - 2,172,288 -

- - - - - - - - -

- - -

- -

-

82



Motor


2011

2012

2013

2014

2015

2016

2017

0 1 2 3 4 5 6 - - - 56,160,296

63,938,545 68,719,001 81,191,819 93,589,482

110,075,590 102,296,031 127,992,132 126,794,750 176,832,772

5,762,888 4,174,288 50,466,032 48,248,432 64,941,243 64,206,037 91,721,283 91,721,283

100,822,331

3,247,188

47,879,232

64,356,037

2,021,688

47,879,232 3,063,788

Marine & Aviation


2011

2012

2013

2014

2015

2016

2017

0 1 2 3 4 5 6 7,829,998 8,732,796 5,654,252 129,164,993

257,411,480 227,854,971 314,468,162 166,559,146

61,780,341 54,107,473 83,048,219 95,914,569 84,112,790

66,556,711 68,116,279 206,614,079 115,868,972 157,793,515 151,193,515 142,720,960 140,103,452

52,028,486

91,085,533

117,317,946

151,193,515

103,395,905

151,747,327 103,441,693

Workmen's Compensation Development Accident Period

2011

2012

2013

2014

2015

2016

2017

0 1 2 3 4 5 6 - - - 26,477,775

36,137,342 44,641,404 41,886,785 45,541,336 29,553,307 30,679,696

7,907,691 16,015,536 17,629,335

11,884,504 20,271,658 57,218,278 36,082,287 36,187,253 31,898,418 34,426,388 36,051,521 32,514,416

18,501,316

37,619,545

31,898,418

16,491,869

37,619,545 16,491,869

83


b Financial risk management

The Company is exposed to financial risks through its financial assets, financial liabilities and insurance and reinsurance assets and liabilities.

In particular, the key financial risk is that investment proceeds are not sufficient to fund obligations arising from insurance contracts.

The most important components of this financial risk are:

-Market risk (which includes currency risk, interest rate risk and equity price risk) -Credit risk; -Liquidity risk; -Capital management; and -Fair value estimation

These risks arise from open position in interest rate, currency and equity products, all of which are exposed to general and open market

movements.

The Company's risk management policies are designed to identify and analyse risks, to set appropriate risk limits and control, and monitor

the risks and adherence to limits by means of reliable and up-to-date administrative and information systems.

The Co mpany regularly reviews its risk management policies and sys tems to reflect changes in markets, products and emerging best

practice.

The Board recognises the critical importance of having efficient and effective risk management policies and systems in place.

To this end, there is a clear organisational structure with delegated authorities and responsibilities from the Board to Board Committees,

executives and senior management, individual responsibility and accountability are designed to deliver a disciplined, conservative and

constructive culture of risk management and control.

i Market risk

Market risk is the risk of adverse financial impact due to changes in fair value of future cashflows of financial instruments from fluctuations in

foreign currency exchange rates, interest rates and equity prices.

The Company has established policies which set out the principles that they expect to adopt in respect of management of the key market risks

to which they are exposed. The Company monitors adherence to this market risk policy through the Company's Investment Committee. The

Company's Investment Committee is responsible for managing market risk.

The financial impact from market risk is monitored at board level through investment reports which examine impact of changes in market risk

in investment returns and asset values. The Company's market risk policy sets out the principles for matching liabilities with appropriate

assets, the approaches to be taken when liabilities cannot be matched and the monitoring processes that are required.

ia Interest rate risk

Interest rate risk arises from the Company's investments in long term debt securities and fixed income securities (Held to-Maturity financial

assets), bank balances and deposits which are exposed to fluctuations in interest rates. Exposure to interest rate risk on short term business

is monitored by the Investment Commit tee through a close matching o f assets and liabilities. The impact of exposure to sustained low

interest rates is also regularly monitored.

The sensitivity analysis for interest rate risk illustrates ho w changes in the fair va lue or future cash flows of a financial instrument will

fluctuate because of changes in market interest rates at the reporting date.

84


b Financial risk management - continued

(b) Equity price risk

The Co mpa ny equity price r isk exposure relates to financial assets whose va lue fluctuate as a result of changes in market prices. The

Company also has unquoted equities classified as available-for-sale whose fair value is determined using a valuation technique because of the

lack of active market for these instruments.

The sensitivity analysis for equity price risk illustrates how changes in the fair value of equity securities will fluctuate because of changes in

market prices, whether those changes are caused by factors specific to the individual equity issuer, or factors affecting all s imilar equity

securities traded in the market.

A 1%movement in market prices will result in an unrealised gain or loss for the of =N=0.184 million (December 2015: =N=1.544 million).

