2009 Annual Report & Accounts
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF CONTINENTAL REINSURANCE PLC Report on the Financial Statements We have audited the accompanying financial statements of Continental Reinsurance Plc, set out on pages 13 to 36, which comprise the balance sheet as at 31 December, 2009, the income statement, statement of cash flows for the year then ended, a summary of significant accounting policies, value added statement, financial summary and other explanatory information. Directors’ Responsibility for the Financial Statements The Directors are responsible for the preparation and fair presentation of these financial statements in accordance with the Companies and Allied Matters Act, Cap C20, LFN 2004, the Insurance Act, Cap I17 LFN 2004 and the NAICOM Guidelines 2009, and for such internal control as the Directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of Continental Reinsurance Plc as at 31 December, 2009, and of its financial performance and its cash flows for the year then ended; the company has kept proper books of account, which are in agreement with the balance sheet and income statement, in the manner required by the Companies and Allied Matters Act, Cap C20, LFN 2004, and, in accordance with the Statements of Accounting Standards issued by the Nigerian Accounting Standards Board.
Chartered Accountants Lagos, Nigeria 2 June, 2010 Member of Deloitte Touche Tohmatsu 2
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES FOR THE YEAR ENDED 31 DECEMBER 2009 The following are the statement of significant accounting policies which have been adopted by the company. 1.
Basis of accounting The financial statements are prepared under the historical cost convention. The Life business is accounted for on fund accounting basis while the Non-Life business is on annual accounting basis.
2.
Underwriting accounts and reinsurance funds .a
Gross Premium Income Recognition
Premium is recognised as income when offers from ceding companies are confirmed via credit notes. This comprises premiums generated on contracts entered into during the year as well as premiums and adjustments on contracts entered into in earlier years but confirmed in the current accounting year. All written premiums are recorded on underwriting year basis and a provision is made for unearned income as Reserve for Unexpired Risk for the portion of the premium relating to the current underwriting year that have not expired by the end of the accounting year. Earned Premium Income represents Gross Premium less change in reserve for Unexpired Premium during the year. .b
Retrocession
Retrocession premium represents the cost of outward reinsurance for the year. The retrocession programme is on underwriting year basis with appropriate reserves calculated using the same basis as the reserve for unexpired risks. Retrocession recoveries on claims are disclosed separately as an asset and charged against Gross Claims Incurred to arrive at the Net Claims Incurred. .c
Gross Claims
Gross claims represent claims and claims handling expenses paid to the ceding companies during the accounting year. Gross Claims incurred consist of gross claims net of changes in Reserve for Outstanding Claims (including IBNR) during the year. .d
Reserve for unexpired risks
The portion of the Non-Life gross written premium which has not yet expired by the end of the accounting year on a class by class risk earning profile basis is accounted for as Reserve for Unexpired Risks. 3
This is calculated as 45% of current underwriting year premium for all classes of business except Marine Hull which is 25%. .e
Reserve for outstanding claims
Reserve for Outstanding Claims represents provisions made to account for estimated cost of all claims and the related claims handling expenses incurred but not paid at the Balance Sheet date including the cost of claims incurred but not reported (IBNR) using best available information. The reserve which is based on historical experience is calculated at an amount not less than 35% of gross claims paid during the accounting year. 3.
Actuarial valuation of Life Fund Actuarial valuation of the life fund is carried out annually for purpose of determining the surplus or deficit at the end of the year. Surplus or deficit arising on valuation is reflected in the profit and loss account in the year in which this is carried out.
4.
Contingency Reserves Contingency reserves are done in accordance with the provisions of the Insurance Act, CAP I17 LFN 2004: a. For general business the contingency reserve is credited with the higher of an amount not less than 3% of the total premium or 20% of the net profits. b.For life business the contingency reserve is credited with the higher of an amount equal to 1% of the gross premium or 10% of the profits.
5.
Investments .a
Short term investments
Short term investments are held as placements and term deposits with banks and other financial institutions.They are stated at the lower of cost and market value.Interest receivable is accrued for and credited to the profit and loss account. .b
Long term investments bi
Quoted investments
Investments in quoted securities are held as long term and stated at market value. Gain between the cost and the market value is transferred to investment revaluation reserve. Diminution in the value of investments is also transferred to investment revaluation reserve to the extent of the balance in the reserve. Subsequent amounts are thereafter charged to the profit and loss account. bii
Unquoted investments 4
Unquoted investments are stated at cost.Provision is made when there is permanent diminution in value. 6. Investment properties Investment properties are investments in land and buildings that are not occupied substantially for use in the operations of the company. Investment properties are revalued every three years by external professional valuers and are not subject to periodic charges for depreciation. 7.
Fixed assets Fixed assets are stated at cost less accumulated depreciation.
8.
Depreciation Depreciation is provided using the straight-line method at rates calculated to write off the cost of the fixed assets over their estimated useful lives .The principal annual rates used for the purpose are: % Motor vehicles 25 Furniture and equipment 20 Computer equipment 20 Partitioning 10
9.
