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Niger Insurance Plc FY 2012 results

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Niger Insurance Plc FY 2012 results

Niger Insurance Plc FY 2012 results

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  • 1. NIGER INSURANCE PLC GROUP FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER, 2012
  • 2. NIGER INSURANCE PLC GROUP FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER, 2012 CONTENTS PAGE Results at a Glance 1 Corporate Information 2 Statement of Directors responsibilities 3 Report of the Directors 4 Statement of management discussion and analysis 10 Independent Auditors' Report 12 Report of the Audit and compliance committee 14 Certification pursuant to section 60 15 Company information and accounting policies 16 Risk and capital management framework 40 Group statement of financial position 48 Group statement of comprehensive income 49 Statement of changes in equity 50 Statement of Cash Flows 51 Notes to the Financial Statements 52 Explanation of transition to IFRS 83 Group statement of value added 108 Company Statement of Value Added 109 Group five-year financial summary 110 Company five-year financial summary 111 Appendices 112
  • 3. NIGER INSURANCE PLC RESULTS AT A GLANCE Group % Company % 2012 2011 Increase/ 2012 2011 Increase/ N’000 N’000 decrease N’000 N’000 decrease Gross premiums written 10,330,471 7,809,878 32 10,330,471 7,809,878 32 Investment and other incomes 1,505,383 1,181,766 27 975,377 1,107,759 (12) Profit before taxation 703,499 2,492,115 (72) 256,561 2,501,111 (90) Retained profit transferred to reserves 776,293 2,295,554 (66) 470,175 2,307,032 (80) Transfer to contingency reserve 167,571 243,476 (31) 167,571 243,476 (31) Other comprehensive income 518,096 71,953 620 518,096 71,953 620 Issued and paid share capital 3,869,747 2,868,307 35 3,869,747 2,868,307 35 Shareholders fund 7,350,256 5,224,123 43 7,086,966 5,266,951 38 Insurance contract liabilities 7,074,690 5,600,599 26 7,074,690 5,600,599 26 Investment contract liabilities 4,846,250 5,817,050 (17) 4,846,250 5,817,050 (17) Total assets 22,289,093 19,960,945 12 21,732,480 19,848,339 9 ======== ======== ======== ======= Per share data: Earnings per 50k share in kobo (k) - basic 10.03k 40.02k 6.07k 40.22k Earnings per share - diluted 10.03k 29.66k 6.07k 29.81k Net assets per 50k share in (Naira N) - basic N0.95 N0.91 N0.92 N0.92 - Diluted N0.95 N0.67 N0.92 N0.68 Stock exchange quotation at 31 December 50k 50k 50k 50k - Page 1 -
  • 4. NIGER INSURANCE PLC CORPORATE INFORMATION The Board: Bala Zakariya'u - Chairman Dauda Kolapo Adedeji - Managing Director/Chief Executive (appointed w.e.f. 1/1/2013) Justus Clinton Uranta - Managing Director/Chief Executive (retired w.e.f. 31/12/2012) and appointed non executive director w.e.f. 1/1/2013) Ibrahim R. Hassan - Executive Director Frederick S. Ugwuja - Executive Director Osa Osunde - Director Idris Onaolapo Sulaimon - Director Frederick Nnamdi Udechukwu - Director Yusuf Hamisu Abubakar, OON - Director Secretary: Taiwo A. Otuneye, Esq.- LL.M, B.L. Registered office: 48/50, Odunlami Street, Lagos. www.nigerinsurance.com Registered numbers: RC. 6484 RIC - 007 (R1 - 012) Bankers: MainStreet Bank Plc Union Bank of Nigeria Plc First Bank of Nigeria Plc United Bank for Africa Plc Access Bank Plc Skye Bank Plc Keystone Bank Plc Stanbic IBTC Chartered Bank Unity Bank Plc Registrars: NIC Securities and Trust Limited, 61 Marina, Lagos. Auditors: Baker Tilly Nigeria, (Chartered Accountants), Kresta Laurel Complex (4th Floor), 376, Ikorodu Road, Maryland, Lagos. www.bakertillynigeria.com FRC/2013/ICAN/00000002724 - Page 2 -
  • 5. STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RELATION TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER, 2012 The directors accept responsibility for the preparation of the annual consolidated financial statements that give a true and fair view of the statement of financial position of the Group and Company at the end of the year and of its comprehensive income in the manner required by the Companies and Allied Matters Act of Nigeria and the Insurance Act of Nigeria. The responsibilities include ensuring that the Group: i. keeps proper accounting records that disclose, with reasonable accuracy, the financial position of the Group and comply with the requirements of the Companies and Allied Matters Act and the Insurance Act. ii. establishes adequate internal controls to safeguard its assets and to prevent and detect fraud and other irregularities; and iii. prepares its financial statements using suitable accounting policies supported by reasonable and prudent judgements and estimates, that are consistently applied. The directors accept responsibility for the financial statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgements and estimates, in compliance with: - International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB); - relevant guidelines and circulars issued by the National Insurance Commission (NAICOM) and the requirements of the Companies and Allied Matters Act. The directors are of the opinion that the financial statements give a true and fair view of the financial position of the Group and of the profit for the year. The directors further accept responsibility for the maintenance of accounting records that may be relied upon in the preparation of financial statements, as well as adequate systems of internal financial control. The directors have made assessment of the Group‟s ability to continue as a going concern and have no reason to believe that the Group will not remain a going concern in the year ahead. Signed on behalf of the Board of Directors by: ………………….… ………………….. Dauda K. Adedeji Bala Zakariya'u FRC/2013ICAN/00000003021 FRC/2013/CIIN/00000003437 9 May, 2013 9 May, 2013 - Page 3 -
  • 6. NIGER INSURANCE PLC REPORT OF THE DIRECTORS 1. Accounts The directors are pleased to submit their report together with the group audited financial statements for the year ended 31 December, 2012. Result for the year N‘000 Company total comprehensive income - life 558,348 - non-life 429,923 988,271 ======== 2. Legal form The company was established in 1962 as an affiliate of Yorkshire Insurance Company (U.K.) and was then known as Yorkshire Insurance Company Nigeria Limited, with the registered office at 47, Marina, Lagos. Following the implementation of the indigenisation Act 1976, the Federal Ministry of Finance through NICON wholly acquired the company and its name was changed to „The Niger Insurance Company Limited‟. As a result of privatization policy of the Federal Government, the company‟s shares were sold to the public in 1989 and its name changed to Niger Insurance Plc. The Company has two wholly owned subsidiary: NIC Securities Trust Limited and NIC Properties Limited. 3. Principal activities The principal activities of the company are the underwriting of life and general insurance business. 4. The Directors The current composition of the Board of Directors is as set out on page 2 of these financial statements. 5. Directors' interests The interests of the directors in the issued share capital of the company are as follows:- Number of shares held as at 31/12/2012 31/12/2011 Bala Zakariya‟ u 166,480,207 112,136,170 Justus Clinton Uranta 81,054,470 46,400,775 Dauda Kolapo Adedeji 37,042,491 12,042,491 Osa Osunde - Direct 90,978,771 144,957,363 - Indirect 299,363,501 - Idris Onaolapo Sulaimon - Direct 226,030,473 228,440,812 - Indirect 82,494,941 80,084,602 Frederick Nnamdi Udechukwu –Direct 30,066,666 20,500,000 - Indirect (Chrome Oil Services Ltd) 2,122,015,587 722,015,587 Yusuf Hamisu Abubakar - Indirect 114,908,943 114,908,943 Fredrick Sunday Ugwuja 16,201,184 2,690,268 Ibrahim R. Hassan 15,035,984 1,835,984 ======== ======= - Page 4 -
  • 7. 6. Shareholdings (a) Summary of the shareholding position: As at 31/12/12 As at 31/12/11 Number of Number of Shareholders shares held % shares held % Management Alliance Company Limited 827,705,560 11 833,443,650 14 Fidelity Finance Company Limited 299,363,501 4 299,363,501 5 Chrome Oil Services 2,122,015,587 27 722,015,587 13 Afribank/Asset Management Nominees 418,027,943 5 - - Other Nigerian Individuals and Associations 4,072,383,111 53 3,881,792,067 68 7,739,495,702 100 5,736,614,805 100 ========== === ========== === (b) Substantial interest in shares: No individual shareholder other than Management Alliance Company Limited and Chrome Oil Services Limited held more than 10% of the issued share capital of the company as at 31 December, 2012. (c) Analysis of shareholding: Holding between Total Units % holders Nigerian Shareholders 1 and 1,000 873 423,314 0.01 1,001 and 5,000 2,255 6,115,069 0.08 5,001 and 10,000 1,971 14,007,731 0.18 10,001 and 50,000 3,952 90,460,444 1.17 50,001 and 100,000 1,062 75,247,467 0.97 100,001 and 500,000 1,281 258,113,856 3.34 500,001 and 1,000,000 194 132,506,495 1.71 1,000,001 and 10,000,000 182 495,379,070 6.40 10,000,001 and 50,000,000 31 661,900,898 8.55 50,000,001 and 100,000,000 9 675,563,150 8.73 100,000,000 999,999,999 15 5,329,778,208 68.86 11,825 7,739,495,702 100 ===== ========== ==== 7. Dividend The directors do not recommend any dividend for the year. - Page 5 -
  • 8. 8. Unclaimed Share Certificates and Dividend Warrants The Company is aware that some share certificates belonging to shareholders have been returned marked „Unclaimed‟. Similarly, some dividend warrants sent to shareholders have been returned marked „Unclaimed‟ while some are yet to be presented for payment. Shareholders with unclaimed share certificates and/or dividend warrants are advised to write to the Registrars, NIC Securities and Trust Limited or the company Secretary or call at the office of the Registrars during normal working hours. Furthermore, members are urged to advise the Registrars or the Company Secretary of any change of address or situation particularly as it relates to share certificates and dividend warrants. 9. Property, plant & equipment Movements in property, plant and equipment during the year are shown in Note 13 to the financial statements. In the opinion of the directors, the market value of the company's properties is not less than the value shown in the financial statements. 10. Donations No donation was made to charitable organization during the year. 11. Personnel (a) Employment of physically challenged persons: The company continues its general policy of extending employment opportunities to physically challenged persons as and when there are openings for such employees. Two such employees are at present engaged by the company. (b) Health, safety and welfare: In addition to medical retainership in private clinics and hospitals, all essential safety regulations are being observed to guaranty maximum protection of personnel and also protect the company's assets. (c) Employees' involvement and training: Employees are kept fully informed of the company's performance and the company continues with its open door policy whereby views of employees are sought and given due consideration on matters which particularly affect them. The company attaches importance to the training of its staff through regular in-house, on-the- job training sessions and outside courses which have broadened employees' opportunities for career development within the company. - Page 6 -
  • 9. 12. Audit and compliance Committee In accordance with Section 359(3) of the Companies and Allied Matters Act Cap C20 LFN 2004, the Audit Committee members of the company elected at the last Annual General Meeting were as follows:- F. S. Ugwuja - (Director) O. Osunde - (Director) Y. H. Abubakar, OON - (Director) S. E. Bediare - (Shareholders' representative) M. O. Sodipe - (Shareholders' representative) Prince Adekunle Olodun - (Shareholders' representative) The functions of the audit committee are as stated in Section 359(6) of the Companies and Allied Matters Act, Cap C20 LFN 2004. 13. Compliance with the code of Corporate Governance The Directors confirm that they manage the affairs of the company in accordance with the provisions of the code of best practices on Corporate Governance in Nigeria with regards to matters stated concerning the Board of Directors, the Shareholders and the Audit Committee. Board meetings are scheduled well in advance. Also, the agenda of Board meetings and reports on full business review, full report from the various Board Committees and reports from the Audit Committee are circularised to all Directors. The Board meets at least four times in a year. Stated below is the record of attendance at Board meetings convened and held in year 2012: No. of meetings attended Bala Zakariya‟u 12 Justus Clinton Uranta 12 Dauda Kolapo Adedeji 12 Osa Osunde 12 Idris Onaolapo Sulaimon 12 Frederick Nnamdi Udechukwu 12 Yusuf Hamisu Abubakar 12 Frederick Sunday Ugwuja 12 Ibrahim R. Hassan 12 The following are the various committees of the board and their composition: Enterprise risk management committee No. of meetings attended 1. Yusuf H. Abubakar, OON Chairman 4 2. Justus Clinton Uranta V-Chairman 4 3. Alhaji Ibrahim R. Hassan Member 4 4. Alhaji I. O. Sulaimon Member 4 5. Osa Osunde Member 4 Taiwo A. Otuneye Secretary 4 - Page 7 -
  • 10. Finance, Investment and General Purpose Committee 1. Osa Osunde Chairman 5 2. Alhaji I. O. Sulaimon V-Chairman 6 3. Dauda Kolapo Adedeji Member 6 4. Frederick Nnamdi Udechukwu Member 3 5. Frederick Sunday Ugwuja Member 6 Taiwo A. Otuneye, Esq., Secretary 6 Establishment and governance 1. Alhaji Idris Onaolapo Sulaimon Chairman 4 2. Yusuf H. Abubakar, OON V-Chairman 3. Justus Clinton Uranta Member 4 4. Mr. D. K. Adedeji Member 4 5. Mr. F. N. Udechukwu Member 4 Taiwo A. Otuneye, Esq., Secretary 4 Executive management committee 1. Justus Clinton Uranta Chairman 12 2. Dauda Kolapo Adedeji Member 12 3. Frederick Sunday Ugwuja Member 12 4. Alhaji Ibrahim R. Hassan Member 12 Taiwo A. Otuneye, Esq., Secretary 12 Audit and compliance committee 1. Frederick N. Udechukwu Chairman 4 2. Alhaji Idris O. Sulaimon V-Chairman 4 3. Alhaji Ibrahim R. Hassan Member 4 4. Frederick S. Ugwuja Member 4 5. Yusuf H. Abubakar, OON Member 4 Taiwo A. Otuneye, Esq., Secretary 4 15. Risk management Niger Insurance Plc recognizes the need for fast and efficient service delivery. At the same time, necessary attention is given to risk management. The company‟s approach is to minimize risk complexity whilst improving efficiency in the workplace. Insurance risk Niger Insurance underwrites both General and Life insurance businesses. The nature of risks involved are the likelihood that the insured event may occur and the uncertainty of the magnitude of the resulting claim. To mitigate against these risks, Niger Insurance Plc has produced and issued a company-wide underwriting manual, covering acceptance criteria, pricing, accumulation control and levels of authority. The manual serves as a guide to the underwriters in accepting risks on the basis of prudence, professionalism, objectivity and risk discrimination. Besides, adequate Reinsurance Treaty have been put in place and reviewed annually to take account of changing retention profile. - Page 8 -
  • 11. The company regularly trains and re-trains its underwriting staff to acquaint them with recent developments in the risk bearing industry. Besides, the company constantly reviews and controls risk quality and prudently applies policy limits when the need arises. In addition, our Internal Control Unit monitors adherence to existing guidelines via regular examination of the activities of various strategic business units. Financial risks Niger Insurance Plc is an active player in the economy. In the course of its operations, the company uses various financial instruments including cash and its equivalents, bonds, equities and trade debtors. Niger Insurance Plc is exposed to likely losses arising from market risk. Such risks comprise fluctuations in interest rates, equity prices and rate of exchange of foreign currencies and default in collection of receivables. Niger Insurance Plc has developed a comprehensive financial management policy taking into account the relevant regulatory investment guidelines. Appropriate manuals are provided detailing administrative and accounting procedures. These manuals set out the framework for the investing function and specify the conditions and benchmarks for the acceptable levels of exposure to credit, currency and interest rate risks, etc. Liquidity and credit risks Liquidity or cashflow risk relate to the possibility that the company may encounter some difficulty to mobilize funds to discharge its obligation to clients as and when the need arises. Niger Insurance Plc‟s investment guidelines are formulated such that minimum levels of financial assets are held in cash and cash equivalents with short maturity periods and easily convertible to cash at short notice. Credit risk refers to the likelihood that one party to a financial transaction may fail to fulfill its obligation as and when due thereby causing the other party to a transaction to suffer financial loss. Our company is exposed to credit risks through its investment in financial assets such as short-term deposits, fixed interest securities and receivables. Niger Insurance Plc‟s approach is to ensure that short-term deposits are placed with financial institutions with high credit rating. Moreover, deposits are spread amongst high quality institutions to avoid undue concentration on any one organization. Credit risks associated with receivables are managed through a deliberate assessment of present and potential clients to ensure their ratings meet with our set criteria for granting credit and making necessary provision for doubtful and irrecoverable debts. 14. Auditors Messrs Baker Tilly Nigeria (Chartered Accountants) have indicated their willingness to continue as auditors in accordance with Section 357(2) of the Companies and Allied Matters Act Cap C20 LFN 2004. A resolution will be proposed to authorise the directors to fix their remuneration. By Order of the Board Taiwo A. Otuneye, Esq., Secretary Lagos, Nigeria 9 May, 2013 - Page 9 -
  • 12. STATEMENT OF MANAGEMENT DISCUSSION AND ANALYSIS FOR THE YEAR ENDED 31 DECEMBER, 2012 The Management's Discussion and Analysis was prepared on July 19, 2013. Forward-Looking Statements This Management's Discussion and Analysis may contain statements relating to strategies used by Niger insurance plc or statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “may,” “could,” “should,” “would,” “suspect,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” and “continue” (or the negative thereof), as well as words such as “objective” or “goal” or other similar words or expressions. Such statements constitute forward-looking statements within the meaning of securities laws. Forward-looking statements include, but are not limited to, information concerning the Company‟s possible or assumed future operating results. These statements are not historical facts; they represent only the Company‟s expectations, estimates and projections regarding future events. Documents Related To the Financial Results All documents related to the financial results of Niger insurance plc are available on the Company's website at www.nigerinsurance.com, in the section under Financial Reports. Description of Niger insurance plc Niger insurance plc is a composite insurance company with branch network & managers nationwide. It underwrites life and general business insurance policies. The Company‟s mission is “to be a customer-oriented provider of superior insurance services which can be broadly classified into life and pensions; general business and special risk; and miscellaneous insurance business.” It is one of the leading insurance companies in Nigeria with over 400 staff. Legal constitution The company was established in 1962 as an affiliate of Yorkshire insurance company (U.K.) and was then known as Yorkshire Insurance Company Nigeria Limited, with the registered office at 47, Marina, Lagos. Following the implementation of the indigenization Act 1976, the Federal Ministry of Finance through the National Insurance Corporation of Nigeria (NICON), wholly acquired the company and its name was changed to „The Niger Insurance Company Limited. As a result of privatization policy of the Federal government, the company‟s shares were sold to the public in 1989 and its name changed to Niger Insurance Plc. Business strategy of the company and overall performance The group is registered and incorporated in Nigeria and is primarily engaged in the underwriting of life and general insurance business. The company „s objectives is to become the insurance company of first choice in Nigeria noted for transparency, efficiency and capacity in providing total financial solutions through un-marched staff productivity and exceptional customer service orientation. - Page 10 -
  • 13. Over the years, various strategies have been put in place to achieve the objectives such as networking by expanding its distribution channels, products offering reappraisal, refocusing and managing the existing talents to create value. The company also utilizes the development and deployment of electronic platforms and facilities to all its regions and branches nationwide for quick and reliable service delivery. The group has implemented the NAICOM directive on “NO PREMIUM, NO COVER” policy from the 1st of January, 2013. This policy aims to stimulate liquidity within the system by reducing the huge receivables being carried on the statement of financial position of insurance companies. This will positively impact the income statements of insurance companies by eliminating the large portion of outstanding premium charge for the receivables and make available more cash which can be used to generate more investment income. Operating result, cashflow and financial condition The entity„s critical performance measurement and indicators to evaluate the entity‟s performance against stated objectives includes budgeting, ratio analysis and bench marking with industry average. It is the company‟s plan to re-build and re-focus its investment portfolio by taking advantage of opportunities in the fixed income securities for safe and guaranteed returns. The company is also diversifying into oil and gas and telecommunications and other safe areas to grow its investment income. - Page 11 -
  • 14. REPORT OF THE INDEPENDENT AUDITORS’ TO THE MEMBERS OF NIGER INSURANCE PLC Report on the financial statements We have audited the accompanying financial statements of Niger Insurance Plc („the Company‟) set out on pages 48 to 111 These financial statements comprise the statement of financial position as at 31 December 2012, the comprehensive income statement, statement of changes in equity, statement of cash flows, value added statement and financial summary statement as well as the significant accounting policies for the year then ended on pages 16 to 47. Directors’ responsibility for the financial statements The directors are responsible for the preparation and fair presentation of these financial statements in accordance with provisions of the Financial Reporting Council Act No.6 of 2011 and in the manner required by the Companies and Allied Matters Act Cap C20 LFN 2004, the Insurance Act 2003, and relevant National Insurance Commission (NAICOM) guidelines and circulars. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the International Standards on Auditing (ISAs). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance that the financial statements are free from material misstatements. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor‟s judgment, including the assessment of the risks of material misstatement of the financial statements. In making those risk assessments, the auditor considers internal control relevant to the entity‟s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity‟s internal control. - Page 12 -
  • 15. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, these financial statements give a true and fair view of the state of affairs of the company and the group as at 31 December, 2012, the group‟s financial performance and cash flows for the year then ended in accordance with Financial Reporting Council Act No.6 of 2011 and in the manner required by the Companies and Allied Matters Act Cap C20 LFN 2004, Insurance Act 2003 and relevant NAICOM guidelines and circulars. In our opinion, proper books of account have been kept by the Company and its group and proper returns adequate for the purpose of our audit have been received from branches not visited by us. Report on other legal requirements The Companies and Allied Matters Act, CAP C20 LFN, 2004 requires that in carrying out our audit we consider and report to you on the following matters. 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, so far as appears from our examination of those books; and iii) the Company‟s statement of financial position and income statement are in agreement with the books of account. (CHARTERED ACCOUNTANTS) FRC/2013/ICAN/00000002724 Lagos, Nigeria 9 May, 2013 - Page 13 -
  • 16. NIGER INSURANCE PLC REPORT OF THE AUDIT AND COMPLIANCE COMMITTEE FOR THE YEAR ENDED 31 DECEMBER, 2012 To the members of Niger Insurance Plc In compliance with the provision of Section 359(6) of the Companies and Allied Matters Act of Nigeria, the members of the Audit and Compliance Committee of Niger Insurance Plc, hereby report as follows: - We have exercised our statutory functions under section 359(6) of the Companies and Allied Matters Act of Nigeria and acknowledge the co-operation of management and staff in the conduct of these responsibilities. We are of the opinion that the accounting and reporting policies of the Group are in compliance with legal requirements and agreed ethical practices and that the scope and planning of both the external and internal audits for the year ended 31 December, 2012 were satisfactory and reinforce the Group‟s internal control systems. We have deliberated with the external auditors, who have confirmed that necessary cooperation was received from Management in the course of their statutory audit and we are satisfied with Management‟s responses to their recommendations for improvement and with the effectiveness of the Group‟s system of accounting and internal control. …………………………… Prince Adekunle Olodun FRC/2013/NIM/00000003105 Chairman Audit Committee Dated this 16 May, 2013 Members of the Audit Committee are: Prince Adekunle Olodun - Chairman Frederick S. Ugwuja M. O. Sodipe O. Osunde S. E. Bediare In attendance: Taiwo A. Otuneye - Secretary - Page 14 -
  • 17. NIGER INSURANCE PLC CERTIFICATION PURSUANT TO SECTION 60(2) OF INVESTMENT AND SECURITIES ACT NO.29 OF 2007 We the undersigned hereby certify the following with regards to our audited reports and financial statements for the year ended 31 December, 2012 that: (a) we have reviewed the report; (b) to the best of our knowledge, the report does not contain: (i) any untrue statement of a material fact, or (ii) omit to state a material fact, which would make the statement, misleading in the light of circumstances under which such 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 operation of the company as of, and for the periods presented in the report; (d) we: (i) are responsible for establishing and maintaining internal controls; (ii) have designed such internal controls to ensure that material information relating to the company and its consolidated subsidiaries is made known to such officers by others within those entities particularly during the period in which the periodic reports are being prepared; (iii) have evaluated the effectiveness of the company‟s internal controls as of date within 90 days prior to the report; (iv) 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 audit committee: (i) all significant deficiency in the design or operation of internal controls which would adversely affect the company‟s ability to record, process, summarise and report financial data and have identified for the company‟s auditors any material weakness in internal controls; and (ii) any fraud, whether or not material, that involves management or other employees who have significant role in the company‟s internal controls; (f) 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. ………………………............. ………………………........... Frederick S. Ugwuja Dauda K. Adedeji FRC/2013/ICAN/00000002794 FRC/2013/ICAN/00000003021 Chief Finance Officer Chief Executive Officer - Page 15 -
  • 18. NIGER INSURANCE PLC COMPANY INFORMATION AND ACCOUNTING POLICIES FOR THE YEAR ENDED 31 DECEMBER, 2012 1. General information (a) Reporting Entity Niger Insurance Plc („the Company‟) underwrites life and non-life insurance risks, such as those associated with death, disability, health, property and liability. The Company also issues a diversified portfolio of investment contracts to provide its customers with asset management solutions for their savings and retirement needs. The company was incorporated in 1962 as an affiliate of Yorkshire Insurance Company (UK) and was then known as Yorkshire Insurance Nigeria Limited. Following the implementation of the indigenisation Act of 1976, the Federal Ministry of Finance through the National Insurance Corporation of Nigeria (NICON) wholly acquired the company and the company‟s name was changed to Niger Insurance Company Limited. As a result of the privatisation policy of the Federal Government, the company‟s shares were sold to the public in 1989 and its name changed to Niger Insurance Plc. The address of its registered office is 48/50 Odunlami Street, Lagos. The Company has a primary listing on the Nigerian Stock Exchange. Nature of entity’s operation and its principal activities The principal activities of the company are the underwriting of life and general insurance businesses, payment of claims and investments as described below: - • Underwriting The company underwrites both life and general insurance businesses. Under the life business, it underwrites both group life and individual life businesses whilst its general business includes motor vehicles, marine and aviation, fire, accident and sundry policies generally classified under miscellaneous insurance policies. The company also handles deposits administration business, which is of a savings nature in respect of which guaranteed interest is paid to the beneficiaries. • Claims The company pays claims incurred as part of its insurance business and which consist of the claims and claim handling expenses. • Investments Niger Insurance Plc engages in investments of its funds in properties as well as in listed and unlisted stocks, bonds, treasury bills and other money market instruments in line with the provisions of the Insurance Act 2003. 2. Going concern These consolidated financial statements have been prepared on the going concern basis. The Group has no intention or need to reduce substantially its business operations. The Management believes that a going concern assumption is appropriate for the group due to sufficient capital adequacy ratio and projected liquidity, based on historical experience that short-term obligations will be refinanced in the normal course of business. Liquidity ratio and continuous evaluation of current ratio of the group is carried out by the group to ensure that there are no going concern threats to the operations of the group. - Page 16 -
  • 19. 3. Basis of preparation a) Statement of Compliance The Group‟s first consolidated financial statements have been prepared in compliance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and with the interpretations issued by the International Financial Reporting Interpretation Committee (IFRIC) as adopted by the Federal Republic of Nigeria, through the Financial Reporting Council Act No. 6 of 2011. The transition balances as at 1 January, 2011 and the comparative figures as at 31 December, 2011 have been restated accordingly. The accounting policies have been applied consistently to all periods presented in these consolidated financial statements. The Company‟s functional and presentation currency is the Nigerian naira. b) Use of estimates and judgements The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and the future periods if the revision affects both current and future periods. c) Basis of measurement The company prepares its financial statements under the historical cost convention as modified by the fair value and revaluation of its investments and buildings. 4. Explanation of transition to IFRS a) Implementation of IFRSs These are the Group‟s first consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS). The Group publishes comparative information for the year in its financial statements. The date of transition to IFRSs is effectively, 1 January, 2011, which represents the start of the earliest period of comparative information presented. The opening balance sheet as at 1 January, 2011 has been restated accordingly. The accounting policies have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities. Comparative information at 31 December, 2011 is restated to take account of the requirements of all standards including IAS 32 – Financial instruments: Presentation, IAS 39 – Financial instruments: Recognition and Measurement and IFRSs 7 – Financial Instruments: Disclosure effective 1 July, 2009. The most significant IFRSs impact for the Group originated from the implementation of IAS 39 – Financial instruments: Recognition and measurement which requires the valuation of financial assets and liabilities at fair values and impairment of financial assets to only be accounted if there is objective evidence that a loss event has occurred after initial recognition but before the balance sheet date, IAS 27 – Consolidated and separate financial statements and SIC 12 – Consolidated, Special purpose entities which requires the consolidation of the Group‟s interest in the staff share Investments Trust and IAS 1 Presentation of financial statements and the change in recognition and measurement for life contracts from fund accounting method to annual accounting method. - Page 17 -
