2015 Zenith Assurance · Professor Oyewusi Ibidapo-Obe Independent Non-executive director Dividend...

ZENITH LIFE ASSURANCE COMPANY LTD

ENITH Assurance

RC 407202

Supporting your best interest

TABL

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CON

TENS

Corporate information ..................................................... 1

Directors' report ................................................................ 2-5

Management's Discussion and Analysis.......................... 6 - 1 4

Statement of directors' responsibilities........................... 15

Corporate governance report .......................................... 16-20

Independent auditor's report............................................ 21-22

Reporting entity................................................................... 23

Statement of compliance with International

Financial Reporting Standard............................................ 23

Basis of preparation............................................................ 23-24

Significant accounting policies.......................................... 25-34

Required technical and other reserves by NAICOM.... 34

Statement of profit or loss and other

comprehensive income..................................................... 35

Statement of financial position......................................... 36

Statement of changes in equity........................................ 37

Statement of cash flows…………………............................... 38

Notes to the financial statement ..................................... 39

1. Financial risk management............................... 39-61

2. Operating segment ........................................... 62

3. Financial assets and liabilities........................... 63

4. Gross premium................................................... 64

5. Reinsurance expenses...................................... 64

6. Commission income.......................................... 64

7. Claims expenses................................................. 64

8. Underwriting expenses..................................... 64

9. Investment income ............................................ 65

10. Management expenses .................................... 65

11. Cash and cash equivalents................................ 66

12. Financial assets:

Investment securities - held to maturity... 66

Investment securities - available for sale... 67

Loans and receivables........................... 68

Trade receivables..................................... 68

13. Reinsurance assets.......................................... 69

14. Other receivables........................................... 69

15. Intangible assets.............................................. 69

16. Property and equipment................................... 70

17. Statutory deposit............................................... 70

18. Insurance contract liabilities............................ 71-73

19. Investment contract liabilities......................... 73

20. Trade payables................................................... 74

21. Accruals and other payables........................... 74

22. Current income tax liabilities....................... 74-75

23. Deferred taxation.............................................. 75 - 76

24. Share capital....................................................... 76

25. Statutory contingency reserves...................... 76

26. Retained earnings............................................... 77

27. Fair value reserves............................................ 77

28. Earnings per share............................................. 77

29. Related party transactions............................... 77-78

30. Litigations............................................................ 79

31. Events after reporting date............................. 79

32. Directors and Employees................................ 79

33. Contravention of laws and regulations........ 80

Other National Disclosures ............................................. 81

1. Hypothecation................................................... 82-83

II. Value added statement.................................... 84

III. Financial summary............................................ 85

CORPORATE

INFORMATIONName of Directors Jim Ovia Chairman

Chukwuemeke Igumbor Managing DirectorEbelechukwu Nwachukwu Executive DirectorElaine Delaney Non-Executive DirectorJoseph Onwubuya Non-Executive DirectorVictor Abulele Non-Executive DirectorProfessor Oyewusi Ibidapo-Obe Independent Non-Executive Director

Registered Office Civic TowersOzumba Mbadiwe Road,Victoria IslandLagos

RC Number 407202

Company Secretary Emeka AnyaejiCivic TowersOzumba Mbadiwe Road,Victoria IslandLagos

Auditors KPMG Professional ServicesKPMG TowerBishop Aboyade Cole StreetVictoria IslandLagos

Major Banker(s) Zenith Bank PlcFirst Bank of Nigeria PlcFCMB

Actuary HR Nigeria Limited

Reinsurers Africa Reinsurance CorporationContinental Reinsurance Plc

001Supporting your best interest

2015 ANNUAL REPORT


DIRECTORS' REPORT Matters Act as a private limited liability company, and is domiciled in Nigeria.

For the year ended 31 December 2015The address of its registered office is: 280 Ajose Adeogun Street, Victoria Island, Lagos.The Directors are pleased to present their annual

report on the affairs of Zenith Life Assurance The Company's principal activities are the provision Company Limited (“the Company”), together with the of life assurance services, claims settlement and audited financial statements and the auditor's report undertaking investment activities.for the year ended 31 December 2015.

Legal form and principal activity

The Company was incorporated in Nigeria on 30 March 2001 under the Companies and Allied

Operating results:The following is a summary of the Company's operating results:

31-Dec-2015 31-Dec-2014

N'000 N'000Gross Premium Written 3,363,440 2,325,452 -

Profit before taxation 867,407 1,373,090 Minimum dividend tax (425,857) -Taxation 599,187 (241,163)

Profit after taxation 1,040,737 1,131,927 Transfer to contingency reserve (104,074) (113,193)

Retained earnings for the year 936,663 1,018,734 Retained earnings beginning of year 2,447,011 2,128,277 Interim dividend (2,000,000) (700,000)

Retained earnings, end of year 1,383,674 2,447,011 -

Earnings per share – basic 52K 57k

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Directors and their interests

The directors of the Company who held office during the year were as follows:

Jim Ovia ChairmanChukwuemeke Igumbor Managing DirectorEbelechukwu Nwachukwu Executive DirectorJoseph Onwubuya Non-executive directorVictor Abulele Non-executive directorElaine Delaney Non-executive directorProfessor Oyewusi Ibidapo-Obe Independent Non-executive director

Dividend Excess Dividend Taxation

On 7 October 2015, the directors declared an interim Excess dividend tax of ? 425.86million was recognised dividend of ? 1.00 (2014: ? 0.35) per share on issued in the current year from reserves of ? 2.45billion paid up capital of 2,000,000,000 ordinary shares included in the amount of ? 2billion declared as interim amounting to ? 2billion (2014: ? 700million). dividend based on the fact that an amount of

? 508.48million has already been subjected to tax in previous years.

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Directors' interest in contracts Employment of disabled persons

None of the directors has notified the Company, for The Company operates a non-discriminatory policy on the purpose of section 277 of the Companies and recruitment. Applications by disabled persons are Allied Matters Act, of their direct or indirect interest in always fully considered, bearing in mind the respective contracts or proposed contracts with the Company aptitudes and abilities of the applicants concerned.during the year.

In the event of members of staff becoming disabled, Property and equipment every effort is made to ensure that their employment

with the Company continues and that appropriate Information relating to changes in property and training is arranged. It is the policy of the Company that equipment during the year is given in Note 16 to the the training, career development and promotion of financial statements. disabled persons should, as far as possible, be identical

with those of other employees. During the year under Donations and charitable gifts review, there was no disabled person in its

employment.The Company made no contributions to charitable and non-political organisations during the year (2014:Nil)

Directors shareholding

The following directors have direct shareholding in the Company:2015 2014

Number of Shares Number of SharesJim Ovia 1 1

Ownership structure

The called-up and fully paid-up shares of the Company as at 31 December 2015 were beneficially held as follows:

2015 2015 2014 2014 No. of Shares % Holding No. of Shares % Holding

Zenith General Insurance Co Ltd 1,999,999,999 100.00% 1,999,999,999 100.00%Jim Ovia 1 0.00% 1 0.00%

2,000,000,000 100.00% 2,000,000,000 100.00%

Analysis of shareholding

The analysis of the distribution of the shares of the Company at the end of the financial year is as follows:

31 December 2015 No. of

Share range Shareholders % of Holdings No. of HoldingsLocal Shareholders 1-1,000,000,000 1 0.00% 1 1,000,000,000-2,000,000,000 1 100.00% 1,999,999,999 -

Total 2 100.00 2,000,000,000

31 December 2014

No. of Share range Shareholders % of Holdings No. of HoldingsLocal Shareholders 1-1,000,000,000 1 0.00% 1 1,000,000,000-2,000,000,000 1 100.00% 1,999,999,999 -

Total 2 100.00 2,000,000,000

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Health, safety and welfare of employees affecting them as employees and the various factors affecting the performance of the Company. This is achieved through regular meetings between The Company's employees are adequately insured management and staff of the Company.against occupational hazards. In addition, medical

facilities at specified limits are provided to employees Gender analysisand their immediate families at the Company's

expense.The number and percentage of male and female employed during the financial year vis-à-vis total Employee training and involvementworkforce was as follows:

The Company places considerable value on the involvement of its employees and has continued its practice of keeping them informed on matters

31 December 2015

Male Female Male FemaleNumber Number Percentage Percentage

Employees 16 10 62% 38%

Gender analysis of the board and top management is as follows:

Board 5 2 71% 29%Top Management 3 2 60% 40%

Detailed analysis of the board and top management is as follows:

Assistant Manager 0 0 0% 0%Deputy Manager 0 0 0% 0%Manager 0 2 0% 100%Senior Manager 1 0 100% 0%Principal Manager 0 0Executive Director 1 0 100% 0%Non-executive Director 5 2 71% 29%

31 December 2014

Male Female Male FemaleNumber Number Percentage Percentage

Employees 14 6 70% 30%

Gender analysis of the board and top management is as follows:

Board 5 2 71% 29%Top Management 4 2 67% 33%

Detailed analysis of the board and top management is as follows:

Assistant Manager 0 2 0% 100%Deputy Manager 0 0 0% 0%Manager 1 0 100% 0%Senior Manager 1 0 100% 0%Executive Director / CEO 1 1 50% 50%Non-executive Director 4 1 80% 20%

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Contracts Companies and Allied Matters Act of Nigeria, the Board of Directors will propose for approval at the next

In accordance with Section 277 of the Companies and shareholders' meeting for the appointment of a new Allied Matters Act of Nigeria, none of the Directors independent auditor for the Company.has notified the Company of any direct or indirect interest in contracts deliberated by the Company By order of the boardduring the year.