Debtors Debtors are stated after deducting provision made for specific debts considered doubtful of recovery.Full provision is made for balances outstanding for over 2 years.
10. Management expenses Certain management expenses, which relate directly to underwriting businesses are charged thereto, and are apportioned to the various classes of business in the proportion of the premium income of the current underwriting year. 11. Foreign currency balances a. Underwriting businesses from outside Nigeria denominated in foreign currencies are translated to Naira using the rates of exchange ruling at the time of the transaction. Other transactions denominated in foreign currencies are translated to Naira at the rates of exchange ruling at the time of the transaction. b. All assets and liabilities (except for underwriting businesses as stated in Note 11a above) existing in foreign currencies are converted to Naira at the rate of exchange ruling at the balance sheet date, and gains and losses are treated on the Foreign Exchange Reserve Account. 12.
Retirement Benefit Scheme
5
The company has a Gratuity Scheme for its employees managed by Trustees. The scheme is non-contributory and employees qualify for benefits after five years’ service. Provision for gratuity is made when it is determined that there is a shortfall in the assets funding the liabilities. The Company also has a contributory pension scheme in line with the Pension Reform Act, 2004. Contribution to the scheme is 7.5% of total emoluments (basic salary, housing and transport allowances) by both employer and employee. The company’s contribution each year is charged against income and is included in staff cost. 13. Taxation i.
Income tax
Income tax is provided at the company tax rate on the taxable income for the year. ii. Deferred taxation Deferred tax provision is made by the liability method and calculated at the current rate of taxation on the difference between the net book value of qualifying fixed assets and their corresponding tax written down value. 14. Provisions Provision is recognized when the Company has a present obligation, whether legal or constructive, as a result of past event for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, in accordance with the Statement of Accounting Standard (SAS) 23. 15. Dividend Proposed dividend for the year is recognized as a liability only when declared and approved by shareholders at the Annual General Meeting.
6
CONTINENTAL REINSURANCE PLC BALANCE SHEET AS AT 31 DECEMBER 2009 Life N'000
Non-Life N'000
2009 N'000
2008 N'000
2 3 4
357,847 229,181
338,216 6,290,250 3,120,334
338,216 6,648,097 3,349,515
189,932 7,409,768 2,495,191
5 6 7 8 9
57,006 148,766 -
693,484 2,565,846 678,863 1,000,000 160,392
693,484 2,622,852 827,629 1,000,000 160,392
772,671 1,678,985 687,344 1,000,000 119,698
792,800
14,847,385
15,640,185
14,353,589
10 11 12 13 14 15
219,488 573,312 792,800
559,996 1,964,918 884,096 213,266 19,146 36,345 3,677,767
779,484 2,538,230 884,096 213,266 19,146 36,345 4,470,567
705,037 1,598,678 378,151 265,779 271,616 3,219,261
16 17 18 19 20 21 22
792,800
5,186,372 3,915,451 635,748 568,966 772,680 90,401 11,169,618 14,847,385
5,186,372 3,915,451 635,748 568,966 772,680 90,401 11,169,618 15,640,185
5,186,372 3,896,559 522,216 623,181 1,987 232,997 568,595 102,421 11,134,328 14,353,589
Note ASSETS Cash and bank balances Short term investments Reinsurance debtors Prepayments and other debit balances Long term investments Investment properties Statutory deposits Fixed assets Total assets LIABILITIES Creditors and accruals Insurance Funds Outstanding Claims Taxation Deferred taxation Dividend payable
CAPITAL AND RESERVES Share capital Share premium Revenue reserve General reserve fund Investments revaluation reserve Exchange equalisation reserve Contingency reserve Revaluation reserve Shareholders' funds
The financial statements on pages 2 to 26 were approved by the Board of Directors on 2 June, 2010 and signed on its behalf by:
Engr. S. A. Laguda (Chairman)
A. Adejumo (Managing Director)
} } } Directors } }
The accounting policies on pages 2 to 6 and the notes on pages 13 to 24 form part of these financial statements.