Management monitors movements of financial assets and equity price risk movements on a monthly basis by assessing the expected changes

in the different portfolios due to parallel movements of a 10%increase or decrease in the Nigeria All share index with all other variables held

constant and all the Company’s equity instruments in that particular index moving proportionally.

ib Currency risk

The Company purchases reinsurance contracts internationally, thereby being exposed to foreign currency fluctuations.

The Company's primary exposures are with respect to the US Dollar.

The Company has a number of investments in foreign currencies which are exposed to currency risk. The Investment Commit tee closely

monitors currency risk exposures against pre-determined limits. Exposure to foreign currency exchange risk is not hedged.

Sensitivity risk

If the Naira had weakened/strenthened against the following currencies with all variables remaining constant, the impact on the results for

the year would have been as shown below mainly as a result of foreign exchange gains/losses:

The Company financial assets and financial liabilities by currency is detailed below:

A 1%movement in foreign exchange rate in USD against the Naira will result in =N=2.117 million gain or loss (2015: =N=0.810 million). In

Euro, =N=0.08 million (2015: =N=0.253 million). And in pounds sterling, =N=0.054 million (2015: =N=0.1 million).

Naira USD Euro Pounds Total 31 December 2017 =N='000 =N='000 =N='000 =N='000 =N='000

Cash and cash equivalents 785,260 211,748 8,084 5,400 1,010,492

31 December 2016 Cash and cash equivalents 637,448 211,748 8,084 5,400 862,680

85



ic Credit Risk

Credit Risk is the risk that one party to a financial instrument will fail to honour its obligations and cause the Group to incur a financial loss.

Credit risk arises mainly from 3 sources: Insurance and reinsurance receivables and cash and investment securities.

Maximum exposure

Maximum exposure to credit risk before collateral held or other credit

enhancements: 2017 2016

=N='000 =N='000

Cash and cash equivalents 1,010,492 862,680 Available-for-sale 1,878,385 1,098,213 Trade receivables 6,517 7,931 Loans and other receivables 55,701 113,789 Held-to-maturity 2,420,199 1,622,105 Total assets bearing credit risk 5,371,294 3,704,718

Age analysis for past due and impaired Cash and cash Loans and other equivalents Trade receivables receivables Held-to-maturity Total

=N='000 =N='000 =N='000 =N='000 =N='000 31 December 2017 Neither past due nor impaired 1,010,492 6,517 66,330 2,420,199 3,503,538 Past due but not impaired - - - - - Impaired - - (10,629) - (10,629) Net 1,010,492 6,517 55,701 2,420,199 3,492,909

31 December 2016 Neither past due nor impaired 862,680 7,931 124,418 1,622,105 2,617,134 Past due but not impaired - - - - - Impaired - - (10,629) - (10,629) Net 862,680 7,931 113,789 1,622,105 2,606,505 Reinsurance credit exposures

The Company is however exposed to concentrations of risks with respect to their reinsurers due to the nature of the reinsurance market and

the restricted range of reinsurers that have acceptable credit ratings. The Company is exposed to the possibility of default by their reinsurers

in respect of share of insurance liabilities and refunds in respect of claims already paid.

The Company manages its reinsurance counterparty exposures and the reinsurance department has a monitoring role over this risk.

This exposure is monitored on a regular basis for any shortfall in the claims history to verify that the contract is progressing as expected and

that no further exposure for the Company will arise.

Management also monitors the financial strength of reinsurers and there are policies in place to ensure that risks are ceded to top-rated and

credit worthy reinsurers only.

86



id Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its insurance liabilities as they fall due. Prestige mitigates this risk by having

an investment strategy which focuses on liquidity and capital preservation before investment returns.

The table below presents the cash flows receivable/payable by the Company. The amounts disclosed in the table are the contractual

undiscounted cash flows. All liabilities are presented on a contractual cash flow basis except for the insurance liabilities, which are presented

with their expected cash flows.

Over 1 year but less

31 December 2017 0 - 30 days 31 - 90 days 91 - 180 days Over 5 years Total =N='000 =N='000 =N='000 =N='000 =N='000 =N='000 =N='000

Cash and cash equivalents 854,468 156,024 - - - - 1,010,492 Insurance receivables - - 6,517 - - - 6,517 Loans and other receivables - - 49,527 - - - 49,527 Other assets - - 57,076 - - - 57,076 Reinsurance assets 737,924 1,018,154 13,057 1,705,937 Finance lease receivables - 35,622 83,117 14,204 51,087 - 184,030 Debt Securities at amortised cost Equities at available for

sale

- - 880,925 142,893 1,396,381 - 2,420,199 - - - - - 1,878,385 1,878,385

Total financial assets 854,468 929,569 2,095,316 170,154 1,447,468 1,878,385 7,312,163

