wapic insurance plc consolidated and separate … · directors' report wapic insurance plc...

Wapic Insurance Plc

Consolidated and Separate Financial Statements for

the year ended 31 December 2017

Together with Directors' and Auditor's Reports

Contents

Wapic Insurance Plc

Consolidated and Separate Financial Statements

for the year ended 31 December 2017

Table of Contents

Page

Corporate information 1

Directors report 2

Corporate governance report 7

Management commentary 16

Statement of directors' responsibilities 18

Report on audit committee 19

Independent auditor's report 20

Reporting entity 26

Basis of preparation 26

Significant accounting policies 30

Critical estimates and judgements 46

Consolidated financial statements:

Consolidated statement of financial position 47

Consolidated statement of profit or loss and other comprehensive income 48

Consolidated statement of changes in equity 50

Consolidated statement of cash flows 54

Notes to the consolidated financial statements:

Financial risk management 55

Financial assets and liabilities: Accounting classification measurement basis and fair values 103

Operating segments 107

Notes to the financial statements 111

Contravention of laws and regulations 140

Litigations and claims 140

Events after the end of the reporting period 140

Related parties 141

Hypothecation 143

Other national disclosures - Value added statement 147

Other national disclosures - Financial summary 148

Directors' report

Wapic Insurance Plc



Directors’ reportFor the year ended 31 December 2017

Legal form and principal activity

Operating results

Highlights of the Group's operating results for the year are as follows:

Group Group Company Company

2017 2016 2017 2016

31-Dec 31-Dec 31-Dec 31-Dec

N'000 N'000 N'000 N'000

Gross premium written 9,807,616 8,005,308 6,388,069 5,375,431

Profit before tax 1,622,691 1,193,446 230,625 514,554

Income tax (91,881) (607,423) 85,019 (422,581)

Profit after tax for the year 1,530,810 586,023 315,644 91,972

Transfer to contingency reserve (253,204) (182,438) (191,642) (161,263)

Basic and diluted earnings per share (kobo) 11 4 2 1

Directors and their interests

Name of Director Direct Indirect Direct Indirect

Mr. Aigboje Aig-Imoukhuede (Chairman) +

5,495,785 6,378,300,514 5,495,785 4,884,759,600

Mr. Barnabas Olise 5,002,061 - 5,002,061 -

Mr. Bababode Osunkoya - - 1,411 -

Mr. Adamu Mahmound Atta 16 - 16 -

Mr. Femi Obaleke 1,876 - 1,876 -

Mr. Bode Ojeniyi 387,758 - 387,758 -

Ms. Chizoba Ufoeze 33,789,000 - 18,000,000 -

Mrs. Ifeyinwa Osime 656,693 - 656,693 -

Mrs. Adeyinka Adekoya - - - -

The Directors who served during the year together with their direct and indirect interests in the issued share capital of the Company as recorded in the

Register of Directors' Shareholding and as notified by the Directors for the purposes of Sections 275 and 276 of the Companies and Allied Matters Act and

listing requirements of the Nigerian Stock Exchange are noted below:

The Company was incorporated on 14 March 1958 as a private limited liability Company under the name of West African Provincial Insurance Company

Limited and was converted to a public limited liability company on the 31st day of August 1990 when the Company’s shares were listed on the Nigerian

Stock Exchange. The Company was issued a life insurance license by the National Insurance Commission (NAICOM) in the year 2000 and became a

composite insurance business offering general and life insurance until March 1st 2007 when, in furtherance of the objective of complying with the

requirements of the National Insruance Commission, the Company established Wapic Life Assurance Limited as a wholly owned Subsidiary to which it

transferred the related life assets and liabilities.

The directors are pleased to submit their report together with the audited financial statements of Wapic Insurance Plc ("the Company") and its subsidiaries

(together "the Group") for the year ended 31 December 2017.

The financial results of the subsidiaries have been consolidated in these financial statements.

The Company became a Subsidiary of Access Bank Plc in 2011 and was subsequently divested to enable compliance by the Bank with the Central Bank of

Nigeria (CBN) Regulation on the Scope of Banking Activities and other Ancilliary Matters on the permitted activities of Commercial Banks with International

Authorization.

The Company's principal activities include underwriting the various classes of insurance such as general accident, fire, motor, engineering, marine insurance

aviation, oil and gas and other special risks.

In addition to its Life Subsidiary - Wapic Life Assurance Limited, the Company also has an International Subsidiary - Wapic Insurance (Ghana) Limited

which was established on 21 Januaary 2008, and an associate company - Coronation Merchant Bank Limited.

31 December 2017 31 December 2016

2

Directors' report

Wapic Insurance Plc



+ Indirect holdings by directors are broken down as follows

2017 2016

31-Dec 31-Dec

Director/Indirect Interest

Mr. Aigboje Aig-Imoukhuede (Chairman):-

- United Alliance Company of Nigeria Limited 130,008,200 50% 130,082,000 50%

- Trust and Capital Limited 365,324,106 50% 248,920,958 50%

- Reunion Energy Limited 2,313,142,646 50% - 50%

- Strategic Alliance Investment Limited - 50% - 50%

- Stanbic Nominees Nigeria Limited - 50% 2,313,142,646 50%

- Coronation Capital Maurutius Limited 3,569,825,562 50% 2,192,613,996 50%

6,378,300,514 4,884,759,600

Related Director Interest in Entity Name of

Company

Services

Mr. Aigboje Aig-Imoukhuede Equity Investor Coronation

Capital Limited

Advisory services

Analysis of shareholders

31 December 2017

Range

Number of

Shareholders

No. of shares

held

% of number of

shareholders

% of number of

shares held

1-1,000 657,055 129,403,227 79 1

1,001-5,000 127,062 272,208,764 15 2

5,001-10,000 22,268 161,815,033 3 1

10,001-50,000 20,945 430,291,658 3 3

50,001-100,000 2,714 186,806,199 0 1

100,001-500,000 2,228 449,126,160 0 3

500,0001-1,000,000 313 221,614,417 0 2

1,000,001-5,000,000 422 750,007,605 0 6

5,000,001-10,000,000 52 363,035,887 0 3

10,000,001-1,000,000,000 62 10,418,429,298 0 78

833,121 13,382,738,248 100 100

31 December 2016

Range

Number of

Shareholders

No. of shares

held

% of number of

shareholders

% of number of

shares held

1-1,000 660,487 130,098,478 79 1

1,001-5,000 128,602 275,816,816 15 2

5,001-10,000 22,703 165,030,997 3 1

10,001-50,000 21,563 444,334,033 3 3

50,001-100,000 2,839 195,459,967 0 1

10,001-500,000 2,366 480,237,548 0 4

500,0001-1,000,000 359 258,875,741 0 2

1,000,001-5,000,000 465 858,284,433 0 6

5,000,001-10,000,000 66 449,531,060 0 3

10,000,001-100,000,000 58 1,504,149,872 0 11

100,000,001-1,000,000,000 18 8,620,919,307 0 64

839,526 13,382,738,252 100 100

The shareholding pattern of the Company as at December 31st 2017 is as stated below:

Beneficial

Percentage

Ownership

Beneficial

Percentage

Ownership

Directors' interest in contracts

In accordance with section 277 (1) and (3) of the Companies and Allied Matters Act of Nigeria, the Board has received declaration of interest from the under-

listed Director in respect of the company (vendors to the Company) set against the Director's name:

3

Directors' report

Wapic Insurance Plc



Substantial Interest in Shares

Number of

shares

Percentage

holding

Number of

shares

Percentage

holding

2017 2017 2016 2016

Reunion Energy Limited 2,313,142,646 17 - 0

Stanbic Nominees Nig. Limited - 0 2,313,142,646 17

Strategic Alliance Investment Limited - 0 - 0

Blakeney GPIII Limited - 0 2,192,613,996 16

Coronation Capital (Mauritius) Limited 3,569,825,562 27 1,950,644,844 15

Other Nigerian entities, citizens and associations 7,499,770,040 56 6,926,336,762 52

Total 13,382,738,248 100 13,382,738,248 100

Acquisition of own shares

Donations

Beneficiary Purpose Amount (N)

Aisha Buhari Foundation 10,000,000.00

Henshaw Foundation 10,000,000.00

Nigerian Insurers Association (NIA) 17,361,927.52

Lagos polo Club 12,803,000.00

Nigerian Bar Association 5,000,000.00

Fifth Chukker 2,000,000.00

Finance Africa 2,000,000.00

Dreamland Foundation 1,200,000.00

Temple Productions 1,000,000.00

The Boy's Brigade Nigeria 1,000,000.00

Nigerian Red cross Society 200,000.00

Imperial Gate School 200,000.00

Professional Insurance Ladies Association 100,000.00

Red ConnectNg 100,000.00

National Association of Microfinance Banks 100,000.00

St. George's Boys Primary School 100,000.00

Chartered Insurance Institute of Nigeria (CIIN) 75,000.00

Access Women Network 1,000,000.00

Zebra Living Limited 5,000,000.00

69,239,927.52

TThe Company did not purchase any of its own shares during the year (2016: Nil).

* Blakeney Nominees held the shares as custodian for various investors and does not exercise any right over the underlying shares. All the rights reside with the various

investors on whose behalf Blakeney Nominees carries out the custodian service.

The Company identifies with the aspirations of the community and the environment in which it operates. The Company made contributions to charitable and non-charitable

organisations amounting to N50,555,963.52 (December 2016:N61,644,152.37) during the period, as listed below:

Donation towards the construction of an orphanage and

school in Borno

Donation towards the suport of Autism Spectrum

Disorder

Donation to the Nigerian Insurers Association

Donation towards to the Lagos Polo Tournament

Donation to the Nigeian Bar Association

Donation to Fifth Chukker Access Bank Charity Shiled

Tournament

Contribution towards NHF Conference

Donation towards the Dreamland foundation's

empowerment center

Contibution towards the private screening of the movie -

"A Hotel Called Memory"

Donation to the Boy's Brigade Nigeria

Donation towards the support of the organization’s

infrastructural programs

Donation to Imperial Gate School

Donation to the Professional Insurance Ladies

Association

Donations towards a workshop on Sickle Cell

Donation to the National Association of Microfinance

Banks

Donation to St. George's Boys Primary School

Donation towards the 2017 Annual Fitness Work

Donation for Fitness walk for cervical cancer

2017 Annual film festival

According to the register of members as at December 31st 2017 the underlisted shareholders held more than 5% of the issued share capital of the Company as

follows:

4

Directors' report

Wapic Insurance Plc



Property and Equipment

Human Resources

1. Report on Diversity in Employment

2017 2017 2016 2016

Composition of Employees Number Percentage Number Percentage

Female 42 43% 55 52%

Male 56 57% 50 48%

Total 98 105

Board Composition by Gender

Female 3 30% 3 30%

Male 7 70% 7 70%

Total 10 10

Top Management (Executive Director to CEO)

Female 1 33% 1 33%

Male 2 67% 2 67%

Total 3 3

Top Management (AGM to Divisional Head)

Female 3 43% 3 43%

Male 4 57% 4 57%

Total 7 7

2. Employment of disabled persons

3. Health, safety and welfare of employees

4. Employee involvement and training

The Company maintains business premises designed to guarantee the safety and healthy living conditions of both its employees and customers.

Employees are adquately insured against occupational and other hazards.

The Company operates a Group Personal Accident, Third Party Liability Insurance and Professional Indemnity for the benefit of its employees.

The Company also operates a contributory pension plan in line with the Pension Reform Act 2004 as amended and the Nigeria Social Insurance

Trust Fund in line with the Employees Compensation Act 2010 and other benefit schemes for its employees.

The Company encourages participation of employees in arriving at decisions in respect of matters affecting their wellbeing. Consquently, the

Company provides opportunities where employees deliberate on issues affecting the Company and employee interests to enable the employees

make inputs on those decisions. The Company places a high premium on the development of its manpower and sponsors its employees for

training courses.

We believe diversity and inclusiveness are powerful drivers of competitive advantage in understanding the needs of our customers and creatively

developing solutions to address them.

The Company has fire prevention and fire fighting equipment installed in strategic locations within it's premises.

In the event of any employee becoming disabled in the course of employment, the Company will endeavour to arrange appropriate training to

ensure the continuous employment of such a person without subjecting the employee to any disadvantage in career development.

The Company operates a non-discriminatory policy in the consideration of applications for employment. The Company's policy is that the most

qualified and experienced persons are recruited for appropriate job levels, irrespective of an applicant's state of origin, ethnicity, religion, gender

or physical condition.

Information relating to changes in property and equipment is given in Note 18 to the financial statements. In the Directors' opinion the fair value

of the Group's property and equipment is not less than the carrying value in the financial statements.

5

Directors' report

Wapic Insurance Plc



5. Statement of Commitment to Maintain Positive Work Environment

Credit Ratings

Long term financial strength rating Long Term Date

C++ (Stable

Outlook)

2017

Long term issuer credit rating Long Term Date

b+ (Stable

Outlook)

2017

Audit Committee

Mr. Bode Osunkoya Director Chairman

Mr. Chinwendu Achara Shareholder Member

Mr. Adeniyi Adebisi Shareholder Member

Mrs. Mary Joke Shofolahan Shareholder Member

Ms. Chizoba Ufoeze Director Member

Mr. Barnabas Olise Director Member

By order of the Board

119, Awolowo Road, Ikoyi, Lagos

__________________________

Mary Agha

FRC/2013/NBA/00000002817

Company Secretary

29 January 2018

PricewaterhouseCoopers were appointed as the External Auditor for the Company by the ordinary resolution of shareholders passed during the 56th Annual

General Meeting held on April 29th 2015.

The auditors, PricewaterhouseCoopers have indicated their interest to continue in office and will do so pursuant to section 357(2) of the Companies and

Allied Matters Act.

Pursuant to Section 359(3) of the Companies and Allied Matters Act of Nigeria, the Company has a Statutory Audit Committee comprising three

shareholders and three Directors as follows:

The Company shall strive to maintain a positive work environment that is consistent with best practice to ensure that business is conducted in a

positive and professional manner and to ensure that equal opportunity is given to all qualified members of the Company's operating environment.

The functions of the Audit Committee are as provided in Section 359(6) of the Companies and Allied Matters Act of Nigeria.

Auditors

6

Corporate governance report

Wapic Insurance Plc



Corporate Governance

Corporate Governance Report for Year Ended 31 December 2017

Our corporate governance report documents the corporate governance practices that were in place during the Financial Year Ended December 31, 2017. This

report affords us the opportunity to explain to our stakeholders how our Company has been governed during the year. It reports on how the Board has

functioned and the workings of our systems and structures of governance.

Wapic Insurance Plc (“Wapic” or “the Company”) remains committed to implementing the best practice standards of corporate governance. The Company

and its subsidiaries (‘the Group’) function under a governance frame work that enables the Board to discharge its role of providing oversight and strategic

direction in balance with its responsibility to ensure the Company’s compliance with regulatory requirements and acceptable risk.

The Company is mindful of its obligations under the relevant codes of corporate governance such as the National Insurance Commission (NAICOM) Code of

Corporate Governance for the Insurance Industry in Nigeria, the Securities and Exchange Commission’s Code of Corporate Governance (‘the SEC Code’)

and the Post Listing Requirements of the Nigerian Stock Exchange (NSE). These, in addition to its Board Charter collectively provide the basis for promoting

sound corporate governance in the Company. Our core values of excellence, professionalism, innovation, sustainability, teamwork, leadership, and empathy

are the bedrock upon which we continue to build our corporate behavior.

Performance Monitoring and Evaluation

In compliance with the NAICOM Code of Corporate Governance the Annual Board Performance Report for the 2016 Financial Year was presented to the

shareholders at the Annual General Meeting of the Company held on May 24, 2017.

The Board, in the discharge of its oversight function continuously engages management in the planning, definition and execution of the Company's strategy.

Management's report on the execution of defined strategic objectives is a regular feature of the Board's meeting agenda, thus providing the Board with the

opporunity to evaluate and critique Management's execution of the strategy.

The Company’s performance on Corporate Governance is continuously being monitored and reported. Regular reviews are carried out on the Company’s

compliance status with the NAICOM Code of Corporate Governance for the Insurance Industry in Nigeria, the SEC Code of Corporate Governance, and the

NSE Post Listing Requirements as well as on the Company's compliance status with the various regulatory circulars and guidelines and regulatory returns are

filed thereon.

As part of its commitment to uphold sound Corporate Governance practices and in compliance with the requirement of the NAICOM Code of Corporate

Governance, the Board has established a system of independent annual evaluation carried out by an independent consulting firm engaged to carry out an

assessment of its own performance, that of its Committees and individual Directors. At its Annual General Meeting (AGM), held on May 24, 2017, the

shareholders of the Company approved the engagement of an external consultant to conduct the Annual Board Performance Appraisal. In this regard

Accenture Limited was engaged to conduct the Board performance evaluation for the Financial Year ended December 31st 2017. The Board is comfortable

that Accenture Limited provides value-adding and objective evaluation notwithstanding its provision of strategy consulting assistance to the Wapic Group.

The evaluation takes the form of a 360 degree confidential on-line survey covering director's self-assessment, peer assessment and evaluation of the Board

and the Committees.

The result of the Board performance evaluation is presented to the Board and the individual director’s assessment is communicated and discussed with the

Chairman. The evaluation was a 360 degree on-line survey covering directors's self assessment, peer assessment adn evaluation of the Board and the Board

Committees. The effectiveness of the Independent Directors was evauated and the result confirmed that the individual directors and teh Board continue to

operate as a very high level of efficiency.

Appointment, Retirement and Re-election of Directors

The Board has put in place a formal process for the selection of new directors to ensure the transparency of the nomination process. The process is

documented in the Fit and Proper Person Policy and is led by the Board Establishment and Remuneration Committee. The Committe identifies candidates for

appointment as director in consultation with the Chairman, Managing Director and/or any other director, or through the use of search firms or such other

methods as the Committee deems helpful to identify candidates. Once candidates have been identified the Committee shall confirm that the candidates meet

the minimum qualifications for director nominees set forth in the policy and relevant statutes and regulations. The Committee may gather information about

the candidates through interviews, questionnaires, enhanced due diligence checks or any other means that the Committee deems helpful in the evaluation

process. The Committee meets to discuss and evaluate the qualities and skills of each candidate, taking into consideration the overall composition and needs

of the Board. Based on the results of the evaluation process, the Committee recommends candidates to the Board for appointment as director subject to the

approval of shareholders and the National Insurance Commission.

In accordance with the Company's Articles of Association, Ms. Chizoba Ufoeze and Mrs. Ifeyinwa Osime retired at the Company's 58th Annual General

Meeting held on May 24, 2017 and being eligible were duly re-elected by shareholders. The Board confirms that following a formal evaluation, these two

Directors continued in 2017 to demonstrate commitment to their role as Non-Executive Directors.

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Wapic Insurance Plc



In the 2017 Financial Year, the Board, upon the recommendation of the Governance and Remuneration Committee appointed Mr. Olusegun Ogbonnewo as a

Non-Executive Director on October 25, 2017. Mr. Segun Ogbonnewo holds a BA (Ed) and Master of Business Administration (MPA) from the University of

Ilorin, and Master of Business Administration (MBA) from Lagos Business School/IESE Barcelona and has also attended management development

programs in IDI Dublin, Harvard Business School, INSEAD and IMD amongst others. Mr. Olusegun Ogbonnewo's work experience spans over 28-years and

includes, People's Bank of Nigeria, Guaranty Trust Bank Plc and Access Bank Plc where Mr. Ogbonnewo worked for 10-years ahead of his retirement from

the Bank in March 2017. This appointment is however subject to requisite regulatory approvals.

In accordance with the Company's Memorandum and Articles of Association as well as Section 259 of the Companies and Allied Matters Act Cap C20, Laws

of the Federation of Nigeria 1990, one-third of all Non-executive Directors (rounded down) are offered for re-election every year (depending on their tenure

on the Board) together with Directors appointed by the Board since the last Annual General Meeting. In keeping with this requirement, Mr. Bababode

Osunkoya and Mr. Adamu Atta will retire during this Annual General Meeting and being eligible, will submit themselves for re-election. The Board

confirms that following a formal evaluation these two Directors continue to demonstrate commitment to their role as Non-Executive Directors. The Board

confirms its conviction that the Directors standing for re-election will continue to add value to the Company and recommends that they should be elected to

maintain the needed balance of skill, knowledge and experience on the Board.

Shareholder Engagement

The Board recognises the importance of ensuring the flow of complete, adequate and timely information to shareholders to enable them make informed

decisions. The Company is committed to maintaining highr standards of corporate disclosure. Shareholders meetings are duly convened and held in an open

manner in line with the Company’s Articles of Association and existing statutory and regulatory regimes, for the purpose of deliberating on issues affecting

the Company’s strategic direction. The Company's General Meetings serve as a medium for promoting interaction between the Board, Management and

Shareholders. Attendance at the Annual General Meeting is open to shareholders or their proxies, while proceedings at such meetings are usually monitored

by members of the press, representatives of the Nigerian Stock Exchange, the National Insurance Commission and the Securities and Exchange Commission.

The Board ensures that shareholders are provided with adequate notice of meetings. An Extraordinary General Meeting may also be convened at the request

of the Board or Shareholders holding not less than 10% of the Company’s paid-up capital.

Shareholders Rights Protection

The Company's reports and communication to shareholders and other stakeholders are in plain, readable and understandable format. The Company's website -

www.wapic.com is regularly updated with both financial and non-financial information. The Board ensures that shareholders statutory and general rights are

protected at all times, particularly their right to vote at general meetings. The Board also ensures that all shareholders are treated equally regardless of the size

of their shareholding and social conditions. Our shareholders are encouraged to share in the responsibility of sustaining the Company's corporate values by

exercising their rights as protected by law.

The Company has a dedicated Investor Relations Unit which focuses on facilitating communication with shareholders and analysts on a regular basis and

addressing their enquiries and concerns. Investors and stakeholders are frequently provided with information abou the Company through various channels

such as quarterly Investor Conference Calls, the General Meetings, the Company's website, as well as the Annual Report and Accounts.

Access to Information and Resources

Executive Management recognises the importance of ensuring the flow of complete, adequate and timely information to the Directors on an ongoing basis to

enable them make informed decisions in the discharge of their responsibilities. There is ongoing engagement between Executive Management and the Board,

and the Heads of relevant Strategic Business Units attend Board meetings to make presentations. The Company’s External Auditors attend the Board, the

Board Audit and Compliance Committee and the Statutory Audit Committee Meetings to make presentations on the audit of the Company's Financial

Statements. The Directors have unrestricted access to the Group Management and Company information in addition to the resources to carry out their roles

and responsibilities. This includes access to external professional advice at the Company’s expense as provided by the Board and Board Committtee Charters.

The Board

The primary function of the Board of Directors is to advance the prosperity of the Company by collectively directing the Company’s affairs, whilst meeting

the appropriate interests of shareholders and stakeholders. The Board has the overall responsibility for reviewing the strategic plans and performance

objective, financial performance review and corporate governance practices of the Company. The Board is the Company’s highest decision making body

responsible for governance. It operates on the understanding that sound governance practices are fundamental to earning the trust of stakeholders which is

critical to sustainable growth.

Composition and Role

The Company has a unitary Board structure. As at December 31, 2017, the Board was comprised of eleven (11) members made up of seven (7) Non-

Executive Directors and four (4) Executive Directors, in line with the provisions of S.5.04 (ii) of the NAICOM Code of Corporate Governance for Insurance

Companies in Nigeria. Two of the Non-Executive Directors are Independents and meet the criteria set by the SEC and NAICOM Codes of Corporate

Governance on Independent Directors. The full details of the Board Composition and their roles are as set out below:

8


Wapic Insurance Plc



S/N Gender Designation

1 Mr. Aigboje Aig-Imoukhuede Male Chairman

2 Mr. Adamu Mahmoud Atta Male Non-Executive Director

3 Mr. Bababode Osunkoya Male Independent Non-Executive Director

4 Mr. Barnabas Olise Male Non-Executive Director

5 Ms. Chizoba Ufoeze Female Non-Executive Director

6 Mrs. Ifeyinwa Osime Female Independent Non-Executive Director

7 Mr. Olusegun Ogbonnewo* Male Managing Director

8 Mrs. Adeyinka Adekoya Female Executive Director

9 Mr. Bode Ojeniyi Male Executive Director

10 Mr. Femi Obaleke Male

11 Mr. Peter Ehimhen** Male Executive Director Technical/Operations

* Appointed by the Board October 25, 2017

** Approved by NAICOm December 5, 2017

Name

In line with best practice and in accordance with the provisions of all the Codes of Corporate Governance by which the Company is governed, the roles of the

Chairman and Managing Director are assumed by different individuals and there is a separation of powers and functions between the Chairman and the

Managing Director. This ensures the balance of power and authority. The Board is able to reach impartial decisions as its Non-Executive Directors are a

blend of Independent and Non-Independent directors with no shadow or alternate Directors, which ensures that independent thought, is brought to bear on

decisions of the Board. The effectiveness of the Board derives from the diverse range of skills and competences of the Executive and Non-Executive directors

who have exceptional degrees of insurance, financial and broader entrepreneurial experiences.

The Board is responsible for ensuring the creation and delivery of sustainable value to the Company’s stakeholders through its management of the

Company’s business. The Board is accountable to the shareholders and is responsible for the management of the Company’s relationship with its various

stakeholders. The Board ensures that the activities of the Company are at all times executed within the relevant regulatory framework. The Board Charter is

comprised of a set of principles that have been adopted by the Board as a definitive statement of Corporate Governance.

Duties of the Board

The duties of the Board include but are not limited to:

• Defining the Company’s business strategy and objectives,

• Formulating risk policies

• Approval of quarterly, half yearly and full year financial statements

• Approval of significant changes in accounting policies and practices

• Appointment or removal of Directors and Company Secretary

• Approval of major acquisitions, divestments of operating companies, disposal of capital assets or capital expenditure

• Approval of charter and membership of Board Committee

• Setting of annual board objectives and goals

• Approval of allotment of shares

• Approval of remuneration of auditors and recommendation for appointment or removal of auditors

• Succession Planning for key positions

• Approval of the corporate strategy, medium term and short term plans

• Monitoring delivery of the strategy and performance against plan

• Approval of the framework for determining the policy and specific remuneration of executive directors

• Review and monitoring of the performance of the Managing Director and the executive team

• Ensuring the maintenance of ethical standards and compliance with relevant laws.

• Performance appraisal and compensation of Board members and senior executives

• Ensuring effective communication with shareholders

• Ensuring the integrity of financial reports

Appointment Process and Induction of Board Members

The Company's Fit and Proper Person Policy is designed to ensure that the Company and it's Subsidiaries are managed and overseen by competent, capable

and trustworthy individuals. In making Board appointments, the Board takes into cognisance the knowledge, skill and experience of a potential director as

well as other attributes considered necessary for the role. The Board also considers the need for appropriate demographic and gender representation.

Candidates are subjected to enhanced due diligence enquiries as required by extant regulations.

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Wapic Insurance Plc



S/N BACC BERMC BFIC BERC BITC

1 - - - - -

2 - M M C -

3 C M M M M

4 M M M - C

5 M M C M -

6 - C M M M

7 - M M M M

8 - M M - M

9 - M M - -

10 - - M - -

11 - M M - -

*Key

C Chairman of Committee

M Member

- Not a member

1 Non-Executive

2 Executive

3 Independent

BACC Board Audit and Compliance Committee

BERMC Board Enterprise Risk Management and Governance Committee

BFIC Board Finance, Investment and General Purpose Committee

BENC Board Establishment and Nomination Committee

BITC Board Information Technology Committee

Delegation of Authority

The ultimate responsibility for the Company’s operations rests with the Board. The Board retains effective control through a well-developed Committee

governance structure that provides in-depth focus on Board responsibilities. Each Board Committee has a written charter and presents quarterly reports to the

Board on its activities. The Board delegates authority to the Managing Director and the Executive Management to manage the affairs of the Company within

the parameters established by the Board from time to time.

Board Meetings

The Board meets quarterly and emergency meetings are convened as may be required. The Annual Calendar of Board and Board Committee meetings are

approved in advance during the last quarter of the preceding financial year and all Directors are expected to attend each meeting. Material decisions may be

taken between meetings through written resolutions as provided for by the Company’s Articles of Association. The Annual Calendar of Board activities

include a Board Retreat at an offsite location, to consider strategic matters and review the opportunities and challenges facing the institution. All Directors are

provided with Notices, Agenda and meeting papers in advance of each meeting and where a Director is unable to attend a meeting he/she is still provided

with the relevant papers for the meeting. Such Director reserves the right to discuss with the Chairman any matter he/she may wish to raise at the meeting.

The Directors are also provided with regular updates on developments in the regulatory and business environment. The Board met 4 times in the 2017

financial year and also held its Annual Board Retreat. The Board also uses a secure electronic portal for the circulation of Board papers to members. This

underscores the commitment of the Board to embrace environment sustainability by reducing paper usage.

Board Committees

The Board carries out its oversight function through its standing committees each of which has a charter that clearly defines its purpose, composition, and

structure, frequency of meetings, duties, tenure and reporting lines to the Board. In line with best practice, the Chairman of the Board does not sit on any of

the committees. In line with the 2015 NAICOM Corprate Governance Guidelines, the Board's standing committees are; the Board Enterprise Risk

Management and Governance Committee, the Board Audit and Compliance Committee, the Board Establishment and Remuneration Committee, the Board

Finance, Investment and General Purpose Committee. The Company having determined the importance of technology to its business has also set up a Board

Information Technology Committee whose function is to primarily monitor the Company’s information technology systems and ensure the successful

implementation of all the various information technology initiatives. The committee is to also recommend to the Board of Director’s, the information

technology strategy of the Company and its implementation, together with relevant policies. The Board accepts that while the various Board Committees have

the authority to examine a particular issue and report back to the Board with their decisions and/or recommendations, the ultimate responsibilities on all

matters lies with the Board. The composition and responsibilities of the Committees are set out below:

The Board believes that a robust induction as well as regular training and education of Board members on issues pertaining to their oversight functions will

improve Director's performance. Regarding new Directors, there is a personalised induction programme which includes one-on-one meetings with Executive

Directors and Senior Management responsible for the Company's key business areas. Such sessions focus on the challenges, opportunities and risks facing

the business areas. The induction programme covers an overview of the Strategic Business Units as well as the Board processes and policies. A new Director

receives an induction pack which includes charters of the various Board Committees, significant reports, important legislation and policies, minutes of

previous Board Meetings and a Calendar of Board Activities. Directors are also required to participate in periodic, relevant continuing professional

development programmes to update their knowledge.

The Board Establishment and Remuneration Committee is responsible for recommending new appointments to the Board of both Executive and Non-

Executive Directors as well as for succession planning of the Board. When making Board appointment recommendations, the Committee takes cognizance of

the existing range of skills, experience, background and diversity on the Board in the context of the Company’s strategic direction before articulating the

specification for the candidate sought. We are comfortable that our Board is sufficiently diversified to optimize its performance.

Mrs. Ifeyinwa Osime1

Mr. Olusegun Ogbonnewo1

Mrs. Adeyinka Adekoya2

Mr. Bode Ojeniyi2

Mr. Peter Ehimhen2

Director

Mr. Aigboje Aig-Imoukhuede1

Mr. Adamu Mahmoud Atta1

Mr. Bababode Osunkoya1

Mr. Barnabas Olise1

Ms. Chizoba Ufoeze1

Mr. Femi Obaleke2

10


Wapic Insurance Plc



Board Audit and Compliance Committee

The Committee is chaired by Mrs. Ifeyinwa Osime. Mrs. Osime holds a Law Degree (L.L.B), and Masters (LL.M) in Commercial & Corporate Law from the

University of Benin and London School of Economics, University of London respectively. She is also a Barrister at Law (BL) of the Supreme Court of

Nigeria. She has over 25 years professional experience in law and insurance and was the Company Secretary of African Development Insurance Company

Limited from 1989 to 1997 with oversight over claims settlement. She is an alumnus of the Harvard Business School.

Board Establishment and Remuneration Committee

The Committee advises the Board on its oversight responsibilities in relation to governance, remuneration, other human resource matters affecting the

Directors and employees of the Company and all other general matters. Specifically, the Committee is responsible for determining and executing the

processes for board appointments, recommending appropriate remuneration for directors (both executive and non-executive) and approving remuneration for

all other members of staff. The Committee is responsible for reviewing and recommending the Company’s organizational structure to the Board for approval.

The Committee is also responsible for reviewing the performance and effectiveness of the Board of the Company’s subsidiaries on an annual basis. The

Committee ensures that the Company’s human resources are maximized to support the long term success of the enterprise and to protect the welfare of all

employees.

The key decision and initiatives of the Committee in 2017 include review of the Succession Plan Policy, review of Executive Management Performance as

well as review and recommendation to the Board of 2016 Full Year and 2017 Half Year Collegiate Appraisal Report, providing strategic oversight over the

human resources transformation plan for the Company, review of the Board assessment report for the Company and its subsidiaries. The Committee met four

(4) times during the period.

The Committee is chaired by Mr. Adamu Atta. Mr. Atta holds a B.A in International Relations and Economics and an MA in Development Economics from

the United States International University and the University of California respectively. He also has a Masters in Political Economics from Ahmadu Bello

University, Zaria. Mr. Atta has over two decades experience in financial management and consulting.

The Committee supports the Board in fulfilling its oversight responsibility relating to the integrity of the Company’s financial statements and the financial

reporting process; the independence and performance of the Company’s internal and external auditors; and the Company’s system of internal control and

mechanism for receiving complaints regarding the Company’s accounting and operating procedures. The Committee also monitors the status of the

Company’s internal and regulatory compliance. The Company’s Chief Internal Auditor and Chief Compliance Officer have access to the Committee and

make quarterly presentations to the Committee. The Company's External Auditors also priodically meet with the Committee.

Key issues considered by the Committee during the period included the review of the status of compliance with internal policies and regulatory requirements,

review and recommendation of Full Year Audited Financial Statements, review of reports of the Chief Internal Auditor and Internal Audit Consultants, the

review of the whistle-blowing reports as well as the approval of the Internal Audit and Internal Control and Compliance Plans. The Committee met four (4)

times in the 2017 financial year.

The Committee is chaired by Mr. Bababode Osunkoya. Mr. Osunkoya is an accounting graduate from the University of Lagos. He is a Fellow of the Institute

of Chartered Accountants of Nigeria and the Chartered Institute of Taxation of Nigeria. He is also an associate member of the Institute of Directors. Mr.

Osunkoya is a Certified Forensic Accountant of the Institute of Chartered Accountants of Nigeria. He is also a member of Public Practice Monitoring

Committee of the Institute of Chartered Accountants of Nigeria.

Board Enterprise Risk Management and Governance Committee

The Committee supports the Board in fulfilling its oversight responsibility relating to establishment of policies, standards and guidelines for risk

management, and compliance with legal and regulatory requirements. In addition, it oversees the establishment of a formal written policy on the overall risk

management system. The Committee also ensures compliance with established policies through periodic reviews of reports provided by management and

ensures the appointment of qualified officers to manage the risk function. The Committee evaluates the Company’s risk policies on a periodic basis to

accommodate major changes in the internal or external environment.

The key issues considered by the Committee during the period included consideration of the Solvency II, Enterprise Risk and Capital Management Project,

A.M. Best Report on the risk rating for the Company and implementation of relevant internal policies. The Committee also monitored the status of the

Company’s compliance with relevant regulatory policies, review of the impact of audit findings on the risk profile of the Company, evaluation of the nature

and effectiveness of action plans implemented to address identified compliance weaknesses. The Committee met four (4) times in the 2016 financial year.

11


Wapic Insurance Plc



S/N Director BoD BACC BERMC BFIC BEGPC BITC

4 4 4 4 4 4

1 Mr. Aigboje Aig-Imoukhuede 4 N/A N/A N/A N/A N/A

2 Mr. Adamu Mahmoud Atta 4 N/A 4 4 4 N/A

3 Mr. Bababode Osunkoya 4 4 4 4 4 4

4 Mr. Barnabas Olise 4 4 4 4 N/A 4

5 Ms. Chizoba Ufoeze 4 4 4 4 4 N/A

6 Mrs. Ifeyinwa Osime 4 N/A 4 4 4 4

7 Mr. Olusegun Ogbonnewo - - - - - -

8 Mrs. Adeyinka Adekoya 4 N/A 4 4 N/A 4

9 Mr. Bode Ojeniyi 4 N/A 4 4 N/A N/A

10 Mr. Femi Obaleke 4 N/A N/A 4 N/A 4

11 Mr. Peter Ehimhen** - - - - - -

* Mr. Olusegun Ogbonnewo was appointed to the Board on October 25, 2017

** Mr. Peter Ehimhen's appointment was approved by NAICOM on December 5, 2017

Board Finance, Investment and General Purpose Committee

The Committee is chaired by Mr. Barnabas Olise. Mr.Olise studied and graduated with Bachelors (B.SC Hons) in Mathematics from the University of

Ibadan. He is a Fellow of the Institute of Charted Accountants of Nigeria (ICAN) and has over 20years professional experience in Auditing and Consulting.

He is currently the Managing Partner/CEO Of Enterprise Value Matrix Consult (EVMC) Limited, a multidisciplinary consultancy firm established in 2010.

Attendance at Board and Board Committee Meetings

Directors' attendance at meetings during the 2017 financial year was as shown below:

NAME OF DIRECTORS MEETING

Number of Meetings Held

The Committee advises the Board on its oversight responsibilities in relation to the Company’s general investments and provides strategic guidance for the

development and achievement of the Company’s investment objectives. The Committee therefore works with Management to review the quality of the

Company’s investment portfolio and the trends affecting the portfolio, overseeing the effectiveness and administration of investment related policies

including compliance with legal investment limits and the Company’s in-house investment restrictions, reviewing the process for determining provision for

investment losses and the adequacy of the provisions made as well as providing oversight and guidance to the Company regarding all aspects of

implementing the NAICOM Guidelines and compliance with other regulatory Risk based supervision framework.

Key issues considered by the Committee included review of the financial control report and investment report, approval of the annual budget as well as the

capital and operating expenses of the company, quarterly review of budget utilization against the actual plan, quarterly review of rights issue utilisation,

review of the unaudited financial statement, approval of the investment portfolio and risk appetite, oversight of the Company’s investment portfolio and

related risk management processes, continued monitoring of the Company’s compliance with relevant regulatory and internal investment policies with

respect to the Company’s investment portfolio, approval of investment limits as well as investment exceptions where necessary. The Committee met four (4)

times in the 2017 financial year.

Ms. Chizoba Ufoeze chaired the Committee. Ms. Chizoba Ufoeze is a graduate of University of Nigeria Nsukka and has an MSc in Investment Management

from the City University Business School London, and an MBA from the Middlesex University Business School, London. Ms. Ufoeze is an Investment

Analyst with over 23 years’ experience in the financial services industry.

Board Information Technology Committee

The Committee assists the Board in fulfilling its governance and oversight responsibilities relating to development, periodic review and implementation of

the Company’s Information Technology strategy, monitoring the Company’s investments and operations in relation to technology and information systems,

ensuring that the Company’s technology initiatives are consistent with the Company’s overall corporate strategy and performing such other related functions

as may be assigned to the Committee by the Board of Directors.

Key issues considered by the Committee included monitoring and ensuring the successful implementation of the Company's new core insurance application,

quarterly review of the information technology report, review of the technical functionality and system report, quarterly review of the IT budget utilization

against the actual plan, quarterly review of the internal audit and control report and consideration of status report on the StarIns Application Implementation.

The Committee met four (4) times during the 2017 financial year.

Attendance:

Executive Committee

The Executive Committee (EXCO) is made up of the Managing Director as Chairman, and all the Executive Directors as members. The Committee is

primarily responsible for the implementation of strategies approved by the Board and ensuring the efficient deployment of the Company’s resources.

12


Wapic Insurance Plc



The management committees include: Finance and Investment Management Committee, Underwriting and Claims Management Committee, Enterprise Risk

Management Committee, Criticized Assets Committee and IT Steering Committee.

Statutory Audit Committee

In compliance with Section 359 of the Companies and Allied Matters Act 1990, Wapic constituted a standing Statutory Audit Committee made up of three

(3) non-executive directors and three (3) shareholders. The composition of the Committee is as set out below:

1. Mr. Bode Osunkoya (Director) Chairman

2. Mr. Chinwendu Achara (Shareholder) Member

3. Mr. Adeniyi Adebisi (Shareholder) Member

4. Mrs. Mary Joke Shofolahan (Shareholder) Member

5. Ms. Chizoba Ufoeze (Director) Member

6. Mr. Barnabas Olise (Director) Member

The Committee is constituted to ensure its independence which is fundamental to upholding stakeholders' confidence in the reliabiilty of the Committee's

report and the Company's Financial Statements. There is no Executive Director sitting on the Committee. The appointment of the Committee Chairman was

to ensure compliance with the requirement that the Committee Chairman should be a professional member of an accounting body established by Act of the

National Assembly in Nigeria who shall be required to attest to the Company's annual report, financial statements, accounts, financial report, returns and

other documents of a financial nature.

Going Concern

Management Committees

These are standing committees made up of the Company's Executive and Senior Management staff. The Committees are set up to idnetify, analyse and make

recommendations on risks pertaining to the Company's day to day activities. They ensure that risk limits set by the Board and the regulatory bodies are

complied with and also provide input into the various Board Committees in addition to ensuring the effective implementation of risk polices. These

Committees meet as frequently as risk issues occur and take actions and decisions within the ambit of their respective powers.

The duties of the Committee are as enshrined in the Section 359(3) and (4) of CAMA. The Committee is responsible for ensuring that the Company's

financials comply with applicable financial reporting standards.

The Committee met 2 times during the 2016 financial year.

The Directors confirm that after making appropriate enquiries they have reasonable expectations tha the Company has adequate resources to continue in

operational existence for the foreseeable future. Accordingly they continue to adopt going concern basis in preparing the financial statements.

Succession planning

The Company has a robust policy which is aligned with the Company's performance management process. The policy identifies key positions, for all Wapic

Insurance Plc operating entities in respect of which there will be formal succession planning. The Company’s policy provides that potential candidates for the

other positions shall be identified at the beginning of each financial year based on performance and competencies.