  • 20. The effect of the company‟s transition to IFRS is summarised as follows: - i) Transition election; ii) Explanation of material adjustments to cash and cash equivalents as at 1 January, 2011 and 31 December, 2011; iii)Recognition of equity and comprehensive income as previously reported under Nigerian GAAP to IFRS; iv) Adjustment to the statement of cash flows. b) Transition election: In preparing these financial statements in accordance with IFRS 1, the company has applied the mandatory exceptions from full retrospective application of IFRS. The optional exemptions from full retrospective application selected by the company are summarised below. 4.1. Transition elections The IFRS 1 applicable exemptions and exceptions applied in the conversion from Nigerian GAAP to IFRS are as follows: Fair value or revaluation as deemed cost (IAS 16 and IAS 38) An entity may elect to measure an item of property, plant and equipment, investment property or intangible assets at the date of transition to IFRS at its fair value and use that fair value as its deemed cost at that date, or may elect to use a previous GAAP revaluation of these assets at, or before, the date of transition to IFRS as deemed cost at the date of the revaluation. The Group has property, plant and equipment and the Company has elected to revalue its property plant and equipment for the financial year ending 1 January, 2011 and the revalued amount represents the deemed cost in the company‟s opening IFRS statement of financial position under IFRS. 4.1.1 Business combinations The retrospective application of IFRS 3, (business combination) would require the restatement of all business combination that occurred prior to the transition date. IFRS 1 provided an option not to apply IFRS 3 retrospectively to acquisition that occurred before the transition date. The Company elected not to retrospectively apply IFRS 3, Business Combinations, to business combinations that occurred prior to its Transition Date and such business combinations have not been restated. 4.1.2 Fair value of revaluation as deemed cost (IAS 16 and IAS 38) An entity may elect to measure an item of property, plant and equipment, investment property or intangible assets at the date of transition to IFRS at its fair value and use that fair value as its deemed cost at that date; or may elect to use a previous GAAP revaluation of these assets at, or before, the date of transition to IFRS as deemed cost at the date of the revaluation. The Group has property, plant and equipment and the Company has elected to revalue its property plant and equipment for the financial year ended 1 January, 2011 and the revalued amount represents the deemed cost in the company‟s opening IFRS statement of financial position under IFRS. 4.1.3 Investments in subsidiaries, jointly controlled entities and associates (IAS 27) Where a first-time adopter measures its investment in subsidiaries, jointly controlled entities and associates at cost, it shall measure that investment in its separate opening IFRS statement of financial position either at cost determined in accordance with IAS 27 or at deemed cost. The deemed cost for the first-time adopter shall be the investment‟s fair value (determined in accordance with IAS 39) at the entity‟s date of transition to IFRS in its separate financial statements or previous GAAP carrying amount at that date. - Page 18 -
  • 21. The entity has adopted to measure its investments in its subsidiary in its separate opening IFRS statement of financial position at cost determined in accordance with IAS 27. 4.1.4 Designation of previously recognised financial instruments (IAS 39) IAS 39 permits a financial asset to be designated on initial recognition as available for sale or a financial instrument (provided it meets certain criteria) to be designated as a financial asset or financial liability at fair value through profit or loss. An entity is permitted to designate, at the date of transition to IFRSs, any financial asset or financial liability as at fair value through profit or loss provided the asset or liability meets the criteria in IAS 39 at that date. Niger Insurance has designated its financial assets or financial liability as either, held to maturity, loans and recoverable, available for sale, held for trading, fair value through profit and loss for those that meets the criteria in IAS 39. 4.1.5 De-recognition of financial assets and financial liabilities An entity is required to avoid retrospective application of de-recognition requirements in IAS 39 for transactions entered into before 1 January, 2011. 4.2 Explanation of material adjustments to NGAAP as at 1 January, 2011 and 31 December, 2011 A quantitative explanation of how the transition to International Financial Reporting Standards (IFRS) has affected the reported financial position, financial performance and cash flows of the Group and the Parent is provided in note 36. The note includes reconciliations of equity and profit or loss for comparative periods reported under Nigerian GAAP (previously GAAP) to those reported for this period under IFRS. 5. New Standards and Amendments (a) New standards and amendments issued but not effective for the financial year beginning 1 January, 2012 and not early adopted are as follows:- New Standards (i) IFRS 9- Financial instruments IFRS 9 requires financial assets to be classified into two measurement categories: those measured at fair value and those measured at amortised cost. The determination is made at initial recognition. The classification depends on the entity‟s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value options is taken for financial liabilities, the part of a fair value change due to an entity‟s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates a qualitative mismatch. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Company‟s financial assets, we will now have two main categories of financial assets i.e. fair value and amortised cost (as opposed to the four categories prescribed by IAS 39 – fair value through profit and loss, loans and receivables, held to maturity and available for sale financial assets) but will potentially have no impact on classification and measurements of financial liabilities. The Group intends to adopt IFRS 9 not later than the accounting period beginning 1 January, 2015. (ii) IFRS 10- Consolidated financial statements IFRS 10 introduces a single control to determine whether an investee should be consolidated. As a result, a company may need to change its consolidation conclusion in respect of its investees, which may lead to changes in the current accounting for these investees. The Group intends to adopt IFRS 10 not later than the accounting period beginning 1 January, 2013. - Page 19 -
  • 22. (iii) IFRS 12- Disclosures of interests in other entities This standard brings together into a single standard all the disclosure requirements about an entity‟s interests in subsidiaries, joint arrangements, associates and unconsolidated structured entities. IFRS 12 requires the disclosure of information about the nature, risks and financial effects of these interest. The Group intends to adopt IFRS 12 not later than the accounting period beginning 1 January, 2013. (iv) IFRS 13 – Fair value measurement IFRS 13 provides a single source of guidance on how fair value is measured, and replaces the fair value measurement guideline that is currently dispersed throughout IFRS. The Group is currently reviewing its methodologies in determining fair values in line with this standard. The Group intends to adopt IFRS 13 not later than the accounting period beginning 1 January, 2013. Amendments (v) IAS 27 as amended IAS 27 as amended, is limited to accounting for investment in subsidiaries, joint ventures and associates in separate financial statements. The Group is yet to assess IAS 27‟s full impact and intends to adopt it not later than the accounting period beginning 1 January, 2013. The adoption of IFRS 10,12,13, and IAS 27 as amended has no material effect on the Company‟s accounting policies. (vi) Annual improvements 2011 These annual improvements, address six issues in the 2009- 2012 reporting cycle. It includes changes to: IFRS 1, „First time adoption‟ IAS 1, „Financial statement presentation‟ IAS 16, „Property plant and equipment‟ IAS 32, „Financial instruments, presentation‟ IAS 34, „Interim financial reporting‟ (b) The IASB and the IFRIC have published the following standards and interpretations, which were not yet effective. The standards, amendments and interpretation are not expected to be relevant to the group‟s operations: IFRS II Joints arrangements 1 January, 2013 IAS 19 Amendment to IAS 19 employee benefit 1 January, 2013 IAS 28 Investments in associate and JV 1 January, 2013 IFRIC 20 Costing in the production phase of a surface mine 1 January, 2013 6. Assets and liabilities of subsidiaries IFRS 1 allows the Group and the subsidiaries to adopt different dates for strategic or regulatory reasons. This exemption allows a subsidiary to measure its assets and liabilities either at the carrying amounts included in its parents consolidated IFRS financial statements or on the basis of IFRS 1 as applied to its statutory financial statements at its own date of financial statements, these carrying amounts are adjusted, where relevant, to exclude consolidation and acquisition adjustments. Goodwill on acquisition of associates is included in the amount of the investment. Gains and losses on the disposal of an entity is recognised in the income statement. - Page 20 -
  • 23. 7. Summary of significant accounting policies The principal accounting policies applied in the preparation of these financial statements are as set out below. These policies have been applied consistently to all years presented, unless otherwise stated. 7.1 Cash and cash equivalents Cash and cash equivalents include cash in hand and at bank, unrestricted balances held with Central Bank, call deposits and short term highly liquid financial assets (including money market funds) with original maturities of less than three months, which are subject to insignificant risk of changes in their fair value, and are used by the company in the management of its short-term commitments. 7.2 Financial assets i. Recognition Financial assets are initially recognized at fair value, which includes transaction costs. Subsequent to initial measurement, financial instruments are measured either at fair value or amortised cost, depending on their classification. ii. Classification The Group classifies its financial assets into the following categories: available for sale, held to maturity loans and receivables, and financial asset at fair value through profit and loss. The classification is determined by management at initial recognition depending on the purpose for which the investments were acquired. a) Available-for-sale financial assets Available-for-sale investments are financial assets that are intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or equity prices or that are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit and loss. Unrealised gains and losses arising from changes in the fair value of available- for-sale financial assets are recognised in other comprehensive income while the investment is held and are subsequently transferred to the income statement upon sale or de-recognition of the investment. Interest income, calculated using the effective interest method, is recognised in the income statement. Dividends received on available-for-sale instruments are recognised in income statement when the Company‟s right to receive payment has been established. b) Held-to-maturity financial assets Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Company‟s management has the positive intention and ability to hold to maturity. Where the company sells more than an insignificant amount of held-to-maturity assets, the entire category would be tainted and reclassified as available-for-sale assets and the difference between amortised cost and fair value will be accounted for in equity. - Page 21 -
  • 24. Interest on held-to-maturity investments are included in the income statement and are reported as „Interest and similar income‟. Held-to-maturity investments are carried at amortised cost, using the effective interest method. An impairment is reported as a deduction from the carrying value of the investment and recognised in the income statement as „Net gains/(losses) on investment securities‟. c) 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 or that it has designated as at fair value through profit and loss or available for sale. Loans and receivables consist primarily of Staff loans and advances (which are managed in accordance with a documented policy and information is provided internally on this basis), Agents and Brokers loans and loans receivable from related parties which arise in the ordinary course of business. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment losses. d) Financial assets fair value through profit and loss Financial assets designated as „at fair value through profit and loss‟ at inception are those that are: Held in internal funds to match insurance and investment contracts liabilities, that are linked to the changes in fair value of these assets. The designation of these assets to be at fair value through profit and loss eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as „an accounting mismatch‟) that would otherwise arise from measuring assets or liabilities or recognising the gains and losses on them on different bases. Information about these financial assets is provided internally on a fair value basis by the Company‟s key management personnel. The Company‟s investment strategy is to invest in equity and debt securities and to evaluate them with reference to their fair values. Assets that are part of these portfolios are designated upon initial recognition at fair value through profit and loss .The fair values of quoted investments in active markets are based on current bid prices. The fair values of unlisted securities, and unquoted investments for which there is no active market, are established using valuation techniques corroborated by independent third parties. These may include reference to the current fair value of other instruments that are substantially the same. Interest earned and dividends received while holding trading assets at fair value through profit or loss are included in net trading income. The group as at 31 December, 2012 do not have any financial assets classified as fair value through profit and loss. iii. Measurements of financial assets The best evidence of the fair value of a financial assets on initial recognition is the transaction price, i.e. the fair value of the consideration paid or received, unless the fair value is evidenced by comparison with other observable current market transactions in the same instrument, without modification or repackaging, or based on discounted cash flow models. Subsequent to initial recognition, the fair values of financial instruments are based on quoted market prices or dealer price quotations for financial instruments traded in active markets. If the market for a financial asset is not active or the instrument is an unlisted instrument, the fair value is determined by using applicable valuation techniques. These include the use of recent arm‟s length transactions, discounted cash flow analyses, pricing models and valuation techniques commonly used by market participants. - Page 22 -
  • 25. Where discounted cash flow analyses are used, estimated cash flows are based on management‟s best estimates and the discount rate is a market-related rate at the balance sheet date from a financial asset with similar terms and conditions. Where pricing models are used, inputs are based on observable market indicators at the balance sheet date and profits or losses are only recognised to the extent that they relate to changes in factors that market participants will consider in setting a price. iv. Reclassification of financial assets Financial assets other than loans and receivables are reclassified out of the held for-trading category only in rare circumstances arising from a single event that is unusual and highly unlikely to recur in the near-term. In addition, the Company may choose to reclassify financial assets that would meet the definition of loans and receivables out of the held-for-trading or available-for- sale categories if the Company has the intention and ability to hold these financial assets for the foreseeable future or until maturity at the date of reclassification. Reclassifications are made at fair value at the reclassification date. Fair value becomes the new cost or amortised cost as applicable, and no reversals of fair value gains or losses recorded before reclassification date are subsequently made. Effective interest rates for financial assets reclassified to loans and receivables and held-to-maturity categories are determined at the reclassification date. Further increases in estimates of cash flows adjust effective interest rates prospectively. v. Impairment of financial assets (a) Financial assets carried at amortised cost The Group assesses at the 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 Group about the following events: 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 Group, including:– adverse changes in the payment status of issuers or debtors in the Group; or national or local economic conditions that correlate with default on the assets in the Group. The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant. If the Group 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. - Page 23 -
  • 26. 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 income statement. If a held-to- maturity investment or a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current 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 income statement. (b) Assets classified as available for sale The Group 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 10% 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 income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement. 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 income statement. vi. Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the statement of financial position 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. vii. Derecognition of financial instruments The Group 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. Any interest in transferred financial assets that is created or retained by the Group is recognized as a separate asset or liability. The Company derecognises a financial liability when its contractual obligations are discharged, cancelled or expired. - Page 24 -
  • 27. 7.3 Trade receivables Trade receivables are receivable arising from insurance contract, these include amounts due from agents, brokers and insurance contract holders. They 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 an objective evidence (such as the probability of solvency or significant financial difficulties of the debtors) that the Group will not be able to collect all the amount due under the original terms of the invoice. Allowance is made based on an impairment model which consider the loss given default for each debtor, probability of default for the sectors in which the debtor belongs and emergence period which serves as an impairment trigger based on the age of the debt. Impaired debts are derecognised when they are assessed as uncollectible. 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 to the extent that the carrying value of the asset does not exceed its amortised cost at the reversed date. Any subsequent reversal of an impairment loss is recognised in the income statement. 7.4 Reinsurance assets Contracts entered into by the Group with reinsurers under which the Group is compensated for losses on one or more contracts issued by the Group and that meet the classification requirements for insurance contracts in accounting policy 7.13 are classified as reinsurance contracts held. Contracts that do not meet these classification requirements are classified as financial assets. Insurance contracts entered into by the Group under which the contract holder is another insurer (inwards reinsurance) are included with insurance contracts. 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 reinsured insurance contracts. Amounts recoverable from or due to reinsurers are measured consistently with the amounts associated with the reinsured insurance contracts and in compliance with the terms of each reinsurance contract. Reinsurance liabilities are primarily premiums payable for reinsurance contracts and are recognised as an expense when due. The Group has the right to set-off re-insurance payables against amount due from re-insurance and brokers in line with the agreed arrangement between both parties. The Group assesses its reinsurance assets for impairment on a quarterly basis. If there is objective evidence that the insurance asset is impaired, the Group reduces the carrying amount of the reinsurance asset to its recoverable amount and recognises that impairment loss in the income statement. The Group gathers the objective evidence that a reinsurance asset is impaired using the same process adopted for financial assets held at amortised cost. The impairment loss is calculated using the incurred loss model for these financial assets. These processes are described in accounting policy 7.2. 7.5. 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). 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 future policy benefit liabilities. 7.6 Other receivables and prepayment Other receivables and prepayment are recognised when due and at amortised cost less provision for impairment. These include receivables from suppliers, rent receivables and prepayment and other receivable other than those classified as trade receivable and loans and receivables. If there is objective evidence that the receivable is impaired, the Group reduces the carrying amount of the other receivable and prepayment accordingly and recognises that impairment loss in the income statement. The Group gathers the objective evidence that an item of other receivable and prepayment is impaired using - Page 25 -
  • 28. the same methodology adopted for financial assets held at amortised cost. The impairment loss is calculated under the same method used for these financial assets. These processes are described in accounting policy 7.2. 7.7 Investment in subsidiaries Subsidiaries are all entities over which the group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are de- consolidated from the date on which control ceases. The group uses the purchase method of accounting to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired, liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the group‟s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement. Intra-group transactions, balances and unrealised gains on intra-group transactions are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. 7.8 Investment properties Property held for long-term rental yields and(or) capital appreciation that is not occupied by the companies in the Group is classified as investment property. Investment property comprises freehold land and buildings. It is carried at fair values, adjusted if necessary, for any difference in the nature, location or condition of the specific asset. If this information is not available, the Group uses alternative valuation methods such as discounted cash flow projections or recent prices in less active markets. Gains/losses in the fair value of investment properties are recognised in the income statement. These valuations are reviewed annually by an independent valuation expert. investment property under construction that is being developed for continuing use as investment property are measured at cost. Property located on land that is held under an operating lease is classified as investment property as long as it is held for long-term rental yields and is not occupied by the companies in the consolidated Group. The initial cost of the property shall be the fair value (where available), when not available the initial cost shall be used. The property is carried at fair value after initial recognition. If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment, and its fair value at the date of reclassification becomes its cost for subsequent accounting purposes. If an item of property, plant and equipment becomes an investment property because its use has changed, any difference arising between the carrying amount and the fair value of this item at the date of transfer is recognised in other comprehensive income as a revaluation of property, plant and equipment. However, if a fair value gain reverses a previous impairment loss, the gain is recognised in the income statement. Upon the disposal of such investment property any surplus previously recorded in equity is transferred to retained earnings net of associated tax; the transfer is not made through profit or loss. - Page 26 -
  • 29. Properties could have dual purposes whereby part of the property is used for own use activities. The portion of a dual use property is classified as an investment property only if it could be sold or leased out separately under a finance lease or if the portion occupied by the owner is immaterial to the total lettable space. The group consider 10% of the lettable space occupied by the owner as insignificant. 7.9 Deferred tax asset 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. 7.10 Intangible assets Computer software Software acquired by the company is stated at cost less accumulated amortisation and impairment losses. Expenditure on internally developed software is recognised as an asset when the Company is able to demonstrate its intention and ability to complete the development and use the software in a manner that will generate future economic benefits, and can reliably measure the costs to complete the development. The capitalised costs of internally developed software include all costs directly attributable to developing the software, and are amortised over its useful life. Internally developed software is stated at capitalised cost less accumulated amortisation and impairment. Subsequent expenditure on the software is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred. 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 3 years. This is reassessed annually. 7.11 Property, Plant and Equipment (i) Recognition and measurement Items of property, plant and equipment comprise mainly outlets and offices occupied by the Group. They are carried at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Properties are measured at fair value less accumulated depreciation on leasehold land and building and impairment losses recognised after the date of the revaluation. Valuation are performed on periodic basis to ensure that the fair value of the assets does not differ materially from its carrying amount. Any revaluation surplus is recorded in other comprehensive income and subsequently asset revaluation reserve in equity except to the extent that it reverses a revaluation deficit earlier recognised on the same property in the income statement, in which case, the increase is recognised in the income statement. A revaluation deficit is recognised in the income statement, except to the extent that it reverses an existing surplus on the same property in which case it is recognised in the other comprehensive income and subsequently in the asset revaluation reserve in equity. (ii) 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. (iii) Depreciation Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an 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. - Page 27 -
  • 30. Land is not depreciated, depreciation on the building and other items of property, plant and equipment is calculated using the straight-line method to allocate their cost or re-valued amounts over their estimated useful lives. The depreciation rates used for the current and comparative period are as follows: Leasehold building In equal instalments over the period of the lease Freehold buildings 1% of cost/valuation Furniture, fittings and equipment 12 ½% on cost Motor vehicles 20% on cost Computer hardware 33⅓ % on cost 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. (iv) 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. 7.11.1 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 the income statement. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any intangible asset 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. 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 - Page 28 -
  • 31. depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are recognised in profit or loss. 7.12 Statutory deposit Statutory deposit represents 10% of the paid up capital of the company deposited with the Central bank of Nigeria (CBN) pursuant to Section 10(3) of the Insurance Act, 2003. 7.13 Insurance contracts 7.13.1 Classification of insurance contracts The group classifies insurance contracts into life and non-life insurance contracts. The Group issues contracts that transfer insurance risk or financial risk or both. Insurance contracts are those contracts that transfer significant insurance risk. Such contracts may also transfer financial risk. As a general guideline, the Group defines as significant insurance risk, the possibility of having to pay benefits on the occurrence of an insured event that is at least 10% more than the benefits payable if the insured event did not occur. a) Life insurance contracts These contracts insure events associated with human life (for example, death or survival) over a long duration. b) General business insurance contracts These contracts are accident and casualty and property insurance contracts Accident and casualty insurance contracts protect the Group‟s customers against the risk of causing harm to third parties as a result of their legitimate activities. Damages covered include both contractual and non- contractual events. 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 Group‟s customers for damage suffered to their properties or for the value of property lost. Customers who undertake commercial activities on their premises could also receive compensation for the loss of earnings caused by the inability to use the insured properties in their business activities (business interruption cover). Non-life insurance contracts protect the Group‟s customers from the consequences of events (such as death or disability) that would affect the ability of the customer or his/her dependants to maintain their current level of income. Guaranteed benefits paid on occurrence of the specified insurance event are either fixed or linked to the extent of the economic loss suffered by the policyholder. There are no maturity or surrender benefits. 7.13.2 Recognition and measurement of insurance contracts a) Insurance contract liabilities Technical reserves These are computed in compliance with the provisions of Section 20, 21 and 22 of the Insurance Act 2003 as follows: - i) General business Reserves for unearned premium In compliance with Section 20 (1) (a) of Insurance Act 2003, the reserve for unearned premium is calculated on a time apportionment basis in respect of the risks accepted during the year. - Page 29 -