Acquisition of own shares

The Company did not purchase any of its own shares Emeka Anyaejiduring the year. Company Secretary

FRC/2013/NBA/00000002409Events after reporting date Plot 280 Ajose Adeogun Street,

Victoria Island, Lagos.There was no material event subsequent to year end that could impact on the financial statements. 29 March 2016

AuditorsMessrs KPMG Professional Services will be serving out their tenor in office as independent auditors of the Company. In accordance with section 357(2) of the

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MANAGEMENT'S DISCUSSION AND ANALYSIS (i) its revenues in 2016 will be approximately 4.4billion naira; This income expectation is associated with improved patronage, diversified This Management's Discussion and Analysis (“MD&A”) marketing strategies especially in the first Quarter is designed to provide the reader with a greater of the year when insurance covers will be required understanding of the Company's business, business by many.strategy and performance, as well as how it manages

risk and capital resources.In addition, the Company's expectation with regard to its net earnings in 2016 is based in part It is intended to enhance the understanding of the on the assumptions that tax rates will be similar to audited annual f inancial statements and those in 2015.accompanying notes, and should therefore be read in

conjunction with these documents.These forward-looking statements are subject to a number of risks and uncertainties that could cause Reference in this MD&A to the “Company” means actual results or events to differ materially from "Zenith Life Assurance Company Limited”current expectations, including, but not limited to:

The Company's quarterly and annual financial lfailure to realize revenue growth, anticipated statements, its Annual returns form and other financial

cost savings or operating efficiencies from the documents are available in our various offices Company's major initiatives, including nationwide and with the National Insurance investments in the Company's IT systems, Commission.including the Company's IT systems implementation, or unanticipated results from Unless otherwise indicated, all financial information these initiatives; the inability of the presented in this MD&A, including tabular amounts, is Company's IT infrastructure to support the in Nigeria Naira and is prepared in accordance with requirements of the Company's business; International Financial Reporting Standards (“IFRS”).heightened competition, whether from current competitors or new entrants to the marketplace; changes in economic conditions including the rate of inflation or deflation, This Annual Report – Financial Review for Zenith Life changes in interest and currency exchange Assurance Company Limited contains forward-looking rates and derivative and commodity prices; statements about the Company's objectives, plans, public health events including those related to goals, aspirations, strategies, financial condition, results food safety; of operations, cash flows, performance, prospects and

opportunities. These forward-looking statements are lthe inability of the Company to manage typically identified by words such as “anticipate”,

receivables to minimize the impact of inability “expect”, “believe”, “foresee”, “could”, “estimate”, to collect the premiums due;“goal”,“intend”, “plan”, “seek”, “strive”, “will”, “may” and

“should” and similar expressions, as they relate to the lfailure by the Company to maintain Company and its management.

appropriate records to support its compliance with accounting, tax or legal rules, regulations The forward-looking statements in this document and policies;reflects the Company's expectations as at 29 March,

2016 when the Company's Board of Directors lfailure of the Company's to manage her approved this document, and are subject to change

relationship with Brokers and Insurance after this date. These forward-looking statements are Agents;not historical facts but reflect the Company's current

expectations concerning future results and events. lreliance on the performance and retention of They also reflect management's current assumptions

third-party service providers including those regarding the risks and uncertainties referred to below associated with the Company's supply chain and their respective impact on the Company. The and apparel business;Company does not undertake any obligation to update

publicly or to revise any such forward-looking lsupply and quality control issues with vendors;statements, unless required by applicable legislation or

regulation.lchanges to or failure to comply with laws and

regulations affecting the Company and its In this Annual Report – Financial Review, forward business,looking statements include the Company's expectation

that:

(a) Forward-Looking Statements

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lchanges in the Company's income, Mission commodity, other tax and regulatory liabilities including changes in tax laws, regulations or To employ the use of a highly motivated workforce and future assessments; state of the art technology in our risk management

process thereby generating good returns to our lthe risk that the Company would experience a stakeholders.

financial loss if its counterparties fail to meet their obligations in accordance with the terms Strategic Priorities Include and conditions of their contracts with the Company; and - Operational Excellence

- Improved Competitivenesslthe inability of the Company to collect on its - Stronger relationships with Clients

Brokers/Insurance Companies receivables. - Geographical Diversification and growth of markets and Offerings

This is not an exhaustive list of the factors that may - B u i l d i n g S u s t a i n a b l e P e o p l e a n d affect the Company's forward-looking statements. Organizational CapabilitiesOther risks and uncertainties not presently known to - Financial Strength and Flexibilitythe Company or that the Company presently believes - Corporate Social Responsibilityare not material could also cause actual results or events to differ materially from those expressed in its Our Boardforward-looking statements.

The Company has enjoyed a steady growth in its Additional risks and uncertainties are discussed in the commitment to providing integrated financial services Company's Enterprise Risks and Risk Management to its customers from various sectors of the economy.section of this MD&A.

The company's growth, since its incorporation, is Readers are cautioned not to place undue reliance on premised upon sound business standards backed by these forward-looking statements, which reflect the being a subsidiary of Zenith General Insurance Company's expectations only as of the date of this Company Limited, one of the leading and insurance MD&A. The Company disclaims any intention or companies in Nigeria and the uncompromising obligation to update or revise these forward-looking integrity and dedication of its directors, led by Mr. Jim statements, whether as a result of new information, Oviafuture events or otherwise, except as required by law.

Our Business(b) Overview of Our Business and Strategy

The Company offers unique, customer based products The Company was incorporated in 30 March 2001 to to clients in various sectors. The services we offer carry out the business of Life Assurance The company include;is a subsidiary of Zenith General Insurance Company - Life Insurance ServicesLimited and it is domiciled in Nigeria. - Investment linked services

(c) Vision and Strategies Our Reinsurance

To be the best provider of insurance services to our The Company underwrites with the support of various valuable clients, both locally and globally. reinsurance companies and brokers to ensure its risk

management is always optimal. We also consult with We aim to be the preferred insurer by all our brokers reinsurance companies and brokers on technical and clients on the basis of issues/alliance.

- Integrity- Professionalism Our Reinsurers are Africa Reinsurance, Continental - Satisfaction Reinsurance, as a localized reinsurer is required, - Sustainable stakeholder value creation however, we liaise with Hannover Life Re of South - Good Corporate Governance Africa and are working towards an alliance for products

and advisory support.We operate from 12 locations, three within Lagos, Abuja, Kaduna, Kano, Ibadan, Enugu, Port harcourt, Warri, Asaba, Benin. Each Branch or Operational office situated strategically to serve a wider area.

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Our Clients Our Core Values

The Company is proud to be of service to companies in - Customer Satisfactionall sectors. Our clientele base spans across all major - Sustainable stakeholder value creationindustries including Oil & Gas, Transportation, Marine, - ProfessionalismAviation, Power, Construction, Engineering, Ministries, - Good Corporate GovernanceGovernment, Missions, Embassies and Individuals.

Our Branch Network

We have specialized strategically located underwriting offices in Ikeja, Apapa, Abuja, Enugu, Port Harcourt, Kano, Warri, and Ibadan.

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The company is structured to ensure absolute professionalism at all levels.

Generally, People, Service, Technology, Skills, Talent, Our Brand, Integrity, Reinsurance and effective Relationship Management and Alliances all fit together to increase our competitive advantage

OUR OPERATING STRUCTURE

Customer care, Products, Human Resources, Internal Control/ Compliance, Credit Control, Corporate Affairs.

ZENITH LIFE ASSURANCE

GROUP SHARED SERVICES

REINSURANCE &LIFE CLAIMS

UNDERWRITINGFINANCIALCONTROL

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(d) Revenue and Underwriting Activities

Items Form Current period Prior period Change 2015 2014 N'000 N'000 %-

Gross premium written 3,363,440 2,325,452 31%-

Gross premium earned 2,986,247 2,393,159 20%-

Reinsurance expenses (653,152) (576,200) 12%-

Net premium income 2,333,095 1,816,959 22%-

Fees and commission income 161,292 125,819 22%-

Net underwriting income 2,494,387 1,942,778 22%-

Profit or loss before taxation 867,407 1,373,090 -58%-

Minimum tax (425,857) - 43%-

Income tax expense 599,187 (241,163) -89%-

Profit after taxation 1,040,737 1,131,927 -9%

(e) Financial condition

Financial profile 2015 2014 N'000 N'000

AssetsCash and cash equivalents 1,747,983 1,404,212

Financial assets Investment securities held to maturity 5,544,704 5,267,151 Investment securities available for sale 106,009 123,953 Loans and receivables 89 - Trade receivables 12,958 - Reinsurance assets 496,708 306,196Other receivables and prepayments 3,225 3,225 Deferred tax asset 762,599 - Intangible assets 18,640 8,549 Property and equipment 5,405 6,839 Statutory deposits 200,000 200,000

8,898,320 7,320,125

LiabilitiesTrade payables 23,779 34,064 Provisions and other payables 2,085,747 924,177 Insurance contract liabilities 1,854,293 1,429,053 Investment contract liabilities 634,392 419,596 Current income tax liabilities 496,333 188,038 Deferred tax liabilities - 972

5,094,544 2,995,900

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(f) Key Financial Performance Indicators

The Company has identified specific key financial performance indicators to measure the progress of short and long term objectives.