Code of Ethics

Wapic Insurance has in place, a Code of Conduct which specifies expected behaviour of its employees and Directors. The code is designed to empower

employees and Directors and enable effective decision making at all levels of the business according to defined ethical principles. The Code requires that

each Company employee shall read the Code and sign a confirmation that he has understood the content. In addition, there is an annual re-affirmation

exercise for all employees. The Company also has a Compliance Manual which provides guidelines for addressing violations/breaches and ensuring

enforcement of discipline with respect to staff conduct. The Company also has a Disciplinary Guide which provides sample offences/violations and

prescribes disciplinary measures to be adopted in various cases. The Head of Human Resources is responsible for the design and implementation of the

“Code of Conduct” while the Chief Compliance Officer is responsible for monitoring and ensuring compliance.

The Chief Compliance Officer issues at the commencement of each financial year, an Ethics & Compliance message to all staff within the Group. The Ethics

& Compliance message reiterates the Company’s policy of total compliance with all applicable laws, regulations, corporate ethical standards and policies in

the conduct of the Company’s business. The message admonishes employees to safeguard the franchise and advance its growth in a sustainable manner while

ensuring compliance with relevant policies, laws and regulations.

13


Wapic Insurance Plc



0703-000-0026

0703-000-0027

0808-822-8888

0708-060-1222

0809-933-6366

Dealing in Company Securities

The Group implements a Non-Dealing Period Policy that prohibits Directors, members of the Audit Committee, employees, financial consultants and all

other insiders from abusing, or placing themselves under the suspicion of abusing price sensitive information in relation to the Company’s securities. In line

with the policy affected persons are prohibited from trading on the company’s security during closed period which is usually announced by the Company

Secretary. The Company has put in place a mechanism for monitoring on-going compliance with the policy. A copy of the policy is contained within this

report.

Remuneration Statement

The Report on Directors’ remuneration is as set out in the Audited Financial Statements. The Group has established clear policy guideline for the

determination and administration of compensation. In line with the policy guidelines, the Company seeks to attract and retain the best talent in countries that

it operates. To achieve this, the Company seeks to position itself among the best performing and best employee rewarding companies in its industry. This

principle will act as a general guide for the determination of compensation. The objective of the policy is to ensure that salary structure including short and

long term incentives motivate sustained high performance and are linked to corporate performance. It is also designed to ensure that stakeholders are able to

make reasonable assessment of the Company’s reward practices. It is the Company’s policy to comply in full with all local tax policies while seeking to take

opportunities of legal tax avoidance.

Whistle Blowing Procedure

The Company expects all its employees and Directorss to observe the highest level of probity in their dealings with the Company and its stakeholders. The

Company's Whistle-Blowing Policy covers internal and external whistle-blowers and extends to the conduct of the stakeholders including employees,

vendors, and customers. It provides the framework for reporting suspected breaches of the Company's internal policies as well as extant laws and regulations.

The Company has retained KPMG Professional Services to provide consulting assistance in the implementation of the policy. The policy provides that

suspected wrongdoing by an employee, vendor, supplier or consultant may be reported through the KPMG Ethics lines or email, details of which are provided

below:

Total compensation provided to employees will typically include guaranteed and variable portions. Guaranteed pay will include base pay and other

guaranteed portions while variable pay may be both performance based and discretionary. The Company has put in place a performance bonus scheme which

seeks to attract and retain high performing employees. Awards to individuals are based on the job level, business unit performance and individual

performance. Other determinants of the size of individual award amount include pay level for each skill sets which may be influenced by relative dearth of

skill in a particular area.

The Company complies with the Pension Reform Act on the provision of retirement benefit to employees at all levels.

The Company Secretary

Directors have separate and independent access to the Company Secretary. The Company Secretary is responsible for among other things ensuring that Board

procedures are observed and that the Company's Memorandum and Articles Association and other rules and regulations are complied with. She also assits the

Chairman and the Board in implementing and strengthening corporate governance practices and processes with a view to enhancing long-term shareholder

value.

Toll Free numbers for calls from MTN numbers only:

Toll Free numbers for calls from Airtel numbers only:

Toll Free numbers for calls from Etisalat numbers only:

E-mail

[email protected]

The Company's Chief Compliance and Internal Control Officer is responsible for monitoring and reporting on whistleblowing. Quarterly reports are rendered

to the Board Audit and Compliance Committee.

14

mailto:[email protected]


Wapic Insurance Plc



Complaints Resolution

The Company Secretary assists the Chairman in ensuring good information flow within the Board and its Committees and between Management and Non-

Executive Directors. The Company Secretary also facilitates the orientation of new Directors and coordinates the professional development of Directors.

The Company has a Complaint Management Policy which has been put in place in line with the SEC Rules Relating to the Complaint Management

Framework of the Nigerian Capital Market and applies to all complaints about Wapic Insurance Plc, made by members of the public or external organisations

arising out of issues contained in the Investment and Securities Act. The Complaint Management is hosted on the Company's website www.wapic.com and is

also contained within this Annual Report.

Statement of Compliance

The Company is a public limited liability company and therefore subject to the relevant provisions of the SEC as well as the NAICOM Codes of Corporate

Governance. In the event of any conflict between the provisions of the two codes regarding any matter, the Company will defer to the provisions of the

NAICOM Code as its primary regulator.

As primary compliance officer for the Company's compliance with the listing rules of the Nigerian Stock Exchange, the Company Secretary is responsible for

designing and implementing a framework for the Company's compliance with the listing rules, including advising Management on prompt disclosure of

material information.

The Company Secretary attends and prepares the minutes for all Board meetings. As secretary of all board committees she assists in ensuring coordination

and liaison between the Board, the Board Committees and Management. The Company Secretary also assists in the development of the agendas for the

various Board and Board Commtitee meetings.

The appointment and removal of the Company Secretary are subject to the Board's approval.

15

Management commentary and analysis

Wapic Insurance Plc




GROUP

31 Dec 2017 31 Dec 2016 Change 31 Dec 2017 31 Dec 2016 Change

N'000 N'000 % N'000 N'000 %

Gross premium written 9,807,616 8,005,308 23% 6,388,069 5,375,431 19%

Net premium income 5,652,039 4,291,340 32% 3,752,138 2,672,942 40%

Net claims expenses 3,061,710 2,868,625 7% 1,682,351 1,233,309 36%

Underwriting profit 1,536,136 380,677 304% 1,198,406 577,962 107%

Investment and other income 3,130,472 3,737,135 (16)% 2,214,804 2,804,526 (21)%

Operating expenses (4,432,115) (4,150,240) 7% (3,182,585) (2,867,934) 11%

Profit before tax 1,622,691 1,193,446 36% 230,625 514,554 (55)%

Profit after tax for the year 1,530,810 586,023 161% 315,644 91,973 243%

Basic and diluted earnings per share (kobo) 11 4 161% 2 1 243%

Operating results and financial condition

COMPANY

The business contiuned to experience gains resulting from the business model restructuring and transformation of the service channels embarked upon to

reposition the group. These contributed to a 23% (Company: 19% increase) increase in the Group’s gross written premium when compared to prior year’s result.

The Group reported net insurance claims expenses of N3.06billion in 2017, an increase of N193 million over December 2016. The Company also recorded an

increase of N449 million in net claim expenses between 2016 and 2017. The underwriting result at the end of the year amounted to an underwriting profit of

N1.54 billion (Company: underwriting profit of N1.20 billion) compared to an underwriting profit of N381 million (Company: N578 billion) reported during the

year ended 31 December 2016. The underwriting performance was impacted by the improved net underwriting income in spite of the claims experience within

the period.

The transformation in the business model also impacted on the net premium income of N5.65 billion which represents an increase of N1.80 billion over

December 2016 results.

Performance indicators

Wapic Management's Commentary and Analysis

In order to foster deeper understanding of our strategy, operating risk and performance and also in compliance with regulatory requirements, we have outlined a

Management’s Commentary and Analysis (“MC&A”) report as contained hereunder.

Reference in this MC&A to the “Company” or to “Group” is with respect to, as the context may require, WAPIC Insurance Plc and all or some of its subsidiaries.

Unless otherwise indicated, all financial information presented in this MC&A, including tabular amounts, is in Nigerian Naira and is prepared in accordance with

International Financial Reporting Standards (“IFRS”).

To facilitate wholesome understanding of the Company’s position, it is advised that the content in this MC&A be read in conjunction with the full audited annual

consolidated financial statements as well as the accompanying notes.

Nature of business

Wapic Insurance Group operates three Companies namely: Wapic Insurance Plc (the parent company), Wapic Life Assurance Limited and Wapic Insurance

(Ghana) Limited. Wapic Insurance Plc’s major business activity is insurance. However, the Group is developing capacity for expansion into the asset

management and property business.

Business objective and strategy

Wapic Insurance Plc is registered, incorporated and listed in Nigeria. The Company is principally engaged in providing insurance and investment services to cater

for the needs of corporate and retail sectors of the Nigerian economy.

The Company aims to evolve into a truly diversified financial services institution that provides protection against all forms of insurable risks to all customer

segments. By this, the Company’s objective is to emerge as one of the top twenty financial services institutions in Nigeria by 2019.

To ensure this goal is achieved, Wapic Group's strategy is to broaden and align service delivery channels along customer segments taking cognizance of the

difference between policy administration, product support and customer care to adequately cater for peculiar needs for each segment.

Wapic is set to provide excellent service in a sustainable manner and thereby redefine the business of insurance within the West Africa region.

16

Management commentary and analysis

Wapic Insurance Plc



Forward looking statements

Some aspects of the statement above relate to the Company’s future outlook. Reference to the Company’s or Management’s budget, estimates, expectations,

forecasts, predictions or projections constitute aspect of the “forward-looking statements”. Such statements may also be deduced from the use of conditional or

forward‑looking terminologies including but not limited to words such as “anticipates”, “believes”, “estimates”, “expects”, “may”, “plans”, “projects”, “should”,

“will”, or the adverse variants of such which appear within the body of this document.

Many factors and assumptions may affect the manifestation of the Company’s projections, including, but not limited to, production rate, claims rate, employee

turnover, relationships with brokers, agents and suppliers, economic and political conditions, non-compliance with laws or regulations by the Company’s

employees, brokers, agents, suppliers, and/or partners, and other factors that are beyond its control.

Without prejudice to the Company, such forward looking statements reflect Management’s current belief and are based on available information which are

subject to risks and uncertainties as identified. Therefore, the eventual action and/or outcome could differ materially from those expressed or implied in such

forward-looking statements, or could affect the extent to which a particular projection materializes.

The forward-looking statements in this document reflect the Company’s expectations at the time the Company’s Board of Directors approved this document, and

are subject to change after this date. The Company does not undertake any obligation to update publicly or to revise any such forward-looking statements, unless

required by applicable legislation or regulation.

The Group’s cash investment is in accordance with its investments policy which is compliant with regulatory requirements. The Group's investment strategy

during the year was underpinned by a focus on highly liquid financial instruments such as term deposit, equity and debt instruments. At the end of December

2017, the Group had approximately N7.8 billion invested in fixed income, N1.7 billion in equity instruments and N812 million on money market placements as

against N6.4 billion, N1.01 billion and N1.05 billion respectively for the comparative prior year period as at 31 December 2016.

Investment and other income decreased by 16% (Company: 21%) is a reflection of the group's strategic direction which leveraged on investment income as a key

revenue source to agument the uncertainties from fluctuations in underwriting margins. The decline from N3.74 billion (Company: N2.81 billion) in 2016 to

N3.13 billion (Company: N2.22 billion) in 2017 is a mainly as result of the impact foreign exchange translation gains on the group's foreign currency assets in

2016 which was not available in the current period; if this impact is adjusted for, the performance reflected the Company's contiuned efforts at growing

investment portfolio with maximum yields through taking advantage of strategic investment opportunities.

Operating expenses for the year totaled N4.43 billion (Company: N3.18 billion), representing a 7% increase (Company: 11%) compared to prior the year

expenses.

As at 31st December 2017, the Group had N1.75 billion in the cash and cash equivalents (Company: N911 million), including money market placements of N812

million (Company: N403 million) with maturity of not more than three months.

Liquidity, capital resources and risk factors

17

Statement of Directors' responsibilities

Wapic Insurance Plc



STATEMENT OF DIRECTORS' RESPONSIBILITIES

FOR THE YEAR ENDED 31 DECEMBER 2017

(a)

(b)

(c)

By order of the Board

- Financial Reporting Council Act of Nigeria

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.

Nothing has come to the attention of the directors to indicate that the company will not remain a going concern for at least twelve months from the date of this

statement.

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 as required by the Companies and Allied Matters Act of Nigeria and the

Insurance Act of Nigeria. The responsibilities include ensuring that the Group:

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;

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

prepares its financial statements using suitable accounting policies supported by reasonable and prudent judgements and estimates, which are all 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 conformity with;

- the requirements of the Companies and Allied Matters Act.

- relevant guidelines and circulars issued by the National Insurance Commission (NAICOM);

- the requirements of the Insurance Act;

- International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB);

Bode Ojeniyi

FRC/2016/CIBN/00000013894

Executive Director

29 January 2018

Managing Director

29 January 2018

FRC/2016/CIIN/00000013893

Adeyinka Adekoya

18

Report of the Audit committee

Wapic Insurance Plc



Report of the Audit CommitteeFor the year ended 31 December 2017

-

-

-

Mr. Bababode Osunkoya

FRC/2013/ICAN/00000002054

Chairman, Audit Committee

Members of the committee as at 31 December 2017:

Mr. Bode Osunkoya - Non - Executive Director (chairman)

Mr. Chinwendu Achara - Shareholder (member)

Mr. Adeniyi Adebisi - Shareholder (member)

Mrs. Mary Joke Shofolahan - Shareholder (member)

Ms. Chizoba Ufoeze - Non - Executive Director (member)

Mr. Barnabas Olise - Non - Executive Director (member)

In accordance with the provisions of Section 359 (6) of the Companies and Allied Matters Act of Nigeria,

the members of the Audit Committee of Wapic Insurance Plc hereby, report on the financial statements

for the year ended 31 December 2016 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 and Company are in

accordance 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 2016 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 the External Auditor’s recommendations on accounting and internal

control matters and the effectiveness of the Company’s system of accounting and internal control.

29 January 2018

19

Independent Auditor's opinion

Wapic Insurance Plc



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25

Reporting entity, basis of preparation and significant account policies

Wapic Insurance Plc



Notes to the financial statements

1. Reporting entity

Going concern

2. Basis of preparation

(a) Statement of compliance with International Financial Reporting Standards

(b) Functional and presentation currency

(c) Basis of measurement

(d) Use of estimates and judgments

Wapic Insurance Plc (“Wapic” or ‘‘the Company”) together with its subsidiaries (collectively "the Group") is a public liability company domiciled in

Nigeria with operations in Nigeria and Ghana. Wapic Insurance Plc was incorporated on 14 March 1958 as a private limited liability Company under the

name of West African Provincial Insurance Company Limited. It became a public limited liability company in 1990 when the Company’s shares were listed

on the Nigerian Stock Exchange. The Company secured a life insurance business license from National Insurance Commission (NAICOM) in 2000, and

became a composite insurance business. The Company separated the life business and transferred the related assets and liabilities to its subsidiary,

Intercontinental Life Assurance Limited (now Wapic Life Assurance Limited), on 1 March 2007 through which it continues to provide life assurance

services. Wapic Insurance Ghana Limited, a wholly owned subsidiary of Wapic Insurance Plc, was incorporated on 21 January 2008 to carry on general

insurance business in Ghana from 19 February 2008. The address of the Company’s corporate office is 119, Awolowo Road, Ikoyi. The Group is principally

engaged in the business of underwriting life and non-life insurance risks and also issues a diversified portfolio of investment contracts products to provide

its customers with asset management solutions for their savings and target investment plans.

The financial statements have been prepared in accordance with, and comply with, International Financial Reporting Standards (IFRS) and IFRS

Interpretations Committee (IFRIC) Interpretations applicable to companies reporting under IFRS and in the manner required by Companies and Allied

Matters Act of Nigeria, the Insurance Act of Nigeria, the Financial Reporting Council of Nigeria Act (FRC Act) and Nigerian Insurance Commission

(NAICOM) guidelines and circulars.

The financial statements are presented in Nigerian currency (Naira) which is the Company’s functional currency. Except otherwise indicated, financial

information presented in Naira have been rounded to the nearest thousand.

The consolidated financial statements have been prepared on a historical cost basis except for the following:

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 and liabilities and income and expenses. Actual results may differ from these

estimates under different assumptions and conditions.

These financial statements have being prepared on the going concern basis. The Group and Company has no intention or need to reduce substantially its

business operations. The management believes that the going concern assumption is appropriate for the Group and Company 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 and Company is carried out to ensure that there are no going concern threats to the

operation of the Group and Company.

These financial statements were authorised for issue by the Company’s Board of Directors on 29 January 2018.

• financial instruments at fair value through profit or loss are measured at fair value;

• available-for-sale financial assets are measured at fair value;

• investment properties are measured at fair value;

• land and building are carried at revalued amount; and

• Insurance liabilities are measured at present value of future cashflows.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the

estimates are revised and in any future periods affected.

Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on

the amounts recognised in the consolidated financial statements is included in note 4 to the financial statements.

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Wapic Insurance Plc



(e) Regulation

(f) Reporting period

(g) Changes in accounting policies

Title of standard

Nature of change

IFRS 9 Financial Instruments

IFRS 9 addresses the classification, measurement and derecognition of financial assets and financial liabilities,

introduces new rules for hedge accounting and a new impairment model for financial assets.

The new classification and measurement and impairment requirements will be applied by adjusting our opening

balance sheet of 01 Jan 2018 (31 December, 2017) the date of initial application, with no restatement of comparative

period financial information. The Group will recognise any difference between the previous carrying amount and the

carrying amount in the opening retained earnings (or other component of equity, as appropriate). Based on current

estimates, the adoption of IFRS 9 is expected to result in a reduction to retained earnings as at 31 Dec 2017. The

impact is primarily attributable to increases in the allowance for credit losses under the new impairment

requirements. We continue to monitor and refine certain elements of our impairment process in advance of Q1 2018

reporting.

Classification and measurement

IFRS 9 introduces a principles-based approach to the classification of financial assets. Debt instruments, including

hybrid contracts, are measured at fair value through profit or loss (FVTPL), FVOCI or amortized cost based on the

nature of the cash flows of the assets and an entity’s business model. These categories replace the existing IAS 39

classifications of FVTPL, AFS, loans and receivables, and held-to-maturity. Equity instruments are measured at

FVTPL, unless they are not held for trading purposes, in which case an irrevocable election can be made on initial

recognition to measure them at FVOCI with no subsequent reclassification to profit or loss.

The statement of financial position has been prepared for a 12 month period.

The accounting policies adopted are consistent with those of the previous financial period. No new and amended standards and interpretations were adopted

during the financial year.

As at year end, a number of standards and interpretations, and amendments thereto, had been issued by the IASB which are not yet effective for these

financial statements. Set-out below are standards relevant to the Company, with a date of initial application after 1 January 2018:

Impact

Except for the changes below, the Group and Company has consistently applied the accounting policies as set out in Note 3 to all periods presented in these

financial statements.

New and amended standards and interpretations yet to be adopted by the Group

New and amended standards and interpretations

The FRC Act provides that in the matters of financial reporting if there is any inconsistency between the FRC Act and of other Act or law, the FRC Act shall

supercede the other Act or law. The FRC Act provides that IFRS shall be the national financial reporting framework in Nigeria. Consequently, the

following provision of the National Insurance Act, which conflict with the provisions of IFRS have not been adopted:

i) the requirement to provide 10 per cent for outstanding claims in respect of claims incurred but not reported (IBNR) at the end of the year under review

under section 20 (1b);

ii) the requirement for additional provision of 25 per cent of net premium to general reserve fund under section 22 (1a).

iii) sections 21 (1a) and 22 (1b) require maintenance of contingency reserves for general and life businesses respectively at specified rates as set out under

note 3.24 to cover fluctuations in securities and variation in statistical estimates;

iv) section 22 (1a) requires that the maintenance of a general reserve fund (insurance contract fund) which shall be credited with an amount equal to the net

liabilities on policies in force at the time of the actuarial valuation and an additional 25 percent of net premium for every year between valuation date;

v) section 24 requires the maintenenance of a margin of solvency to be calculated in accordance with the Act.

The Company is regulated by the NAICOM under the National Insurance Act of Nigeria. The Act specifies certain provisions which have impact on

financial reporting as follows:

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

ii) section 20 (1b) requires provision for outstanding claims to be credited with an amount equal to the total estimated amount of all outstanding claims with

a further amount representing 10 per centum of the estimated figure for outstanding claims in respect of claims incurred but not reported at the end of the

year under review. Under IFRS the Incurred but not Reported (IBNR) claims are included in the reserves is as determined by the Actuary;

27


Wapic Insurance Plc



Financial Statement Line Financial instrument Amount

(N'000)

IAS 39 classification IFRS 9

classification

Cash at bank 933,582 Loans and receivables Amortised cost

Money market

placements 811,760 Loans and receivables Amortised cost

Equity securities with

readily determinable

fair values

1,548,487 Available for sale FVTOCI

Unquoted equity

securities179,990 Available for sale FVTOCI

Fixed income

securities with readily

determinable fair

values

2,304,336 Available for sale FVTOCI

Trade receivables 707,489 Loans and receivables Amortised cost

Other receivables

(excluding

prepayments)

924,102 Loans and receivables Amortised cost

Reinsurance assets

(excluding prepaid

reinsurance)

1,087,216 Loans and receivables Amortised cost

Statutory depositRestricted deposit

with central bank632,964 Loans and receivables Amortised cost

For financial liabilities, most of the pre-existing requirements for classification and measurement previously included

in IAS 39 were carried forward unchanged into IFRS 9. The requirements related to the fair value option for financial

liabilities, which were adopted in 2014, were changed to address the treatment of own credit risk. The combined

application of the contractual cash flow characteristics and business model tests as at 31 December 2017 is expected

to result in certain differences in the classification of financial assets when compared to our classification under IAS

39. The most significant changes in classification include the following:

There were no significant changes in the Group's classification of financial liabilities.

The implementation of IFRS 9 requires certain decisions to be taken by the managment. and approved in line the

relevant governance framework. Management will within the intervening period identify and assess the complexity of

implementation decision point and the range of policy options available for each. Management will also consider

conceptual suitability, implementation feasibility and regulatory directives on each option to guide the range of key

decision points, policy options for each decision point and the policy that will be chosen by management at

implementation date.

Decisions points

Impact

Cash and cash equivalents

Investment securities -

Available for sale

investment securities

Other assets

IFRS 9 introduces an expected credit loss impairment model that differs significantly from the incurred loss model

under IAS 39 and is expected to result in earlier recognition of credit losses. Additional details on the key elements of

the new expected credit loss model are described below.

Impairment

Scope

Under IFRS 9, the same impairment model is applied to all financial assets, except for financial assets classified or

designated as at FVTPL and equity securities designated as at FVOCI, which are not subject to impairment

assessment. The scope of the IFRS 9 expected credit loss impairment model includes amortized cost financial assets,

debt securities classified as at FVOCI, and off balance sheet loan commitments and financial guarantees which were

previously provided for under IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The implemntation is

expected to consider the above-mentioned reclassifications into or out of these categories for both on and off-balance

sheet exposures in line with IFRS 9.

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Wapic Insurance Plc



Definition of default

IFRS 9 does not define default, but contains a rebuttable presumption that default has occurred when an exposure is

greater than 90 days past due. The Group will adopt a definition of default based on the best practice. In addition,

qualitative factors will also be considered. This will be applied consistently from one reporting period to another.

Governance

The implementation of IFRS 9 will be designed and implemented in-line with the existing governance structure

around the finance and investment management framework of the Group.

IFRS 9 must be applied for financial years commencing on or after 1 January 2018.

During the intervening period, we will carry-out initial assessments of the scope of IFRS 9, gap assessments from IAS

39, classification of financial assets, financial and economic impacts, system and resource requirements, and key

accounting interpretations. We will also design and commencing the building of systems, models, controls and

processes required to implement IFRS 9.

Under IFRS 9, the population of financial assets and corresponding allowances disclosed as Stage 3 will not

necessarily correspond to the amounts of financial assets currently disclosed as impaired in accordance with IAS 39.

Consistent with IAS 39, loans and receivables are written off when there is no realistic probability of recovery.

Accordingly, our policy, when financial assets are written-off will not significantly change on adoption of IFRS 9.

Because all financial assets within the scope of the IFRS 9 impairment model will be assessed for at least 12-months

of expected credit losses, and the population of financial assets to which full lifetime expected credit losses applies is

larger than the population for which there is objective evidence of impairment in accordance with IAS 39, loss

allowances are generally expected to be higher under IFRS 9 relative to IAS 39.

Changes in the required credit loss allowance, including the impact of movements between Stage 1 (12 month

expected credit losses) and Stage 2 (lifetime expected credit losses), will be recorded in profit or loss. Because of the

impact of moving between 12 month and lifetime expected credit losses and the application of forward looking

information, provisions are expected to be more volatile under IFRS 9 than IAS 39.

The measurement of expected credit losses will primarily be based on the product of the instrument’s probability of

default (PD), loss given default (LGD), and exposure at default (EAD), discounted to the reporting date. The main

difference between Stage 1 and Stage 2 expected credit losses is the respective PD horizon. Stage 1 estimates will use

a maximum of a 12-month PD while Stage 2 estimates will use a lifetime PD.

Stage 3 estimates will continue to leverage existing processes for estimating losses on impaired loans, however, these

processes will be updated to reflect the requirements of IFRS 9, including the requirement to consider multiple

forward-looking scenarios. The Group will combine the regulatory prudential guidelines with other relevant

qualitative factors in the "definition of default".

Movement across stages

Movements between Stage 1 and Stage 2 are based on whether an instrument’s credit risk as at the reporting date has

increased significantly relative to the date it was initially recognized. For the purposes of this assessment, credit risk

is based on an instrument’s lifetime PD, not the losses expected to be incur.

Movements between Stage 2 and Stage 3 are based on whether financial assets are credit-impaired as at the reporting

date. The determination of credit-impairment under IFRS 9 will be similar to the individual assessment of financial

assets for objective evidence of impairment under IAS 39.

Expected life

For instruments in Stage 2 or Stage 3, loss allowances will cover expected credit losses over the expected remaining

lifetime of the instrument. For most instruments, the expected life is limited to the remaining contractual life,

adjusted as applicable for expected prepayments. However, an exemption from this limit is granted for instruments

that include both a loan and undrawn commitment component and where the contractual ability allows demand of

repayment and cancellation of the undrawn commitment does not limit the exposure to credit losses to the

contractual notice period.

Impact

Expected credit loss impairment model

Measurement

Under IFRS 9, credit loss allowances will be measured on each reporting date according to a three-stage expected

credit loss impairment model:

• Stage 1 – From initial recognition of a financial asset to the date on which the asset has experienced a significant

increase in credit risk relative to its initial recognition, a loss allowance is recognized equal to the credit losses

expected to result from defaults occurring over the next 12 months.

• Stage 2 – Following a significant increase in credit risk relative to the initial recognition of the financial asset, a loss

allowance is recognized equal to the credit losses expected over the remaining lifetime of the asset.

• Stage 3 – When a financial asset is considered to be credit-impaired, a loss allowance equal to full lifetime expected

credit losses will be recognized. Interest revenue is calculated based on the carrying amount of the asset, net of the

loss allowance, rather than on its gross carrying amount.

Mandatory application

date/ Date of adoption by the Group

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Wapic Insurance Plc



Title of standard

Nature of change

Impact

Mandatory application

date/ Date of adoption by the Group

3. Significant accounting policies

3.1. Cash and cash equivalents

3.2. Financial instruments

(i) Financial assets

(a)Classification

(b) Initial recognition

( c) Subsequent measurement

Financial assets at fair value through profit or loss

IFRS 16 must be applied for financial years commencing on or after 1 January 2019. The Group does not intend to

adopt IFRS 16 before its mandatory date. Expected date of adoption by the Group is 1 January 2019.

There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting

periods and on foreseeable future transactions.

IFRS 16 Leases

IFRS 16 was issued in January 2016. It will result in almost all leases being recognised on the balance sheet, as the

distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the

leased item) and a financial liability to pay rentals are recognised. The only exceptions are shortterm and low-value

leases. The accounting for lessors will not significantly change.

The standard will affect primarily the accounting for the Group’s operating leases. As at the reporting date, the Group

has no operating lease commitments.

The Group’s financial assets include cash and short term deposits, trade and other receivables, staff loans, quoted and unquoted equity instruments, treasury

bills, bonds and debt notes.

The classification of financial assets depends on the purpose for which the investments were acquired or originated.

The Group classifies its financial assets into the following categories:

• financial assets at fair value through profit or loss;

• held-to-maturity;

• loans and receivables, and

• available-for-sale.

All financial instruments are initially recognized at fair value plus directly attributable transaction costs for financial instruments not classified as at fair

value through profit and loss. Financial instruments are recognized when the Group has a contractual right to receive cash flows from the financial

instruments or where the Group has assumed substantially all risks and rewards of ownership.

Financial assets classified as held for trading are acquired principally for the purpose of selling in the short term for profit purposes.

Subsequent to intial recognition, financial assets are measured either at fair value, amortised cost or cost, depending on their categorization.

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designiated at initial recognition at fair value

through profit or loss.

Except for the changes explained above, the significant accounting policies set out below have been consistently applied by the Group and Company to all

periods presented in these financial statements.

Cash and cash equivalents include cash in hand and at bank, call deposits and short term highly liquid financial assets with original maturities of three

months or less from the acquisition date, which are subject to insignificant risk of changes in their fair value and are used by the Group in the management

of its short-term commitments.

Cash and cash equivalents are carried at amortised cost in the statement of financial position.

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Wapic Insurance Plc



Held-to-maturity

Available-for-sale

Loans and receivables

Subsequent to initial recognition, financial assets as fair value through profit or loss investments are re-measured at fair value, with gains and losses arising

from changes in this value recognized in the profit or loss in the period in which they arise. The fair values of quoted instruments in active markets are

based on current bid prices, while those of unquoted instruments are determined by reference to an active markets or valuation techniques.

Interest earned and dividends received while holding trading assets at fair value through profit or loss are recognised in the profit or loss. The Group holds

financial assets designated at initial recognition at fair value through profit or loss in addition to those financial assets held for trading.

Available-for-sale financial assets are carried at fair value. Fair values for quoted instruments are determined in the same manner as those of instruments at

fair value through profit or loss. The fair values of unquoted equities and other instruments for which there is no active market, are established using

appropriate valuation techniques. These inputs may include reference to the current fair value of other instruments that are substantially similar in terms of

underlying cash flows and risk characteristics.

Available for sale equity instruments for which fair value cannot be reliably determined are carried at cost less impairment allowance, if any.

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 profit or loss upon sale or de-recognition of the instrument. When available for sale instruments

are impaired, the impairment loss is recognised immediately in profit or loss.

Held-to-maturity investments are non-derivative financial assets with fixed determinable payments and fixed maturities that management has both the

positive intention and ability to hold to maturity other than:

• those that the Group designates as available for sale;

• those that upon initial recognition has been designated as at fair value through profit or loss; and '

Held to maturity investments are measured subsequent to initial recognition at amortised cost using the effective interest rate.

The Group consider tainted any financial assets classified as held to maturity, if during the current financial year or the two preceding financial years, it has

sold or reclassified more than an insignificant amount of the held-to-maturity investments before maturity (more than insignificant in relation to the total

amount of held-to-maturity investments) other than sales or reclassifications that:

• are so close to maturity or the financial asset’s call date (for example, less than three months before maturity) that changes in the market rate of interest

would not have a significant effect on the financial asset’s fair value;

• occur after substantially all of the financial asset’s original principal has been collected through scheduled payments or prepayments; or

• are attributable to an isolated event that is beyond the Group’s control, is non-recurring and could not have been reasonably anticipated by the Group.

• those that meet the definition of loans and receivables.

Such instruments as government bonds, corporate bonds and treasury bills are carried at amortised cost using the effective interest method, less impairment

allowance, if any.

Available for sale financial investments include equity and debt securities. The Group classifies as available-for-sale those financial assets that are generally

not designated as another category of financial assets and strategic capital investments 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.

Dividends received on available-for-sale instruments are recognised in profit or loss when the Group’s right to receive payment has been established.

Interest income on available for sale debt instruments are recognised in the profit or loss for the related period using the effective interest rate method.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, other than those

classified by the Group as at fair value through profit or loss or available-for-sale.

Loans and receivables consist primarily of staff loans, premium debtors, due from reinsurers, other debtors.

Loans and receivables are measured at amortised cost using the effective interest rate method, less any impairment losses. Loans granted to staff at below

market rates are fair valued by reference to expected future cash flows and current market interest rates for instruments in a comparable or similar risk class

and the difference between the historical cost and fair value is accounted for as employee benefits under staff costs where these are considered material.

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Wapic Insurance Plc



(d) Impairment of financial assets

- significant financial difficulty of a counter party;

- a breach of contract such as default of contractual terms or delinquency in interest or principal payment;

- it is probable that the counterparty will enter bankruptcy or other financial reorganisation; and

(i) a decline is generally regarded as significant if it represent substantial fall in value below cost and

(ii) a decline in quoted price is considered to be prolonged if decline persists for more one financial year.

Loans and receivables and held-to-maturity financial instruments

Available-for-sale financial assets

(ii) Financial liabilities

- observable data which indicates that there is a measurable decrease in the estimated future cash flows from a group of assets since the initial recognition of

those assets although the decrease cannot yet be identified with the individual financial assets. In addition, for an available-for-sale financial asset, a

significant or prolonged decline in the fair value below its cost is also considered objective evidence of impairment. While the determination of what is

significant or prolonged is a matter of judgement. In respect of equity securities that are quoted, the group is guided by the following:

In accordance with IAS 39, all financial assets and liabilities (including derivative financial instruments) have to be recognized in the financial statements

and measured in accordance with their assigned categories. The table below represents the Company's classification of all its financial assets and liabilities:

When there is objective evidence of impairment, the amount of the impairment loss determined 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 not been incurred) discounted at the financial asset’s

original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced through an

allowance account. The impairment loss is recognised in profit or loss.

Impairment reversals in a subsequent period arising as a result of decreases in the amount of the impairment loss is recognised where 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

allowance account. The reversal is reinstated as far it does not result in the carrying amount of the financial asset that exceeds what the amortised cost

would have been had the initial impairment not been recognised.

The carrying amounts of financial assets subsequently measured at amortised cost are reviewed at each reporting date to determine whether there is any

objective evidence of impairment. A financial asset is considered to be impaired if objective evidence indicates that one or more events that have occurred

since the initial recognition of the asset have had a negative effect on the estimated future cash flows of that asset and can be reliably estimated.

Observable data or evidence that the group uses to determine if an impairment allowance is required on a financial asset include:

Available-for-sale financial assets are impaired if there is objective evidence of impairment, resulting from one or more loss events that occurred after

initial recognition but before the statement of financial position date, that have an impact on the future cash flows of the asset.

For financial assets measured at amortised cost, the Group first assesses whether objective evidence of impairment exists individually for financial assets

that are individually significant and or collectively for the entire portfolio or class of financial assets. Individually significant financial assets are tested for

impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

All impairment losses are recognized through profit or loss. If any loss on the financial asset was previously recognized directly in equity as a reduction in

fair value, the cumulative net loss that had been recognized in equity is transferred to the income statement and is recognized as part of the impairment loss.

The amount of the loss recognized in the profit or loss is the difference between the acquisition cost and in the case of equity instruments or amortised cost

in the case of debt instruments the current fair value, less any previously recognized impairment loss in the profit or loss.

When an available-for-sale financial instrument is carried at cost because fair value is not reliably measured, an impairment loss is measured as the

difference between the carrying amount and the present value of estimated future cash flows discounted at current market rate of return for similar

instruments.

Subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fair value while other financial liabilities are

measured at amortised cost.

The Group's financial liabilities are classified as other financial liabilities at amortised cost. They include: investment contract liabilities, trade and other

payables.

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Wapic Insurance Plc



Subclasses

Cash at bank and in

hand

Money market

placements

Due from agents

Due from policy

holders/brokers

Due from insurance

companies

Bancassurance

receivables

Claim recoverables

Staff loans

Intercompany

Sundry receivables

Listed equity Shares

Unlisted equity Shares

Treasury Bills

Corporate Bonds

Government Bonds

Financial liabilities at fair

value through profit or

loss

Nil Nil

Reinsurance payable

Customer deposits

Accounts payable

Due to contractors

Accrued expenses

Individual deposit

adminstration

Group deposit

adminsitration

(iii) Fair value measurement

Financial assets at fair value

through profit or loss

Investment securities

Investment securities

Nil

Financial liabilities

Financial liabilities at

amortized cost

Trade payables

Other payables

Investment contract liabilities

Held to maturity

Category Classes as determined by the Company

Financial assets

Financial assets at fair

value through profit or

loss

Unlisted equity securities

Shares

Loans and receivables

Cash and cash equivalents

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the

measurement date in the principal or in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability

reflects its non performance risk.

When available, the Group measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as

active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

If there is no quoted price in an active market, then the Group uses valuation techniques that maximize the use of relevant observable inputs and minimise

the use of unobservable inputs. The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a

transaction. Valuation techniques include using recent arm’s length market transactions between knowledgeable, willing parties, if available, reference to

the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models. Where an appropriate

and reliable valuation technique can not be achieved the instrument is carried at cost.

The best evidence of the fair value of a financial instrument at initial recognition is normally the transaction price, i.e. the fair value of the consideration

paid or received. If the Group determines that the fair value at initial recognition differs from the transaction price and the fair value is evidenced neither by

a quoted price in an active market for an identical asset or liability nor based on a valuation technique that uses only data from observable markets, then the

financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value at initial recognition and the transaction price.

Subsequently, that difference is recognised in profit or loss on an appropriate basis over the life of the instrument but no later than when the valuation is

wholly supported by observable market data or the transaction is closed out. If an asset or a liability measured at fair value has a bid price and an ask price,

then the Group measures assets and long positions at a bid price and liabilities and short positions at an ask price or at the price that best present the

financial instrument.

Trade receivables

Reinsurance assets

Other receivables and prepayment

Listed debt securities

Available for sale

33


Wapic Insurance Plc



(iv) Offsetting financial assets and liabilities

(v) De-recognition of financial assets and liabilities

(vi) Write-off policy

(vii) Trade receivables

3.3. Reinsurance assets and liabilities

3.4 Deferred acquisition costs (DAC)

For non life business and short-duration life insurance contracts, the Group amortises the deferred acquisition costs over the terms of the policies as

premium is earned on the underlying insurance contracts by applying to the acquisition expenses the ratio of unearned premium to written premium.

A financial asset is derecognized when the contractual rights of the Group to the cash flows from the asset expire, or its rights to receive the contractual

cash flows on the financial asset in a transaction that transfers substantially all the risks and rewards of ownership of the financial asset are transferred, or

when it assumes 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.

Financial assets and liabilities are set off and the net amount presented in the statement of financial position when, and only when, the group has a legally

enforceable right to set off the recognized amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

The fair value of a demand deposit is not less than the amount payable on demand, discounted from the first date on which the amount could be required to

be paid. The Group recognises transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change has

occurred.

Trade receivables are loans and receivables financial instruments specifically arising from insurance contracts and constitutes premium debtors with

determinable payments that are not quoted in an active market and the Group has no intention to sell. Trade receivables on insurance contracts are initially

recognised at fair value and subsequently measured at amortised cost less impairment. Trade receivables are recognised for insurance cover for which

payments have been received indirectly through duly licensed insurance brokers or lead insurers in co-insurance arrangements. Premium collected on behalf

of the Group are expected to be received within 30 days from insurance brokers and lead insurers. Trade receivables that are individually identified as

impaired are assessed for specific impairment. All other trade receivables are assessed for collective impairment.

Reinsurance liabilities are premiums payable for the Group's reinsurance contracts and are recognised as an expense when due.

Acquisition costs comprise insurance commissions, brokerage and other related underwriting expenses arising from the generation and underwriting of

insurance contracts. Deferred acquisition costs represent a proportion of commission and underwriting expenses which are incurred during a financial

period and are deferred to the extent that they are recoverable out of future revenue margins.

The Group writes off a financial asset (and any related allowances for impairment losses) when it determines that the assets are uncollectible. This is

determined after consideration of information such as significant changes in the issuer's financial position such that the issuer can no longer pay the

obligation or charge off decisions generally based on specific past due status considerations.

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 that

meets the classification requirements for insurance contracts are classified as reinsurance contracts held by the Group. Contracts that do not meet these

classification requirements are classified as financial assets.

Reinsurance assets represent balances due from reinsurance companies. Amounts recoverable from reinsurers on settled or outstanding claims are estimated

in a manner consistent with the outstanding claims provision or settled claims associated with the reinsurer's obligations according to the reinsurance

policies and are in accordance with the related reinsurance contract.

Reinsurance premiums paid and payable on the Group's reinsurance contracts are amortised over the life of the underlying insurance contracts covered by

the reinsurance policies. The unexpired portion of the amortised reinsurance premiums are recognised as prepaid reinsurance.

The Group's reinsurance assets are measured at their carrying amount less impairment charges. Amounts recoverable under reinsurance contracts are

assessed for impairment at each reporting date. If there is objective evidence of impairment, the Group reduces the carrying amount of its reinsurance assets

to its recoverable amount and recognizes the impairment loss in the profit or loss. An objective evidence exists if an event has occurred by which the Group

may determine that it may not recover all amounts due and that the event has a reliably measurable impact on the amounts that the Group will receive from

the reinsurer.

The proportion of these acquisition costs that correspond to the unearned premiums are deferred as an asset and amortised over the life of the associated

insurance contracts on a basis consistent with the related unearned portion of the premiums.

The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or has expired.

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Wapic Insurance Plc



3.5. Other receivables and prepayments

3.6. Basis of consolidation

(a) Subsidiaries

(b) Transactions eliminated on consolidation

(c) Associates

Subsidiaries are entities controlled by the Group. The Group controls an entity if it is exposed to, or has rights to, variable returns from its involvement with

the investee and has the ability to affect those returns through its power over the investee. The consolidated financial statements include the assets,

liabilities and results of the Group and subsidiary undertakings. The financial statements of subsidiaries are included in the consolidated financial

statements from the date that control commences until the date that control ceases. The financial statements have been prepared using uniform accounting

policies for like transactions and other events in similar circumstances.

The Group determine at each reporting date whether there is any objective evidence that the investment in the associate is impaired. The amount of

impairment is determined as the difference between the recoverable amount of the associate and its carrying value. This amount is recognised against the

share of profit or loss of associates in the income statement.