  • 32. Reserves for outstanding claims The premium for unexpired risk represents the net liabilities on policies in force as computed by the actuaries at the time of the actuarial valuation. 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 balance sheet date. The IBNR is based on the liability adequacy test. Reserves for unexpired risk A provision for additional unexpired risk reserve (AURR) is recognised for an underwriting year where it is envisaged that the estimated cost of claims and expenses would exceed the unearned premium reserve (UPR). ii) Life business General reserve fund This is made up of net liabilities on policies in force as computed by the actuaries at the time of the actuarial valuation. iii) Liability adequacy test At the end of each reporting period, liability adequacy tests are performed to ensure the adequacy of the contract liabilities net of related Deferred Acquisition Cost (DAC) 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 unexpired risk provision). b) Insurance contract revenue and expenses i. Premium General business In the non-life insurance business, the company offers fire, general accident, workmen compensation, marine and aviation, engineering all risk, credit and goods in transit policies or insurance undertaking services. Gross written premiums comprise the premiums on insurance contracts entered into during the year, irrespective of whether they relate in whole or in part to a later accounting period. Premiums are disclosed gross of commission to intermediaries. Premiums written include adjustments to premiums written in prior accounting periods. Premiums on reinsurance inward are included in gross written premiums and accounted for as if the reinsurance was considered direct business, taking into account the product classification of the reinsured business. Outward reinsurance premiums are accounted for in the same accounting period as the premiums for the related direct insurance or reinsurance business assumed. The earned portion of premiums received is recognized as revenue. Premiums are earned from the date of attachment of risk, over the indemnity period, based on the pattern of risk underwritten. Outward reinsurance premiums are recognized as an expense in accordance with the pattern of indemnity received. - Page 30 -
  • 33. Life business Premiums are recognised as revenue when they become payable by the contract holders. Premium are shown before deduction of commission. ii) Salvages Some non-life insurance contracts permit the Group to sell (usually damaged) property acquired in the process of settling a claim. The Group may also have the right to pursue third parties for payment of some or all costs of damages to its clients property (i.e. subrogation right). Salvage recoveries are used to reduce the claim expense when the claim is settled. iii) Subrogation Subrogation is the right for an insurer to pursue a third party that caused an insurance loss to the insured. This is done as a means of recovering the amount of the claim paid to the insured for the loss. A receivable for subrogation is recognised in other assets when the liability is settled and the company has the right to receive future cash flow from the third party. iv) Claims Claims and other benefits are recorded as an expense when they are incurred for both life and non-life business. 7.14 Investment contracts liabilities Investment contracts are those that transfer financial risk with no significant insurance risk. Investment contracts can be classified into interest linked and un-utilized fund. Interest linked investment contracts are measured at amortised cost while unutilised funds are measured at fair value. Investment contracts with guaranteed returns (interest linked) and other business of a savings nature are recognised as liabilities. Interest accruing to the life assured from investment of the savings is recognised in the income statement in the year it is earned while interest paid and due to depositors is recognised as an expense. The net result of the deposit administration revenue account is transferred to the income statement of the group. 7.15 Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost, any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction cost of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent that there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates. Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liabilities for at least 12 month after the date of the statement of financial position. - Page 31 -
  • 34. 7.15.1 Borrowing costs. Borrowing costs that are directly attributable to the acquisition, construction and production of a qualifying asset are capitalised as part of the cost of the asset over the period up to the time such asset is substantially ready for its intended use. Other borrowing cost are recognised as an expense in the period in which they are incurred. When the carrying amount or the expected ultimate cost of the qualifying asset exceeds its recoverable amount or net realisable value, the carrying amount is written down or written off. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. 7.16 Trade payables Trade payable are recognised initially at fair value and subsequently at amortised cost using the effective interest method. The fair value of a non-interest bearing liability is its discounted repayment amount. If the due date of the liability is less than one year discounting is omitted. 7.17 Provisions and other payables i. Provisions A provision is recognized only 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. The provision is measured at the best estimate of the expenditure required to settle the obligation at the reporting date. Provisions are normally made for restructuring costs and legal claims. ii. Restructuring A provision for restructuring is recognised when the company has approved a detailed and formal restructuring plan and the restructuring plan has either commenced or been formally communicated. iii. Onerous Contracts A provision for onerous contracts is recognised when the expected benefits to be derived by the company from a contract are lower than unavoidable costs of meeting obligations under the contract. The provision is measured at the present value of the lower of expected costs of terminating the contract and the expected costs of continuing the contract. Before a provision is established, the company recognises any impairment loss on the assets associated with that contract. v) Deferred income Deferred income represent a proportion of commission received on reinsurance contracts which are booked during a financial year and are deferred to the extent that they are recoverable out of future revenue margins. It is calculated by applying to the reinsurance commission income the ratio of prepaid reinsurance to reinsurance cost. 7.18 Income tax expense Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement 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. - Page 32 -
  • 35. Current income tax is the estimated income tax payable on taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. 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 enacted or substantively enacted at the reporting date. 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. 7.19 Share capital Shares are classified as equity when there is no obligation to transfer cash or other assets. 7.20 Share premium reserve Share premium reserve represent surplus on the per value price of share issued. Incremental costs directly attributable to the issue of new shares are shown in equity (short premium reserve) as a deduction. 7.21 Contingency reserve a) General business In compliance with Section 21(2) of Insurance Act 2003, the contingency reserve is credited with the greater of 3% of total premiums, 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. b) Life business In compliance with Section 22(1) (b) of Insurance Act 2003, the contingency reserve is credited with the higher of 1% of gross premiums or 10% of net profit. 7.22 Asset revaluation reserve The reserve represents revaluation surplus on the Group revalued items of property, Plant and Equipment, the surplus is recognised net of tax through the statement of other comprehensive income. 7.23 Fair value reserve Fair value reserve represent fair value gain on available for sale financial asset that do not reserve any previous loss on such asset. The fair value gain is recognised net of tax through the other comprehensive income statement. 7.24 Contingent liabilities and assets i) Contingent liabilities A contingent liability is disclosed, unless the possibility of an outflow of resources embodying economic benefits is remote. Where the company is jointly and severally liable for an obligation, the part of the obligation that is expected to be met by other parties is treated as a contingent liability. The entity recognises a - Page 33 -
  • 36. provision for the part of the obligation for which an outflow of resources embodying economic benefits is probable, except in the extremely rare circumstances where no reliable estimate can be made. Contingent liabilities are assessed continually to determine whether an outflow of resources embodying economic benefits has become probable. If it becomes probable that an outflow of future economic benefits will be required for an item previously dealt with as a contingent liability, a provision is recognised in the financial statements of the period in which the change in probability occurs except in the extremely rare circumstances where no reliable estimate can be made. ii) Contingent assets Contingent assets arising from unplanned or other unexpected events giving rise to the possibility of an inflow of economic benefits are disclosed in the financial statements. Contingent assets are assessed continually to ensure that developments are appropriately reflected in the financial statements. If it has become virtually certain that an inflow of economic benefits will arise, the asset and the related income are recognised in the financial statements of the period in which the change occurs. If an inflow of economic benefits has become probable, an entity discloses the contingent asset. 7.25 Revenue recognition Revenue comprises the fair value for services, net of value-added tax, after eliminating revenue within the Group Revenue is recognised as follows: - a) Gross premium Gross recurring premiums on life are recognised as revenue when payable by the policyholder. For single premium business, revenue is recognised on the date on which the policy is effective. Gross general insurance written premiums comprise the total premiums receivable for the whole period of cover provided by contracts entered into during the accounting period. They are recognised on the date on which the policy commences. Premiums include any adjustments arising in the accounting period for premiums receivables in respect of business written in prior accounting periods. Rebates that form part of the premium rate, such as no-claim rebates, are deducted from the gross premium; others are recognised as an expense. Premiums collected by intermediaries, but not yet received, are assessed based on estimates from underwriting or past experience and are included in premiums written. Unearned premiums are those proportions of premiums written in a year that relate to periods of risk after the reporting date. Unearned premiums are calculated on a daily pro-rata basis. The proportion attributable to subsequent periods is deferred as a provision for unearned premiums. b) Rendering of services: Revenue arising from asset management and other related services offered by the Group are recognised in the accounting period in which the services are rendered. Fees consist primarily of investment management fees arising from services rendered in conjunction with the issue and management of investment contacts where the Group actively manages the consideration received from its customers to fund a return that is based on the investment profile that the customer selected on origination of the instrument. These services comprise the activity of trading financial assets and derivatives in order to reproduce the contractual returns that the Group‟s customers expect to receive from their investments. Such activities generate revenue that is recognised by reference to the stage of completion of the contractual reserves. - Page 34 -
  • 37. In all cases, these services comprise an indeterminate number of acts over the life of the individual contracts. For practical purposes, the Group recognises these fees on a straight-line basis over the estimated life of the contract. Certain upfront payments received for asset management services („front-end fees‟) are deferred and amortised in proportion to the stage of completion of the service for which they were paid. The Group charges its customers for asset management and other related services using the following different approaches: Front-end fees are charged to the client on inception. This approach is used particularly for single premium contracts. The consideration received as a liability and recognised over the life of the contract on a straight-line basis: and Regular fees are charged to the customer periodically (monthly, quarterly or annually) either directly or by making a deduction from invested funds. Regular charges billed in advance are recognised on a straight-line basis over the billing period; fees charged at the end of the period are accrued as a receivable that is offset against the financial liability when charged to the customer. c) Fees and commission 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. Investment income Interest income is recognised in the income statement 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. Investment income also include dividends when the right to receive payment is established. For listed securities, this is the date the security is listed as exdidivend. Realized gains and losses Realised gains and losses recorded in the income statement on investments include gain and losses on financial assets and investment properties. Gains and losses on the sale of investments are calculated as the difference between net sales proceeds and the original or amortised cost and are recorded on occurrence of the sale transaction. d) Dividend income Dividend income is recognised when the right to receive income is established. Dividends are reflected as a component of net trading income, net income on other financial instruments at fair value or other operating income depending on the underlying classification of the equity instrument. e) Interest Interest income and expense for all interest bearing financial instruments, except for those classified at fair value through profit or loss, are recognised within „interest income‟ and „interest expense‟ in the income statement using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated future cash payments and receipts through the expected life of the financial asset or liability (or, where appropriate, a shorter period) to the net carrying amount of the financial asset or liability. The effective interest rate is calculated on initial recognition of the financial asset and liability and is not revised subsequently. - Page 35 -
  • 38. The effective interest rate includes all fees paid or received, transaction costs, and discounts or premiums that are an integral part of the effective interest rate. Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or liability. Interest income and expense on all trading assets and liabilities are considered to be incidental to the company‟s trading operations and are presented together with all other changes in the fair value of trading assets and liabilities in net trading income. Interest income and expense presented in the income statement include interest on financial assets and liabilities at amortised cost on an effective interest rate basis. Fair value changes on other financial assets and liabilities carried at fair value through profit or loss, are presented in net income from other financial instruments and carried at fair value in the income statement. f) Net trading income Net trading income comprises gains less losses related to trading assets and liabilities, and includes all realised and unrealised fair value changes, interests, dividends and foreign exchange differences. g) Net income from other financial instruments at fair value Net income from other financial instruments at fair value relates to non-qualifying financial assets and liabilities designated as „at fair value through profit or loss‟ and includes all realised and unrealised fair value changes, interest, dividends and foreign exchange differences. h) Other operating revenues This comprises revenue earned by the company during the year that is directly from insurance operation and not accounted for under any other separate leads on the financial statements. 7.26 Benefit, claims and expenses recognition Gross benefits and claims Gross benefits and claims for life insurance contracts include the cost of all claims arising during the year, including internal and external claims handling costs that are directly related to the processing and settlement of claims. Changes in the gross valuation of insurance are also included. Death claims and surrenders are recorded on the basis of notifications received. Maturities and annuity payments are recorded when due. General insurance claims include all claims occurring during the year, whether reported or not, related internal and external claims handling costs that are directly related to the processing and settlement of claims, a reduction for the value of salvage and other recoveries, and any adjustments to claims outstanding from previous years. 7.27 Reinsurance expenses Reinsurance cost represents outward premium paid to reinsurance companies less the unexpired portion as at the end of the accounting year. 7.28 Investment income and expenses Investment income and expenses for all interest-bearing financial instruments including financial instrument measured at fair value through profit or loss, are recognised within investment income and finance cost in the income statement using the effective interest rate method. When a receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. - Page 36 -
  • 39. 7.29 Underwriting expenses Underwriting expenses comprise acquisition costs and other underwriting expenses. Acquisition costs comprise all direct and indirect costs arising from the writing of insurance contracts. Examples of these costs includes, but are not limited to, commission expense, supervisory levy, supervising fees and other technical expenses. Other underwriting expenses are those incurred in servicing existing policies/contract. These expenses are charged in the income statement. 7.30 Deficits and surpluses on actuarial valuation Actuarial valuation of the life fund is conducted every year to determine the net liabilities on the existing policies and the adequacy of the assets representing the insurance fund as at the date of valuation. All deficits arising therefrom are charged to the income statement while the surplus is appropriated to the shareholders and credited to the income statement. 7.31 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 recognised in the income statement upon utilization of the service or at the date of their origin. 7.32 Employees Benefit Pension obligations: The Group operates a defined contribution plan. A defined contribution plan is a pension plan under which the group pays fixed contributions to a separate entity. The group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. For defined contribution plans, the group makes contributions on behalf of qualifying employees to a mandatory scheme under the provisions of the Pension Reforms Act of 2004. The group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit 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. 7.33 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 date of the statement of financial position are dealt with in the subsequent events note. 7.34 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. - Page 37 -
  • 40. 7.35 Hypothecation of assets The company hypothecates its life and non-life business assets into those belonging to the policy holders, other creditors and shareholders fund in accordance with section 26(i) of the Insurance Act/SC1.10E(3) operational guideline. 7.36. Segment Reporting A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments. Segment results, assets and liabilities include items directly attributable to segment as well as those that can be allocated on a reasonable basis. For Niger Insurance Plc, no geographical segment information is reported as the company‟s primary geographical segment is Nigeria. Business segment is presented in respect of the Company‟s life and non-life businesses and is based on the company‟s management and reporting structure. 7.37 Foreign Currency Translation i. Transactions and balances: Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. Translation differences on non-monetary items, such as equities held at fair value through profit or loss, are reported as part of the fair value gain or loss. Translation differences on non-monetary items, such as equities classified as available-for-sale financial assets, are included in the fair value reserve in equity. 7.38 Leases i. Where the company is the lessee Leases, in respect of which the company assumes substantially all the risks and rewards of ownership are classified as finance leases. At the beginning of the lease term, the leased asset is measured at an amount equal to the fair value of the leased asset less the present value of unguaranteed or partially guaranteed residual value which would accrue to the lessor at the end of the term of the lease. Subsequent to initial recognition, the asset is accounted for in accordance with the policy applicable to that asset. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed. - Page 38 -
  • 41. Other leases are classified as operating leases and are not recognised in the company‟s balance sheet. Payments made under operating leases are recognised in the income statement on a straight line basis over the term of the lease. ii. When the company is the lessor The Group does not lease out its fixed assets and as such are not lessors. - Page 39 -
  • 42. 8. Risk and capital management framework a. Government framework The main objective of the company‟s risk management structure is to protect the company‟s shareholders from the adverse effects of events that hinder the sustainable achievement of financial performance objective, including failing to exploit opportunities. Key management recognises the critical importance of having efficient and effective risk management systems in place. The company has established a risk management function with clear terms of reference from the board of directors, its committee and the associated executive management committees. This is supplemented with a clear organisational structure with documented delegated authorities and responsibilities from the board of directors to executive management committees and senior managers. Lastly, a company policy framework which sets out the risk profiles for the company, risk management, control and business conduct standards for the company‟s operations has been put in place. Each policy has a member of senior management charged with overseeing compliance with the policy through the company. The board of directors approves the company risk management policies and meets regularly to approve any commercial, regulatory and organisational requirements of such policies. These policies define the company‟s identification of risk and its interpretation, limit structure to ensure the appropriate quality and diversification of assets, align underwriting and reinsurance strategy to the corporate goals and specify reporting requirements. b. Capital management objectives, policies and approach The company has established the following capital management objectives, policies and approach to managing the risks that affect its capital position. ▪ to maintain the required level of stability of the company thereby providing a degree of security to policyholders ▪ to maintain the required level of stability of the company thereby providing a degree of security to policyholders ▪ to allocate capital efficiently and support the development of business by ensuring that returns on capital employed meet the requirements of its capital providers and of its shareholders. ▪ to retain financial flexibility by maintaining strong liquidity and access to a range of capital markets. ▪ to align the profile of assets and liabilities taking account of risks inherent in the business. ▪ to maintain financial strength to support new business growth and to satisfy the requirements of the policyholders, regulators and stakeholders. ▪ to maintain strong credit ratings and healthy capital ratios in order to support its business objectives and maximise shareholders value. In reporting financial strength, capital and solvency are measured using the rules prescribed by the National Insurance Commission. These regulatory capital tests are based upon required levels of solvency, capital and a series of prudent assumptions in respect of the type of business written. - Page 40 -
  • 43. Agreement to capital management The company seeks to optimise the structure and source of capital to ensure that it consistently maximises returns to the shareholders and policyholders. The company‟s approach to managing capital involves managing assets, liabilities and risks in a coordinated way, assessing shortfall between reported and required capital levels on a regular basis and taking appropriate action to influence the capital position of the company in the light of changes in economic conditions and risk characteristics.‟ The primary source of capital used by the company is equity shareholders‟ funds and borrowings. The company has had no significant changes in its policies and processes to its capital structure during the past year from previous years. Available capital resources at 31 December, 2012 N Total shareholders‟ funds per financial statements 7,463,649 Adjustments into a regulatory basis 5,000,000 Available capital resources 2,463,649 Available capital resources at 31 December, 2011 Total shareholders‟ funds per financial statements 5,224,123 Adjustments onto a regulatory basis 5,000,000 Available capital resources 224,123 The adjustments onto a regulatory basis represent assets inadmissible for regulatory reporting purposes. NAICOM measures the financial strength of non-life insurers using a solvency margin model. It generally expects non-life insurers to comply with this capital adequacy requirement. Section 24 of the Insurance Act 2003 define solvency margin of a non-life insurer as the difference between the admissible assets and liabilities and this shall not be less than 15% of the net premium income (Gross Premium Income less Reinsurance Premium paid) of the minimum capital base (3 billion) whichever is higher. This test comprises insurers‟ capital against the risk profile. The regulator indicated that insurers should produce a minimum solvency margin of 100%. During the year, the Group has consistently exceeded this minimum. The regulator has the authority to request more extensive reporting and can place restrictions on the Group‟s operations if the Group falls below this requirements. - Page 41 -
  • 44. Solvency margin for the non-life business as at 31 December, 2012 is as follows:- Assets N’000 Cash and cash equivalents 508,623 Available for sale 1,532,548 Loans and receivable 3,825 Trade receivable 84,031 Reinsurance assets 268,920 Deferred acquisition cost 139,319 Investment properties 1,372,000 Property, plant and equipment 590,341 Statutory deposit 300,000 4,799,606 Liabilities Insurance contract liabilities 1,054,753 Provision and other payables 40,177 Income tax payable 283,757 Deferred tax liabilities - 1,379,686 ======= Solvency margin 3,420,920 ======= The higher of 15% net premium income and shareholders‟ fund 3,000,000 Solvency ratio 114% Regulatory framework Regulators are mainly interested in protecting the rights of policyholders and monitor them closely to ensure that the company is satisfactorily managing affairs for their benefit. At the same time, regulators are also interested in ensuring that the company maintains an appropriate solvency position to meet unforeseen liabilities arising from economic shocks or natural disasters. The operation of the company are subject to regulatory requirements within the jurisdictions in which it operates. Such regulations not only prescribe approval and monitoring of activities, but also impose certain restrictive provisions (e.g. capital adequacy) to minimise the risk of default and insolvency on the part of insurance companies to meet unforeseen liabilities as these arise. Insurance and financial risk Insurance risk The principal risk of the company faces under insurance contracts is that the actual claims and benefit payments or the timing thereof, differ from expectations. This is influenced by the frequency of claims, severity of claims, actual benefits paid and subsequent development of long-term claims. Therefore, the objective of the company is to ensure that sufficient reserves are available to cover these liabilities. - Page 42 -
  • 45. The risk exposure is mitigated by diversification across a large portfolio of insurance contracts and geographical areas. The variability of risks is also improved by careful selection and implementation of underwriting strategy guidelines, as well as the use of reinsurance arrangements. The company purchases reinsurance as part of its risk mitigation programme. Reinsurance ceded is placed on both a proportional and non-proportional basis. The majority of proportional reinsurance is quota-share reinsurance which is taken out to reduce the overall exposure of the company to certain classes of business. Non-proportional insurance is primarily excess-of-loss reinsurance designed to mitigate the company‟s net exposure to catastrophe losses. Retention limits for the excess-of-loss reinsurance vary by product line and territory. Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding claims provision and are in accordance with the reinsurances contracts. Although the company has reinsurance arrangements, it is not relieved of its direct obligations to its policyholders and thus a credit exposure exists with respect to ceded insurance, to the extent that any reinsurer is unable to meet its obligations assumed under such reinsurance agreements. The company‟s placement of reinsurance is diversified such that it is neither dependent on a single reinsurer nor are the operations of the company substantially dependent upon any single reinsurance contract. Life insurance contract (including investment contract) Life insurance contracts offered by the company include: whole life, term assurance and investment contract liabilities (ICL). Whole life and term assurance are conventional regular premium products when lump sum benefits are payable on death or permanent disability. ICL is an investment product which accepts deposit from clients and other business of savings nature by agreeing to pay interest on those deposits for an agreed period. For contract for which death or disability is the insured risk, the significant factors that could increase the overall frequency of claims are epidemics, widespread changes in lifestyles and natural disasters, resulting in earlier or more claims than expected. For annuity contracts, the most significant factor is continued improvement in medical science and social conditions that would increase longevity. For contacts with DPF, the participating nature of these contracts results in a significant portion of the insurance risk being shared with the insured party. The company‟s underwriting strategy is designed to ensure that risks are well diversified in term of type of risk and level of insured benefits. This is largely achieved through diversification across industry sectors and geography, the use of medical screening in order to ensure that pricing takes account of current health conditions and family medical history, regular review of actual claims experience and product pricing as well as detailed claims‟ handling procedures. Underwriting limits are in place to enforce appropriate risk selection criteria. Insurance contracts also entitle the company to pursue third parties for payment of some or all costs. The company further enforces a policy of activity managing and promptly pursuing claims, in order to reduce its exposure to unpredictable future developments that can negatively impact the company. Key assumptions Material judgement is required in determining the liabilities and in the choice of assumptions. Assumptions in use are based on past experience, current internal data, external market indices and benchmarks which reflect current observable market prices and other published information. Assumptions and prudent estimates are determined at the date of valuation and no credit is taken for possible beneficial effects of voluntary - Page 43 -