Financial liabilities Insurance contract liabilities

793,078 845,949 1,004,565 2,643,592 Trade payables 140,180 327,086 - - 467,266 Other liabilit ies - - 276,595 - - - 276,595 Borrowings - - - - - - - Total financial liabilities - - 276,595 - - - 276,595

Insurance contract liabilit ies 264,359 396,539 660,898 1,321,796 - - 2,643,592

31 December 2016

Cash and cash equivalents 706,656 156,024 - - - - 862,680 Insurance receivables - - 7,931 - - - 7,931 Loans and other receivables - - 97,199 - - - 97,199 Other assets - - 51,982 - - - 51,982 Reinsurance assets - 737,924 491,949 - - - 1,229,873 Finance lease receivables 35,622 83,117 14,204 - 132,943 Debt Securities at amortised cost Equities at available for

sale Total relevant financial

assets

Financial liabilities Insurance contract liabilities

- 208,532.00 738,032 142,893 - 741,180 1,830,637

- - - - - 1,098,213 1,098,213 706,656 1,138,101 1,470,210 157,097 - 1,839,393 5,311,458

539,763 575,747 683,700 1,799,210

Trade payables - - 72,120 168,746 - - 240,866 Other liabilit ies 535,498 - - - 535,498 Borrowings - - - 152,335 - 152,335 Total financial liabilities - - 607,618 321,081 - - 928,699

Insurance contract liabilit ies

179,921 269,882 449,803 89,961 809,645 - 1,799,210

87

181 - 365 days than 5 yrs



The following tables indicate the contractual timing of cash flows in respect of arising from financial instruments and non-financial assets

impacted by this risk: Carrying

amount No stated

maturity 0 - 90 days 91 - 180 days 180 - 365 days 1 - 5 years > 5 years

At 31 December 2017 =N='000 =N='000 =N='000 =N='000 =N='000 =N='000 =N='000

Cash and cash equivalents 1,010,492 - 1,010,492 - - - - -Loans and receivables 49,527 - - 49,527 - - - Trade receivables 6,517 - 6,517 - - - - Other assets 6,174 - 6,174 - - - - Reinsurance assets 1,705,937 - 1,023,562 682,375 - - -

Finance lease receivables

-Financial asset at FVPL

Debt Securities - held to

maturity

184,030 - 44,527 103,895 35,608 - - 259,006 259,006 - - - - -

Listed 2,420,199 - 297,700 440,332 142,893 1,539,274 - Equities - available for

sale Unlisted 1,878,385 1,878,385 - - - - - Statutory deposit 300,000 - - - - - 300,000

7,820,267 2,137,391 2,388,972 1,276,129 178,501 1,539,274 300,000

Financial liabilities

Insurance contract liabilities 2,643,592 - 793,078 845,949 1,004,565 Other liabilities 276,595 - 276,595 - - - - Trade payables 467,266 - 140,180 327,086 - - - Borrowings 72,078 - 72,078 - - - -

815,939 - 488,853 327,086 - - -

Note: Other assets excludes prepayments whilst other liabilities exclude statutory deductions and rent received in advance

88



The following tables indicate the contractual timing of cash flows in respect of arising from financial instruments and non-financial assets

impacted by this risk: Carrying

amount No stated

maturity 0 - 90 days 91 - 180 days 180 - 365 days 1 - 5 years > 5 years

At 31 December 2016 =N='000 =N='000 =N='000 =N='000 =N='000 =N='000 =N='000

Cash and cash equivalents 862,680 - 862,680 - - - - -Loans and receivables 97,199 - 97,199 - - - Trade receivables 7,931 - 7,931 - - - - Other assets 16,590 - 16,590 - - - - Reinsurance assets 1,339,406 - 803,644 535,762 - - -

Finance lease receivables

-Financial asset at FVPL

Debt Securities - held to

maturity

132,943 - 35,622 83,117 14,204 - - 495,841 495,841 - - - - -

Listed 1,622,105 - 297,700 440,332 142,893 741,180 Equities - available for

sale Unlisted 1,098,213 1,098,213 - - - - - Statutory deposit 300,000 - - - - - 300,000

5,972,908 1,594,054 2,024,167 1,156,410 157,097 741,180 300,000

Financial liabilities

Insurance contract liabilities 1,799,210 - 539,763 575,747 683,700 Other liabilities 535,498 - 535,498 - - - - Trade payable 241,066 - 72,320 168,746 - - - Borrowings 152,335 - 10,805 - 141,530 10,805 -