7
CONTINENTAL REINSURANCE PLC PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2009
Non-life revenue account
2009 N'000 763,427
2008 N'000 351,784
Life revenue account
103,646
22,000
Note
Investment and other income
25
1,179,408
1,462,188
Provision for doubtful balances
26
(914,725)
(1,138,667)
(151,941)
(139,819)
Administrative expenses Profit on ordinary activities before taxation
27
979,815
557,486
Taxation
13
(74,597)
(84,161)
905,218
473,325
Profit on ordinary activities after taxation Transfer to contingency reserve: - Non-life - Life
22 22
(195,069) (9,016)
(121,055) -
Profit for the year
18
701,133
352,270
522,216
688,583
(68,964)
-
(518,637)
(518,637)
635,748
522,216
Revenue reserve brought forward Transfer from Life Contingency Reserve
18a
Prior year dividend declared Revenue reserve carried forward Earnings per share - Basic (kobo)
9
The financial statements on pages 2 to 24 were approved by the Board of Directors on 19 March, 2009 and signed on its behalf by: } } } Directors } }
Engr. S. A. Laguda (Chairman)
A. Adejumo (Managing Director)
8
5
CONTINENTAL REINSURANCE PLC STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2009 2009 N'000
2008 N'000
6,813,083
4,013,670
Retrocession receipts in respect of claims Acquisition cost paid Retrocession premium paid
634,293 (1,907,518) (234,716)
163,123 (1,453,115) 157,460
Cash paid to and on behalf of employees Other operating income Claims paid Income tax paid
13
(1,184,993) 1,145,777 (3,613,310) (96,453)
(964,557) 969,547 (1,526,701) (107,744)
Net cash provided by operating activities
28
1,556,163
1,251,683
9
(100,350) (1,300,518) (250,285) 325,878 44,569 5,740
(106,563) (1,311,712) (90,000) 692,626 89,394 580
(1,274,966)
(725,675)
18,892 (753,908)
25,600 (267,602)
Net cash used in financing activities
(735,016)
(242,002)
Net (decrease)/increase in cash and cash equivalents
(453,819)
284,006
Cash and cash equivalents at the beginning of the year
8,321,610
8,037,604
7,867,791
8,321,610
Note Cash flows from operating activities Premium received from policy holders
Cash flows from investing activities Purchase of fixed assets Purchase of investments Investment properties Proceed on sale of investments Dividend received Proceed on sale of fixed assets
7
Net cash used in investing activities Cash flows from financing activities Share issue expenses refund Dividend paid
17 15
Cash and cash equivalents at the end of the year
29
9
NON-LIFE REVENUE ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2009 Fire N'000 2,733,460
Accident N'000 1,329,892
Marine N'000 908,950
Liability N'000 706,261
Energy N'000 823,738
2009 Total N'000 6,502,301
727,439 (835,267) 2,625,632 (127,575) 2,498,057
256,890 (419,788) 1,166,994 (16,962) 1,150,032
168,770 (223,533) 854,187 (23,818) 830,369
178,122 (194,868) 689,515 689,515
42,866 (291,462) 575,142 (66,361) 508,781
1,374,087 (1,964,918) 5,911,470 (234,716) 5,676,754
722,794 (1,374,087) 3,383,870 (157,460) 3,226,410
1,540,291
563,095
270,927
150,046
1,633
2,525,992
1,080,434
539,102
197,083
94,824
52,516
571
884,096
378,151
Balance beginning of the year Claims incurred Retrocession recoveries
(180,717) 1,898,676 (634,293)
(92,739) 667,439 -
(50,499) 315,252 -
(53,598) 148,964 -
(598) 1,606 -
(378,151) 3,031,937 (634,293)
(205,324) 1,253,261 -
Net claims incurred Underwriting expenses: Acquisition and maintenance cost: - Commissions - Brokerage and charges Management expenses
1,264,383
667,439
315,252
148,964
1,606
2,397,644
1,253,261
784,902 53,415 318,873
374,097 30,859 155,139
225,210 19,974 106,034
76,318 39,092 82,389
149,580 3,707 96,094
1,610,107 147,047 758,529
1,022,950 121,765 476,650
2,421,573
1,227,534
666,470
346,763
250,987
4,913,327
2,874,626
76,484
(77,502)
163,899
342,752
257,794
763,427
351,784
Income Gross premium income Reserve for unexpired premium: Balance beginning of the year Balance end of the year Earned premium income Retrocession cost Net premium written Expenses Gross claims paid Reserve for outstanding claims: Balance end of the year
Transfer to profit and loss account
Notes
23 11.1
24
12
2008 Total N'000 4,035,163
LIFE BALANCE SHEET AS AT 31 DECEMBER 2009 Note
2009 N'000
3 4
357,847 229,181
36,498 588,341
5 6 7
57,006 148,766
5,231 687,344
792,800
1,317,414
10 12
219,488 573,312 792,800
298,257 224,591 522,848
19 22
-
623,181 68,964 102,421
-
794,566
792,800
1,317,414
ASSETS Short term investments Reinsurance debtors Prepayments and other debit balances Long term investments Investment properties Total assets LIABILITIES Creditors and accruals Insurance funds
RESERVES General reserve fund Contingency reserve Revaluation reserve Shareholders' funds
2008 N'000
The financial statements were approved by the Board of Directors on 2 June, 2010 and signed on its behalf by:
Engr. S.A. Laguda
A. Adejumo
} } } Directors } }
The accounting policies on pages 2 to 6 and the notes on pages 13 to 24 form part of these financial statements.
LIFE REVENUE ACCOUNT FOR THE YEAR ENDED 31 DECEMBER 2009 Notes
Individual N'000
23
63,446
Income Premium Income Retrocessions
-
Net premium Investment Income
Expenses Commission Claims Other charges Management expenses Provision for premium debtors
25
26
Group N'000
2009 Total N'000
838,167
901,613
-
-
2008 Total N'000 1,240,133 (30,000)
63,446
838,167 44,928
901,613 44,928
1,210,133 43,037
63,446
883,095
946,541
1,253,170
71,934 12,314 2,890 13,321 -
225,477 569,059 37,791 175,978 77,555
297,411 581,373 40,681 189,299 77,555
308,400 446,267 1,197 117,769 55,412
100,459
1,085,860
1,186,319
929,045
-
(Deficit)\Excess of income over expenditure General Reserve fund Contingency reserve Transfer to profit and loss
(37,013) (15,999)
(202,765) (87,647)
(239,778) (103,646)
324,125 (249,252) (32,413) (22,000)
Transfer to Insurance Fund
(53,012)
(290,412)
(343,424)
20,460
12
NOTES TO THE FINANCIAL STATEMENTS FOR YEAR ENDED 31 DECEMBER 2009 1.