Financial trends and ratios 2015 2014Business volumes and trends Growth in gross premium written (in thousands of naira) 1,037,988 802,721 Premium growth rate 45% 53% Renewal rates 69% 78%

ProfitabilityUnderwriting profit ratio 20% 38%Operating ratio 8% 10%Average return on investment 16% 14%Return on equity 38% 25%

Solvency and reservesNet premium/Shareholders' funds 61% 42%Policyholders' funds/Shareholders' funds 49% 33%Solvency ratio 9% 11%% growth, Shareholders' funds -13% 9%% growth, Net premiums 28% 68%

LiquidityPolicyholders' funds/Liquid assets 21% 19%Trade debts/Assets 0% 0%Cash claims cover 1476% 1491%Trade debts/Shareholders' funds 0% 1%

InvestmentsInvestment yield 16% 14%% growth, Investment income 25% 2%

Underwriting performanceUnderwriting performance ratio 20% 38%Retention ratio 69% 78%Claims (loss) ratio 39% 32%Expense ratio 15% 13%Combined ratio 54% 45%

Capital adequacyGross risk ratio 113% 187%Net risk ratio 163% 240%

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(g) Insurance Industry Regulatory Framework

Impact of reforms on insurance industry

(h) Financial instruments

(I) Disclosure Controls and Procedures

(j) Internal Control over Financial Reporting

Our Vision

- Sustainable stakeholder value creation- Good corporate Governance

Our services remained uncompromised making our The Company being a major player in the Nigerian growth trajectory and maintaining a stronghold on our insurance industry has witnessed tremendous changes existing businesses in 2015.in recent times owing to the new reforms embarked upon by NAICOM. We operate from 14 locations, four within Lagos,

Abuja, Kaduna, Kano, Ibadan, Enugu, Port harcourt, “These reforms include the introduction of Risk Based Warri, Asaba, Benin, Uyo. Each Branch or Operational Supervision, migration to International Financial office situated strategically to serve a wider area.Reporting Standard (IFRS) from the Nigerian Generally With our proper understanding of Nigeria's business Accepted Accounting Principles (NGAAP); Market environment we shall continuously activate tailored Conduct Reforms, Claims Settlement Reforms, activities that would enable us utilize the Financial Inclusion, etc, all geared towards developing developmental opportunities of our “Market Space” the industry and improving the general perception through our strategic business plan.about insurance.

“Suffice it to say that these reforms are in line with the Federal Government's vision 2020:20 of deepening The Company discloses information on the insurance penetration to become the insurance classification and fair value of its financial instruments, industry of choice among the emerging markets in as well as on the nature and extent of risks arising from terms of capacity, safety, transparency and efficiency. financial instruments, and related risk management in

the 2015 audited annual financial statements.In its third year of the commencement of the 'No premium no cover' (NPNC) policy, Zenith Life Assurance is consolidating the gains of the regulatory reform. Though not so much enthusiasm was Management is responsible for establishing and expressed about the enforcement of the 'NPNC' policy maintaining a system of disclosure controls and at its inception, now reviewing the performance in its procedures to provide reasonable assurance that all third year the experience has been a positive one in material information relating to the Company is improved cash flows and liquidity. gathered and reported to senior management on a

timely basis so that appropriate decisions can be made Leveraging on the complementary strength of NPNC regarding public disclosure.regulatory framework , further gains were recognized as Gross Premiums were up by 45% to about N3.36B and premium receivables reducing to almost Nil in line with the regulators drive to stem its unhealthy growth, Management is also responsible for establishing and whilst our investment income went up by 25%. maintaining adequate internal controls over financial

reporting to provide reasonable assurance regarding Management believes that this positive development the reliability of financial reporting and the preparation which has enhanced the performance of the company of financial statements for external purposes in in terms of Good public Image and increased accordance with International Financial Reporting profitability which obviously has been achieved as a Standard (IFRS).result of efficient and prompt claims settlement and ability to generate more income on investment which It should be recognized that due to inherent limitations, will arise because of the increase in Investible any controls, no matter how well designed and funds(Liquidity). operated, can provide only reasonable assurance of

achieving the desired control objectives and may not prevent or detect misstatements. Projections of any evaluations of effectiveness to future periods are

To be the best provider of insurance services to our subject to the risk that controls may become valuable clients, both locally and globally. inadequate because of changes in conditions, or that

the degree of compliance with the policies or We aim to be the preferred insurer by all our brokers procedures may deteriorate. and clients on the basis of- Integrity Additionally, management is required to use judgment - Professionalism in evaluating controls and procedures.- Satisfaction

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(k) Changes in Internal Control over Financial Reporting

(l) Enterprise Risks and Risk Management

Operating Risks and Risk Management

reputational risks affecting the Company and to effectively prioritize the risks.

Management has also been evaluated whether there The annual ERM assessment is carried out primarily were changes in the Company's internal controls over through interviews and risk assessments with senior financial reporting that occurred during the period management. Risks are assessed and evaluated based beginning on January 1, 2015 and ended on December on the Company's vulnerability to the risk and the 31, 2015 that materially affected, or are reasonably potential impact that the underlying risk would have on likely to materially affect, the Company's internal the Company's ability to execute its strategies and control over financial reporting. Management achieve its objectives. Risk owners are assigned determined that no material changes occurred during relevant risks and metrics are developed for the top this period. risks for monitoring. Management provides a semi-

annual update to the Audit Committee of the status of the top risks based on significant changes from the prior update, anticipated impacts in future quarters and

The Company is committed to establishing a significant changes in key risk metrics. In addition, the framework that ensures risk management is an integral long-term (1-3 year) risk level is assessed in order to part of its activities. To ensure the continued growth monitor potential long term impacts on the risk which and success of the Company, risks are identified and may assist in risk mitigation planning activities.

-managed through an Enterprise Risk Management The Internal Audit and Risk Management group (“ERM”) program. The Board has approved an ERM manages the ERM program through the development policy and oversees the ERM program through of the risk framework and methodologies, completion approval of the Company's risks and risk prioritization. of the annual ERM assessment, continuous monitoring The ERM program assists all areas of the business in of the key risks and semi-annual reporting to the Audit managing appropriate levels of risk tolerance by Committee. The accountability for oversight of the bringing a systematic approach, methodology and tools management of each risk is allocated by the Audit for evaluating, measuring and monitoring key risks. The Committee to either the full Board or to a Committee results of the ERM program and other business of the Board.planning processes are used to identify emerging risks -

to the Company, prioritize risk management activities The operating, financial and reputational risks and risk and develop a risk-based internal audit plan. management strategies are discussed below.

-

Each of these risks has the potential to negatively Risk is not eliminated through the ERM program. Risks affect the Company's financial performance. The are identified and managed within understood risk Company has risk management strategies, including tolerances. The ERM program is designed to:insurance programs, that are intended to mitigate the potential impact of these risks. However, these - Promote a culture of awareness of risk strategies do not guarantee that the associated risks management and compliance within the will be mitigated or not materialize or that events or Company;circumstances will not occur that could negatively - Facilitate corporate governance by affect the Company's financial condition or providing a consolidated view of risks across performance.the Company and insight into the

methodo log ies for ident i f i ca t ion , assessment, measurement and monitoring

- Operating Risksof the risks;- Information Technology and other Systems - Assist in developing consistent risk

Implementationsmanagement methodologies and tools - Change Management and Process Executionacross the organization;- Contract Management and Records Retention- Ensure that resources are acquired - Information Integrity and Reliabilityeconomically, used efficiently and - Competitive Environmentadequately protected; and- Economic Environment- Enable the Company to focus on its key risks - Food Safety and Public Healthin the business planning process and - Colleague Retention and Succession Planningoptimize financial performance through - Distribution and Supply Chainresponsible risk management.- Labour Relations- MerchandisingRisk identification and assessments are important - Inventory Managementelements to the Company's ERM framework. An - Disaster Recovery & Business Continuityannual ERM assessment is completed to assist in the

update and identification of financial, operational or

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- Strategy Development and Execution · Consolidated level- Privacy and Information Security- Franchise Independence and Relationships The divisional budgets are subsequently reviewed by - Vendor Management and Third Party Service the Company's senior executives .