  • 46. withdrawals. Assumptions are further evaluated on a continuous basis in order to ensure realistic and reasonable valuations. Sensitivities The analysis which follows is performed for reasonable possible movements in key assumptions with all other assumptions held constant, showing the impact on gross and net liabilities, profit before tax and equity. The correlation of assumptions will have a significant effect in determining the ultimate claims liabilities, but to demonstrate the impact due to changes in assumptions, assumptions had to be changed on an individual basis. It should be noted that movements in these assumptions are non-linear. Sensitivity information will also vary according to the current economic assumptions, mainly due to the impact of changes to both the intrinsic cost and time value of options and guarantees. When options and guarantees exist, they are the main reason for the asymmetry of sensitivities. Non-life insurance contract (which comprise general insurance) The company principally issues the following types of general insurance contracts: fire, motor, casualty, workman compensation, personal accident, marine and oil and gas. Risks under non-life insurance policies usually cover twelve months duration. For general insurance contracts, the most significant risk arise from climate changes, natural disasters and terrorist activities. For longer tail claims that take some years to settle, there is also inflation risk.. The above risk exposure is mitigated by diversification across a large portfolio of insurance contracts and geographical areas. The variability of risks is improved by careful selection and implementation of underwriting strategies, which are designed to ensure that risks are diversified in terms of type of risk and level of insured benefits. This is largely achieved through diversification across industry sectors and geography. Furthermore, strict claim review policies to assess all new and ongoing claims, regular detailed review of claims handling procedures and frequent investigation of possible fraudulent claims are all policies and procedure put to reduce the risk exposure of the company. The company further enforces a policy of activity managing and promptly pursuing claims, in order to reduce its exposure to unpredictable future developments that can negatively impact the business. Inflation risk is mitigated by taking expected inflation into account when estimating insurance contract liabilities. The company has also limited its exposure by imposing maximum claim amounts on certain contracts as well as the use of reinsurance arrangements in order to limit exposure to catastrophic events (e.g. insurance, earthquakes and flood damage). The purpose of these underwriting and reinsurance strategies is to limit exposure to catastrophes based on the company‟s risk appetite as decided by management. The overall aim is currently to restrict the impact of a single catastrophic event to approximately 50% of shareholders‟ equity on a gross basis and 10% on a net basis. In the event of such a catastrophe, counterparty exposure to a single reinsurer is estimated not to exceed 2% of shareholders‟ equity. The Board may decided to increase or decrease the maximum tolerance based on market conditions and other factors. Mortality and morbidity rates Assumptions are based on standard industry and tables based on assumptions by the Actuary, according to the type of contract written. They reflect recent historical experience and are adjusted when appropriate to reflect the company‟s own experiences. An appropriate, but not excessive, prudent allowance is made for expected - Page 44 -
  • 47. future improvements. Assumptions are differentiated by gender, underwriting class, contract type and occupational hazard. An increase in rate will lead to an increase in premium. A decrease in the number of claim settlements will lead to decrease in the expenditure and subsequent increase in profits. Longevity Longevity assumptions are based on standard industry and tables based on assumptions by the Actuary, according to the type of contract written. An appropriate but not excessive prudent allowance is made for expected future improvements. Assumptions are differentiated by genders, underwriting class and contract type. A decrease in longevity will lead to a decrease in number of annually payment payments and subsequent decrease in expenditure increase profits. Investment return One of the major variables in determining the underwriting liabilities is the weighted average rate of returns. The estimations are based on current market returns as well as expectations about future economic and financial changes. Any increase in investment returns would lead to a reduction in expenditure and subsequent positive effects on orgainsation financials Expenses Expenses assumptions reflect the projected costs of administration of in-force policies and associated expenses. The current level of expenses is taken as an appropriate expenses base on adjustment for expected expense and inflation appropriately. A decrease in the level of expenses would result in a decrease in expenditure thereby increasing shareholder‟s profits. Lapse and surrender rates Surrender refers to the voluntary termination of policies by policyholders while lapse refer to the termination of policies due to non-payment of premiums. Lapses assumptions are determined using statistical measures based on the company‟s internal data and appropriate policy conditions. Discount rate Underwriting liabilities are the discounted value of the expected benefits and future administration expenses directly related to the contracts, less the discounted value of the expected theoretical premium that would be required to meet the future cash outflows. The rates are based on the current industry risk rates, adjusted for the company‟s own risk exposure. - Page 45 -
  • 48. Key assumptions The principal assumption underlying the liability estimates is that the company‟s future claims development will follow a similar pattern to past claims development experience. This includes assumptions in respect of average claim costs, claim handling costs, claim inflation factors and claim numbers for each accident year. Additional qualitative judgements are used to assess the extent to which past trends may not apply in the future, for example; once-off occurrence, changes in market factors such as public attitude to claiming, economic conditions, as well as internal factors such as portfolio mix, policy conditions and claims handling procedures, judgement is further used to assess the extent to which external factors such as judicial decisions and government legislation affect the estimates. Other key circumstances affecting the reliability of assumptions include variation in interest rates, delays in settlement and changes in foreign currency rates. Sensitivities The non-life insurance claim liabilities are sensitive to the key assumptions that follow. It has not been possible to quantify the sensitivity of certain assumptions such as legislative changes or uncertainty in the estimation process. Niger to disclose for 2012 and 2011 the impact of changes in assumptions, impact on gross liabilities, impact on profit before tax and impact on equity of 10% increase in average claim cost, average number of claims and average claim settlement period. Financial risks Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss to the other party by falling to discharge an obligation at the due date. Credit risk is the risk of loss arising from the failure of a client or counterparty to fulfil its obligations to Niger Insurance Plc. This Credit Risk Management framework being part of Enterprise Risk Management framework has been prepared and approved to provide broad guidelines for management of credit risk in the insurance company. In addition to credit risks arising out of investments and transactions with clients, Niger actively assumes credit risk through the writing of insurance business and the approval and issuance of loans. Credit risk can arise when a client defaults on loan payments or settlement of premium payments and can also arise when its own repayment capacity decreases. Niger‟s strategy as insurance company does not entail the elimination of credit risk but rather to take on credit risk in a well-controlled, planned and targeted manner pursuant to its business objectives its approach to measuring credit risk is therefore designed to ensure that it is assessed accurately in all its forms, and that relevant, timely and accurate credit risk information is available to the relevant decision makers at an operational and strategic level at all times. At a strategic level, Niger manages its credit risk profile within the constraints of its overall risk appetite and structured its portfolio so that it provides optimal returns for the level of risk taken. Operationally, the insurance company credit risk management is governed by the overall risk appetite framework and aims to ensure that the risk inherent to individual exposures or certain business portfolios are appropriately managed through the economic cycle. - Page 46 -
  • 49. The organization is committed to: a) Create, monitor and manage credit risk in a manner that complies with all applicable laws and regulations; b) Identify credit risk in each investment, loan or other activity of the insurance company; c) Utilize appropriate, accurate and timely tools to measure credit risk; d) Set acceptable risk parameters; e) Maintain acceptable levels of credit risk for existing individual credit exposures; f) Maintain acceptable levels of overall credit risk for Niger‟s portfolio; and g) Coordinate credit risk management with the management of other risks inherent in Niger‟s business activities. Unsecured exposures to high risk obligors, transactions with speculative cash flows, loans in which the insurance company will hold an inferior or subordinate position are some of the credit exposures that are considered undesirable by the company. Credit exposure The company‟s maximum exposure to credit risk for the components of the statement of financial position at 31 December, 2012 and 2011 is the carrying amounts as presented in the note. The credit risk analysis below is presented in line with how the company manages the risk. The company manages its credit exposure based on the carrying value of the financial instruments. Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial instruments. In respect of catastrophic events there is also a liquidity risk associated with the timing differences between gross cash out-flows and expected reinsurance recoveries. This is the potential for loss to the company arising from either its inability to meet its obligations or to fund increases in liabilities as they fall due without incurring unacceptable cost or losses. The liquidity risk management framework which is a segment of ERM framework manual ensures that Niger is not unduly exposed to Liquidity Risk and is in compliance with regulatory requirements and international best practice with respect to Liquidity Risk Management. Final authority and responsibility (outlined in the ERM framework) for all activities that expose Niger to Liquidity Risk Management rests with the Board of Directors and the Board of Directors subsequently, delegates this authority to the Board investment and Enterprise Risk Management Committee and the Management Executive Committee (EXCO). The key elements of the organisation‟s liquidity risk management process are: ▪ Definition of Niger‟s liquidity strategy ▪ Identification of liquidity risk ▪ Measurement of liquidity risk ▪ Controlling, monitoring and reporting liquidity risk. The Board Investment and Enterprise Risk Management meet quarterly while management meet monthly to review the liquidity position of the company. - Page 47 -
  • 50. NIGER INSURANCE PLC GROUP STATEMENT OF FINANCIAL POSITION AS AT YEAR ENDED 31 DECEMBER, 2012 Group Company Note December December January December December January 2012 2011 2011 2012 2011 2011 Assets N’000 N’000 N’000 N’000 N’000 N’000 Cash and cash equivalents 1 1,844,594 1,823,544 1,397,005 1,784,442 1,813,432 1,379,914 Financial assets Available for sale 2.1 1,850,998 1,713,849 2,061,707 1,849,654 1,669,758 2,048,491 Held to maturity 2.2 90,821 100,000 - 90,821 100,000 - Loans and receivables 2.3 442,012 912,739 815,133 431,835 912,739 900,896 Trade receivables 3 84,031 - - 84,031 - - Reinsurance assets 4 324,269 325,512 7,468,681 324,269 325,512 7,468,681 Deferred acquisition costs 5 139,319 203,621 194,207 139,319 203,621 194,207 Other receivables and prepayment 6 201,625 357,506 311,389 179,237 304,102 150,785 Investment in subsidiaries 7 - - - 73,753 75,753 73,753 Investment properties 8 14,515,000 12,898,992 12,487,460 14,045,000 12,884,676 12,487,460 Deferred tax assets 9 616,832 - - 616,832 - - Intangible assets 10 117,378 44,057 65,699 116,604 43,283 64,925 Property, plant and equipment 11 1,562,214 1,081,125 922,406 1,496,683 1,017,463 857,340 Statutory deposit 12 500,000 500,000 500,000 500,000 500,000 500,000 Total assets 22,289,093 19,960,945 26,223,687 21,732,480 19,848,339 26,126,452 ======== ======= ======== ======== ======== ======== Liabilities Insurance contract liabilities 14 7,074,690 5,600,599 11,529,432 7,074,690 5,600,599 11,529,432 Investment contract liabilities 15 4,846,250 5,817,050 7,793,315 4,846,250 5,817,050 7,793,315 Borrowings 16 1,351,209 2,297,581 2,569,916 1,351,209 2,279,641 2,569,916 Trade payables 17 179,994 159,945 387,056 76,453 66,644 300,482 Provision and other payables 18 210,760 155,228 274,414 175,139 142,445 261,629 Income tax liabilities 19.2 317,552 392,296 470,256 310,392 367,886 446,030 Deferred tax liabilities 19.4 958,382 314,123 254,432 811,381 307,123 249,432 Total liabilities 14,938,837 14,736,822 23,278,821 14,645,514 14,581,388 23,150,236 ======== ======= ======= ======== ======= ======= Equity Issued and paid share capital 20 3,869,747 2,868,307 2,607,545 3,869,747 2,868,307 2,607,545 Share premium 21 791,491 817,772 1,166,784 791,491 817,772 1,166,784 Contingency reserve 22 1,221,959 1,054,388 810,912 1,221,959 1,054,388 810,912 Asset revaluation reserve 23 709,175 366,805 319,282 709,175 366,805 319,282 Fair-Value reserves 24 200,156 24,430 - 200,156 24,430 - Retained earnings 25 557,728 92,421 (1,959,657) 294,438 135,249 (1,928,307) Shareholders’ fund 7,350,256 5,224,123 2,944,866 7,086,966 5,266,951 2,976,216 -------------- ------------- ------------- ------------- ------------- -------------- Total liabilities and equity 22,289,093 19,960,945 26,223,687 21,732,480 19,848,339 26,126,452 ======== ======== ======== ======== ======== ======== The accounting policies on pages 16 to 47 and the notes on pages 51 to 107 form part of these financial statements - Page 48 -
  • 51. NIGER INSURANCE PLC GROUP STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER, 2012 Group Company Note Dec, 2012 Dec, 2011 Dec, 2012 Dec, 2011 N’000 N’000 N’000 N’000 Gross premium written 26 10,330,471 7,809,878 10,330,471 7,809,878 Unearned premium (1,737,963) (911,708) (1,737,963) (911,708) Gross premium income 26 8,592,508 6,898,170 8,592,508 6,898,170 Reinsurance expenses 27 (573,943) (251,895) (573,943) (251,895) Net premium income 8,018,565 6,646,275 8,018,565 6,646,275 Fee and commission income 28 642,833 1,508,942 642,833 1,508,942 Net underwriting income 8,661,398 8,155,217 8,661,398 8,155,217 ------------- ------------ ------------- ------------- Claims expenses 29 (2,448,169) (1,555,399) (2,448,169) (1,555,399) Changes in insurance contract liability 29 (450,041) (404,329) (450,041) (404,329) Claims recovered from reinsurer 29 79,020 151,309 79,020 151,309 Net claim expenses (2,819,190) (1,808,419) (2,819,190) (1,808,419) Underwriting expenses 30 (2,353,982) (1,491,680) (2,353,982) (1,491,680) Total underwriting expenses (5,173,172) (3,300,099) (5,173,172) (3,300,099) ------------- ------------ ------------- ------------ Underwriting profit 3,488,226 4,855,118 3,488,226 4,855,118 Investment income 31 221,249 316,736 207,291 312,224 Net fair value gains on investment property 32 1,154,015 48,500 703,112 48,500 Other operating income 33 130,120 816,530 64,972 747,035 Management expenses 34 (3,290,144) (2,773,004) (3,210,306) (2,693,107) Impairment loss on investment 35 (214,318) (603,425) (214,318) (603,425) Impairment on trade receivable 3.1 (610,154) - (610,120) - Depreciation and amortisation 36 (175,495) (168,340) (172,296) (165,234) Net operating profit before tax 33 703,499 2,492,115 256,561 2,501,111 Information technology levy 17 (9,414) (14,187) (9,414) (14,187) Income tax expense 19 82,208 (182,374) 223,028 (179,892) Retained profit after tax transferred to reserve 25 776,293 2,295,554 470,175 2,307,032 Other comprehensive income Revaluation gain on property, plant and equipment 342,370 47,523 342,370 47,523 Net fair value gain on available for sale financial assets 5.1 175,726 24,430 175,726 24,430 Total comprehensive income for the year 1,294,389 2,367,507 988,271 2,378,985 ======= ======== ======= ======== Earning per share Attributable to ordinary equity holders: - Basic 10.03k 40.02k 6.07k 40.22k ====== ======= ===== ======= - Diluted 10.03k 29.66k 6.07k 29.81k ====== ====== ======= ====== ................................................ .............................................. ...................................... Frederick S. Ugwuja Dauda K. Adedeji Bala Zakariya’u FRC/2013/ICAN/00000002754 FRC/2013/ICAN/00000003021 FRC/2013/CIIN/00000003437 Chief Finance Officer Chief Executive Officer Chairman The accounting policies on pages 16 to 47 and the notes on pages 51 to 107 form part of these financial statements - Page 49 -
  • 52. NIGER INSURANCE PLC STATEMENT OF CHANGES IN EQUITY AS AT 31 DECEMBER 2012 Group Ordinary share Share Assets reva- Fair valueContingency Retained capital premium reserve reserve reserve earnings Total N’000 N’000 N’000 N’000 N’000 N’000 N’000 As at 1 January, 2011 2,607,545 1,166,784 319,282 - 810,912 (1,959,657) 2,944,866 Bonus issue 260,762 (260,762) - - - - - Share increase expenses - (88,250) - - - (88,250) Revaluation gains on PPE - - 47,523 - - - 47,523 Fair value gain on available for sale assets - - - 24,430 - - 24,430 Transfer to contingency reserve - - - - 243,476 (243,476) - Transfer from income statement - - - - - 2,295,554 2,295,554 Balance at 31 December 2011 2,868,307 817,772 366,805 24,430 1,054,388 92,421 5,224,123 ======== ======= ======= ======= ======= ======= ======= As at 1 January, 2012 2,868,307 817,772 366,805 24,430 1,054,388 92,421 5,224,123 Right issue 1,001,440 - - - - 1,001,440 Dividend paid - - - - - (143,415) (143,415) Share capital increase expenses - (26,281) - - - (26,281) Fair value gain available for sale assets - - - 175,726 - - 175,726 Revaluation gain on PPE - - 342,370 - - - 342,370 Transfer to contingency reserve - - - - 167,521 (167,571) - Transfer from income statement - - - - - 776,293 776,293 Bal. as at December, 2012 3,869,747 791,491 709,175 200,156 1,221,959 557,728 7,350,256 ======== ======== ======= ======= ======= ======= ======== Company As at 1 January, 2011 2,607,545 1,166,784 319,282 - 810,912 (1,928,307) 2,976,216 Bonus issue 260,762 (260,762) - - - - Share increase expenses - (88,250) - - - (88,250) Fair value gain on available for sale assets - - - 24,430 - - 24,430 Revaluation gain on PPE - - 47,523 - - - 47,523 Transfer from income statement - - - - - 2,307,032 2,307,032 Transfer to contingent reserve - - - - 243,476 (243,476) - Balance as at September, 2011 2,868,307 817,772 366,805 24,430 1,054,388 135,249 5,266,951 ======== ======= ======== ======= ======= ======== ======= As at 1 January, 2012 2,868,307 817,772 366,805 24,430 1,054,388 135,249 5,266,951 Right issue 1,001,440 - - - - 1,001,440 Dividend - - - - (143,415) (143,415) Share capital increase expenses - (26,281) - - - (26,281) Fair/value gain on available for sale assets - - - 175,726 - - 175,726 Revaluation gain on PPE - - 342,370 - - - 342,370 Transfer from income statement - - - - - 470,175 470,175 Transfer to contingency reserve - - - - 167,571 (167,571) - Bal. as at December, 2012 3,869,747 791,491 709,175 200,156 1,221,959 294,438 7,086,966 ======= ====== ======= ======= ======= ======== ======= The accounting policies on pages 16 to 47 and the notes on pages 51 to 107 form part of these financial statements - Page 50 -
  • 53. NIGER INSURANCE PLC STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER, 2012 Group Company Note 2012 2011 2012 2011 N’000 N’000 N’000 N’000 Profit after tax 776,293 2,295,554 470,175 2,307,032 Add back: - - - - Taxation expenses (72,794) 196,561 (213,614) 194,079 Operating profit 703,499 2,492,115 256,561 2,501,117, Adjustment for item not involving movement of cash Depreciation and amortisation 36 175,495 168,340 172,296 165,234 Provision/(write back) for impairment on trade receivables 3.1 610,154 (741,680) 610,120 (741,680) Provision for impairment on investment 35 51,318 432,925 51,317 432,925 (Profit) on disposal of property, plant and equipment (788) (2,925) (788) (2,925) Working capital adjustment Increase/(decrease) in insurance contract liabilities 1,474,091 (5,928,833) 1,474,091 (5,928,833) Increase/(decrease) in investment contract liabilities (970,800) (1,976,265) (970,800) (1,976,265) Increase/(decrease) in trade payables 20,049 (227,111) 9,808 (233,838) Increase/(decrease) in provision and other payables 46,118 (133,373) 23,279 (133,371) Increase/(decrease) in trade receivable s (694,150) 741,680 (694,151) 741,680 (Increase)/decrease in reinsurance assets 1,243 7,143,169 1,243 7,143,169 (Increase)/decrease in loans and receivable s 470,727 (97,606) 480,904 (11,843) (Increase)/decrease in other receivables and prepayment 155,880 (46,118) 124,865 (153,317) Increase/(decrease) in deferred acquisition costs 64,302 (9,414) 64,302 (9,414) Tax paid (159,129) (234,503) (141,055) (234,205) Net cash used in operating activities 1,948,009 1,580,403 1,461,992 1,558,428 ======= ======= ======== ========= Investing activities Available for sale financial assets 53,014 (49,141) 10,302 (18,266) Held to maturity investment 9,179 (100,000) 9,179 (100,000) Proceeds from sale of property, plant and equipment 788 5,489 788 5,489 Acquisition of Property, Plant and Equipment (134,360) (238,095) (129,295) (236,391) Acquisition of intangible assets (124,944) - (124,944) - Acquisition of investment properties (1,616,008) (411,532) (1,160,324) (397,216) Net cash outflow from investing activities (1,812,331) (793,279) (1,394,294) (746,384) ======== ======== ======= ========= Finance activities Borrowing (946,372) (272,335) (928,432) (290,275) Dividend paid (143,415) - (143,415) - Share capital increase 1,001,440 - 1,001,440 - Share increase expenses (26,281) (88,250) (26,281) (88,250) Net cash used in servicing of finance (114,628) (360,585) (96,688) (378,525) ======= ======= ======= ======== Net cash used in servicing of finance 21,050 426,539 (28,990) 433,519 Cash and cash equivalent at the beginning 1,823,544 1,397,005 1,813,432 1,379,914 Cash and cash equivalent at the end 1,844,594 1,823,544 1,784,442 1,813,433 ======== ======= ======= ======== The accounting policies on pages 16 to 47 and the notes on pages 51 to 107 form part of these financial statements - Page 51 -
  • 54. NIGER INSURANCE PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER, 2012 1. Cash and cash equivalents Cash and cash equivalents comprise cash in hand, at the banks and investments in short term liquid instruments. This comprise: Balance held with banks in Nigeria Group Group Group Dec.2012 Dec. 2011 Jan. 2011 N’000 N’000 N’000 Cash at bank and in hand 1,280,767 1,725,928 1,201,027 Short term deposits 726,827 268,116 258,119 2,007,594 1,994,044 1,459,146 Impairment on short term deposits (1.1) (163,000) (170,500) (62,141) As at 31 December, 2011 1,844,594 1,823,544 1,397,005 ======== ======== ========= Life Non-life Company Company Company Dec.2012 Dec.2012 Dec.2012 Dec. 2011 Jan. 2011 N’000 N’000 N’000 N’000 N’000 Cash at bank and in hand 982,692 268,197 1,250,889 1,716,316 1,184,436 Short term deposits 208,421 488,132 696,553 267,616 257,619 1,191,113 756,329 1,947,442 1,983,932 1,442,055 Impairment (1.1) (131,239) (31,761) (163,000) (170,500) (62,141) As at 31 December, 2011 1,059,874 724,568 1,784,442 1,813,432 1,379,914 ======== ======= ======== ======== ======== 1.1 Impairment Impairment on short term deposits are in respect of deposits with some banks and other financial institutions that are long overdue and individually impaired. The movement in the impairment account during the year is detailed as follows: Life Non-life Company Company Company Dec.2012 Dec.2012 Dec.2012 Dec. 2011 Jan. 2011 N’000 N’000 N’000 N’000 N’000 At January, 2012 138,739 31,761 170,500 33,855 33,855 (Recoveries)additons during the period (7,500) - (7,500) 136,645` 28,286 As at 31 December, 2012 131,239 31,761 163,000 170,500 62,141 ======= ======= ======= ======= ======== 2. Financial assets The company‟s financial assets are summarised by measurement category as follows: - Group Group Group Dec.2012 Dec. 2011 Jan. 2011 N’000 N’000 N’000 Available for sale (note 2.1) 1,850,998 1,713,849 2,061,707 Held to maturity (note 2.2) 90,821 100,000 - Loans and receivables (note 2.3) 442,012 912,739 815,133 2,383,831 2,726,588 2,876,840 ======= ======= ======= - Page 52 -
  • 55. Life Non-life Company Company Company Dec. 2012 Dec.2012 Dec.2012 Dec. 2011 Jan. 2011 N’000 N’000 N’000 N’000 N’000 Available for sale (note 2.1) 317,106 1,532,548 1,849,654 1,669,758 2,048,491 Held to maturity (note 2.2) 90,821 - 90,821 100,000 - Loans and receivables (note 2.3) 428,010 3,825 431,835 912,739 900,896 835,937 1,536,373 2,372,310 2,582,597 2,949,387 ======= ======== ======== ======== ======== 2.1 Available for sale Available for sale investment securities represent the group‟s equity interest in some listed and unlisted companies as follows:- Group Group Group Dec.2012 Dec. 2011 Jan. 2011 N’000 N’000 N’000 Equity securities Listed (note 2.1.1) 3,704,343 3,742,646 3,688,408 Unlisted (note 2.1.1) 2,178,782 2,193,493 2,198,590 5,883,125 5,936,139 5,886,998 ======== ======= ======== Less: Impairment At beginning 4,222,290 3,825,291 3,825,291 Charge for the period 51,352 432,925 - Write back (241,515) (35,926) - 4,032,127 4,222,290 3,825,291 ------------- ------------- -------------- 1,850,998 1,713,849 2,061,707 ======== ======= ======= Life Non-life Company Company Company Dec. 2012 Dec. 2012 Dec.2012 Dec. 2011 Jan. 2011 N’000 N’000 N’000 N’000 N’000 Listed (note 2.1.1) 2,841,679 861,285 3,702,964 3,556,607 3,688,408 Unlisted (note 2.1.1) 105,316 2,073,466 2,178,782 2,335,441 2,185,374 2,946,995 2,934,751 5,881,746 5,892,048 5,873,782 ======== ======== ======== ======== ========= Less: Impairment At beginning 2,764,229 1,458,061 4,222,290 3,825,291 3,825,291 Charge for the period 8,604 42,713 51,317 432,925 - Write back (142,944) (98,571) (241,515) (35,926) - 2,629,889 1,402,203 4,032,092 4,222,290 3,825,291 ------------- ----------- ------------ ------------ ------------- At ending (note 2) 317,106 1,532,548 1,849,654 1,669,758 2,048,491 ======== ======== ======== ======== ========= - Page 53 -
  • 56. 2.1.1Movement in the cost of available for sale assets Group Group Group Dec.2012 Dec. 2011 Jan. 2011 N’000 N’000 N’000 Listed securities At beginning 3,742,646 3,688,408 3,688,408 Addition during the year 149,553 54,238 - Disposals during the period (187,856) - - At ending 3,704,343 3,742,646 3,688,408 ======= ======= ======= Unlisted securities: At beginning 2,193,493 2,198,590 2,198,590 Addition during the year 134,842 161,903 - Reclassification to listed securities (149,553) - - Disposal during the year - (167,000) - At ending 2,178,782 2,193,493 2,198,590 ======== ======= ======= Life Non-life Company Company Company Dec. 2012 Dec. 2012 Dec.2012 Dec. 2011 Jan. 2011 N’000 N’000 N’000 N’000 N’000 Listed securities At beginning 2,844,875 711,732 3,556,607 3,688,408 3,688,408 Reclassification from unlisted securities - 149,553 149,553 - - Disposals during the period (3,196) - (3,196) (131,801) - At ending 2,841,679 861,285 3,702,964 3,556,607 3,688,408 ======= ======= ======= ======= ======== Unlisted securities At beginning 105,020 2,230,420 2,335,440 2,156,235 2,185,374 Addition during the year 296 1,000 1,296 346,206 - Reclassification to listed securities - (149,553) (149,553) - - Disposal during the year - (8,401) (8,401) (167,000) - At ending 105,316 2,073,466 2,178,782 2,335,441 2,185,374 ======== ======== ======== ======== ======== - Page 54 -
  • 57. 2.1.2 Exposure to market risk is the fair value The table below provides cost and fair value information on investments securities for sale. The group maximum exposure to market risk is the fair value. Group 31 December, 2012 31 December, 2011 1 January, 2011 Cost Fair value Cost Fair value Cost Fair value N’000 N’000 N’000 N’000 N’000 N’000 Equity securities Listed securities 3,704,343 465,953 3,742,646 374,792 3,688,408 660,347 Unlisted securities 2,178,782 1,385,045 2,193,493 1,339,057 2,198,590 1,401,360 5,883,125 1,850,998 5,936,139 1,713,849 5,886,998 2,061,707 ======= ======= ======= ======= ======= ======= Company Equity securities Listed securities 3,702,964 464,574 3,556,607 188,753 3,688,408 660,347 Unlisted securities 2,178,782 1,385,080 2,335,441 1,481,005 2,185,374 1,388,144 5,881,746 1,849,654 5,892,048 1,669,758 5,873,782 2,048,491 ======= ======= ======= ======= ======= ======= 2.1.3 The investments are carried at fair value by valuation method. The different levels have been defined as follows: Level 1: Fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities using the last bid prices; Level 2: Fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e.) or indirectly (i.e.) derived from prices; and level 3: Fair value measurements are those derived from valuation techniques that include inputs for the assets or liability that are not based on observable market data (unobservable inputs). Level 1 Level 2 Level 3 Total N’000 N’000 N’000 Group Equity securities Listed securities Company 464,574 - - 464,574 Subsidiaries 1,379 - - 1,379 Unlisted securities Company - - 1,385,080 1,385,080 Subsidiaries - - (35) (35) 465,953 - 1,385,045 1,850,998 ======= ======= ======= ======= - Page 55 -
  • 58. 2.2 Held to maturity financial asset Delta State government 14% fixed rate infrastructure bond 2011/2018 Group Group Group Company Company Company Dec.2012 Dec.2011 Jan. 2011 Dec.2012 Dec.2011 Jan. 2011 N’000 N’000 N’000 N’000 N’000 N’000 At beginning 100,000 - - 100,000 - - Addition during the year - 100,000 - - 100,000 - Disposal during the year (9,179) - - (9,179) - - At ending 90,821 100,000 - 90,821 100,000 - ======= ======= ====== ======= ======= ====== 2.3 Loans and receivables Group Group Group Dec.2012 Dec.2011 Jan. 2011 N’000 N’000 N’000 Staff and agents loan 245,784 645,060 584,692 Loans to policy holders (note 2.3.1) 196,228 267,679 230,441 442,012 912,739 815,133 --------- ----------- ---------- Current 76,908 547,451 264,996 Non current 365,104 365,288 550,137 442,012 912,739 815,133 ====== ====== ====== Company Company Company Life Non-life Dec.2012 Dec. 2011 Jan. 2011 N’000 N’000 N’000 N’000 N’000 Staff and Agents loan 231,782 3,825 235,607 645,060 584,692 Receivable from related parties (note 35) - - - - 85,763 Loans to policy holders (note 2.3.1) 196,228 - 196,228 267,679 230,441 428,010 3,825 431,835 912,739 900,896 ---------- ----------- ---------- ---------- ---------- Current 73,083 3,825 76,908 547,451 264,996 Non-current 354,927 - 354,927 365,288 635,900 428,010 3,825 431,835 912,739 900,896 ====== ====== ====== ====== ======= 2.3.1 Loans to policy holders –life Group Group Group Company Company Company Dec.12 Dec.11 Jan. 11 Dec.12 Dec.11 Jan.11 N’000 N’000 N’000 N’000 N’000 N’000 Mortgage loan - 97,983 97,983 - 97,983 97,983 Policy loan 195,305 168,773 131,535 195,305 168,773 131,535 Non-forfeiture regulations 923 923 923 923 923 923 196,228 267,679 230,441 196,228 267,679 230,441 ======= ====== ======= ====== ======= ======= These are different categories of loans granted to life business policy holders within the surrender values of their respective policies. Non forfeiture regulations are in respect of unpaid premiums due to unforeseen contingencies - Page 56 -