The Group's share of post-acquisition profit or loss is recognised in the income statement, and its share of the post-acquisition movement in other

comprehensive income is recognised in other comprehensive income with corresponding adjustment to the carrying amount of the investment. When the

Group's share of losses in an associate equals or exceeds its interest in the associates, including any unsecured receivables, the Group does not recognise

further losses, unless it has incurred constructive obligations or made payments on behalf of the associate.

Investment in associates are carried in the Company's separate financial statements at cost less allowance for impairment and consolidated in the Group's

consolidated financial statements under the equity accounting method.

On the disposal of a foreign operation, the Group recognises in profit or loss the cumulative amount of exchange differences relating to that foreign

operation. When a subsidiary that includes a foreign operation is partially disposed of or sold, the Group re-attributes the proportionate share of the

cumulative amount of the exchange differences recognised in other comprehensive income to the non controlling interests in that foreign operation. In the

case of any other partial disposal of a foreign operation, the Group reclassifies to profit or loss only the proportionate share of the cumulative amount of

exchange differences recognised in other comprehensive income.

The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency

different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities for statement of financial position presented are translated at the closing rate at the reporting date;

• income and expenses for each statement of profit or loss and other comprehensive income are translated at average exchange rates (unless this average is

not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at

the rate on the dates of the transactions); and

• all resulting exchange differences are recognised in other comprehensive income and transferred to equity.

Associates are entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of

the voting rights. Investment in associates are accounted for using the equity accounting method. Under the equity accounting the method, the investment is

initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor's share of the post-acquisition profit or loss and other

comprehensive income of the investee. The Group's investment in associates includes goodwill identified on acquisition while gains realised on purchase

below fair value are recognised in profit or loss.

For long-term life insurance contracts no assets are established in respect of deferred acquisition cost. However, an allowance for acquisition cost loading is

provided for in the valuation of the insurance contract liabilities using assumptions consistent with those used in calculating future policy benefit liabilities

as well as historical and anticipated future experience and is updated at the end of each accounting period.

Investment in subsidiary are carried at cost in the Group's separate financial statements and are reviewed for impairment annually. An impairment loss is

recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair

value less costs to sell and value in use.

Intra-Group balances and transactions and any unrealized gains or losses arising from intra-Group transactions are eliminated in preparing the consolidated

financial statements. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.

Investment in subsidiaries are carried in the Company's separate financial statements at cost less allowance for impairment.

Prepayments represent prepaid expenses and are carried at cost less amortisation expensed in profit or loss.

Other receivables are stated after deductions of amount considered bad or doubtful of recovery. These are loans and receivables other than investment

securities, insurance trade receivables and reinsurance assets. When a debt is deemed not collectible, it is written-off against the related provision or directly

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

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Wapic Insurance Plc



(d) Elimination of upstream and downstream transactions

3.7. Investment property

3.8. Intangible assets

Software

3.9. Property and equipment

Recognition and measurement

Fair values are reviewed annually by independent valuer, registered with the Financial Reporting Council of Nigeria and holding a recognized and relevant

professional qualification and with relevant experience in the location and category of investment property being valued.

Investment properties are disclosed separate from the property and equipment used for the purposes of the business. The Group separately accounts for a

dual purpose property as investment property if it occupies only an insignificant portion and the related value can be separately identifiable and measured

reliably. Otherwise, the portion occupied by the Group is treated as property and equipment.

Subsequent expenditure on investment property is capitalized only if future economic benefit will flow to the Group; otherwise they are expensed as

incurred.

Recognition of software acquired is only allowed if it is probable that future economic benefits attributable to this intangible asset will flow to the Group.

Software acquired is initially measured at cost. The cost of acquired software comprises its purchase price, including any import duties and non-refundable

purchase taxes and any directly attributable expenditure on preparing the asset for its intended use. After initial recognition, software acquired is carried at

its cost less any accumulated amortisation and any accumulated impairment losses. Maintenance costs are expensed to profit or loss.

Internally developed software is capitalized when the Group has the intention and demonstrates the ability to complete the development, has the technical

feasibility of completing the intangible asset so that it will be available for use and it has adequate technical, financial and other resources to complete the

development and use of the software in a manner that will generate future economic benefits, and can reliably measure the costs to complete the

development. The capitalised costs include all costs directly attributable to the development of the software. Internally developed software is stated at

capitalised cost less accumulated amortisation and impairment.

Subsequent expenditure on software assets 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 five years subject to annual reassessment.

On disposal of ownership interest in an associate which reduces holding but where significant influence in retained, only a proportionate share of the

amount previously recognised in other comprehensive income is reclassified to profit or loss where appropriate, where significant influenced is lost, the

investment is reclassified as equity investment and the amount previously recognised in other comprehensive income is reclassified to profit or loss.

Profits and losses resulting from upstream and downstream transactions between the Group and its associate are recognised in the Group's financial

statements only to the extent of unrelated investor's interests in the associate. Unrealised losses are eliminated unless the transaction present evidence of an

impairment of the asset transferred. Accounting policies of the associate are reviewed and aligned to ensure consistency with the policies adopted by the

Group. Dilution gains and losses arising in investments in associates are recognised in income statement.

Investment property comprises investment in land or buildings held primarily to earn rentals or capital appreciation or both.

Investment property is initially recognized at cost including transaction costs. The carrying amount includes the cost of replacing part of an existing

investment property at the time that cost is incurred if the recognition criteria are met; and excludes cost of day to day servicing of an investment property.

Investment property is subsequently measured at fair value with any change therein recognised in profit or loss. Fair values are determined individually, on a

basis appropriate to the purpose for which the property is intended and with regard to recent market transactions for similar properties in the same location.

All items of property and equipment except land and buildings are initially recognised at cost and subsequently measured at cost less accumulated

depreciation and impairment losses .Cost includes expenditures that are directly attributable to the acquisition of the asset.

Land and buildings are initially recognised at cost and subsequently carried at revalued amounts, being fair value at the date of revaluation less subsequent

accumulated depreciation and impairment losses, if any.

When parts of an item of property or equipment have different useful lives, they are accounted for as separate items (major components) of property and

equipment.

The gain or loss on disposal of an item of property and equipment is determined by comparing the proceeds from disposal with the carrying amount of

property and equipment and are recognised net within other income in profit or loss.

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Wapic Insurance Plc



Subsequent Costs

Depreciation

Work-in-progress property and equipment

Derecognition

3.10. Leases

Operating leases

Finance leases

Depreciation is calculated on property and equipment on the straight line basis to write down the cost of each asset to its residual value over its estimated

useful life. Depreciation methods, useful lives and residual values are reassessed at each reporting date. No depreciation is charged on property and

equipment until they are available for use.

Leases where the lessor retains the risks and rewards of ownership of the underlying asset are classified as operating leases. Payments made under operating

leases are charged against income on a straight-line basis over the period of the lease.

Leases of equipment where the group has substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised

at the inception of the lease at the lower of the fair value of the leased asset or the present value of the minimum lease payments. Each lease payment is

allocated between the liability and finance charges so as to achieve a constant interest rate on the outstanding balance of the liability.

The corresponding lease obligations, net of finance charges, are included in liabilities. The finance cost is charged to profit or loss over the lease period

according to the effective interest method. The equipment acquired under the finance lease is depreciated over the shorter of the useful life of the asset and

the lease term, if ownership does not pass at the end of the lease term. Leased assets under finance leases where ownership is expected to pass to the Group

at the end of the lease term are treated in the same manner as property and equipment.

This represent property and equipment under construction and are carried at the cost incurred until completion. Work-in-progress property and equipment

are transferred to the appropriate class of property and equipment upon completion when they are ready for use and are depreciated from the date of transfer

when they are brought into use.

An item of property and equipment is derecognised when it is disposed of or where no future economic benefits are expected from its use or disposal. Gains

and losses arising on derecognition are calculated as the difference between the net disposal proceeds and the carrying amount of the asset and are

recognised in profit or loss as other income. Where a revalued asset is disposed or scrapped, the revaluation reserve balance in respect of that asset is

transferred as a reserve reclassification from other reserves to retained earnings.

Depreciation reduces an asset's carrying value to its residual value at the end of its useful life and is allocated on a straight line basis over the estimated

useful lives, as follows:

Land - Over the lease period

Buildings - Over 50 years

Office equipment - Over 5 years

Computer hardware - Over 3 years

Furniture and fittings - Over 5 years

Motor vehicles - Over 4 years

Revaluation of land and building

When an individual property is revalued, any increase in its carrying amount (as a result of revaluation) is transferred to a revaluation reserve, except to the

extent that it reverses a revaluation decrease of the same property previously recognised as an expense in the statement of profit or loss.

When the value of an individual property is decreased as a result of a revaluation, the decrease is charged against any related credit balance in the

revaluation reserve in respect of that property. However, to the extent that it exceeds any surplus, it is recognised as an expense in the statement of profit

and loss.

Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic

benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance costs are

charged to the profit or loss account during the financial period in which they are incurred.

Subsequent costs on replacement parts on an item of property and equipment are recognized in the carrying amount of the asset and the carrying amount of

the replaced or renewed component is derecognized.

Land and building is accessed for impairment at each reporting date but valued on an open market basis by qualified property valuers at the reporting date at

minimum of once within three financial years.

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Wapic Insurance Plc



3.11. Impairment of non-financial assets

3.12. Deferred tax

3.13. Insurance contract liabilities

Deferred tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying

amounts in the consolidated financial statements. However, if the deferred tax arises from initial recognition of the asset or liability in a transaction other

than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss, it is not accounted for. Deferred tax is

determined using the tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when

the related deferred asset tax is realisable or the deferred tax liability is payable.

Deferred tax assets are recognised to the extent that it is possible that future profit will be available against which the temporary differences can be utilised.

Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the Group controls the timing of the

reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets and liabilities are offset when there is legally enforceable right to offset current tax assets against current tax liabilities and when

deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different entities where

there is an intention to settle the balances on a net basis.

Insurance contract liabilities are determined in line with the provisions of Section 20, 21 and 22 of the Insurance Act of Nigeria to the extent that they do

not conflict with the requirements of IFRS as follows:

The tax effects of carry-forwards of unused losses or unused tax credits are recognised as an asset when it is probable that future taxable profits will be

available against which these losses can be utilised.

Investment contracts are those contracts that transfer financial risk and no significant insurance risk. Financial risk is the risk of possible future change in

one or more of a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of price or rates, credit rating or credit

index or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract.

Once a contract has been classified as an insurance contract, it remains an insurance contract for the remainder of its lifetime, even if the insurance risk

reduces significantly during this period, unless all rights and obligations are extinguished or expired. Investment contracts can, however, be reclassified as

insurance contracts after inception if the terms are amended to include significant insurance risk.

Receipts and payments under investment contracts are not classified as insurance transactions in the income statement, but instead are accounted for in the

statement of financial position in accordance with IAS 39. The liability recognised in the statement of financial position represents the expected amounts

payable to the holders of the investment contracts inclusive of allocated investment income.

Deferred tax related to fair value re-measurement of available-for-sale investments, which are charged or credited directly in other comprehensive income,

is also credited or charged to other comprehensive income and subsequently recognised in the consolidated income statement together with the deferred

gain or loss.

The Group issues contracts that transfer insurance risk or financial risk or both. Insurance contracts are when the Group (the insurer) has accepted

significant insurance risk from another party (the policyholder) by agreeing to compensate the policyholder if a specified uncertain future event (the insured

event) adversely affects the policyholder. As a general guideline, the Group defines as significant insurance risk the possibility of having to pay benefits on

the occurrence of the insured event that are at least 10% more than the benefit payable if the insured event did not occur.

Non-life insurance contracts are issued to indemnity against property and liability insurance risk and are generally annual in tenor although some contracts

can be beyond one year. These are short term insurance risks.

Life insurance contracts are issued to indemnify the insured life, the dependent or other third-party of the insured life in the even of death, permanent

disability, loss of job or on survival to maturity of the contract with the sums assured.

The carrying amounts of the Group’s non-financial assets are considered to be impaired when there exist any indication that the asset’s recoverable amount

is less than the carrying amount and are at a minimum assessed for impairment annually. The recoverable amount is the higher of an asset's fair value less

costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which they are separately identifiable

cashflows (cash generating units). Impairment losses are recognised in profit or loss.

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 since the impairment loss was recognised.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined,

net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are recognised in profit or loss.

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Wapic Insurance Plc



(a) General insurance contracts: Measurement of insurance contracts liabilities

Reserving methodology and assumptions

Valuation methods and assumptions

Discounting

Sensitivity analysis

(b) Life insurance contracts: Measurement of insurance contracts liabilities

No allowance has been made for discounting as these reserves are for short term contracts, the effect of discounting is not expected to have a significant

impact on the reserves.

Sensitivity analyses are performed to test the variability around the reserves that are calculated at the best estimate level. The sensitivity analysis is done to

determine how the IBNR reserve amount would change if a 75th percentile is considered as opposed to the best estimate figures included in reserve reviews

as at 31 December 2017. The 75th percentile is a generally accepted level of prudency.

This is made up of liabilities on life policies in force as determined by qualified actuaries at the reporting date. Surplus or deficit arising from the periodic

valuation of the life insurance contracts are recognised in profit and loss.

The reserves include Incurred But Not Reported (IBNR) and Unearned Premium Reserve (UPR).

The following valuation methods are used as appropriate in calculating the reserves:

This model assumes that past experience is indicative of future experience, i.e. that claims reported to date will continue to develop in a similar manner in

the future. An implicit assumption is that, for an immature accident year, the claims observed thus far tells something about the claims yet to be observed. A

further assumption is that it assumes consistent claim processing, a stable mix of types of claims, stable inflation and stable policy limits.

This method is used for cases where there are extremely large losses that have been reported but not paid, and therefore will not influence the development

patterns. The IBNR was calculated as follows; The reserving was determined as ultimate claim amount (excluding extreme large losses) minus claims paid

to date (excluding extremely large losses) minus claims outstanding (excluding extreme large losses). This method was used for the following classes of

business; motor vehicle, fire, general accident, marine, engineering and miscellaneous.

This model assumes that the average delay in the payment of claims will continue into the future. If it is expected that these delay assumptions no longer

hold, an adjustment needs to be made to allow for this change in payment delay. If the delay period in payment is expected to have increased from previous

years, the results shown in this report will be understated. Additionally, an estimate of the average ultimate loss ratio was assumed. The assumption for the

ultimate loss ratio was based on estimated average loss ratio on claims experience to date for accident years covering ten years history. The Loss ratio

method is been used for three classes namely oil and gas, bonds and aviation which had very limited data, and where use of the basic chain ladder method

was inappropriate. The model allowed for expected experience to date within the assumed delay period and the assumed average ultimate loss ratios in

carrying out the calculation. The average delay is the average number of months that it takes for a claim to be paid after the loss incident occurred. The

IBNR was calculated as follows; Expected average ultimate loss ratio for the assumed average delay period x Earned premium for the assumed delay period-

Current experience to date relating to the accident months that the delay implies.

(i) Life fund

This is made up of net liabilities on policies in force as determined by qualified actuaries at the reporting date. Surplus or deficit arising from the periodic

valuation of the life insurance contracts are recognised in the income statement.

(ii) Reserve for outstanding claims

The reserve for outstanding claims is maintained at the total amount of outstanding claims incurred and reported plus claims incurred but not reported

(IBNR) at the reporting date.

Data segmentation

The data used for reserving is segmented into the 8 classes as per the Insurance Act 2003 of Nigeria:

- Motor vehicle insurance business

- Fire insurance business

- General accident insurance business

- Marine, aviation and transport insurance business

- Oil and gas insurance business

- Engineering

- Bonds, credit and suretyship

- Miscellaneous

(ii) Loss ratio method, adjusted for assumed experience to date.

(i) The basic chain ladder method

(i) Reserve for unearned premium and unexpired risk

The reserve for unearned premium is calculated on a time apportionment basis in respect of risk accepted during the year. A provision for additional

unexpired risk reserve is recognised for an underwriting year where it is envisaged that the estimated cost of claims and expenses would exceed the

unearned premium reserve.

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Wapic Insurance Plc



Data segmentation

Methodologies and assumptions

(i) Premiums income

(ii) Unearned premiums

(iii) Reinsurance cost

(iv) Fees and commission

(iv) Claims incurred

For all individual risk business, the gross premium method of valuation was used. Reserves were calculated via a cashflow projection approach, taking into

account future office premiums, expenses and benefit payments. Future cashflows were discounted back to the valuation date at the valuation rate of

interest.

(c) General insurance: Insurance contracts revenue recognition

The recognition and measurement of the insurance contracts in the group's general business are set out as follows:

An unexpired premium reserve (UPR) was included for Group life business after allowing for acquisition expenses at a ratio of 20% of premium. The UPR

is tested against an Additional Unexpired Risk Reserve (AURR) for adequacy and an AURR may also be held to allow for any inadequacies in the UPR for

meeting claims in respect of the unexpired period. The claim rates underlying the AURR were based on pooled historical scheme claims experience.

Allowance was made for IBNR (Incurred But Not Reported) claims in Group Life to take care of the delay in reporting claims. This was based on a loss

ratio approach, which uses historical claims experience to estimate the expected claims, from which the IBNR portion is determined.

Gross premium relates to premium written in a year to cover assumed insurance risk. Gross 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 on reinsurance inward from facultative reinsurance arrangement are included in gross written premiums and accounted for as if ceded business

was 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 written 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 the indemnity.

Unearned premiums are those proportions of premiums written in the year that relate to periods of risks after the reporting date. It is computed separately

for each insurance contract using a time proportionate basis, or another suitable basis for uneven risk contracts.

The Group cedes insurance risks in the normal course of business for the purpose of limiting its potential net loss on policies written. Premium ceded

comprise written premiums ceded to reinsurers, adjusted for the reinsurers’ share of the movement in the provision for the unearned premiums; the prepaid

reinsurance cost. Reinsurance arrangements do not relieve the Group from its direct obligations to its policyholders. Subsequently, premium ceded, claims

reimbursed and commission recovered are presented in profit or loss and the statement of financial position separately from the gross amounts. Reinsurance

recoverable are recognized when the Group records the liability for the claims and are not netted off claims expense but are presented separately in profit or

loss as part of claims expenses recoverable.

Fee and commissions are recognized on ceding business to reinsurance. Commissions are amortised and credited to the profit or loss account over the

period of the reinsurance contract.

Claims incurred consist of claims and claims handling expenses paid during the financial year together with the movement in the provision for outstanding

claims and these are recognised in the profit or loss. The provision for outstanding claims represent the Group’s estimate of the ultimate cost of settling all

claims incurred but unpaid at the reporting date whether reported or not. The provision includes an allowance for claims management and handling

expenses.

The provision for outstanding claims is estimated based on current information and the ultimate liability may vary as a result of subsequent information and

events and may result in significant adjustments to the amounts provided. Adjustments to the amounts of claims provision for prior years are reflected in the

profit or loss in the financial period in which adjustments are made, and disclosed separately if material.

- the valuation age is taken as Age Last Birthday at the valuation date;

- the period to maturity is taken as the full term of the policy less the expired term.

- full credit is given to premiums due between valuation date and the end of the premium paying term.

The valuation for both the individual business and Group business utilises various assumptions which include:

The data used for reserving is segmented into the 2 classes as follows:

- Individual business

- Group business

The Group does not have contracts with discretionary participating features.

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Wapic Insurance Plc



(v) Salvage and Subrogation Reimbursement

(vi) Deferred income

(vii) Deferred acquisition cost

(i) Risk premiums on life assurance

(ii) Claims on life assurance

(iii) Insurance contract provisions on life assurance

(i) Short term insurance contracts

(i) Long term insurance contracts

Acquisition costs comprise all direct and indirect costs arising from the origination of insurance contracts; commission and maintenance expenses. Deferred

acquisition costs represent portion of commissions which are incurred during a financial year and are deferred to the extent that they are recoverable out of

future revenue margins. It is calculated by applying the ratio of unearned premium to written premium.

Claims on general insurance contracts are payable on a claims-occurrence basis. The Group recognise liability for all insured events that occurred during the

term of the contract. There are several variables that affect the amount and timing of cash flows from these contracts. These mainly relate to the inherent

risks of the business activities carried out by individual contract holders and the risk management procedures they adopted.

(c) Life insurance: Insurance contracts revenue recognition

The recognition and measurement of the insurance contracts in the Group's life business are set out as follows:

Some insurance contracts permit the Group to sell (usually damaged) property acquired in settling a claim for example and make salvage recovery on them.

The Group may also have the right to pursue third parties for payment of some or all costs for example in a subrogation. A subrogation represent the

portion of claims incurred expected to be recovered from negligent third-party or the third-party insurance Group.

Salvaged property is recognized in profit or loss when the amount that can reasonably be recovered from the disposal of the property has been established

and are included as part of claims recoveries. Subrogation reimbursements are recognized in claim recoveries when the amount to be recovered from the

liable third party has been established.

Premiums and annuity considerations written and/or receivable under insurance contracts are stated gross of commission and recognised when due.

Outward reinsurance premiums are recognised when due for payment. Premium written relates to risks assumed during the period.

(d) Classification of insurance contracts of the Group

Short term insurance contracts are annual insurance contracts. This comprised mainly of the Group's general insurance business and the life insurance

business group life products; for which the gross premium relates to premium written to cover assumed annual insurance risk liability.

Long term insurance contracts are insurance contracts which provide insurance cover over a long duration, generally more than one annual insurance period.

This comprises mainly of the Group's life insurance business individual life products; for which the gross premium relates to premium written to cover

assumed insurance risk liability covering more than one insurance period. These contracts insure events associated with human life (for example, death or

survival) over a long duration.

For all these contracts, premiums are recognized as revenue proportionally over the period of coverage. The portion of premium received on in-force

contracts that relates to unexpired risk at the end of reporting date is reported as the unearned premium liability.

The estimated cost of claims includes direct expenses to be incurred in settling claims, net of the expected subrogation value and other recoveries. The

Group takes all reasonable steps to ensure that it has appropriate information regarding its claims exposures. However, given the uncertainty in establishing

claims provisions, it is likely that the final outcome will prove to be different from the original liability established.

The reserves held for these contracts comprises a provision for IBNR, a provision for reported claims not yet paid and a provision for unearned premiums at

the end of the reporting period.

Deferred income represents a portion of commissions received on reinsurance contracts during the financial year but are deferred based on the tenor of the

underlying contracts. It is calculated by applying the reinsurance commission income ratio of prepaid reinsurance to reinsurance cost.

Insurance contract provisions are determined using valuation basis adopted in accordance with the generally accepted actuarial practices and methodologies

as set out in note 3.16 (b).

The gross insurance contract provisions and related reinsurance recoveries are estimated on the basis of the information currently available to the Group.

The ultimate liability may vary as a result of subsequent information and events and may result in significant adjustments to the amount provided.

Claims recognised include maturities, surrenders, death and disability payments. Claims arising on maturities are recorded as they fall due for payments.

Death, disability and surrenders are accounted for on notification. Reinsurance recoveries are accounted for when the Group records the liability for the

claims.

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Wapic Insurance Plc



3.14. Liability adequacy test of insurance contracts liabilities and related assets

3.15. Investment contract liabilities

3.16. Trade and other payables

3.17. Provisions

3.18. Income tax

3.19. Dividends

3.20. Share capital and premium

3.21. Share premium

3.22. Contingency reserve

3.23. Other reserve

Revaluation reserve

Amounts received under investment contracts are recognised directly as investment contract liabilities.

The Company classifies ordinary shares and share premium as equity when there is no obligation to transfer cash or other assets. Incremental costs directly

attributable to issue of shares are recognized as deductions from equity net of any tax effects.

Contracts under which the transfer of insurance risk to the Group from the policy holder is not significant are classified as investment contracts. Such

contracts include savings and /or investment contracts sold with insignificant or without life assurance protection. These contracts transfer financial risk but

insignificant insurance risk.

Income tax comprises current and deferred tax. Income tax expense or credit is recognised in the profit or loss except to the extent that it relates to items

recognised directly in equity, in which case it is recognised in equity.

Dividend distribution to the Group's shareholders is recognized as a liability in the financial statements in the period in which the dividends are approved by

the Group's shareholders. Dividends that are proposed but not yet declared are disclosed in the notes to the financial statements. Dividends on the Group’s

ordinary shares are recognised in equity in the period in which they are paid or, if earlier, approved by the Group’s shareholders.

Investment contract liabilities are reported at amortised cost and are assessed for adequacy at each reporting date.

The liability for insurance contracts is tested for adequacy by discounting current estimates of all future contractual cash flows and comparing this amount

to the carrying value of the liability net of deferred acquisition costs. Where a shortfall is identified, an additional provision is made and the Group

recognizes the deficiency in the profit or loss. Insurance contract liabilities are subject to liability adequacy testing on an annual basis. The method of

valuation and assumptions used, the cashflows considered and the discounting and aggregation practices adopted have been set out as part of note 3.16(a)

and 3.16(b).

The Group maintains contingency reserves in accordance with the provisions of the Insurance Act 2003 to cover fluctuations in securities and variations in

statistical estimates. For general business, the reserve is calculated at the rate equal to the higher of 3% of total premium or 20% of net profit until the

reserve reaches the greater of minimum paid up capital or 50% of net premium for general business. Contingency reserve for life business is credited with

the higher of 1% of gross premiums and 10% of net profit.

Other reserves are made up of the following:

Revaluation reserve represents the fair value differences on the revaluation of items of property and equipment as at the statement of financial position date.

If an asset's carrying amount is increased as a result of a revaluation, the increase is recognised in other comprehensive income and accumulated in

revaluation reserve. The increase is recognised in profit or loss to the extent that it reverses a revaluation decrease of the same asset previously recognised in

profit or loss. If an assets carrying amount is decreased as a result of a revaluation, the decrease is recognised in profit or loss, however, the decrease shall

be recognised in other comprehensive income to the extent of any credit balance existing in the revaluation surplus in respect of that asset.

Share premiums are classified as equity when there is no obligation to transfer cash or other assets. Incremental costs directly attributable to the issue of

equity instruments are shown in equity as a deduction from the proceeds, net of tax.

Trade and other payables are recognised initially at fair value and subsequently measured 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 is less than one year, discounting is omitted as the impact is not

expected to be significant.

A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is

probable that an outflow of economic benefits will be required to settle the obligation.

Provisions are determined by discounting the expected future cash flows at a rate that reflects current market assessments of the time value of money and

the risks specific to the obligation.

42


Wapic Insurance Plc



Foreign currency translation reserve

Fair value reserve

Merger reserve

3.24. Retained earnings and Earnings per share

(i) Retained earnings

(ii) Earnings per share

(a) Basic earnings per share

(b) Diluted earnings per share

3.25. Underwriting expenses

3.26. Income recognition

(i) Gross premium income

Adjusted earnings per share is determined by dividing the profit or loss attributable to ordinary shareholders by the weighted average number of ordinary

shares adjusted for the bonus shares issued.

The net profits or losses from operations in current and prior periods are accumulated in retained earnings less distributions to equity holders.

Gross written premiums recognised for assumed insurance risks during the year are amortised over the period of the insurance contract. The gross premiums

written are recognised as gross premiums income by adjusting for the movement in the unearned premiums reserves for insurance risks brought forward

from the last year at the beginning of the year and the required unearned premiums reserves for the outstanding insurance risks at the end of the year.

Recognised gross premiums income represent the earned portion of all insurance contracts in force during the year both from preceding years and the

current year.

The Nigerian Naira is the Group’s functional and reporting currency. The assets and liabilities of foreign operations are translated to Naira at spot exchange

rates at the reporting date. The income and expenses of foreign operations are translated to Naira at spot exchange rates at the dates of the transactions or at

average rates of exchange where these approximate to actual rates. Foreign currency differences on the translation of foreign operations are recognised in

other comprehensive income and presented in the foreign currency translation reserve in equity. However, if the foreign operation is not wholly owned the

relevant proportion of the translation difference is allocated to non-controlling interests. When a foreign operation is disposed of, such that controls is lost,

the cumulative amount in the foreign currency translation reserve related to that foreign operation is transferred to profit or loss as part of the gain or loss in

disposal.

The fair value reserve comprises the net cumulative change in the fair value of available-for-sale investments until the investment is derecognised or

impaired.

Merger reserve warehouses the difference between the consideration paid and the capital of the acquiree under a common control transaction using the book

value accounting method. This was accounted for by the merger of the Company business with it subsidiary Intercontential Properties Limited (IPL).

The Group presents basic earnings per share for its ordinary shares. Basic earnings per share are calculated by dividing the profit attributable to ordinary

shareholders of the Group by the number of shares outstanding during the year.

The revaluation surplus in respect of an item of property and equipment is transferred to retained earnings when the asset is derecognised. This involves

transferring the whole of the surplus when the asset is retired or disposed and some of the surplus are transferred to retained earnings to correspond to the

asset use by the entity. The amount of the surplus transferred is the difference between depreciation based on the revalued carrying amount of the asset and

the depreciation based on the asset's original cost. Transfers from revaluation reserve to retained earnings are not made through profit or loss.

The Group presents diluted earnings per share where appropriate. Diluted earnings per share is determined by adjusting the profit or loss that is attributable

to ordinary shareholders and the weighted-average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which

comprise share options granted to employees.

Underwriting expenses for insurance contracts are recognized as expense when incurred, with the exception of acquisition costs which are recognized on a

time apportionment basis in respect of risk.

Underwriting expenses are made up of acquisition and maintenance expenses comprising commission and policy expenses, other direct costs and insurance

supervision levy.

43


Wapic Insurance Plc



(ii) Fees and commission income

Net realised gain/ (loss) from financial assets:

Net fair value gain/ (loss) from assets at fair value through profit or loss (FVTPL):

(iv) Other operating income

(v) Dividend income

3.27. Foreign currency transactions

3.28. Employee benefits

Short-term benefits

Post employment benefits

Other operating income comprises of profit from sale of property and equipment, interest income earned on staff loans and net foreign exchange gain.

Interest income is recognised in the profit or loss as it accrues and is calculated using the effective interest rate method.

Dividend is recognized when the Group's right to receive the dividend has been established. The right to receive dividend is established when the dividend

has been duly declared.

Foreign currency transactions are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in

foreign currencies are translated using the exchange rate ruling at the reporting date; the resulting foreign exchange gain or loss is recognized in the profit or

loss.

Short-term employee benefit obligations include wages, salaries and other benefits which the Group has a present obligation to pay, as a result of

employees’ services provided up to the reporting sheet date. The accrual is calculated on an undiscounted basis, using current salary rates and recognised in

the profit or loss.

The Group operates a defined contributory retirement scheme as stipulated in the Pension Reform Act 2004. Under the defined contribution scheme, the

Group pays fixed contributions of 10% to a separate entity – Pension Fund Administrators; employees also pay a minimum fixed percentage contribution of

8% to the same entity. Once the contributions have been paid, the Group retains no legal or constructive obligation to pay further contributions if the Fund

does not hold enough assets to finance benefits accruing under the retirement benefit plan. The Group’s obligations are recognized in the profit or loss.

A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or

constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

Unrealized exchange differences are recognized in profit or loss for financial asset held for trading or designated at fair value through profit or loss, or

directly in equity through other comprehensive income until the asset is sold or becomes impaired for available-for-sale financial assets.

Net fair value changes arising from the changes in the fair value of financial assets held at fair value through profit or loss are recognised in the profit or

loss. These are mainly fair value changes from financial assets held for trading or designated at fair value through profit or loss and investment properties.

Fees and commission income are recognised on the commission and policy admin fees received in respect of businesses ceded out to reinsurance companies

and other insurance companies as set out in note 3.16 (c) (iv), and fees earned from other related financial services during the period.

Net realised gain/ (loss) is the gain/(loss) arising from the disposal of financial assets held at fair value through other comprehensive income and are

reclassified from other comprehensive income and recognised in the profit or loss.

Interest income is recognised in the profit or loss as it accrues and is calculated using the effective interest rate method. Fees and commissions that form an

integral part of the effective yield of a financial instrument are recognised as an adjustment to the effective interest rate of the instrument.

(iii) Investment income

Investment income comprises interest income earned on short-term deposits, rental income and income earned on trading of securities including all realised

and unrealised fair value changes, interest, dividends and foreign exchange differences. Investment income, other than interest income, is recognised at fair

value and on an accrual basis.

44


Wapic Insurance Plc



Termination benefits

3.29. Management expenses

3.30. Operating segment

3.31. Business Combination

3.33. Contingent liabilities and contingent assets

3.32. Statutory deposit

An operating segment is a component of the group engaged in business activities, whose operating results are reviewed regularly by management in order to

make decisions about resources to be allocated to segments and assessing segment performance. The group's identification of segments and the

measurement of segment results is based on the group's internal reporting to management. Transactions between segments are priced at market-related rates.

Management expenses are expenses other than claims and underwriting expenses. They include depreciation expenses and other operating expenses and are

accounted for on an accrual basis.

Termination benefits are payable whenever an employee’s employment is terminated before the normal retirement date or whenever an employee accepts

voluntary redundancy in exchange for these benefits. The Group recognizes termination benefits when it is demonstrably committed either to terminate the

employment of current employees according to a detailed formal plan without possibility of withdrawal, or to provide termination benefits as a result of an

offer made to encourage voluntarily redundancy if it is probable that the offer will be accepted and the number of acceptances can be estimated. Benefits

falling due more than 12 months after reporting sheet date are discounted to present value.

The Group disclose as contingent liabilities possible obligations whose existence will be confirmed only by the occurrence or non-occurrence of one or

more uncertain future events not wholly within the entity’s control; or a present obligation that arises from past events but is not recognised because, it is

not probable that an outflow of economic benefits will be required to settle the obligation; or the amount of the obligation cannot be measured reliably.

The Group classify as contingent assets, possible assets whose existence will be confirmed only by the occurrence or non-occurrence of one or more

uncertain future events not wholly within the Group’s control. Where the assets are not probable – no asset is recognised or disclosed, where the assets are

probable, but not virtually certain – no asset is recognised, but disclosure is included; and where the assets are virtually certain – the asset is recognised in

the statement of financial position.

Contingent liabilities and contingent assets are grouped by class with brief description of the nature of the contingency and, where practicable, an estimate

of the financial effect, the uncertainties relating to the amount and timing of the probable liabilities and assets. These normally comprise of legal claims

under arbitration or court process in respect of which a liability or asset is not likely to crystallise.

Business Combinations are accounted for using the acquisition method as at the acquisition date i.e.. when control is transferred to the Group. The

Consideration transferred in the acquisition is generally measured at fair value as are the identifiable net assets acquired . Any goodwill that arises is tested

annually for impairment. Any gain on a bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed as incurred except if

they are related to the issue of debt or equity securities. The consideration transferred does not include amounts related to the settlement of pre-existing

relationships. Such amounts are generally recognised in accordance with the relevant IFRS in profit or loss. Any contingent consideration payable is

measured at fair value at the acquisition date. If the contingent consideration is classified as equity, then it is not remeasured and settlement is accounted for

within equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognised in profit or loss.

These deposits represent balances statutorily required by the insurance regulator of the Group to be held with the Central Bank of Nigeria. These deposits

are not available for day to day use and are stated at amortised cost.

45

Critical estimates and judgements

Wapic Insurance Plc



4

(i)

(ii)

(iii)

(iv)

(v)

(vi)

Critical accounting estimates and judgments

Management makes estimates and assumptions that affect the reported amounts of assets and liabilities. The underlying judgments of the

selection and disclosure of the Group’s critical accounting policies and estimates, and the application of these policies and estimates are

continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable

under the circumstances.

Key sources of estimation uncertainty

The determination of fair value for financial assets and liabilities for which there is no observable market price requires the use of techniques as

described in accounting policy 3.2(d). Further disclosures on the Group’s valuation methodology have been made on note 5 (Fair value hierarchy)

. For financial instruments that trade infrequently and have little price transparency, fair value is less objective, and requires varying degrees of

judgement depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific

instrument.

Determination of fair values

Impairment of fair value through profit or loss financial assets

At the balance sheet date, the fair values of certain financial assets classified as at fair value through profit or loss (FVTPL) with a carrying

amount of N458 million have have appreciated above book value by N47 million.

If the appreciation in fair value above cost were not considered, the Group would have recognised an additional loss of N47 million in its 2017

financial statements.

Depreciation and carrying value of property and equipment

The estimation of the useful lives of assets is based on management’s judgement. Adjustment to the estimated useful lives of items of property

and equipment will have an impact on the carrying value of these items. There were no significant sensitivities of the carrying value of property

and equipment and the depreciation charge for the year to increase or decrease in the useful life of property and equipment in the books of the

Group and Company as at 31 December 2017 (31 December 2016: Nil).

If the decline in fair value below cost was considered significant or prolonged, the Group would have recognised an additional loss of N25

million in its 2017 financial statements.

At the balance sheet date, the fair values of equity and tradeable fixed income securities classified as available-for-sale financial assets with a

carrying amount of N3.773 billion have certain items that have declined below cost by N25 million. The Group has made a judgement that this

depreciation in value is not significant or prolonged. In making this judgement, the Group has considered, among other factors, the short-term

duration of the decline, the small magnitude by which the fair value of the investment is below cost; and the positive financial health and short-

term business outlook of the investees and investment instruments.

Impairment of available-for-sale financial assets

Actuarial valution of insurance contracts liabilities

The liabilities for life insurance contracts are estimated using appropriate and acceptable base tables of standard mortality according to the type

and nature of the insurance contracts. Assumptions such as expenses inflation, valuation interest rate, mortality and claims experience are

considered in estimating the required reserves for individual life contracts fund and the incurred but not reported claims under the Group life and

non-life insurance contracts. The sensitivities to various valuation index for the life business is included under note 5 (Sensitivity Analysis).

Recoverability of deferred tax assets

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that in

management's judgements it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are

reviewed at each reporting date and adjusted to the extent that it is no longer probable that the related tax benefit will be realised.

46

Financial position

Wapic Insurance Plc



Consolidated Statements of Financial Position


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Notes

ASSETS

Cash and cash equivalents 8 1,745,342 2,220,395 911,023 311,223

Financial assets 9 9,495,935 7,401,489 4,356,929 3,429,338

Trade receivables 10 707,489 553,575 486,997 553,574

Reinsurance assets 11 1,586,301 1,572,830 838,139 1,094,415

Deferred acquisition cost 12 530,793 447,934 317,832 281,344

Other receivables and prepayments 13 1,061,531 1,145,019 871,238 1,137,047

Investment property 14 312,750 539,930 312,750 539,930

Investment in associates 15 8,264,440 7,173,843 5,059,810 5,059,810

Investment in subsidiaries 16 - - 3,876,571 3,876,571

Intangible assets 17 479,685 203,896 476,144 199,171

Property and equipment 18 3,787,381 4,025,510 3,521,507 3,811,639

Deferred tax asset 24 - - - -

Statutory deposit 19 632,964 617,632 300,000 300,000

TOTAL ASSETS 28,604,611 25,902,053 21,328,940 20,594,062

LIABILITIES

Insurance contract liabilities 20 7,141,465 6,373,682 3,817,332 3,763,964

Investment contract liabilities 21 1,063,860 920,154 - -

Trade payables 22 516,371 235,800 415,414 157,870

Other payables 23 1,458,750 1,320,043 1,417,790 1,157,450

Current income tax 25 263,793 208,382 115,315 88,114

Deferred tax liabilities 24 202,547 277,657 202,548 393,175

TOTAL LIABILITIES 10,646,786 9,335,718 5,968,399 5,560,573

EQUITY and LIABILITIES

Equity attributable to owners

Share capital 26 6,691,369 6,691,369 6,691,369 6,691,369

Share premium 27 6,194,983 6,194,983 6,194,983 6,194,983

Contingency reserves 28 2,061,153 1,807,949 1,742,067 1,550,425

Other reserves 29 941,704 1,209,743 671,027 788,338

Retained earnings 30 2,068,615 662,291 61,094 (191,626)

TOTAL EQUITY 17,957,824 16,566,335 15,360,540 15,033,489

TOTAL LIABILITIES AND EQUITY 28,604,610 25,902,053 21,328,939 20,594,062

Adeyinka Adekoya

FRC/2016/CIIN/00000013893

Managing Director

Bode Ojeniyi

FRC/2016/CIBN/00000013894

Managing Director

Oluseyi Taiwo

FRC/2013/ICAN/00000004011

Chief Finance Officer

These financial statements were approved by the board of directors (BOD) on 29 January 2018 and signed on behalf of the board of directors by the directors listed

below:

The statement of significant accounting policies and the accompanying notes form an integral part of these financial statements.