The Company a.
Legal form Continental Reinsurance Plc was incorporated in 1985 as a professional reinsurance limited liability company under the Companies Act 1968 and obtained licence to transact non-life Reinsurance business on 10 December, 1986. It commenced business operation in January, 1987. The Company subsequently obtained licence to transact life reinsurance business in September, 1989 and commenced life reinsurance business in January 1990. In 1999, the Company was converted to a public limited liability company and on 30 May, 2007, its shares were listed on the Nigerian Stock Exchange. In January, 2005, the Company opened a business office in Douala Cameroun.
b.
2.
3.
Principal activities The Company was licensed to carry out both life and non-life reinsurance business. Life Non-Life N'000 N'000 Cash and bank balances Cash 705 Local bank balances 13,062 Foreign bank balances 324,449
4.
4.1
2008 N'000
705 13,062 324,449
425 34,530 154,977
-
338,216
338,216
189,932
357,847 357,847 357,847
5,483,855 154,444 1,477,337 56,092 7,171,728 (881,478) 6,290,250
5,841,702 154,444 1,477,337 56,092 7,529,575 (881,478) 6,648,097
6,255,085 63,405 1,727,337 85,851 8,131,678 (721,910) 7,409,768
Provision for doubtful investments At 1 January Charge for the year (Note 26)
-
721,910 159,568
721,910 159,568
58,092 663,818
At 31 December
-
881,478
881,478
721,910
Short term investment Bank placements- local Bank placements- Foreign Managed funds Other short term placements Provision for doubtful investments (note 3.1)
3.1
2009 N'000
The provisions in this account balance were principally as a result of the diminution in the value of quoted equities held with fund and stock managers on behalf of the company. Reinsurance debtors Due from ceding companies (Local) 468,613 3,611,701 4,080,314 2,657,404 Due from ceding companies (Foreign) 746,059 Due on retrocession 652,002 652,002 15,747 Premium reserves retained by ceding 10,625 10,625 19,970 companies 468,613 4,274,328 4,742,941 3,439,180 Provision for bad and doubtful debts (Note 4.1) (239,432) (1,153,994) (1,393,426) (943,989) 229,181 3,120,334 3,349,515 2,495,191 Provision for bad and doubtful debts At 1 January Charge for the year (Note 26)
165,037 74,395
778,952 375,042
943,989 449,437
458,341 485,648
At 31 December
239,432
1,153,994
1,393,426
943,989
13
Life N'000 5.
2009 N'000
2008 N'000
Prepayments and other debit balances Prepayments Interest receivable Staff loans and advances Staff share ownership trustee Due from subsidiaries Withholding tax recoverable Life business Deposit for shares (note 5.1) Retrocession unexpired risk (note 24) Branch development Others
Provision for other debtors (note 5.2)
5.1
Non-Life N'000
-
74,740 168,759 143,993 1,533 10,401 4,430 174,191 14,693
74,740 168,759 143,993 1,533 10,401 4,430 174,191 14,693
6,972 189,504 109,908 4,716 10,413 11,512 266,342 107,318
-
192,042
192,042
-
-
27,989
27,989
99,561 85,712
-
812,771
812,771
891,958
-
(119,287)
(119,287)
(119,287)
-
693,484
693,484
772,671
Deposit for shares This represents money paid for various public offers of companies and financial institutions for which the shares had not been alloted as at year end. However after year end, some of these funds have been refunded by the Registrars to the various issues.
5.2
6.