  • 59. causing the policy holder to default in premium payment while policy loans and Mortgage loans are usually applied for by the holders. In the opinion of the Directors none of the loans is impaired. 3. Trade receivables Trade receivable represent insurance receivable at the end of the year Group Group Group Company Company Company Group Dec.12 Dec.11 Jan.11 Dec.12 Dec.11 Jan.11 N’000 N’000 N’000 N’000 N’000 N’000 Insurance receivables 1,474,014 779,863 1,521,543 1,474,014 779,863 1,521,543 Provisions for impairment (note 3.1) (1,389,983) (779,863) (1,521,543) (1,389,983) (779,863) (1,521,543) 84,031 - - 84,031 - - ======= ====== ======= ======= ====== ======= The company‟s insurance receivable represents outstanding agents and brokers balances in respect of non-life insurance yet to be remitted to the company at year end. All past due insurance receivables were individually impaired. Trade receivable are expected to be realised within the next financial cycle, hence current in nature. 3.1 Movement in impairment of trade receivables is as follows:- Company Company Company Dec.12 Dec.11 Jan.11 N’000 N’000 N’000 At beginning 779,863 1,521,543 667,920 Provision for impairment for the period 610,120 (741,680) 853,623 At ending 1,389,983 779,863 1,521,543 ======== ======== ======== 3.2 The age analysis of insurance receivables before impairment as at end of the year are as follows:- Company Company Company Dec.12 Dec.11 Jan.11 N’000 N’000 N’000 1-90days 84,031 - - 91-180days 738,875 - - Above 180 days 1,389,983 779,863 1,521,543 1,474,014 779,863 1,521,543 ======= ======= ======== 4. Reinsurance assets Group Group Group Dec.12 Dec.11 Jan.11 N’000 N’000 N’000 Share of reinsurer‟s liabilities (note 4.1) 324,269 325,512 7,468,681 ======= ======= ========= Current 324,269 325,512 7,468,681 ======= ======= ======== - Page 57 -
  • 60. Life Non-life Company Company Company Dec.2012 Dec.2012 Dec.2012 Dec. 2011 Jan. 2011 N’000 N’000 N’000 N’000 N’000 Share of reinsurer‟s liabilities (4.1) 17,398 306,871 324,269 325,512 7,468,681 ====== ======= ======= ======= ======== 4.1 Share of reinsurer’s liabilities At beginning 9,935 315,577 325,512 7,468,681 7,468,681 Changes during the year 7,463 (8,706) (1,243) (7,143,169) - At ending 17,398 306,871 324,269 325,512 7,468,681 ====== ====== ======= ======== ======== Directors are of the opinion that no impairment allowance is necessary on the receivable from reinsurance. 4.2 Analysis of reinsurance assets per policies is as follows Life Non-life Dec.2012 Dec. 2011 Jan. 2011 N’000 N’000 N’000 N’000 N’000 Fire - 27,266 27,266 30,784 27,416 Motor vehicle - 103,830 103,830 90,362 77,843 Marine and aviation - 84,489 84,439 24,963 31,842 General accident - 91,286 91,286 169,468 86,710 Individual 2,897 - 2,897 2,403 1,919 Group 14,501 - 14,501 7,532 7,242,951 17,398 306,871 324,269 325,512 7,468,681 ====== ====== ======= ======= ======== 5. Deferred acquisition cost non-life business Group Group Group Company Company Company Dec.12 Dec.11 Jan. 11 Dec.12 Dec.11 Jan.11 N’000 N’000 N’000 N’000 N’000 N’000 At the beginning of the year 203,621 194,207 194,207 203,621 194,207 194,207 Acquisition cost paid during the year 258,195 259,782 - 258,195 259,782 - Charged to non life revenue (322,497) (250,368) - (322,497) (250,368) - 139,319 203,621 194,207 139,319 203,621 194,207 ----------- ---------- ----------- ----------- ---------- ----------- Current 139,319 203,621 194,207 139,319 203,621 194,207 Non current - - - - - - 139,319 203,621 194,207 139,319 203,621 194,207 ======= ====== ======= ====== ======= ======= - Page 58 -
  • 61. 5.1 The deferred acquisition cost represents unearned premium relating to the unexpired risk and is analysed by policy as follows: Dec.12 Dec.11 Jan.11 N’000 N’000 N’000 Fire 13,313 29,003 23,453 Motor vehicle 32,424 49,456 54,924 Maritime and aviation 13,074 22,603 19,099 General accident 80,508 102,559 96,731 139,319 203,621 194,207 ====== ====== ======= 6. Other receivables and prepayment -life business Group Group Group Company Company Company Dec.12 Dec.11 Jan.11 Dec.12 Dec.11 Jan.11 N’000 N’000 N’000 N’000 N’000 N’000 Rent prepayment 58,994 39,644 27,814 58,994 39,644 27,814 Staff allowances 45,338 187,646 70,442 45,338 187,646 70,442 Prepayment to suppliers 42,858 38,255 17,000 42,858 39,245 17,000 Rent receivable 54,435 85,451 192,651 - - - Other receivable - 6,510 3,482 - 5,520 3,482 201,625 357,506 311,389 147,190 272,055 118,738 ====== ======= ======= ====== ======= ======= Current 201,625 357,506 311,389 147,190 272,055 118,738 Non-current Deposit for share with NIC Securities & Trust Limited - - - 32,047 32,047 32,047 201,625 357,506 311,389 179,237 304,102 150,785 ======= ======== ======= ======= ======= ======= 6.1 In the opinion of the Directors, none of the balances in other receivables and prepayment is past due; hence no impairment allowance is made in the account 7. Investment in subsidiaries – life business Company Company Company Dec.12 Dec.11 Jan.11 N’000 N’000 N’000 NIC properties Limited 4,996 4,996 4,996 NIC Securities & Trust Limited 68,757 68,757 68,757 As at 31 December 73,753 73,753 73,753 ======= ====== ======== All the subsidiaries are wholly owned by the company. There was no movement in the investments in subsidiaries during the year. NIC Properties Limited was incorporated on 13 August, 1991 and its principal activity involves property management services to both individuals and corporate clients. NIC Securities and Trust Limited was incorporated on 13 August, 1991 to carry out Trusteeship and Registrars activities to both corporate and individual clients. - Page 59-
  • 62. 8. Investment properties Group Group Group Dec.12 Dec.11 Jan.11 N’000 N’000 N’000 River Plaza 10,000,000 10,514,385 10,507,840 Polo House 1,862,600 1,485,402 1,172,731 Ajao Estate 1,372,000 350,889 350,889 Port Harcourt 402,400 250,000 210,000 Others 878,000 298,316 246,000 14,515,000 12,898,992 12,487,460 ========= ======== ========= Life Non-life Company Company Company Dec.12 Dec.12 Dec.12 Dec.11 Jan.11 N’000 N’000 N’000 N’000 N’000 River Plaza 10,000,000 - 10,000,000 10,514,385 10,507,840 Polo House 1,862,600 - 1,862,600 1,485,402 1,172,731 Ajao Estate - 1,372,000 1,372,000 350,889 350,889 Port Harcourt 402,400 - 402,400 250,000 210,000 Others 408,000 - 408,000 284,000 246,000 12,673,000 1,372,000 14,045,000 12,884,676 12,487,460 ========= ======= ======== ======== ========= 8.1 Details of movement in investment properties Polo Ajao Port River Plaza House Estate Harcourt Others Company Group N’000 N’000 N’000 N’000 N’000 N’000 N’000 As at 1 Jan. 2011 10,507,840 1,172,731 350,889 210,000 246,000 12,487,460 12,487,460 Additions 6,545 312,671 - 29,502 - 348,716 363,032 Fair value gain/(loss) - - - 10,498 38,000 48,500 48,500 As at 31 Dec. 2011 10,514,385 1,485,402 350,889 250,000 284,000 12,884,676 12,898,992 ------------- ------------ --------- ----------- ---------- ------------- ------------- As at 1 Jan. 2012 10,514,385 1,485,402 350,889 250,000 284,000 12,884,676 12,898,992 Additions 188,783 268,429 - - - 457,212 461,993 Fair value gain/(loss) (703,168) 108,769 1,021,111 152,400 124,000 703,112 1,154,015 Disposals - - - - - - - As at 31 Dec. 2012 10,000,000 1,862,600 1,372,000 402,400 408,000 14,045,000 14,515,000 ======== ======= ======= ======== ======= ======== ========= The company‟s investment properties was independently valued at the end of the year by Messrs. Tokun & Associates Estate Surveyors & Valuers with Financial Reporting Council of Nigeria (FRC) registration No.FRC/2013/0000000001353. All adjustment has been recognised in the income statement in line with the provision of relevant International Standard. 8.2 Investment properties targed “others‟ are properties whose individual and collective fair value at year end is lower than 5% of the total value of the properties. 9. Deferred tax assets The company has substantial deferred tax assets of N2,569,085,680 in its life business which arose from unrecouped losses and unrelieved capital allowances. 25% (N616,831,500,000) of this amount has been recognised in the 2012 financial statements being an amount, the directors believe, will be recouped by future profits. The balance of N1,952,254,180 is carried forward to be recognised in future when directors are convinced of the possibility of sufficient profit to recoup the asset. - Page 60-
  • 63. Group Company N’000 N’000 10. Intangible assets – life business Cost/revaluation As at 1 January, 2011 65,699 64,925 Additions - - As at 31 December, 2011 65,699 64,925 ======= ======= As at 1 January, 2012 65,699 64,925 Additions 124,944 124,944 As at 31 December, 2012 190,643 189,869 ---------- ----------- Accumulated amortisation As at 1 January, 2011 - - Amortisation for the year 21,642 21,642 As at 31 December, 2011 21,642 21,642 --------- --------- As at 1 January, 2012 21,642 21,642 Amortisation for the year 51,623 51,623 As at 31 December, 2012 73,265 73,265 ====== ====== Carrying amount As at 31 December, 2012 117,378 116,604 ---------- ----------- As at 31 December, 2011 44,057 43,283 ---------- ----------- As at 1 January, 2011 65,699 64,925 ======= ======= - Page 61-
  • 64. 11. Property, plant & equipment - Group Furniture Land & fittings & Motor Building equipment vehicle Total Cost/revaluation N’000 N’000 N’000 N’000 As at 1 January, 2011 754,098 673,106 498,637 1,925,842 Additions 970 128,954 108,171 238,095 Revaluation adjustment 69,887 - - 69,887 Disposal - (280) (6,410) (6,690) As at 31 December, 2011 824,955 801,780 600,398 2,227,134 ------------ ---------- ---------- ------------- As at 1 January, 2012 824,955 801,780 600,398 2,227,134 Additions 159 70,446 63,755 134,360 Adjustment for fair value 470,597 - - 470,598 Disposal - - (7,317) (7,317) As at 31 December, 2012 1,295,711 872,226 656,836 2,824,775 ------------ ---------- ---------- ------------ Depreciation As at 1 January, 2011 99,544 522,646 381,246 1,003,436 Charge for the year 6,480 85,978 54,240 146,698 On disposal - (280) (3,846) (4,126) As at 31 December, 2011 106,024 608,344 431,640 1,146,008 ---------- ---------- ---------- ------------ As at 1 January, 2012 106,024 608,344 431,640 1,146,008 Charge for the year 6,480 66,122 51,267 123,870 On disposal - - (7,317) (7,317) As at 31 December, 2012 112,504 674,466 475,590 1,262,561 ======= ======= ======= ========= Carrying amount As at 31 December, 2012 1,183,207 197,760 181,246 1,562,214 ======== ======= ======== ========= As at 31 December, 2011 718,931 193,436 168,758 1,081,125 ======== ======== ======= ========= As at 1 January, 2011 654,554 150,460 117,391 922,406 ========= ======== ======== ========= - Page 62-
  • 65. 11.1 Company Furniture Land & fittings & Motor Building equipment vehicles Total Cost/revaluation N’000 N’000 N’000 N’000 As at 1 January, 2011 691,890 655,430 487,726 1,835,046 Additions 970 127,250 108,171 236,391 Revaluation adjustment 69,887 - - 69,887 Disposal - (280) (6,410) (6,690) As at 31 December, 2011 762,747 782,400 589,487 2,134,634 --------- --------- ---------- ------------ As at 1 January, 2012 762,747 782,400 589,487 2,134,634 Additions 159 68,351 60,785 129,295 Adjustment for fair value 470,598 - - 470,598 Disposal - - (7,317) (7,317) As at 31 December, 2012 1,233,504 850,751 642,955 2,727,210 ========= ======= ======= ======== Depreciation As at 1 January, 2011 93,890 513,481 370,335 977,706 Charge for the year 5,857 83,494 54,240 143,591 On disposal - (280) (3,846) (4,126) ---------- ----------- ----------- ----------- As at 31 December, 2011 99,747 596,695 420,729 1,117,171 ======= ======= ======= ======== As at 1 January, 2012 99,747 596,695 420,729 1,117,171 Charge for the year 5,858 63,795 51,020 120,673 On disposal - - (7,317) (7,317) As at 31 December, 2012 105,605 660,490 464,432 1,230,527 ======= ======= ====== ========= Carrying amount As at 31 December, 2012 1,127,899 190,261 178,523 1,496,683 ======== ======= ======= ======== As at 31 December, 2011 663,000 185,705 168,758 1,017,463 ======== ======= ======= ======== As at 1 January, 2011 598,000 141,949 117,391 857,340 ======== ======= ======= ======== As a result of the revaluation of the company‟s landed property by Tokun & Associates and the subsequent adoption of the fair values as at 31 December, 2012, the carrying amount of the property as stated above is therefore the fair value of the property as at year end. - Page 63-
  • 66. 11.2 Disposal of assets during the year – company Motor Property, plant and equipment vehicles Total N’000 N’000 Cost 7,317 7,317 Accumulated depreciation (7,317) (7,317) - - Sales proceeds (788) (788) (Gain)/loss on disposal (788) (788) ===== ===== 12. Statutory deposit - Company Company Company Company Life Non-life Dec.2012 Dec. 2011 Dec.2011 N’000 N’000 N’000 N’000 Deposit with CBN 200,000 300,000 500,000 500,000 500,000 ====== ====== ====== ====== ====== Section 11(1) of the Insurance Act No.1 2003 requires an existing insurance company to retain 10% of the minimum share capital with the Central Bank of Nigeria as statutory deposit. 13. Statement of investments representing Insurance Funds In accordance with Section 26(1) of the Insurance Act 2003/SC1.10E(3) operational guideline, the company‟s investments as at 31 December, 2012 are represented as follows: - Non-life business Life business Shareholders Policyholders Others ShareholdersPolicyholders Fund fund creditors fund fund Other N’000 N’000 N’000 N’000 N’000 N’000 Assets Property, plant and equipment 203,231 58,675 221,592 147,675 278,675 218,050 Equipment 41,003 32,645 15,403 38,923 16,783 45,505 Motor vehicles 5,312 2,587 9,893 13,402 4,542 142,787 Intangible assets - - - 36,788 12,453 67,363 Deferred tax asset - - - 616,832 - - Other assets Reinsurance assets 28,546 163,624 114,701 - - 17,398 Statutory deposit 300,000 - - 200,000 - - Investment in subsidiaries - - - 105,800 - - Investment properties 1,372,000 - - 2,428,908 8,995,928 1,248,164 Cash and cash equivalents 10,582 546,759 167,227 67,453 910,976 81,445 Trade receivable 80,104 - 3,927 - - - Deferred acquisition costs 98,675 - 40,644 - - - Financial assets 913,602 401,807 220,964 275,785 472,388 87,764 Other receivables and prepayment - - - 102,345 23,098 21,747 3,053,055 1,206,097 794,351 4,033,911 10,714,843 1,930,223 ======== ======= ====== ======= ======= ======== - Page 64 -
  • 67. 14. Insurance contract liabilities Group Group Group Dec. 12 Dec.11 Jan.11 N’000 N’000 N’000 Unearned premium (note 14.1) 604,712 429,297 541,966 Reported claims and loss adjustment expenses (note 14.2) 309,181 440,726 183,343 Claims incurred but not reported 292,204 293,740 146,794 Life fund 5,868,593 4,436,836` 10,657,329 7,074,690 5,600,599 11,529,432 ======== ======== ======== Reinsurance share of insurance contract liabilities 324,269 325,512 7,468,681 -------------- ------------- ------------- Net insurance contract liabilities 6,750,421 5,275,087 4,060,751 ======== ======== ======== Current 1,206,097 1,163,763 872,103 Non current 5,868,593 4,436,836 10,657,329 7,074,690 5,600,599 11,529,432 ======== ======= ======== Life Non-life Company Company Company Dec.12 Dec.12 Dec.12 Dec.11 Jan.11 N’000 N’000 N’000 N’000 N’000 Unearned premium (note 14.1) - 604,712 604,712 429,297 541,966 Reported claims and loss adjustment expenses - 309,181 309,181 440,726 183,343 claims incurred but not reported - 292,204 292,204 293,740 146,794 Life fund 5,868,593 - 5,868,593 4,436,836 10,657,329 5,868,593 1,206,097 7,074,690 5,600,599 11,529,432 ======= ======= ======= ======= ======== Reinsurance share of insurance contract liabilities 17,398 306,871 324,269 325,512 7,468,681 ---------- ----------- ------------ ------------ ------------- Net insurance contract liabilities 5,851,195 899,226 6,750,421 5,275,087 4,060,751 ======= ======= ======= ======== ======= Current - 1,206,097 1,206,097 1,163,763 872,103 Non current 5,868,593 - 5,868,593 4,436,836 10,657,329 5,868,593 1,206,097 7,074,690 5,600,599 11,529,432 ======= ======== ======= ======= ======== - Page 65 -
  • 68. 14.1 Movement in unearned premium during the year Group Life Non-life Company N’000 N’000 N’000 N’000 As at 1 January, 2011 541,966 - 541,966 541,966 Premium written during the year 3,049,301 - 3,049,301 3,049,301 Premium earned during the year1 (3,161,970) - (3,161,970) (3,161,970) As at 31 December, 2011 429,297 - 429,297 429,297 ======== ====== ======= ======== As at 1 January, 2012 429,297 - 429,297 429,297 Premium written during the year 3,213,323 - 3,213,323 3,213,323 Premium earned during the year (3,037,908) - (3,037,908) (3,037,908) As at 31 December, 2012 604,712 - 604,712 604,712 ========= ======= ======== ======= The unearned premium represents the group‟s premium written on non-life insurance business that has not expired as at year end Group Life Non-life Company N’000 N’000 N’000 N’000 14.2 Movement in outstanding claim during the year As at 1 January, 2011 330,137 - 330,137 330,137 Reported/incurred claims during the year 767,006 - 767,006 767,006 Claims paid during the year (note 1) (656,417) - (656,417) (656,417) 440,726 - 440,726 440,726 Claims incurred but not reported 293,740 - 293,740 293,740 As at 31 December, 2011 734,466 - 734,466 734,466 ======= ====== ====== ====== As at 1 January, 2012 734,466 - 734,466 734,466 Reported/incurred claims during the year 847,037 - 847,037 847,037 Claims paid during the year (note 1) (1,272,322) - (1,272,322) (1,272,322) 309,181 - 309,181 309,181 Claims incurred but not reported 292,204 - 292,204 292,204 As at 31 December, 2012 601,385 - 601,385 601,385 ======= ====== ======= ====== - Page 66 -
  • 69. 14.3 The analysis of insurance contract liability by policy is as follows: a) Non-life Incurred but Reported Unearned Not reported claims premium Total N’000 N’000 N’000 N’000 As at 1 January, 2011 Fire 8,594 34,637 49,319 92,550 Accident 126,746 19,015 27,909 173,670 Motor vehicle 1,870 48,824 209,748 260,442 Marine and aviation 990 12,683 80,051 93,724 General accident 8,594 68,184 174,939 251,717 146,794 183,343 541,966 872,103 ====== ====== ====== ======= As at 31 December, 2011 Fire 46,660 17,422 34,645 98,727 Accident 26,070 181,347 16,777 224,194 Motor vehicles 81,530 54,277 205,959 341,766 Marine and aviation 26,330 6,706 39,949 72,985 General accident 113,150 180,974 131,967 426,091 293,740 440,726 429,297 1,163,763 ====== ====== ====== ====== As at 31 December, 2012 Fire 29,912 15,798 54,306 100,016 Accident 11,548 27,557 24,553 63,658 Motor vehicle 8,935 85,786 288,052 382,773 Marine and aviation 33,939 28,655 53,243 115,837 General accident 207,870 151,385 184,558 543,813 292,204 309,181 604,712 1,206,097 ======= ====== ====== ======= - Page 67 -
  • 70. The outstanding claims for non-life business represent reported cases that are yet to be settled as at year end and an amount determined by the actuarial valuer as incurred but not reported (IBNR) claims to ensure the group has carried adequate liability for its exposure to insurance risk. b) Life Dec.12 Dec. 11 Jan.11 N’000 N’000 N’000 Individual life 5,797,184 4,341,190 3,181,756 Group life 71,409 95,646 7,475,573 5,868,593 4,436,836 10,657,329 ======== ======== ======== 14.4 The company‟s insurance contract liabilities for both life and non-life businesses were established at the end of the year by Messrs. TAF Consulting Nigeria Limited with FRC number FRC/2013/NAS/00000002723. All necessary adjustments have been passed in line with the recommendation of the National Insurance Commission (NAICOM), and the provisions of the relevant International Standards. 15. Investment contract liabilities –life business Movement during the year Company Company Company Dec.12 Dec.11 Jan.11 N’000 N’000 N’000 As at 1 January 5,817,050 7,793,315 7,121,060 Deposit during the year 7,073,614 6,274,281 7,611,266 12,890,664 14,067,596 14,732,326 Withdrawer during the year (8,044,414) (8,250,546) (6,939,011) As at 31 December 4,846,250 5,817,050 7,793,315 ======== ======== ======== This is analysed as follows: Deposit administration 4,010,795 5,250,496 7,519,108 -------------- ------------- ------------- Guaranteed interest At beginning 566,554 274,207 257,026 For the year: Guaranteed 357,944 383,672 93,989 Less: Payment (89,043) (91,325) (76,808) 835,455 566,554 274,207 ------------ ------------ ------------ As at 31 December 4,846,250 5,817,050 7,793,315 ======== ======== ======== Current 4,846,250 5,817,050 7,793,315 Non current - - - ======== ======= ======= - Page 68 -
  • 71. 16. Borrowings – life insurance Group Group Group Company Company Company Dec.2012 Dec.2011 Jan.2011 Dec.2012 Dec.2011 Jan. 2011 N’000 N’000 N’000 N’000 N’000 N’000 Bank loan secured 1,351,209 2,279,641 2,569,916 1,351,209 2,279,641 2,569,916 Short term borrowing - 17,940 - - - - 1,351,209 2,297,581 2,569,916 1,351,209 2,279,641 2,569,916 ======= ======= ======= ====== ======= ======== Current 928,432 946,372 272,335 928,432 928,432 290,275 Non current 422,777 1,351,209 2,297,581 422,777 1,351,209 2,279,641 1,351,209 2,297,581 2,569,916 1,351,209 2,279,641 2,569,916 ======= ======= ======= ====== ======= ======== The bank loan which was initially obtained from Afribank Plc (now Mainstreet Bank) to finance acquisition of additional investment was secured by quoted shares of the company. The loan was bought over in 2011 by Asset Management Company of Nigeria (AMCON) and subsequently restructured. Group Group Group 17. Trade payables Dec.12 Dec.11 Jan.11 N’000 N’000 N’000 As at 1 January, 2011 159,054 93,301 86,574 Deferred rental income 20,940 66,644 300,482 Payable to vendors 179,994 159,945 387,056 ====== ====== ====== Life Non-lifeCompany Company Company Dec.12 Dec.12 `Dec.12 Dec.11 Jan.11 N’000 N’000 N’000 N’000 N’000 Deferred rental income 55,513 - 55,513 - - Payable to vendors 20,940 - 20,940 66,644 300,482 76,453 - 76,453 66,644 300,482 ===== ===== ===== ===== ======= 18 Provision and other payables Group Group Group Dec.2012 Dec.2011 Jan.2011 N’000 N’000 N’000 Accrued expenses 111,429 83,070 218,531 Information Technology Dev. Levy (18.2) 35,786 26,372 12,185 Pension fund (18.1) 37,646 45,786 43,698 Industrial training fund 25,899 - - 210,760 155,228 274,414 ====== ====== ====== Life Non-life Company Company Company Dec.12 Dec.12 Dec.12 Dec.11 Jan.11 N’000 N’000 N’000 N’000 N’000 Accrued expenses 68,109 7,699 75,808 70,287 205,746 Pension fund (18.1) 33,654 3,992 37,646 45,786 43,698 Information Technology Dev. Levy (18.2) 20,243 15,543 35,786 26,372 12,185 Industrial training fund 12,956 12,943 25,899 - - 134,962 40,177 175,139 142,445 261,629 ====== ====== ====== ====== ======= - Page 69 -
  • 72. 18.1 Pension fund Life Non-life Company Company Dec.12 Dec.12 Dec.12 Dec.11 N’000 N’000 N’000 N’000 As at 1 January 35,187 10,599 45,786 43,698 Contribution during the year: - Employees 19,272 8,032 27,304 21,766 - Employer 19,272 8,032 27,304 21,766 73,731 26,663 100,394 87,230 Remittance during the year (40,077) (22,671) (62,748) (41,444) As at 31 December 33,654 3,992 37,646 45,786 ======= ====== ====== ======= 18.2 Information Technology Development Levy As at 1 January 10,885 15,487 26,372 12,185 Charge for the year 9,358 56 9,414 14,187 As at 31 December 20,243 15,543 35,786 26,372 ====== ====== ====== ====== The Nigerian Information Technology Development Agency (NITDA) Act was signed into law on 24 April, 2007, section 12(2a) of the Act stipulates that specified companies contribute 1% of their profit before tax to the Nigerian Information Technology Development Agency. In line with the Act, the company and group have provided for NITDA levy at the specified rate. 19 Income tax expense Group Group For the year ended 31 December Dec.12 Dec.11 N’000 N’000 Company income tax expense (19.1) 84,381 156,543 Deferred tax charge/(received) (19.2) (166,589) 25,831 (82,208) 182,374 ======= ======= Life Non-life Company Company Dec.12 Dec.12 Dec.12 Dec.11 N’000 N’000 N’000 N’000 Company income tax expense (note 19.1) 48,097 35,464 83,561 156,061 Deferred tax charge/(received (note 19.2) (17,241) 327,484 310,243 23,831 Deferred tax assets (note 9) (616,832) - (616,832) - (585,976) 362,948 (223,028) 179,892 ======= ====== ======= ====== - Page 70 -
  • 73. 19.1 Company income tax expense Group Life Non-life Company For the year ended 31 December, 2011 N’000 N’000 N’000 N’000 Company tax 153,023 102,988 49,553 152,541 Education tax 3,520 3,520 - 3,520 156,543 106,508 49,553 156,061 ---------- ---------- ---------- ----------- Deferred tax Deferred tax charge on fair value gain on investment properties 15,520 15,520 - 15,520 Deferred tax release on others 10,311 (14,781) 23,092 8,311 25,831 739 23,092 23,831 ---------- ----------- ---------- ----------- Charged to operating income 182,374 107,247 72,645 179,892 ====== ====== ====== ====== For the year ended 31 December, 2012 Company income tax 70,480 48,097 21,563 69,660 Education tax 13,901 - 13,901 13,901 84,381 48,097 35,464 83,561 ---------- --------- --------- ---------- Deferred tax Liabilities Deferred tax charge on fair value gain on investment properties 452,236 (15,520) 326,756 311,236 Deferred tax release on others (1,993) (1,721) 728 (993) 450,243 (17,241) 327,484 310,243 Asset Recognised during the year (616,832) (616,832) - (616,832) (166,589) (634,073) 327,484 (306,589) ------------ ------------ ----------- ------------- Charged to operating income (82,208) (585,976) 362,948 (223,028) ======= ======= ======= ======== Company income tax provision has been made in accordance with the Company Income Tax act as modified to date. 19.2 Financial position Group Life Non-life Company N’000 N’000 N’000 N’000 Income taxes payable As at 1 January, 2011 470,256 (73,443) 519,473 446,030 Provision for the period 156,543 106,508 49,553 156,061 626,799 33,065 569,026 602,091 Payment for the period (234,503) (14,663) (219,542) (234,205) As at 31 December, 2011 392,296 18,402 394,484 367,886 ======= ====== ====== ======= At the beginning 392,296 18,402 349,484 367,886 Provision for the period 84,381 48,097 35,464 83,561 476,677 66,499 384,948 451,447 Payment for the period (159,125) (39,864) (101,191) (141,055) As at 31 December, 2012 317,552 26,635 283,757 310,392 ======= ====== ======= ======= - Page 71 -
  • 74. 19.3 The company income tax expense for the year ended 31 December, 2012 can be reconciled to the accounting profit as follows: Group Life Non-life Company N’000 N’000 N’000 N’000 Profit before tax from continuing operation 816,889 (299,366) 669,317 369,951 ====== ======== ======= ======= Expected tax based on statutory tax rate of 32% 214,182 - 214,182 214,182 Effect of capital allowance on taxable profit (19,800) - (19,800) (19,800) Franked investment income (927) - (927) (927) Disallowed management expense 323,505 - 275,464 275,464 Allowed income (480,676) - (433,455) (433,455) Minimum tax 48,097 48,097 - 48,097 Income tax expense recognised in the income statement 84,381 48,097 35,464 83,561 ======== ======= ======= ======= 19.4 Deferred taxation Group Life Non-life Company N’000 N’000 N’000 N’000 As at 1 January, 2011 254,432 232,172 17,260 249,432 Charge to income statement (note 19.1) 25,831 739 23,092 23,831 Charge to comprehensive income (note 34) 33,860 14,847 19,013 33,860 As at 31 December, 2011 314,123 247,758 59,365 307,123 ====== ====== ====== ======= As at 1 January, 2012 314,123 247,758 59,365 307,123 Charge to income statement (note 19.1) 450,243 (17,241) 327,483 310,242 Charge to comprehensive income (note 34) 194,016 110,446 83,570 194,016 As at 31 December, 2012 958,382 340,963 470,418 811,381 ====== ====== ====== ======= 20.1 Ordinary share capital Authorised 8,600,000,000 (2011: December, 8,600,000,000, January – 6,000,000,000) ordinary shares of 50kobo each. Issued and fully paid 4,300,000 2,000,000 2,300,000 4,300,000 ======= ======= ======= ======== As at 31 December, 2011 5,736,598,470 (2010 – 5,215,089,518 ordinary shares of 50k each As at 1 January, 2011 2,607,545 1,057,241 1,550,304 2,607,545 Right issue 260,762 105,724 155,038 260,762 2,868,307 1,162,965 1,705,342 2,868,307 ======= ======= ======= ======== As at 31 December, 2012 7,739,495,702 (2011-5,736,598,470) ordinary shares of 50k each As at 1 January, 2012 2,868,307 1,162,965 1,705,342 2,868,307 Right issue 1,001,440 49,687 951,753 1,001,440 3,869,747 1,212,652 2,657,095 3,869,747 ======= ======== ======= ======== 20.2During the year, the company‟s issued and fully paid capital was increased by a Right Offer of 2,677,079,286 ordinary shares of 50k each at 50kobo per share and out of which 75% (2,002,288,000) was subscribed for. - Page 72 -
  • 75. Group Life Non-life Company 21. Share premium N’000 N’000 N’000 N’000 As at 1 January, 2011 1,166,784 554,819 611,965 1,166,784 Bonus issue (260,762) (105,724) (155,038) (260,762) Share capital increase expenses (88,250) (60,424) (27,826) (88,250) As at 31 December, 2011 817,772 388,671 429,101 817,772 ======= ======= ====== ======= 1 January, 2012 817,772 388,671 429,101 817,772 Share capital increase expenses (26,281) (19,583) (6,698) (26,281) As at 31 December, 2012 791,491 369,088 422,403 791,491 ======= ======= ======= ======= 22. Contingency reserve As at 1 January, 2011 810,912 177,808 633,104 810,912 Transfer from related earnings 243,476 151,997 91,479 243,476 As at 31 December, 2011 1,054,388 329,805 724,583 1,054,388 ======== ====== ======= ======== As at 1 January, 2012 1,054,388 329,805 724,583 1,054,388 Transfer from retained earnings 167,571 71,171 96,400 167,571 As at 31 December, 2012 1,221,959 400,976 820,983 1,221,959 ======= ====== ====== ======== Transfer to the contingency reserve during the year is in line with the provisions of sections 21(2) and 22(b) of the Insurance Act, 2003 as amended. 23 Assets revaluation reserves As at 1 January, 2011 319,282 113,474 205,808 319,282 Revaluation gain on property, plant & Equipment net of tax 47,523 19,194 28,329 47,523 As at 31 December, 2011 366,805 132,668 234,137 366,805 ====== ====== ====== ======= As at 1 January, 2012 366,805 132,668 234,137 366,805 Revaluation gain on property, plant & equipment net of tax 342,370 178,079 164,291 342,370 709,175 310,747 398,428 709,175 ====== ====== ====== ====== Messrs. Tokun & Associates Estate Surveyors, Valuers and Property Managers (FRC/2013/0000000001353) valued the Group‟s Property, Plant as well as the investment properties as at year end. All necessary adjustments have been recognised in the financial statements in line with the relevant international standards. - Page 73 -
  • 76. Group Life Non-life Company N’000 N’000 N’000 N’000 24. Fair value reserves As at 1 January, 2011 - - - - Fair value gain on available for sale net of tax 24,430 12,356 12,074 24,430 As at 31 December, 2011 24,430 12,356 12,074 24,430 ====== ===== ===== ===== As at 1 January, 2012 24,430 12,356 12,074 24,430 Fair value gain on available for sale net of tax 175,726 103,016 72,710 175,726 As at 31 December, 2012 200,156 115,372 84,784 200,156 ====== ====== ====== ====== 25. Retained earnings As at 1 January, 2011 (1,959,657) (217,878) (1,710,429) (1,928,307) Transfer from income statement 2,295,554 1,350,409 956,623 2,307,032 Transfer to contingency reserve (243,476) (151,997) (91,479) (243,476) Reclassification - 510,000 (510,000) - As at 31 December, 2011 92,421 1,490,534 (1,355,285) 135,249 ======== ======= ======== ======= As at 1 January, 2012 92,421 1,490,534 (1,355,285) 135,249 Transfer from income statement 776,293 277,252 306,316 470,175 Transfer to contingency reserve (167,571) (71,171) (96,400) (167,571) Dividend paid (143,415) (71,540) (71,875) (143,415) 557,728 1,625,075 (1,217,244) 294,438 ======= ======== ========= ======== Group Life Non-life Company N’000 N’000 N’000 N’000 26. Gross premium written For the year ended 31 December, 2011 Gross premium written during the year 7,809,878 4,760,577 3,049,301 7,809,878 (Increase)/decrease in unearned premium (911,708) (1,024,387) 112,679 (911,708) 6,898,170 3,736,190 3,161,980 6,898,170 ======= ======= ======= ======= For the year ended 31 December, 2012 Gross premium written during the year 10,330,471 7,117,150 3,213,321 10,330,471 (Increase)/decrease in unearned premium (1,624,570) (1,449,155) (175,415) (1,624,570) 8,705,901 5,667,995 3,037,906 8,705,901 ======== ======== ======== ======= 26.1 Analysis of gross premium by policies Company Company Dec.12 Dec.11 N’000 N’000 a) Non-life business Motor vehicle 818,166 990,213 Fire 263,368 261,600 Marine and aviation 254,295 344,633 General Accident 1,877,492 1,452,855 3,213,321 3,049,301 ======= ======= - Page 74 -