47

Profit or loss and other comprehensive income Wapic Insurance Plc



Consolidated Statements of Profit or Loss and Other Comprehensive Income


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Notes

Gross premium written 31 9,807,616 8,005,308 6,388,069 5,375,431

Gross premium income 31 9,589,128 7,586,131 6,494,411 5,249,208

Reinsurance expenses 31 (3,937,089) (3,294,791) (2,742,273) (2,576,266)

Net premium income 31 5,652,039 4,291,340 3,752,138 2,672,942

Fee and commission income 32 682,888 651,992 471,328 497,408

Net underwriting income 6,334,927 4,943,332 4,223,466 3,170,350

Claims expenses 33 3,820,558 3,843,297 1,764,096 1,785,827

Claims expenses recoverable 33 (758,848) (974,672) (81,745) (552,518)

Net claims expenses 3,061,710 2,868,625 1,682,351 1,233,309

Underwriting expenses 34 1,757,567 1,680,773 1,342,708 1,359,079

Increase in individual life fund 20(d) (20,487) 13,257 - -

Total underwriting expenses 4,798,790 4,562,655 3,025,059 2,592,388

Underwriting profit 1,536,136 380,677 1,198,406 577,962

Investment income 35(a) 1,255,961 1,018,308 621,263 741,965

Profit on investment contracts 35(b) 96,108 351,495 - -

Net realised gain on financial assets 36 614,534 33,713 614,534 33,713

Net fair value loss on assets at fair value through profit or loss 37 (663) (254) (1,549) (254)

Other operating income 38 1,164,532 2,333,873 980,556 2,029,102

3,130,472 3,737,135 2,214,804 2,804,526

Net income 4,666,608 4,117,812 3,413,210 3,382,488

Impairment (reversal)/charge on trade receivables 10(b) - (12,782) - 7,370

Impairment charge/(reversal) on other receivables 13(b) 38,333 154,630 54,028 (3,095)

Employee benefit expense 39 1,481,332 1,309,821 923,382 825,209

Other operating expenses 40 2,912,450 2,698,571 2,205,175 2,038,451

Expenses 4,432,115 4,150,240 3,182,585 2,867,934

Operating profit/(loss) 234,493 (32,428) 230,625 514,554

48

Profit or loss and other comprehensive income Wapic Insurance Plc




2017 2016 2017 2016


N'000 N'000 N'000 N'000

Share of profit of associate 15(c) 1,388,198 1,225,874 - -

Profit before tax 1,622,691 1,193,446 230,625 514,554

Income tax 25 (91,881) (607,423) 85,019 (422,581)

Profit after tax for the year 1,530,810 586,023 315,644 91,973

Other comprehensive income, net of tax

Items that are or may be reclassified to profit or loss:

Foreign currency translation difference of foreign operations 29(b) (27,610) 459,766 - -

Net changes in fair value of AFS financial instruments:

- Unrealised net (losses)/gains arising during the period 29(c) (7,292) 50,879 11,408 104,722

- Net reclassification adjustments for realised net gains (128,719) - (128,719) -

Share of other comprehensive income of associates 15(c) (104,418) 244,258 - -

Items that will not be reclassified to profit or loss:

Revaluation gain on property and equipment - 949,415 - 949,415

Deferred tax on revaluation gain on property and equipment - (284,824) - (284,824)

Other comprehensive (loss)/income for the year, net of tax (268,039) 1,419,494 (117,311) 769,313

Total comprehensive income for the year 1,262,771 2,005,517 198,333 861,286

Profit atributable to the owners of the Company 1,530,810 586,023 315,644 91,973

Total comprehensive income attributtable to the owners of the Company

1,262,771 2,005,517 198,333 861,286

Basic and diluted earnings per share (kobo) 41 11 4 2 1

49

Changes in equity

Wapic Insurance Plc



Consolidated Statements of Changes in Equity - Group

For the period ended 31 December 2017

(All amounts in Naira thousands unless otherwise stated)

Share Share Contingency Other Retained Total

capital premium reserves reserves earnings equity

Notes

Balance at 1 January 2017 6,691,369 6,194,983 1,807,949 1,209,743 662,291 16,566,335

Total comprehensive income for the year

Profit for the year - - - - 1,530,810 1,530,810

Transfer to contingency reserves 28 - - 253,204 - (253,204) -

- - 253,204 - 1,277,606 1,530,810

Other comprehensive income

Net changes in fair value of AFS financial instruments 29(c) - - - (7,292) - (7,292)

Net reclassification adjustments for realised net gains 29(c) - - - (128,719) 128,719 -

Foreign currency translation difference 29(b) - - - (27,610) - (27,610)

Revaluation gain on property and equipment, net of tax 29(a) - - - - - -

Share of other comprehensive income of associates 15(c) - - - (104,418) - (104,418)

- - - (268,039) 128,719 (139,320)

Total comprehensive income/(loss) for year - - 253,204 (268,039) 1,406,325 1,391,490

Transactions with equity holders, recorded directly in equity:

Dividend paid during the year - - - - - -

Total transactions with owners - - - - - -

Balance at 31 December 2017 6,691,369 6,194,983 2,061,153 941,704 2,068,616 17,957,825

Total other comprehensive income/(loss) for the year

50

Changes in equity

Wapic Insurance Plc



Statement of Changes in Equity - Company




Capital premium reserves reserves earnings equity

Notes

Balance at 1 January 2017 6,691,369 6,194,983 1,550,425 788,338 (191,626) 15,033,489


Profit for the year - - - - 315,644 315,644


- - 191,642 - 124,002 315,644


Net changes in fair value of AFS financial instruments 29(c) - - - 11,408 - 11,408

Net reclassification adjustments for realised net gains/(loses) 29(c) - - - (128,719) 128,719 -

Revaluation gain on property and equipment, net of tax 29(a) - - - - - -

Total other comprehensive income/(loss) for the year - - - (117,311) 128,719 11,408

Total comprehensive income/(loss) for year - - 191,642 (117,311) 252,721 327,052

Dividend paid during the year - - - - - -

Total transactions with owners - - - - - -

Balance at 31 December 2017 6,691,369 6,194,983 1,742,067 671,027 61,095 15,360,541


51

Changes in equity

Wapic Insurance Plc



Consolidated Statements of Changes in Equity - Group




capital premium reserves reserves earnings equity

Notes

Balance at 1 January 2016 6,691,369 6,194,983 1,625,511 (209,751) 660,185 14,962,297


Profit for the year - - - - 586,023 586,023


- - 182,438 - 403,585 586,023



Net reclassification adjustments for realised net gains 29(c) - - - - - -

Foreign currency translation difference 29(b) - - - 459,766 - 459,766

Revaluation gain on property and equipment, net of tax 29(a) - - - 664,591 - 664,591

Share of other comprehensive income of associates 15(c) - - - 244,258 - 244,258

- - - 1,419,494 - 1,419,494

Total comprehensive income for year - - 182,438 1,419,494 403,585 2,005,517


Dividend paid during the year - - - - (401,479) (401,479)

Total transactions with owners - - - - (401,479) (401,479)

Balance at 31 December 2016 6,691,369 6,194,983 1,807,949 1,209,743 662,291 16,566,335

Total other comprehensive income for the year

52

Changes in equity

Wapic Insurance Plc



Statement of Changes in Equity -Company




Capital premium reserves reserves earnings equity

Notes

Balance at 1 January 2016 6,691,369 6,194,983 1,389,162 19,025 279,143 14,573,682


Loss for the year - - - - 91,973 91,973


- - 161,263 - (69,290) 91,973



Net reclassification adjustments for realised net gains/(loses) 29(c) - - - - - -

Revaluation gain on property and equipment, net of tax 29(a) - - - 664,591 - 664,591

Reclassification - Excess depreciation transfer 29(a) - - - - - -

- - - 769,313 - 769,313

Total comprehensive income/(loss) for year - - 161,263 769,313 (69,290) 861,286


Dividend paid during the year - - - - (401,479) (401,479)

Total transactions with owners - - - - (401,479) (401,479)

Balance at 31 December 2016 6,691,369 6,194,983 1,550,425 788,338 (191,626) 15,033,489

Total other comprehensive income for the year

53

Cash flows

Wapic Insurance Plc



Consolidated Statement of Cash Flows


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Cash flows from operating activities

Premiums received 9,853,408 8,047,607 6,654,352 5,351,829

Fees and commission received 672,064 678,098 459,832 526,804

Fees and commission paid (2,144,355) (1,680,824) (1,476,844) (1,300,892)

Reinsurance premiums paid (3,732,839) (3,386,767) (2,539,796) (2,635,838)

Gross claims paid to policy holders (3,230,058) (2,850,434) (1,638,237) (1,407,234)

Reinsurance recoveries on claims 631,176 441,624 208,135 296,026

Payments to employees (1,481,332) (1,309,821) (923,382) (825,209)

Other operating cash payments (2,656,723) (2,184,229) (1,636,721) (1,534,471)

Other operating cash receipts 861,382 2,284,927 745,159 2,211,786

Receipts from Investment contract 326,029 117,624 - -

Payments to Investment contract (167,672) (162,265) - -

Tax paid (319,961) (188,705) (78,407) (152,073)

Net cashflow from operations (1,388,881) (193,165) (225,909) 530,728

Cash flows from investing activities

Purchases of property and equipment (328,657) (845,012) (146,160) (684,228)

Purchases of intangible assets (311,097) (183,693) (310,624) (182,787)

Proceeds from sale of property and equipment 19,445 57,104 14,804 52,660

Purchases of investment in associates and subsidiaries - - - (2,060,896)

Purchases of investment securities (7,191,138) (4,287,568) (3,623,992) (1,655,103)

Proceeds from redemption of investment securities 5,718,053 2,289,128 2,783,315 1,335,605

Purchases to investment properties 3,892 (280,480) (108) (315,980)

Proceeds from sale of investment properties 214,670 335,601 214,670 336,101

Rental income received 2,000 1,333 2,000 1,333

Dividend income received 135,346 158,665 328,529 381,206

Interest income received 1,481,871 1,107,217 359,585 509,985

Net cash (used in) / from investing activities (255,615) (1,647,705) (377,981) (2,282,104)

Cash flows from financing activities

Dividend paid - (401,479) - (401,479)

Net cash from financing activities - (401,479) - (401,479)

Changes in cash and cash equivalents (1,644,496) (2,242,349) (603,890) (2,152,854)

Cash and cash equivalent at beginning of year 6,691,319 8,933,668 1,654,226 3,807,080

Net increase/(decrease) in cash and cash equivalent (1,644,496) (2,242,349) (603,890) (2,152,854)

Cash and cash equivalent at end of year 5,046,823 6,691,319 1,050,336 1,654,226

Summary of Cash and cash equivalents

For the purposes of the statement of cash flow, cash and cash equivalents is as follows:


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Cash at bank and in hand 933,582 1,172,179 508,263 103,773

Money market placements 811,760 1,048,216 402,760 207,450

Treasury bills less than 90 days maturity 3,301,480 4,470,924 139,312 1,343,003

Balance, end of year 5,046,822 6,691,319 1,050,335 1,654,226

The statement of significant accounting policies and the accompanying notes form an integral part of these financial statements.

54

Risk management disclosures Wapic Insurance Plc



5. Financial risk management

Introduction and Overview

· Implementation of our economic risk based capital model

· Implementation of Own Risk and Solvency Assessment (ORSA)

· Capital Management Framework

· Risk-adjusted Performance Measures Framework

· WapX core insurance application

· ERP for the finance module

Over the past five years, Wapic has taken risk management as an integral part of its operations and business activities. Enterprise risk

management system has been enhanced and aligned with the Group’s strategies and the Group’s approved risk appetite. We continuously

optimizing our risk management framework, standardizing our risk management procedures, and adopting both qualitative and quantitative risk

management methodologies to identify, evaluate and mitigate risks. A robust risk management system is maintained to support our decision-

making and facilitate the effective, sustainable and healthy growth of the Group, in transforming and illuminating the insurance industry.

The Group optimized its ERM framework by establishing a Board Information Technology Committee which has the responsibility to review and

approve all information on technology policies, finance, and projects, on behalf of the BODs.

The Group has adequate risk policies and procedures in place for the management of material risks including sovereign risk. A robust system for

assessing sovereign risk in the Group’s cross-border exposure. The country’s political risk is elevated as the banking liquidity issue became

weakened. The industry felt the effect of a tight monetary and liquidity policy pursued by CBN. The effect of the depreciation of the naira still

reflected on the price of replacement assets. Wapic has a well-tested enterprise-wide risk management framework, and this proved pivotal in

anticipating the risks arising from macroeconomic. This enabled early intervention measures to be taken, whilst remaining positioned to take

advantage of emerging opportunities.

The Group continued its journey of further deepening its risk practices and successfully completed a number of risk and capital management

culture enhancing mechanisms. These included:

The above is in addition to all the existing robust risk practices, including effective risk monitoring process, enhanced enterprise-wide stress

testing, and tested business resilience practice. In all, the above practices have enhanced the integrity of our risk identification, risk analysis and

risk monitoring with attendant positive impact on the risk metrics we have achieved, including sustaining the rating assigned by AM Best

Agency.

It has been a remarkable year for risk management, in which the country macroeconomic was characterized “The Turning Tides” as Nigeria GDP

gradually turned positive following the economy exit from recession. The economy exited from recession in second quarter 2017 with an average

GDP growth rate of 0.5% y/y after successive declines for five quarters. This recovery was supported by a strong rebound in the oil sector (8.8 %

of GDP), which expanded by 1.6% y/y (–15.6%y/yin Q1 2017). The non-oil sector, on the other hand was boosted by strengthened the broader

manufacturing sector, reflecting the impact of improved foreign exchange liquidity. Thereafter (Q3 2017), GDP grew by 1.4% y/y while growth

in oil sector was 25.89% y/y representing an increase of 48.92% relative to the rate recorded in the corresponding quarter of 2016.

The Group risk management had maintained a strong and sustained focus on planning for the possibility of, and ultimately managing the market

volatility and macroeconomic uncertainty. Our well-established risk governance structure and experienced risk team has allowed us to control

successfully risk exposures to the Group throughout the year. Our risk management framework provides essential tools to enable us take timely

and informed decisions to maximize opportunities and mitigate potential threats.

In order to meet and exceed our customers and other stakeholders’ expectations, the Group ensure that adequate capital (economic or regulatory)

are held at all times. Furthermore, risk capital reflecting our risk profile and cost of capital are important aspects which were taken into account

in making business decisions. We closely monitor the capital position of Wapic and apply regular stress tests (standardized and historical stress

test scenarios). This allows us to take appropriate measures to ensure our continued capital and solvency strength.

Specifically, ERM, Economic Capital, Capital Management, Risk-Adjusted Performance Measures and Own Risk Solvency Assessment (ORSA)

workshops were held Group-wide regularly with a view to upscale staff knowledge with the management of risk and capital.

55




Our Enterprise Risk Management Remains Custom-made

Risk Management Framework

Risk strategies and policies are set by the Board of Directors of the Group. These policies define acceptable levels of risk for day-to-day

operations as well as the willingness of the Group to assume risk weighed against the expected rewards. The umbrella risk policy is detailed in

the Enterprise Risk Management (ERM) Framework, which is a structured approach to identifying opportunities, assessing the risk inherent in

these opportunities and actively managing these risks in a cost-effective manner. Specific policies are also in place for managing risks in the

different core risk areas of underwriting, claims, credit, market and operational risks as well as for other key risks such as liquidity, strategic and

reputational risk.

The role of the Chief Risk Officer in the Group remains pivotal as he is the custodian of the ERM Framework of both the Group and its

subsidiaries. He provides robust framework and drives the Group’s risk culture through both best practice risk policies and metrics, as well as

through leading the enthronement of the behaviour and practices that are consistent with our risk appetite. The Risk Management Group is

responsible for the enforcement of the Group’s risk policies by constantly monitoring risk, with the aim of identifying and quantifying significant

risk exposures and acting upon such exposures as necessary.

Risk Management in Wapic has become a culture and everyone from the junior cadre to the Executive Management has cultivated some level of

risk culture. The Group’s officers approach every transaction with care, taking into consideration the Group’s acceptable risk appetite.

All activities and processes of the Group, involve the identification, measurement, evaluation, acceptable and management of risk or

combinations of risks. The Board advised by the various Board and Management Risk Committees requires and encourage a strong risk

governance culture, which shapes the Group’s attitude to risk. Risk management encompasses the insights delivered by information which

facilitate appropriate actions. Our annual risk cycle is designed to give management relevant, up-to-date information from which trends can be

observed and assessed. The governance structure supporting our risk cycle is designed to deliver the right information, at the right time, to the

right people.

To some institutions, risk is viewed as a threat or uncertainty, but to us, it goes beyond that. Risk to us, presents potential opportunity to grow and

develop our business within the context of our clearly articulated and Board-driven risk appetite. Hence our approach to risk management is not

limited to considering downside impacts or risk avoidance; it also encompasses taking risk knowingly for competitive advantage. The Group

approaches risk, capital and value management robustly and we believe that our initiatives to date have positioned the Group at the leading edge

of risk management.

Our Enterprise-wide Risk Management (ERM) remains custom-made, assisting our stakeholders achieve their ambitions. The ERM lies at the

heart of our processes as we apply tailored risk management framework in identifying, assessing, monitoring, controlling and reporting the

inherent and residual risks associated with the pursuit of these ambitions and ensuring they are achieved the right way. We help in connecting our

customers to opportunities through our affirmed promise of risk insured rest assured.

Risk is an inherent part of the Group and its subsidiary companies’ business activities. The Group’s overall risk tolerance is established in the

context of our earnings power, capital, and diversified business model. The Group’s organizational structure and business strategy is aligned with

its risk philosophy. As we navigate through new frontiers in a growth market in the ever-dynamic risk universe, proactive ERM framework

becomes even more critical. We are committed to continually push the frontiers of overall risk profile whilst remaining responsive to the ever-

dynamic risk universe.

Wapic views and treat risks as an intrinsic part of business and maintains a disciplined approach to its management of risk. Its Group Risk

functions remain dynamic and responsive to the needs of stakeholders as it improves its focus on the inter-relationships between risk types, it

uses on-going reviews of risk exposure limits and risk control to position itself against adverse scenarios. This is an invaluable tool with which

the Group predicted and successfully managed the headwinds which continued to impact the macroeconomic throughout 2017. The Group

regularly subjects its exposures to a range of scenario analyses and stress tests across a wide variety of products, currencies, portfolios and

customer segments to effectively manage the market volatility and economic uncertainty.

The Group’s risk management architecture, as designed, continued to balance corporate oversight with well-defined risk management functions,

which fall into one of three categories where risk must be managed: lines of business, governance and control and corporate audit. The Board of

Directors and management of the Group are committed to constantly establishing, implementing and sustaining tested practices in risk

management to match those of leading international insurance companies. We are convinced that the long-term sustainability of our Group

depends critically on the proper governance and effective management of our business. As such, risk management occupies a significant position

of relevance and importance in the Group.

56




Balancing Risk and Return

Enterprise-wide Scenario and Stress Testing

• Understand the nature of the risks we are taking, and what range of outcomes could be under various scenarios, for taking these risks;

• Understand the capital required in order to assume these risks;

We believe that understanding and managing our risks and continuously improving our controls are central to the delivery of our strategic

objectives. The Board’s risk committees play an active role in ensuring that we undertake well-measured, profitable risk-taking activities that

support long-term sustainable growth.

Balancing risk and return and taking cognizance of the capital required demands rigorous analysis. The ultimate aim is to optimize the upside

and minimize the downside with a view to adding value to our shareholders and providing security to our other capital providers and clients, as

well as ensuring overall sustainability in our business activities. Every business activity in the Group requires us to put capital at risk in exchange

for the prospect of earning a return. In some activities, the level of return is predictable, whereas in other activities the level of return can vary

over a very wide spectrum, ranging from a loss to a profit. Accordingly, over the past years we have expended substantial energy on improving

our Risk and Management Framework, to focus on taking risks where we:

• Understand the range of returns that we can earn on the capital required to backs risks; and

• Attempt to optimize the risk-adjusted rate of return we can earn, by reducing the range of outcomes and capital required arising from these

risks, and increasing the certainty of earning an acceptable return.

The Group’s objective of balancing risk, return and capital has enhanced substantially our risk management methodologies. This enables the

Group to identify threats, uncertainties and opportunities and in turn develop mitigation and management strategies to achieve an optimal

outcome.

Value is added for shareholders if our process allows us to demonstrate sustainable risk-adjusted returns in excess of our cost of capital. The

process provides security to our capital providers and clients by assuring them that we are not taking on incremental risks which adversely affect

the outcomes we have contracted to deliver to them.

At Wapic, robust and appropriate scenario stress testing is used to assess the potential impact on the Group’s capital adequacy and strategic

plans. Our stress testing and scenario analysis programme is central to the monitoring of strategic and potential risks. It highlights the

vulnerabilities of our business and capital plans to the adverse effects of extreme but plausible events.

As a part of our core risk management practice, the Group conducts enterprise-wide stress tests on a periodic basis to better understand earnings,

capital and liquidity sensitivities to certain economic scenarios, including economic conditions that are more severe than anticipated. The

outcome of the testing and analysis is also used to assess the potential impact of the relevant scenarios on the demand for regulatory capital

compared with its available capital. These enterprise-wide stress tests provide an understanding of the potential impacts on our risk profile,

capital and liquidity. It generates and considers pertinent and plausible scenarios that have the potential to adversely affect our business.

Stress testing and scenario analysis are used to assess the financial and management capability of Wapic to continue operating effectively under

extreme but plausible trading conditions. Such conditions may arise from economic, legal, political, environmental and social factors. Scenarios

are carefully selected by a group drawn from senior line of business, risk and finance executives. Impacts on each line of business from each

scenario are then analyzed and determined, primarily leveraging the models and processes utilized in everyday management routines. Impacts are

assessed along with potential mitigating actions that may be taken in each scenario. The Group would continue to invest in and improve stress

testing capabilities as a core business process.

By definition, risk is dynamic in nature. Consequently, the management of risk must be evolving necessitating regular review of the effectiveness

of each enterprise risk management component. It is in the light of this that Wapic’s ERM Framework is subject to continuous review to ensure

effective and cutting-edge risk management. The review is done in the following ways: through continuous self-evaluation and monitoring by the

risk management and compliance functions in conjunction with internal audit; and through independent evaluation by external auditors,

examiners and consultants.

In Wapic, we have a holistic view of all major risks facing the Group. We remain conscious with regard to both known and emerging risks and

ensure that we are strong enough to withstand any exogenous shocks. Our Board-driven committees play a critical role in providing oversight of

risk management and ensuring that our risk appetite, risk culture and risk profile are consistent with and support our strategy to deliver long-term,

sustainable success in achieving our strategic vision of being the top two Insurance Companies in Africa.

57




Our stress testing framework is designed to:

• Contribute to the setting and monitoring of risk appetite

• Identify key risks to our strategy, financial position, and reputation

• Examine the nature and dynamics of the risk profile and assess the impact of stresses on our profitability and business plans

• Ensure effective governance processes and systems are in place to co-ordinate and integrate stress testing

• Inform senior management

• Ensure adherence to regulatory requirements

Risk Management Philosophy, Culture, Appetite and Objectives

Wapic Insurance Risk Culture Statement

• Risk acceptance is done in a responsible manner;

• The executive and the Board of the Group have adequate risk management support;

• Uncertain outcomes are better anticipated;

• Risk mitigating actions are implemented;

• Accountability is strengthened; and

• Stewardship is enhanced.

The Group identifies the following attributes as guiding principles for its risk culture;

(a) Management and culture:

• Consider all forms of risk in decision-making;

• Create and evaluate business-unit and Group-wide risk profile to consider what is best for their individual business units/department;

• Retain ownership and accountability for risk and risk management at the business unit or other point of influence level;

In 2017, our risk management process was optimized further to continue achieving desired results despite the increase economic uncertainty and

in size and scale of operations. The Group’s risk management is continuously evolving with improvements, as there can be no assurance that all

market developments, in particular those of extreme nature, can be fully anticipated at all times. Hence, management has remained closely

involved with important risk management initiatives, which have focused on preserving appropriate levels of liquidity and capital, as well as

managing the risk inherent in the portfolios.

Risk management is fundamental to the Group's decision-making and management process. It is embedded in the role of all employees through

the organizational culture, thus enhancing the quality of strategic, capital allocation and day-to-day business decisions.

The Group considers risk management philosophy and culture as the set of shared beliefs, values, attitudes and practices that characterize how

the Group considers risk in everything it does, from strategy development and implementation to its day-to-day activities. In this regard, the

Group’s risk management philosophy is that a moderate and guarded risk attitude ensures sustainable growth in shareholder value and reputation.

The Group believes that enterprise risk management provides the superior capabilities to identify and assess the full spectrum of risks and to

enable staff at all levels better understand and manage risks. This will ensure that:

At Wapic, we embrace a moderate risk appetite, whilst delivering strategic objectives. We anticipate the risks in our activities and reward

behaviour that aligns with our core values, controls and regulations. Challenges are discussed in an open environment of partnership and shared

responsibility.

The Group’s Risk management philosophy and culture remain fundamental to the delivery of our strategic objectives. We strive to limit adverse

variations in earnings and capital by managing risk exposures within our moderate risk appetite. Our risk management approach includes

minimizing undue concentrations of exposure, limiting potential losses from stress events and the prudent management of liquidity and capital.

• Adopt a holistic and integrated approach to risk management and bring all risks together under one or a limited number of oversight;

• Empower risk officers to perform their duties professionally and independently without undue interference;

• Ensure clear segregation of duties between market facing business units and risk management/control functions;

• Strive to maintain a conservative balance between risk and profit considerations; and

• Document and report all significant risks and enterprise-risk management deficiencies;

• Continue to demonstrate appropriate standards of behaviour in development of strategy and pursuit of objectives.

• Internalize and share the Group’s Risk Culture Statement and Pledge to affirm commitment to desired behaviour.

• Strive to achieve best practices in enterprise risk management;

• Adopt a portfolio view of risk in addition to understanding individual risk elements;

58




Strategy and Business Planning

Risk Appetite

e) Equal attention is paid to both quantifiable and non-quantifiable risks.

f) The Group avoids products and businesses it does not understand.

b) Risk officers’ work as allies and thought partners to other stakeholders within and outside the Group and are guided in the exercise of their

powers by a deep sense of responsibility, professionalism and respect for other parties.

c) Risk management is a shared responsibility. Therefore, the Group aims to build a shared perspective on risks. The Group also partners with its

customers to improve their attitudes to risk management and encourage them to build corporate governance culture into their business

management.

d) Risk management is governed by well-defined policies, which are clearly communicated across the Group.

Group risk oversight approach

Our risk governance framework of which our risk appetite framework is a significant element, ensure the appropriate oversight of and

accountability for the effective management of risk. Our oversight starts with the strategy setting and business planning process. These plans help

us articulate our appetite for risk, which is then set as risk appetite limits for each business unit to work within.

The Group’s risk management function provides a central oversight of risk management across the Group to ensure that the full spectrum of risks

facing the Group are properly identified, measured, monitored and controlled in order to minimize adverse outcomes.

The function is complemented by the financial control and Strategy groups in the management of strategic and reputational risks.

The Chief Risk Officer coordinates the process of monitoring and reporting risks across the Group. Internal audit has the responsibility of

auditing the risk management and control function to ensure that all units charged with risk management perform their roles effectively on a

continuous basis. Audit also tests the adequacy of internal control and makes appropriate recommendations where there are weaknesses.

Risk management is embedded in our business strategy and planning cycle. Testament to this is the inclusion of risk management as one of our

strategic priorities. By setting the business and risk strategy, we are able to determine appropriate capital allocation and target setting for the

Group and each of our businesses.

All business units are required to consider the risk implications of their annual plans. These plans include analysis of the impact of objectives on

risk exposure. Throughout the year, business performance is monitored regularly focusing both on financial performance and risk exposure. The

aim is to continue the process of integrating risk management into the planning and management process and to facilitate informed decisions.

Through ongoing review, the links between risk appetite, risk management and strategic planning are embedded in the business so that key

decisions are made in the context of the risk appetite for each business unit.

Risk appetite is an articulation and allocation of the risk capacity or quantum of risk the Group is willing to accept in pursuit of its strategy, duly

set and monitored by the executive committee and the Board, and integrated into our strategy, business, risk and capital plans. Risk appetite

reflects the Group’s willingness and capacity to absorb potential losses arising from a range of potential outcomes under different stress

scenarios.

The Group defines its risk appetite in terms of both volatility of earnings and the maintenance of minimum regulatory capital requirements under

stress scenarios. Our risk appetite can be expressed in terms of how much variability of return the Group is prepared to accept in order to achieve

a desired level of result. It is determined by considering the relationship between risk and return. We measure and express risk appetite

qualitatively and in terms of quantitative risk metrics. The quantitative metrics include earnings at risk (or earnings volatility), liquidity and

economic capital adequacy. In addition, a large variety of risk limits, triggers, ratios, mandates, targets and guidelines are in place for all the

financial risks (e.g. credit, market and asset and liability management risks).

The Group’s risk profile is assessed through a ‘bottom-up’ analytical approach covering all of the Group’s major businesses and products. The

risk appetite is approved by the Board and it forms the basis for establishing the risk parameters within which the businesses must operate,

including policies, concentration limits and business mix. The Risk Appetite is reviewed annually by the Risk Management function and

recommended changes are approved by the Board.

59




Risk Management Objectives

Risk Categorization

• Credit risk

• Operational risk

• Market risk

• Liquidity risk

• Underwriting risk

• Strategic risk

• Capital risk

• Property price risk

• Reputational risk

Risk Management Responsibilities and Functions

Risk Management Division

Financial Control and Strategy

b) Conduct strategic and operational review of the Company’s activities

c) Conduct regular scanning of the Company’s operating environment

d) Coordinate and monitor the Company’s rating exercises by external rating agencies

In 2017, the risk appetite metrics were tracked against approved triggers and exceptions were reported to management for prompt corrective

actions. Key issues were also escalated to the Enterprise-wide Risk Management Committee and Board Risk Management Committee.

The broad risk management objectives of the Group are:

The Group is exposed to an array of risks through its operations. The Group has identified and categorized its exposure to these broad risks as

listed below:

These risks and the framework for their management are detailed in the Enterprise-wide Risk Management Framework.

The responsibilities of the Risk Management Group, the Financial Control and Strategy Group, and other key stakeholders with respect to risk

management are highlighted below:

a) Champion the implementation of the ERM Framework across the Company and subsidiaries. Routinely share risk reports with management

highlighting key risk areas, control failures and remedial action steps taken by management.

b) Develop risk policies, principles, process and reporting standards that define the Company’s risk strategy and appetite in line with the

Company’s overall business objectives.

c) Ensure that controls, skills and systems are in place to enable compliance with the Company’s policies and standards, and with all regulatory

requirement.

d) Facilitate the identification, measurement, assessment, monitoring and control of the level of risks in the Company.

e) Embed risk culture in the Company to ensure that everyone in the Company takes into consideration Wapic’s risk appetite in whatever they do.

l) Provide assurance on compliance with internal and external policies with respect to risk management.

a) Prepare and monitor the implementation of the Company’s Strategic Plan

• To identify and manage existing and new risks in a planned and coordinated manner with minimum disruption and cost;

• To protect against unforeseen losses and ensure stability of earnings;

• To maximize earnings potential and opportunities;

• To maximize share price and stakeholder protection;

• To enhance credit ratings and depositor, analyst, investor and regulator perception; and

• To develop a risk culture that encourages all staff to identify risks and associated opportunities and to respond to them with cost effective

actions.

f) Collect, process, verify, monitor and distribute risk information across the Company and other material risk issues to senior management, the

Board and regulators.

g) Monitor compliance with company-wide risk policies and limits.

h) Empower Business unit risk champion to identify, monitor and report on the effectiveness of risk mitigation plans in reducing risk incidence

as related to day to day activities in the unit.

i) Ensure that laws, regulations and supervisory requirements are complied with including consequence management.

j) Champion the implementation of Solvency II

k) Promote risk awareness and provide education on risk.

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Risk Management Governance Framework

Roles of the Board of Directors

General

Credit Risk

Market Risk

g) Ensure that liquidity risk is identified, measured, monitored and controlled.

f) Approve the Company’s liquidity risk management framework; and

a) Define Company overall risk appetite in relation to market risk;

b) Ensure that the Company’s overall market risk exposure is maintained at levels consistent with the available capital;

d) Approve the Company’s strategic direction and tolerance level for liquidity risk;

e) Ensure that the Company’s senior management has the ability and required authority to manage liquidity risk;

c) Ensure that top management as well as individuals responsible for market risk management possess sound expertise and knowledge to

accomplish the risk management function;

g) Appoint credit officers and delegate approval authorities to individuals and committees.

e) To put in place effective internal policies, systems and controls to identify, measure monitor, and control credit risk concentrations.

f) Ensure that detailed policies and procedures for credit risk exposure creation, management and recovery are in place; and

c) Ensure that top management as well as individuals responsible for counterparty credit risk management possess the requisite expertise and

knowledge to accomplish the risk management function;

d) Ensure that the Company implements a sound methodology that facilitates the identification, measurement, monitoring and control of credit

risk;

b) Ensure that Wapic overall counterparty credit risk exposure is maintained at prudent levels and consistent with the available capital through

quarterly review of various types of credit exposure;

k) Review and approve changes/amendments to the risk management framework;

l) Review and approve risk management procedures and control for new products and activities; and

m) Periodically receive risk reports from management highlighting risk areas, control failures and remedial action steps taken by management.

a) Approve Wapic overall risk tolerance in relation to credit risk based on the recommendation of the Company Chief Risk Officer;

c) Ratify the appointment of qualified officers to manage the risk management function;

d) Approve and periodically review the Company’s risk strategy and policies;

e) Approve the Company’s risk appetite and monitor the Company’s risk profile against this appetite;

g) Ensure that the Company maintains a sound system of risk management and internal control with respect to:

• Efficiency and effectiveness of operations

i) Ensure that management maintains an appropriate system of internal control and review its effectiveness;

j) Ensure risk strategy reflects the Company’s tolerance for risk;

f) Ensure that the management of the Company has an effective ongoing process to identify risk, measure its potential impact and proactively

manage these risks;

• Safeguarding of the Company’s assets (including information)

• Compliance with applicable laws, regulations and supervisory requirements

• Reliability of reporting

• Behaving responsibly towards all stakeholders

h) Ensure that a systemic, documented assessment of the processes and outcomes surrounding key risks is undertaken at least annually;

The framework details Wapic’s risk universe and governance structure comprising three distinct layers:

1. The enterprise-wide risk management and corporate governance committee forums;

2. The executive management committees; and

3. Risk management responsibilities per risk area.

The Board of Directors’ role as it relates to risk management is divided into seven areas; general, credit, market, liquidity, underwriting,

perational, reputational and strategic risk. Specific roles in these areas are further defined below:

a) Develop a formal enterprise-wide risk management framework;

b) Review and approve the establishment of a risk management function that would independently identify, measure, monitor and control risks

inherent in all risk-taking units of the Company;

e) Prepare business intelligence reports for the Company’s management

f) Prepare periodic management reports on subsidiaries and associates

g) Perform competitive analysis in comparison with industry peers

h) Conduct strategic/operational review of branches

61




Compliance Risk

Operational Risk

Reputational Risk

Strategic Risk

The Board and Management Committees

The management committees which exist in the Company include: The Executive Committee (EXCO), Enterprise-wide Risk Management and

Governance Committee (ERMC), Finance, Investment and General Purpose Management Committee (FIMC), Underwriting and Claims

Management Committee (UCMC), and Information Technology Steering Committee (ITSC). Without prejudice to the roles of these committees,

the full Board retains ultimate responsibility for risk management.

The Board of director is the highest approval authority for risk policies and risk appetite setting in Wapic. It carries out its oversight function

through its standing committees each of which has a charter that clearly defines its purpose, composition, structure, frequency of meetings,

duties, tenure, and reporting lines to the Board. In line with best practice, the Chairman of the Board does not sit on any of the Committees. The

Board has five standing committees namely: The Board Risk Management and Governance Committee, the Board Audit and Compliance

Committee, the Board Establishment and Remuneration Committee, the Board Finance, Investment and General Purpose Committee and the

Board Information Technology Committee.

a) Oversee the strategic risk management process.

b) Ensure that Wapic has in place an appropriate strategic risk management framework which suits its own circumstances and needs;

c) Ensure that the strategic goals and objectives are set in line with its corporate mission and values, culture, business direction and risk

tolerance;

d) Approve the strategic plan (including strategies contained therein) and any subsequent changes, and review the plan (at least annually) to

ensure its appropriateness;

e) Ensure the organization’s structure, culture, infrastructure, financial means, managerial resources and capabilities, as well as systems and

controls are appropriate and adequate to support the implementation of its strategies.

f) Review high-level reports periodically submitted to the Board on the overall strategic risk profile, and ensure that any material risks and

strategic implications identified from those reports are properly addressed; and

g) Ensure that senior management is competent in implementing strategic decisions approved by the Board and supervising such performance on

a continuing basis

g) Ensure that only fit and proper persons are appointed to senior management positions in the Company.

f) Ensure that Board members do not compromise their fit and proper status with regulators. They shall ensure that only Board members who do

not tarnish the Wapic’s image and reputation remain as members; and

b) Set the Company’s operational risk strategy and direction in line with the Company’s corporate strategy;

c) Approve the Company’s operational risk management framework;

d) Periodically review the framework to ensure its relevance and effectiveness;

e) Ensure that senior management is performing its risk management responsibilities; and

f) Ensure that the Company’s operational risk management framework is subject to effective and comprehensive internal audit by operationally

independent, appropriately trained and competent staff.

d) Monitor the Company’s compliance with its reputational risk management policies and recommend sanctions for material breaches of internal

policies;

e) Review all exception reports by external parties such as regulators and auditors; ensure that appropriate sanctions are applied to erring officers;

demand from management appropriate explanations for all exceptional items; ensure that management puts in place effective and remedial

actions and reports on progress to the Board on an on-going basis;

a) Set an appropriate tone and guidelines regarding the development and implementation of effective reputation

b) Risk management practices, including an explicit statement of a zero tolerance policy for all unethical behaviour;

c) Approve the Company’s framework for the identification, measurement, control and management of reputational risk;

a) Approve the Company’s code of conduct and ethics;

b) Monitor the Company’s compliance with laws and regulations, its code of conduct and ethics and corporate governance practices;

c) Ensure new and changed legal and regulatory requirements are identified, monitored and reflected in Company processes;

e) Ensure the Company’s has a compliance culture that contributes to the overall objective of risk management.

d) Approve the compliance structure, mechanisms and processes established by management to ensure compliance with current laws, regulations

and supervisory requirements; and

a) Oversee the overall governance of the Company’s operational risk management process;

62




Board Information Technology Committee • Advises the Board on its oversight responsibilities in relation to

development and implementation of company’s information

technology strategy

• Monitor company’s investment on technology and information

systems

• Oversight of financial reporting and accounting

• Oversight of the external auditor

• Oversight of regulatory compliance

• Monitoring the internal control process

• Oversight of enterprise risk management

Board Audit and Compliance Committee

BOARD COMMITTEES FUNCTIONS

Board Establishment and Remuneration Committee • Advises the Board on its oversight responsibilities in relation to

compensation, benefits and all other human resource matters

affecting the directors and employees of the Company.

• Monitor the Group people-risk universe.

• Ensure the right caliber of executive management is attracted,

retained, motivated and rewarded.

• Provides periodic oversight of Boards approved programs.

Board Finance, Investment and General Purpose Committee

• Assist in the oversight of the review and approval of the

companies’ risk management policy including risk appetite and

risk strategy;

• Review the adequacy and effectiveness of risk management

and controls;

• Oversee management’s process for the identification of

significant risks across the company and the adequacy of

prevention, detection and reporting mechanisms;

• Review of the company’s compliance level with applicable

laws and regulatory requirements that may impact the company’s

risk profile;

• Review changes in the economic and business environment,

including emerging trends and other factors relevant to the

company’s risk profile; and

• Review large underwritten risks for adequacy of reinsurance

and other risk management techniques including environmental

& social management system

• Review and recommend for approval of the Board risk

management procedures and controls for new products and

services.

Board Enterprise Risk Management and Governance Committee

• Reviews and approves the company’s investment policy

• Approves investments over and above managements’ approval

limit

• Ensures that optimum asset allocation is achieved

• Assists the Board on its oversight function of managing

financial risks.

• Review and make recommendation on long term financial plan

for the company.

• Review the company capital appropriation.

• Provides periodic oversight of Boards approved programs.

63




Risk Management Unit – relationship with other units

The relationships between risk management unit (RMU) and other units are highlighted below:

• RMU sets policies and defines risk limits for other units in the Company;

• RMU performs group-wide risk monitoring and reporting;

Group risk oversight approach

Risk Identification and Classification

Credit risk:

Operational risk:

Market risk:

Credit risk is the risk of default arising from the uncertainty of counterparty’s ability to perform its contractual obligations. This may arise from

the following but not limited to premium receivables, reinsurance recoveries, fund placements in deposit money banks, vendors, and fund’s

managers. However, in terms of premium payment and investments in counterparties, considerable risks exist that brokers and lead insurers who

are allowed extended payment period may default. Credit risk is that of the lender and includes lost principal and interest, disruption to cash

flows, and increased collection costs. The three sources of credit risk identified are:

- Direct Default Risk: risk that the Group will not receive the cash flows or assets to which it is entitled because a party with which the firm has

a bilateral contract defaults on one or more obligations.

- Downgrade Risk: risk that changes in the possibility of a future default by an obligor will adversely affect the present value of the contract with

the obligor today.

This is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This includes legal risk,

strategic risk and reputational risk. Legal risk includes, but is not limited to, exposure to fines, penalties, or punitive damages resulting from

supervisory actions, as well as private settlements.

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to movements in market factors.

Volatility frequently refers to the standard deviation of the change in value of a financial instrument with a specific time horizon. The Group is

exposed to this risk through its financial assets and it comprises of:

- Settlement Risk: risk arising from the lag between the value and settlement dates of securities transactions.

• Other units provide relevant data to RMU for risk monitoring and reporting and identify potential risks in their line of business and RMU

provides a framework for managing such risks;

The division is complemented by the financial control and regulatory/reputation risk group in the management of strategic and reputational risks

respectively.

The Chief Risk Officer coordinates the process of monitoring and reporting risks across the Group. Internal audit has the responsibility of

auditing the risk management and control function to ensure that all units charged with risk management perform their roles effectively on a

continuous basis. Audit also tests the adequacy of internal controls and makes appropriate recommendations where there are weaknesses.

Our oversight starts with the strategy setting and business planning process. These plans help us articulate our appetite for risk, which is then set

as risk appetite limits for each business unit to work within.

The Group’s risk management and compliance division provides a central oversight of risk management across the Group to ensure that the full

spectrum of risks facing the Group are properly identified, measured, monitored and controlled in order to minimize adverse outcomes.

• RMU and market facing units collaborate in designing new products;

• RMU makes recommendations with respect to capital allocation, pricing and reward/sanctions based on risk reports; and

• Information technology support group provides relevant user support to the RMU function in respect of the various risk management software.

• RMU and internal audit co-ordinate activities to provide a holistic view of risks across the Group;

64




Liquidity risk:

Underwriting risk:

Property price risk:

Reputational risk:

- Interest rate risk: the risk that the fair value of a fixed income security will fall as a result of movement in market interest rates. Interest rate risk

also arises from fluctuations in future cash flows of a financial instrument because of changes in market interest rates.

- Asset liquidity risk: arising from our financial assets where we might not be able to execute transactions at prevailing market price because

there is temporarily, no appetite for the deal at the other side of the market.

- Funding liquidity risk: Arising from our investment-linked products where there is a financial obligation to customers.

- Risks are not adequately ceded to reinsurers exposing the Group to potential high claims pay-out;

- The Group’s policyholder will act in ways that are unanticipated and have an adverse effect on the Group.

- Equity price risk: the risk that the fair value of equities decreases as a result of changes in the levels of equity indices and the value of individual

stocks.

- Foreign Exchange risk: The risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign

exchange rates associated with foreign currency denominated transactions which the Group is exposed to.

Liquidity risk is the risk that the Group may be unable to meet its obligations associated with financial liabilities that are settled by delivering

cash or another financial assets. This usually occurs due to the inability to convert a security or hard asset to cash without a loss of capital and/or

income in the process. The Group recognizes the risk of loss due to insufficient liquid assets to meet cash flow requirements or to fulfill its

financial obligation once a claim crystallize.