Life N'000
Non-Life N'000
2009 N'000
2008 N'000
Provision for doubtful balances At 1 January Charge for the year (Note 26)
-
119,287 -
119,287 -
95,006 24,281
At 31 December
-
119,287
119,287
119,287
5,231 (3,160) 2,071
1,108,858 (380,115) 728,743
1,114,089 (383,275) 730,814
2,248,364 (1,160,899) 1,087,465
-
1,857,051
1,857,051
562,811
54,935 54,935
1,998 1,859,049
54,935 1,998 1,913,984
48,657 1,998 613,466
54,935 57,006
(21,946) 1,837,103 2,565,846
(21,946) 1,892,038 2,622,852
(21,946) 591,520 1,678,985
Long term investments Quoted investments [at market value]: Quoted shares and debenture: Cost Diminution in market value Market value Unquoted investments [at cost]: Unquoted shares Foreign currencies commercial bonds (note 6.1) Investment in subsidiary Provision for doubtful investments (Note 6.2)
14
Long term investments (Cont'd) Foreign currencies commercial bonds These represent long term investments in life bonds with HSBC International and foreign mutual funds with Scottish Widow and J. P. Morgan. Life Non-Life 2009 2008 N'000 N'000 N'000 N'000 Provision for doubtful investments At 1 January 21,946 21,946 1,998 Charge for the year (note 26) 19,948 At 31 December Investment in properties - Life Valuation/cost Disposal during the year: - Cost - Revaluation reserve Transfer Additions in the year
-
21,946
21,946
21,946
687,344
-
687,344
597,344
(97,980) (12,020) (678,863) 250,285
-
(97,980) (12,020) 250,285
90,000
827,629
687,344
148,766
678,863 678,863
Three of the Company's land and buildings were revalued by Fola Oyekan & Associates, a professional firm of Estate Surveyors and Valuers on the basis of Open Market Value on 16 November, 2006 and a revaluation surplus of N102.421 million was incorporated into the books of the Company. During the year, the company disposed one of the buildings in exchange for another. The property was disposed for the sum of N145million in exchange for another in a different location at the value of N200million. Basis of valuation was carried out by Fola Oyekan & Associates (Estate Surveyors and Valuers). The relevant revaluation amount in the revaluation reserve on the disposed property was transferred to the profit and loss account in line with SAS 3(43). Statutory deposit This represents statutory deposit with Central Bank of Nigeria.
Fixed Assets
Cost At1January Additions Disposal
Freehold land N'000
Motor vehicles N'000
Furniture and equipment N'000
Office partitioning N'000
Computer equipment N'000
Total N'000
2,524 -
97,204 34,474 (13,807)
57,025 20,411 (13,387)
37,294 11,242 (3,272)
41,240 34,223 (22,170)
235,287 100,350 (52,636)
2,524
117,871
64,049
45,264
53,293
283,001
At31December Depreciation At1January Chargefortheyear Ondisposal At31December NetBookValue At31December,2009
-
53,460 27,600 (10,254) 70,806
30,503 11,500 (13,199) 28,804
5,761 4,526 (2,359) 7,928
25,865 10,659 (21,453) 15,071
115,589 54,285 (47,265) 122,609
2,524
47,065
35,245
37,336
38,222
160,392
At31December,2008
2,524
43,744
26,522
31,533
15,375
119,698
15
NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2009 Life N'000 10.
11. .1
.2
2009 N'000
2008 N'000
Creditors: Amounts falling due within one year: Due to retrocessionaires Due to ceding companies Sundry creditors Rent received in advance Stale cheques Accrued expenses PAYE, NSITF & withholding tax Public offer fees Non-life business Staff gratuity scheme (note 30.iv) Due to susidiaries Information technology development levy (note 10.1)
10.1
Non-Life N'000
33,929 14,519 -
137,351 212,379 94,180 51,546
171,040 -
38,015 338
171,040 38,015 338
24,225 234,762 5,228 26,752 20,584 8,703 1,504 69,177 266,342 38,015 338
-
13,610
13,610
9,407
-
137,351 246,308 108,699 51,546 -
12,363 214 -
12,363 214
-
-
219,488
559,996
779,484
705,037
-
12,016 5,576 (8,185)
Information technology development levy At 1 January Based on profit for the year Payments during the year
-
9,407 9,777 (5,574)
9,407 9,777 (5,574)
At 31 December
-
13,610
13,610
9,407
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 have provided for NITDA levy at the specified rate. 2009 2008 N'000 N'000 Insurance funds Non-Life Reserve for unearned premium At 1 January 1,374,087 722,794 Arising during the year 590,831 651,293 At 31 December 1,964,918 1,374,087 Life At 1 January Arising during the year Transfer from Life General Reserve (note 19) Transfer from Contingency reserve (note 22.2)
224,591 (343,424) 623,181 68,964
At 31 December
573,312 2,538,230
16
204,131 20,460 224,591 1,598,678
12.
Reserve for outstanding claims At 1 January Arising during the year
378,151 505,945
205,324 172,827
At 31 December
884,096
378,151
2009 N'000 13.
Taxation
13.1
Per profit and loss account: Income tax based on profit for the year Education tax Over provision in prior years
198,652 14,614 (157,815)
195,100 15,151 (117,922)
55,451 19,146
92,329 (8,168)
74,597
84,161
At 1 January Based on profit for the year Withholding tax credits Payments during the year
265,779 55,451 (11,511) (96,453)
281,194 92,329 (107,744)
At 31 December
213,266
265,779
Deferred tax (note 14)
13.2
2008 N'000
Per Balance Sheet:
The charge for taxation has been computed in accordance with the provisions of the Companies Income Tax Act, CAP C21 LFN 2004 and the Education Tax Act, CAP E4 LFN 2004 as ammended. 14.
Deferred taxation At 1 January Arising/(Release) during the year
19,146 19,146
At 31 December 15.
17.
-
Dividend payable At 1 January Prior year dividend (note 18) Payments
16.