Providers- Regulatory and Tax · Board of Directors- Workplace Health and Safety- Environmental Final approval of the Annual Budget is provided by the - Trademark and Brand Protection Board of Directors in the first quarter of the current - Defined Benefit Plan Contributions year.- Multi-Employer Pension Plans- Real Estate and Store Renovations The Annual Budget is a key tool used by management - Utility and Fuel Prices to monitor the Company's performance and progress - Ethical Business Conduct against key financial objectives. Furthermore, the

figures set in the Annual Budget have an impact on Financial Risks and Risk Management management's compensation, as these figures are used

in determining part of their performance bonus. The - Financial Risks Annual Budget is updated during the year to reflect - Liquidity and Capital Availability current information as the Company prepares - Commodity Prices forecasts of its annual expected results in the first, - Credit Common Share Price second and third quarters (“Quarterly Forecasts”), - Interest Rates Derivative Instruments which are presented to the Board of Directors. In - Foreign Currency Exchange Rate addition, the performance of each individual project

(i.e., its estimated revenues and costs to complete) is (l) Accounting Policies and Changes continuously reviewed by its respective project

manager and, depending on the size and risk profile of The Company's accounting policies adopted are the project, by key management personnel, including consistently applied in the current and preceeding the divisional manager, the business segment periods, except as disclosed in Note IV. executive vice-president, the Chief Financial Officer

and the Chief Executive Officer. (m) How We Analyze and Report Our Results

Budgeted and forecasted marketing, general and Result by category of activity. These include; administrative expenses, net financial expenses, and - Life assurance revenues income tax expense are derived from detailed analysis - Investment income and are influenced by the level of anticipated activities

and profitability.(n) How We Budget and Forecast Our Results

In regards to its OCI budget and forecast, expected The Company prepares a formal annual budget results based on assumptions specific to each (“Annual Budget”) in the First quarter of each year, investment are used.which is the basis of the Company's financial outlook.

One of the key management tools for monitoring the · Insurance Lines of business level Company's performance is the monthly evaluation and

analysis of actual results compared to the Annual The budget information is prepared for individual lines Budget or the Quarterly Forecasts, for revenues, gross of business which will form the primary basis of the margin and profitability. This enables management to Company's Annual Budget analyze its performance and, if necessary, take

remedial actions. · Divisional level

The project information is then compiled by each marketing division/branch /zone and approved by the Company's divisional management .

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Statement of Directors' responsibilities in relation to the financial statements For the year ended 31 December 2015

The Directors accept responsibility for the preparation of the annual financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS) and in the manner required by the Companies and Allied Matters Act of Nigeria, the Financial Reporting Council of Nigeria Act, 2011, the Insurance Act of Nigeria and relevant National Insurance Commission regulations.

The Directors further accept responsibility for maintaining adequate accounting records as required by the Companies and Allied Matters Act of Nigeria and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatements.

The Directors have made assessment of the Company's ability to continue as a going concern and have no reasons to believe that the Company will not remain a going concern in the year ahead.

SIGNED ON BEHALF OF THE BOARD OF DIRECTORS BY:

Victor Abulele Chukwuemeke IgumborDirector Managing Director/CEO(FRC/2013/ICAN/00000004830) (FRC/2012/CIIN/00000000475)29 March 2016 29 March 2016

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b. Shareholding

Company's shareholding is as follows:

2015 2015 2014 2014 No. of Shares % Holding No. of Shares % Holding

Zenith General Insurance Co Ltd 1,999,999,999 100.00% 1,999,999,999 100.00%Jim Ovia 1 0.00% 1 0.00%

2,000,000,000 100.00% 2,000,000,000 100.00%-

CORPORATE GOVERNANCE REPORT of the Company, but also carries on its business in a manner that engenders public trust and confidence while meeting the expectations of all stakeholders.a. Introduction

Zenith Life Assurance Company Limited ("the Company") has in place an effective governance mechanism that not only ensures proper over-sight of its business by the Directors and other principal organs

c. Board of Directors lReview and approval of annual budgets and business plans; setting performance objectives,

The Board is responsible for driving the Corporate monitoring implementation and corporate Governance mechanism of the Company. performance.Besides possessing the requisite academic qualifications and experience in Board affairs, lOverseeing major capital expenditures, Directors are well abreast of their responsibilities and acquisitions and divestitures.are conversant with the Company's business.

lMonitoring the effectiveness of the governance They are therefore able to exercise sound judgment on practices under which the Company operates and matters relating to its business. making appropriate changes as necessary.

d. Board Structure lEnsuring the integrity of the Company's accounting and financial reporting systems,

The board is made up of a seven (7) directors including the internal audit function and that comprising of four (4) non-executive directors, one (1) appropriate systems of control and risk monitoring independent non-executive director and two (2) are in place.executive directors

lProviding oversight of senior management.The Managing Director/Chief Executive is responsible for the day to day running of the Company, assisted by lEstablishment of the various Committees of the the Management Committee. Board including the terms of reference and review

of reports of such Committees to address key e. Responsibilities of the Board areas of the Company's business.

The Board is responsible for:

lReviewing and providing guidance for the Company's corporate and business strategy, major plans of action and risk Policy.

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The Board meets at least every quarter but may hold Committee's Terms of Referenceextra-ordinary sessions to address urgent matters requiring the attention of the Board. ?Consideration and recommendation to the

Board, of all financial and administrative matters f. Board Committees whose aggregate monetary value is beyond the

limit of the Company's Management approving The Board carries out its oversight functions using its power;various Board Committees. This makes for efficiency ? Consideration and recommendation of staff and allows for a deeper attention to specific matters for compensation package;the board. The Committees are set up in line with ? Consideration and Recommendation of statutory and regulatory requirements and consistent promotion of senior management staff;with global best practice. ? Setting limit for approval of commission by

Management;Membership of the Committees of the Board is ? Approving commission payment in excess of intended to make the best use of the skills and Management approval limit, standardization of experience of non-executive directors in particular. process and mode of payment of commission in

line with cashless policy and in compliance with The Committees have well defined terms of reference Anti Money Laundering requirements;and Charters defining their scope of responsibilities in such a way as to avoid overlap of functions. ? Any other matter that may be referred to the

Committee by the Board from time to time.The Committees of the Board meet quarterly but may hold extraordinary sessions as business of the ii. Enterprise Risk Management and Governance Company demand. Committee

The following are the current standing Committees of The Committee has oversight responsibility for the the Board: overall risk assessment of various areas of the

Company's operations and Compliance with the code i. Finance and General Purpose Committee of corporate governance as well as global best practice.

This Committee is made up of four (4) members. It is Chaired by Mr. Onwubuya Joseph Ndidi (a Non-chaired by a non-executive Director. The Committee executive Director), the Committee's membership considers large scale procurement by the Company, as comprises the following:well as matters bordering on staff welfare, discipline, staff remuneration and promotion. Mr. Onwubuya Joseph Ndidi Chairman

Mrs. Ebelechukwu Nwachukwu MemberThe membership of the Committee is as follows: Mr. Chukwuemeke Igumbor Member

Mr. Victor Abulele Chairman Committee's Terms of ReferenceMrs. Elaine Delaney MemberMrs. Ebelechukwu Nwachukwu Member ? The primary responsibility of the Committee is to Mr. Chukwuemeke Igumbor Member ensure that sound policies, procedures and

practices are in place for the risk-wide management of the Company's material risks and to report the results of the Committee's activities to the Board of Directors.

The board members who served on the board during the financial year are as follows:-

Board of Directors -

NAME POSITION Mr. Jim Ovia ChairmanMr. Chukwuemeke Igumbor Managing DirectorMrs. Ebelechukwu Nwachukwu Executive DirectorMrs. Elaine Delaney Non- Executive Director Mr. Onwubuya Joseph Ndidi Non- Executive Director Mr. Abulele Victor Non- Executive Director Professor Oyewusi Ibidapo-Obe Independent Non- Executive Director

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l Design and implement risk management practices, specifically provide ongoing guidance l The Company's quarterly and audited annual and support for the refinement of the overall risk financial statements, including any related notes, management framework and ensuring that best the Company's specific disclosures and discussion practices are incorporated; under "Managements Control Report and the

independent auditors' report, in advance of l Ensure and monitor risk management practices, publication;

specifically determine which enterprise risks are most significant and approve resource allocation l the performance and results of the external and for risk monitoring and improvement activities, internal audits, including the independent auditors' assign risk owners and approve action plans; management letter, and management's responses

thereto;l Periodically review and monitor risk mitigation

process and periodically review and report to l the effectiveness of the Company's system of the Board of Directors. internal controls, including computerized

informations systems and security; any iii. Audit, Compliance & Investment Committee recommendations by the independent auditor and

internal auditor regarding internal control issues The Committee's membership consists of three (3) and any actions taken in response thereto; and, the Non-executive Directors and one (1) independent internal control certification and attestation Non-executive Director. The Committee meets every required to be made in connection with the quarter, but could also meet at any other time, should Company's quarterly and annual financial reports;the need arise.

(a) Management CommitteeThe membership of the Committee is as follows:Mrs. Elaine Delaney Chairman The Management Committee comprises the senior Mr. Jim Ovia Member management of the Company and has been Prof. Oyewusi Ibidapo-Obe Member established to identify, analyse, and make Mr. Abulele Victor Member recommendations on risks arising from day-to-day

activities. They also ensure that risk limits as contained Committee's Terms of Reference in the Board and Regulatory policies are complied with.