Underwriting activities are primarily concerned with the pricing, acceptance and management of risks arising from our contracts with

policyholders. It entails the risk that:

- The prices charged by the Group for insurance contracts will be ultimately inadequate to support the future obligations arising from those

contracts, risk exposure under its insurance contracts that were unanticipated in the design and pricing of the insurance contract;

- Many more claims occur than expected or that some claims that occur are much larger than expected claims resulting in unexpected losses; and

The Group’s portfolio is subject to property price risk arising from changes in the market value of investment properties and fluctuations in

expected rental incomes realised from the Group's properties.

The Group is exposed to this risk through events that damage its image amongst stakeholders and the public which may impair the ability to

retain, generate and drive sustainable business. We understand that reputational risk is the biggest risk to our business as it poses a special threat

to the confidence of our customers, regulators and industry.

- Property price risk: the risk arising from changes in the market value of properties and fluctuations in expected rental incomes.

65




Operational risk management

• Recognized ownership of the risk by the businesses;

• Oversight by independent risk management; and

• Independent review by Corporate Audit.

Our operational risk strategy seeks to minimize the impact that operational risk can have on shareholders’ value.

The Group’s strategy is to:

• Reduce the likelihood of occurrence of expected events and related cost by managing the risk factors and implementing loss

prevention or reduction techniques to reduce variation to earnings.

• Minimize the impact of unexpected and catastrophic events and related costs through risk financing strategies that will support the

Group’s long term growth, cash flow management and balance sheet protection.

• Eliminate bureaucracy, improve productivity, reduce capital requirements and improve overall performance through the institution

of well designed and implemented internal controls.

In order to create and promote a culture that emphasizes effective operational risk management and adherence to operating controls,

there are three distinct levels of operational risk governance structure in the Group.

Level 1 refers to the oversight function carried out by the board of directors, board risk committee and the executive management.

Responsibilities at this level include ensuring effective management of operational risk and adherence to the approved operational

risk policies.

Level 2 refers to the management function carried out by operational risk management group. It has direct responsibility for

formulating and implementing the Group’s operational risk management framework including methodologies, policies and

procedures approved by the board.

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people, or systems, or from external

events. Our definition of operational risk excludes regulatory risks, strategic risks and potential losses related solely to judgments

with regard to taking credit, market, interest rate, liquidity, or insurance risks.

We seek to minimize exposure to operational risk, subject to cost trade-offs. Operational risk exposures are managed through a

consistent set of management processes that drive risk identification, assessment, control and monitoring.

The goal is to keep operational risk at appropriate levels relative to the characteristics of our businesses, the markets in which we

operate, our capital and liquidity, and the competitive, economic and regulatory environment. Notwithstanding these controls, the

Group incurs operational losses.

It also includes the reputation and franchise risk associated with business practices or market conduct in which the Group is

involved. Operational risk is inherent in the Group’s global business activities and, as with other risk types, is managed through an

overall framework designed to balance strong corporate oversight with well-defined independent risk management. This

framework includes:

66




The Group’s operational risk framework

Management and control responsibilities

Measuring and managing operational risk

Risk event data collection and reporting

The Group’s current operational risk framework was implemented to meet internal and regulatory requirements. There has been

significant investment in the implementation of improved measurement and management approaches for operational risk to

strengthen control, improve customer service, improve process efficiencies and minimize operating losses. The Group recognizes

the fact that it is neither cost-effective nor possible to attempt to eliminate all operational risks. Events of small significance are thus

expected to occur and are accepted as inevitable with relevant budgeting for these losses being exercised where appropriate. Events

of material significance are limited and the Group seeks to reduce the risk from these extreme events in a framework consistent

with its agreed risk appetite. Processes are in place to monitor management and future mitigation of such events.

The first line of governance for managing operational risk rests with business and operational risk management that forms part of

the day-to-day responsibilities of all business unit management. Business unit staff report any identified breakdowns in control and

any risk events that may result in financial loss and/or reputation damage. Amongst others, business management are responsible to

ensure that processes for identifying and addressing ineffective controls and the mitigating of risk events are implemented and

executed. Operational risk teams form the secondary line of governance by ensuring that processes to identify weaknesses are

effective and identified weaknesses are acted upon. The Group operational risk profile is presented to the Board quarterly. Control

effectiveness is monitored at the Risk Management Committee and at the Board; and the multi-layered system of defenses ensures

pro-active operational risk management.

A standard process is used Group-wide for the recognition, capture, assessment, analysis and reporting of risk events. This process

is used to help identify where process and control requirements are needed to reduce the recurrence of risk events. Risk events are

loaded onto a central database and reported monthly to the ERMC. The Group also uses a database of external public risk events

and is part of a consortium of other insurance companies that share loss data information anonymously to assist in risk

identification, assessment, modelling and benchmarking.

The Group recognizes the significance of operational risk and is committed to enhancing the measurement and management

thereof. Within the Group’s operational risk framework, qualitative and quantitative methodologies and tools are applied to identify

and assess operational risks and to provide management information for determining appropriate mitigating measures.

Level 3 refers to the operational function carried out by all business units and support functions in the Group. These

units/functions are fully responsible and accountable for the management of operational risk in their respective units. They work in

liaison with operational risk management to define and review controls to mitigate identified risks. Internal audit provides

independent assessment and evaluation of the Group’s operational risk management framework. This periodic confirmation of the

existence and utilization of controls in compliance with approved policies and procedures, provide assurance as to the effectiveness

of the Group’s operational risk management framework. Importantly, the tools used to assess, measure and monitor operational

risks in the Group include but are not limited to a loss database of operational risk events; an effective risk and control self-

assessment process that helps to analyze business activities and identify operational risks that could affect the achievement of

business objectives; and key risk indicators which are used to monitor operational risks on an ongoing basis.

The role of risk department is to establish, implement and maintain the operational risk framework for the modelling and managing

of the Group’s operational risk, while reinforcing and enabling operational risk management culture throughout the Group. The aim

is to integrate, based on international norms and best practices, all operational risk activities and to compile a reliable operational

risk profile contributing to the Group’s risk- reward profile. The key advantage introduced by the current framework is the financial

quantification and modelling of operational risks. This functionality has significantly improved the Group’s operational risk

measurement and management capabilities.

67




Risk and control self assessments (RCSA)

Key risk indicators (KRIs)

Reporting

Allocating Capital to Business Units

Expected loss (EL) budgeting mitigation

Information Security and Continuity of Business

Information Security and Continuity of Business

• Established the resilience of the Group following a major operational disruption such as flood and fire by conducting a

comprehensive test of the business continuity plan. A major outcome of the exercise is our Information Technology (IT) Team’s

capacity to resume critical IT-related services from anywhere within 3 hours following a major operational disruption.

• The effective communication between our primary servers and secondary servers was ascertained following the conduct of a

comprehensive failover test. It was affirmed that our data are accurately and completely backed up in our designated secondary and

tertiary servers.

• Established a Digital Division to boost the creation of opportunities for the Group in the digital space and truly position Wapic as

a Group that has come to transform and illuminate the industry.

• Ensured the early identification and effective management of risk issues by conducting a comprehensive risk assessment on all

our core business processes.

• In order to guarantee the Group’s continuing growth and success, an effective and robust succession plan was established with

the sole purpose of ensuring timely replacement of talents occupying key positions.

A critical tool in managing our operational risk is the Business Continuity Plan (BCP) that documents the procedures to be

executed by relevant teams in the event of a disaster. The Group assesses the feasibility of its BCP annually by simulating a disaster

and gaps noted are properly mitigated to ensure that business operations are not disrupted in the event of a disaster. Furthermore, in

a bid to ensure data security, failover tests are conducted periodically to ascertain the effectiveness of our secondary servers as well

as the accuracy and completeness of data in the secondary servers.

Business units are required to report on both a regular and an event-driven basis. The reports include a profile of the key risks to

their business objectives, RCSA and KRI results, and operational risk events. Risk reports are presented to executive management

and risk committees.

An allocation methodology is applied for allocating capital to business units. For each business unit, the allocation takes into

consideration not only the size of the business unit, but also measures of the business unit’s control environment. This translates to

a risk-sensitive allocation with the opportunity afforded to business to identify actions to positively impact on their respective

allocated operational risk capital.

The ERM team developed a database for loss event collation named Loss Event Register. This register allows staff to report actual

and near-miss (an unplanned event that did not result in injury, illness, or damage – but had the potential to do so) loss events.

Summary statistics from the loss event database are used to show trends of total losses and mean average loss, with analysis by type

of loss and business line.

Information security and the protection of confidential and sensitive customer data are a priority of Wapic Insurance Plc. The

Group has developed and implemented an Information Security Risk Management framework that is in line with best practice. The

framework is reviewed and enhanced regularly to address emerging threats to customers’ information.

A comprehensive set of KRIs are in place across the Group, with relevant and agreed thresholds set by the business. KRIs are

monitored on a Group as well as business unit level, based on significance. Threshold breaches are managed in accordance with an

agreed process across the Group.

In order to pro-actively identify and actively mitigate risks, the operational risk framework utilizes RCSAs. RCSA is used at a

granular level to identify relevant material risks and key controls mitigating these risks. The risks and controls are assessed on a

quarterly basis and relevant action plans are put in place to treat, tolerate, terminate or transfer the risks, taking into account the

relevant business risk appetites. The RCSA programme is extensive and covers the entire Group. The Internal Audit further tests

the effectiveness of the RCSAs within the normal course of auditing and relevant metrics are monitored and actioned where

relevant.

68




Credit Risk Management

31 December 2017

In thousands of naira In thousands of naira

Note

Cash and cash equivalents 8 1,745,342 14% Cash and cash equivalents 911,023 16%

Fixed income instruments 9 7,766,078 60% Fixed income instruments 2,706,063 48%

Held for trading assets 9 1,380 0% Held for trading assets 796 0%

Trade receivables 10 707,489 5% Trade receivables 486,997 9%

Other receivables (excluding prepayments) 13 924,102 7% Other receivables (excluding prepayments) 834,520 15%

Reinsurance assets (excluding prepaid

reinsurance)

11 1,087,216 8% Reinsurance assets (excluding prepaid

reinsurance)

403,620 7%

Statutory deposit 19 632,964 5% Statutory deposit 300,000 5%

12,864,571 100% 5,643,019 100%

31 December 2016

In thousands of naira In thousands of naira

Note

Cash and cash equivalents 8 2,220,395 19% Cash and cash equivalents 311,223 6%

Fixed income instruments 9 6,395,121 54% Fixed income instruments 2,506,018 48%

Held for trading assets 9 105 0% Held for trading assets 7 0%

Trade receivables 10 553,575 5% Trade receivables 553,574 11%

Other receivables (excluding prepayments) 13 1,027,649 9% Other receivables (excluding prepayments) 1,069,803 20%

Reinsurance assets (excluding prepaid

reinsurance)

11 924,313 8% Reinsurance assets (excluding prepaid

reinsurance)

494,779 9%

Statutory deposit 19 617,632 5% Statutory deposit 300,000 6%

11,738,790 100% 5,235,404 100%

Credit risk arises from the failure of a counterparty of the Group to repay amount due as at an agreed date or failure to perform as agreed. The Group’s

exposure to credit risk is primarily derived from the following activities:

The Group’s exposure to credit risk is low as fixed income securties (Government bonds and Treasury bills and blue-chip corporate bonds) and money

market investments accounted for 74% of total credit risk exposures as at 31 December 2017 (31 December 2016: 73%).

• Unpaid premium from insured or brokers; and

• Non-recovery of claims paid from reinsurers.

Group Company

The Group’s investment portfolio and receivables are exposed to credit risk through its fixed income money market instruments, trade receivables and

reinsurance receivables. The maximum exposures from the Group's and Company's financial assets to credit risk are as follows:

The Group’s Risk Management philosophy is that moderate and guarded risk attitude will ensure sustainable growth in shareholder’s value and

reputation. The Group's policy is to set out specific rules for risk origination and management of the investment portfolio. The plan also sets out the roles

and responsibilities of different individuals and committees charged with these responsibilities.

The Group is exposed to risk relating to its debt holdings in its investment portfolio, outstanding premiums from brokers, co-insurance and the reliance

on reinsurers to make payment when certain loss conditions are met. Following the Nigeria economy exited recession in the second half 2017 and the

downgrade of some Nigerian Banks, Wapic has reviewed its banking counterparties profiling in line with the current downgrade. Wapic through its

governance process increased its monitoring on the banking industry as it observed the developments in the industry with a view to proactively mitigate

any downside risk that may emanate.

Group Company

69




Company portfolio

Counterparty Investment in money market %

National Banks 351,524 87%

Other Banks 51,236 13%

Total 402,760 100%

The Company's exposures to banks and finance houses as at 31 December 2016 is represented below:

Company portfolio

Counterparty Investment in money market %

National Banks 191,916 93%

Other Banks 15,534 7%

Total 207,450 100%

Key improvements made in 2017 include the following:

• Counterparty credit policy document was reviewed in line with best practice.

• The automation of the company’s core insurance processes has improved the efficiency of credit monitoring.

• The Risk Management Team has developed an internal model in line with best practice to assess the credit worthiness of counterparties that are not

rated. The model takes into cognizance an interpolation methodology for counterparties with external rating and a full assessment of counterparties

without rating. The creditworthiness of these counterparties are distributed into four tiers with an approved credit limit assigned to each tier. Reinsurance

contract is executed only with reinsurers with a minimum acceptable credit rating and their performance are monitored over a given period.

• Group limit on individual exposure to the banks and other financial institutions were adjusted in line with counterparty policy document. Wapic through

its governance process increased its surveillance on the banking industry as it observed the developments in the industry with a view to proactively

mitigate any down risk that may emanate.

• The behavioral pattern in the company has improved towards the implementation of the NAICOM NPNC directive as credit portfolio monitoring are

cascaded down from counterparties to products, teams and Relationship officer. This resulted to the achievement of over 90% collection rate in 2017.

Credit risk exposure to trade receivables arises from the 30 days’ window given by NAICOM in the “No Premium No Cover” (NPNC) policy. This gives

brokers the latitude to withhold premiums collected from insured for 30 days. However, they are expected to issue their credit note and remit the

premiums at the expiration of the 30 days’ grace period. Brokers who fails to remit are reported on quarterly basis to NAICOM and are subject to the

downgrading process in the Group’s Credit Policy Guide. The Group’s risk exposure to credit risk is low as the receipt of insurance premium from the

insured is a pre- condition for the issuance of insurance cover.

The Group has no significant concentration of credit risk and the carrying amounts of all the financial assets subject to credit risk represents the

maximum exposure of the Group to credit risk.

• Wapic reviewed its counterparty’s ratings in line with the liquidity issues which led to the downgrade of many banks in Nigeria.

Aside credit risk exposure from our investment policies, the Group is also exposed to this risk from its core business – outstanding premiums from

clients. Trade receivables are short-term in nature consisting of a large number of policyholders and are subject to moderate credit risk.

The Company's exposures to banks and finance houses as at 31 December 2017 is represented below:

The Group categorizes its exposure to this risk based on business sources (namely Agents, Brokers and Insurance Companies) and periodically reviews

trade receivable to ensure credit worthiness.

Reinsurance contract is executed only with reinsurers with a minimum acceptable credit rating. The creditworthiness of all reinsurers is monitored and

reported to management by the Risk Management function by reviewing their annual financial statements and qualitative observations through formal

and informal communication channels. Reinsurance treaties are reviewed annually by management prior to renewal of the reinsurance contract.

The Group further manages its exposure to credit risk through counterparty risk via established limits as approved by the Board. These limits are

determined based on credit ratings of the counterparty amongst other factors. All fixed income investments are measured for performance on a quarterly

basis and monitored by management on a monthly basis.

70




Market Risk Management

1. Interest rate risk

2. Foreign exchange risk

3. Equity price risk

1. Interest rate risk

The financial markets of Nigeria and Ghana were adversely affected by volatility in the markets. The Group’s ability to meet business objectives was affected by the adverse

changes in the major market risk factors: interest rates, foreign exchange rates,non- availability of FX, rise in inflation, equity prices, and increse in property prices. The

Group's identification, management, control, measurement and reporting of market risk is designed along the following major risk factors;

The Group is significantly exposed to interest-rate risk as the percentage of floating interest yielding assets to AUM is 15.59% (2016 is 31.50%). Also, the Group is exposed to

interest rate risk through its Life underwriting investment policies that have guaranteed interest rate. As a result, the Group’s investment income move in the direction of

interest rate in the short and medium term. The plan of Central Bank of Nigeria (CBN) to retain Monetary Policy Rate (MPR) at 14% through 2017 consolidating on its tight

monetary policies and regulatory supervision. This development presents a big opportunity for the Group interms of generting more revenue on its investment portfolio to

surport the Group's income aspiration for the year. However, the country saw a sharp drops in economic growth, high inflation rate (though droped from 18.3% to 16.13%) and

currency weaknesses. Owing to this, the country adopted drastical steps of fiscal consolidation and international borrowing. We expect interest rate to drop in 2018 due to the

plan of CBN to focuss more on reducing the impact of inflation on interest rate in 2018.

Interest rate risk is the exposure of the Group’s financial condition to adverse movements in interest rates, yield curves and credit spreads. The interest rste risk exposure arises

when a change in interste rate has a potential to affect the value of the Group's assets and liabilities. The Group is exposed to interest rate risk through the floating interest rate

bearing assets and liabilities and fixed interest bearing financial instruments carried at fair value in the Group’s books.

71




A summary of the Group’s interest rate gap position on non-trading portfolios was as follows:

Market Risk

Carrying

amount

No stated

maturity 1 - 3 months 3 -6 months 6 - 12 months Above 1 year

Group

31 December 2017

Assets

In thousands of Naira

Cash and cash equivalents 1,745,342 - 1,745,342 - - -

Debt securities - Held to maturity 5,461,742 - 3,183,452 - - 2,278,290

Debt securities - Available for sale 2,304,336 - - 118,028 - 2,186,308

Statutory deposit 632,964 - - - - 632,964

10,144,384 - 4,928,794 118,028 - 5,097,562

Liabilities

Liabilities on investment contracts 1,063,860 1,063,860 - - - -

1,063,860 1,063,860 - - - -

Total interest re-pricing gap 9,080,524 (1,063,860) 4,928,794 118,028 - 5,097,562

Cumulative 9,080,524 (1,063,860) 3,864,934 3,982,962 3,982,962 9,080,524

Increase by 100bp 90,805 (10,639) 49,288 1,180 - 50,976

Increase by 500bp 454,026 (53,193) 246,440 5,901 - 254,878

Decrease by 100bp (90,805) 10,639 (49,288) (1,180) - (50,976)

Decrease by 500bp (454,026) 53,193 (246,440) (5,901) - (254,878)

Re-pricing period

72




Carrying

amount

No stated

maturity 1 - 3 months 3 -6 months 6 - 12 months 1 - 5 years

Group

31 December 2016

Assets


Cash and cash equivalents 2,220,395 - 2,220,395 - - -

Debt securities - Held to maturity 5,175,568 - 3,980,841 - - 1,194,727

Debt securities - Available for sale 1,219,553 - - 490,083 - 729,470


9,233,148 - 6,201,236 490,083 - 2,541,829

Liabilities

Liabilities on investment contracts 920,154 920,154 - - - -

920,154 920,154 - - - -

Total interest re-pricing gap 8,312,994 (920,154) 6,201,236 490,083 - 2,541,829

Cumulative 8,312,994 (920,154) 5,281,082 5,771,165 5,771,165 8,312,994

Increase by 100bp 83,130 (9,202) 62,012 4,901 - 25,418

Increase by 500bp 415,650 (46,008) 310,062 24,504 - 127,091

Decrease by 100bp (83,130) 9,202 (62,012) (4,901) - (25,418)

Decrease by 500bp (415,650) 46,008 (310,062) (24,504) - (127,091)

Fair value sensitivity analysis for fixed rate instruments

In thousands of Naira 31-Dec-2017 31-Dec-2016

Increase in interest rate by 2000 basis points 246,273 196,909

Decrease in interest rate by 1000 basis points (123,136) (98,454)

Interest rate movements affect reported equity through impact of increase or decrease in net interest income on the retained earnings.

Re-pricing period

The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, only a change in interest rates at the end of the

reporting period would affect profit or loss.

The table below shows the impact on the Group’s profit before tax if interest rates on financial instruments had increased 2000 basis points or decreased by 1000 basis points,

with all other variables held constant.

73




A summary of the Company’s interest rate gap position on non-trading portfolios was as follows:

Market Risk

Carrying

amount

No stated


Company

31 December 2017

Assets


Cash and cash equivalents 911,023 - 911,023 - - -

Debt securities - Held to maturity 1,004,463 - 21,284 - - 983,179

Debt securities - Available for sale 1,701,600 - - 118,028 - 1,583,572


3,917,086 - 932,307 118,028 - 2,866,751

Liabilities

Liabilities on investment contracts - - - - - -

- - - - - -

Total interest re-pricing gap 3,917,086 - 932,307 118,028 - 2,866,751

Cumulative 3,917,086 - 932,307 1,050,335 1,050,335 3,917,086

Increase by 100bp 39,171 - 9,323 1,180 - 28,668

Increase by 500bp 195,854 - 46,615 5,901 - 143,338

Decrease by 100bp (39,171) - (9,323) (1,180) - (28,668)

Decrease by 500bp (195,854) - (46,615) (5,901) - (143,338)

Re-pricing period

74




Carrying

amount

No stated


Company

31 December 2016

Assets


Cash and cash equivalents 311,223 - 311,223 - - -

Debt securities - Held to maturity 1,947,206 - 1,097,395 - - 849,811

Debt securities - Available for sale 558,812 - - 245,608 - 313,204


3,117,241 - 1,408,618 245,608 - 1,463,015

Liabilities

Liabilities on investment contracts - - - - - -

- - - - - -

Total interest re-pricing gap 3,117,241 - 1,408,618 245,608 - 1,463,015

Cumulative 3,117,241 - 1,408,618 1,654,226 1,654,226 3,117,241

Increase by 100bp 31,172 - 14,086 2,456 - 14,630

Increase by 500bp 155,862 - 70,431 12,280 - 73,151

Decrease by 100bp (31,172) - (14,086) (2,456) - (14,630)

Decrease by 500bp (155,862) - (70,431) (12,280) - (73,151)

Fair value sensitivity analysis for fixed rate instruments

In thousands of Naira 31-Dec-2017 31-Dec-2016

Increase in interest rate by 2000 basis points 60,203 87,815

Decrease in interest rate by 1000 basis points (30,101) (43,907)

Interest rate movements affect reported equity through impact of increase or decrease in net interest income on the retained earnings.

Re-pricing period

The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, only a change in interest rates at the end of the

reporting period would not affect profit or loss.

The table below shows the impact on the Company’s profit before tax if interest rates on financial instruments had increased by 2000 basis points or decreased by 1000 basis

points, with all other variables held constant.

75




Foreign exchange risk

The Group is not exposed to significant risk of adverse movements in foreign exchange rates. The financial

position of the company has no significant sensitivity to foreign exchange risk.

The Group is exposed to foreign exchange risk through cash balances maintained in foreign currency.

Foreign exchange risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of

changes in foreign exchange rates.

Foreign exchange risk exposure of the Group’s financial condition is due to adverse movements in exchange

rates. The Group is exposed to foreign exchange currency risk primarily through transactions denominated in

foreign currency. The Group is also exposed to foreign currency fluctuation in its investments in unquoted equity,

dollar-denominated bond instruments, fixed deposits and bank balances in other foreign currencies.

The Group’s foreign exchange risk is considered at a Group level since an effective overview of such risk is a

critical element of the Group’s asset/liability risk management. The Board of Directors defines its risk tolerance

levels and expectations for foreign exchange risk management and ensures that the risk is maintained at prudent

levels. Both the Central Bank of Nigeria and Bank of Ghana continue to apply the foreign exchange restriction

policies adopted following the weakening of the Naira and Cedi in 2017. Prominent of these policies is the newly

introduced foreign exchange policy which is expected to shore up Naira, infuse dollar liquidity into the system,

IEFX window introduced on April 22 and also ensure easy accessibility of FX by Nigerians as against the past

policy that restrict Nigerians from obtaining foreign exchange at the interbank segment, and the restrictions

placed on foreign currency denominated cash deposits. With the new CBN policy that has returned this into the

confines of the inter-bank market and that of the banks, we expect that this will take the demand off the parallel

market and strengthen the Naira in 2018 as time goes on.

Foreign exchange risk is quantified using the net balance of assets and liabilities in each currency, and their total

sum.

76




The table below summaries the Group’s financial instruments at carrying amount, categorised by currency:

Total Naira Us Dollar Euro Pound Gh Cedi Others

Notes

Group


Assets

Cash and cash equivalents 8 1,745,342 365,611 1,033,943 3,762 10,656 331,370 -

Equity securities - Available-for-sale 9 4,032,813 2,230,022 1,724,384 - - 78,407 -

Debt securities - Held to maturity 9 5,461,742 2,563,113 1,940,904 - - 957,725 -

Non pledged trading assets 9 1,380 1,380 - - - - -

Trade receivables 10 707,489 707,489 - - - - -

Reinsurance assets (excluding prepaid reinsurance) 11 1,087,216 612,437 - - - 474,779 -

Other receivables (excluding prepayments) 13 924,102 284,468 504,691 - - 134,943 -

Statutory deposit 19 632,964 500,000 - - - 132,964 -

Total financial assets 14,593,047 7,264,520 5,203,922 3,762 10,656 2,110,188 -

Liabilities

Investment contract liabilities 21 1,063,860 1,063,860 - - - - -

Trade payables 22 516,371 432,248 - - - 84,123 -

Other payables (excluding non-financial liabilities) 23 1,354,731 1,049,233 - - - 305,498 -

Total financial liabilities 2,934,962 2,545,341 - - - 389,621 -

Net financial assets/liabilities 11,658,085 4,719,179 5,203,922 3,762 10,656 1,720,567 -

Insurance contract liabilities 20 7,141,465 7,141,465 - - - - -

Net policyholders' assets/(liabilities) 4,516,620 (2,422,286) 5,203,922 3,762 10,656 1,720,567 -

31 December 2017

77




Total Naira Us Dollar Euro Pound Gh Cedi Others

Notes

Group


Assets

Cash and cash equivalents 8 2,220,395 352,951 753,453 9,341 729 1,103,921 -

Equity securities - Available-for-sale 9 2,225,816 1,712,073 430,793 - - 82,950 -

Debt securities - Held to maturity 9 5,175,568 4,066,155 849,811 - - 259,602 -

Non pledged trading assets 9 105 105 - - - - -

Trade receivables 10 553,575 553,575 - - - - -

Reinsurance assets (excluding prepaid reinsurance) 11 924,313 515,039 - - - 409,274 -

Other receivables (excluding prepayments) 13 1,027,649 94,544 849,974 - - 83,131 -

Statutory deposit 19 617,632 500,000 - - - 117,632 -

Total financial assets 12,745,052 7,794,442 2,884,031 9,341 729 2,056,510 -

Liabilities

Investment contract liabilities 21 920,154 920,154 - - - - -

Trade payables 22 235,800 176,423 - - - 59,377 -

Other payables (excluding non-financial liabilities) 23 1,205,200 1,002,295 - - - 202,905 -

Total financial liabilities 2,361,154 2,098,872 - - - 262,282 -

Net financial assets/liabilities 10,383,898 5,695,570 2,884,031 9,341 729 1,794,228 -

Insurance contract liabilities 20 6,373,682 5,348,153 - - - 1,025,529 -

Net policyholders' assets/(liabilities) 4,010,216 347,417 2,884,031 9,341 729 768,699 -

31 December 2016

78




The table below summaries the Company’s financial instruments at carrying amount, categorised by currency:

Total Naira Us Dollar Euro Pound Others

Company Notes


Assets

Cash and cash equivalents 8 911,023 710,858 202,235 (2,215) 145 -

Equity securities - Available-for-sale 9 3,351,670 1,921,142 1,430,528 - - -

Debt securities - Held to maturity 9 1,004,463 21,284 983,179 - - -

Non pledged trading assets 9 796 796 - - - -

Trade receivables 10 486,997 486,997 - - - -

Reinsurance assets (excluding prepaid reinsurance) 11 403,620 403,620 - - - -

Other receivables (excluding prepayments) 13 834,520 329,829 504,691 - - -

Statutory deposit 19 300,000 300,000 - - - -

Total financial assets 7,293,088 4,174,525 3,120,633 (2,215) 145 -

Liabilities

Trade payables 22 415,414 415,414 - - - -

Other payables (excluding non-financial liabilities) 23 1,324,350 1,324,350 - - - -

Total financial liabilities 1,739,764 1,739,764 - - - -

Net financial assets/liabilities 5,553,324 2,434,761 3,120,633 (2,215) 145 -

Insurance contract liabilities 20 3,817,332 3,817,332 - - - -

Net policyholders' assets/(liabilities) 1,735,992 (1,382,571) 3,120,633 (2,215) 145 -

31 December 2017

79




Total Naira Us Dollar Euro Pound Others

Company Notes


Assets

Cash and cash equivalents 8 311,223 358,111 (56,958) 9,341 729 -

Equity securities - Available-for-sale 9 1,482,125 1,271,498 210,627 - - -

Debt securities - Held to maturity 9 1,947,206 1,097,395 849,811 - - -

Non pledged trading assets 9 7 7 - - - -

Trade receivables 10 553,574 553,574 - - - -

Reinsurance assets (excluding prepaid reinsurance) 11 494,779 494,779 - - - -

Other receivables (excluding prepayments) 13 1,069,803 219,829 849,974 - - -

Statutory deposit 19 300,000 300,000 - - - -

Total financial assets 6,158,717 4,295,193 1,853,454 9,341 729 -

Liabilities

Trade payables 22 157,870 157,870 - - - -

Other payables (excluding non-financial liabilities) 23 1,052,514 1,052,514 - - - -

Total financial liabilities 1,210,384 1,210,384 - - - -

Net financial assets/liabilities 4,948,333 3,084,809 1,853,454 9,341 729 -

Insurance contract liabilities 20 3,763,964 3,763,964 - - - -

Net policyholders' assets/(liabilities) 1,184,369 (679,155) 1,853,454 9,341 729 -

31 December 2016

80




Equity price risk

Allocation Target

Quoted

Equities

Unquoted

Equities

Quoted

Equities

Unquoted

Equities

Insurance and investment contract fund 19% 2% 39% 5%

Shareholders fund 0% 0% 0% 0%

Allocation Target

Quoted

Equities

Unquoted

Equities

Quoted

Equities

Unquoted

Equities

Insurance fund 12% 1% 22% 3%

Shareholders fund 0% 0% 0% 0%

Below is the Group and Company equity price sensitivity:

2017 2016 2017 2016


Increase/

Decrease by

200Bp

Increase/

Decrease by

200Bp

Increase/

Decrease by

200Bp

Increase/

Decrease by

200Bp

Listed Equities (HFT) 55 4 32 0

Listed Equities (AFS) 61,939 36,349 58,803 33,031

Unlisted Equities (AFS) 7,200 3,901 7,200 3,901

Impact on profit before tax 55 4 32 0

Tax charge of 30% (17) (1) (10) (0)

Impact on profit after tax 39 3 22 0

Impact on equity 69,178 40,253 66,025 36,933

The Group is exposed to equity price risks arising from equity investments. This exposure is managed through the adherence to investment in good

fundamentals equities approved by the Board and in line with NAICOM investment guidelines.

Company

Group Company

Asset allocation to investment in equity is shown below

31-Dec-2017 31-Dec-2017

31-Dec-2016 31-Dec-2016

Group Company

Group

The equity price changes are monitored by the investment committee and the holdings are adjusted when there deviations from the investment policy.

The Group manages its exposure to equity price risk using sensitivity analysis to assess potential changes in the value of investment in equities and the

impact of such changes on the Group's investment income. There have been no major changes from prior period in the exposure to risk or policies,

procedures and methods used to monitor and measure the Group equity price risk.

81




Liquidity Risk Management

Quantifications

a) Funding and Liquidity plan;

b) Gap Analysis; and

c) Ratio Analysis.

The Group adopts both qualitative and quantitative approaches to measuring liquidity risk. Specifically, the

Company uses the following techniques;

Liquidity risk is the risk that the Group may be unable to meet its obligations associated with financial liabilities

that are settled by delivering cash or another financial assets. This usually occurs due to the inability to convert a

security or hard asset to cash without a loss of capital and / or income in the process. The Group mitigates this

risk by monitoring cash activities and expected outflows. The Group’s current liabilities arise as claims are made

and clients request for termination of their investment-linked products. The Group has zero tolerance for liquidity

risk and is committed to meeting all liabilities as they fall due.

Below is a summary of the contractual re-pricing or maturity dates (whichever is earlier) of financial assets

matched with financial liabilities.

The Board approves the Group’s liquidity policy and contingency funding plan, including establishing liquidity

risk tolerance levels. The Board and its committees, monitors the liquidity position and reviews the impact of

strategic decisions on the Group's liquidity. Liquidity positions are measured by calculating the Group’s net

liquidity gap.

The Funding and Liquidity plan defines the Group’s sources and channels of utilization of funds. The funding

liquidity risk limit is quantified by calculating liquidity ratios and measuring/monitoring the cumulative gap

between our assets and liabilities. The Liquidity Gap Analysis quantifies the monthly and cumulative gap in a

business environment. The gap for any given tenor bucket represents the liabilities to, or placements made, the

market required to replace maturing liabilities or assets. The Group monitors the cumulative gap as a ±20% of the

total risk assets and the gap as a ±20% of total liabilities.

82




Carrying

amount Gross nominal 1 - 3 months 3 -6 months 6 - 12 months 1 - 5 years

inflow/

(outflow)

Group

31 December 2017


Assets

Cash and cash equivalents 1,745,342 1,745,342 1,745,342 - - -

Securities - Available for sale 4,032,813 4,032,813 4,032,813 - - -

Investment at fair value through profit or loss 1,380 1,380 1,380 - - -

Held to maturity 5,461,742 5,461,742 1,910,071 1,273,381 - 2,278,290

Trade receivables 707,489 707,489 707,489 - - -

Reinsurance assets (excluding prepaid reinsurance) 1,087,216 1,087,216 - - 1,087,216 -

Other receivables (excluding prepayment) 924,102 924,102 419,411 - - 504,691

Statutory deposit 632,964 632,964 - - - 632,964

Total financial assets 14,593,047 14,593,047 8,816,505 1,273,381 1,087,216 3,415,945

Liabilities

Investment contracts 1,063,860 1,063,860 1,063,860 - - -

Trade payables 516,371 516,371 516,371 - - -

Other payables (excluding non-financial liabilities) 1,354,731 1,354,731 1,354,731 - - -

Total financial liabilities 2,934,962 2,934,962 2,934,962 - - -

Gap - Net financial assets/liabilities 11,658,085 11,658,085 5,881,543 1,273,381 1,087,216 3,415,945

Insurance liabilities 7,141,465 7,141,465 7,141,465 - - -

Gap - Net policyholders' assets/(liabilities) 4,516,620 4,516,620 (1,259,922) 1,273,381 1,087,216 3,415,945

Cumulative liquidity gap 4,516,620 4,516,620 (1,259,922) 13,459 1,100,675 4,516,620

The following table shows the undiscounted cash flows on the Group’s financial assets and liabilities and insurance liabilities, as well as on the basis of their

earliest possible contractual maturity. The Gross nominal inflow / (outflow) disclosed in the table is the contractual, undiscounted cash flow on the financial asset

and liability and insurance liability.

Residual contractual maturities of financial assets and liabilities

83




Carrying

amount Gross nominal 1 - 3 months 3 -6 months 6 - 12 months 1 - 5 years

inflow/

(outflow)

Group

31 December 2016


Assets

Cash and cash equivalents 2,220,395 2,220,395 2,220,395 - - -


Investment at fair value through profit or loss 105 105 105 - - -

Held to maturity 5,175,568 5,175,568 2,388,505 1,592,336 - 1,194,727


Reinsurance assets (excluding prepaid reinsurance) 924,313 924,313 - - 924,313 -

Other receivables (excluding prepayment) 1,027,649 1,027,649 177,675 - - 849,974


Total financial assets 12,745,053 12,745,053 7,566,071 1,592,336 924,313 2,662,333

Liabilities

Financial liabilities:

Investment contracts 920,154 920,154 920,154 - - -

Trade payables 235,800 235,800 235,800 - - -



Gap - Net financial assets/liabilities 10,383,899 10,383,899 5,204,917 1,592,336 924,313 2,662,333


Gap - Net policyholders' assets/(liabilities) 4,010,217 4,010,217 (1,168,765) 1,592,336 924,313 2,662,333

Cumulative liquidity gap 4,010,217 4,010,217 (1,168,765) 423,571 1,347,884 4,010,217


84




.

Carrying

amount

Gross

nominal 1 - 3 months

3 -6

months

6 - 12

months 1 - 5 years

inflow/

(outflow)

Company

31 December 2017


Assets

Cash and cash equivalents 911,023 911,023 911,023 - - -



Held to maturity 1,004,463 1,004,463 12,770 8,514 - 983,179



Other receivables (excluding prepayment) 834,520 834,520 329,829 - - 504,691


Total financial assets 7,293,088 7,293,088 5,093,084 8,514 403,620 1,787,870

Liabilities

Trade payables 415,414 415,414 415,414 - - -



Gap - Net financial assets/liabilities 5,553,324 5,553,324 3,353,320 8,514 403,620 1,787,870


Gap - Net policyholders' assets/(liabilities) 1,735,992 1,735,992 (464,012) 8,514 403,620 1,787,870

Cumulative liquidity gap 1,735,992 1,735,992 (464,012) (455,498) (51,878) 1,735,992

The following table shows the undiscounted cash flows on the Company’s financial assets and liabilities, as well as on the basis of their earliest possible

contractual maturity. The Gross nominal inflow / (outflow) disclosed in the table is the contractual, undiscounted cash flow on the financial asset or liability.


85




Carrying

amount

Gross

nominal 1 - 3 months

3 -6

months

6 - 12

months 1 - 5 years

inflow/

(outflow)

Company

31 December 2016


Assets

Cash and cash equivalents 311,223 311,223 311,223 - - -

Equity securities - Available for sale 1,482,125 1,482,125 1,482,125 - - -


Held to maturity 1,947,206 1,947,206 658,437 438,958 - 849,811



Other receivables (excluding prepayment) 1,069,803 1,069,803 219,829 - - 849,974


Total financial assets 6,158,717 6,158,717 3,225,195 438,958 494,779 1,999,785

Liabilities

Trade payables 157,870 157,870 157,870 - - -



Gap - Net financial assets/liabilities 4,948,333 4,948,333 2,014,811 438,958 494,779 1,999,785


Gap - Net policyholders' assets/(liabilities) 1,184,369 1,184,369 (1,749,153) 438,958 494,779 1,999,785

Cumulative liquidity gap 1,184,369 1,184,369 (1,749,153) (1,310,195) (815,416) 1,184,369


86




Group

Current Non-current

Carrying

amount Current Non-current

Carrying

amount


ASSETS

Cash and cash equivalents 1,745,342 - 1,745,342 2,220,395 - 2,220,395

Financial assets 7,217,645 2,278,290 9,495,935 6,206,762 1,194,727 7,401,489

Trade receivables 707,489 - 707,489 553,575 - 553,575

Reinsurance assets 1,586,301 - 1,586,301 1,572,830 - 1,572,830

Deferred acquisition cost 530,793 - 530,793 447,934 - 447,934

Other receivables and prepayments 556,840 504,691 1,061,531 295,045 849,974 1,145,019

Investment property - 312,750 312,750 - 539,930 539,930

Investment in associates - 8,264,440 8,264,440 - 7,173,843 7,173,843

Investment in subsidiaries - - - - - -

Intangible assets - 479,685 479,685 - 203,896 203,896

Property and equipment - 3,787,381 3,787,381 - 4,025,510 4,025,510

Deferred tax asset - - - - - -

Statutory deposit - 632,964 632,964 - 617,632 617,632

TOTAL ASSETS 12,344,410 16,260,201 28,604,611 11,296,541 14,605,512 25,902,053

LIABILITIES

Insurance contract liabilities 7,005,744 135,721 7,141,465 6,217,474 156,208 6,373,682

Investment contract liabilities 1,063,860 - 1,063,860 920,154 - 920,154

Trade payables 516,371 - 516,371 235,800 - 235,800

Other payables 1,458,750 - 1,458,750 1,320,043 - 1,320,043

Current income tax 263,793 - 263,793 208,382 - 208,382

Deferred income tax liabilities - 202,547 202,547 - 277,657 277,657

TOTAL LIABILITIES 10,308,518 338,268 10,646,786 8,901,853 433,865 9,335,718

GAP 2,035,892 15,921,933 17,957,825 2,394,688 14,171,647 16,566,335

The following table shows amount expected to be recovered or settled after more than twelve months (non-current) for each asset and liability line item and the amounts

expected to be recovered or settled no more than twelve months after the reporting period (current).

31 December 201631 December 2017

87




Company

Current Non-current

Carrying

amount Current Non-current

Carrying

amount


ASSETS

Cash and cash equivalents 911,023 - 911,023 311,223 - 311,223

Financial assets 3,373,750 983,179 4,356,929 2,579,527 849,811 3,429,338

Trade receivables 486,997 - 486,997 553,574 - 553,574

Reinsurance assets 838,139 - 838,139 1,094,415 - 1,094,415

Deferred acquisition cost 317,832 - 317,832 281,344 - 281,344

Other receivables and prepayments 366,547 504,691 871,238 287,073 849,974 1,137,047

Investment property - 312,750 312,750 - 539,930 539,930

Investment in associates - 5,059,810 5,059,810 - 5,059,810 5,059,810

Investment in subsidiaries - 3,876,571 3,876,571 - 3,876,571 3,876,571

Intangible assets - 476,144 476,144 - 199,171 199,171

Property and equipment - 3,521,507 3,521,507 - 3,811,639 3,811,639

Deferred tax asset - - - - - -

Statutory deposit - 300,000 300,000 - 300,000 300,000

TOTAL ASSETS 6,294,288 15,034,652 21,328,940 5,107,156 15,486,906 20,594,062

LIABILITIES

Insurance contract liabilities 3,817,332 - 3,817,332 3,763,964 - 3,763,964

Trade payables 415,414 - 415,414 157,870 - 157,870

Other payables 1,417,790 - 1,417,790 1,157,450 - 1,157,450

Current income tax 115,315 - 115,315 88,114 - 88,114

Deferred income tax liabilities - 202,548 202,548 - 393,175 393,175

TOTAL LIABILITIES 5,765,851 202,548 5,968,399 5,167,398 393,175 5,560,573

GAP 528,437 14,832,104 15,360,541 (60,242) 15,093,731 15,033,489

31 December 2016

The following table shows amount expected to be recovered or settled after more than twelve months (non-current) for each asset and liability line item and the

amounts expected to be recovered or settled no more than twelve months after the reporting period (current).