8,168 (8,168)
At 31 December Share capital Authorised: 15,000,000,000 ordinary shares of 50k each Issued and fully paid: At 31 December Share premium At 1 January Share issue refund (note 17.1)
17
271,616 518,637 (753,908)
20,581 518,637 (267,602)
36,345
271,616
7,500,000
7,500,000
5,186,372
5,186,372
3,896,559 18,892
3,870,959 25,600
.1
3,915,451
At 31 December Share issue expenses refund
3,896,559
During the year the company got a refund on expenses incurred on the rights offer from one of the parties to the rights and public offer carried out in year 2007 on the bill submitted and paid. This has now been added back to the share premium, since it had been deducted from share premium as part of prior year's issue expenses.
2009 N'000 18.
Revenue reserve- Non-life At 1 January Prior year dividend (note 15) Transfer from Life contigency reserve (a) - (note 22.2) Transfer from profit and loss account
2008 N'000
522,216 (518,637) (68,964) 701,133 635,748
a.
688,583 (518,637) 352,270 522,216
In line with the directives of the National Insurance Commision (NAICOM), the amount previously held in the Life Contingency Reserve was transferred to the Revenue reserve Non-life as stated in the Insurance Act CAP 117 LFN 2004. In respect of the current year, the Directors proposed that a dividend of 5.5kobo per ordinary share will be paid to shareholders. This dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The gross dividend payable is N570,500,937.27.
19.
General Reserve Fund At 1 January Transfer to life insurance fund (note 11.2) At 31 December
20.
2009 N'000
2008 N'000
623,181 (623,181)
373,929 249,252
-
623,181
In line with the Insurance Act CAP I17 LFN 2004, the general reserve fund has been merged with the Life Insurance fund. Investment revaluation reserve - Non-life At 1 January 1,987 1,161,091 Arising during the year (1,987) (1,159,104) 1,987 - Life At 1 January 1,411 Arising during the year (1,795) (384) Charged to life revenue account 384 -
At 31 December
18
1,987
2009 N'000 21.
22.
1.
2.
23.
2008 N'000
Exchange equalisation reserve At 1 January Movement during the year
232,997 335,969
15,377 217,620
At 31 December Contingency reserve
568,966
232,997
The statutory contingency reserve has been computed in accordance with Section 21(1) of the Insurance Act, Cap I17 LFN 2004. The movements on the account are as follows: 2009 2008 N'000 N'000 Non-Life At 1 January Transfer from Profit and Loss account
499,631 195,069
378,576 121,055
At 31 December
694,700
499,631
Life At 1 January Transfer from Revenue account Transfer from Profit and Loss account Transfer from Non-life revenue reserve (note 18) Transfer to Life Insurance fund (note 11.2) At 31 December
68,964 9,016 68,964 (68,964) 77,980
36,551 32,413 68,964
772,680
568,595
823,738 2,733,460 1,329,892 908,950 706,261 6,502,301
104,963 2,067,175 745,575 593,555 523,895 4,035,163
63,446 838,167 901,613 7,403,914
118,088 1,122,045 1,240,133 5,275,296
Premium income Non-life - Energy - Fire - General accidents - Marine - Liability Life - Individual - Group
19
24 .
Retrocession cost 2009
2008
Reserve on Unexpire d N'000
Retrocessio n
Retrocessio n
Cost N'000
Cost N'000
104,380
127,575
100,532
54,296 13,878 19,488
66,361 16,962 23,818
24,575 32,353
426,75 8
192,042
234,716
157,460
Life N'000
NonLife N'000
2009 N'000
2008 N'000
-
44,569 33,990
44,569 33,990
89,394 445,704
29,273 15,655 -
893,430 30,919 174,418 369 1,713
922,703 30,919 190,073 369 1,713
882,286 47,565 26,840 580 590 12,266
44,928
1,179,408
1,224,336
1,505,225
74,395
159,568 375,042
159,568 449,437
663,818 485,648
-
-
-
24,281
3,160 -
380,115 -
383,275 -
384 19,948
77,555
914,725
992,280
1,194,079
24,073 128,701 7,500 (369) 54,285
16,048 34,483 7,500 (580) (590) 34,427
Paid in the Year N'000
Fire Energy Accident Marine
25 .
231,95 5 120,65 7 30,840 43,306
Investment and other income Dividend Profit on disposal of investment Interest on deposits and bank instruments Interest on statutory deposit Rental income Profit on disposal of fixed assets Exchange gain/loss Other income
26 .
Provision for doubtful balances Short term investments (note 3.1) Reinsurance debtors (note 4.1) Prepayment and other debit balances (note 5.3) Provision for diminution in quoted securities (note 6) Long term investments (note 6.2)
27 .
Profit on ordinary activities before taxation Profit on ordinary activities before taxation is arrived at after charging/(crediting): Directors' remuneration: - Fees - Other emoluments Auditors' remuneration Profit on disposal of fixed assets Exchange gain Depreciation
20
28.