Members of the management committee make l To meet with the Chief Financial Officer, Internal contributions to the respective Board Committees and

Auditor and any other executive both individually also ensure that recommendations of the Board and/or together, as the Committee deems Committees are effectively and efficiently appropriate at such times as the Committee shall implemented. They meet weekly and as frequently as determine to discuss and review: the need arises.

l To consider and approve major investment requests by the company & allocate resources as appropriate;

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BOARD AND BOARD COMMITTEES MEETINGS

The table below shows the frequency of meetings of the Board of Directors, Board Committees and members' attendance at these meetings during the year under review.

December 2015

Directors Board Finance & General Purpose Risk Management Committee Committee

Number of Meetings 4 3 3

Attendance Mr. Jim Ovia 4 N/A N/AMrs. Elaine Delaney 4 3 N/AMrs. Ebelechukwu Nwachukwu 4 3 3Mr. Chukwuemeke Igumbor 4 3 3Mr. Onwubuya Joseph Ndidi 4 N/A 3Mr. Abulele Victor 4 3 N/AProfessor Oyewusi Ibidapo-Obe 4 N/A N/A

The table below shows the frequency of meetings of the Audit Committee and members' attendance at these meetings during the year under review.

December 2014

Directors Board Finance & General Purpose Risk Management Committee Committee

Number of Meetings 4 4 4Attendance Mr. Jim Ovia 1 N/A N/AMrs. Elaine Delaney 1 1 N/AMrs. Ebelechukwu Nwachukwu 4 4 4Mr. Chukwuemeke Igumbor 1 1 1Mr. Onwubuya Joseph Ndidi 1 N/A 1Mr. Abulele Victor 1 1 1 N/AProfessor Oyewusi Ibidapo-Obe 1 N/A 1


Members Audit, Compliance & Investment committee


Number of Meetings 3 4Attendance 2015 2014Mr. Abulele Victor 3 1Professor Oyewusi Ibidapo-Obe 3 1Mrs. Elaine Delaney (Chairman) 3 1Mr. Jim Ovia N/A 1Mrs. Nonye Ayeni N/A 3Mr. Ebenezer Onyeagwu N/A 3Mr. Peter Amangbo N/A 3

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Committee members attended all committee meetings h. Relationship with Shareholdersas scheduled and held during the year. Meetings attended depended on their eligibility as determined The Company maintains an effective communication by the date of becoming a member of the board and a with its shareholders and this has helped improve the member of the committee. understanding of our business, financial condition,

operating performance and trends. g. Whistle Blowing Procedure

The Company has a whistle-blowing policy which provides the procedure for reporting suspected breaches of the Company's internal policies, laws and regulations. There is a special portal created on the Company's intranet dedicated for whistle blowing.

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INDEPENDENT AUDITOR'S REPORT

To the Members of Zenith Life Assurance Company Limited

Report on the Financial Statements

We have audited the accompanying financial statements of Zenith Life Assurance Company Limited (“the Company), which comprise the statement of financial position as at 31 December, 2015, and the statement of profit or loss and other comprehensive income, statement of changes in equity, and statement of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 23 to 80.

Directors' responsibility for the financial statements

The directors are responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards and in the manner required by the Companies and Allied Matters Act of Nigeria, the Insurance Act of Nigeria, relevant National Insurance Commission (NAICOM) guidelines and circulars, the Financial Reporting Council of Nigeria Act, 2011, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

KPMG Professional Services KPMG TowerBishop Aboyade Cole Street,Victoria IslandPMB 40014, FalomoLagos

Telephone 234 (1) 271 8955 234 (1) 271 0540Fax 234 (1) 271 0540Internet www.kpmg.com/ng

KPMG Professional Services, a Partnership established underNigeria law, is a member of KPMG International Cooperative(”KPMG International”), a swiss entity. All rights reserved.

Registered in Nigeria No BN 988926

Abayomi SanniAdewale K. AjayiAyo L. SalamiJoseph O. TegbeOladimeji I. SalaudeenOlusseyi BickerstethVictor U. Onyenkpe

Adebisi O. LamikanraAjibola O. OlomolaChibuzor N. AnyanechiKabir O. OkunlolaOlanike I. JamesOluwafemi O. Awotoye

Adekunle A. ElebuteAyodele H. OthihiwaGoodluck C. ObiMuhammed M. AdamaOlumide O. OlayinkaOluwatoyin A. Gbagi

Adetola P. AdeyemiAyodele A. SoyinkaIbitomi M. AdepojuOladapo R. OkubadejoOlusegun A. SowandaTayo I. Ogungbenro

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Opinion

In our opinion, these financial statements give a true and fair view of the financial position of Zenith Life Assurance Company Limited (“the Company) as at 31 December, 2015, and of the Company's financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards and in the manner required by the Companies and Allied Matters Act of Nigeria, the Insurance Act of Nigeria, relevant National Insurance Commission (NAICOM) guidelines and circulars and the Financial Reporting Council of Nigeria Act, 2011.

Report on Other Legal and Regulatory Requirements

Compliance with the requirements of Schedule 6 of the Companies and Allied Matters Act of Nigeria

In our opinion, proper books of account have been kept by the Company, so far as appears from our examination of those books and the statement of financial position and the statement of profit or loss and other comprehensive income are in agreement with the books of account.

Penalties

The Company incurred penalties in respect of contraventions of the requirement of certain sections of the National Insurance Commission's Operational Guideline 2011 during the financial year. The details of the contraventions and penalties are disclosed in note 33 of the financial statements.

Signed:

Kabir Okunlola, FCAFRC/2012/ICAN/00000000428For: KPMG Professional Services Chartered Accountants30 March 2016Lagos, Nigeria

A 1004129

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I. Reporting Entity (c) Use of estimates and judgment

Zenith Life Assurance Company Limited ("the The preparation of financial statements requires Company") is a private limited liability company management to make judgments, estimates and incorporated on 30 March 2001 to carry out the assumptions that affect the application of policies and business of life assurance. The Company is a wholly reported amounts of assets and liabilities, income, and owned subsidiary of Zenith General Insurance expenses. The estimates and associated assumptions Company Limited. are based on historical experience and various other

factors that are believed to be reasonable under The registered office of the Company is: 280 Ajose circumstances, the results of which form the basis of Adeogun Street, Victoria Island Lagos. making judgments about carrying values of assets and

liabilities that are not readily apparent from other The principal activities of the Company are the sources. Actual results may differ from these estimates.provision of life assurance services, claims settlement and undertaking investment activities. The estimates and underlying assumptions are

reviewed on an on-going basis. Revisions to accounting II. Statement of compliance with International estimates are accounted for prospectively, that is,

Financial Reporting Standards lin the period in which the estimate is revised, if the revision affects only that period, or

The financial statements have been prepared in lin the period of the revision and future periods, if accordance with International Financial Reporting the revision affects both current and future Standards (IFRSs). periods.

The financial statements were authorized for issue by Judgments made by management in the application of the Directors on 29 March 2016. IFRSs that have significant effect on the financial

statements and estimates with a significant risk of III. Basis of Preparation material adjustment are disclosed in the notes to the

accounts:(a) Functional and presentation currency

The impairment on trade receivables is provided in The financial statement is presented in Naira, which is Notes 1.2.5the Company's functional currency; except where indicated, financial information presented in Naira has The fair value and fair value hierarchy is provided in been rounded to the nearest thousands. Notes 1.3.4

(b) Basis of measurement Income tax exposure is provided below

The financial statements have been prepared in Income tax exposureaccordance with the going concern principle under the

Current Taxhistorical cost basis except for the following:The current income tax charge is calculated on taxable

?Financial instruments at fair value through profit or income on the basis of the tax laws enacted or loss are measured at fair valuesubstantively enacted at the reporting date. The Company applies Section 16 of the Company Income Available-for-sale financial assets are measured at fair Tax Act. It states that an Insurance business shall be value.taxed as; lan insurance company, whether proprietary or Going concern

mutual, other than a life insurance company; orla Nigerian company whose profit accrued in part The financial statement have been prepared on the

outside Nigeria,going concern basis. The Company has no intention or need to reduce substantially its business operations.

the profit on which tax may be imposed, shall be Management believes that the going concern ascertained by taking the gross premium interest and assumption is appropriate for the Company due to the other income receivable in Nigeria less reinsurance and sufficient capital adequacy ratio and projected liquidity, deducting from the balance so arrived at, a reserve based on historical experience that short-term fund for unexpired risks at the percentage consistently obligations will be refinanced in the normal course of adopted by the company in relation to its operation as a business. Liquidity ratio and continuous evaluation of whole for such risks at the end of the period for which current ratio of the Company is carried out to ensure the profits are being ascertained, subject to the that there are no going concern threats to the limitation below:operation of the Company.

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An insurance company, other than a life insurance (d)(ii) IFRS 15 Revenue from Contracts with company, shall be allowed as deductions from its Customerspremium the following reserves for tax purposes-

IFRS 15 establishes a comprehensive framework for (a) for unexpired risks, 45 percent of the total determining whether, how much and when revenue is

premium in case of general insurance recognised. It replaces existing revenue recognition business other than marine insurance guidance, including IAS 18 Revenue, IAS 11 business and 25 percent of the total Construction Contracts and IFRIC 13 Customer premium in the case of marine cargo Loyalty Programmes.insurance;

IFRS 15 is effective for annual reporting periods (b) for other reserves, claims and outgoings of beginning on or after 1 January 2017, with early

the company an amount equal to 25 percent adoption permitted.of the total premium.