31 December 2017

88




Fair Value Hierarchy

- African Reinsurance Corporation

Relationship of unobservable inputs to fair value

Fair value at 31

December 2017 Valuation Technique Unobservable Inputs

FV if P/B multiples is

increased to 1.01x


decreased to 0.91x

The higher the P/B ratio of similar trading entities, the higher the

fair value 46,827,320

Adjusted fair value

comparison approach

Average P/B multiples of

comparable entities 49,369,271 44,481,223

- Nigerian Liability Insurance Pool


Fair value at 31



increased to 0.95x


decreased to 0.89x



Adjusted fair value

comparison approach



- Nigerian Liability Insurance Pool


Fair value at 31



increased to 1.01x


decreased to 0.91x



Adjusted fair value

comparison approach



Level 1 Level 2 Level 3 Total balance

Group Notes


Assets

Equity securities - Available for sale 9 1,548,487 73,203 106,787 1,728,477

Fixed income securities - Available for sale 9 2,304,336 - - 2,304,336

Equity securities - Held for trading 9 1,380 - - 1,380

Investment properties 14 - 312,750 - 312,750

Total financial and other assets measured at fair value 3,854,203 385,953 106,787 4,346,943

Level 2: The fair value of financial instruments that are not traded in an active market are determined by using valuation techniques based on observable inputs. This category includes

instruments valued using quoted market prices in active markets for similar instruments; quoted prices for similar instruments in markets that are considered less than active; or other valuation

techniques where all significant inputs are directly or indirectly observable from market data.

Level 3: This includes financial instruments and other assets and liabilities, the valuation of which incorporates significant inputs that is not based on observable market data (unobservable

inputs). Unobservable inputs are those not readily available in an active market due to market illiquidity or complexity of the product. These inputs are generally determined based on inputs of

a similar nature, historic observations on the level of the input or analytical techniques.

The table below analyses financial instruments and other assets and liabilities measured at fair value at the end of the year, by the level in the fair value hierarchy into which the fair value

measurement is categorised:

31 December 2017

Determination of fair value of financial instruments:

The determination of fair value for financial and other assets as well as financial and other liabilities for which there is no observable market price requires the use of certain valuation

techniques.

For financial instruments and other assets and liabilities that trades infrequently and have little price transparency, fair value is less objective, and requires varying degrees of judgment

depending on liquidity, concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument.

The Group measures fair value using the following fair value hierarchy that reflects the significance of the inputs used in making the measurement.

The Group's accounting policy and basis of fair value measurements are disclosed under notes 3.2 (d) and 4.

Level 1: The fair value of financial instruments traded in active markets is based on quoted market price in an active market for an identical instrument at the balance sheet date.

(i) Valuation techniques used to derive Level 3 fair values

Level 2 and level 3 fair values of investments have been generally derived using the adjusted fair value comparison approach. Quoted price per earning or price per book value, enterprise value

to EBITDA ratios of comparable entities in a similar industry were obtained and adjusted for key factors to reflect estimated ratios of the investment being valued. Adjusting factors used are the

Illiquidity Discount which assumes a reduced earning on a private entity in comparison to a publicly quoted entity and the Haircut adjustment which assumes a reduced earning for an entity

located in Nigeria contributed by lower transaction levels in comparison to an entity in a developed or emerging market. Below is a table showing sensitivity analysis of material unquoted

investments categorised as Level 2 fair values.

(ii) Determination of fair value of investment property

Management employed the services of estate surveyors and property valuation expert to value its investment properties. The estimated open market value is deemed to be the fair value based on

the assumptions that there will be willing buyers and sellers. Recent market prices of neighborhood properties were also considered in deriving the open market values. A variation of -/+5%

will result in N16 million in the Group and Company results (2016: N27 million).

89





Group Notes


Assets

Equity securities - Available for sale 9 908,728 61,000 36,535 1,006,263


Equity securities - Held for trading 9 105 - - 105




Company Notes


Assets

Equity securities - Available for sale 9 1,470,080 120,812 59,178 1,650,070






Company Notes


Assets

Equity securities - Available for sale 9 825,778 61,000 36,535 923,313

Fixed income securities - Available for sale 9 558,812 - - 558,812




Carrying amount Level 1 Level 2 Level 3 Total balance

Group


Assets

Cash and cash equivalents 1,745,342 - 1,745,342 - 1,745,342

Financial assets 5,461,742 5,529,284 - - 5,529,284

Trade receivables 707,489 - 707,489 - 707,489

Reinsurance assets (excluding prepaid reinsurance) 1,087,216 - - 1,087,216 1,087,216

Deferred acquisition cost 530,793 - - 530,793 530,793

Other receivables (excluding prepayment) 924,102 - - 924,102 924,102

Statutory Deposit 632,964 - 632,964 - 632,964

Total financial assets not measured at fair value 11,089,648 5,529,284 3,085,795 2,542,111 11,157,190

Liabilities

Investment contract liabilities 1,063,860 1,063,860 1,063,860

Trade payables 516,371 516,371 516,371

Other payables (excluding non-financial liabilities) 1,354,731 1,354,731 1,354,731

Total financial liabilities not measured at fair value 2,934,962 - - 2,934,962 2,934,962

31 December 2016

31 December 2016

31 December 2017

The following tables set out the fair values of financial instruments not measured at fair value and analyses them by the level in the fair value hierarchy into which each fair value measurement

is categorised:

31 December 2017

90





Company


Assets

Cash and cash equivalents 911,023 - 911,023 - 911,023



Reinsurance assets (excluding prepaid reinsurance) 403,620 - - 403,620 403,620


Other receivables (excluding prepayment) 834,520 - - 834,520 834,520



Liabilities

Trade payables 415,414 - - 415,414 415,414

Other payables (excluding non-financial liabilities) 1,324,350 - - 1,324,350 1,324,350



Group


Assets

Cash and cash equivalents 2,220,395 - 2,220,395 - 2,220,395





Other receivables (excluding prepayment) 1,027,649 - - 1,027,649 1,027,649



Liabilities

Investment contract liabilities 920,154 920,154 920,154

Trade payables 235,800 235,800 235,800

Other payables (excluding non-financial liabilities) 1,205,200 1,205,200 1,205,200



Company


Assets

Cash and cash equivalents 311,223 - 311,223 - 311,223





Other receivables (excluding prepayment) 1,069,803 - - 1,069,803 1,069,803



Liabilities

Trade payables 157,870 - - 157,870 157,870

Other payables (excluding non-financial liabilities) 1,052,514 - - 1,052,514 1,052,514


31 December 2016

31 December 2017

31 December 2016

91

Risk management disclosures Wapic Insurance Plc.



Underwriting, Claims & Reinsurance risk

Underwriting Risk Management and Control:

Insurance risk

• Ensure compliance with the regulatory requirements as it relates to underwriting.

• Coordinate issues tracking activities and ensure action plans are developed for all identified gaps.

• Collaborate with the underwriting risk committee to develop appetite and tolerance limits.

• Identify and manage the Company’s underwriting risk.

• Review and approve reinsurance and retrocession arrangements as mandated by NAICOM.

Insurance risk is the inherent uncertainty regarding the pricing, adverse selection, product design, net retention, reserving, occurrence,

amount or timing of insurance liabilities. It also covers the future risk claims and expenses exceeding the value placed on insurance

liabilities. The timing is specifically influenced by persistency and expenses about which assumptions are made in order to place a value on

the liabilities.

Brokers’ underwriting risk – This is the risk that brokers may:

Underwriting risk appetite

The following factors constitute the basis for the Company's underwriting risk appetite:

• Wapic does not underwrite risk not fully understood

• We will not underwrite unquantifiable risks.

• Extreme caution is taken when underwriting risk with low safety standards or businesses with excessively high risk profile;

• We exercise caution when underwriting discrete (one-off) risks, particularly where there is no requisite experience or know-how;

• The limits, standard and exposure are guided by prudent underwriting procedure and reinsurance treaties.

• The Company adhere fully with all extant laws and regulations, including NAICOM’s guideline on know your customer (KYC).

ii. Fail to remit premium collected to the Insurer.

For effective management of the underwriting exposures, Risk management and control function is responsible for the following:

• Investigate unusual claims, large sums assured and high variability in quotations submitted to the clients and make sure that unnecessary

risks are not taken.

• Ensure that underwriting standards are never compromised due to pressure from various stakeholders.

• Analysis of insurance exposures, continuous analysis of claims, product profitability analysis and other relevant risk issues.

The Company assesses and monitors insurance risks through thorough data analysis and stress-testing etc. It mainly evaluates the impacts of

actuarial assumptions, such as the discount rate, investment yield and expense ratio, on our reserve, solvency and profit. We manage and

monitor consistently within acceptable limits those exposures assumed in the course of providing insurance cover to insured risks.

Mispricing risk – Risk that insurance premium will be too low to cover the Company’s expenses related to underwriting, claim handling

and administration.

i. Be inadequately trained to assess the risk and offer professional advice to the client.

Underwriting involves appraising risk exposure and determining the premium required to be charged to insure the risk. The Insurer decides

how much coverage the client should receive, how much they should pay for it, or whether to even accept the risk and insure them. The

information used to evaluate the risk of an applicant for insurance will be obtained from the proposal form filled by the proposer.

Underwriting is the process in which an insurer appraises a risk being presented by the proposer and deciding whether or not to accept the

risk and the consideration (premium) to receive. Weaknesses in the systems and controls surrounding the underwriting process can expose

an insurer to the risk of unexpected losses which may threaten the capital adequacy of the insurer. The Company's underwriting process is

subject to internal audit.

In addition, there is a process for assessing brokers’ procedures and systems to ensure that the quality of information provided to the

Company meet suitable standard; and in the case of reinsurers, audits of ceding companies to ensure that reinsurance assumed is in

accordance with treaties.

The factors that the Company uses to classify risks is highly objective, clearly related to the likely cost of providing coverage, practical to

administer, consistent with applicable law, and designed to protect the long-term viability of the insurance program.

Underwriting process risk – This is the risk from exposure to financial losses related to the selection and acceptance of risks to be insured.

92




Managing pricing risk

(a) Individual life products – Term-assurance and savings plan

· Age;

· Gender;

· Smoker status;

· Medical conditions;

· Financial condition; and

· Hazardous pursuits.

(b) Deposit administration

(c) Group life products

· Region;

· Salary structure;

· Gender structure; and

· Industry.

(d) Short-term insurance (general insurance) products

Mortality and morbidity risks

(a) Individual life products – Term assurance and Savings Plan

Where the value of the item(s) to be insured exceeds a pre-specified limit, the underwriting consideration becomes more stringent. This is

particularly the case for marine and aviation cover. In this case the Company makes use of specialist to assess the risks and set an

appropriate premium for cover.

Underwriting on short-term insurance products takes the form of the insurance applicant completing a proposal form. The company uses

identified risk factors to classify the risk and charge the appropriate premium.

The price for an individual life product is adjusted for the following risk factors:

The Group employs the following additional controls and measures to ensure that only acceptable risks are accepted and risks are

appropriately priced:

· Underwriting controls, with risk classification based on the above risk factors;

· Regular review of premium rates; and

· Appropriate policy conditions, including any exclusion on the cover of the subject matter of insurance.

· Premium rates are guaranteed for the period up to the renewal of a policy, typically, after 1 year.

Premium rating on deposit administration policies distinguishes between the ages and gender of prospective policyholders. Annual

premiums, payable up front, are re-priced at renewal of the deposit administration policies.

Underwriting of Group business is much less stringent than for individual business, as there is typically less scope for anti-selection. The

main reason for this is that participation in the Group schemes is normally compulsory and members have limited choice in the level of the

benefits.

Group's policies are priced using standard mortality tables. The price for an individual scheme is adjusted for the following risk factors:

The risk that actual experience in respect of the rates of mortality and morbidity may vary from what is assumed in pricing and valuation,

depending on the terms of different products. The material classes of business most affected by these risks are discussed below.

Products are sold directly to individuals providing a benefit on death. The main insurance risk relates to the possibility that rates of death

may be higher than expected.

For large schemes, a scheme’s past experience is a crucial input in setting rates for the scheme. Rates are guaranteed for one year and

reviewable at the renewal of the policy.

Pricing risk is effectively managed in the company through efficient insurance premium rating controls embedded in its process.

Pricing risk is effectively managed in the company through efficient insurance premium rating controls embedded in its process. This

amongst others include but not limited to:

93




(b) Group life products

(c) Deposit administration

Outstanding claims

Claims management risk

• Ensure that only acceptable risks are accepted.

• Claims assessment processes to ensure only valid claims are paid;

• Purchased reinsurance to limit liability on particularly large claims or substandard risks; and

• Concentration risk is reduced by diversification of business over a large number of independent lives, as well as by taking out catastrophe

reinsurance.

• A functional system is in place to ensure that claim files without activity are reviewed on a regular basis;

Deposit administration contracts provide a guaranteed life annuity conversion at the maturity of the contract. The mortality risk in this case

is that the policyholders may live longer than assumed in the pricing of the contract. This is known as the risk of longevity.

The Group manages this risk by allowing for improvements in mortality when pricing and valuing the contracts. The Group also performs

more detailed actuarial experience investigations and adjust assumptions in pricing for new contracts and valuation of existing contracts

when necessary.

This represents the estimated ultimate cost of settling all claims arising from incidents occurring as at the date of the statement of financial

position.

This is the risk that the insurer may be unable to manage the settlement process by which insurers fulfil their contractual obligation to

policyholders. The Company has in place a claims management policy and procedure for ensuring that claims are handled fairly and

promptly. In establishing and maintaining effective claims handling systems and procedures, the Company considers the following factors:

• Appropriate systems and controls to ensure that all liabilities or potential liabilities notified to the insurer are recorded promptly and

accurately. Accordingly, the systems and controls in place ensure that proper records are established for each notified claim;

• Suitable controls are maintained to ensure that estimates for reported claims and additional estimates are appropriately made on a

consistent basis and are properly categorized;

• Regular reviews of the actual outcome of the estimates made is carried out to check for inconsistencies and to ensure that procedures

remain appropriate. The reviews include the use of statistical techniques to compare the estimates with the eventual cost of settling the

claims, after deducting the amounts already paid at the time the estimates were made;

• Appropriate systems and procedures are in place to assess the validity of notified claims by reference to the underlying contracts of

insurance and reinsurance treaties;

• Suitable systems are adopted to accommodate the use of suitable experts such as loss adjusters, lawyers, actuaries, accountants etc. as and

when appropriate, and to monitor their use; and

• Appropriate procedures are in place to identify and handle large or unusual claims, including system to ensure that senior management are

involved from the outset in the processing of claims that are significant because of their size or nature.

In addition, there is a catastrophe reinsurance treaty in place for both group business and individual business. Such a treaty is particularly

important for the group life business as there are considerably more concentrations of risks compared to individual business.

Employee benefit products provide life cover to members of a group, such as employees of companies or members of trade unions.

An aggregate stop-loss reinsurance agreement is in place to ensure that the Group's exposure to the aggregate mortality risk in its group life

business is managed and limited to a specified limit.

For contracts with fixed and guaranteed benefits (such as the minimum death benefits available on savings plan policies) and fixed future

premiums, the Group employs additional underwriting controls and measures to manage its exposure to mortality risk. This includes but not

limited to:

94




Claims experience risk

Reinsurance risk

Technical Reserving methods

IBNR

Group Company

Gross IBNR Gross IBNR Gross IBNR Gross IBNR

In thousands of Naira 31-Dec-17 31-Dec-16 31-Dec-17 31-Dec-16

Class of business

Aviation 47,632 24,140 47,632 24,140

Bonds 340 18 340 18

Engineering 57,315 48,322 38,747 33,537

Fire 134,532 122,408 23,585 58,576

General Accident 334,594 318,328 298,236 291,685

Marine 42,980 56,691 36,457 52,763

Motor 370,020 247,578 137,581 85,268

Oil and Energy 394,862 384,506 394,862 384,506

Group Life 824,342 642,476 - -

Total 2,206,617 1,844,467 977,440 930,493

• Clearly defined managerial responsibilities and controls;

• Reinsurers were profiled and categorized into tiers in determining the company’s exposure limit to reinsurers.

• Senior management that review the Company’s reinsurance management systems on a regular basis.

• Presence of a well-resourced reinsurance department that prepares clear methodologies for determining all aspects of a reinsurance

programme.

The provision for outstanding claims, including IBNR, was determined for each line of business on both gross and net of reinsurance basis.

A yearly cohort from year 2007 has been adopted in building the historical claims. The UPR was calculated using a time – apportionment

basis, in particular, the 365ths method. The UPR is calculated on the assumption that risk will occur evenly during the duration of the

policy.

Description of insurance reserves by segment:

• Systems for the selection of reinsurance brokers and other reinsurance advisers;

• Systems for selecting and monitoring reinsurance programmes;

In terms of the short-term insurance contracts held by the Company, the claims experience risk for these policies is that the number of

claims and/or the monetary claim amounts are worse than that assumed in the pricing basis. The Company manages this risk by charging

premiums which are appropriate to the risks under the insurance contracts.

Under the short-term insurance products, the Company also holds a concentration risk, which is the risk of a large number of claims from a

single event or in a particular geographical area. The Company reduced this risk by diversification over a large number of uncorrelated

risks, as well as arranged catastrophe reinsurance cover.

This is the risk of inadequate reinsurance cover which may be triggered by a situation such as the insolvency of a reinsurer, omission to

cede risk to the treaty, wrong cession to the treaty, assumption of risks without reinsurance cover, acceptance of risks above automatic

capacity and there is already market saturation and non-payment of reinsurance premium as at when due. The Company ensures that it

manages reinsurance risk by maintaining adequate reinsurance arrangements and treaties in respect of the classes or category of insurance

business authorized to transact. The Company particularly put in place a documented policy stating:

95




UPR and Life fund

Group Company

Gross UPR Gross UPR Gross UPR Gross UPR

In thousands of Naira 31-Dec-17 31-Dec-16 31-Dec-17 31-Dec-16

Class of business

Aviation 36,324 55,065 36,324 55,065

Bonds 430 177 430 177

Engineering 659,113 756,609 659,113 756,609

Fire 144,571 197,102 136,321 185,957


Marine 156,563 140,985 155,759 140,617

Motor 603,470 615,812 329,031 321,073

Oil and Energy 125,630 145,024 123,339 137,988

Group Life 771,308 432,580 - -

Life Fund 135,721 156,208 - -

Total 3,090,334 2,904,669 1,890,526 1,996,868

Sensitivity analysis

Best Gross IBNR Best Net IBNR

In thousands of Naira Estimate 75th

percentile

Estimate 75th

percentile

Class of business

Aviation 47,632 60,104 46,655 58,871

Bonds 340 429 96 121

Engineering 38,747 48,893 19,019 23,999

Fire 23,585 29,761 5,912 7,460


Marine 36,457 46,003 15,681 19,787

Motor 137,581 173,608 118,104 149,030

Oil and Energy 394,862 498,258 345,208 435,602

Total 977,440 1,233,386 774,839 977,733

Key Developments in the Group 2017

• Optimized the reinsurance arrangement to focus more on enhancing the existing placements and better arrangement of new placement to

make adequate profit in line with the Company’s strategy and risk tolerance level.

• The facilitation of information flow was upgraded through Microsoft Dynamics Nav, which enabled the Company to manage its finance,

sales, project management and services.

• Maximized cost savings and improved the claims investigation process following the appointment an internal loss adjuster

• In order to ensure compliance with best practice and an effective process system, all our core processes were aligned to meet the

requirements of Solvency II.

• The critical technical processes such as underwriting, claims processing, reinsurance posting and reserves creation was significantly

improved following the launch of a new effective core insurance application. The new application serves as a one-stop shop for all our Life

& General core processes.

• The competence skills of our Technical Team was enhanced following the comprehensive training on the new application conducted for

the Team. Furthermore, an overseas training on the application was also attended by some Team members.

Key improvements made in 2017 include the following:

Sensitivity analyses are performed to test the variability around the reserves that are calculated at a best estimate level. The estimated claim

amounts can never be an exact forecast of future claim amounts and therefore looking at how these claim amounts vary provides valuable

information for business planning and risk appetite considerations.

A sensitivity analysis was done to determine how the IBNR reserve amount would change if we were to consider the 75th percentile as

opposed to our best estimate figures included in reserve reviews as at 31 December 2017. The 75th percentile is a generally accepted level

of prudency. The results based on fitting a Normal distribution to the best estimate IBNR reserves as at 31 December 2017 are as follows:

96




Claims Paid Triangulations as at December 2017

Engineering

Accident

Year 0 1 2 3 4 5 6 7 8 9

2008 1,183,499 9,781,557 20,000,023 20,000,023 20,000,023 20,000,023 20,000,023 20,000,023 20,000,023 20,000,023

2009 2,360,909 43,629,952 43,836,452 43,836,452 43,836,452 43,904,984 43,904,984 43,904,984 43,904,984

2010 7,608,992 37,059,857 63,710,125 64,698,811 64,698,811 64,698,811 64,698,811 64,698,811

2011 16,696,398 24,873,634 40,152,598 40,154,377 40,154,377 40,154,377 40,154,377

2012 46,746,703 52,164,231 52,674,992 52,674,992 52,674,992 52,674,992

2013 19,127,818 20,836,534 25,786,648 25,786,648 25,786,648

2014 9,028,198 9,764,664 11,276,393 11,276,393

2015 2,142,843 5,511,960 5,565,341

2016 11,520,379 19,016,049

2017 10,311,579

Fire

Accident

Year 0 1 2 3 4 5 6 7 8 9

2008 64,227,677 127,911,623 139,232,653 139,232,653 139,232,653 139,232,653 139,232,653 139,232,653 139,232,653 139,232,653

2009 40,937,273 114,548,121 119,212,960 119,212,960 119,221,760 119,221,760 119,221,760 119,221,760 119,221,760

2010 14,058,843 25,577,128 27,677,117 28,222,647 28,222,647 28,222,647 28,222,647 28,222,647

2011 8,850,612 39,764,583 40,169,587 41,941,919 42,117,672 42,117,672 42,117,672

2012 6,956,337 46,860,967 47,200,550 47,200,550 47,200,550 47,200,550

2013 5,541,845 54,436,925 55,374,297 55,562,486 55,562,486

2014 3,417,765 11,581,843 14,140,656 14,140,656

2015 24,041,289 54,129,152 54,398,806

2016 57,529,892 86,090,669

2017 68,692,122

General Accident

Accident

Year 0 1 2 3 4 5 6 7 8 9

2008 95,246,249 231,689,063 287,336,184 294,342,361 299,209,041 300,485,824 300,519,001 300,943,829 300,943,829 300,943,829

2009 48,806,069 212,396,320 245,761,687 268,392,329 273,225,211 274,384,268 275,620,104 275,846,569 275,846,569

2010 72,051,700 243,040,104 267,087,136 289,460,687 295,997,513 296,140,581 296,851,193 297,189,903

2011 58,395,892 208,905,420 265,524,431 274,452,742 275,299,783 280,333,199 282,450,341

2012 37,324,821 193,808,821 220,670,585 229,483,213 237,666,709 237,666,709

2013 82,796,310 149,999,875 174,350,335 178,716,416 178,716,416

2014 28,862,114 124,631,290 143,357,380 143,804,629

2015 108,959,894 268,393,237 273,897,748

2016 117,719,787 160,358,285

2017 119,275,845

Marine

Accident

Year 0 1 2 3 4 5 6 7 8 9

2008 10,041,349 42,853,371 103,708,212 103,953,649 103,953,649 103,953,649 103,953,649 103,953,649 103,953,649 103,953,649

2009 31,537,216 64,874,539 100,050,600 100,554,119 100,554,119 100,554,119 100,615,612 100,615,612 100,615,612

2010 28,954,132 45,973,224 46,031,767 47,302,856 47,302,856 47,302,856 47,302,856 47,302,856

2011 50,333,949 99,423,651 114,853,221 119,373,293 119,373,293 157,367,366 157,367,366

2012 14,363,632 44,204,968 44,204,968 44,204,968 44,378,736 44,378,736

2013 41,397,922 44,075,404 44,075,404 44,138,904 44,138,904

2014 9,019,667 13,527,085 13,706,887 13,706,887

2015 20,647,833 37,559,314 39,267,348

2016 47,309,022 63,592,694

2017 45,342,989

Motor

Accident

Year 0 1 2 3 4 5 6 7 8 9

2008 442,931,617 656,874,254 672,336,910 673,417,360 674,312,064 674,312,064 674,312,064 674,312,064 674,312,064 674,312,064

2009 421,152,839 587,874,584 595,920,840 595,920,840 596,608,840 596,608,840 596,608,840 596,608,840 596,608,840

2010 256,770,668 387,863,521 396,260,808 397,537,546 398,039,789 398,093,921 398,131,921 398,137,423

2011 227,594,911 295,665,676 299,592,255 300,496,940 300,904,358 300,904,358 300,904,358

2012 120,160,436 172,810,134 172,818,234 172,818,234 172,818,234 172,818,234

2013 113,637,984 144,895,313 148,603,342 148,603,342 148,603,342

2014 118,670,920 188,724,175 197,407,441 199,647,459

2015 250,904,197 327,618,530 328,166,397

2016 400,498,448 415,630,356

2017 593,889,705

The claims paid triangulations is presented below for the five classes where triangulation methods were used, i.e. for Engineering, Fire, General Accident, Marine and Motor. The

triangulations is based on the Company's claims paid data as at 31 December 2017 which formed the basis of the results of the actuarial valuation of the insurance contract claims liabilities

carried-out by QED Actuaries. The triangulations have excluded large claims.

Development Year

Development Year

Development Year

Development Year

Development Year

97





Engineering

Accident

Year 0 1 2 3 4 5 6 7 8 9

2007 3,061,915 18,730,090 20,837,895 20,837,895 20,837,895 20,837,895 20,837,895 20,837,895 20,837,895 20,837,895

2008 1,183,499 9,781,557 20,000,023 20,000,023 20,000,023 20,000,023 20,000,023 20,000,023 20,000,023

2009 2,360,909 43,629,952 43,836,452 43,836,452 43,836,452 43,904,984 43,904,984 43,904,984

2010 7,608,992 37,059,857 63,710,125 64,698,811 64,698,811 64,698,811 64,698,811

2011 16,696,398 24,873,634 40,152,598 40,154,377 40,154,377 40,154,377

2012 46,746,703 52,164,231 52,674,992 52,674,992 52,674,992

2013 19,127,818 20,836,534 25,786,648 25,786,648

2014 9,028,198 9,764,664 11,276,393

2015 2,142,843 5,511,960

2016 11,520,379

Fire

Accident

Year 0 1 2 3 4 5 6 7 8 9

2007 23,303,768 44,330,380 53,656,663 54,050,853 54,756,866 55,992,051 55,992,051 55,992,051 55,992,051 55,992,051

2008 64,227,677 127,911,623 139,232,653 139,232,653 139,232,653 139,232,653 139,232,653 139,232,653 139,232,653

2009 40,937,273 114,548,121 119,212,960 119,212,960 119,221,760 119,221,760 119,221,760 119,221,760

2010 14,058,843 25,577,128 27,677,117 28,222,647 28,222,647 28,222,647 28,222,647

2011 8,850,612 39,764,583 40,169,587 41,941,919 42,117,672 42,117,672

2012 6,956,337 46,860,967 47,200,550 47,200,550 47,200,550

2013 5,541,845 54,436,925 55,374,297 55,562,486

2014 3,417,765 11,581,843 14,140,656

2015 24,041,289 54,129,152

2016 57,529,892

General Accident

Accident

Year 0 1 2 3 4 5 6 7 8 9

2007 106,387,115 179,904,803 233,656,011 236,130,244 238,461,729 242,705,888 242,821,312 243,248,812 243,480,135 243,480,135

2008 95,246,249 231,689,063 287,336,184 294,342,361 299,209,041 300,485,824 300,519,001 300,943,829 300,943,829

2009 48,806,069 212,396,320 245,761,687 268,392,329 273,225,211 274,384,268 275,620,104 275,846,569

2010 72,051,700 243,040,104 267,087,136 289,460,687 295,997,513 296,140,581 296,851,193

2011 58,395,892 208,905,420 265,524,431 274,452,742 275,299,783 280,333,199

2012 37,324,821 193,808,821 220,670,585 229,483,213 237,666,709

2013 82,796,310 149,999,875 174,350,335 178,716,416

2014 28,862,114 124,631,290 143,357,380

2015 108,959,894 268,393,237

2016 117,719,787

Marine

Accident

Year 0 1 2 3 4 5 6 7 8 9

2007 28,873,155 43,428,239 47,096,323 47,286,882 48,242,886 48,242,886 48,242,886 48,242,886 48,242,886 48,242,886

2008 10,041,349 42,853,371 103,708,212 103,953,649 103,953,649 103,953,649 103,953,649 103,953,649 103,953,649

2009 31,537,216 64,874,539 100,050,600 100,554,119 100,554,119 100,554,119 100,615,612 100,615,612

2010 28,954,132 45,973,224 46,031,767 47,302,856 47,302,856 47,302,856 47,302,856

2011 50,333,949 99,423,651 114,853,221 119,373,293 119,373,293 157,367,366

2012 14,363,632 44,204,968 44,204,968 44,204,968 44,378,736

2013 41,397,922 44,075,404 44,075,404 44,138,904

2014 9,019,667 13,527,085 13,706,887

2015 20,647,833 37,559,314

2016 47,309,022

Motor

Accident

Year 0 1 2 3 4 5 6 7 8 9

2007 214,681,643 350,932,235 394,865,504 397,286,592 397,286,592 397,286,592 397,286,592 397,286,592 397,286,592 397,286,592

2008 442,931,617 656,874,254 672,336,910 673,417,360 674,312,064 674,312,064 674,312,064 674,312,064 674,312,064

2009 421,152,839 587,874,584 595,920,840 595,920,840 596,608,840 596,608,840 596,608,840 596,608,840

2010 256,770,668 387,863,521 396,260,808 397,537,546 398,039,789 398,093,921 398,131,921

2011 227,594,911 295,665,676 299,592,255 300,496,940 300,904,358 300,904,358

2012 120,160,436 172,810,134 172,818,234 172,818,234 172,818,234

2013 113,637,984 144,895,313 148,603,342 148,603,342

2014 118,670,920 188,724,175 197,407,441

2015 250,904,197 327,618,530

2016 400,498,448

Development Year

Development Year

Development Year

Development Year

Development Year

98




Sensitivity Analysis

Sensitivity of liabilities to changes in long term valuation assumptions

31 December 2017


N'000m Base

Interest rate

+1%

Interest rate -

1%

Expenses

+10%

Expenses

-10%

Expense

Inflation

+2%

Expense

Inflation

-2%

Lapses

+10%

Lapses

-10%

Mortality

+5%

Mortality

-5%

Individual Traditional 135,721 129,889 141,909 139,247 130,236 135,721 135,151 n/a n/a 136,265 128,818

Individual Investment Linked 1,007,273 1,007,273 1,007,273 1,007,273 1,007,273 1,007,273 1,007,273 n/a n/a 1,007,273 1,007,273

Group DA 54,472 54,472 54,472 54,472 54,472 54,472 54,472 n/a n/a 54,472 54,472

Group Life – UPR 581,310 581,310 581,310 581,310 581,310 581,310 581,310 n/a n/a 581,310 581,310

Group Life – AUR 824,342 824,342 824,342 824,342 824,342 824,342 824,342 n/a n/a 824,342 824,342

Group Life – IBNR 52,048 52,048 52,048 52,048 52,048 52,048 52,048 52,048 52,048

Additional reserves - - - - - - - n/a n/a - -

Reinsurance (137,178) (137,178) (137,178) (137,178) (137,178) (137,178) (137,178) n/a n/a (137,178) (137,178)

Net liability 2,517,987 2,512,155 2,524,175 2,521,513 2,512,502 2,517,987 2,517,417 n/a n/a 2,518,532 2,511,084

% change in liability - -0.2% 0.2% 0.1% -0.2% 0.0% 0.0% n/a n/a 0.0% -0.3%

Summary Base

Interest rate

+1%

Interest rate -

1%

Expenses

+10%

Expenses

-10%

Expense

Inflation

+2%

Expense

Inflation

-2%

Lapses

+10%

Lapses

-10%

Mortality

+5%

Mortality

-5%

Individual 1,142,994 1,137,162 1,149,182 1,146,520 1,137,509 1,142,994 1,142,424 n/a n/a 1,143,538 1,136,091

Group 1,374,993 1,374,993 1,374,993 1,374,993 1,374,993 1,374,993 1,374,993 n/a n/a 1,374,993 1,374,993


% change in liability - -0.2% 0.2% 0.1% -0.2% 0.0% 0.0% n/a n/a 0.0% -0.3%

Sensitivity Analysis

Sensitivity of liabilities to changes in long term valuation assumptions

31 December 2016


N'000m Base

Interest rate

+1%

Interest rate -

1%

Expenses

+10%

Expenses

-10%

Expense

Inflation

+2%

Expense

Inflation

-2%

Lapses

+10%

Lapses

-10%

Mortality

+5%

Mortality

-5%

Individual Traditional 153,863 150,432 154,223 160,086 147,644 154,314 153,416 n/a n/a 154,867 152,860

Individual Investment Linked 865,681 865,681 865,681 865,681 865,681 865,681 865,681 n/a n/a 865,681 865,681

Group DA 54,472 54,472 54,472 54,472 54,472 54,472 54,472 n/a n/a 54,472 54,472

Group Life – AURR 399,085 399,085 399,085 399,085 399,085 399,085 399,085 n/a n/a 399,085 399,085

Group Life – UPR 33,495 33,495 33,495 33,495 33,495 33,495 33,495 n/a n/a 33,495 33,495

Group Life – IBNR 642,476 642,476 642,476 642,476 642,476 642,476 642,476 n/a n/a 642,476 642,476

Additional reserves 2,345 2,345 2,345 2,345 2,345 2,345 2,345 n/a n/a 2,345 2,345

Reinsurance (19,487) (19,487) (19,487) (19,487) (19,487) (19,487) (19,487) n/a n/a (19,487) (19,487)


% change in liability - -0.2% 0.0% 0.3% -0.3% 0.0% 0.0% n/a n/a 0.0% 0.0%

Summary Base

Interest rate

+1%

Interest rate -

1%

Expenses

+10%

Expenses

-10%

Expense

Inflation

+2%

Expense

Inflation

-2%

Lapses

+10%

Lapses

-10%

Mortality

+5%

Mortality

-5%

Individual 1,021,889 1,018,458 1,022,249 1,028,111 1,015,670 1,022,340 1,021,442 n/a n/a 1,022,892 1,020,886

Group 1,110,041 1,110,041 1,110,041 1,110,041 1,110,041 1,110,041 1,110,041 n/a n/a 1,110,041 1,110,041


% change in liability - -0.2% 0.0% 0.3% -0.3% 0.0% 0.0% n/a n/a 0.0% 0.0%

99





Accident Year 0 1 2 3 4 5 6 7 8

2009 281,424,502 464,592,107 464,592,107 468,586,368 471,323,561 471,568,305 472,098,371 477,109,263 477,141,815

2010 180,162,677 380,188,154 401,717,216 457,712,600 471,789,466 499,808,895 504,340,721 520,545,794 -

2011 153,644,033 254,274,204 321,915,739 349,462,441 370,136,520 373,537,409 382,400,353 - -

2012 53,378,309 283,111,111 314,908,488 325,067,235 337,508,527 350,022,591 - - -

2013 196,586,494 401,417,665 436,403,443 440,646,782 441,201,971 - - - -

2014 47,109,502 147,211,665 220,533,127 244,773,673 - - - - -

2015 165,537,238 412,614,454 500,383,514 - - - - - -

2016 312,958,358 722,029,575 - - - - - - -

2017 642,455,377 - - - - - - - -


Accident Year 0 1 2 3 4 5 6 7

2009 281,424,502 464,592,107 464,592,107 468,586,368 471,323,561 471,568,305 472,098,371 477,036,463

2010 180,175,681 380,371,043 401,900,105 457,895,488 471,972,355 512,373,628 519,279,659 -

2011 153,644,033 254,274,204 321,915,739 349,462,441 370,168,967 376,821,827 - -

2012 53,378,309 283,111,111 314,908,488 325,199,583 339,180,001 - - -

2013 196,586,494 401,417,665 436,403,443 440,456,273 - - - -

2014 47,852,137 148,672,123 226,183,719 - - - - -

2015 166,816,221 459,694,054 - - - - - -

2016 445,659,176 - - - - - - -

Development Year

Development Year

100

Capital management Wapic Insurance Plc



Capital Management

The solvency margin for the Company as at 31 December 2017 was as follows;

N'000 N'000

11,543,390

Higher of:

Gross premium written 6,388,069

Less: Reinsurance paid during the year (2,742,273)

Net Premium 3,645,796

15% of Net premium 546,869

Minimum capital base- Non life 3,000,000

The higher thereof: 3,000,000

8,543,390

Solvency Ratio 285%

Excess of Assets (Admissible assets) over Liabilities -Solvency Margin

Surplus in Solvency Margin over minimum capital base

Capital risk is the risk of company’s capital diminishing or attaining below the minimum capital requirement level due to the occurrence of certain loss or risk

event. The Group’s objectives with respect to capital management are to maintain a capital base that is structured to exceed regulatory and to best utilize capital

allocations.management are to maintain a capital base that is structured to exceed regulatory and to best utilize capital allocations.

Insurance industry regulator measures the financial strength of Non-life insurers using a solvency margin model, NAICOM generally expect non-life insurers to

comply with this capital adequacy requirement. This test compares insurers’ capital against the risk profile. Section 24 (1) of the Insurance Act, 2003 requires that

an insurer shall in respect of its business other than its life insurance business, maintain at all times a margin of solvency being the excess of the value of its

admissible assets in Nigeria over its liabilities in Nigeria. The solvency margin shall not be less than 15 per centum of the gross premium income less reinsurance

premiums paid out during the year under review or the minimum paid-up capital whichever is greater. During the year, the Company has consistently exceeded this

minimum. The regulator has the authority to request more extensive reporting and can place restrictions on the Company’s operations if the Company falls below

this requirement as deemed necessary.

Wapic is exposed to a variety of risks through its holding company and reinsurance activities. These include market, credit, underwriting, business, operational,

strategic, liquidity and reputational risks. With Solvency II being the binding regulatory regime approval of our internal model, risk is measured and steered based

on the risk profile underlying our regulatory capital requirement. By that we allow for a consistent view on risk steering and capitalization under the Solvency II

framework. This is supplemented by economic scenarios and sensitivities.

The company steers its portfolio using a comprehensive view of risk and return, i.e. results based on the internal risk model, including scenario-based analysis, are

actively used for decision making. On one hand, economic risk and concentrations are actively restricted by means of limits. On the other hand, return on risk

capital (RORC) is a key input in the Company. The latter allows us to identify profitable lines of business on a sustainable basis, which provide reasonable profits

on allocated risk capital. Therefore, it is a key criterion for Wapic’s capital allocation decisions.

As a Group holding company with presence in Ghana, we consider diversification across different business segments and geographic regions as a key element in

managing our risks efficiently by limiting the economic impact of any single event and by contributing to relatively stable results and risk profile in general.

Therefore, our aim is to maintain a balanced risk profile without bearing any disproportionately large risk concentrations and accumulations.

During the year, the company complied with the minimum capital requirements and the statutory regulatory solvency margin requirement. The company continued

to maintain its established risk-based capitalization position and a linked dividend policy. The company has commenced to link its risk management framework

with its capital management in order to have an optimize capital allocation.

101

Capital management Wapic Insurance Plc



The solvency margin for the Company as at 31 December 2016 was as follows;

N'000 N'000

Excess of Assets (Admissible assets) over Liabilities -Solvency Margin 10,970,810

Higher of:

Gross premium written 5,375,431

Less: Reinsurance paid during the year (2,576,266)

Net Premium 2,799,165

15% of Net premium 419,875

Minimum capital base- Non life 3,000,000

The higher thereof: 3,000,000

7,970,810

Solvency Ratio 266%

The Company further developed an internal capital adequacy model that assesses the risk of assets, policy liabilities and other exposures by applying various

factors. The model calculates the capital required for each class of the broad risks identified by the Company and aggregates through co-variance methodology that

considers the relationship among these risk categories.

Surplus in Solvency Margin over minimum capital base

102

Financial assets and liabilities Wapic Insurance Plc



6 Financial assets and liabilities

Accounting classification, measurement basis and fair values

Measurement basis

(i) Financial assets:

(ii) Cash and cash equivalents, trade receivables, other receivables, reinsurance assets and statutory deposits:

(iii) Investment contract liabilities, trade payables and other payables:

Accounting classification and fair values

The table below sets out the Group’s classification of each class of financial assets and liabilities, and their fair values.

FVTPL

Held-to-

Maturity

Loans and

receivables

Available-

for-sale

Other financial

liabilities at amortised

cost

Total

carrying

amount Fair value

Group Notes


31 December 2017

Cash and cash equivalents 8 - - 1,745,342 - - 1,745,342 1,745,342

Financial assets 9 1,380 5,461,742 - 4,032,813 - 9,495,935 9,563,477

Trade receivables 10 - - 707,489 - - 707,489 707,489

Reinsurance assets (excluding prepaid reinsurance) 11 - - 1,087,216 - - 1,087,216 1,087,216

Other receivables (excluding prepayment) 13 - - 924,102 - - 924,102 924,102

Statutory deposit 19 - - 632,964 - - 632,964 632,964

Total financial assets 1,380 5,461,742 5,097,113 4,032,813 - 14,593,048 14,660,590

Investment contract liabilities 21 - - - - 1,063,860 1,063,860 1,063,860

Trade payables 22 - - - - 516,371 516,371 516,371

Other payables (excluding non-financial liabilities) 23 - - - - 1,081,335 1,081,335 1,081,335

Total financial liabilities - - - - 2,661,566 2,661,566 2,661,566

The fair value for these financial assets is based on market prices from financial market dealer price quotations. Where this information is not available, fair value is

estimated using quoted market prices for securities with similar credit, maturity and yield characteristics.