  • 77. Company Company Dec.12 Dec.11 N’000 N’000 b) Life business Individual 3,205,190 1,443,925 Co Insurance - 169,283 Group 3,911,960 3,147,369 7,117,150 4,760,577 ======== ======== Group Life Non-life Company N’000 N’000 N’000 N’000 26.2 Unearned premium Unearned premium (112,669) - (112,669) (112,669) Change in life fund (6,220,493) (6,220,493) - (6,220,493) Change in reinsurance assets 7,254,805 7,254,806 - 7,254,805 Reinsurance change (9,935) 9,935 - (9,935) 911,708 1,024,377 (112,669) 911,708 ======== ========= ======== ======= Life Non-life Company Dec.12 Dec.12 Dec.12 Dec.11 N’000 N’000 N’000 N’000 Increase in unearned premium 175,415 - 175,415 175,415 Increase in life insurance contract liability 1,545,150 1,431,757 113,393 1,545,150 Reinsurance change 17,398 17,398 - 17,398 1,737,963 1,449,155 288,808 1,737,963 ======= ======== ======= ======== 27. Analysis of reinsurance expense by policies Life Non-life Company Company Dec.12 Dec.12 Dec.12 Dec.11 N’000 N’000 N’000 N’000 Life reinsurance cost 205,398 - 205,398 146,939 Motor vehicle - 692 692 2,557 Fire - 73,167 73,167 27,635 Marine and aviation - 45,224 45,224 38,383 General Accident - 249,462 249,462 36,381 205,398 368,545 573,943 251,895 ======= ====== ======= ====== Group Dec.12 Dec.11 N’000 N’000 28. Fee and commission income Reinsurance commission received 56,814 32,309 Management fee on deposit administration 586,019 1,476,633 642,833 1,508,942 ====== ======== - Page 75 -
  • 78. Life Non-life Company Company Dec.12 Dec.12 Dec.12 Dec.11 N’000 N’000 N’000 N’000 Reinsurance commission received 18,540 38,274 56,814 32,309 Management fee on deposit administration 586,019 - 586,019 1,476,633 604,559 38,274 642,833 1,508,942 ====== ====== ====== ======= Group Group Company Company Dec.12 Dec.11 Dec.12 Dec.11 29. Net claim expenses N’000 N’000 N’000 N’000 29.1 Claim expenses Life insurance contract 1,864,768 898,983 1,864,768 898,983 Non-life insurance contract 583,401 656,416 583,401 656,416 2,448,169 1,555,399 2,448,169 1,555,399 ======== ======= ======== ======== 29.2 Changes in insurance contract liability Non-life insurance contract: Change in outstanding claim provision 309,181 121,433 309,181 121,433 Incurred but no reported claim provision 140,860 282,896 140,860 282,896 450,041 404,329 450,041 404,329 ====== ====== ======= ====== 29.3 Claim expenses recovered from reinsurers Non-life insurance contract 61,622 141,374 61,622 141,374 Life insurance contract 17,398 9,935 17,398 9,935 79,020 151,309 79,020 151,309 ======= ======= ======= ====== Net claim expenses 2,819,190 1,808,419 2,819,190 1,808,419 ======= ======== ======== ======== 30. Underwriting expenses Group Group Dec.12 Dec.11 N’000 N’000 Acquisition cost 1,587,555 889,267 Maintenance cost 766,428 602,413 2,353,983 1,491,680 ======== ======== Life Non-life Company Company Dec.12 Dec.11 Dec.12 Dec.11 N’000 N’000 N’000 N’000 Acquisition cost 1,265,057 322,497 1,587,554 889,267 Maintenance cost 654,422 112,006 766,428 602,413 1,919,479 434,503 2,353,982 1,491,680 ======= ======= ======== ======== - Page 76 -
  • 79. Group Group Dec.12 Dec.11 N’000 N’000 31. Investment income Investment income attributable to policyholders‟ fund (31.1) 103,291 124,890 Investment income attributable to shareholders‟ funds (31.2) 117,958 191,846 221,249 316,736 ======= ======= Life Non-life Company Company Dec.12 Dec.12 Dec.12 Dec.11 N’000 N’000 N’000 N’000 Investment income attributable to policyholders‟ fund (31.1) 80,941 22,350 103,291 124,890 Investment income attributable to shareholders‟ fund (31.2) 70,475 33,525 104,000 187,334 151,416 55,875 207,291 312,224 ====== ====== ====== ======= 31.1 Investment income to policyholders fund Cash and cash equivalent interest income 2,118 910 3,028 10,500 Renal income 23,958 20,484 44,442 43,090 Available for sale dividend income 20,907 956 21,863 13,647 Profit on deposit administration (31.3) 33,958 - 33,958 57,653 80,941 22,350 103,291 124,890 ====== ====== ======= ======= 31.2 Investment income attributable to shareholders’ fund Cash and cash equivalent interest income 21,645 7,529 29,174 59,814 Rental income 32,468 25,810 58,278 67,010 Available for sale dividend income 16,362 186 16,548 60,510 70,475 33,525 104,000 187,334 ===== ====== ======= ====== 31.3 Deposit administration –life business Group Group Company Company Dec.12 Dec.11 Dec.12 Dec.11 N’000 N’000 N’000 N’000 Interest income 302,859 350,000 302,859 350,000 Guaranteed interest (268,901) (292,347) (268,901) (292,347) Net investment income 33,958 57,653 33,958 57,653 ======= ======= ======= ======== - Page 77 -
  • 80. 32. Net fair value gains/(loss) on investment property N’000 N’000 N’000 N’000 For the year ended 31 December, 2011 Fair value gain on investment property (note 8) 48,500 48,500 - 48,500 ===== ====== ======= ====== For the year ended 31 December, 2012 Fair value gain on investment property (note 8) 1,154,015 (317,999) 1,021,111 703,112 ======= ======= ======= ====== 33. Other operating income Group Group Dec.12 Dec.11 N’000 N’000 Profit on disposal of property, plant and equipment 788 2,925 Rental income 129,332 71,925 Write back of impairment on trade receivable - 741,680 130,120 816,530 ======= ======== Life Non-life Company Company Dec.12 Dec.12 Dec.12 Dec.11 N’000 N’000 N’000 N’000 For the year ended 31 December, 2012 Write back of impairment on trade receivable (3.1) - - - 741,680 Rental income 64,184 - 64,184 35,627 Profit on disposal of Property, Plant and Equipment - 788 788 2,925 64,184 788 64,972 747,035 ======= ====== ======== ======== Group Group Dec.12 Dec.11 N’000 N’000 34. Management expenses Directors‟ emoluments 54,065 49,724 Employees benefits expenses (34.2) 1,691,758 1,425,713 Auditors‟ remuneration 14,115 13,643 Finance charges 155,010 51,229 Other expenses 1,375,196 1,232,695 3,290,144 2,773,004 ======= ======== Life Non-life Company Company Dec.12 Dec.12 Dec.12 Dec.11 N’000 N’000 N’000 N’000 Directors‟ emoluments 38,160 15,905 54,065 49,721 Employees benefit expenses (34.2) 1,139,700 864,850 1,646,609 1,425,709 Auditors remuneration 6,000 6,000 12,000 13,643 Finance charges 140,408 14,602 155,010 51,226 Other expenses 903,421 81,260 1,342,622 1,152,808 2,227,689 982,617 3,210,306 2,693,107 ======== ======= ======== ======== - Page 78 -
  • 81. 34.1 Directors and employee Chairman’s and Directors’ emoluments pensions and compensation for loss of office Group Group Company Company Dec.2012 Dec.2011 Dec.2012 Dec.2011 N’000 N’000 N’000 N’000 a) Chairman’s emoluments Fees 29,277 27,561 29,277 27,561 ====== ====== ====== ====== b) The highest paid director The emolument of the director (executive) 9,688 8,165 9,688 8,165 ====== ====== ====== ======= c) The number of directors excluding the chairman whose emoluments were within the following ranges were: - Number Number Number Number N850,001 - N3,600,000 4 4 4 4 N3,600,001 - and above 3 2 3 2 ====== ====== ====== ===== d) Compensation to key management personnel Key management personnel of the company includes all directors (executive/non-executive) and senior management. The summary of compensation of key management personnel for the year is as follows:- Group Group Company Company Dec.12 Dec.11 Dec.12 Dec.11 N’000 N’000 N’000 N’000 Salaries 86,297 - 86,297 - Sitting allowance 16,856 - 16,856 - Fees 9,277 - 9,277 - Executive compensation - - - - Other short-term employment Benefits 22,933 - 22,933 - Post employment pension benefits 9,560 - 9,560 - 144,923 - 144,923 - ======= ====== ======= ======= - Page 79 -
  • 82. 34.2 Staff number and costs a) The average number of persons employed during the period was as follows:- Group Group Company Company Dec.12 Dec.11 Dec12 Dec.11 Number Number Number Number Senior 315 315 304 305 Junior staff 101 113 89 96 416 428 393 401 ===== ===== ==== ===== b) The related staff costs for both life and non-life accounts amounted to: Group Group Company Company Dec.2012 Dec.2011 Dec.2012 Dec.2011 N’000 N’000 N’000 N’000 Wages and salaries 1,205,597 1,160,849 1,161,986 1,160,845 Staff training 74,481 70,489 74,481 70,489 Staff retirement benefit 219,254 - 219,254 - Staff welfare and Medical expenses 163,584 167,823 163,584 167,823 Pension fund charge 28,842 26,552 27,304 26,552 1,691,758 1,425,713 1,646,609 1,425,709 ======== ======= ======== ======== c) Employees remunerated at higher rates and staff costs The number of employees in receipt of emoluments excluding allowances and pensions within the following ranges were:- Group Group Company Company Dec.2012 Dec.2011 Dec.2012 Dec.2011 Number Number Number Number N401,000 - N1,000,000 - 4 - - N1,000,001 - N1,200,000 70 72 68 70 N1,200,001 - N1,400,000 24 28 21 25 N1,400,0001 and above 322 324 304 306 416 428 393 401 ==== ==== ==== ===== - Page 80 -
  • 83. Group Group Dec.12 Dec.11 N’000 N’000 35. Impairment loss on investment Impairment on available for sale financial asset 51,318 432,925 Impairment on cash and cash equivalent 163,000 170,500 214,318 603,425 ====== ====== Life Non-life Company Company Dec.12 Dec.12 Dec.12 Dec.11 N’000 N’000 N’000 N’000 Impairment on available for sale assets 8,604 42,714 51,318 432,925 Impairment on cash and cash equivalent 131,239 31,761 163,000 170,500 139,843 74,475 214,318 603,425 ====== ===== ====== ====== Group Group Dec.12 Dec.11 N’000 N’000 36. Depreciation and amortisation Depreciation of property, plant and equipment 128,870 146,698 Amortisation of intangible assets 51,623 21,642 175,495 168,340 ====== ====== Life Non-life Company Company Dec.12 Dec.12 Dec.12 Dec.11 N’000 N’000 N’000 N’000 Depreciation of property, plant and equipment 78,288 42,385 120,673 143,592 Amortisation of intangible assets 51,623 - 51,623 21,642 129,911 42,385 172,296 165,234 ====== ====== ====== ====== 37. Profit on ordinary activities before taxation is stated After charging: Group Group Company Company Dec.12 Dec,12 Dec.12 Dec.11 N’000 N’000 N’000 N’000 Depreciation and amortisation 175,492 168,340 172,296 165,234 Auditor‟s remuneration 14,115 13,643 12,000 12,000 Directors remuneration 54,065 49,724 54,066 49,721 ====== ====== ======= ====== and crediting Investment income 221,249 316,736 207,293 312,224 Profit on sale of properties, plant and equipment 788 2,925 788 2,925 ====== ====== ====== ====== - Page 81 -
  • 84. 38. Other comprehensive income Gross Taxation Net gain Net gain gain (deferred) company group N’000 N’000 N’000 N’000 For the year ended 31 December, 2011 Gain on revaluation of property, plant and equipment 69,887 (22,364) 47,523 47,523 Fair value gain on available for sale financial assets 35,926 (11,496) 24,430 24,430 105,813 (33,860) 71,953 71,953 ====== ======= ====== ======= For the year ended 31 December, 2012 Gain on revaluation of property, plant and equipment 470,598 (128,228) 342,370 342,370 Fair value gain in available for sale financial assets 241,515 (65,789) 175,726 175,726 712,113 (194,017) 518,096 518,096 ======= ======== ======= ======= 39. Related parties transactions The company enters into transactions with its subsidiaries and other key management personnel in the normal course of business. The earnings and payments in relation to these related parties transactions which were made at arms length are as follows: - Life Non-life Company N’000 N’000 N’000 During the year ended 31, December, 2012 Earnings Chrome Oil Services Limited 4,845 - 4,845 ======== ===== ====== Payments for services NIC Properties Limited 10,949 - 10,949 NIC Securities Limited 5,678 - 5,678 Chrome Oil Services Limited 969 - 969 ====== ===== ====== 31 December, 2012 Earnings Chrome Oil Services Limited 4,126 - 4,126 ======= ===== ====== Payments for services NIC Properties Limited 4,806 - 4,806 NIC Securities Limited 10,382 - 10,382 Chrome Oil Services Limited 825 - 825 ====== ===== ====== - Page 82 -
  • 85. 39.1 Receivables from and payable to related parties are as follows: - Company Company Company Dec.12 Dec.11 Jan.11 N’000 N’000 N’000 NIC Properties Limited - - 85,763 ======== ======= ======== 39.2 The key management staff balance represent the outstanding loan given to them. The company offers the possibility for senior management to receive loans with a maximum repayable period of 10 years from the date of disbursement. Such loans are secured and the same interest rate as long term company loans is applicable. Detailed as follows: Types of loan Tenor Interest Outstanding balances rate 2012 2011 % N’000 N’000 Share loan 18 months 6 89,075 87,964 Mortgage loan 10 years 6 51,934 48,929 ===== ====== 35.3 Payable to key management staff 2012 2011 N’000 N’000 Severance benefit 9,560 43,683 ====== ====== Outstanding loans receivable balances as at the reporting dates were unsecured but there was no allowance for impairment at the reporting dates, because in the directors opinion, no impairment is required for these staff who are still in the company‟s employment. 36. Penalty and fines The company paid a total of N1.6 million for failure to observe certain guideline of NAICOM.. 37. Explanation of transition to IFRS These are the company‟s first financial statements prepared in accordance with IFRS. The accounting policies set out on pages 16 to 48 have been applied in preparing the financial statements for the year ended 31 December, 2012, the comparative information presented in these financial statements for the year ended 31 December, 2011 and in the preparation of the opening IFRS financial position at 1 January, 2011 (the company‟s date of transition). In preparing its opening IFRS statement of financial position, the company has adjusted amounts reported previously in the financial statements prepared in accordance with Nigerian GAAP. An explanation of how the transition from previous Nigerian GAAP to IFRS have affected the company‟s financial position, financial performance and cash flow is set out in the following tables and the notes that accompany the tables. The tables are 6, namely: i) Group comparative statement of financial position as at 31 December, 2011 ii) Company comparative statement of financial position as at 31 December, 2011 iii) Group comparative statement of profit and loss and other comprehensive income for the year ended 31 December, 2011 iv) Company comparative statement of profit and loss and other comprehensive income for the year ended 31 December, 2011 v) Group comparative statement of financial position as at 1 January, 2011 - Page 83 -
  • 86. vi) Company comparative statement of financial position as at 1 January, 2011 Each of the table has six (6) column as follows: i) Notes –these are numbers for notes explaining the make up of each item of IFRS balances that we now have. ii) Description- this column consist of all line items, those that we had under NGAAP and those we now have under IFRS. iii) Reference- these are alphabet attached to each item that existed under NGAAP, the alphabet are also used in cross referencing IFRS balances to their NGAAP source. This is given in details in their respective note. iv) NGAAP – these are exact balances and account description that existed under NGAAP published accounts. v) Effect of transition to IFRS – this explain the IFRS effect on NGAAP balances either as (a) Reclassification - these are adjustment by moving a balance from a particular head under NGAAP to another head under IFRS. b) Re-measurement - these are adjustment that resulted in a different figure from what we have under NGAAP as a result of; recognition, derecognition, (fair value/revaluation) measurement, error/commission etc that are necessitated by IFRS. vi) IFRS – this column represents the new balances as well as account description that now exist under IFRS. - Page 84 -
  • 87. GROUP COMPARATIVE STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER, 2011 Effect to transition to IFRS NGAAP Reclassification Re-measurement IFRS N’000 N’000 N’000 N’000 Note Assets Reference Cash and bank balances a 1,725,928 (1,725,928) - - 1. Cash and cash equivalents a,b - 1,823,544 - 1,823,544 Short term investments b 472,408 (472,408) - - Financial assets; 2. Available for sale b,g - 2,523,370 (809,521) 1,713,849 3. Held-to maturity f - 100,000 - 100,000 4. Loans and receivables c,d - 1,435,276 (522,537) 912,739 Debtors c 1,901,113 (1,901,113) - - 5. Trade receivables c - 197,449 (197,449) - 6. Reinsurance assets f - 178,561 146,951 325,512 7. Other receivables and prepayment u,c - 357,506 - 357,506 Loans to policy holders d 267,679 (267,679) - - 8. Deferred acquisition costs e 203,621 - - 203,621 Government bond f 100,000 (100,000) - - Long term investment g 2,148,578 (2,148,578) - - 9. Investment in subsidiaries - - - - 10. Investment properties h 12,768,598 - 130,394 12,898,992 Fixed assets i 1,114,084 (1,114,084) - - 11. Intangible assets i - 44,057 - 44,057 12. Property, plant & equipment i - 1,070,027 11,098 1,081,125 13. Statutory deposit j 500,000 - - 500,000 21,202,009 - (1,241,064) 19,960,945 ========= ======== ======== ========= Liabilities Creditors and accruals k 2,612,754 (2,612,754) - - Insurance fund l 6,735,740 (6,735,740) - - 14. Insurance contract liabilities l - 6,735,740 (1,135,141) 5,600,599 Deposit administration m 5,817,050 (5,817,050) - - 15. Investment contract liabilities m - 5,817,050 - 5,817,050 16. Trade payables k - 159,945 - 159,945 17. Provision and other payables k - 155,228 - 155,228 18. Borrowings k - 2,297,581 - 2,297,581 Current taxation n 321,777 (321,777) - - 19 Income tax liabilities n - 321,777 70,519 392,296 Deferred taxation o 264,743 (264,743) - - 20. Deferred tax liabilities 0 - 264,743 49,380 314,123 15,752,064 - (1,015,242) 14,736,822 ========= ======== ========= ========= Capital and reserve (equity) Share capital p 2,868,307 (2,868,307) - - 21 Issued and paid share capital p - 2,868,307 - 2,868,307 22. Share premium q 817,772 - - 817,772 Capital reserve r 6,108,188 (6,108,188) - - 23. Assets revaluation reserve r - 378,071 (11,266) 366,805 24. Fair value reserves - 35,926 (11,496) 24,430 25. Contingency reserves s 1,000,968 - 53,420 1,054,388 General reserve t (5,345,290) 5,345,290 - - 26. Retained earnings r, t - 384,901 (256,480) 92,421 5,449,945 - (225,822) 5,224,123 -------------- -------------- -------------- --------------- Shareholders fund 21,202,009 - (1,241,064) 19,960,945 ========= ======== ======== ========= - Page 85 -
  • 88. COMPANY COMPARATIVE STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER, 2011 Effect to transition to IFRS NGAAP Reclassification Re-measurement IFRS N’000 N’000 N’000 N’000 Note Assets Reference Cash and bank balances a 1,716,316 (1,716,316) - - 1. Cash and cash equivalents a,b - 1,813,432 - 1,813,432 Short term investments b 285,869 (285,869) - - Financial assets 2. Available for sale b,g - 2,479,279 (809,521) 1,669,758 3. Held-to-maturity f - 100,000 - 100,000 4. Loans and receivables c, d - 1,435,276 (522,537) 912,739 Debtors c 1,815,662 (1,815,662) - - 5. Trade receivable c - 197,449 (197,449) - 6. Reinsurance assets c - 178,561 146,951 325,512 7. Other receivables and prepayment b, c - 272,055 - 272,055 Loans to policy holders d 267,679 (267,679) - - 8. Deferred acquisition costs e 203,621 - - 203,621 Government bond f| 100,000 (100,000) - - Longterm investment g 2,396,326 (2,396,326) - - 9. Investment in subsidiaries g - 105,800 - 105,800 Deferred tax assets 10. Investment properties h 12,754,282 - 130,394 12,884,676 Fixed assets i 1,049,648 (1,049,648) - - 11. Intangible assets i - 43,283 - 43,283 12. Property, plant & equipment i - 1,006,365 11,098 1,017,463 13. Statutory deposit j 500,000 - - 500,000 21,089,403 - (1,241,064) 19,848,339 ========= ======= ======== ========== Liabilities Creditors and accruals k 2,488,730 (2,488,730) - - Insurance fund l 6,735,740 (6,735,740) - - 14. Insurance contract liabilities l - 6,735,740 (1,135,141) 5,600,599 Deposit administration m 5,817,050 (5,817,050) - - 15. Investment contract liabilities m - 5,817,050 - 5,817,050 16. Trade payables k - 66,644 - 66,644 17. Provision and other payables k - 142,445 - 142,445 18. Borrowings k - 2,279,641 - 2,279,641 Current taxation n 301,113 (301,113) - - 19. Income tax liabilities n - 301,113 66,773 367,886 Deferred taxation o 257,743 (257,743) - - 20. Deferred tax liabilities o - 257,743 49,380 307,123 15,600,376 - (1,018,988) 14,581,388 ======== ======== ======== ========= Capital and reserve (equity) Share capital p 2,868,307 (2,868,307) - - 21. Issued and paid share capital p - 2,868,307 - 2,868,307 22. Share premium q 817,772 - - 817,772 Capital reserves r 6,108,188 (6,108,188) - - 23. Assets revaluation reserve r - 378,071 (11,266) 366,805 24. Fair value reserves - 35,926 (11,496) 24,430 25. Contingency reserve s 1,000,968 - 53,420 1,054,388 General reserve t (5,306,208) 5,306,208 - - 26. Retained earnings t,r - 387,983 (252,734) 135,249 5,489,027 - (222,076) 5,266,951 -------------- ------------ -------------- --------------- Shareholders fund 21,089,403 - (1,241,064) 19,848,339 ======== ======= ======== ========= Group comparative statement of profit and loss and other comprehensive income - Page 86 -
  • 89. NIGER INSURANCE PLC GROUP COMPARATIVE STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER, 2011 NON-LIFE LIFE DEPOSIT NGAAP Effect of transition to IFRS ref REVENUE REVENUE ADMIN TOTAL Reclassification Re-measurement IFRS N'000 N'000 N'000 N'000 N'000 N'000 N'000 i Gross premium written 3,049,301 4,760,577 7,809,878 7,809,878 ii Decrease/(increase) in unearned premium (77,219) - - (77,219) (1,143,050) 308,561 (911,708) Gross premium income 2,972,082 4,760,577 - 7,732,659 (1,143,050) 308,561 6,898,170 iii Reinsurance premium expenses (54,956) (196,939) - (251,895) - - (251,895) Net premium income 2,917,126 4,563,638 - 7,480,764 (1,143,050) 308,561 6,646,275 Commission received A 23,747 8,562 32,309 (32,309) - - Investment and other income B 121,288 121,288 (121,288) - - Interest income C 350,000 350,000 (350,000) - Management fee D 1,476,633 1,476,633 (1,476,633) - iv Fees and commission income (A,D) - - - - 1,508,942 - 1,508,942 Net underwriting income 2,940,873 4,693,488 1,826,633 9,460,994 (1,614,338) 308,561 8,155,217 - - Direct claims and surrender expenses E (656,416) (898,983) (1,555,399) 1,555,399 - v Gross benefit and claims paid (E) - (1,555,399) (1,555,399) Increase in outstanding claim provision F (121,433) (121,433) 121,433 - - vi Gross changes in outstanding claim reserve G - (121,433) (282,896) (404,329) Reinsurance recovery G 25,691 25,691 (25,691) vii Claim ceded to reinsurers (G) - - - - 25,691 125,618 151,309 Net benefit and claim (752,158) (898,983) - (1,651,141) - (157,278) (1,808,419) Guaranteed interest H (292,347) (292,347) 292,347 - Acquisition cost I (250,367) (638,900) (889,267) 889,267 - Maintenance cost J (395,863) (206,550) (602,413) 602,413 - Amortisation of staff retirement benefit K - (244,833) (244,833) 244,833 - Operating expenses L (1,526,191) (1,526,191) 1,526,191 - Provision for doubtful debt M (3,791) (3,791) 3,791 - Depreciation N (78,160) (78,160) 78,160 - Provision for investment losses O (416,622) (416,622) 416,622 - Transfer from profit and loss account P 463,592 463,592 (463,592) - Underwriting expenses (I,J) - - - - (1,491,680) - (1,491,680) Total underwriting expenses (1,398,388) (3,550,438) (292,347) (5,241,173) 1,853,519 87,555 (3,300,099) ------------- ----------- ------------ -------------- ------------- ---------- ------------ Underwriting profit 1,542,485 1,143,050 1,534,286 4,219,821 239,181 396,116 4,855,118 ------------- ======= ======= ------------- -------------- ------------ ----------- Transfer from profit and loss account O (463,592) (463,592) 463,592 - Income from fixed investment R 128,229 128,229 (128,229) - Interest receivable and other similar income S 169,922 169,922 (169,922) - Profit from deposit administration T 1,534,286 1,534,286 (1,534,286) - Provision for investment losses U (104,254) (104,254) 104,254 - viii Investment incomes (B,C,H,S) - 316,736 316,736 ix Fair value gain on investment properties - 48,500 48,500 x other operating income (S) - 160,356 656,174 816,530 xi Management expenses (I,M) (1,117,464) (1,117,464) (1,414,126) (241,414) (2,773,004) xii Depreciation and amortisation (N,V,L) - (168,340) (168,340) xiii Impairment loss on investment (O,U,L) - (603,425) (603,425) Depreciation V (56,873) (56,873) 56,873 - Provision for doubtful debt W (223,080) - - (223,080) - 223,080 - Profit on ordinary activities before tax 1,409,659 4,086,995 (2,677,336) 1,082,456 2,492,115 Information tech levy (14,187) (14,187) (14,187) Taxation X (156,543) (156,543) 156,543 - xiv Income taxes (X,Y) - (166,854) (15,520) (182,374) Deffered taxation Y (10,311) - - (10,311) 10,311 - - Profit on ordinary activities after tax 1,228,618 - - 3,905,954 (2,677,336) 1,066,936 2,295,554 Transfer to contigency reserve Z (190,056) - - (190,056) - 190,056 - 1,038,562 - - 3,715,898 (2,677,336) 1,256,992 2,295,554 ======== ======= ======= ======== ========= ======= ======= - Other comprehensive income net of tax 11 Gain on revaluation of Property, Plant and Equipment 47,523 47,523 24 Net fair value gain on available for sale financial assets. 24,430 24,430 Total comprehensive income for the year 1,328,945 2,367,507 ====== ======= Earning per share Basic profit for the year attributable to ordinary equity holders 40.02 ======== - Page 87 -
  • 90. NIGER INSURANCE PLC COMPANY COMPARATIVE STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER, 2011 NON-LIFE LIFE DEPOSIT NGAAP Effect of transition to IFRS ref REVENUE REVENUE ADMIN TOTAL Reclassification Re-measurement IFRS N'000 N'000 N'000 N'000 N'000 N'000 N'000 i Gross premium written 3,049,301 4,760,577 7,809,878 7,809,878 ii Decrease/(increase) in unearned premium (77,219) (77,219) (1,143,050) 308,561 (911,708) Gross premium income 2,972,082 4,760,577 - 7,732,659 (1,143,050) 308,561 6,898,170 iii Reinsurance premium expenses (54,956) (196,939) - (251,895) - - (251,895) Net premium income 2,917,126 4,563,638 - 7,480,764 (1,143,050) 308,561 6,646,275 Commission received A 23,747 8,562 32,309 (32,309) - - Investment and other income B 121,288 121,288 (121,288) - - Interest income C 350,000 350,000 (350,000) - - Management fee D 1,476,633 1,476,633 (1,476,633) - - iv Fees and commission income (A,D) - - - - 1,508,942 - 1,508,942 Net underwriting income 2,940,873 4,693,488 1,826,633 9,460,994 (1,614,338) 308,561 8,155,217 ------------------ ------------------ ----------------- ---------------- --------------------- ------------------ ----------------- Direct claims and surrender expenses F (656,416) (898,983) (1,555,399) 1,555,399 - - v Gross benefit and claims paid (E) - (1,555,399) - (1,555,399) Increase in outstanding claim provision F (121,433) (121,433) 121,433 - vi Gross changes in outstanding claim reserve G - (121,433) (282,896) (404,329) Reinsurance recovery G 25,691 25,691 (25,691) - vii Claim ceded to reinsurers (G) - - - - 25,691 125,618 151,309 Net benefit and claim H (752,158) (898,983) - (1,651,141) - (157,278) (1,808,419) Guaranteed interest J (292,347) (292,347) 292,347 - Acquisition cost K (250,367) (638,900) (889,267) 889,267 - Maintenance cost L (395,863) (206,550) (602,413) 602,413 - Amortisation of staff retirement benefit M - (244,833) (244,833) 244,833 - Operating expenses N (1,526,191) (1,526,191) 1,526,191 - Provision for doubtful debt O (3,791) (3,791) 3,791 - Depreciation P (78,160) (78,160) 78,160 - Provision for investment losses I (416,622) (416,622) 416,622 - Transfer from profit and loss account J 463,592 463,592 (463,592) - Underwriting expenses (I,J) - - - - (1,491,680) - (1,491,680) Total underwriting expenses (1,398,388) (3,550,438) (292,347) (5,241,173) 1,853,519 87,555 (3,300,099) --------------------- -------------------- ---------------- ------------------- ------------------ ----------------- ----------------- Underwriting profit 1,542,485 1,143,050 1,534,286 4,219,821 239,181 396,116 4,855,118 ------------------ ======== ======= ------------------- --------------- -------------- ----------------- Transfer from profit and loss account O (463,592) (463,592) 463,592 - Income from fixed investment R 123,717 123,717 (123,717) - Interest receivable and other similar income S 100,427 100,427 (100,427) - Profit from deposit administration T 1,534,286 1,534,286 (1,534,286) - Provision for investment losses U (104,254) (104,254) 104,254 - viii Investment incomes (B,C,HS) 312,224 312,224 ix Fair value gain on investment properties - 48,500 48,500 x other operating income (S) 90,861 656,174 747,035 xi Management expenses (L,M) (1,037,568) (1,037,568) (1,414,126) (241,412) (2,693,106) xii Depreciation and amortisation (N,V,L) (165,234) (165,234) xiii Impairment loss on investment (O,U,L) (603,425) (603,425) Depreciation V (53,767) (53,767) 53,767 - Provision for doubtful debt W (223,080) - - (223,080) - 223,080 - Profit on ordinary activities before tax 1,418,654 4,095,990 (2,677,336) 1,082,458 2,501,112 Information tech levy (14,187) (14,187) (14,187) Taxation N (156,061) (156,061) 156,061 - xiv Income taxes (X,Y) (164,372) (15,520) (179,892) Deferred taxation Y (8,311) - - (8,311) 8,311 - - Profit on ordinary activities after tax 1,240,095 - - 3,917,431 (2,677,336) 1,066,938 2,307,033 Transfer to contingency reserve Z (190,056) - - (190,056) - 190,056 - 1,050,039 - - 3,727,375 (2,677,336) 1,256,994 2,307,033 ========= ========= ======== ========== =========== ========= ========= Other comprehensive income net of tax 11 Gain on revaluation of Propety, Plant and Equipment 47,523 47,523 24 Net fair value gain on available for sale financial assets. 24,430 24,430 Total comprehensive income for the year 1,328,947 2,378,986 ======= ========= Earning per share Basic profit for the year attributable to ordinary equity holders 40.22 ======== - Page 88 -
  • 91. NIGER INSURANCE PLC GROUP COMPARATIVE STATEMENT OF FINANCIAL POSITION AS AT 1 JANUARY, 2011 Effect to transition to IFRS NGAAP Reclassification Re-measurement IFRS Note Reference N’000 N’000 N’000 N’000 Assets Cash and bank balances a 1,201,027 (1,201,027) - - 1. Cash and cash equivalents a,b - 1,425,291 (28,286) 1,397,005 Short term investments b 695,892 (695,892) - - Financial assets 2. Available for sale b,f - 2,829,798 (768,091) 2,061,707 3. Held to maturity - - - - 4. Loans and receivables c,d - 1,422,615 (607,482) 815,133 Debtors c 2,782,744 (2,782,744) - - 5. Trade receivables c - 853,623 (853,623) - 6. Reinsurance assets c - 202,478 7,266,203 7,468,681 7. Other receivables and prepayment f - 721,469 (410,080) 311,389 Loans to policy holders d 230,441 (230,441) - - 8. Deferred acquisition costs e 194,207 - - 194,207 9. Long term investment g 2,545,170 (2,545,170) - - 10. Investment properties h 12,185,448 - 302,012 12,487,460 Fixed assets i 1,013,586 (1,013,586) - - 11. Intangible assets i - 32,391 33,308 65,699 12. Property, plant & equipment - 981,195 (58,789) 922,406 13. Statutory deposit j 500,000 - - 500,000 21,348,515 - 4,875,172 26,223,687 ========= ======= ======== ========= Liabilities Creditors and accruals k 3,231,386 (3,231,386) - - Insurance fund l 5,394,038 (5,394,038) - - 14. Insurance contract liabilities - 5,394,038 6,135,394 11,529,432 Deposit administration m 7,793,315 (7,793,315) - - 15. Investment contract liabilities - 7,793,315 - 7,793,315 16. Trade payables k - 387,056 - 387,056 17. Provision and other payables k - 274,414 - 274,414 18. Borrowings k - 2,569,916 - 2,569,916 Current taxation m 399,737 (399,737) - - 19. Income tax liabilities - 399,737 70,519 470,256 Deferred taxation o 254,432 (254,432) - 20 Deferred tax liabilities - 254,432 - 254,432 17,072,908 - 6,205,913 23,278,821 ======== ======= ======== ========= Capital and reserve (equity) Share capital p 2,607,545 (2,607,545) - - 21. Issued and paid share capital p - 2,607,545 - 2,607,545 22. Share premium q 1,166,784 - - 1,166,784 Capital reserves r 6,108,188 (6,108,188) - - 23. Assets revaluation reserves r - 378,071 (58,789) 319,282 24. Fair value reserves - - - - 25. Contingency reserves s 810,912 - - 810,912 General reserve t (6,417,822) 6,417,822 - - 26. Retained earnings r, t - (687,705) (1,271,952) (1,959,657) 4,275,607 - (1,330,741) 2,944,866 ------------- ------------ -------------- -------------- Shareholders fund 21,348,515 - 4,875,172 26,223,687 ======== ======== ======== ========= - Page 89 -