The Company is yet to consider the impact of the The Directors have adopted current tax practices in standard on its business.computing the tax liabilities.

The following new or amended standards are not Actual results may differ from these estimates based expected to have a significant impact of the Company's on the interpretation by the tax authorities. The financial statements.Directors acknowledge that changes in the application of the current tax practices can have a significant The following new or amended standards are not impact on the tax expense and tax liabilities recorded in expected to have a significant impact of the Group's the financial statements. consolidated financial statements.

(d) New standards and interpretation not yet lIFRS 14 Regulatory Deferral Accounts.adopted lAccounting for Acquisitions of Interests in Joint

Operations (Amendments to IFRS 11).The following new or revised standards and lClarification of Acceptable Methods of amendments which have a potential impact on the Depreciation and Amortisation (Amendments to company are not yet effective for the year ended 31 IAS 16 and IAS 38).December 2015 and have not been applied in lEquity Method in Separate Financial Statements preparing these financial statements. However, the (Amendments to IAS 27).company's assessments of the new standards and lSale or Contribution of Assets between an amendments are not expected to have significant Investor and its Associate or Joint Venture impact on the company's operations and financial (Amendments to IFRS 10 and IAS 28).position. lAnnual Improvements to IFRSs 2012–2014 The Company does not plan to adopt these standards Cycle.early. lInvestment Entities: Applying the Consolidation

Exception (Amendments to IFRS 10, IFRS 12 and (d)(I) IFRS 9 Financial Instruments (2010) and IFRS 9 IAS 28).

Financial Instruments (2009) (together IFRS 9) lDisclosure Initiative (Amendments to IAS 1)

IFRS 9, published in July 2014, replaces the existing IV Changes in accounting policiesguidance in IAS 39 Financial Instruments: Recognition Except for the changes below, the Company has and Measurement. IFRS 9 includes revised guidance on consistently applied the accounting policies as set out the classification and measurement of financial in notes V to all periods presented in the financial instruments, including a new expected credit loss statements.model for calculating impairment on financial assets, and the new general hedge accounting requirements. It The Company has considered the following new also carries forward the guidance on recognition and standards and amendments to standards, including any derecognition of financial instruments from IAS 39. consequential amendments to other standards with a

date of initial application of 1 January 2015.IFRS 9 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted.The Company is yet to consider the impact of the standard on its business.

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Defined Benefit Plans: Employee Contributions Where applicable, segment results that are reported (Amendments to IAS 19) include items directly attributable to a segment as well

as those that can be allocated on a reasonable basis.Annual Improvements to IFRSs 2010-2012 Cycle - various standards (c) Underwriting activities

Annual Improvements to IFRSs 2011-2013 Cycle - (i) Gross premiums writtenvarious standards Gross premiums comprise the premiums on

insurance contracts entered into during the The Company has no transactions that would be year, irrespective of whether they relate in affected by these new amendments. whole or in part to a later accounting period. It

is recognised at the point of attachment of risk V Significant accounting policies to a policy before deducting cost of Except for the changes explained in Note IV above, the reinsurance cover and unearned portion of the Company consistently applied the following premium. accounting policies to the periods presented in the financial statements. Gross premium on life contract are recognised

in the life fund account when payable by the (a) Foreign currency transactions policy holder. Gross life insurance written

premium comprise the total premium Transactions denominated in foreign currencies are receivable for the whole period of cover recorded in Naira at the rate of exchange ruling at the provided by contracts entered into during the date of each transaction. Any gain or loss arising from a accounting period and are recognised on the change in exchange rates subsequent to the date of the date of inception of the policy.transaction is recognised in the profit or loss.

Premiums on reinsurance inward are included Monetary assets and liabilities denominated in foreign in gross written premiums and accounted for currencies at the reporting date are translated into the as if the reinsurance was considered direct functional currency at the spot exchange rate at that business, taking into account the product date. The foreign currency gain or loss on monetary classification of the reinsured business.items is the difference between the amortised cost in the functional currency at the beginning of the year, Outward reinsurance premiums are adjusted for effective interest and payments during the accounted for in the same accounting period year, and the amortised cost in the foreign currency as the premiums for the related direct translated at the spot exchange rate at the end of the insurance or reinsurance business assumed.year.

Premium on investment products are Non-monetary assets and liabilities that are measured unbundled and reported as gross premium at fair value in a foreign currency are translated into the during the period.functional currency at the exchange rate when the fair value was determined. Gross premium income

Foreign currency differences arising on translation are Gross premium income relates to premium generally recognised in profit or loss. However, foreign earned net of unearned premium reserves and currency differences arising from the translation of are stated gross of commission and recognised Available-for-sale equity instruments are recognised in when due. Premium earned relates to risks OCI. assumed during the period.

(b) Segment reporting (ii) Unearned premiums

An operating segment is a distinguishable component Unearned premiums are those proportions of of the Company that is engaged in providing products premiums written in the year that relate to or services (business segment), or in providing products periods of risks after the reporting date. It is or services within a particular economic environment computed separately for each insurance (geographical segment), which is subject to risks and contract using a time proportionate basis, or rewards that are different from those of other another suitable basis for uneven risk segments. The Company's primary format for segment contracts.reporting is based on business segments.

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(iii) Reinsurance measurable impact on the amounts that the The Company undertakes reinsurance in the Company will receive from the reinsurer.normal course of business for the purpose of limiting its net loss potential on policies written. Reinsurance liabilities Premium ceded comprise written premiums ceded to reinsurers, adjusted for the reinsurers' Reinsurance liabilities are primarily premiums share of the movement in the provision for the payable for the reinsurance contracts entered unearned premiums. into by the Company and are recognised as a

payable when incurred. The Company has the Reinsurance arrangements do not relieve the right to set-off re-insurance payables against the Company from its direct obligations to its amount due from re-insurance and brokers in policyholders. line with the agreed arrangement between both

parties.Premium ceded, claims reimbursed and commission recovered are reported directly in (iv) Claims incurred the Life fund account.

Claims incurred in respect of life business consist Reinsurance assets of claims arising during the year including

provision for policyholders' liabilities. Claims are Reinsurance assets represent balances due from charged against the Life fund account.reinsurance contracts. Reinsurance assets consist of short-term balances due from (v) Underwriting expensesreinsurers, as well as longer term receivables that Underwriting expenses are made up of are dependent on the expected claims and acquisition and maintenance expenses benefits arising under the related reinsured comprising commission and policy expenses, insurance contracts. Amounts recoverable from proportion of staff cost and insurance or due to reinsurers are measured consistently supervision levy. with the amounts associated with the reinsured insurance contracts and in compliance with the Underwriting expenses for insurance contracts terms of each reinsurance contracts. are recognized as expense when incurred.

Underwriting expenses relating to investment Prepaid reinsurance contracts are also recognised as an expense

when incurred and are reported in the profit or Prepaid reinsurance cost is determined on a time loss.apportionment basis and is reported under reinsurance assets in the statement of financial (d) Commission earnedposition. Premiums include any adjustments arising in the accounting period in respect of Commissions are recognized on ceding business to the reinsurance contracts incepting in prior reinsurer, and are credited to the profit and loss accounting periods. account over the period the service is provided.

Reinsurance claims recoveries (e) Investment income

Reinsurance recoverable are estimated in Investment income comprises interest income earned manner consistent with the outstanding claims on short-term deposits and income earned on trading provision and claims incurred associated with the of securities including all realised and unrealised fair reinsurer's polices and are in accordance with value changes, interest, dividends and foreign the related insurance contract. They are exchange differences. Investment income is accounted measured at their carrying amount less for on an accrual basis. impairment charges. Amounts recoverable under reinsurance contracts are assessed for Interest income is recognised in the profit or loss as it impairment at each reporting date. If there is accrues and is calculated using the effective interest objective evidence of impairment, the Company rate method. Fees and commissions that form part of reduces the carrying amount of its reinsurance an integral part of the acquisition or issue of a financial assets to its recoverable amount and recognizes instrument are recognised as an adjustment to the the impairment loss in the profit or loss as a result effective interest rate of the instrument.of an event that occurred after its initial recognition, that the Company may not recover all amounts due and that the event has a reliably

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When a receivable is impaired, the Company reduces terms of the Lease. Lease incentives received are the carrying amount to its recoverable amount, being recognised as an integral part of the total lease the estimated future cash flow discounted at the expense, over the term of the lease.original effective interest rate of the instrument, and continues unwinding the discount as interest income. Minimum lease payments made under finance leases

are apportioned between the finance expense and the (f) Dividend income reduction of the outstanding liability. The finance

expense is allocated to each period during the lease Dividend is recognised as earned in the period in which term so as to produce a constant periodic rate of the right of receipt is established and is stated net of interest on the remaining balance of the liability.withholding tax.