928,899 - 618,623 168,746 141,530 10,805 -

Note: Other assets excludes prepayments whilst other liabilities exclude statutory deductions and rent received in advance

89



(a) Financial instruments not measured at fair value

At 31 December 2017 At 31 December 2016

Carrying Fair Carrying Fair value value value value

=N='000 =N='000 =N='000 =N='000 Financial assets Cash and cash equivalents 1,010,492 1,010,492 862,680 862,680 Trade receivables 6,517 5,865 7,931 7,138 Loans and other receivables 49,527 42,098 97,199 82,619 Other assets 57,076 51,368 51,982 46,784 Reinsurance assets 1,705,937 1,592,222 1,339,406 1,205,465 Debt securities at amortised cost Listed 2,420,199 2,178,179 1,622,105 1,459,895

Financial liabilities Trade payables 467,266 420,539 241,066 216,959 Other liabilit ies 295,978 254,541 565,557 486,379 Borrowings 72,078 61,266 152,335 129,485 Fair Value Hierarchy

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three levels of fair value

hierarchy. This grouping is determined based on the lowest level of 'significant inputs used in fair value measurement, as follows:

· level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities

· level 2 – inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e as prices) or

indirectly (ie derived from prices)

· level 3 – inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The hierarchy of the fair value measurement of the Company’s financial assets and financial liabilities are as follows:

Level 1 Level 2 Level 3 Total 31 December 2017 =N='000 =N='000 =N='000 =N='000 Financial assets Financial assets designated at fair value

Equity securit ies at available for sale 259,006 - - 259,006

Unlisted - - 1,878,385 1,878,385 Asset for which fair value are disclosed

Loans and other recivables - - 42,098 42,098

31 December 2016

Financial assets Financial assets designated at fair value 495,841 - - 495,841 Equity securit ies at available for sale

Unlisted - - 1,098,213 1,098,213

Asset for which fair value are disclosed Loans and other recivables - - 82,619 82,619 Borrowings 61,266 61,266

90



Maturity analysis on expected maturity basis

Current Non-current Total At 31 December 2017 =N='000 =N='000 =N='000

Cash and cash equivalents

Financial assets:

- Fair value through profit or loss

1 , 010, 492 - 1,010,492

259 , 006 - 259,006

- Held-to-maturity 880 , 925 1 , 539, 274 2,420,199 - Available-for-sale 1 , 878, 385 1,878,385 - Loans and receivables 49 , 527 - 49,527

Trade receivables 6,517 - 6,517 Other assets 57 , 076 - 57,076 Reinsurance assets 1 , 705, 937 - 1,705,937 Deferred acquisit ion costs

Finance lease receivables 154 , 149 - 154,149 161 , 531 22 , 499 184,030

Investment property - 2 , 439, 002 2,439,002 Intangible assets - 44 , 475 44,475 Property, plant and equipment - 1 , 266, 758 1,266,758 Statutory depos it - 300 , 000 300,000

Total assets 4 , 285, 160 7 , 490, 393 11,775,553

Liabilities Insurance contract liabilit ies 2,643,592 - 2,643,592 Trade payables 467,266 - 467,266 Other payable 295,978 - 295,978 Borrowings 72,078 - 72,078 Ret irement benefits obligat ion

Current income tax payable - 164,290 164,290

162,372 - 162,372

Deferred tax liabilit ies - 461,856 461,856

Total liabilities 3,641,286 626,146 4,267,432

Net maturity mismatch 643,874 6,864,247 7,508,121

91



Maturity analysis on expected maturity basis

Current Non-current Total At 31 December 2016 =N='000 =N='000 =N='000

Cash and cash equivalents 862 , 680 - 862,680 Financial assets: - -Financial asset designated as fair value 495 , 841 - 495,841 - Held-to-maturity 880 , 925 741 , 180 1,622,105 - Available-for-sale - 1 , 098, 213 1,098,213 - Loans and receivables 97 , 199 - 97,199

Trade receivables 7,931 - 7,931 Other assets 51 , 982 - 51,982 Reinsurance assets 1 , 339, 406 - 1,339,406 Deferred acquisit ion costs

Finance lease receivables 92 , 839 - 92,839

110 , 531 22 , 412 132,943

Investment property - 2 , 286, 564 2,286,564 Intangible assets - 9,162 9,162 Property, plant and equipment - 1 , 292, 722 1,292,722 Statutory depos it - 300 , 000 300,000

Total assets 3 , 939, 334 5 , 750, 253 9,689,587

Liabilities Insurance contract liabilit ies 1,799,210 - 1,799,210 Trade payables 241,066 - 241,066 Other liabilit ies 565,557 - 565,557 Borrowings 152,335 - 152,335 Ret irement benefits obligat ion

Current income tax payable - 107,646 107,646

127,950 - 127,950

Deferred tax liabilit ies - 467,561 467,561

Total liabilities 2,886,118 575,207 3,461,325

Net maturity mismatch 1,053,216 5,175,046 6,228,262

92


Enterprise risk management

Prestige Assurance is committed to the management of various enterprise risks that could hinder the achievement of its strategic objectives.