Reconciliation of profit after tax to net cash provided by operating activities Profit after tax (Deficit)\Excess of income over expenditure - life Adjustment for non-cash items: Depreciation Provision for bad and doubtful balances Decrease in income tax payable Deferred taxation Changes in operating assets/liabilities: Reinsurance debtors Prepayments and other debit balances Creditors and accruals Dividend payable Actuarial surplus Provision for unexpired risks Provision for outstanding claims Profit on disposal of investments Profit on disposal of fixed assets Dividend received Net cash provided by operating activities
29.
i)
473,325 324,125
54,285 992,280 (52,513) 19,146
34,427 1,194,079 (23,600) 8,168
(1,303,761) 79,187 74,447 (235,271)
(1,262,010) 146,009 (180,778) 251,035
(103,646) 939,552 505,945 (33,990) (369)
(22,000) 671,754 172,827 (445,704) (580)
(44,569)
(89,394)
1,556,163
1,251,683
338,216 7,529,575
189,932 8,131,678
7,867,791
8,321,610
24,073 128,701
16,048 34,483
152,774
50,531
3,295 18,664
1,838 14,877
Cash and cash equivalents Cash and bank balances Short term investments
30.
905,218 (239,778)
Information regarding directors and employees Directors Emoluments paid to Directors include : - Fees - Other emoluments
Fees and other emoluments disclosed above (excluding pension contribution) include amount paid to: Chairman Highest paid director The number of directors excluding the chairman emoluments were in the following ranges were: N 4,000,001 Above
-
N 7,000,000 7,000,001
whose Number 1 2 3
21
Number 1 2 3
30. ii)
2009 Number
2008 Number
14 10 7 6 3 7 47
16 10 6 5 2 6 45
N'000
N'000
Information regarding directors and employees (Cont'd) Employees Employees remunerated at higher rates. The number of employees in receipt of emoluments within the following ranges were: N 500,001 1,000,001 1,500,001 2,000,001 2,500,001 3,000,001
iii)
&
N 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 Above
Pension -
At 1 January Provision during the year Release to PFAs At 31 December iv)
14,964 (14,964)
599 11,200 (11,799)
-
-
Gratuity At 1 January
38,015
38,015
Provision during the year
10,105
Release to Con Re Trustees/PFAs
(10,105)
At 31 December
v)
38,015
38,015
No additional provision has been made in these financial statements as the Directors have determined and assessed that the asset available has covered the liabilities of the fund. Staff cost 296,222
Salaries and Allowances Staff pension
14,964
Staff gratuity The average number of persons employed during the year was as follows: Managerial and Senior Staff Junior Staff
22
207,129 11,200 -
10,105 321,291
218,329
Number
Number
45 2 47
43 2 45
31.
SEGMENT INFORMATION BY GEOGRAPHICAL DISTRIBUTION Below is the Non-Life revenue account by office segments. Nigeria N'000 Income Gross premium income Reserve for unearned premium at the beginning of the year Reserve for unearned premium at the end of the year
Cameroun N'000
2009 Total N'000
Kenya N'000
2008 Total N'000
4,471,750
1,623,313
407,238
6,502,301
4,035,163
1,026,298
347,789
-
1,374,087
722,794
(1,296,187)
(531,015)
(137,716)
(1,964,918)
(1,374,087)
Earned premium income Retrocession costs
4,201,861 (115,935)
1,440,087 (93,418)
269,522 (25,363)
5,911,470 (234,716)
3,383,870 (157,460)
Net premium written
4,085,927
1,346,669
244,158
5,676,754
3,226,410
2,258,822
260,398
6,772
2,525,992
1,080,434
790,587
91,139
2,370
884,096
378,151
(345,684)
(32,467)
-
(378,151)
(205,324)
Claims incurred Retrocession recoveries
2,703,725 (634,293)
319,070 -
9,142 -
3,031,937 (634,293)
1,253,261 -
Net claims incurred Underwriting expenses: Acquisition and maintenance cost Administrative expenses
2,069,432
319,070
9,142
2,397,644
1,253,261
1,206,586 611,041
433,242 80,863
117,326 66,625
1,757,154 758,529
1,144,715 476,650
3,887,059
833,175
193,093
4,913,327
2,874,626
198,868
513,494
51,065
763,427
351,784
15,640,185
-
-
15,640,185
14,353,589
54,285
-
-
54,285
34,427
91
83
60
87
80
Expenses Gross claims paid Reserve for outstanding claims at the end of the year Reserve for outstanding claims at the beginning of the year
Underwriting Profit Total assets employed Depreciation Net premium margin (%)
23
32. a)
Related Party Transactions Amount due from Directors The following facilities were due from the Managing Director/Chief Executive Officer [MD/CEO] and Deputy Managing Director [DMD] at the end of the year: MD/CEO
DMD N'000
Total 2009 N'000
Total 2008 N'000
N'000 Mortgage loan
1,371
1,702
3,073
5,130
Personal loan Car loan
8,408
4,551
12,959
11,549
6,000
2,125
8,125
2,625
-
1,500 -
1,500 -
2,250 4,186
9,878
25,657
25,740
Car refurbishment loan Staff land purchase loan
15,779
These loans were given in line with the conditions of service of the Directors. Under the terms of the mortgage loan, repayment is to be made over the mortgage period from 2004. For other loans, 100% repayment is through deductions from salaries plus cash payment of balance upon cessation of employment. All the facilities were performing at the balance sheet date. b)
Due from subsidiary The company has an outstanding sum of N10,401,435 (31 December 2008 N10,401,435) with CReStech Limited, a wholly-owned subsidiary. The transaction was in the ordinary course of business and is to be repaid according to the agreed terms and conditions. The financial statements of the company was not consolidated as there was no audited financial statements for the company since inception.