The carrying amount of cash and cash equivalents, trade receivables, other receivables, reinsurance assets and statutory deposits are a reasonable approximation of their fair

value as they are all short term in nature.

The carrying amount of investment contract liabilities, trade payables and other payables are a reasonable approximation of their fair value as they are all short term in

nature.

The fair value for financial assets and liabilities that are not carried at fair value were determined respectively as follows:

103




FVTPL

Held-to-

Maturity

Loans and

receivables

Available-

for-sale

Other financial

liabilities at amortised

cost

Total

carrying

amount Fair value

Group Notes


31 December 2016

Cash and cash equivalents 8 - - 2,220,395 - - 2,220,395 2,220,395

Financial assets 9 105 5,175,568 - 2,225,816 - 7,401,489 7,332,772


Reinsurance assets (excluding prepaid reinsurance) 11 - - 924,313 - - 924,313 924,313

Other receivables (excluding prepayment) 13 - - 1,027,649 - - 1,027,649 1,027,649


Total financial assets 105 5,175,568 5,343,564 2,225,816 - 12,745,053 12,676,336

Investment contract liabilities 21 - - - - 920,154 920,154 920,154

Trade payables 22 - - - - 235,800 235,800 235,800

Other payables (excluding non-financial liabilities) 23 - - - - 948,581 948,581 948,581


104




Financial assets and liabilities

Accounting classification, measurement basis and fair values

The table below sets out the Company’s classification of each class of financial assets and liabilities, and their fair values.

FVTPL

Held-to-

Maturity

Loans and

receivables

Available-

for-sale

Other financial liabilities at

amortised cost

Total

carrying

amount Fair value

Company Notes


31 December 2017

Cash and cash equivalents 8 - - 911,023 - - 911,023 911,023




Other receivables (excluding prepayment) 13 - - 834,520 - - 834,520 834,520



Trade payables 22 - - - - 415,414 415,414 415,414

Other payables (excluding non-financial liabilities) 23 1,139,318 1,139,318 1,139,318


105




FVTPL

Held-to-

Maturity

Loans and

receivables

Available-

for-sale

Other financial liabilities at

amortised cost

Total

carrying

amount Fair value

Company Notes


31 December 2016

Cash and cash equivalents 8 - - 311,223 - - 311,223 311,223




Other receivables (excluding prepayment) 13 - - 1,069,803 - - 1,069,803 1,069,803



Trade payables 22 - - - - 157,870 157,870 157,870

Other payables (excluding non-financial liabilities) 23 - - - - 876,326 876,326 876,326


106

Operating segment report Wapic Insurance Plc



7 Operating segments

- Internal controls and audits

- Financial control

- Human resources

- Information technology

The Group is organized into two operating segments as described below, which are the Group’s strategic business units. These segments distribute

their products through various forms of brokers, agencies and direct marketing programs. Management identifies its reportable operating segments by

product line consistent with the reports used by the management. These segments and their respective operations are as follows:

Life business: This segment covers the protection of the Group’s customers against the risk of premature death, disability, critical illness and other

accidents. Revenue from this segment is derived primarily from insurance premium, investment income and net fair value gains on financial assets at

fair value through profit and loss.

Expenses for corporate units that render services for all business segments are initially paid by the general business segment and transferred to other

business units at cost price. The expenses are allocated based on service man hours rendered by the corporate units to the various business segments.

General business: This segment covers the protection of customers’ assets (particularly their properties, both for personal and commercial business)

and indemnification of other parties that have suffered damage as a result of customers’ accidents. All contracts in this segment are short-term in

nature. Revenue in this segment is derived primarily from insurance premium, investment income, net realized gains on financial assets, and net fair

value gains on financial assets at fair value through profit or loss.

The corporate expenses for the following centrally shared services are being apportioned to all business segments in the group:

107

Operating segment report Wapic Insurance Plc



7 Operating segment (continued)

Business segments

The Group operates the following main business segments:

General

Wapic Insurance Plc - Includes general business insurance transactions with individual and corporate customers

Wapic Insurance Ghana Limited - Includes general business insurance transactions with individual and corporate customers

Life

Wapic Life Assurance Limited - Includes life insurance policies with individual and corporate customers.

The segment information is based on internal reporting to the Chief Operating Decision Maker in line with IFRS.

Elimination

Adjustments

Elimination

Adjustments

31/12/17 31/12/16 31/12/17 31/12/16 31/12/17 31/12/16 31/12/17 31/12/16 31/12/17 31/12/16

Revenue:

Derived from external customers:

- Gross premium income 6,494,411 5,249,208 1,712,521 1,239,949 1,382,196 1,096,974 - - 9,589,128 7,586,131

- Reinsurance expenses (2,742,273) (2,576,266) (615,792) (312,372) (579,024) (406,153) - - (3,937,089) (3,294,791)

Net insurance premium income 3,752,138 2,672,942 1,096,729 927,577 803,172 690,821 - - 5,652,039 4,291,340

- Commission received 471,328 497,408 85,279 49,213 126,281 105,371 - - 682,888 651,992

- Investment income 621,263 741,965 682,392 346,964 160,552 165,441 (193,183) (236,062) 1,271,024 1,018,308

- Profit on investment contracts - - 96,108 351,495 - - - - 96,108 351,495

- Net realised gain/(loss) on financial assets 614,534 33,713 - - - - - - 614,534 33,713 - Net fair value loss on financial assets at fair

value through profit or loss (1,549) (254) 886 - - - - - (663) (254)

- Other operating income 980,556 2,029,102 89,517 125,299 110,133 179,472 (15,674) - 1,164,532 2,333,873

6,438,270 5,974,876 2,050,911 1,800,548 1,200,138 1,141,105 (208,857) (236,062) 9,480,462 8,680,467

Expenses:

Underwriting expenses (1,342,708) (1,359,079) (193,761) (144,885) (221,098) (176,809) - - (1,757,567) (1,680,773)

Increase in individual life fund - - 20,487 (13,257) - - - - 20,487 (13,257)

Employee benefit expense (923,382) (825,208) (202,378) (183,192) (280,075) (251,539) (75,497) - (1,481,332) (1,259,939)

Other operating expense (2,259,202) (2,042,726) (376,883) (440,776) (421,041) (406,798) 91,281 - (2,965,845) (2,890,301)

Claims incurred (1,682,352) (1,233,309) (938,554) (1,076,858) (440,804) (558,458) - - (3,061,710) (2,868,625)

Total underwriting and operating expenses (6,207,644) (5,460,322) (1,691,089) (1,858,968) (1,363,018) (1,393,604) 15,784 - (9,245,967) (8,712,895)

Share of profit of associate 1,388,198 1,225,874

Profit/(loss) before tax 230,626 514,554 359,822 (58,420) (162,880) (252,499) (193,073) (236,062) 1,622,693 1,193,446

Income tax 85,019 (422,581) (176,900) (156,532) - (28,309) - - (91,881) (607,423)

Profit/(loss) after tax 315,645 91,973 182,922 (214,952) (162,880) (280,808) (193,073) (236,062) 1,530,812 586,023

Assets and Liabilities:

Total assets 21,328,940 20,594,062 6,098,309 5,055,269 2,293,288 2,247,483 (1,115,926) (1,994,761) 28,604,611 25,902,053

Total liabilities 5,968,399 5,560,573 3,659,498 2,781,745 1,462,878 1,287,811 (443,989) (294,413) 10,646,786 9,335,718

Net assets/(liabilities) 15,360,541 15,033,489 2,438,811 2,273,524 830,410 959,672 (671,938) (1,700,348) 17,957,825 16,566,335

Group

General Business

Wapic Insurance Plc

Life Business

Wapic Life Assurance Ltd

General Business

Wapic Insurance Ghana Ltd

108

Operating segment report

Wapic Insurance Plc



Revenue Account - Company

Revenue account for the period ended 31 December 2017

MOTOR FIRE GEN ACC MARINE AVIATION ENGINEERING

OIL AND

ENERGY BOND TOTAL

DETAILS N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000

Income

Direct Premium 1,117,114 364,751 1,926,887 302,029 177,404 309,431 2,013,466 2,310 6,213,392

Reinsurance Inwards 33,910 16,318 38,519 67,381 5,092 12,656 799 - 174,675

Gross written premium 1,151,024 381,069 1,965,406 369,410 182,496 322,087 2,014,265 2,310 6,388,067

Movement in provision for unexpired risks (7,960) 49,636 (50,827) (15,141) 18,741 14,651 97,496 (254) 106,342

Gross premium income 1,143,064 430,705 1,914,579 354,269 201,237 336,738 2,111,761 2,056 6,494,409

Deduction from income

- Facultative outward 78,868 7,730 376,838 4,093 26,086 127,569 850,756 1,824 1,473,764

- Liability pool 58,224 - 17,050 - - - - - 75,274

- Surplus Treaty 76,516 170,208 412,674 137,473 - 105,392 - - 902,263

- Minimum and deposit premium - 16,425 - - 100,367 - - - 116,792

Outward reinsurance Premium 213,608 194,363 806,562 141,566 126,453 232,961 850,756 1,824 2,568,093

Movement in prepaid reinsurance (32,897) 33,570 (15,384) 25,537 18,886 67,038 78,049 (619) 174,180

Reinsurance Cost 180,711 227,933 791,178 167,103 145,339 299,999 928,805 1,205 2,742,273

Net premium income 962,353 202,772 1,123,401 187,166 55,898 36,739 1,182,956 851 3,752,136

Commission received 47,586 65,129 222,301 45,073 8,843 55,941 9,366 575 454,814

Movement in deferred commission income 675 2,547 (318) 3,500 1,157 11,741 (2,679) (109) 16,514

Underwriting income 1,010,614 270,448 1,345,384 235,739 65,898 104,421 1,189,643 1,317 4,223,464

Expenses

Gross claims paid 713,131 140,096 366,241 84,325 5,795 36,905 277,629 14,115 1,638,237

Movement in provision for outstanding claims 63,987 116,967 (190,881) (1,683) 14,512 56,254 34,371 (14,615) 78,912

Movement in provision for IBNR 52,313 (34,991) 6,551 (16,306) 23,492 5,211 10,356 322 46,948

829,431 222,072 181,911 66,336 43,799 98,370 322,356 (178) 1,764,097

Claims recoveries (152,765) (98,475) (78,349) (64,722) (2,246) (21,347) - - (417,904)

Movement in claims recoverable 21,708 (53,494) 282,151 65,148 41,770 5,893 (41,344) (3,960) 317,872

Movement in IBNR claims recoverable (11,774) 2,243 42,603 9,923 (778) (947) (22,739) (244) 18,287

Net claims incurred 686,600 72,346 428,316 76,685 82,545 81,969 258,273 (4,382) 1,682,352

Underwriting expenses

Acquisition expenses 115,649 71,143 310,477 65,621 42,237 54,655 405,801 (2) 1,065,581

Movement in deferred acquisition cost 3,317 13,759 (4,371) 4,372 3,003 3,696 (60,283) 18 (36,489)

Maintenance expenses 37,618 67,142 100,371 17,242 7,986 16,997 66,114 143 313,613

Total underwriting expenses 156,584 152,044 406,477 87,235 53,226 75,348 411,632 159 1,342,705

Underwriting profit 167,430 46,058 510,591 71,819 (69,873) (52,896) 519,738 5,540 1,198,407

109

Operating segment report

Wapic Insurance Plc



Revenue Account - Company

Revenue account for the period ended 31 December 2016

MOTOR FIRE GEN ACC MARINE AVIATION ENGINEERING

OIL AND

ENERGY BOND TOTAL

DETAILS N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000

Income

Direct Premium 797,006 408,913 1,762,078 170,549 226,661 140,423 1,621,394 300 5,127,324

Reinsurance Inwards 46,457 8,459 30,620 150,852 3,162 3,699 4,856 - 248,105

Gross written premium 843,463 417,372 1,792,698 321,401 229,823 144,122 1,626,250 300 5,375,429

Movement in provision for unexpired risks (19,097) (42,838) (140,791) (683) (40,983) 17,579 100,767 (177) (126,223)

Gross premium income 824,366 374,534 1,651,907 320,718 188,840 161,701 1,727,017 123 5,249,206

Deduction from income

- Facultative outward 51,237 28,627 517,515 23,005 55,906 26,119 1,054,802 - 1,757,211

- Liability pool 31,441 - 12,974 - - - - - 44,415

- Surplus Treaty - 287,169 112,394 152,089 - 225,656 - - 777,308

- Minimum and deposit premium - 20,925 13,500 8,100 74,767 - - - 117,292

Outward reinsurance Premium 82,678 336,721 656,383 183,194 130,673 251,775 1,054,802 - 2,696,226

Movement in prepaid reinsurance (8,294) 13,870 (48,290) (45,225) (17,973) (37,684) 23,636 - (119,960)

Reinsurance Cost 74,384 350,591 608,093 137,969 112,700 214,091 1,078,438 - 2,576,266

Net premium income 749,982 23,943 1,043,814 182,749 76,140 (52,390) 648,579 123 2,672,940

Commission received 14,021 92,271 180,473 59,324 17,686 73,909 89,120 - 526,804

Movement in deferred commission income 4,119 (155) (20,836) (8,093) (6,959) (6,901) 9,429 - (29,396)

Underwriting income 768,122 116,059 1,203,451 233,980 86,867 14,618 747,128 123 3,170,348

Expenses

Gross claims paid 483,588 156,122 499,173 102,992 31,009 16,396 117,954 - 1,407,234

Movement in provision for outstanding claims 6,893 16,321 224,865 8,191 2,700 795 62,018 4,615 326,398

Movement in provision for IBNR 37,141 21,032 (8,381) 19,459 10,120 15,197 (42,391) 18 52,195

527,622 193,475 715,657 130,642 43,829 32,388 137,581 4,633 1,785,827

Claims recoveries (52,083) (164,288) (5,154) (65,708) - (8,795) - - (296,028)

Movement in claims recoverable 1,701 (12,090) (230,099) (16,028) (41,243) (534) 41,243 - (257,050)

Movement in IBNR claims recoverable (2,107) (7,888) 16,707 (13,465) 316 (11,643) 18,640 - 560

Net claims incurred 475,133 9,209 497,111 35,441 2,902 11,416 197,464 4,633 1,233,309

Underwriting expenses

Acquisition expenses 86,403 82,851 357,690 64,297 43,362 28,318 239,379 28 902,328

Movement in deferred acquisition cost 1,246 (8,972) (32,936) (1,335) (7,267) 3,493 103,976 (18) 58,187

Maintenance expenses 54,898 51,782 127,944 22,096 15,742 10,073 116,009 19 398,562

Total underwriting expenses 142,547 125,661 452,698 85,058 51,837 41,884 459,364 29 1,359,077

Underwriting profit 150,442 (18,811) 253,642 113,481 32,128 (38,682) 90,300 (4,539) 577,962

110

Notes to the financial statements Wapic Insurance Plc



8 Cash and cash equivalents


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Cash at bank and in hand 933,582 1,172,179 508,263 103,773

Money market placements 811,760 1,048,216 402,760 207,450

Balance, end of year 1,745,342 2,220,395 911,023 311,223

9 Financial assets


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Available-for-sale (see note 9(a) below) 4,032,813 2,225,816 3,351,670 1,482,125

Held for trading (see note 9(b) below) 1,380 105 796 7

Held-to-maturity (see note 9(c) below) 5,461,742 5,175,568 1,004,463 1,947,206


(a) Available-for-sale financial assets

These securities represent the Group and the Company's interest in entities:


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Equity securities:

– Listed (see note (i) below) 1,548,487 908,728 1,470,080 825,778

– Unlisted (see note (ii) below) 179,990 97,535 179,990 97,535

Fixed income securities (see note (iv) below) 2,304,336 1,219,553 1,701,600 558,812

Carrying amount 4,032,813 2,225,816 3,351,670 1,482,125


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Equity securities:

(i) Listed

Balance, beginning of year 908,728 668,219 825,778 668,219

Acquisitions during the year 1,495,018 82,950 1,495,018 -

Fair value changes during the year (29,481) 157,559 (24,938) 157,559

Disposal during the year (825,778) - (825,778) -

Balance, end of year 1,548,487 908,728 1,470,080 825,778

These financial assets represent the Group's and the Company's holdings in investment securities and are summarised by classification category below:

Cash and cash equivalent includes cash in hand, balances at bank and short term instruments with less than 3 months maturity from the date of acquisition.

Movement in Available-for-sale financial assets

111




(ii)


Acquisitions during the year 53,275 61,000 52,590 61,000

Fair value changes during the year 29,180 1,280 29,865 1,280

Disposal during the year (see note (iv) below) - (40,499) - -

Balance, end of year 179,990 97,535 179,990 97,535

- - - -

(iii) The breakdown of available-for-sale unlisted equity securities are shown below;


2017 2016 2017 2016


N'000 N'000 N'000 N'000

African Reinsurance Corporation 46,827 32,013 46,827 32,013

Nigerian Liability Insurance Pool 12,351 4,522 12,351 4,522

Energy and Allied Insurance Pool 47,609 61,000 47,609 61,000

Access Bank (Ghana) Limited - - - -

FBS Reinsurance - - - -

Coronation Merchant Bank Money Market Fund 73,203 - 73,203 -

Carrying amount 179,990 97,535 179,990 97,535


2017 2016 2017 2016


(iv) Fixed income securities: N'000 N'000 N'000 N'000

Balance, beginning of year 1,219,553 - 558,812 -

Acquisitions during the year 1,233,480 2,170,740 1,105,066 1,477,141

Disposals/maturities/redemption during the year (490,083) (915,400) (245,608) (915,400)

Accrued interest receivables 86,883 73,139 11,205 40,929

Foreign exchange gain - 10,258 - 10,258

Fair value adjustment 254,503 (119,184) 272,125 (54,116)

Balance, end of year 2,304,336 1,219,553 1,701,600 558,812

- - - -

The breakdown of available for sale fixed income financial assets are shown below;

Debt securities:

– Corporate bonds 601,969 220,166 308,113 -

– Government bonds 1,584,339 509,304 1,275,459 313,204

– Treasury bills 118,028 490,083 118,028 245,608

Carrying amount at fair value 2,304,336 1,219,553 1,701,600 558,812

(b) Held for trading financial assets


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Equity securities:

(i) Listed

Balance, beginning of year 105 109 7 11

Acquisitions during the year 5 - 5 -

Fair value changes during the year 1,270 (4) 784 (4)

Disposal during the year - - - -

Carrying amount at fair value 1,380 105 796 7

Movement in available for sale fixed income securities

Available for sale fixed income financial assets are carried at fair value. At the reporting date, no available for sale fixed income financial asset was either past due or

impaired.

Unlisted

112




(c) Held to maturity financial assets


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Balance, beginning of year 5,175,568 3,568,739 1,947,206 1,627,496

Acquisitions during the year 4,413,452 1,665,820 182,333 116,962

Disposals/maturities/redemption during the year (3,980,841) (1,097,168) (1,097,395) (420,205)

Foreign exchange gain - 296,800 - 296,800

Accrued interest receivables (146,437) 46,082 (27,681) 1,166

Interest received during the year - 695,295 - 324,987


- - - -

The breakdown of Held to maturity financial assets are shown below;

Debt securities:

– Corporate bonds 641,470 539,456 641,470 539,456

– Government bonds 1,636,820 655,271 341,709 310,355

– Treasury bills 3,183,452 3,980,841 21,284 1,097,395

Carrying amount at amortised cost 5,461,742 5,175,568 1,004,463 1,947,206

Held to maturity financial assets are carried at amortised cost. At the reporting date, no held to maturity financial asset was either past due or impaired.

Movement in Held to maturity financial assets

113




10 Trade receivables

(a) Trade receivables


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Gross receivables 1,366,389 1,412,181 657,655 923,938

Less: impairment allowance (see note (b) below) (658,900) (858,606) (170,658) (370,364)


(b) The movements in impairment allowance on trade receivables is analyzed below;


2017 2016 2017 2016


N'000 N'000 N'000 N'000


Reclassification of impairment allowance - (28,394) - -

Exchange difference - - - -

Impairment charge/(reversal) during the year - (12,782) - 7,370

Bad debt written off (199,706) (2,619) (199,706) (2,619)


11 Reinsurance assets


2017 2016 2017 2016


N'000 N'000 N'000 N'000

(a) Claim recoverables (see note (b)) 1,087,216 959,544 403,620 530,010

Prepaid reinsurance (see note (d)) 499,085 648,517 434,519 599,636

1,586,301 1,608,061 838,139 1,129,646

Less impairment (see note (e) below) - (35,231) - (35,231)

Balance, end of year 1,586,301 1,572,830 838,139 1,094,415

(b) Claims recoverables are analysed as follows:


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Recoverable on claims - Incurred but not reported claims 469,828 240,373 202,601 220,886

Recoverable on outstanding claims 617,388 719,171 201,019 309,124

Balance, end of year 1,087,216 959,544 403,620 530,010

There are no trade receivables which are past due, but not impaired as at year end (2016: Nil)

Subsequent to year end, the Group and Company received N708 million and N487 million respective for receivables less than 30 days as at 31 December 2017

(December 2016: N553.5 million). There was not impairment allowance against the amount because it has been received.

114




(c) The movement in claims recoverable is analysed as follows:


2017 2016 2017 2016


N'000 N'000 N'000 N'000


Recoveries during the year (631,176) (441,624) (208,135) (296,026)

Increase in recoverable during the year 758,848 974,672 81,745 552,518

Balance, end of year 1,087,216 959,544 403,620 530,010

(d) The movement in prepaid reinsurance cost is analysed as follows:


2017 2016 2017 2016


N'000 N'000 N'000 N'000


Cost incurred during the year 3,787,657 3,411,991 2,577,156 2,689,642

Amortised during the year (3,937,089) (3,294,791) (2,742,273) (2,576,266)


- - - -

(e) The movements in impairment allowance for reinsurance assets is analyzed below;


2017 2016 2017 2016


N'000 N'000 N'000 N'000


(Recovery)/allowance made during the year for doubtful recoverables - - - -

Write-off during the year (35,231) - (35,231) -

Balance, end of year - 35,231 - 35,231

12 Deferred acquisition cost

This represents commission on unearned premium relating to the unexpired tenure of risk.


2017 2016 2017 2016


N'000 N'000 N'000 N'000


Exchange difference (2,930) 13,286 - -

Addition during the year 1,843,356 1,700,876 1,379,196 1,300,894

Amortised during the year (1,757,567) (1,680,773) (1,342,708) (1,359,079)


13 Other receivables and prepayment

(a)(i) Group Group Company Company

2017 2016 2017 2016


N'000 N'000 N'000 N'000

Staff loans 32,226 8,407 32,226 8,407

Prepayment 137,429 117,370 36,718 67,244

Deposit for shares (see note (ii) below) 235,328 - 117,664 -

Intercompany and related party receivables (see note (iii) below) 40,879 23,606 128,560 114,483

Sundry receivables (see note (ii) below) 2,261,777 2,603,411 1,722,773 2,059,588

2,707,639 2,752,794 2,037,941 2,249,722

– Less: Impairment allowance (see note (b) below):

- Sundry receivables (1,646,108) (1,607,775) (1,166,703) (1,112,675)

1,061,531 1,145,019 871,238 1,137,047

115




(ii) Sundry receivables:


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Due from Summit Finance Limited 1,011,631 1,011,631 728,106 728,106

Due from Tropics Finance Limited 228,115 228,115 228,115 228,115

Due from Petralon Energy Limited 504,691 849,974 504,691 849,974

Due from Oceanview property - - - -

Due from Victoria Estate - - - -

Due from Etuna and other closed Property development 86,882 86,882 86,882 86,882

I-Val Investment Receivable 168,254 186,550 - -

Due from Oilview Estate 27,000 27,000 27,000 27,000

Due from Profund Securities Limited 21,785 21,785 21,785 21,785

Withholding Tax Receivable 51,713 40,812 42,698 33,857

Due from ex-staff loan 6,892 3,327 3,586 -

Due from Stanbic IBTC on Disposal of Property 30,000 30,000 30,000 30,000

Interest Receivable on Statutory Deposit 27,786 23,293 11,287 11,293

Expense Recoverable 11,690 40,314 11,690 21,853

Others 85,338 53,728 26,933 20,723

2,261,777 2,603,411 1,722,773 2,059,588

- - - -

(iii)

Company Company

2017 2016

31-Dec 31-Dec

N'000 N'000

Due from Wapic Ghana - expense recoverable 51,496 70,366

Due from Wapic Ghana - management services fees 36,185 20,511

Due from Coronation Merchant Bank - Dividend recievable 40,879 23,606

128,560 114,483

- -

(b) The movements in impairment allowance for other receivables and prepayments is analyzed below;


2017 2016 2017 2016


N'000 N'000 N'000 N'000


Reclassification of provision for impairment allowance - 28,394 - -

Allowance/(recoveries) made during the year 38,333 154,630 54,028 (3,095)


This relates to expenses recoverable by the Company from related entities for cost incurred on their behalf and shared premium for Life and General received on

behalf of the Company by Wapic Life Assurance. Breakdown of due from related parties is analysed below:

There are no other receivables which are past due, but not impaired as at year end (2016: Nil)

116




(c) The breakdown of impairment allowance on other receivables is analyzed below:


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Profund securities 21,785 21,785 21,785 21,785

Sunmmit finance limited 1,011,631 1,011,630 728,106 728,106

Tropics finance limited 228,115 228,115 228,115 228,115

Triumph bank 10,078 10,078 10,078 10,078

Societe generale bank 43 43 43 43

Fortune int'l bank 1,456 1,456 386 386

I-Val Property Receivable 168,254 186,550 - -

Coronation Merchant Bank 40,879 - 40,879

Olushola Oyinloye 4,000 4,000 4,000 4,000

Okorafor Ebenzer 23,000 23,000 23,000 23,000

Receivable from Etuna and other closed property development 86,882 86,882 86,882 86,882

Withholding tax receivable 23,885 13,005 18,027 9,169

Marina securities stock trading account 1,111 1,111 1,111 1,111

Expense Recoverable 17,392 17,475 - -

Ex-Staff loans 6,892 - 3,586

Others 705 2,643 705 -


14 Investment properties


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Investment properties (see (a) below) 312,750 539,930 312,750 539,930


(a) Investment properties are analysed by location as follows:


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Hexagon Court, Ikeja Lagos (see (c) below) 110,000 106,000 110,000 106,000

Ocean Garden, Lekki, Lagos (see (c) below) 72,000 80,000 72,000 80,000

PalmView Estate, Magodo, Lagos (see (c) below) - 54,500 - 54,500

Ocean View Estate, Lekki, Lagos (see (c) and (b) below) 58,000 227,480 58,000 227,480

Happy People Estate, Magboro, Ogun State (see (c) below) 22,750 18,000 22,750 18,000

Victoria Garden Estate Abuja 50,000 53,950 50,000 53,950


- - - -

(b)

(c)

Estate Surveyors and Valuers

Azuka Iheabunike and Partners FRC/2012/NIESV/00000002206

FRC Registration Number

During the year, the Company disposed its investment property located at Ocean view estate, Lekki Lagos. A total proceeds of N214.7 million was realised from the

disposal.

The Company's investment properties were valued by independent professional Estate Surveyors and Valuers as at 31 December 2017. The determination of fair

value of the investment properties were supported by market evidence. The modalities and process of valuation utilised extensive analysis of market data and other

sector specific peculiarities corroborated with available database derived from previous experiences. The Company used the following Estate Surveyors and Valuers

who have recent experience in the location and category of the investment properties being valued:

117




(d)

(e) The movement in investment properties during the year was as follows:


2017 2016 2017 2016


N'000 N'000 N'000 N'000


Acquisition during the year 108 315,980 108 315,980

Disposal during the year (224,950) (450,750) (224,950) (415,750)

Fair value loss recognised in profit or loss (2,338) (250) (2,338) (250)

At end of year 312,750 539,930 312,750 539,930

- - - -

(f)


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Ocean Garden, Lekki, Lagos 2,000 1,333 2,000 1,333

2,000 1,333 2,000 1,333

(g) Investment properties disposed during the year was as follows:


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Sales proceeds 214,670 371,101 214,670 336,101

Transfer from investment property account (224,950) (450,750) (224,950) (415,750)

(Loss)/gain on disposal of investment property (10,280) (79,649) (10,280) (79,649)

The fair value measurement for the investment properties has been categorised as a Level 2 fair value basis. Level 2 fair values of investment properties have been

derived using the comparative method valuation approach. Sales prices of recent comparable properties within the same or similar neighbourhood are adjusted for

considerations of the peculiar attributes of the property which includes specific location, internal layout plans as well as other relevant qualities.

The Group and the Company earned total rental income N2 million (2016: N1.333 million) from its investment properties during the year (see note 35). Rental

income is analysed below:

The Group applied fair value model in determining the carrying value of its investment properties.

118




15 Investment in associates


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Coronation Merchant Bank Limited 8,264,440 7,173,843 5,059,810 5,059,810


(a) Nature of investment in associates

Name of entity

Place of

business/

country of

incorporation

% of

ownership

interest

Nature

of the

relationship

Measurement

method

Investment in Coronation Merchant Bank Limited Nigeria 25.50% Investee Equity method

(b) Summarised financial information for associates

Below are the summarised financial information for investment in associate accounted for using the equity method

(i) Summarised balance sheet

2017 2016

31-Dec 31-Dec

N'000 N'000

Assets

Cash and cash equivalents 8,264,667 5,655,892

Due from financial institution 29,509,041 16,246,877

Non pledge trading assets 1,137,667 3,443,570

Derivatives financial assets 116,520 -

Investment securities 28,617,585 33,751,332

Pledged assets 18,840,555 14,232,448

Loans and advances to customers 32,254,859 22,706,561

Other assets 6,449,200 355,915

Investment properties 1,657,108 686,865

Intangible assets 1,237,513 1,150,989

Property, plant and equipment 3,430,110 3,046,591

Deferred tax 5,203,887 5,265,490

136,718,711 106,542,530

Asset classified as held for sale - 29,575

Total assets 136,718,711 106,572,105

Liabilities

Financial liabiliites (excluding trade payables) 87,600,612 72,114,875

Other liabiliites 18,963,541 8,579,523

Total liabilities 106,564,153 80,694,398

Total equity 30,154,558 25,877,707

There are no contingent liabilities relating to the group’s interest in the associates.

This represents 25.50% holding in the ordinary share capital of Coronation Merchant Bank Limited, a Company incorporated and operating in Nigeria (2016:

25.50%). The holding became an associate as a result of additional acquisition of shareholding in the Company in January 2015. During the year the Company made

no additional acquisition in the equity stake in the associate (2016: 2.78%). Coronation Merchant Bank Limited (Formerly; Associated Discount House Limited

(ADH)) is involved in trading in, holding and provision of discount and rediscount facilities for Federal Government Securities, Commercial Bills and other eligible

financial instruments, as prescribed by the CBN to corporate and individual customers.

119




(ii) Summarised statement of profit or loss and other comprehensive income

2017 2016

31-Dec 31-Dec

N'000 N'000

Interest income 22,373,522 13,422,704

Interest expense (14,369,179) (5,420,070)

Net Impairment / (writeback) on financial assets 3,662 (70,119)

Fees and commission income 1,658,062 1,187,193

Net gains on investment securities 898,266 308,257

Net foreign exchange income 216,243 220,716

Other income 10,438 55,355

operating expenses (4,968,930) (4,386,837)

Profit before tax 5,822,084 5,317,199

Income tax (378,166) (183,909)

Profit for the year 5,443,918 5,133,290

Other comprehenive income (409,485) 468,038

Total comprehensive income 5,034,433 5,601,328

(c) Movement in investment in associate


2017 2016 2017 2016


N'000 N'000 N'000 N'000


Additions during the year - 695,471 - 695,471

Dividend received during the year (193,183) (236,061)

Share of current year profit 1,388,198 1,225,874 - -

Share of current year other comprehensive income (104,418) 244,258 - -


- - - -

(i)

(ii) Reconciliation of summarised financial information

Group Group

2017 2016

31-Dec 31-Dec

N'000 N'000

Opening net assets/net assets on date on acquisition 25,877,707 20,236,741

Profit/(loss) for the year 5,443,918 5,133,290

Other comprehensive income for the year (377,258) 947,329

Net (loss)/gains on AFS instruments recycled to profit or loss (32,227) (479,291)

Additional capital through share issuance - 1,075,000

Dividend paid to shareholders (757,582) (1,035,362)

Closing net assets 30,154,558 25,877,707

Interest in associate (25.5%) 7,689,413 6,598,816

Impact of changes in net assets 147,085 147,085

Notional goodwill 427,942 427,942

Carrying value 8,264,440 7,173,843

- -

There are no significant restrictions on the Group’s ability to access or use the assets and settle the liabilities of the associate to the extent that regulatory framework

within which the associate operate does not inhibit the Group.

120




16 Investment in subsidiaries

Company Company

2017 2016

31-Dec 31-Dec

N'000 N'000

Wapic Life Assurance Limited (see note (a) below) 2,700,000 2,700,000

Wapic Insurance Ghana Limited (see note (b) below) 1,176,571 1,176,571

Balance, end of year 3,876,571 3,876,571

(a)

(b)

( c)

(d) The movement in investment in subsidiaries during the year was as follows:

Company Company

2017 2016

31-Dec 31-Dec

N'000 N'000

Balance, beginning of the year 3,876,571 3,876,571

Additions during the year - -

Balance, end of the year 3,876,571 3,876,571

The Group does not have significant restrictions on its ability to access or use its assets and settle its liabilities other than those resulting from the supervisory

framework within which subsidiaries operate. The supervisory framework require the insurance subsidiaries to keep certain levels of regulatory capital and liquid

assets.

This represents 100% holding in the ordinary share capital of Wapic Insurance Ghana Limited; a wholly owned subsidiary incorporated and conducting general

insurance business in Ghana. There was no additional capital injected into the subsidiary during the year (2016: Nil).

This represents 100% holding in the ordinary share capital of Wapic Life Assurance Limited, a wholly owned subsidiary incorporated and operating in Nigeria. There

was no additional capital injected into the subsidiary during the year (2016: Nil).

121




17 Intangible assets - Computer software

Group Company

N'000 N'000

Cost:

31 December 2017

Balance at 1 January 2017 351,532 312,477

Additions 311,097 310,624

Write-off from intangible asset - -

Exchange difference (301) -

Balance at 31 December 2017 662,327 623,101

31 December 2016


Additions 183,693 182,787


Exchange difference 1,740 -


Amortization:

31 December 2017


Charge for the year 35,218 33,651


Exchange difference (212) -


31 December 2016


Charge for the year 16,099 15,461


Exchange difference 504 -


Net book value:



The Group and Company's intangible assets relates to purchased computer software.

122




18 (a) Property and equipment - Group

As at 31 December 2017

Leasehold Building Motor Computer Office Work in Total

land vehicles equipment equipment progress

Cost N' 000 N' 000 N' 000 N' 000 N' 000 N' 000 N' 000

Balance, beginning of year 424,597 2,330,711 804,358 298,332 895,417 220,890 4,974,306

Transfer from PPE (see note (v) below) - - - - - (64,573) (64,573)

Revaluation surplus (see note (i) below) - - - - - - -

Additions - 2,866 139,625 59,985 43,437 41,798 287,710

Reclassifications - - - - 153,635 (153,635) -

Disposals - - (68,306) (16,140) (119,177) - (203,622)

Exchange difference - - (6,432) (2,379) (1,082) (2,682) (12,574)

Balance, end of year 424,597 2,333,577 869,246 339,799 972,231 41,798 4,981,247

Accumulated depreciation

Balance, beginning of year 12,997 24,711 530,917 144,930 235,241 - 948,796

Transfer to retained earnings (See note 29) -

Charge for the year 7,277 47,187 138,548 84,051 173,973 - 451,036

Disposals - - (67,710) (15,579) (112,762) - (196,052)

Exchange difference - - (6,835) (4,568) 1,489 - (9,914)

Balance, end of year 20,274 71,898 594,920 208,834 297,941 - 1,193,866

Net book value

Balance at 31 December 2017 404,323 2,261,679 274,326 130,965 674,290 41,798 3,787,381


i. The latest independently valuation of the Interest in leasehold land and building to ascertain the open market value of the leasehold land and building was carried by Bode Adedeji Partnership,

professional estate surveyors and valuers, as at 31 December 2016. No valuation was carried out in the current financial year; it is the Group’s policy to carry-out valuations of its leasehold land and

building at least once within three financial year. The Group’s assessment is that there has not been significant risk of impairment in the open market value of the land and building, and they are

currently carried at the revalued amount plus the additions less amortisation of the lease charge/depreciation during the period for leasehold land: N404,323,000.00 (31 December 2016:

N411,600,000.00) and building: N2,261,679,000.00 (31 December 2016: N2,306,000,000.00).

iii. There are no other leased assets included in the Group's property and equipment apart from leasehold land (31 December 2016: Nil)

iv. The Group had no capital commitments as at the Statement of Financial Position date (31 December 2016: Nil)

ii. The carrying amount of the Group's leasehold land would have been N16,860,000.00 (31 December 2016: N17,186,000.00) based on the cost model if it had not been restated at the revalued

amount.

v. The transfer from PPE work-in-progress related to cost incurred for leasehold improvement which have been subsequently converted to lease payment based in-line the final contract with the

landlord in respect of the upgrade of the Wapic Insurance Ghana Limited Head office

123




18 (b) Property and equipment - Company




Cost N' 000 N' 000 N' 000 N' 000 N' 000 N' 000 N' 000

Balance, beginning of year 424,597 2,330,711 577,555 243,313 817,154 158,641 4,551,971

Reclassification from PPE - - - - - (5,009) (5,009)

Revaluation surplus (see note (i) below) - - - - - - -

Additions - 2,866 - 55,372 6,647 40,328 105,213

Reclassifications - - - 153,635 (153,635) -

Disposals - - (61,328) (16,140) (80,026) - (157,493)



Balance, beginning of year 12,997 24,711 415,950 113,424 173,250 - 740,332

Transfer to retained earnings (See note 29) - - - - - -

Charge for the year 7,277 47,187 93,981 73,859 163,753 386,057

Disposals - - (60,733) (15,579) (76,902) (153,214)

Balance, end of year 20,274 71,898 449,198 171,704 260,101 - 973,175

Net book value



iii. There are no other leased assets included in the Company's property and equipment apart from leasehold land (31 December 2016: Nil)

iv. The Company had no capital commitments as at the Statement of Financial Position date (31 December 2016: Nil)


professional estate surveyors and valuers, as at 31 December 2016. No valuation was carried out in the current financial year; it is the Company’s policy to carry-out valuations of its leasehold land

and building at least once within three financial year. The Company’s assessment is that there has not been significant risk of impairment in the open market value of the land and building and they

are currently carried at the latest revalued amount plus the additions less amortisation of the lease charge/depreciation during the period for leasehold land: N404,323,000.00 (31 December 2016:

N411,600,000.00) and building: N2,261,680,000.00 (31 December 2016: N2,306,000,000.00).

ii. The carrying amount of the Company's leasehold land would have been N16,860,000.00 (31 December 2016: N17,186,000.00) based on the cost model if it had not been restated at the revalued

amount.

124




18 (a) Property and equipment - Group




Cost N' 000 N' 000 N' 000 N' 000 N' 000 N' 000 N' 000

Balance, beginning of year 188,763 - 717,085 159,135 237,383 1,760,148 3,062,514

Revaluation surplus (see note (i) below) 235,834 713,581 - - - - 949,415

Additions - 191,076 151,519 97,399 129,889 476,086 1,045,969

Reclassifications - 1,426,054 - 30,092 559,197 (2,015,343) -

Disposals - - (90,181) (130) (37,874) - (128,185)

Exchange difference - - 25,935 11,836 6,822 - 44,593



Balance, beginning of year 9,754 - 410,606 83,746 183,885 - 687,991

Transfer to retained earnings (See note 29) - - - - - -

Charge for the year 3,243 24,711 158,100 55,282 77,124 - 318,460

Disposals - - (52,012) (130) (29,795) - (81,937)

Exchange difference - - 14,223 6,033 4,027 - 24,283


Net book value Balance at 31 December 2016 411,600 2,306,000 273,441 153,402 660,176 220,890 4,025,510

Balance at 31 December 2015 179,009 - 306,479 75,389 53,498 1,760,148 2,374,523


professional estate surveyors and valuers, as at 31 December 2016. The valuation was carried out in the current financial year in-line with the Group's policy which is to carry-out valuations of its

leasehold land and building at least once within three financial year. The valuation outcome in-line with the Group's assessment is that there has been appreciation in the open market value of the

leasehold land and building, and it is currently carried at the revalued amount of leasehold land N411,600,000.00 (31 December 2015: N185,000,000.00) and building N2,306,000,000.00 (31

December 2015: Nil) plus the additions less amortisation of the lease charge/depreciation during the period.

ii. The carrying amount of the Group's leasehold land would have been N17,186,000.00 (31 December 2015: N17,512,000.00) based on the cost model if it had not been restated at the revalued

amount.

iii. There are no other leased assets included in the Group's property and equipment apart from leasehold land (31 December 2015: Nil)

iv. The Group had no capital commitments as at the Statement of Financial Position date (31 December 2015: Nil)

125




18 (b) Property and equipment - Company



Land Vehicles Equipment Equipment progress

Cost N' 000 N' 000 N' 000 N' 000 N' 000 N' 000 N' 000

Balance, beginning of year 188,763 - 588,888 128,442 157,150 1,760,149 2,823,392

Revaluation surplus (see note (i) below) 235,834 713,581 - - - - 949,415

Additions - 191,076 67,625 84,909 127,740 413,835 885,185

Reclassifications - 1,426,054 - 30,092 559,197 (2,015,343) -

Disposals - - (78,958) (130) (26,933) - (106,021)



Balance, beginning of year 9,754 - 340,361 66,498 122,268 - 538,881

Transfer to retained earnings (See note 29) - - - - - - -

Charge for the year 3,243 24,711 117,294 47,056 70,056 262,360

Disposals - - (41,705) (130) (19,074) - (60,909)


Net book value Balance at 31 December 2016 411,600 2,306,000 161,605 129,889 643,904 158,641 3,811,639

Balance at 31 December 2015 179,009 - 248,527 61,944 34,882 1,760,149 2,284,511


professional estate surveyors and valuers, as at 31 December 2016. The valuation was carried out in the current financial year in-line with the Company's policy which is to carry-out valuations of its

leasehold land and building at least once within three financial year. The valuation outcome in-line with the Company's assessment is that there has been appreciation in the open market value of the

leasehold land and building, and it is currently carried at the revalued amount of leasehold land N411,600,000.00 (31 December 2015: N185,000,000.00) and building N2,306,000,000.00 (31

December 2015: Nil) plus the additions less amortisation of the lease charge/depreciation during the period.

iii. There are no other leased assets included in the Company's property and equipment apart from leasehold land (31 December 2015: Nil)

iv. The Company had no capital commitments as at the Statement of Financial Position date (31 December 2015: Nil)

ii. The carrying amount of the Company's leasehold land would have been N17,186,000.00 (31 December 2015: N17,512,000.00) based on the cost model if it had not been restated at the revalued

amount.