In doing this, the company follows its internal control and enterprise r isk management policies which was developed according to the

provisions of the Committee of Sponsoring Organizations of Treadway Commission (COSO) and approved by the National Insurance

Commission, NAICOM. While this framework does not provide answers to all the questions and the challenges experienced in the market in

the past year, its engagement has strengthened our organization’s resilience to major risk exposures.

Our risk philosophy and objectives are clearly defined and has been integrated into our decision making process. Some of the components of

our enterprise risk management system are:

Governance System: The overall responsibility for the management of our enterprise risks resides with the Board through its Enterprise Risk

Management (ERM) Committee. This committee works closely with the Chief Risk Officer/ERM Steering Committee to ensure significant risks

are not only identified but escalated to the Management and Board. The functional Managers are saddled with the responsibility to carry out

regular assessment of existing, newly identified and emerging risk applicable to the functional operations.

Risk Identification & Assessment: Risks associated with Company’s operations that may affect its strategic objectives and annual

performance are regularly identified and evaluated by management. This process involves a dynamic and interactive procedure where the

staff, functional managers, chief risk officer and management staff attempt to identify significant risk situations, assess risk exposures from

them and suggest controls to combat them. In the course of the year the company encountered some significant risks:

Significant Risks Impact on Operations Reputation Risks Brand Image of the company Financial Risks Paid higher values on claims due to Naira devaluation. Legal Risks Increased management cost.

Risk Control & Mitigation: Risk control activities are engaged at different levels and by different functional units. Its major focus is to reduce

the impact of losses from identified risk categories and emerging significant risks. Some of our existing risk categories and control measures

are:

Risk Categories Control Measures Insurance Risks Finalization of underwriting policies and acceptance of risk defined to the Underwriting department

and branches. Financial Risks Interest rate gap analysis, reports, priority focus, measurement testing Strategic Risks Instituted Risk Strategy Committee Hazard Risks Risks and Control Assessment, Monitoring and Control Measures Reputational Risks Due diligence, Trend in Customer Complaints and customer feedback mechanism.

Internal & External Communication: in line with the Company’s philosophy of open communication, management provides relevant

information to staff, Board, shareholders and industry regulators. This enhances the achievement of our corporate objectives in various ways.

We do this by sharing regular information with staff, provision of standard operating systems and standard level agreement for effective

internal operations. W e also provide quarterly report to the Board, Securities and Exchange Commission, Nigerian Stock Exchange and the

National Insurance Commission on all aspects of the Company’s operations.

Risk Monitoring: management ensures an ongoing monitoring of the operations of the company through the activities of internal audit and

control and the risk management department of the Company. Adherences to existing policies are checked, control activities are evaluated

and deficiencies are identified and corrected.

93


Enterprise-wide Risk Management Principles

Prestige Assurance Plc try as much as possible to balance its portfolio while maximizing our value to stakeholders through an approach that

mitigate the inherent risk.

To ensure effective and economic use of resources, we operate strictly by the following principles: - The Company will not take any action that will compromise its integrity - The Company will at all times comply with all government regulations and uphold best international practice. - The Company will build an enduring risk culture, which shall pervade the entire organisation -

-

The Company will at all time hold a balanced portfolio and adhere to guidelines on investment issued by the regulator and Finance and General Purpose Committee of the company. The Company will ensure that there is adequate reinsurance in place for the business above its limit and also prompt payment of such

premiums. Approach to Risk Management In Prestige Assurance, there are levels of authority put in place for the oversight function and management of risk to create and promote a

culture that mitigate the negative impact of risks facing the company. The Board

The Board sets the organisat ion's object ives, risk appetite and approves the strategy for managing r isk. There are various commit tee

nominated to serve of whom their various functions are geared towards minimising likehood impacts of risks faced by the Company.

The Audit Committee:

The Board Audit Committee performs the following functions: 1.) Perform oversight function on accounting and Financial reporting 2.) Liase with the external auditors 3.) Ensure regulatory compliance 4.) Monitoring the effectiveness of internal control processes within the Company.