Contingent lease payments are accounted for by (g) Employee benefits/personnel expenses revising the minimum lease payments over the

remaining term of the lease when the lease adjustment Short-term benefits is confirmed.

Short-term employee benefit obligations include Lease assets – Lesseewages, salaries and other benefits which the Company has a present obligation to pay, as a result of Assets held by the Company under leases that transfer employees' services provided up to the reporting date. to the Company substantially all of the risks and The accrual is calculated on an undiscounted basis, rewards of ownership are classified as finance leases. using current salary rates. The leased asset is initially measured at an amount

equal to the lower of its fair value and the present value A provision is recognised for the amount expected to of the minimum lease payments. Subsequent to initial be paid under short-term cash bonus or profit-sharing recognition, the asset is accounted for in accordance plans if the Company has a present legal or with the accounting policy applicable to that asset.constructive obligation to pay this amount as a result of past service provided by the employee and the Lease assets – Lessorobligation can be estimated reliably.

If the Company is the lessor in a lease agreement that Post Employment Benefits transfers substantially all of the risks and rewards

incidental to ownership of the asset to the lessee, then The Company operates a defined contributory the arrangement is classified as a finance lease and a retirement scheme as stipulated in the Pension Reform receivable equal to the net investment in the lease is Act 2014. Under the defined contribution scheme, the recognised and presented within loans and Company pays fixed contributions of 13% to a receivables.separate entity – Pension Fund Administrators; employees also pay a fixed contribution of 5% to the (j) Income taxsame entity. Once the contributions have been paid, the Company retains no legal or constructive Income tax comprises current and deferred tax. obligation to pay further contributions if the Fund does Income tax expense is recognised in profit or loss not hold enough assets to finance benefits accruing except to the extent that it relates to items recognised under the retirement benefit plan. The Company's directly in equity, in which case it is recognised in other obligations are recognized in the profit or loss. comprehensive income .

(h) Management expenses Current tax 'Current tax' comprises the expected tax payable or

Management expenses are expenses other than claims receivable on the taxable income or loss for the year and underwriting expenses. They include depreciation and any adjustment to the tax payable or receivable in expenses and other expenses. They are accounted for respect of previous years. It is measured using tax rates on an accrual basis and are recognised in the profit or enacted or substantively enacted at the reporting date. loss. Current tax also includes any tax arising from

dividends.(I) Leases

Lease payments - Lessee

Payments made under operating leases are recognised in the profit or loss on a straight line basis over the

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Deferred tax (l) Cash and cash equivalent

Deferred tax is recognised in respect of temporary Cash and cash equivalent include notes and coins on differences between the carrying amounts of assets hand, unrestricted balances held with banks and highly and liabilities for financial reporting purposes and the liquid financial assets with original maturities of three amounts used for taxation purposes. Deferred tax is months or less from the acquisition date that are not recognised for: subject to an insignificant risk of changes in their fair ltemporary differences on the initial recognition value, and are used by the Company in the

of assets or liabilities in a transaction that is not a management of its short term commitment.business combination and that affects neither accounting nor taxable profit or loss; (m) Financial assets and liabilities

ltemporary differences related to investments in (I) Classificationsubsidiaries to the extent that it is probable that they will not reverse in the foreseeable future; The classification of financial assets depends on and management's intention for which the investments

were acquired or originated. The Company classifies its l taxable temporary differences arising on the financial assets into the following categories:

initial recognition of goodwill. lfinancial assets at fair value through profit or loss;

Deferred tax assets are recognised for unused tax lheld-to-maturity investments;losses, unused tax credits and deductible temporary lloans and receivables, and differences to the extent that it is probable that future lavailable-for-sale financial assetstaxable profits will be available against which they can be used. Deferred tax assets are reviewed at each The Company's financial assets include cash and short reporting date and are reduced to the extent that it is term deposits, trade and other receivables, quoted and no longer probable that the related tax benefit will be unquoted equity instruments, bonds and treasury bills.realised.Unrecognised deferred tax assets are reassessed at The Company's financial liabilities are classified as each reporting date and recognised to the extent that it other financial liabilities. They include: investment has become probable that future taxable profits will be contract liabilities, creditors and accruals.available against which they can be used.

Initial MeasurementDeferred tax is measured at the tax rates that are expected to be applied to temporary differences when All financial instruments are initially recognized at fair they reverse, using tax rates enacted or substantively value, which includes directly attributable transaction enacted at the reporting date. costs for financial instruments not classified at fair

value through profit and loss. The measurement of deferred tax reflects the tax consequences that would follow the manner in which (ii) Subsequent measurementthe Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Subsequent to initial measurement, financial Deferred tax assets and liabilities are offset only if instruments are measured either at fair value or certain criteria are met. amort ised cost , depending on the i r

classification.(k) Earnings per share

(iii) Derecognition: Financial assetsThe Company presents basic and diluted earnings per share for its ordinary shares. Basic EPS is calculated by The Company derecognises a financial asset dividing the profit or loss that is attributable to ordinary when the contractual rights to the cash flow shareholders of the Company by the weighted average from the financial asset expires; or transfers its number of ordinary shares outstanding during the right to receive the contractual cash flows in a period. Diluted EPS is determined by adjusting the transaction in which substantially all the risks profit or loss that is attributable to ordinary and rewards of the financial assets are shareholders and the weighted-average number of transferred or in which the Company neither ordinary shares outstanding for the effects of all transfers nor retains substantially all risks and dilutive potential ordinary shares. rewards of ownership and it does not retain Adjusted EPS is determined by dividing the profit or control of the asset;loss attributable to ordinary shareholders by the weighted average number of shares adjusted for bonus shares issued.

2015 ANNUAL REPORT


ENITH Assurance

RC 407202

(iv) Derecognition: Financial liabilities lsales or reclassification that are so close to maturity that changes in the market rate interest

The Company derecognises a financial liability would not have a significant effect in the when its contractual obligations are discharged, financial asset's fair value;cancelled or expired.

lsales or reclassification after the Company has (v) Financial assets held at fair value through profit or collected substantially all of the assets' original

loss principals; and

Financial assets at fair value through profit or lsales or reclassification attributable to non-loss include financial assets held for trading. recurring isolated events beyond the Company's Financial assets classified as trading are acquired control that could not have been reasonably principally for the purpose of selling in the short anticipated.term.

(vii) Available-for-saleThese investments are initially recorded at fair value. Subsequent to initial recognition, they are Available for sale financial investments are non-remeasured at fair value, with gains and losses derivative instruments which includes equity arising from changes in this value recognized in and debt securities. The Company classifies as the profit or loss in the period in which they available-for-sale those financial assets that are arise. The fair values of quoted investments in generally not designated as another category of active markets are based on current bid prices. financial assets, and strategic capital The fair values of unquoted equities, and quoted investments held for an indefinite period of time, equities for which there is no active market, are which may be sold in response to needs for established using valuation techniques liquidity or changes in interest rates, exchange corroborated by independent third parties. rates or equity prices.These may include reference to the current fair value of other instruments that are substantially Available-for-sale financial assets are carried at the same and discounted cash flow analysis. fair value, with the exception of investments in

equity instruments where fair value cannot be Interest earned and dividends received while reliably determined, which are carried at cost. holding trading assets at fair value through profit Fair values are determined in the same manner or loss are included in investment income. as for investments at fair value through profit or Interest income are recognised using effective loss. Unrealised gains and losses arising from interest rate. changes in the fair value of available-for-sale

financial assets are recognised in other (vi) Held-to-maturity comprehensive income while the investment is

held, and are subsequently transferred to the Held-to-maturity investments are non- profit or loss upon sale or de-recognition of the derivative financial assets with fixed investment.determinable payments and fixed maturities that management has both the positive intention and Dividends received on available-for-sale ability to hold to maturity other than: instruments are recognised in the profit or loss l those that the Company designates as when the Company's right to receive payment

available for sale. has been established. l those that meet the definition of loans and

receivables. Interest income on available for sale investments are recognised in the profit and loss using the

Held-to-maturity investments are carried at amortised effective interest rate method.cost using effective interest method less any impairment losses. A sale or reclassification of more (viii) Loans and receivablesthan an insignificant amount of held-to-maturity investment would result in the reclassification of all Loans and receivables include non-derivative held-to-maturity investments to Available-for-sale, financial assets with fixed or determinable and would prevent the Company from classifying payments that are not quoted in an active investment securities as held-to-maturity for the market, other than those classified by the current and following two financial years. However, Company at fair value through profit or loss or sales and reclassification in any of the following available-for-sale.circumstances would not trigger a reclassification;