  • 92. NIGER INSURANCE PLC COMPANY COMPARATIVE STATEMENT OF FINANCIAL POSITION AS AT 1 JANUARY, 2011 Effect of transition to IFRS NGAAP Reclassification Re-measurement IFRS N’000 N’000 N’000 N’000 Note Assets Reference Cash and bank balance a 1,184,436 (1,184,436) - - 1. Cash and cash equivalents a,b - 1,408,200 (28,286) 1,379,914 Short term investments b 695,392 (695,392) - - Financial assets: 2. Available for sales b,g - 2,816,582 (768,091) 2,048,491 3. Held- to-maturity - - - - 4. Loans and receivables c,d - 1,508,378 (607,482) 900,896 Debtors c 2,590,093 (2,590,093) - - 5. Trade receivables c - 853,623 (853,623) - 6. Reinsurance assets c - 202,478 7,266,203 7,468,681 7. Other receivables and prepayment c,b - 528,818 (410,080) 118,738 Loans to policy holders d 230,441 (230,441) - - 8. Deferred acquisition costs e 194,207 - - 194,207 Government bond f - - - - Long term investment g 2,723,517 (2,723,517) - - 9. Investment in subsidiaries g - 105,800 - 105,800 Deferred tax assets 10. Investment properties h 12,185,448 - 302,012 12,487,460 Fixed assets i 947,746 (947,746) - - 11. Intangible assets i - 31,617 33,308 64,925 12. Property, plant and equipment l - 916,129 (58,789) 857,340 13. Statutory deposit j 500,000 - - 500,000 21,251,280 - 4,875,172 26,126,452 ========= ======= ======== ========= Liabilities Creditors and accruals k 3,132,027 (3,132,027) - - Insurance fund l 5,394,038 (5,394,038) - - 14. Insurance contract liabilities l - 5,394,038 6,135,394 11,529,432 Deposit administration m 7,793,315 (7,793,315) - - 15. Investment contract liabilities - 7,793,315 - 7,793,315 16. Trade payables k - 300,482 - 300,482 17. Provision and other payables k - 261,629 - 261,629 18. Borrowings k - 2,569,916 - 2,569,916 Current taxation n 379,257 (379,257) - - 19. Income tax liabilities n - 379,257 66,773 446,030 Deferred taxation o 249,432 (249,432) - - 20. Deferred tax liabilities o - 249,432 - 249,432 16,948,069 - 6,202,167 23,150,236 ========= ======= ======== ========= Capital and reserve (Equity) Share capital p 2,607,545 (2,607,545) - - 21. Issued and paid share capital p - 2,607,545 - 2,607,545 22. Share premium q 1,166,784 - - 1,166,784 Capital reserves r 6,108,188 (6,108,188) - - 23. Assets revaluation reserves r - 378,071 (58,789) 319,282 24. Fair value reserve - - - - 25. Contingency reserves s 810,912 - - 810,912 General reserve t (6,390,218) 6,390,218 - - 26. Retained earnings t,r - (660,101) (1,268,206) (1,928,307) 4,303,211 - (1,326,995) 2,976,216 ------------- -------------- ------------- ---------------- Shareholder‟s fund 21,251,280 - 4,875,172 26,126,452 ========= ======== ======== ========= - Page 90 -
  • 93. 1. Cash and cash equivalents Cash and cash equivalents under IFRS represents cash and bank balances and short term deposit maturing not more than three (3) months from year end. This is reconciled to the NGAAP account as follows: Life business Non-life Business Company Subsidiaries Group N’000 N’000 N’000 N’000 N’000 01 January,2011 Reclassification a. Cash and bank balances under NGAAP that transit direct to IFRS 960,520 223,916 1,184,436 16,591 1,201,027 b. Bank deposit reclassified from short Term investment under NGAAP 166,774 56,990 223,764 500 224,264 Re-measurement 1,127,294 280,906 1,408,200 17,091 1,425,291 Derecognised impaired past due bank deposit - (28,286) (28,286) - (28,286) 1,127,294 252,620 1,379,914 17,091 1,397,005 ======= ====== ======= ===== ======== 31 December, 2011 Reclassification a. Cash and bank balances under NGAAP that transit direct to IFRS 1,052,081 664,234 1,716,315 9,613 1,725,928 b. Bank deposit reclassified from short Term investment under NGAAP 77,386 19,731 97,117 499 97,616 1,129,467 683,965 1,813,432 10,112 1,823,544 ======== ======= ======== ====== ======= 2. Available for sale financial assets Upon the transition to IFRS, the company has opted for classifying all its equity securities investment (quoted and unquoted) as available for sale financial assets. This is reconciled to the NGAAP account as follows: 01 January, 2011 Reclassification b. Trading (quoted) securities from Short term investment under NGAAP 224,559 60,069 284,628 - 284,628 g. Trading (quoted) securities from Long term investment under NGAAP 477 375,242 375,719 - 375,719 g. Ordinary shares (unquoted) securities from Long term loss under NGAAP 249,616 1,906,619 2,156,235 13,216 2,169,451 474,652 2,341,930 2,816,582 13,216 2,829,798 Re-measurement: Fair value adjustment on unquoted investment (169,300) (598,791) (768,091) - (768,091) 305,352 1,743,139 2,048,491 13,216 2,061,707 ====== ======== ======== ====== ========= 31 December, 2011 Reclassification b. Trading (quoted) securities from Short term investment under NGAAP 105,351 83,402 188,753 186,039 374,792 Ordinary shares (unquoted) securities from g. Long term investments under NGAAP 80,020 2,210,506 2,290,526 (141,948) 2,148,578 185,371 2,293,908 2,479,279 44,091 2,523,370 Re-measurement Fair value loss on unquoted investments 296 (809,817) (809,521) - (809,521) 185,667 1,484,091 1,669,758 44,091 1,713,849 ====== ======== ======== ======= ======= 3. Held to maturity financial assets Under IFRS, investment with maturity date and for which management has the intention and capacity to hold to maturity is classified as held to maturity financial assets. This is reconciled to the NGAAP account as follows: 31 December, 2011 Reclassification: f. Delta State Government 14% fixed rate Infrastructure development bond 2011/2018 from Government Bond under NGAAP 100,000 - 100,000 - 100,000 ======= ====== ======== ======= ======== - Page 91 -
  • 94. 4. Loans and receivables Loan and receivables as disclosed under IFRS is reconciled to NGAAP figure as follows: Life business non-life Business Company Subsidiaries Group N‟000 N‟000 N‟000 N‟000 N‟000 01 January, 2011 Reclassification c. Staff and agents loan reclassified from Other debtors and prepayment under NGAAP 584,692 - 584,692 - 584,692 Receivable from related party wrongly classified as part of longterm investment in subsidiary under NGAAP (note 9) 85,763 - 85,763 - - d. Loans to policy holder under NGAAP 230,441 - 230,441 - 230,441 c. Staff retirement benefit reclassified from Other debtors and prepayment 607,482 - 607,482 - 607,482 1,508,378 - 1,508,378 - 1,422,615 Re-measurement: Derecognition of capitalised staff retirement Benefit under NGAAP (607,482) - (607,482) - (607,482) 900,896 - 900,896 - 815,133 ======= ===== ======== ===== ======== 31 December, 2011 Reclassification c. Staff and agents loan reclassified from Other debtors and prepayment under NGAAP 771,396 33,552 804,948 - 804,948 d. Loans to policy holder under NGAAP 267,679 - 267,679 - 267,679 c. Staff retirement benefit reclassified from Other debtors and prepayment under NGAAP 362,649 - 362,649 - 362,649 1,401,724 33,552 1,435,276 - 1,435,276 Re-measurement Derecognition of receivable from related Parties in staff loan under NGAAP (159,888) - (159,888) - (159,888) Derecognition unamortised balance of capitalised staff Retirement benefit under NGAAP (362,649) - (362,649) - (362,649) 879,187 33,552 912,739 - 912,739 ======= ======= ======= ===== ======= 5 Trade receivable 01 January, 2011 Reclassification c. Agents and brokers reclassified from debtors under NGAAP - 853,623 853,623 - 853,623 - 853,623 853,623 - 853,623 Re-measurement Impairment - (85,623) (853,623) - (853,623) - - - - - ======= ======= ======= ======= ======= 31 December, 2011 Reclassification c. Agents and brokers reclassified from debtors under NGAAP - 197,449 197,449 - 197,449 - 197,449 197,449 - 197,449 Re-measurement Impairment - 197,449 197,449 - 197,449 - - - - - ==== ===== ===== ===== ======= 6. Reinsurance assets 01 January, 2011 Reclassification: c. Reinsurance receivable reclassified from debtors under NGAAP - 202,478 202,478 - 202,478 Re-measurement Actuarial valuation adjustment 7,244,870 21,333 7,266,203 - 7,266,203 7,244,870 223,811 7,468,681 - 7,468,681 ======= ======= ======= ===== ======= 31 December, 2011 Reclassification c. Reinsurance receivables reclassified from debtors under NGAAP - 178,561 178,561 - 178,561 Re-measurement: Actuarial valuation adjustment 9,935 137,016 146,951 - 146,951 9,935 315,577 325,512 - 325,512 ===== ====== ======= ===== ======= - Page 92 -
  • 95. Life business non-life Business Company Subsidiaries Group N’000 N’000 N’000 N’000 N’000 7 Other receivables and prepayments 01 January, 2011 Reclassification b. Deposit for shares reclassified from Short term investments - 187,000 187,000 - 187,000 c. Rent receivables from other debtors and prepayment under NGAAP 70,442 - 70,442 - 70,442 c. Rent prepaid from other debtors and Prepayment under NGAAP 27,814 - 27,814 - 27,814 c. Other receivables from other debtors & prepayment Under NGAAP 20,482 223,080 243,562 192,651 436,213 118,738 410,080 528,818 192,651 721,469 Re-measurement Derecognised deposit for shares reclassified from short term investment (187,000) (187,000) - (187,000) Prepayment wrongly posted to related parties Derecognition of unsubstantiated other receivables - (223,080) (223,080) - (223,080) 118,738 - 118,738 192,651 311,389 ======= ======= ======= ====== ======== 31 December, 2011 Reclassification c. Rent receivable from other debtors and prepayment under NGAAP 187,646 - 187,646 - 187,646 c. Rent prepaid from other debtors and prepayment under NGAAP 39,644 - 39,644 - 39,644 c. Other receivable from other debtors and prepayment under NGAAP 44,765 - 44,765 85,451 130,216 272,055 - 272,055 85,451 357,506 Re-measurement ====== ==== ====== ===== ======= 8. Deferred acquisition costs 01 January 2011 e. Reclassification: Deferred acquisition cost under NGAAP that transit direct to IFRS - 194,207 194,207 - 194,207 ===== ======= ======= ===== ======= 31 December, 2011 Reclassification e. Deferred acquisition costs under NGAAP that Transit direct to IFRS - 203,621 203,621 - 203,621 ====== ======= ======= ====== ======== 9 Investment in subsidiaries 01 January, 2011 Reclassification g. Investment in subsidiaries from longterm Investment under NGAAP 191,563 - 191,563 - - Receivables wrongly classified as part of Investment in subsidiaries under NGAAP (note 4) (85,763) - (85,763) - - 105,800 - 105,800 - - ======= ===== ======= ===== ===== 31 December, 2011 Reclassification g. Investment in subsidiaries from longterm Investment under NGGAP 105,800 - 105,800 - - ====== ===== ======= ===== ===== - Page 93 -
  • 96. Life business non-life Business Company Subsidiaries Group N’000 N’000 N’000 N’000 N’000 10. Investment properties 01 January, 2011 h. Investment properties that transit direct to IFRS 12,185,448 - 12,185,448 - 12,185,448 Re-measurement: Reversal of previous years depreciation 220,118 - 220,118 - 220,118 Fair value adjustment 81,894 - 81,894 - 81,894 12,487,460 - 12,487,460 - 12,487,460 ========= ===== ========= ====== ========= 31 December, 2011 Reclassification J. Investment properties that transit direct to IFRS 12,754,282 - 12,754,282 14,316 12,768,598 Re-measurement 1 January, 2011 fair value again 81,894 - 81,894 - 81,894 Fair value gain Dec., 2011 48,500 - 48,500 - 48,500 12,884,676 - 12,884,676 14,316 12,898,992 ========= ===== ======== ===== ========= 11. Intangible assets 01 January, 2011 Reclassification i. Net book value of software from fixed Asset under NGAAP 31,617 - 31,617 774 32,391 Re-measurement Reversal of previous depreciation made‟ Before assets is put to use 33,308 - 33,308 - 33,308 64,925 - 64,925 774 65,699 ===== ==== ===== ==== ===== 31 December, 2011 Reclassification i. Net Book Value of software from fixed Assets under NGAAP 43,283 - 43,283 774 44,057 ====== ===== ====== ==== ====== 12. Property, plant and equipment 01 January, 2011 Reclassification i. Net book Value of fixed assets under NGAAP that transit direct to IFRS 565,355 350,774 916,129 65,066 981,195 Re-measurement Revaluation adjustment 14,130 (72,919) (58,789) - (58,789) 579,485 277,855 857,340 65,066 922,406 ===== ====== ====== ===== ======= 31 December, 2011 Reclassification i. Net book value of fixed assets under NGAAP that transit direct to IFRS 597,688 408,677 1,006,365 63,662 1,070,027 Re-measurement Revaluation adjustment 42,357 (31,259) 11,098 - 11,098 640,045 377,418 1,017,463 63,662 1,081,125 ======= ====== ======= ====== ========= 13. Statutory deposit 01 January, 2011 Reclassification j. Statutory deposit that transit direct to IFRS 200,000 300,000 500,000 - 500,000 ====== ====== ======= ===== ======= 31 December, 2011 Reclassifications j. Statutory deposit that transit direct to IFRS 200,000 300,000 500,000 - 500,000 ====== ====== ====== ===== ======= 14. Insurance contract liabilities 01 January, 2011 Reclassification l. Insurance fund that transit direct to IFRS 4,728,632 665,406 5,394,038 - 5,394,308 Re-measurement Actuarial valuation adjustment 5,928,697 206,697 6,135,394 - 6,135,394 10,657,329 872,103 11,529,432 - 11,529,432 ========= ======== ========= ===== ======== - Page 94 -
  • 97. Life business non-life Business Company Subsidiaries Group N’000 N’000 N’000 N’000 N’000 31 December, 2011 Reclassification l. Insurance fund that transit direct to IFRS 5,871,672 864,068 6,735,740 - 6,735,740 Re-measurement Reversal of transfer under NGAAP (1,143,050) - (1,143,050) - (1,143,050) Actuarial valuation adjustment (291,786) 299,695 7,909 - 7,909 4,436,836 1,163,763 5,600,599 - 5,600,599 ======== ======== ========= ===== ======= 15. Investment contract liabilities 01 January, 2011 Reclassification m. Deposit administration that transit direct to IFRS 7,793,315 - 7,793,315 - 7,793,315 ======== ====== ======= ===== ======= 31 December, 2011 Reclassification m. Deposit administration that transit direct to IFRS 5,817,050 - 5,817,050 - 5,817,050 ======== ====== ======== ===== ======== 16. Trade payables 01 January, 2011 Reclassifications k. Deferred rental income from creditors and k. Accruals under NGAAP account - - - 86,574 86,574 k. Payable to vendor from creditors and Accruals under NGAAP account 165,956 134,526 300,482 - 300,482 165,956 134,526 300,482 85,574 387,056 ====== ====== ====== ====== ====== 31 December, 2011 Reclassification k. Deferred rental income from creditors and Accruals under NGAAP account - - - 93,301 93,301 k. Payable to vendor from creditors and Accruals under NGAAP account 39,846 26,798 66,641 - 66,641 39,846 26,798 66,644 93,301 159,945 ====== ====== ====== ====== ====== 17. Provision and other payables 01 January, 2011 Reclassification k. Accrued expenses from creditors and Accrual under NGAAP account 75,446 130,300 205,746 12,785 218,531 k. Pension fund from creditors and accruals Under NGAAP account 28,675 15,023 43,698 - 43,698 k. Information Technology Development Levy from creditors and accruals under NGAAP account - 12,185 12,185 - 12,185 104,121 157,508 261,629 12,785 274,414 ======= ====== ======== ====== ======= 31 December, 2011 Reclassification k. Accrued expenses from creditors and Accrual under NGAAP account 47,513 22,777 70,290 12,783 83,070 k. Pension fund from creditors and accruals Under NGAAP account 35,187 10,599 45,786 - 45,786 k. Information Technology Development Levy from creditors and accruals under NGAAP account 10,884 15,485 26,372 - 26,372 93,584 48,861 142,445 12,783 155,228 ====== ====== ====== ====== ======= - Page 95 -
  • 98. Life business non-life Business Company Subsidiaries Group N’000 N’000 N’000 N’000 N’000 18. Borrowings 01 January, 2011 Reclassification k. Bank loan from creditors and accruals 2,569,916 - 2,569,916 - 2,569,916 ======== ====== ======== ====== ========== 31 December, 2011 Reclassification k. Bank loan from creditors and accruals 2,279,641 - 2,279,641 - 2,279,641 k. Bank overdraft from creditors and accruals - - - 17,940 17,940 2,279,641 - 2,279,641 17,940 2,297,581 ======== ======= ======== ====== ======== 19. Income tax liabilities 01 January, 2011 Reclassification n. Current taxation that transit direct to IFRS 14,663 364,594 379,257 20,480 399,737 Re-measurement Prior years (under)/over provision of income tax (88,106) 154,879 66,773 3,746 70,519 (73,443) 519,473 446,030 24,226 470,256 ======= ======= ======= ======= ======== 31 December, 2011 Reclassification n. Current taxation that transit direct to IFRS 106,508 194,605 301,113 20,664 321,777 Re-measurement Prior years (under)/over provision of income tax (88,106) 154,879 66,773 3,746 70,519 18,402 349,484 367,886 24,410 392,296 ======= ======= ======= ====== ======== 20. Deferred tax liabilities 01 January, 2011 Reclassification o. Deferred tax liabilities that transit direct to IFRS 232,172 17,260 249,432 5,000 254,432 ====== ====== ====== ==== ======= 31 December, 2011 Reclassification o. Deferred tax liabilities that transit to Direct to IFRS 217,391 40,352 257,743 7,000 264,743 Re-measurement Deferred tax effect of revaluation/fair value surplus 30,367 19,013 49,380 - 49,380 247,758 59,365 307,123 7,000 314,123 ====== ====== ======= ===== ======= 21. Issued and paid share capital 01 January, 2011 Reclassification p. Share capital that transit direct to IFRS 1,057,241 1,550,304 2,607,545 - 2,607,545 ======== ======== ======== ===== ========= 31 December, 2011 Reclassification p. Share capital that transit direct to IFRS 1,162,965 1,705,342 2,868,307 - 2,868,307 ======== ======== ======== ===== ========= 22. Share premium 01 January, 2011 Reclassification q. Share premium that transit direct to IFRS 554,819 611,965 1,166,784 - 1,166,784 ======= ====== ======= ===== ======= 31 December, 2011 Reclassification q. Share premium that transit direct to IFRS 388,671 429,101 817,772 - 817,772 ======= ======= ====== ===== ======= 23. Assets revaluation reserves 01 January, 2011 Reclassification r. Revaluation surplus on property, plant & equipment from capital reserve under NGAAP 99,344 278,727 378,071 - 378,071 Re-measurement Fair value adjustment on property, plant & equipment 14,130 (72,919) (58,789) - (58,789) 113,474 205,808 319,282 - 319,282 ====== ====== ====== ===== ======= - Page 96 -
  • 99. Life business non-life Business Company Subsidiaries Group N’000 N’000 N’000 N’000 N’000 31 December, 2011 Reclassification r. Revaluation surplus on property, plant & Equipment from capital reserve under NGAAP 99,344 278,727 378,071 - 378,071 Re-measurement Fair value adjustment on property, plant & Equipment net of tax 42,357 (31,259) 11,098 - 11,098 Deferred tax effect on revaluation surplus (9,033) (13,331) (22,364) - (22,364) 132,668 234,137 366,805 - 366,805 ====== ====== ======= ===== ======= 24. Fair value reserve 31 December, 2011 Reclassification Reclassification of appreciation on AFS assets to fair value reserve from income under NGAAP 18,170 17,756 35,926 - 35,926 Deferred tax effect on fair value gain (5,814) (5,682) (11,496) - (11,496) 12,356 12,074 24,430 - 24,430 ====== ====== ====== ======= ====== 25. Contingency reserves 01 January, 2011 Reclassification s. Contingency reserves that transit direct to IFRS 177,808 633,104 810,912 - 810,912 ====== ====== ====== ====== ======= 31 December, 2011 Reclassification s. Contingency reserves that transit direct to IFRS 276,385 724,583 1,000,968 - 1,000,968 Additional transfer to contingency based on IFRS effect on net profit 53,420 - 53,420 - 53,420 329,805 724,583 1,054,388 - 1,054,388 ======= ======= ======= ====== ======== 26. Retained earnings reconciliation 01 January, 2011 Reclassification t. General reserve that transit direct to IFRS (6,910,812) 520,594 (6,390,218) (27,604) (6,417,822) r. Revaluation surplus on investment property from capital reserve under NGAAP 5,730,117 - 5,730,117 - 5,730,117 Re-measurement: Fair value adjustment on quoted investment (note 2) (169,300) (598,791) (768,091) - (768,091) Derecognised deposit for shares reclassified from Short term investment (note 7) - (187,000) (187,000) - (187,000) Derecognised past due bank deposit (note 1) - (28,286) (28,286) - (28,286) Reversal of previous year is depreciation on investment properties (note 10) 220,118 - 220,118 - 220,118 Prior years (under)/over provision of income tax (note 19) 88,106 (154,879) (66,773) (3,746) (70,519) Impairment loss on trade receivable (note 5) - (853,623) (853,623) - (853,623) Derecognition of capitalised staff retirement benefit under NGAAP (note 4) (607,482) - (607,482) - (607,482) Derecognition of unreconciled balance of other receivables fully provided for under NGAAP (note 7) - (223,080) (223,080) - (223,080) Reversal of previous depreciation made before Software is put to use (note 11) 33,308 - 33,308 - 33,308 Actuarial valuation adjustment (note 6 & 14) 1,316,173 (185,364) 1,130,809 - 1,130,809 Fair value adjustment on investment properties (note 10) 81,894 - 81,894 - 81,894 (217,878) (1,710,429) (1,928,307) (31,350) (1,959,657) ======= ======== ======== ======== ========= - Page 97 -
  • 100. Note Life business Non-life Business Company Subsidiaries Group N’000 N’000 N’000 N’000 N’000 31 December, 2011 Reclassification t. General reserve that transit direct to IFRS (5,293,503) (12,705) (5,306,208) (39,082) (5,345,290) r. Revaluation surplus on investment property from capital reserve under NGAAP 5,730,117 - 5,730,117 - 5,730,117 Re-measurement Reclassification of appreciation of AFS assets to fair value reserve from income net under NGAAP (note24) (18,170) (17,756) (35,926) - (35,926) Prior years (under)/over provision of income tax (note 19) 88,106 (154,879) (66,773) (3,746) (70,519) Derecognition of capitalised staff retirement benefit under NGAAP (note 4) (362,649) - (362,649) - (362,649) Additional transfer to contingency based on IFRS effect on net profit (note 25) (53,420) - (53,420) - (53,420) impairment on trade receivable (note 5) - (197,449) (197,449) - (197,449) Reversal of transfer to life fund under NGAAP (note14) 1,143,050 - 1,143,050 - 1,143,050 Fair value adjustment on quoted investment available (note 2) 296 (809,817) (809,521) - (809,521) Derecognition of recoverable from related parties (note 4) (159,888) - (159,888) - (159,888) Actuarial valuation adjustment on insurance fund (note 14) 301,721 (299,695) 2,026 - 2,026 Actuarial valuation adjustment on reinsurance asset (note 6) - 137,016 137,016 - 137,016 Deferred tax effect on investment properties (15,520) - (15,520) - (15,520) Fair value adjustment on investment tproperties (note 10) 130,394 - 130,394 - 130,394 1,490,534 (1,355,285) 135,249 (42,828) 92,421 ======= ======== ======== ======= ======== Reconciliation notes on NGAAP items derecognized in the statement of financial position as a result of complete reclassification under IFRS as follows: a. Cash and bank balance 1 January, 2011 as per NGAAP 960,520 223,916 1,184,436 16,591 1,201,027 Transfer to cash and cash equivalent (960,520) (223,916) (1,184,436) (16,591) (1,201,027) - - - - - ======== ======= ======== ======= ========= 31 December, 2011 As per NGAAP 1,052,081 664,234 1,716,315 9,613 1,725,928 Transfer to cash and cash equivalent (1,052,081) (664,234) (1,716,315) (9,613) (1,725,928) - - - - - ========= ======= ======== ======== ======== b. Short term investment 1 January, 2011 391,333 304,059 695,392 500 695,892 As per NGAAP Transfer to available for sale financial assets (224,559) (60,069) (284,628) - (284,628) Transfer to cash and cash equivalent (166,774) (56,990) (223,764) (500) (224,264) Transfer to other receivables/and prepayment - (187,000) (187,000) - (187,000) - - - - - ======== ======= ======== ======= ======== 31 December, 2011 As per NGAAP 182,736 103,133 285,869 186,539 472,408 Transfer to cash and cash equivalent (77,388) (19,730) (97,116) (500) (97,616) Transfer to available for sale financial assets (105,350) (83,402) (188,753) (186,039) (374,792) - - - - - ======== ======= ======== ======== ======== - Page 98 -
  • 101. c. Debtors 1 January, 2011 As per NGAAP 1,310,712 1,279,181 2,590,093 192,651 2,782,744 Transfer to loans and receivables (1,192,174) - (1,192,174) - (1,192,174) Transfer to trade receivable - (853,623) (853,623) - (853,623) Transfer to reinsurance assets - (202,478) (202,478) - (202,478) Transfer to other receivable and prepayment (118,738) (223,080) (341,818) (192,651) (534,469) - - - - - ======== ======= ======= ======= ======== As at 31 December, 2011 As per NGAAP 1,406,100 409,562 1,815,662 85,451 1,901,113 Transfer to loans and receivable (1,134,045) (33,552) (1,167,597) - (1,167,597) Transfer to trade receivables - (197,449) (197,449) - (197,449) Transfer to reinsurance assets - (178,561) (178,561) - (178,561) Transfer to other receivables and prepayment (272,055) - (272,055) (85,451) (357,506) - - - - - ======= ======= ======= ======= ======== d. Loan to Policyholders 1 January, 2011 As per NGAAP 230,441 - 230,441 - 230,441 Transfer to loans and receivables (230,441) - (230,441) - (230,441) - - - - - ======== ====== ======= ======= ======= 31 December, 2011 As per NGAAP 267,679 - 267,679 - 267,679 Transfer to loans and receivables (267,679) - (267,679) - (267,679) - - - - - ======== ======= ======= ======== ======== Life business non-life Business Company Subsidiaries Group N’000 N’000 N’000 N’000 N’000 f. Government bond 31 December, 2011 As per NGAAP 100,000 - 100,000 - 100,000 Transfer to held to maturity (100,000) - (100,000) - (100,000) - - - - - ======== ====== ======= ======= ======== g. Long term investment 1 January, 2011 As per NGAAP 441,656 2,281,861 2,723,517 13,216 2,545,170 Transfer to investment in subsidiaries (191,563) - (191,563) - - Transfer to available for sale financial assets (250,093) (2,281,861) (2,531,954) (13,216) (2,545,170) - - - - - ======= ======= ======== ======= ========= 31 December, 2011 As per NGAAP 185,820 2,210,506 2,396,326 (141,948) 2,148,578 Transfer to investment in subsidiaries (105,800) - (105,800) - - Transfer to available for sale financial assets (80,020) (2,210,506) (2,290,526) 141,948 (1,148,578) - - - - - ====== ======= ======== ======= ======== - Page 99 -
  • 102. Life business non-life Business Company Subsidiaries Group N’000 N’000 N’000 N’000 N’000 i. Fixed assets 1 January, 2011 As per NGAAP 596,972 350,774 947,746 65,840 1,013,586 Transfer to property, plant and equipment (565,355) (350,774) (916,129) (65,129) (981,195) Transfer to intangible assets (31,617) - (31,617) (774) (32,391) - - - - - ======= ====== ======= ======= ======= 31 December, 2011 As per NGAAP 640,971 408,677 1,049,648 64,436 1,114,084 Transfer to property, plant & equipment (597,688) (408,677) (1,006,365) (63,662) (1,070,027) Transfer to intangible asset (43,283) - (43,283) (774) (44,057) - - - - - ======== ======= ======= ======= ======== k. Creditors and accruals 1 January, 2011 As per NGAAP 2,839,993 292,034 3,132,027 99,359 3,231,386 Transfer to trade payable (165,956) (134,526) (300,482) (86,574) (387,056) Transfer to provision and other payables (104,121) (157,508) (261,629) (12,785) (274,414) Transfer to borrowings (2,569,916) - (2,569,916) - (2,569,916) - - - - - ========= ======= ======== ======== ========= 31 December, 2011 As per NGAAP 2,413,070 75,660 2,488,730 124,024 2,612,754 Transfer to trade payables (39,846) (26,798) (66,644) (93,301) (159,945) Transfer to provision and other payables (93,554) (48,864) (142,448) (12,780) (155,228) Transfer to borrowings (2,279,644) - (2,279,638) (17,943) (2,297,581) - - - - - ========= ======= ======== ======== ======== l. Insurance fund 1 January, 2011 As per NGAAP 4,728,632 665,406 5,394,038 - 5,394,038 Transfer to insurance contract liabilities (4,728,632) (665,406) (5,394,038) - (5,394,038) - - - - - ========= ======= ========= ======== ========= 31 December, 2011 As per NGAAP 5,871,672 864,068 6,735,740 - 6,735,740 Transfer to insurance contract liabilities (5,871,672) (864,068) (6,735,740) - (6,735,740) - - - - - ======== ======== ======== ======= ========= m. Deposit administration 1 January, 2011 As per NGAAP 7,519,018 - 7,519,018 - 7,519,018 Transfer to investments contract liabilities (7,519,018) - (7,519,018) - (7,51`9,018) - - - - - ======== ====== ======== ======= ========= 31 December, 2011 As per NGAAP 5,817,050 - 5,817,050 - 5,817,050 Transfer to investment contact liabilities (5,817,050) - (5,817,050) - (5,817,050) - - - - - ======== ====== ======= ======= ======== - Page 100 -
  • 103. Life business non-life Business Company Subsidiaries Group N’000 N’000 N’000 N’000 N’000 n. Current taxation 1 January, 2011 As per NGAAP 14,663 364,594 379,257 20,480 399,737 Transfer to income tax liabilities (14,668) (364,594) (379,257) (20,480) (399,737) - - - - - ======== ======== ========= ========= ========= 31 December, 2011 As per NGAAP 106,508 194,605 301,113 20,664 321,777 Transfer to income tax liabilities (106,508) (194,605) (301,113) (20,664) (321,777) - - - - - ======= ======== ======== ======== ======== o. Deferred taxation 1 January, 2011 As per NGAAP 232,172 17,260 249,432 5,000 254,432 Transfer to deferred tax liabilities (232,172) (17,260) (247,432) (5,000) (249,432) - - - - - ======== ======== ======== ======= ========= 31 December, 2011 As per NGAAP 217,391 40,352 257,743 7,000 264,734 Transfer to deferred tax liabilities (217,391) (40,352) (257,743) (7,000) (264,734) - - - - - ======== ======= ======== ======= ========= p. Share capital 1 January, 2011 As per NGAAP 1,057,241 1,550,304 2,607,545 - 2,607,545 Transfer to issued and paid share capital (1,057,241) (1,550,304) (2,607,545) - (2,607,545) - - - - - ======= ====== ======= ======= ======== 31 December, 2011 As per NGAAP 1,162,965 1,705,342 2,868,307 - 2,868,307 Transfer to issued and paid share capital (1,162,965) (1,705,342) (2,868,307) - (2,868,307) ` - - - - - ========== ======= ======== ======== ========== - Page 101 -
  • 104. Life business non-life Business Company Subsidiaries Group N’000 N’000 N’000 N’000 N’000 r. Capital reserve 1 January, 2011 As per NGAAP 5,829,461 278,727 6,108,188 - 6,108,188 Transfer to asset revaluation reserve (99,344) (278,727) (378,071) - (378,071) Transfer to retained earnings (5,730,117) - (5,730,117) - (5,730,117) - - - - - ========= ======= ======= ======== ======== 31 December, 2011 As per NGAAP 5,829,461 278,727 6,108,188 - 6,108,188 Transfer to asset revaluation reserve (99,344) (278,727) (378,071) - (378,071) Transfer to retained earnings (5,730,117) - (5,730,117) - (5,730,117) - - - - - ========== ======== ========== ========= ========== t. General reserve 1 January, 2011 As per NGAAP (6,910,812) 520,594 (6,390,218) (27,604) (6,417,822) Transfer to retained earnings 6,910,812 (520,594) 6,390,218 27,604 6,417,822 - - - - - ======== ======= ======== ========= ========= 31 December, 2011 As per NGAAP (5,293,503) (12,705) (5,306,208) (39,082) (5,345,290) Transfer to retained earnings 5,293,503 12,705 5,306,209 39,082 5,345,290 - - - - - ======== ======== ======== ======== ======== Reconciliation of comprehensive income statement as at 31 December, 2011 Under IFRS the presentation of statement of profit and loss and other comprehensive income requires that some information disclosed separately in the revenue account under NGAAP be disclosed as line items. This has necessitated the presentation of these information on the income statement; i) Gross premium income ii) Reinsurance contract expenses iii) Fees and commission income iv) Claims expenses v) Investment income Also, transition to IFRS has necessitated the disclosure of additional information as line item in the income statement. The following explanatory notes gives details of such information. Life business non-life Business Company Subsidiaries Group N’000 N’000 N’000 N’000 N’000 i. Gross premium income Reclassifications Premium under NGAAP that transit direct to IFRS 4,760,577 3,047,301 7,809,878 - 7,809,878 ======== ======== ======== ======= ========= - Page 102 -
  • 105. Life business non-life Business Company Subsidiaries Group N’000 N’000 N’000 N’000 N’000 ii. Decrease/(increase) in unearned premium Reclassification Transfer from life fund under NGAAP (1,143,050) - (1,143,050) - (1,143,050) Unearned premium under NGAAP that transit to IFRS - (77,219) (77,219) - (77,219) Re-measurement Actuarial adjustment to unearned premium 118,663 189,898 308,561 - 308,561 (1,024,387) 112,679 911,708 - 911,708 ======== ======= ======== ======== ========= iii. Reinsurance premium expenses Reclassification Reinsurance expenses that transit direct to IFRS (196,939) (54,956) (251,895) - (251,895) ======== ======== ======== ====== ========= iv.. Fee and commission received Reclassification Commission received 8,562 23,747 32,309 - 32,309 Management fee on deposit administration 1,476,633 - 1,476,633 - 1,476,633 1,485,195 23,747 1,508,942 - 1,508,942 ======= ======= ======= ======= ======== v. Gross benefit and claims paid Reclassification Surrender that transit direct to IFRS 87,395 - 87,395 - 87,395 Claims paid that transit to IFRS 811,588 656,416 1,468,004 - 1,468,004 898,983 656,416 1,555,399 - 1,555,399 ======== ======= ======= ======= ========= vi. Gross change in outstanding claims reserve Reclassification Increase in outstanding claim provision that transit from NGAAP - 121,433 121,433 - 121,433 Re-measurement Actuarial valuation adjustment - 282,896 282,896 - 282,896 - 404,329 404,329 - 404,329 ======= ======= ====== ======= ======== vii. Claims ceded to reinsurers Reclassification Reinsurance recovery that transit to IFRS - 25,691 25,691 - 25,691 Re-measurement Actuarial adjustment to reinsurance asset - 125,618 125,618 - 125,618 - 151,309 151,309 - 151,309 ========= ======== ========= ======= ========= viii. Investment income Reclassification Life commission investment and other income 121,288 - 121,288 - 121,288 Interest receivable and other similar income - 9,566 9,566 - 9,566 Income from fixed investment 54,836 68,881 123,717 4,512 128,229 Profit from deposit administration 57,653 - 57,653 - 57,653 233,777 78,447 312,224 4,512 316,736 ======== ======= ====== ======== ======== xi. Fair value gain on investment properties Re-measurement Fair value adjustment on investment properties 48,500 - 48,500 - 48,500 ========= ======= ======== ======= ======= - Page 103 -