Board Risk Committee

This is more of a technical committee that oversee the business process. Their functions include: 1.) Reviewing of Company's risk appetite 2.) Oversee management's process for the identification of significant risk across the Company and the adequacy of prevention detection and reporting mechanisms. 3.) Reviews underwriting risks especially above limit for adequacy of reinsurance and company's participation. 4.) Review and recommend for approval of the Board risk management procedures and controls for new products and services

Board Investment Committee

1.) Sest the investments limit and the type of business the Company should invest in 2.) Reviews and approves the above Company's investment policy 3.) Approves investments over and above managements' approval limit 4.) Ensures that there is optimal asset location in order to meet the targeted goals of the Company.

The second level is the management of the Company. This comprises of Managing Director and the management staff of the Company.

They are responsible for strategy implementation of the Enterprise Risk Management policies and guidelines set by the regulator,

government and the board for risk mitigation. This is achieved through the business unit they supervised. The last level is that of independent

assurance. This comprises the internal audit function that provides independent and objective assurance of the effectiveness of the

company's sys tems of internal control established by the first and second lines of defence in management of enterprise r isks across the

organisation.

94


Risk Categorisation As a business entity and an underwriter, Prestige Assurance Plc is exposed to an array of risk through its operations. The company has

identified and categorised its exposure to these broad risks as listed below.

Financial risk

Business risk

Operational risk

Hazard risk

Underwriting risk

Financial Risk Financial risk comprises of market, liquidity and credit risk. Market risks are sub-divided into interest-rate risk, exchange risk, property price risk and equity risk. Liquidity risk includes liquidation value

risk, affiliated investment risk and capital funding risk. Credit risk includes default risk, downgrade or mitigation risk, indirect credit or spread

risk and concentration risk.

Business Risk

Business risk relates to the potential erosion of our market position. This includes customer risk, innovation risk and brand reputation risk.

Operational Risk

This is the risk of loss resulting from inadequacy or failure of internal processing arising from people, systems and or from external events.

Hazard Risk These are risk which are rare in occurrence but like ly impact ma y be major on the co mpany. Examples o f these are natura l d isaster,

terrorism, health and environmental risk, employee injury and illness, property damage and third-party liability.

Insurance/underwriting Risk Our activities involve various range of risk arising from the business itself. This manifest from underwriting, re-insurance, claims

management, reserve development risk, premium default, product design and pricing risk. Our company has a pragmatic approach in

identifying, assessing and mitigating risk of such approaches as stated above.

Capital Management The main objectives of the Company when managing capital are:

To ensure that the Minimum Capital Requirement of N3 billion as required by the Insurance Act CAP I17, LFN 2004, is maintained at all

times.

This is a risk based capital method of measuring the minimum amount appropriate for an insurance company to support its overall business

operations in consideration of its size and risk profile. The calculation is based on applying capital factors to amongst others, the Company's

assets, outstanding claims, unearned premium reserve and assets above a certain concentration limit.

To safeguard the Company's ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for

other stakeholders and;

To provide an adequate return to shareholders by pricing insurance contracts and other services commensurately with the level of risk.

The Insurance Act CAP I17, LFN 2004 specifies the amount of capital that must be held in proportion to the Company's liabilities, i.e in

respect of outstanding claims liability risk, unearned premium liability risk, investment risk, catastrophe risk and reinsurance ceded.

95


Capital Management - Continued

The Company is also subject to a solvency requirement under the Insurance Act CAP I17, LFN 2004 and is required to maintain its solvency

at the minimum capital required at all times. Solvency margin is the excess of admissible assets in Nigeria over admissible liabilities in Nigeria

and shall not be less than the minimum paid-up capital or 15%of the gross premium income less reinsurance premiums paid out during the

year, whichever is higher in accordance with section 24 of Insurance Act CAP I17 LFN, 2004.

The Company's capital requirement ratio and Solvency margin exceed the requirement of the Insurance Act CAP I17, LFN 2004.

Capital Adequacy Test Based on the capital adequacy claculation below, Prestige Assurance Plc has a surplus of N5.7 billion.

31 December 2017 =N='000 =N='000

Shareholders' fund as per Statement of Financial Position 7,508,121 Less: Intangible Assets (44,475) Deferred tax liabilities (461,856)

(506,331)

Capital base 7,001,790 Management uses regulatory capital ratios to monitor its capital base. Based on the capital base computed above, the Company capital base

is above the minimum capital requirement of N3 billion specified by NAICOM.