33.
Contingent Liabilities and Capital Commitment There were no contingent liabilities and capital commitment as at 31 December, 2009 (2008 - Nil).
34.
Comparative figures
In line with the provisions of the Insurance Act CAP I17 LFN 2004, Insurance Guidelines issued by the National Insurance Commission (NAICOM), and Statement of Accounting Standards, the prior year's balances on the Life's General Reserve Fund and Life Contingency Reserve have been adjusted in the current year’s financial statements in compliance with the National Insurance Commission (NAICOM) directives. Also, certain comparative figures have reclassified to reflect a more meaningful comparison.
24
STATEMENT OF VALUE ADDED FOR YEAR ENDED 31 DECEMBER 2009 2009 N'000 Net premium income Other income
%
2008 N'000
6,578,367 1,269,264
4,436,543 175,744
7,847,631
4,612,287
(5,563,045)
(3,700,719)
%
Claims, commision, charges and management expenses - local imported
(183,951)
(65,547)
2,100,635
100
846,021
100
321,291
15
218,329
26
55,451
3
92,329
11
9,777
-
5,576
-
Retained for growth and payment of dividend to shareholders: - Depreciation
54,285
3
20,336
2
- Deferred taxation
19,146
1
(8,168)
(1)
- Insurance funds
939,552
45
165,349
20
701,133
33
352,270
42
2,100,635
100
846,021
100
Applied as follows: To pay employees: - Salaries and pension cost To pay Government: - Income tax - Information technology levy
- Profit for the year
25
FINANCIAL SUMMARY for the year ended 31 December 2009 2009 N'000 338,216 6,648,097 3,349,515 693,484 2,622,852
2008 N'000 189,932 7,409,768 2,495,191 772,671 1,678,985
2007 N'000 45,619 7,933,893 1,719,212 942,961 1,873,055
2006 N'000 41,844 754,284 1,382,333 545,591 1,059,879
2005 N'000 140,584 627,569 1,039,233 282,957 401,533
Investment properties Statutory deposits Fixed assets Total assets
827,629 1,000,000 160,392 15,640,185
687,344 1,000,000 119,698 14,353,589
597,344 1,000,000 47,562 14,159,646
372,933 35,000 39,100 4,230,964
372,933 35,000 32,503 2,932,312
Liabilities Bank overdrafts Creditors and accruals Insurance funds Oustanding claims Taxation Deferred taxation Dividend
779,484 2,538,230 884,096 213,266 19,146 36,345
705,037 1,598,678 378,151 265,779 271,616
902,185 926,924 205,324 281,194 8,168 20,581
77,955 565,154 744,961 433,070 156,671 8,168 20,581
14,694 433,241 579,612 325,900 120,667 8,168 87,598
4,470,567
3,219,261
2,344,376
2,006,560
1,569,880
5,186,372 3,915,451 635,748 568,966 772,680 90,401
5,186,372 3,896,559 522,216 1,987 623,181 232,997 568,595 102,421
5,186,372 3,870,959 688,583 1,162,502 373,929 15,377 415,127 102,421
1,240,591 76,956 123,881 215,993 178,448 (10,661) 296,775 102,421
856,907 190,424 7,270 84,019 223,812 -
11,169,618
11,134,328
11,815,270
2,224,404
1,362,432
Assets Cash and bank balances Short term investments Reinsurance debtors Prepayments and other debit balances Long term investments
Share capital Reserve for bonus issue Share premium Revenue reserve Investments revaluation reserve General reserve fund Exchange equalisation reserve Contingency reserve Revaluation reserve Shareholders' funds
15,640,185
14,353,589
14,159,646
4,230,964
2,932,312
763,427 979,815
351,784 557,486
519,097 806,443
95,899 214,782
319,759 369,033
(74,597) 905,218 (204,085) -
(84,161) 473,325 (121,055) -
(129,757) 676,686 (111,984) -
(78,991) 135,791 (19,180) -
(114,900) 254,133 (54,711) (85,691)
701,133
352,270
564,702
116,611
113,731
Non-life underwriting profit Profit before taxation Taxation Profit after taxation Contigency reserve Proposed dividend Profit transferred to revenue reserve Earnings per share (basic) (Kobo) Dividend per share (Kobo) Net asset per share (Kobo)
9
5
108
107
-
-
7 5 114
5 90
15 10 79
Note: Earnings and dividend per share were computed on the profit for the year and on the number of issued and fully paid ordinary shares at the end of the year. Net assets per share were computed on the number of issued and fully paid ordinary shares at the end of the respective years.
27