  • 106. Life business non-life Business Company Subsidiaries Group N’000 N’000 N’000 N’000 N’000 x. Other operating income Reclassification Interest receivable and other similar income - 90,861 90,861 69,495 160,356 Re-measurement Write back of impairment on trade receivable - 656,174 656,174 - 656,174 - 747,035 747,035 69,495 816,530 ========= ======== ======== ======== ======== xi. Management expenses Reclassification Management expenses that transit to IFRS 37,153 1,000,415 1,037,568 79,896 1,117,464 Life fund management expenses that transit to IFRS 1,414,126 - 1,414,126 - 1,414,126 Re-measurement Fair value adjustment on unquoted investment available for sale (169,596) 181,886 12,291 1 12,292 Derecognition of receivable from related parties 159,888 - 159,888 - 159,888 Reclassification of appreciation on AFS assets to AFS reserve 18,170 17,756 35,926 - 35,926 Reversal of wrong depreciation on software 33,308 - 33,308 - 33,308 1,493,049 1,200,057 2,693,107 79,896 2,773,004 ======= ======= ======= ======= ========= xii. Depreciation and amortisation Reclassification Depreciation that transit direct to IFRS - 53,767 53,767 3,106 56,873 Life fund management expenses depreciation under NGAAP 89,825 - 89,825 - 89,825 Life fund management expenses amortisation under NGAAP 21,642 - 21,642 - 21,642 111,467 53,767 165,234 3,106 168,340 ======= ======= ======= ======== ======== xiii. Impairment loss on investment Reclassification Provision for impairment on cash and cash equivalent - 31,761 31,761 - 31,761 Provision for investment losses - 104,254 104,254 - 104,254 Writeback provision for investment losses from management expenses (124,525) 175,313 50,788 - 50,788 Life fund provision for investment losses 416,622 - 416,622 - 416,622 292,097 311,328 603,425 - 603,425 ======= ======= ======= ======== ======== xiv. Income taxes Taxation from NGAAP 106,508 49,553 156,061 482 156,543 Deferred tax from NGAAP (14,781) 23,092 8,311 2,000 10,311 Re-measurement Deferred tax effect on fair value gain on investment properties 15,520 - 15,520 - 15,520 107,247 72,645 179,892 2,482 182,374 ======= ======= ======= ======= ======== - Page 104 -
  • 107. Reconciliation notes on NGAAP items derecognised in the statement of comprehensive income as a result of complete reclassification under IFRS as follows: Life business non-life Business Company Subsidiaries Group N’000 N’000 N’000 N’000 N’000 a) Commission received As per NGAAP 8,562 23,747 32,309 - 32,309 Transfer to fee and commission income (8,562) (23,747) (32,309) - (32,309) - - - - - ======== ======== ======== ======== ========= b) Investment and other income As per NGAAP 121,288 -- 121,288 - 121,288 Transfer to investment income (121,288) - (21,288) - (121,288) - - - - - ======== ======= ======= ======= ======== c) Interest income (deposit administration) As per NGAAP 350,000 - 350,000 - 350,000 Transfer to investment income (350,000) - (350,000) - (350,000) - - - - - ======== ======= ======== ======== ========= d) Management fee (deposit administration) As per NGAAP 1,476,633 - 1,476,633 - 1,476,633 Transfer to investment income (1,476,633) - (1,478,633) - (1,476,633) - - - - - ========= ======== ========= ======== ========= c) Reinsurance cost As per NGAAP 196,939 54,956 251,895 - 251,895 Transfer to reinsurance premium expense (196,939) (54,956) (251,895) - (251,895) - - - - - ======== ======== ========= ========= ========= d) Commission received As per NGAAP - 23,747 23,747 - 23,747 Transfer to fee and commission income - (23,747) (23,747) - (23,747) - - - - - ======== ======== ======== ======== ========= e) Direct claims surrender expenses As per NGAAP Claims paid 811,588 656,416 1,468,004 - 1,468,004 Surrender 87,395 - 87,395 - 87,395 898,983 656,416 1,555,399 - 1,555,399 Transfer to gross benefit and claims paid (898,983) (656,416) (1,555,399) - (1,555,399) - - - - - ======== ======== ========= ======== ========= f) Increase in outstanding claims provision As per NGAAP - 121,433 121,433 - 121,433 Transfer to gross charge in outstanding claim reserve ` - (121,433) (121,433) - (121,433) - - - - - ======== ======== ======== ======== ========= g) Reinsurance recovery as per NGAAP - 25,691 25,691 - 25,691 Transfer to claim ceded to reinsurers - (25,691) (25,691) - (25,691) - - - - - ======== ======== ======== ======== ======== h) Guaranteed interest (deposit administration) As per NGAAP (292,347) - (292,347) - (292,347) Transfer to investment income 292,347 - 292,347 - 292,347 - - - - - ========= ======== ======= ======= ======== - Page 105 -
  • 108. Life business non-life Business Company Subsidiaries Group N’000 N’000 N’000 N’000 N’000 i) Acquisition cost As per NGAAP 638,900 250,367 889,267 - 889,267 Transfer to underwriting expense (638,900) (250,367) (889,267) - (889,267) - - - - - ======== ======= ======= ====== ========= j) Maintenance cost As per NGAAP 206,550 395,863 602,413 - 602,413 Transfer to underwriting expenses (206,550 (395,863) (602,413) - (602,413) - - - - - ======== ======== ======= ======== ========= k. Amortization of staff retirement benefit As per NGAAP 244,833 - 244,833 - 244,833 Transfer to investment income (244,833) - (244,833) - (244,833) - - - - - ======= ======= ======== ======== ========= l) Operating expenses As per NGAAP 1,526,191 - 1,526,191 - 1,526,191 Transfer to depreciation and amortization (33,308) - (33,308) - (33,308) Transfer to management expenses (1,410,334) - (1,410,334) - (1,410,334) Transfer to impairment loss on investment (82,549) - (82,549) - (82,549) - - - - - ======== ======= ======== ======== ======== m. Provision for doubtful debt As per NGAAP 3,791 - 3,791 - 3,791 Transfer to management (3,791) - (3,791) - (3,791) - - - - - ======= ======= ======== ======== ========= n. Depreciation As per NGAAP 78,160 53,767 131,927 - 131,927 Transfer to investment income (78,160) (53,767) (131,927) - (131,927) - - - - - ======= ======= ======== ======== ========= o. Provision for investment loss As per NGAAP 416,622 104,254 520,876 - 520,876 Transfer to impairment loss on investment (416,622) (104,254) (520,876) - (520,876) - - - - - ========= ======== ========= ========= ========= p. Transfer to profit and loss As per NGAAP 463,592 - 463,592 - 463,592 Re-measurement: Reversal of provision already derecognised on transition (463,592 - (463,592) - (463,592) - - - - - ======== ======== ======== ======== ========= r. Income from fixed investment As per NGAAP 54,836 68,881 123,717 4,512 128,229 Transfer to investment income (54,836) (68,881) (123,717) (4,512) (128,229) - - - - - ======= ======= ======== ======== ========= - Page 106 -
  • 109. Life business non-life Business Company Subsidiaries Group N’000 N’000 N’000 N’000 N’000 s. Interest receivable and other similar income As per NGAAP - 100,427 100,427 69,495 169,922 Transfer to investment income - (9,566) (9,566) - (9,566) Transfer to other operating income - (90,861) (90,861) (69,495) (60,356) - - - - - ========= ======== ======= ======== ======== t. Profit from deposit administration As per NGAAP 1,534,286 - 1,534,286 - 1,534,286 Transfer to fee and commission income (1,476,633) - (1,476,633) - (1,476,633) Transfer to investment income (57,653) - (57,653) - (57,653) - - - - - ======== ======= ======== ======== ======== u. Provision for investment loss As per NGAAP - 104,254 104,254 - 104,254 Transfer to impairment loss on investment - (104,254) (104,254) - (104,254) - - - - - ========= ======== ========= ========= ========= v. Depreciation As per NGAAP - 53,767 53,767 3,106 56,873 Transfer to depreciation and amortization - (53,767) (53,767) (3,106) (56,873) - - - - - ======== ======== ======== ======== ======== w. Provision for doubtful debts As per NGAAP - 223,080 223,080 - 223,080 Re-measurement: Reversal of provision already derecognised on transition - (223,080) (223,080) - (223,080) - - - - - ======== ======== ======== ======== ========= x. Taxation As per NGAAP 106,508 49,553 156,061 482 156,543 Transfer to income taxes (106,508) (49,553) (156,061) (482) (156,543) - - - - - ======== ======= ======== ======= ======== y. Deferred tax As per NGAAP (14,781) 23,092 8,311 2,000 10,311 Transfer to income taxes 14,781 (23,092) (8,311) (2,000) (10,311) - - - - - ======= ======= ======== ======= ======= z. Transfer to contingency reserve As per NGAAP 98,577 91,479 190,056 - 190,056 To be appropriated from statement of changes in equity (78,577) (91,479) (90,056) - 190,056 - - - - - ======= ====== ======= ======== ======== - Page 107 -
  • 110. NIGER INSURANCE PLC GROUP STATEMENT OF VALUE ADDED 2012 2011 N’000 % N’000 % Net underwriting income 8,774,791 8,155,217 Investment & other income 1,505,383 1,181,766 10,280,174 9,336,983 Underwriting expenses and other overhead cost (7,709,425) (5,250,815) Value added 2,570,749 100 4,086,168 100 ======== ====== ======== ====== Applied as follows: In payment of employees: Personnel cost 1,691,758 66 1,425,713 35 In payment to government: Income tax expense 84,381 3 156,543 4 Information Technology Development Levy 9,414 - 14,187 - Retained for maintenance of assets Depreciation and amortization 175,492 7 168,340 4 Retained for expansion of business and Payment of dividend to shareholders Deferred taxation (166,589) (6) 25,831 1 Retained profit 776,293 30 2,295,554 56 Value added 2,570,749 100 4,086,168 100 ======== ===== ======== ===== The statement represents the distribution of the wealth created through the use of the group's assets, and its employees' efforts. - Page 108 -
  • 111. NIGER INSURANCE PLC COMPANY STATEMENT OF VALUE ADDED 2012 2011 N’000 % N’000 % Net underwriting income 8,774,791 8,155,217 Investment & other income 975,377 1,107,759 9,750,168 9,262,976 Underwriting expenses and other overhead cost (7,674,705) (5,170,922) Value added 2,075,469 100 4,092,054 100 ======== ====== ======= ====== Applied as follows: In payment of employees: Personnel cost 1,646,609 79 1,425,709 35 In payment to government: Income tax expense 83,561 4 156,061 4 Information Technology Development Levy 9,414 - 14,187 - Retained for maintenance of assets Depreciation and amortisation 172,296 8 165,234 4 Retained for expansion of business and Payment of dividend to shareholders Deferred taxation (306,589) (14) 23,831 1 Retained profit 470,173 23 2,307,032 56 Value added 2,075,469 100 4,092,054 100 ======== ===== ======== ===== The statement represents the distribution of the wealth created through the use of the group's assets, and its employees' efforts. - Page 109 -
  • 112. NIGER INSURANCE PLC GROUP FIVE YEARS FINANCIAL SUMMARY IFRS IFRS IFRS NGAAP NGAAP 2012 2011 2010 2009 2008 Source of funds N’000 N’000 N’000 N’000 N’000 Issued and paid share capital 3,869,747 2,868,307 2,607,545 2,172,954 1,975,413 Share premium 791,491 817,772 1,166,784 1,612,158 1,620,247 Contingency reserve 1,221,959 1,054,388 810,912 673,317 543,103 Asset revaluation reserve 709,175 366,805 319,282 - - Capital reserve - - - 6,108,188 1,258,188 Fair value reserves 200,156 24,430 - - - Retained earnings 557,728 92,421 (1,959,657) (6,133,985) 28,450 Reserve for bonus share issue - - - - 197,541 7,350,256 5,224,123 2,944,866 4,432,632 5,622,942 ======== ======== ======== ======== ========= Use of funds Cash and cash equivalents 1,844,594 1,823,544 1,397,005 1,045,784 1,876,459 Financial assets Available for sale 1,850,998 1,713,849 2,061,707 - - Held to maturity 90,821 100,000 - - - Other financial assets designated at fair 442,012 912,739 815,193 - - Investment - - - 4,122,711 - Other assets - - - 3,143,101 3,936,200 Trade receivables 84,031 - - - - Reinsurance assets 324,269 325,512 7,468,681 - - Deferred acquisition costs 139,319 203,621 194,207 - - Other receivable and prepayment 201,625 357,506 311,389 - - Investment properties 14,515,000 12,898,992 12,487,460 10,711,796 9,333,990 Deferred tax assets 616,832 - - - - Intangible assets 117,378 44,057 65,699 - - Property, plant and equipment 1,562,214 1,081,125 922,406 965,196 2,918,626 Statutory deposit 500,000 500,000 500,000 500,000 500,000 22,289,093 19,960,945 26,223,687 20,488,588 18,565,275 Deduct: Borrowings and other liabilities 3,017,897 3,319,173 3,956,074 4,497,425 4,420,821 19,271,196 16,641,772 22,267,613 15,991,163 14,144,454 Investment contract liabilities 4,846,250 5,817,050 7,793,315 7,121,060 6,761,960 -------------- ------------- ------------- ------------- ------------- 14,424,946 10,824,722 14,474,298 8,870,103 7,382,494 Insurance contract liabilities 7,074,690 5,600,599 11,529,432 4,437,471 1,759,552 7,350,256 5,224,123 2,944,866 4,432,632 5,622,942 ======== ======= ======== ======== ======== Turnover and profits Gross premium income 8,592,508 6,898,170 7,043,461 7,196,709 5,114,109 Profit/(loss) before tax 703,499 2,492,115 81,792 (2,149,719) 98,045 Profit/(loss) after tax 776,293 2,295,554 (123,661) (2,285,110) (124,754) Divided paid 143,415 - - 197,541 592,625 Dividend proposed - 143,415 - 197,541 592,625 ======= ======= ======= ======= ======= IFRS 1FRS NGAAP NGAAP NGAAP Financial ratios* Earning per (50k) share-Basic 10.03k 40.02k (43.82k) (2.29k) 12.86k Earning per share – Diluted 10.03k 29.66k (29.53k) (1.61k) 8.67k Dividend per share – paid 2.5k - 5.00k 15.00k 15.00k Dividend per share - proposed - 2.5k - 5.00k 15.00k Dividend cover (times) - - - - 1.14 Net assets per share N0.95 N0.83 N0.85 N1.09 N1.23 ===== ===== ====== ====== ====== - Page 110 -
  • 113. NIGER INSURANCE PLC COMPANY FIVE YEARS FINANCIAL SUMMARY IFRS IFRS IFRS NGAAP NGAAP 2012 2011 2010 2009 2008 Source of funds N’000 N’000 N’000 N’000 N’000 Issued and paid share capital 3,869,747 2,868,307 2,607,545 2,172,954 1,975,413 Share premium 791,491 817,772 1,166,784 1,612,158 1,620,247 Contingency reserve 1,221,959 1,054,388 810,912 673,317 543,103 Asset revaluation reserve 709,175 366,805 319,282 - - Capital reserve - - - 6,108,188 1,258,188 Fair value reserves 200,156 24,430 - - - Retained earnings 294,438 135,249 (1,928,307) (6,133,985) 28,450 Reserve for bonus share issue - - - - 197,541 7,086,966 5,266,951 2,927,216 4,432,632 5,622,942 ======= ======== ======== ======== ======== Use of funds Cash and cash equivalents 1,784,442 1,813,432 1,379,914 1,045,784 1,876,459 Financial assets - - - - - Available for sale 1,849,654 1,669,758 2,048,491 - - Held to maturity 90,821 100,000 - - - Other financial assets designated at fair 431,835 912,739 900,896 - - Investment - - - 4,122,711 - Other assets - - - 2,864,962 3,936,200 Trade receivables 84,031 - - - - Reinsurance assets 324,269 325,512 7,468,681 - - Deferred acquisition costs 139,319 203,621 194,207 - - Other receivable and prepayment 147,190 272,055 118,738 - - Investment in subsidiaries 105,800 105,800 105,800 - - Investment properties 14,045,000 12,884,676 12,487,460 10,711,796 9,333,990 Deferred tax assets 616,832 - - - - Intangible assets 116,604 43,283 64,925 - - Property, plant and equipment 1,496,683 1,017,463 857,340 965,196 2,918,626 Statutory deposit 500,000 500,000 500,000 500,000 500,000 21,732,480 19,848,339 26,126,452 20,210,449 18,565,275 Deduct: Borrowings and other liabilities 2,724,574 3,163,739 3,827,489 4,219,286 4,420,821 19,007,906 16,684,600 22,298,963 15,991,163 14,144,454 Investment contract liabilities 4,846,250 5,817,050 7,793,315 7,121,060 6,761,960 -------------- ------------- ------------- ------------- ------------- 14,161,656 10,867,550 14,505,648 8,870,103 7,382,494 Insurance contract liabilities 7,074,690 5,600,599 11,529,432 4,437,471 1,759,552 7,086,966 5,266,951 2,927,216 4,432,632 5,622,942 ======== ======= ======== ======== ======== Turnover and profits Gross premium income 8,592,508 6,898,170 7,043,461 7,196,709 5,114,109 Profit/(loss) before tax 256,561 2,501,111 86,465 (2,117,508) 63,757 Profit/(loss) after tax 470,175 2,307,032 (118,638) (2,253,299) (152,335) Divided paid 143,415 - - 197,541 592,625 Dividend proposed - 143,415 - - 197,541 ======= ======= ======= ======= ======== Financial ratios* Earning per (50k) share-Basic 6.07k 40.22k (2.27k) (43.21k) (2.92k) Earning per share – Diluted 6.07k 29.81k (1.53k) (29.11k) (1.97k) Dividend per share – paid 2.5k - - 5.00k 15.00k Dividend per share - proposed - 2.5k - - 5.00k Dividend cover (times) - - - - - Net assets per share N0.92 N0.96 N0.81 N0.85 N1.08 ===== ===== ====== ====== ====== - Page 111 -
  • 114. APPENDICES - Page 112 -
  • 115. NIGER INSURANCE PLC SEGMENT INFORMATION Segmental information is presented in respect of the company‟s business segments. The business segments are based on the company‟s management and internal reporting structure. This segment information is based on the total premium received and claims paid in respect of that segment. The company does not have a geographical segment. Segment information is therefore given for its life and non-life businesses as follows: - (a) Non-life business The company‟s non-life business is organised into the segments shown below. i. Motor This business unit underwrites motor insurance by giving cover which indemnifies the insured against any accidental loss to motorbikes and vehicles. There are three types of motor insurances namely; comprehensive, third party and third party fire & theft. ii. Marine & aviation Marine insurance provides cover on airborne cargoes, ships, fishing vessels as well as ports and harbours installation. Aviation on the other hand covers aircrafts itself and cargo passengers. iii. Fire Fire insurance covers accidental destruction of properties including household buildings, personal effects, commercial and industrial plant and machinery, raw materials, finished goods and profits (business disruption) policies. Fire covers is usually in three parts, namely, fire, lighting and limited explosions. iv. Accident Accident policies cover a broad spectrum of activities including personal accidents, family accidents, family personal accidents, group personal accidents, burglary, cash-in-transit, goods-in-transit, bankers indemnity, pedals cycle, product liability, contractors all-risk, travel insurance, bonds etc. - Page 113 -
  • 116. b) Life Business The company‟s life business is organised into the segments shown below. i. Group life This is a policy that is usually undertaken by companies to provide a life assurance policy cover for their employees. The minimum number of the employee is 10 for a duration of 1 year. ii. Individual life Life Assurance: The life fund is skilfully panelled by experts in a wide spread of first class securities yielding adequate interest and capital profits for the benefit of the holders. Other policies under life Assurance policy are: whole life assurance, endowment assurance, children educational endowment assurance, mortgage protection policy. iii. Mutual Halal Plan The scheme is a life insurance policy with a savings and investments plan designed for Muslims and other interested parties in Nigeria. It is a plan that encourages interested parties to save and mobilize funds to meet their financial obligations. iv. Personal Pension and Savings (PPS) PP&S is a plan whereby a small portion of the amount contributed (premium paid) is used to provide you with a life assurance cover, while the larger portion is retained in an investment account (in your name) accumulating interest at a guaranteed minimum rate. PP&S is open to anybody below the age of 50 or 55 depending on the age of maturity. - Page 114 -
  • 117. NIGER INSURANCE PLC 1. COMPANY COMPOSITE STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER, 2012 Life Non-life Company Company Company Dec.2012 Dec.2012 Dec-2012 Dec-2011 Jan-2011 Note N’000 N’000 N’000 N’000 N’000 Assets Cash and cash equivalents 1 1,059,874 724,568 1,784,442 1,813,432 1,379,914 Financial assets: Available for sale 2.1 317,106 1,532,548 1,849,654 1,669,758 2,048,491 Held to maturity 2.2 90,821 - 90,821 100,000 - Loans and receivables 2.3 428,010 3,825 431,835 912,739 900,896 Trade receivable 3 - 84,031 84,031 - - Reinsurance assets 4 17,398 306,871 324,269 325,512 7,468,681 Deferred acquisition costs 5 - 139,319 139,319 203,621 194,207 Other receivables and prepayment 6 179,237 - 179,237 304,102 150,785 Investment in subsidiaries 7 73,753 - 73,753 73,753 73,753 Investment properties 8 12,673,000 1,372,000 14,045,000 12,884,676 12,487,460 Deferred tax asset 9 616,832 - 616,832 - - Intangible assets 10 116,604 - 116,604 43,283 64,925 Property, plant and equipment 11 906,342 590,341 1,496,683 1,017,463 857,340 Statutory deposit 12 200,000 300,000 500,000 500,000 500,000 16,678,977 5,053,503 21,732,480 19,848,339 26,126,452 ======== ======= ======== ======== ======== Liabilities Insurance contract liabilities 14 5,868,593 1,206,097 7,074,690 5,600,599 11,529,432 Investment contract liabilities 15 4,846,250 - 4,846,250 5,817,050 7,793,315 Borrowings 16 1,351,209 - 1,351,209 2,279,644 2,569,916 Trade payables 17 76,453 - 76,453 66,645 300,482 Provision and other payables 18 134,963 40,176 175,139 142,445 261,629 Income taxes payable 19 26,635 283,757 310,392 367,886 446,030 Deferred tax liabilities 19.4 340,963 470,418 811,381 307,123 249,432 12,645,066 2,000,448 14,645,514 14,581,388 23,150,236 -------------- ------------- ------------- ------------- ------------- Equity: Issued and paid share capital 20 1,212,652 2,657,095 3,869,747 2,868,307 2,607,545 Share premium 21 369,088 422,403 791,491 817,772 1,166,784 Contingency reserve 22 400,976 820,983 1,221,959 1,054,388 810,912 Asset revaluation reserve 23 310,747 398,428 709,175 366,805 319,282 Fair value reserves 24 115,373 84,783 200,156 24,430 - Retained earnings 25 1,625,075 (1,330,637) 294,438 135,249 (1,928,307) Shareholders’ fund 4,033,911 3,053,055 7,086,966 5,266,951 2,976,216 ------------- ------------- ------------- ------------- ------------- Total liabilities and equity 16,678,977 5,053,503 21,732,480 19,848,339 26,126,452 ======== ======== ======== ======== ======== The accounting policies on pages 16 to 47 and the notes on pages 51 to 107 form part of these financial statements - Page 115 -
  • 118. 2. Company statement of comprehensive income Life Non-life Total 2012 2011 2012 2011 2012 2011 Note N’000 N’000 N’000 N’000 N’000 N’000 Underwriting profit 2,300,476 3,289,948 1,187,748 1,563,169 3,488,224 4,855,117 Investment income 31 151,416 233,777 55,877 78,447 207,293 312,224 Net fair value gains on investment property 32 (317,999) 48,500 1,021,111 - 703,112 48,500 Other operating income 33 64,184 - 788 747,035 64,972 747,035 Management expenses 34 (2,227,689) (1,700,121) (982,618) (992,985) (3,210,307) (2,693,106) Impairment loss on investment 35 (139,843) (292,097) (74,475) (311,328) (214,318) (603,425) Impairment on trade receivable 3.1 - - (610,120) - (610,120) - Depreciation and amortisation 36 (129,911) (111,467) (42,385) (53,767) (172,296) (165,234) Net operating profit before tax (299,366) 1,468,540 555,927 1,032,571 256,561 2,501,111 Information technology levy 17 (9,358) (10,884) (56) (3,303) (9,414) (14,187) Income tax expense 19 585,976 (107,247) (362,948) (72,645) 223,028 (179,892) Retained profit after tax transferred to reserve 25 277,252 1,350,409 192,923 956,623 470,175 2,307,032 ------------- ------------ ----------- ----------- ------------ -------------- Other comprehensive income Gain on revaluation of property, plant and equipment 178,079 19,194 72,710 12,074 250,789 31,268 Net fair value gain on available for sale financial assets 5.1 103,016 12,356 164,291 28,329 267,308 40,685 ------------ ------------ ----------- ----------- ------------ ------------- Total comprehensive income for the year 558,347 1,381,959 429,924 997,026 988,271 2,378,985 ======= ======= ====== ====== ======= ======= Earnings per share Basic profit for the year attributable to ordinary equity holders - Page 116 -
  • 119. NIGER INSURANCE PLC SEGMENT REPORTING -LIFE REVENUE ACCOUNT FOR THE YEAR ENDED 31 DECEMBER, 2012 2.1 Life revenue account Note Group Individual 2012 2011 Life Life N’000 N’000 N’000 N’000 Gross premium income 26 3,911,959 3,205,190 7,117,149 4,760,577 Unearned premium (796,532) (652,623) (1,449,155) (1,024,387) 3,115,427 2,552,567 5,667,994 3,736,190 Less: Reinsurance cost 27 (112,898) (92,500) (205,398) (196,939) Net premium income 3,002,529 2,460,067 5,462,596 3,539,251 Fee and commission income 332,297 272,262 604,559 1,485,195 Net income 3,334,826 2,732,329 6,067,155 5,024,446 ======== ======== ======== ======== Expenses Direct claims paid (955,862) (783,168) (1,739,030) (811,588) Surrenders (69,019) (56,549) (125,568) (87,395) Gross claims paid (1,024,881) (839,717) (1,864,598) (898,983) Deduct: Reinsurance claims recoveries 9,563 7,835 17,398 9,935 Net claims paid (1,015,318) (831,882) (1,847,200) (889,048) Add: Underwriting expenses Maintenance cost (359,705) (294,717) (654,422) (206,550) Acquisition cost ( 904,194) (360,863) (1,265,057) (638,900) Total expenses (2,279,217) (1,487,462) (3,766,679) (1,734,498) ------------- -------------- ------------ ------------ Underwriting profit transferred to profit and loss account 1,055,609 1,244,867 2,300,476 3,289,948 ======== ======== ======== ======== - Page 117 -
  • 120. NIGER INSURANCE PLC SEGMENT REPORTING -NON- LIFE REVENUE ACCOUNT FOR THE YEAR ENDED 31 DECEMBER, 2012 2.2 Segment reporting – non-life revenue account Motor Marine & General Note vehicle Fire aviation Accident 2012 2011 N’000 N’000 N’000 N’000 N’000 N’000 Income Direct premium 805,140 255,775 247,191 1,857,991 3,166,097 3,042,356 Inward reinsurance premium 13,025 7,593 7,105 19,501 47,224 6,945 Gross written premium 26 818,165 263,368 254,296 1,877,492 3,213,321 3,049,301 ------------ ------------ ------------- -------------- --------------- --------------- Unearned premium (82,093) (19,661) (13,294) (60,367) (175,415) 112,679 ------------- ------------ ------------ -------------- -------------- ---------------- Gross earned premiums 736,072 243,707 241,002 1,817,125 3,037,906 3,161,980 ------------- ------------ ------------- ------------- -------------- ---------------- Gross reinsurance premium fac 6,831 2,170 2,097 15,764 26,862 132,175 Gross reinsurance premium treaty 692 73,167 45,224 66,788 185,871 - Increase/(decrease) in prepd reinsurance cost 39,623 12,587 12,165 91,437 155,812 (77,219) Reinsurance cost 27 47,146 87,924 59,486 173,989 368,545 54,956 ----------- ----------- ----------- ------------ ------------ ------------ Net earned premiums 688,926 155,783 181,516 1,643,136 2,669,361 3,107,024 Commission received fax Commission received treaty 2,351 18,551 5,476 11,896 38,274 23,747 Net underwriting income 691,277 174,334 186,992 1,655,033 2,707,636 3,130,771 ----------- ----------- ----------- -------------- ------------- --------------- Expenses Direct claims paid 80,958 31,534 70,228 400,851 583,571 656,416 Changes in insurance contract liability 94,721 45,710 62,594 360,409 563,434 404,329 Gross claims incurred 175,679 77,244 132,822 761,260 1,147,005 1,060,745 Deduct: Reinsurance claims recoveries (2,258) (3,087) - (56,276) (61,620) 141,374 Net claims paid 173,421 74,157 132,822 704,984 1,085,385 919,371 ----------- ---------- ------------ ----------- ------------ -------------- Add: Expenses Maintenance cost 28,483 9,048 8,745 65,730 112,006 395,864 Acquisition cost 82,011 26,053 25,179 189,254 322,498 250,368 Total expenses 283,915 109,258 166,746 959,968 1,519,889 1,565,602 ------------ ---------- ------------ ----------- ----------- ------------ Underwriting profit transferred to P&L account 407,362 65,076 20,247 695,065 1,187,748 1,565,169 ======== ====== ======= ====== ======= ======= - Page 118 -
  • 121. STATEMENT OF CHANGES IN EQUITY AS AT 31 DECEMBER 2012 ordinary share Share Assets Fair value Contingency Retained capital premium revaluation reserve reserve earnings Total N’000 N’000 N’000 N’000 N’000 N’000 N’000 Life As at 1 January 2011 1,057,241 554,819 113,474 - 177,808 (217,878) 1,685,464 Bonus issue 105,724 (105,724) - - - - - Share capital increase expenses - (60,424) - - - - (60,424) Revaluation gain n PPE - - 19,194 - - - 19,194 Fair value gain on available for sale assets - - - 12,356 - - 12,356 Transfer from income statement - - - - - 1,350,409 1,350,409 Transfer to contingency reserve - - - - 151,997 (151,997) - Reclassification from non-life - - - - - 510,000 510,000 Bal. as at 31 December, 2011 1,162,965 388,671 132,668 12,356 329,805 1,490,534 3,516,999 ======== ======== ======= ======== ======= ======= ======== As at 1 January, 2012 1,162,965 388,671 132,668 12,356 329,805 1,490,534 3,516,999 Right issue 49,687 - - - - 49,687 Dividend paid - - - - (71,540) (71,540) Share capital increase expenses - (19,583) - - - (19,583) Fair value gain on available for sale assets - - - 103,017 - - 103,017 Revaluation gain on PPE - - 178,079 - - - 178,079 Transfer from income statement - - - - - 277,252 277,252 Transfer to contingency reserve - - - - 71,171 (71,171) - Bal. As at 31 December, 2012 1,212,652 369,088 310,747 115,373 400,976 1,625,075 4,033,911 ======== ======= ======= ======== ======== ======== ======== Non-life As at 1 January, 2011 1,550,304 611,965 205,808 - 633,104 (1,710,429) 1,290,752 Bonus issue 155,038 (155,038) - - - - - Share capital increase expenses - (27,826) - - - (27,826) Revaluation gain in PPE - - 28,329 - - - 28,329 Fair value gain available on sale assets - - - 12,074 - - 12,074 Transfer from income statement - - - - - 956,623 956,623 Transfer to contingency reserve - - - - 91,479 (91,479) - Reclassification to life - - - - - (510,000) (510,000) Bal. As at 31 December, 2011 1,705,342 429,101 234,137 12,074 724,583 (1,355,285) 1,749,952 ======== ======= ======= ======= ======== ======== ======== As at 1 January, 2012 1,705,342 429,101 234,137 12,074 724,583 (1,355,285) 1,749,952 Right issue 951,753 - - - - 951,753 Dividend paid - - - - (71,875) (71,875) Share capital increase expenses - (6,698) - - - - (6,698) Revaluation gain on PPE - - 164,291 - - - 164,291 Fair value gain on available for sale assets - - - 72,709 - - 72,709 Transfer from income statement - - - - - 192,923 192,923 Transfer to contingency reserve - - - - 96,400 (96,400) - Bal. as at 31 December, 2012 2,657,095 422,403 398,428 84,783 820,983 (1,330,637) 3,053,055 ======== ======= ======= ======== ======= ======== ======== The accounting policies on pages 16 to 47 and the notes on pages 51 to 107 form part of these financial statements - Page 119-
  • 122. Property, plant & equipment – life Furniture Land & fittings & Motor Cost/revaluation building equipment vehicles Total N’000 N’000 N’000 N’000 As at 1 January, 2011 432,867 576,034 229,632 1,238,533 Additions 970 42,253 78,935 122,158 Revaluation adjustment 28,227 - - 28,227 Disposal - - - - As at 31 December, 2011 462,064 618,287 308,567 1,388,918 ======= ======= ======= ======== As at 1 January, 2012 462,064 618,287 308,567 1,388,918 Additions - 35,513 60,475 95,988 Adjustment for fair value 248,597 - - 248,598 Disposal - - (4,392) (4,392) As at 31 December, 2012 710,661 653,800 364,650 1,729,112 ======= ======= ======= ======== Depreciation As at 1 January, 2011 57,867 443,821 157,360 659,048 Charge for the year 4,197 66,200 19,428 89,825 On disposal - - - - As at 31 December, 2011 62,064 510,021 176,788 748,873 ===== ====== ====== ====== As at 1 January, 2012 62,064 510,021 176,788 748,873 Charge for the year 4,197 42,569 31,522 78,289 On disposal - - (4,392) (4,392) As at 31 December, 2012 66,261 552,590 203,918 822,770 ====== ====== ====== ====== Net book value: As at 31 December, 2012 644,400 101,210 160,732 906,342 ====== ====== ====== ====== As at 31 December, 2011 357,643 108,266 131,779 640,045 ====== ====== ====== ======= As at 1 January, 2011 375,000 132,213 72,272 579,485 ====== ====== ====== ====== - Page 120 -
  • 123. Property, plant and equipment – non-life Furniture Land & fittings & Motor buildings equipment vehicles Total Cost/revaluation N’000 N’000 N’000 N’000 As at 1 January, 2011 259,023 79,396 258,094 596,513 Additions - 84,997 29,236 114,233 Revaluation adjustment 41,660 - - 41,660 Disposals - (280) (6,410) (6,690) As at 31 December, 2011 300,683 164,113 280,920 745,716 ====== ====== ====== ======= At 1 January, 2012 300,683 164,113 280,920 745,716 Additions 159 32,838 311 33,308 Adjustment for fair value 222,000 - - 222,000 Disposals - - (2,925) (2,925) As at 31 December, 2012 522,842 196,951 278,306 998,099 ====== ====== ====== ======= Depreciation As at 1 January, 2011 36,023 69,660 212,975 318,658 Charge for the year 1,660 17,294 34,812 53,766 On disposal - (280) (3,846) (4,126) As at 31 December, 2011 37,683 86,674 243,941 368,298 ===== ====== ====== ====== As at 1 January, 2012 37,683 86,674 243,941 368,298 Charge for the year 1,661 21,227 19,497 42,385 On disposal - - (2,925) (2,925) As at 31 December, 2012 39,344 107,901 260,513 407,758 ====== ======= ======= ======= Net book value: As at 31 December, 2012 483,498 89,050 17,793 590,341 ====== ====== ====== ======= As at 31 December, 2011 263,000 77,439 36,979 377,418 ====== ====== ====== ======= As at 1 January, 2010 223,000 9,736 45,119 277,855 ======= ======= ======= ======= - Page 121 -

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