Determination of Solvency Margin 2017 2016 =N='000 =N='000

Cash and cash equivalents 1,007,398 781,673 Financial assets -Held-for-trading @FVTPL 259,006 495,841 -Held-to-maturity 2,420,199 1,622,105 -Available-for-sale 1,878,385 1,098,213 Reinsurance assets 1,501,624 1,339,406 Deferred acquisition costs 154,149 92,839 Trade receivables 6,517 7,931 Staff loans 49,527 97,199 Finance lease receivables 184,030 132,943 Investment properties 2,439,002 2,286,564 Intangible assets 44,475 9,162 Property, plant and equipment 1,266,758 1,292,722 Statutory deposit 300,000 300,000

Admissable assets 11,338,622 9,556,598

Liabilities Insurance contract liabilities 2,643,592 1,799,210 Trade payables 467,266 241,066 Provisions and other liabilities 295,978 565,557 Borrowings 72,078 152,335 Retirement benefit obligations 164,290 107,646 Current income tax payable 162,372 127,950

Admissible liabilities 3,805,576 2,993,764

Solvency margin 7,533,046 6,562,834 Minimum share capital 3,000,000 3,000,000 Surplus in solvency margin 4,533,046 3,562,834

The Company's capital requirement ratio and Solvency margin is above the requirements of the Insurance Act CAP I17, LFN 2004.

96

Prestige Assurance Plc Revenue account for the year ended 31 December 2017

Workmen CAR &

General Compen- Marine and Oil & Engineering Fire Accident Motor sation Aviation Energy All risk Bond GIT 2017 2016

REVENUE N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000

Direct premium 1,626,525 420,550 390,492 34,718 571,257 249,561 146,633 86,540 202,740 3,729,016 2,593,897 Inward premium 20,728 3,524 6,569 - 2,934 35,439 10,230 75 - 79,499 20,367

Gross premium written 1,647,253 424,075 397,061 34,718 574,191 285,000 156,864 86,615 202,740 3,808,516 2,614,264 Decrease in unearned premium (123,501) (61,515) (28,590) (1,202) (111,228) (23,442) (29,241) (19,811) (24,908) (423,438) (66,733)

Gross premium income 1,523,752 362,559 368,471 33,517 462,962 261,558 127,623 66,804 177,832 3,385,078 2,547,531 Outward reinsurance (1,303,992) (88,576) (14,278) - (377,708) (181,638) (92,145) (59,898) - (2,118,235) 1,429,607 Increase/(decrease) in prepaid re-insurance 84,129 3,164 (3,141) - 50,448 11,782 16,188 19,069 - 181,638 16,116

Net fees and premium income 303,889 277,148 351,052 33,517 135,702 91,701 51,665 25,975 177,832 1,448,481 1,101,808 Commission Income 322,550 26,002 2,177 - 87,894 26,718 24,275 12,322 - 501,938 365,923

Total income 626,439 303,150 353,229 33,517 223,597 118,419 75,940 38,297 177,832 1,950,419 1,467,731

EXPENSES Gross claims paid 418,066 199,799 184,507 22,173 180,124 85,037 31,922 45,150 166,627 1,333,405 1,896,206 (Decrease)/increase in outstanding claims 359,992 73,951 (26,748) (3,544) (125,144) (10,492) 19,351 59,562 73,559 420,487 (1,464,650)

Gross claims expenses 778,058 273,750 157,759 18,629 54,980 74,545 51,273 104,712 240,186 1,753,892 431,556

- - Movement in outstanding claims - - recoverables from reinsurance (175,331) (67,342) 13,267 - 115,048 4,416 (25,230) - (61,244) (196,415) 1,331,422

Reinsurance claims recoveries (440,645) (28,742) (13,746) - (354,009) (14,364) (28,091) - (22,145) (901,743) (1,333,188)

Net claims expenses 162,082 177,666 157,280 18,629 (183,981) 64,597 (2,048) 104,712 156,797 655,735 429,790 Acquisition cost 235,360 62,133 37,032 4,842 63,862 27,397 12,844 12,477 27,648 483,596 369,349 Maintenance costs 205,750 52,969 49,595 4,336 71,719 35,598 19,593 10,819 25,323 475,703 414,518

Total expenses 603,193 292,768 243,907 27,808 (48,399) 127,592 30,389 128,008 209,769 1,615,034 1,213,657

- - Underwriting (loss)/profit 23,246 10,382 109,322 5,709 271,995 (9,173) 45,551 (89,710) (31,937) 335,385 254,074

97

Prestige Assurance Plc Statement of value added for the year ended 31 December 2017

2017 2016

=N='000 % =N='000 %

Gross premium income 3,385,078 2,547,531 Other income - Local 30,774 146,361

3,415,852 2,693,892 Reinsurance,claims,commission and services - local (2,065,647) (1,806,372)