126




19 Statutory Deposit


2017 2016 2017 2016


N'000 N'000 N'000 N'000



Additions 20,401 87,826 - -


20 Insurance contract liabilities


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Outstanding claims (See note (a) below):

– Claims reported and loss adjustment expenses 1,619,805 1,433,688 724,657 645,745

– Claims incurred but not reported 2,206,617 1,844,467 977,440 930,493

Total outstanding claims 3,826,422 3,278,155 1,702,097 1,576,238

– Claims payable 224,709 190,858 224,709 190,858

Unearned premiums (See note (b) below) 2,954,613 2,748,461 1,890,526 1,996,868

Life insurance contract liabilities (See note (d) below) 135,721 156,208 - -

Total insurance contract liabilities 7,141,465 6,373,682 3,817,332 3,763,964

(a) Outstanding claims


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Group life 1,343,845 995,399 - -

Individual life - - - -

Fire 447,151 261,636 168,744 86,768

General accident 571,603 740,699 514,776 699,106

Motor 645,429 561,829 237,069 120,769

Marine 74,278 87,445 57,581 75,570

Oil and Energy 556,345 511,618 556,345 511,618

Engineering 117,967 73,436 97,778 36,314

Aviation 64,964 26,960 64,964 26,960

Bond 4,840 19,133 4,840 19,133

Total outstanding claims 3,826,422 3,278,155 1,702,097 1,576,238

This represents amounts deposited with the Central Bank of Nigeria (CBN) pursuant to Section 10(3) of the Insurance Act, 2003. The deposits are

not available for use by the Group on a normal course of day to day business.

127




- - - -


2017 2016 2017 2016


N'000 N'000 N'000 N'000



Increase/(decrease) in outstanding claims reserve 590,500 992,863 125,859 378,593


- - - -

(b) Unearned premiums


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Group life 771,308 432,580 - -

Fire 144,571 197,102 136,321 185,957

General accident 457,204 405,107 450,209 399,382

Motor 603,470 615,812 329,031 321,073

Marine 156,563 140,985 155,759 140,617

Engineering 659,113 756,609 659,113 756,609

Oil and Energy 125,630 145,024 123,339 137,988

Aviation 36,324 55,065 36,324 55,065

Bond 430 177 430 177

Total unearned premium 2,954,613 2,748,461 1,890,526 1,996,868

(c)


2017 2016 2017 2016


N'000 N'000 N'000 N'000


Exchange difference (12,336) (38,772) - -

Increase/(decrease) in unearned premium 218,488 419,177 (106,342) 126,223


- - - -

(d) Life insurance contract liabilities


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Balance, beginning of year 156,208 142,951 - -

(Release)/addition during the year (20,487) 13,257 - -

Balance, end of year 135,721 156,208 - -

The movement in unearned premium account during the year was as follows:

The movement in outstanding claims reserve during the year was as follows:

128




21 Investment contract liabilities:

(a) At amortised cost


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Group deposit administration -Interest linked 54,472 54,473 - -

Individual deposit administration -Interest linked 1,009,388 865,681 - -

1,063,860 920,154 - -

(b) The movement in deposit administration funds during the year was as follows:


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Balance, beginning of year 920,154 1,196,180 - -

Additions 326,029 117,624 - -

Withdrawals (167,672) (162,265) - -

Guaranteed interest on deposit administration 57,988 78,100 - -

Reversal of surplus reserves (72,639) (309,485) - -

Balance, end of year 1,063,860 920,154 - -

22 Trade payables


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Due to reinsurance 290,618 200,430 195,230 134,190

Commissions payable 225,753 35,370 220,184 23,681


23 Other payables


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Accrued expenses (see (a) below) 273,396 256,619 185,032 176,188

Accounts payable (see (b) below) 839,195 650,079 617,360 543,212

Due to related parties (see note (c) below) - - 328,446 68,455

Due to contractors 89,493 42,118 89,493 42,118

Other taxes 106,439 80,219 90,260 68,007

Deferred commission income 104,019 114,843 93,440 104,936

Customers deposits (see (d) below) 46,208 176,165 13,759 154,534


(a)

NAICOM annual levy 60,384 80,000 40,384 60,000

Audit fee and related expenses 20,682 27,158 15,729 20,955

Staff expense payable 47,172 31,312 25,427 17,957

NSITF remittance - - - -

Directors' and board expenses 22,484 16,072 8,555 10,717

Accrued training cost 38,046 26,742 37,146 16,466

Accrued advert and publicity expense - 19,000 - 5,000

Consultancy and professional fees 83,759 41,405 56,922 30,163

Office rent 869 809 869 809

Business promotion - 3,067 - 3,067

Investment property - 11,054 - 11,054

Statutory levies (NSE, FRC) - -


- - - -

Breakdown of accrued expenses is analysed below:

129




(b)

Pension payable (2,364) 738 (2,440) 725

Expense payable 259,195 265,286 243,642 252,106

Fixed asset payable 160,010 200,957 160,010 200,957

Investment payable 36,590 60,701 36,590 60,701

Unclaimed bank items 23,850 - - -

Provision for legal expenses - 1,210 - -

Deposit administered products payable 24,599 - - -

Unclaimed dividend 94,390 28,723 94,390 28,723

Others 158,148 92,464 85,168 -


(84,777) - - -

(c)

Company Company

2017 2016

31-Dec 31-Dec

N'000 N'000

Due from Wapic Life - Net shared premium reciepts for Life business 328,446 68,455

328,446 68,455

- -

(d)

24 Deferred taxation


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Deferred tax assets - - - -

Deferred tax liabilities 202,547 277,657 202,548 393,175

Net deferred tax 202,547 277,657 202,548 393,175

(a) Net deferred tax is attributable to the following:


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Property and equipment 20,477 206,461 20,477 230,683

Trade receivable (54,611) - (54,611) -

Tax losses 252 (213,629) 252 (122,332)

Fair value gains on revaluation of property and equipment 236,429 284,825 236,429 284,824

Total 202,548 277,657 202,548 393,175

- - - -

(b) The movement in deferred tax account during the year was as follows:


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Balance, beginning of year (277,657) 363,353 (393,175) 131,679

Exchange difference - 6,179 - -

Movement during the year 75,110 (362,365) 190,627 (240,030)

Movement affecting items in OCI - (284,824) - (284,824)

Balance, end of year (202,547) (277,657) (202,548) (393,175)

This relates to recoverable from the Company by related entities - for premium on Life businesses received on-behalf of Wapic Life Assurance by the Company and

reimbursement of cost incurred on-behalf of the Company. Breakdown of due to related parties is analysed below:

Breakdown of accounts payable is analysed below:

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income

taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to

settle the balances on a net basis.

Customer deposits represents premium receipts yet to be allocated and appropriately matched.

130




25 Current income tax liabilities

(a) The movement in this account during the year was as follows:


2017 2016 2017 2016


N'000 N'000 N'000 N'000


Exchange difference 208,381 - - -

Charge for the year (see note (b) below): 166,991 245,058 105,608 182,551

Payments during the year (319,961) (188,705) (78,407) (152,073)


(b) The tax charge for the year comprises:


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Corporate income tax charge 145,885 138,036 88,281 81,009

Education levy 14,905 14,667 14,905 14,667

Information technology development levy 6,202 5,302 2,423 5,302

Prior year under provision - 87,053 - 81,573

166,991 245,058 105,608 182,551

Deferred tax (credit)/charge (75,110) 362,365 (190,627) 240,030

Total tax charge for the year 91,881 607,423 (85,019) 422,581

( c) Reconciliation of effective tax rate Group Group Company Company

2017 2016 2017 2016


N'000 N'000 N'000 N'000

Tax rate Tax rate Tax rate Tax rate

Profit before Tax 1,622,691 1,193,446 230,625 514,554

Income tax using the domestic corporation tax rate 30% 486,807 30% 358,034 30% 69,188 30% 154,366

Effect of tax rate in foreign jurisdictions 0% - (2)% (28,309) 0% - 0% -

Non deductible expense 36% 588,640 132% 1,575,875 246% 566,615 303% 1,558,965

Tax exempt income (51)% (827,605) (90)% (1,076,858) (153)% (353,042) (119)% (614,563)

Corporate income tax charge (9)% (145,885) (12)% (138,036) (38)% (88,281) (16)% (81,009)

Temporary difference (26)% (420,671) 19% 232,577 54% 124,194 45% 230,683

Prior year over provision 0% - (7)% (87,053) 0% - (16)% (81,573)

Deferred tax (5)% (75,110) 30% 362,365 (83)% (190,627) 47% 240,030

Information technology tax levy (0)% (6,202) (0)% (5,302) (1)% (2,423) (1)% (5,302)

Tertiary education tax (1)% (14,905) (1)% (14,667) (6)% (14,905) (3)% (14,667)

Exempted permanent differences 31% 510,914 (48)% (571,203) (83)% (191,634) (187)% (964,349)

6% 95,984 51% 607,423 (35)% (80,915) 82% 422,581

131




26 Share capital


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Authorized:17,000,000,000 units ordinary shares of 50k each 8,500,000 8,500,000 8,500,000 8,500,000

Issued and fully paid:

13,382,738,248 units of ordinary shares of 50k each (2015: 13,382,738,248

ordinary shares of 50k each) 6,691,369 6,691,369 6,691,369 6,691,369

27 Share premium

28 (a) Contingency reserves

(b) The movement in this account during the year is as follows:


2017 2016 2017 2016


N'000 N'000 N'000 N'000


Transfer from profit and loss 253,204 182,438 191,642 161,263


29 Other reserves

(a) Revaluation reserve


2017 2016 2017 2016


N'000 N'000 N'000 N'000


Revaluation surplus on property,plant and equipment - 949,415 - 949,415

Deferred tax on revaluation - (284,824) - (284,824)


(i)

In accordance with Section 21 (1) of Insurance Act 2003, the contingency reserve is credited with the greater of 3% of total premiums, or 20% of the

profits. This shall accumulate until the reserve reaches the amount of greater of minimum paid-up capital or 50 percent of net premium.

Share premium comprises additional paid-in capital in excess of the par value. This reserve is not ordinarily available for distribution.

This represent the reclassification of the recycled deprecation of revaluation surplus on items of property and equipment during the year from

revalaution reserve to retained earnings reserve.

132




(b) Foreign currency translation reserve


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Balance, beginning of year 115,465 (344,301) - -

Changes during the year (27,610) 459,766 - -


(c) Fair value reserve

Balance, beginning of year (216,879) (267,758) (163,036) (267,758)

Changes during the year (see note 9 (a)(i)) (7,292) 50,879 11,408 104,722

Net reclassification adjustments for realised net gains/(losses) (128,719) - (128,719) -


(d) Merger reserves

Balance, beginning of year (19,367) (19,367) (19,367) (19,367)

Changes during the year - - - -


(e) Share of other comprehensive income of associates

Balance, beginning of year 359,783 115,525 - -

Changes during the year (104,418) 244,258 - -


Total 941,704 1,209,743 671,027 788,338

30 Retained earnings

The movement in this account during the year was as follows;


2017 2016 2017 2016


N'000 N'000 N'000 N'000

At beginning of year 662,291 660,185 (191,626) 279,143

Transfer from profit or loss 1,530,809 586,023 315,643 91,973

Transfer to contingency reserve (see note 28(b) above) (253,204) (182,438) (191,642) (161,263)

Transfer from revaluation reserve (see note 29(a) above) 128,719 - 128,719 -

Dividend paid during the year - (401,479) - (401,479)

Balance, end of the year 2,068,615 662,291 61,094 (191,626)

133




31 Net premium income


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Short-term insurance contracts:

– Gross premium 9,701,299 7,871,055 6,388,069 5,375,431

– Movement in unearned premium (218,488) (419,177) 106,342 (126,223)

Long-term insurance contracts:

– Gross premium 106,317 134,253 - -

Premium revenue arising from insurance contracts issued 9,589,128 7,586,131 6,494,411 5,249,208

Short-term reinsurance contract:

– Reinsurance expense (3,939,804) (3,255,462) (2,742,273) (2,576,266)

Long-term reinsurance contract:

– Reinsurance expense 2,715 (39,329) - -

Reinsurance expenses (3,937,089) (3,294,791) (2,742,273) (2,576,266)

Net premium income 5,652,039 4,291,340 3,752,138 2,672,942

32 Fee and commission income


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Policy administration

– Insurance contracts 682,888 651,992 471,328 497,408

Total 682,888 651,992 471,328 497,408

33 Claims expenses


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Insurance claims and loss adjustment expenses

– Claims paid 3,230,058 2,850,434 1,638,237 1,407,234

– Changes in outstanding claims 590,500 992,863 125,859 378,593

Total claims and loss adjustment expense 3,820,558 3,843,297 1,764,096 1,785,827

Recoverable from reinsurance (758,848) (974,672) (81,745) (552,518)

Net claims and loss adjustment expense 3,061,710 2,868,625 1,682,351 1,233,309

134




34 Underwriting expenses


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Commission paid 1,498,255 1,261,833 1,065,583 902,330

Other acquisition cost 341,060 418,991 313,613 398,562

Chnages in deferred acquisition cost (81,748) (51) (36,488) 58,187

Total 1,757,567 1,680,773 1,342,708 1,359,079

35 Net investment income

(a) Investment income


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Dividend income 135,346 158,665 328,529 381,206

Interest income on held-to-maturity financial assets 974,019 741,377 233,744 326,153

Interest income on cash and cash equivalents 68,205 143,026 15,267 80,788

Interest income on statutory deposits 86,671 53,556 52,003 32,134

Loss from sale of investment property (10,280) (79,649) (10,280) (79,649)

Rental income 2,000 1,333 2,000 1,333

Total 1,255,961 1,018,308 621,263 741,965

(b) Profit on investment contracts


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Interest income 160,457 124,684 - -

Other Income (Reversal of surplus reserves (see note 21(b))) 72,639 309,485 - -

Guaranteed interest (57,988) (78,100) - -

Other expenses (79,000) (4,574) - -

96,108 351,495 - -

36 Net realised gains on financial assets


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Sale of available for sale financial assets:

– Securities 614,534 33,713 614,534 33,713

Sale of other financial assets - trading assets:

– Securities - - - -

Total 614,534 33,713 614,534 33,713

135




(a)

37 Net fair value gain/(loss) on assets

(a) Fair value gain/(loss) through profit or loss


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Fair value loss on equity securities 1,675 (4) 789 (4)

Fair value loss on investment property (see note 14(e)) (2,338) (250) (2,338) (250)

Total (663) (254) (1,549) (254)

(b) Fair value (loss)/gain through other comprehensive income


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Fair value gain on equity securities (16,762) 170,064 (15,685) 158,839

Fair value (loss) on fixed income securities 9,470 (119,185) 27,093 (54,117)

Fair value gain on revaluation of property and equipment - 949,415 - 949,415

Fair value loss recycled to profit or loss on disposal of available for sale securties (128,719) - (128,719) -

Total (136,011) 1,000,294 (117,311) 1,054,137

38 Other operating income


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Profit from sale of property and equipment 11,875 12,477 10,524 7,548

Interest income on staff loans 4,445 1,756 4,445 1,590

Other income received (see note 38(a) below) 556,395 247,466 441,795 68,289

Net foreign exchange gain (see note 38(b) below) 591,817 2,072,174 523,792 1,951,675

Total 1,164,532 2,333,873 980,556 2,029,102

39 Employee benefit expense


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Staff cost 1,228,190 1,109,307 785,747 670,387

Pension cost 44,972 41,736 26,302 26,361

Staff training 106,968 39,783 27,048 31,656

Other staff cost 101,202 118,995 84,285 96,805

Total 1,481,332 1,309,821 923,382 825,209

Net fair value gains on assets relate to financial assets categorised upon initial recognition at fair value through profit or loss and other assets recognised at fair

value through profit or loss such as held for trading financial assets, financial assets through profit or loss and investment properties.

This represent the gains arising upon reclassification of the realised gains from the disposal of the Available for sale investment in Access Bank Plc securites

(Note 15(c)).

136




40 Other operating expenses


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Depreciation (see note 18) 451,036 318,460 386,057 262,360

Amortization of intangible assets (see note 17) 35,218 16,099 33,651 15,461

Directors emoluments 33,700 33,700 33,700 33,700

Auditors remuneration 61,674 57,031 32,500 32,500

Professional fees:

- Legal services fees 16,195 17,255 11,631 14,794

- Professional fee on actuarial services and tax advisory services 91,249 49,037 32,647 18,925

- Professional fees on advisory services 268,704 492,964 257,455 480,538

- Professional fees on consumer research 5,828 12,600 - -

- Professional fees on corporate strategy development 12,316 53,341 12,316 36,534

Corporate branding and advert 99,306 148,385 52,006 101,408

Board expenses 70,970 40,570 58,889 21,124

Rent and rate 316,232 173,392 139,634 81,398

Insurance cost 22,627 19,584 16,926 11,091

Printing and stationaries 83,264 41,659 66,205 19,264

Newspapers and periodicals 587 2,959 284 396

Transport and tour 202,080 250,403 85,108 133,245

Support staff cost 209,051 232,132 161,237 191,359

Business marketing expenses 217,335 136,769 202,905 100,126

Subscription 46,148 13,397 33,020 11,215

Recruitment expense 1,608 1,591 782 1,546

Write off of assets - 726 - -

Repairs and maintenance 318,098 205,302 288,928 137,589

Annual general meeting expense 26,894 24,664 26,894 24,664

Registrar maintenance expense 159,629 147,142 156,447 147,142

Statutory dues and levies 50,322 102,355 20,560 67,139

Audit and performance review expense 6,413 8,090 5,813 6,882

Bank charges 19,348 12,277 12,681 7,647

Loss on disposal of property and equipment - 1,621 - -

Investment management and custodian fees 10,044 21,523 7,659 18,718

Donations and corporate philanthropy 76,574 63,542 69,240 61,685

Total 2,912,450 2,698,571 2,205,175 2,038,451

137




41 Earning per share


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Profit/(loss) attributable to the Company’s equity holders 1,530,810 586,023 315,644 91,973

Weighted average number of ordinary shares in issue (thousands)

Issued ordinary shares at 1 January/31 December 13,382,738 13,382,738 13,382,738 13,382,738

Basic and diluted earnings/(loss) per share (Kobo per share) 11 4 2 1

Basic earnings per share is calculated by dividing the profit/(loss) attributable to equity holders of the group by the weighted average number of ordinary

shares in issue during the year, excluding own ordinary shares purchased by the Company. Diluted earnings per share is computed by dividing the profit/(loss)

attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding after adjusting the effects of all dilutive ordinary

shares.

The calculation of basic earnings per share as at 31 December 2017 was based on the profit attributable to ordinary shareholders of N1.45 billion and N238

million for the Group and Company respectively and weghted average number of ordinary shares outstanding of 13,382,738,000. The Group and Company

had no dilutive instruments as at 31 December 2017 (2016: Nil). Hence the basic and diluted earnings per share are equal.

138




42 Staff information:

(a) Staff analysis:


2017 2016 2017 2016


Number Number Number Number

N1,000,001 – N2,000,000 39 57 - 17

N2,000,001 – N3,000,000 42 43 21 27

N3,000,000 – N4,000,000 31 4 21 -

N4,000,001 – N5,000,000 20 34 11 26

N5,000,001 – N10,000,000 44 29 27 23

Above N10,000,000 23 14 18 8

Total 199 181 98 101


2017 2016 2017 2016



Management staff 14 16 10 9

Non management staff 185 165 88 92

Total 199 181 98 101

(b) Directors' remuneration:


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Directors' fees and sitting allowances 33,700 53,782 33,700 33,700

Other directors' expenses 129,810 119,898 129,810 119,898

Total 163,510 173,680 163,510 153,598

ii. The directors' remuneration shown above includes:


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Chairman 2,700 2,700 2,700 2,700

Highest paid director 36,043 45,091 36,043 45,091

i. Employees earning more than 1,000,000 per annum, other than the executive directors, whose duties were wholly or mainly discharged in Nigeria, received

emoluments (excluding pension contribution and other allowances) in the following ranges:

ii. The average number of full time persons employed by the Company during the year was as follows:

i. Remuneration paid to the directors of the Company was as follows:

139




iii. The emoluments of all other directors fell within the following range:


2017 2016 2017 2016



N200,001 - N500,000 - - - -

N500,001 - N5,000,000 - - - -

N5,000,001 - N10,000,000 - - - -

N10,000,001 - N20,000,000 11 9 11 9

Total 11 9 11 9

43 Contravention of laws and regulations

44 Litigations and claims

45 Events after the end of the reporting period

46 Dividend

47 Comparatives

Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current period.

The Company compiled with all subsisting laws and regulations during the year and suffered no penalties for contraventions. (31 December 2016 : Nil).

The Group in the ordinary course of business is presently involved in 15 (2016: 16) litigation cases while the Company is involved in 14 (2016: 14) litigation

cases. There was no other contingent liabilities against the Group and Company at the reporting date. (2016: Nil).

Based on the advice of the solicitors, the Directors of the Company are of the opinion that none of the cases is likely to have material adverse effect on the

Company and they are not aware of any other pending and or threatened claims or litigation which may be material to the financial statements.

No significant event that requires special disclosure occurred between the date of authorisation of the financial statements and the date when the financial

statements were issued.

There was no proposal for dividend in respect of the year ended 31 December 2017 by the directors at the annual general meeting to strengthen and consolidate

the Group performance by the reinvestment of the surplus reserve. (31 December 2016: Nil total dividend). Where dividends are proposed they are not included

as liability in the financial statements.

140




48 Related parties

a) Parent

b) Subsidiaries

c) Associate

d) Transactions with key management personnel

e) Key management personnel compensation


2017 2016 2017 2016


N'000 N'000 N'000 N'000

Short term employees benefits - 207,166 - 172,424

Total - 207,166 - 172,424

f) Key management personnel and director transactions


Directors Transactions 2017 2016 2017 2016

(i) Income received/receivable from key management personnel:

Mr. Aigboje Aig-Imoukhuede Insurance premium 1,214 1,675 - -

Mr. Bababode Osunkoya Insurance premium 499 1,129 - -

Mr. Adamu Mahmoud Atta Insurance premium - 225 - -

Mr. Barnabas Olise Insurance premium 5 10 - -

Mrs. Ifeyinwa Osime Insurance premium - 5 - -

Ms. Chizoba Ufoeze Insurance premium 46 126 - -

Mr. Olusegun Ogbonnewo Insurance premium - - - -

Mrs. Adeyinka Adekoya Insurance premium 195 350 - -

Mr. Bode Ojeniyi Insurance premium - - - -

Mr. Femi Obaleke Insurance premium - 10

Mr Peter Ehimhen Insurance premium - -

Total 1,959 3,530 - -

(ii) Loans and advances to key management personnel:

Mr. Bode Ojeniyi Loans and advances - - 4,415 9,443

Total - - 4,415 9,443

Wapic Insurance Plc is the parent Company of the Wapic Group.

The Company has two wholly owned subsidiaries as at 31 December 2017. These are Wapic Life Assurance Limited, domiciled in Nigeria and Wapic

Insurance (Ghana) Limited incorporated in Ghana. Transactions between Wapic Insurance Plc and the subsidiaries also meet the definition of related party

transactions. Where these are eliminated on consolidation, they are not disclosed in the consolidated financial statements.

The Group’s key management personnel and persons connected with them, are also considered to be related parties for disclosure purposes. Key management

personnel is defined as members of the board of directors of the Company, including their close members of family and any entity over which they exercise

control. Close members of family are those who may be expected to influence, or be influenced by that individual in dealings with Wapic Plc. and its

subsidiaries.

The compensation of key management personnel comprised the following:

Key management personnel engaged in the following transactions with the Company during the year:

The Company has one associate company as at 31 December 2017, Coronation Merchant Bank Limited where it has 25.5% (2016: 25.5%) holding.

Transactions between Wapic Insurance Plc and the associate also meet the definition of related party transactions. Where these are eliminated on

consolidation, they are not disclosed in the consolidated financial statements.

Transaction

values for the

year ended

Transaction

values for the

year ended

Balance

outstanding

as at

Balance

outstanding as

at

141




g) Other related party transactions


Entities Relationship Transactions 2017 2016 2017 2016

(i) Income received/receivable related entities:

Coronation Merchant Bank Limited Associate company Insurance premium 48,445 27,982 - -

Coronation Securities Limited Associate company Insurance premium 1,265 1,923 - -

Petralon Energy Common director Insurance premium 1,732 773 - -

Cornation Capital Limited Common director Insurance premium 13,611 13,671 - -

Coronation Merchant Bank Limited Associate company Interest income 1,447 24,443 - -

Coronation Asset Management Associate company Insurance premium 934 653 - -

Coronation Nomiees and Trustee

Limited

Associate company Insurance premium

1,469 509 - -

Wapic Insurance (Ghana) Limited Subsidiary Expense recoverable - - 87,681 90,877

Total 68,904 69,954 87,681 90,877

(ii) Expense paid/payable to related entities:

Coronation Merchant Bank Limited Common director Claims expense 1,680 3,764 - -

Coronation Securities Limited Common director Brokerage service and

professional fee - 11,865 - -

Cornation Capital Limited Common director Consultancy Fee 105,000 137,313

Coronation Merchant Bank Limited Common director Consultancy Fee 10,500 94,750

Coronation Nomiees and Trustee

Limited

Common director

Claims expense 884 369 - -

Wapic Life Assurance Limited Subsidiary Collections to be

remitted - - 328,446 68,455

Total 118,064 248,061 328,446 68,455

(iii) Cash and cash equivalents

Coronation Merchant Bank Limited Common director Money market

placement - - 109,270 36,983

Total - - 109,270 36,983

Transaction

values for the

year ended

Transaction

values for the

year ended

Balance

outstanding

as at

Balance

outstanding as

at

Transactions with key management personnel's related persons and entities as at end of year:

142

Hypothecation of assets and liabilities Wapic Insurance Plc



49 Hypothecation

Group- 31 December 2017

Total

Non life Life Non life Life Non life Life


ASSETS

Cash and cash equivalents 322,585 205,219 - - 919,808 297,730 1,745,342

Financial assets 3,650,204 1,826,986 - 1,178,387 1,742,857 1,097,501 9,495,935

Trade receivables - - - - 486,998 220,491 707,489

Reinsurance assets 838,139 273,383 - - 474,779 - 1,586,301

Deferred acquisition cost - - - - 386,941 143,852 530,793

Other receivables and prepayments - - - - 562,191 499,340 1,061,531

Investment property 186,000 - - - 126,750 - 312,750

Investment in associates - - - - 8,264,440 - 8,264,440

Investment in subsidiaries - - - - - - -

Intangible assets - - - - 479,639 46 479,685

Property and equipment - - - - 3,632,007 155,374 3,787,381

Deferred tax asset - - - - - - -

Statutory deposit - - - - 432,964 200,000 632,964

TOTAL ASSETS 4,996,928 2,305,588 - 1,178,387 17,509,374 2,614,334 28,604,611

LIABILITIES

Insurance contract liabilities 3,817,332 2,250,874 - - 1,073,259 - 7,141,465

Investment contract liabilities - - - 1,063,860 - - 1,063,860

Trade payables - - - - 499,537 16,834 516,371

Provisions and other payables - - - - 1,279,298 179,452 1,458,750

Current income tax - - - - 115,315 148,478 263,793

Deferred tax liabilities - - - - 202,547 - 202,547

TOTAL LIABILITIES 3,817,332 2,250,874 - 1,063,860 3,169,956 344,764 10,646,786

GAP 1,179,596 54,714 - 114,527 14,339,416 2,269,570 17,957,825

The Group is exposed to a range of financial risks through its financial assets, financial liabilities, reinsurance assets and insurance liabilities. In

particular, the key financial risk is that the in the long- term its investment proceeds will not be sufficient to fund the obligations arising from its

insurance and investment contracts. In response to the risk, the Group's assets and liabilities are allocated as follows:

Insurance contract Investment contract Shareholders funds

143




49 Hypothecation

Group- 31 December 2016

Total

Non life Life Non life Life Non life Life


ASSETS

Cash and cash equivalents 220,900 445,978 - 231,319 1,194,244 127,954 2,220,395

Financial assets 3,337,936 1,552,230 - 741,069 433,954 1,336,300 7,401,489

Trade receivables - - - - 553,575 - 553,575

Reinsurance assets 1,094,415 69,143 - - 409,272 - 1,572,830

Deferred acquisition cost - - - - 349,342 98,592 447,934

Other receivables and prepayments - - - - 1,041,171 103,848 1,145,019

Investment property 240,749 - - - 299,181 - 539,930

Investment in associates - - - - 7,173,843 - 7,173,843

Investment in subsidiaries - - - - - - -

Intangible assets - - - - 203,826 70 203,896

Property and equipment - - - - 3,992,267 33,243 4,025,510

Deferred tax asset - - - - - 115,519 115,519

Statutory deposit - - - - 417,632 200,000 617,632

TOTAL ASSETS 4,894,000 2,067,351 - 972,388 16,068,307 2,015,526 26,017,572

LIABILITIES

Insurance contract liabilities 4,789,495 1,584,187 - - - - 6,373,682

Investment contract liabilities - - - 920,154 - - 920,154

Trade payables - - - - 217,247 18,553 235,800

Other payables - - - - 1,181,459 138,584 1,320,043

Current income tax - - - - 88,114 120,268 208,382

Deferred tax liabilities - - - - 393,176 - 393,176

TOTAL LIABILITIES 4,789,495 1,584,187 - 920,154 1,879,996 277,405 9,451,237

GAP 104,505 483,164 - 52,234 14,188,311 1,738,121 16,566,335

The Group is exposed to a range of financial risks through its financial assets, financial liabilities, reinsurance assets and insurance liabilities. In

particular, the key financial risk is that the in the long- term its investment proceeds will not be sufficient to fund the obligations arising from its

insurance and investment contracts. In response to the risk, the Group's assets and liabilities are allocated as follows:

Insurance contract Investment contract Shareholders funds

144




49 Hypothecation

Company- 31 December 2017

Insurance

contract

Shareholders

funds

Total


ASSETS

Cash and cash equivalents 322,585 588,438 911,023

Financial assets 3,650,204 706,725 4,356,929

Trade receivables - 486,997 486,997

Reinsurance assets 838,139 - 838,139

Deferred acquisition cost - 317,832 317,832

Other receivables and prepayments - 871,238 871,238

Investment properties 186,000 126,750 312,750

Investment in associates - 5,059,810 5,059,810

Investment in subsidiaries - 3,876,571 3,876,571

Intangible assets 476,144 476,144

Property, plant and equipment - 3,521,507 3,521,507

Deferred tax asset - - -

Statutory deposit - 300,000 300,000

TOTAL ASSETS 4,996,928 16,332,012 21,328,940

LIABILITIES

Insurance contract liabilities 3,817,332 - 3,817,332

Investment contract liabilities - - -

Trade payables - 415,414 415,414

Provisions and other payables - 1,417,790 1,417,790

Current income tax liabilities - 115,315 115,315

Deferred tax liabilities - 202,548 202,548

TOTAL LIABILITIES 3,817,332 2,151,067 5,968,399

GAP 1,179,596 14,180,945 15,360,541

The Company is exposed to a range of financial risks through its financial assets, financial liabilities, reinsurance assets and insurance liabilities.

In particular, the key financial risk is that the in the long- term its investment proceeds will not be sufficient to fund the obligations arising from its

insurance and investment contracts. In response to the risk, the Company's assets and liabilities are allocated as follows:

145




49 Hypothecation

Company- 31 December 2016

Insurance

contract

Shareholders

funds

Total


ASSETS

Cash and cash equivalents 220,900 90,323 311,223

Financial assets 3,337,936 91,402 3,429,338

Trade receivables - 553,574 553,574

Reinsurance assets 1,094,415 - 1,094,415

Deferred acquisition cost - 281,344 281,344

Other receivables and prepayments - 1,137,047 1,137,047

Investment properties 240,749 299,181 539,930

Investment in associates - 5,059,810 5,059,810

Investment in subsidiaries - 3,876,571 3,876,571

Intangible assets - 199,171 199,171

Property, plant and equipment - 3,811,639 3,811,639

Deferred tax asset - - -

Statutory deposit - 300,000 300,000

TOTAL ASSETS 4,894,000 15,700,062 20,594,062

LIABILITIES

Insurance contract liabilities 3,763,964 - 3,763,964

Trade payables - 157,870 157,870

Provisions and other payables - 1,157,450 1,157,450

Current income tax liabilities - 88,114 88,114

Deferred tax liabilities - 393,175 393,175

TOTAL LIABILITIES 3,763,964 1,796,609 5,560,573

GAP 1,130,036 13,903,453 15,033,489

The Company is exposed to a range of financial risks through its financial assets, financial liabilities, reinsurance assets and insurance

liabilities. In particular, the key financial risk is that in the long- term its investment proceeds will not be sufficient to fund the obligations

arising from its insurance and investment contracts. In response to the risk, the Company's assets and liabilities are allocated as follows:

146

Other national disclosures:

Value added

Wapic Insurance Plc



Other national disclosures

Value Added Statement

For the year ended 31 December 2016


2017 2016 2017 2016


N'000 % N'000 % N'000 % N'000 %

Net premium income - Nigeria 4,848,867 3,600,519 3,752,138 2,672,942

- Foreign 803,172 690,821 - -

Investment Income - Nigeria 3,193,586 2,463,695 1,234,248 775,424

- Foreign 160,552 165,441 - -

Other income - Nigeria 1,054,399 2,154,401 980,556 2,029,102

- Foreign 110,133 179,472 - -

Claims incurred, net commissions and operating expenses

- Nigeria (5,217,412) (5,022,916) (4,393,226) (3,859,884)

- Foreign (1,363,018) (1,393,606) - -

Value added 3,590,279 100 2,837,827 100 1,573,716 100 1,617,584 100

Applied to pay

Employee benefit expense 1,481,332 41 1,309,821 46 923,382 59 825,209 51

Government taxes 91,881 3 607,423 21 (85,019) (5) 422,581 26

Retained in the business:

Depreciation of property and equipment 451,036 13 318,460 11 386,057 25 262,360 16

Amortisation of intangible assets 35,218 1 16,099 1 33,651 2 15,461 1

To augment contingency reserve 253,204 7 182,438 6 191,642 12 161,263 10

(Depletion)/augmentation of reserves 1,277,605 36 403,586 14 124,001 8 (69,290) (4)

Value added 3,590,277 100 2,837,827 100 1,573,714 100 1,617,584 100

147


Historcial fnancial Summary

Wapic Insurance Plc



Financial summaryStatement of financial position

Group Group Group Group Group Company Company Company Company Company

2017 2016 2015 2014 2013 2017 2016 2015 2014 2013

31-Dec 31-Dec 31-Dec 31-Dec 31-Dec 31-Dec 31-Dec 31-Dec 31-Dec 31-Dec

N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000

Assets

Cash and cash equivalents 1,745,342 2,220,395 7,053,721 5,173,243 5,853,022 911,023 311,223 3,320,235 3,190,253 3,651,476

Financial assets 9,495,935 7,401,489 4,312,821 8,786,496 7,606,904 4,356,929 3,429,338 2,330,981 6,030,939 5,794,406

Trade receivables 707,489 553,575 552,079 2,699 186,223 486,997 553,574 534,723 - 34,430

Reinsurance assets 1,586,301 1,572,830 922,583 667,928 727,612 838,139 1,094,415 724,547 618,021 536,666

Deferred acquisition cost 530,793 447,934 414,545 253,508 194,916 317,832 281,344 339,529 214,138 148,165

Other receivables and prepayments 1,061,531 1,145,019 1,225,121 314,624 1,423,543 871,238 1,137,047 1,284,950 203,031 1,319,670

Investment in associates 8,264,440 7,173,843 5,244,301 - - 5,059,810 5,059,810 4,364,339 - -

Investment in subsidiaries - - - - - 3,876,571 3,876,571 3,876,571 3,231,976 2,705,576

Investment property 312,750 539,930 674,950 4,056,314 4,358,495 312,750 539,930 639,950 4,021,314 4,308,161

Deferred tax asset - - 363,353 664,759 330,580 - - 131,679 479,583 133,073

Property, plant and equipment 3,787,381 4,025,510 2,374,523 1,570,978 1,036,305 3,521,507 3,811,639 2,284,511 1,480,074 688,142

Intangible assets 479,685 203,896 35,065 49,814 70,212 476,144 199,171 31,844 45,835 60,127

Statutory deposit 632,964 617,632 521,547 518,508 516,234 300,000 300,000 300,000 300,000 300,000

Total assets 28,604,611 25,902,053 23,694,609 22,058,871 22,304,046 21,328,940 20,594,062 20,163,859 19,815,164 19,679,892

Equity and Liabilities:

Liabilities

Insurance contract liabilities 7,141,465 6,373,682 4,676,611 3,070,797 2,951,635 3,817,332 3,763,964 3,200,391 2,201,313 1,923,813

Investment contract liabilities 1,063,860 920,154 1,196,180 1,176,266 1,455,087 - - - - -

Trade payables 516,371 235,800 210,576 417,655 462,248 415,414 157,870 104,066 328,885 203,607

Provisions and other payables 1,458,750 1,320,043 2,496,916 2,893,034 2,904,378 1,417,790 1,157,450 2,228,084 2,731,208 2,764,257

Deferred income tax liabilities 202,547 277,657 - - - 202,548 393,175 - - -

Current income tax liabilities 263,793 208,382 152,029 300,498 351,171 115,315 88,114 57,636 162,681 240,603

Total liabilities 10,646,786 9,335,718 8,732,312 7,858,250 8,124,519 5,968,399 5,560,573 5,590,177 5,424,087 5,132,280

Equity attributable to parent company

Share capital 6,691,369 6,691,369 6,691,369 6,691,369 6,691,369 6,691,369 6,691,369 6,691,369 6,691,369 6,691,369

Share premium 6,194,983 6,194,983 6,194,983 6,194,983 6,194,983 6,194,983 6,194,983 6,194,983 6,194,983 6,194,983

Contingency reserves 2,061,153 1,807,949 1,625,511 1,436,917 1,289,685 1,742,067 1,550,425 1,389,162 1,232,784 1,112,313

Other reserves 941,704 1,209,743 (209,751) 325,958 577,169 671,027 788,338 19,025 460,605 611,926

Retained earnings 2,068,615 662,291 660,185 (448,606) (573,679) 61,094 (191,626) 279,143 (188,664) (62,979)

Total Equity 17,957,824 16,566,335 14,962,297 14,200,621 14,179,527 15,360,540 15,033,489 14,573,682 14,391,077 14,547,612

Total Liabilities and Equity 28,604,610 25,902,053 23,694,609 22,058,871 22,304,046 21,328,939 20,594,062 20,163,859 19,815,164 19,679,892

148


Historcial fnancial Summary

Wapic Insurance Plc



Statement of profit or loss and

other comprehensive income

Group Group Group Group Group Company Company Company Company Company

2017 2016 2015 2014 2013 2017 2016 2015 2014 2013

31-Dec 31-Dec 31-Dec 31-Dec 31-Dec 31-Dec 31-Dec 31-Dec 31-Dec 31-Dec

N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000

Gross premium written 9,807,616 8,005,308 7,100,713 5,203,960 3,760,515 6,388,069 5,375,431 5,212,600 4,015,687 2,380,024

Net underwriting income 6,334,927 4,943,332 4,370,306 3,160,425 2,843,023 4,223,466 3,170,350 3,067,264 2,155,678 1,566,602

Total underwriting expenses 4,798,790 4,562,655 2,892,613 1,844,587 2,942,261 3,025,059 2,592,388 1,873,087 1,317,237 1,638,150

Underwriting profit 1,536,136 380,677 1,477,693 1,315,838 (99,238) 1,198,406 577,962 1,194,177 838,441 (71,548)

Total investment income 3,130,472 3,737,135 2,893,778 1,817,085 2,274,227 2,214,804 2,804,526 2,207,035 1,122,716 1,766,104

Net income 4,666,608 4,117,812 4,371,471 3,132,923 2,174,989 3,413,210 3,382,488 3,401,212 1,961,157 1,694,554

Expenses 4,432,115 4,150,240 3,468,246 3,074,352 2,804,118 3,182,585 2,867,934 2,364,884 2,235,984 1,904,404

Profit before tax 1,622,691 1,193,446 1,667,662 58,572 (629,129) 230,625 514,554 1,036,327 (274,827) (209,850)

Income tax expense (91,881) (607,423) (370,277) 178,261 421,002 85,019 (422,581) (412,142) 269,613 241,326

Profit after tax 1,530,810 586,023 1,297,385 236,833 (208,127) 315,644 91,973 624,185 (5,214) 31,476

Other comprehensive income:

Items that are or may be reclassified to profit or loss:

Foreign currency translation

difference of foreign operations (27,610) 459,766 (209,654) (64,419) (30,579) - - - - -

Net changes in fair value of AFS

financial instruments:

- Unrealised net gains/(losses) arising

during the period (7,292) 50,879 (116,437) (151,321) 325,143 11,408 104,722 (116,437) (151,321) 325,143

- Net reclassification adjustments for

realised net gains/(loses) (128,719) - (325,143) - (128,719) - (325,143) -

Share of other comprehensive income of

associates (104,418) 244,258 115,525 - - - - -

Items will not be reclassified to profit or loss:

Revaluation gain on property and

equipment, net of tax - 949,415 - - 255,903 - 949,415 - - 243,898

Deferred tax on revaluation gain on

property and equipment - (284,824) - - (36,836) - (284,824) - - (33,235)

Total comprehensive income for the

year 1,262,771 2,005,517 761,676 21,093 305,504 198,333 861,286 182,605 (156,535) 567,282

Earnings per share (basic) 11 4 10 2 (2) 2 1 5 (0) 0

Earnings per share (adjusted) 11 4 10 2 (2) 2 1 5 (0) 0

149

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