Value added 1,350,205 100 887,520 100

Applied as follows:

To pay employees: Salaries and other employees benefits 480,952 35.6 413,608 46.6

To pay government: Taxation 158,398 11.7 127,815 14.4

Retained for replacement of assets and

expansion of business: Deferred taxation 7,750 0.6 (9,413) (1.1) Depreciation and amortization 57,010 4.2 55,090 6.2 Statutory/contingency reserve 114,255 8.5 78,428 8.8 Result for the year 531,841 39.4 221,992 25.0

Value added 1,350,205 100 887,520 100

98

Prestige Insurance Plc Five-year financial summary

STATEMENT OF FINANCIAL POSITION <---------------------------------------31 DECEMBER --------------------------------->

AS AT 2017 2016 2015 2014 2013

=N='000 =N='000 =N='000 =N='000 =N='000 ASSETS Cash and cash equivalents 1,010,492 862,680 1,312,659 3,259,625 2,449,694 Financial assets (investments) 4,607,117 3,313,358 2,118,514 1,880,871 1,562,881 Trade receivables 6,517 7,931 2,723 1,092 222 Other assets 57,076 51,982 92,705 92,115 41,906 Reinsurance assets 1,705,937 1,339,406 2,686,944 2,814,046 3,168,227 Deferred acquisition costs 154,149 92,839 87,130 71,216 120,121 Intangible assets 44,475 9,162 10,152 5,400 6,300 Finance lease receivables 184,030 132,943 129,070 77,110 130,366 Investment property 2,439,002 2,286,564 2,300,000 2,100,000 - Property, plant and equipment 1,266,758 1,292,722 1,327,844 1,292,471 2,354,776 Statutory deposit 300,000 300,000 300,000 300,000 300,000 Total assets 11,775,553 9,689,587 10,367,741 11,893,946 10,134,493

LIABILITIES Insurance contract liabilities 2,643,592 1,799,210 3,197,127 4,173,905 3,877,074 Trade payables 467,266 241,066 279,544 532,101 383,526 Provisions and other payables 295,978 565,557 107,385 103,794 154,242 Borrowings 72,078 152,335 223,149 457,637 529,370 Deposit for shares - - - 1,504,989 - Retirement benefit obligations 164,290 107,646 136,408 113,873 116,958 Current income tax payable 162,372 127,950 145,991 170,090 391,091 Deferred tax liabilities 461,856 467,561 468,559 445,479 268,889 Total liabilities 4,267,432 3,461,325 4,558,163 7,501,868 5,721,150

EQUITY Share capital 2,685,216 2,685,216 2,685,216 1,254,157 1,254,157 Share premium 1,127,599 1,127,599 1,127,599 1,140,092 1,155,540 Statutory contingency reserve 1,867,906 1,753,651 1,675,223 1,602,307 1,522,696 Accumulated losses (347,325) (776,511) (945,069) (755,718) (742,695) Gratuity valuation reserve (13,433) 9,841 (9,797) (3,612) (29,058) Available-for-sale reserve 1,450,955 671,542 494,488 385,296 247,986 Property revaluation reserve 737,203 756,924 781,918 767,556 1,004,717 Total equity 7,508,121 6,228,262 5,809,578 4,390,078 4,413,343

Total liabilities and equity 11,775,553 9,689,587 10,367,741 11,891,946 10,134,493

99

Prestige Insurance Plc Five year financial summary - continued

STATEMENT OF PROFIT OR LOSS

FOR THE YEAR ENDED

<---------------------------------------31 DECEMBER --------------------------------->

2017 2016 2015 2014 2013 =N='000 =N='000 =N='000 =N='000 =N='000

Gross premium written 3,808,516 2,614,264 2,430,533 2,653,695 4,222,338

Profit before income tax expense 697,989 340,394 20,339 176,755 127,484 Income tax expense (166,148) (118,402) (157,342) (160,800) (217,045) Profit /(loss) for the year 531,841 221,992 (137,003) 15,955 (89,561)

Appropriations: Transfer to statutory contingency reserve 114,255 78,428 72,916 79,611 126,670

Transfer to retained earnings 417,586 143,564 (209,919) (63,656) (216,231)

Baic earnings per ordinary share (kobo)

Diluted earnings per ordinary share

(kobo)

9.90 4.13 (2.94) 0.57 3.62

9.9 4.1 (2.9) 0.6 3.6

Net assets per share (kobo) 140 116 112 182 176

Note: Earnings and dividend per share were computed based on the profit for the year and on the number of issued and

fully paid ordinary shares at the end of the year. Net assets per share were computed on the number of issued and fully paid

ordinary shares at the end of the respective years.

100

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