2015 ANNUAL REPORT


ENITH Assurance

RC 407202

Loans and receivables consist primarily of staff Subsequently, that difference is recognized in loans, premium debtors, due from reinsurers and the statement of profit or loss on an appropriate other receivables. These are managed in basis over the life of the instrument but no later accordance with a documented policy. than when the valuation is wholly supported by

observable market data or the transaction is Loans and receivables are subsequently closed out. measured at amortised cost using the effective interest method, less any impairment losses. If an asset or a liability measured at fair value has Loans granted at below market rates to staff are a bid price and an ask price, the Company fair valued by reference to expected future cash measures the assets and long positions at a bid flows and current market interest rates for price and liabilities and short positions at an ask instruments in a comparable or similar risk class price. and the difference between the historical cost and fair value is accounted for as employee Portfolios of financial assets and financial benefits under staff costs in the period over the liabilities that are exposed to market risk and period of the staff loan. credit risk that are managed by the Company on

the basis of the net exposure to either market or (ix) Fair value measurement credit risk are measured on the basis of a price

that would be received to see a net long position ‘Fair value’ is the price that would be received to (or paid to transfer a net short position) for a sell an asset or paid to transfer a liability in an particular exposure. Those portfolio-level orderly transaction between market participants adjustments are allocated to the individual at the measurement date in the principal or, in its assets and liabilities on the basis of the relative absence, the most advantageous market to risk adjustment of each of the individual which the Company has access at that date. The instruments in the portfolio. fair value of a liability reflects its non-performance risk. The Company recognises transfers between

levels of fair value hierarchy as of the end of the When available, the Company measures the fair reporting period during which the change has value of an instrument using the quoted price in occurred. an active market for that instrument. A market is regarded as active if transactions for the asset or (x) Amortised cost measurementliability take place with sufficient frequency and volume to provide pricing information on an The amortised cost of a financial asset or liability ongoing basis. is the amount at which the financial asset or

liability is measured at initial recognition, minus If there is no quoted price in an active market, principal repayments, plus or minus the then the Company uses valuation techniques cumulative amortisation using the effective that maximise the use of relevant observable interest rate method of any difference between inputs and minimise the use of unobservable the initial amount recognised and the maturity inputs. The chosen valuation technique amount, minus any reduction for impairment.incorporates all of the factors that market participants would take into account in pricing a (xi) Impairment of financial assetstransaction.

The carrying amounts of financial assets not The best evidence of the fair value of a financial subsequently measured at fair value are instrument on initial recognition is the reviewed at each reporting date to determine transaction price, i.e. the fair value of the whether there is any objective evidence of consideration paid or received. If the Company impairment. A financial asset is considered to be determines that the fair value at initial impaired if objective evidence indicates that one recognition differs from the transaction price or more events that have occurred since the and the fair value is evidenced neither by a initial recognition of the financial asset have had quoted price in an active market for an identical a negative effect on the estimated future cash asset or liability nor based on a valuation flows of that asset and can be reliably estimated. 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.

2015 ANNUAL REPORT


ENITH Assurance

RC 407202

For financial assets subsequently measured at adjusted for management's judgment as to amortised cost, the Company first assesses whether current economic and credit conditions whether objective evidence of impairment are such that the actual losses are likely to be exists individually for financial assets that are greater or less than suggested by historical individually significant and, on the other hand, trends. Default rates, loss rates and the collectively for financial assets that are not expected timing of future recoveries are individually significant. Individually significant regularly benchmarked against actual outcomes financial assets are tested for impairment on an to ensure that they remain appropriate.individual basis. The remaining financial assets are assessed in groups that share similar credit Subsequent decreases in the amount relating to risk characteristics. An impairment loss in an impairment loss, that can be linked respect of a financial asset measured at objectively to an event occurring after the amortised cost is calculated as the difference impairment loss was recognized in the between its carrying value and the present value statement of profit or loss, is reversed through of the estimated future cash flows discounted at the statement of profit or loss. An impairment the original effective interest rate. loss in respect of an equity instrument classified

as available-for-sale is not reversed.Available-for-sale financial assets are impaired if there is objective evidence of impairment, (xii) Offsetting financial instrumentsresulting from one or more loss events that occurred after initial recognition but before the Financial assets and liabilities are set off and the reporting date, that have an impact on the future net amount presented in the statement of cash flows of the asset. financial position when, and only when, the

Company has a legally enforceable right to set All impairment losses are recognized through off the recognized amounts and intends either profit or loss. If any loss on the financial asset to settle on a net basis or to realise the asset and was previously recognized directly in equity as a settle the liability simultaneously.reduction in fair value, the cumulative net loss that had been recognized in equity is transferred Income and expenses are presented on a net to the profit or loss and is recognized as part of basis only when permitted under IFRS, or from the impairment loss. The amount of the loss gains and losses arising from a group of similar recognized in the profit or loss is the difference transactions such as in the Company's trading between the acquisition cost and the current fair activities. value, less any previously recognized impairment loss. (n) Insurance contract liabilities

The Company assesses the premium debtors on Classification of insurance contract liabilitiesboth specific and collective impairment test bases. Specific impairment on premium debtors The Company issues contracts that transfer insurance are assessed on individually significant risk or financial risk or both.receivables based on impairment triggers identified by the Company. The amount of loss Contracts under which the Company accepts recognised in the profit or loss is the difference significant insurance risk from another party( the between the carrying amount and discounted policyholder) by agreeing to compensate the policy present value of expected cash flows at the holder or other beneficiary if a specified uncertain original effective interest rate. future event ( the insured event) adversely affects the

policy holder or other beneficiary are classified as Loans and receivables, including premium insurance contracts. Insurance risk is risk other than debtors not specifically impaired are then financial risk, transferred from the holder of the assessed for collective impairment. Loans and contract to the issuer. receivables not individually significant are collectively assessed for impairment by grouping Financial guarantees are contracts that requires the together the receivables with similar risk Company to make specific payments to reimburse the characteristics. holder for a loss it incurs because a specified debtors

fails to make payments when due in accordance with In assessing collective impairment, the Company the terms of a debt instrument.uses statistical modeling of historical trends of the probability of default, the timing of recoveries and the amount of loss incurred,

2015 ANNUAL REPORT


ENITH Assurance

RC 407202

Contracts that transfer financial risks but not Subsequent expenditure on software assets is significant insurance risk are classified as investment capitalised only when it increases the future economic contracts. Financial risk is the risk of a possible future benefits embodied in the specific asset to which it change in one or more of a specified interest rate, relates. All other expenditures are expensed as security price, commodity price, foreign exchange rate, incurred. Amortisation is recognised in profit or loss on index of prices or rates, credit rating or credit index or a straight-line basis over the estimated useful life of other variable, provided in the case of a non-financial the software, from the date that it is available for use. variable that the variable is not specific to a party to the The estimated useful life of software is three (3) years contract. Insurance contracts may also transfer some subject to annual reassessment.financial risk.

(p) Property and equipmentRecognition and measurement of insurance contract liabilities (i) Recognition & Measurement

Liabilities arising from financial guarantees, The cost of an item of property, plant and equipment commitments and insurance contract are initially shall be recognised as an asset if, and only if:measured at fair value and the initial fair value is amortised over the life of the guarantees, (a) it is probable the future economic benefits commitments or insurance contract. The liability is associated with the item will flow to the subsequently carried at the higher of this amortised entity; andamount and the present value of any expected (b) the cost of the item can be measured reliably.payment to settle the liability when a payment under the contracts has become probable. Items of property and equipment are measured at cost

less accumulated depreciation and any accumulated (o) Intangible assets impairment losses.

Software Purchased software that is integral to the functionality of the related equipment is capitalised as part of that

Software acquired by the Company is measured at equipment. If significant parts of an item of property or cost less accumulated amortisation and any equipment have different useful lives, then they are accumulated impairment losses. accounted for as separate items (major components)

of property and equipment. Any gain or loss on Recognition of software acquired is only allowed if it is disposal of an item of property and equipment is probable that future economic benefits to this recognised within other income in profit or loss.intangible asset are attributable and will flow to the Company. (ii) Subsequent Costs

Software acquired is initially measured at cost. The Subsequent costs are included in the asset's carrying cost of acquired software comprises its purchase price, amount or recognized as a separate asset, as including any import duties and non-refundable appropriate, only when it is probable that future purchase taxes, and any directly attributable economic benefits associated with the item will flow to expenditure on preparing the asset for its intended the Company and the cost of the item can be use. After initial recognition, software acquired is measured reliably. All other repairs and maintenance carried at its cost less any accumulated amortisation costs are charged to the statement of profit or loss and and any accumulated impairment losses. Maintenance other comprehensive income during the financial costs is not included but recognised and expensed period in which they are incurred. immediately in the profit or loss.

(iii) DepreciationInternally developed software is capitalized when the Company has the intention and demonstrates the Depreciation is calculated on property and equipment ability to complete the development of the software on the straight line basis to write down the cost of each and to use it in a manner that will generate future asset to its residual value over its estimated useful life. economic benefits, and can reliably measure the costs Depreciation methods, useful lives and residual values to complete the development. The capitalised costs are reassessed at each reporting date. No depreciation include all costs directly attributable to the is charged on item of property and equipment under development of the software. Internally developed construction until they are brought into use.software is stated at capitalised cost less accumulated amortisation and impairment.

2015 ANNUAL REPORT


ENITH Assurance

RC 407202

Depreciation begins when an asset is available for use The carrying amount of these non-financial assets are and ceases at the earlier of the date that the asset is reviewed at each reporting date to determine whether derecognised or classified as held for sale in there is any indication of impairment.accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. Impairment losses of non-financial assets, related

claims for or payments of compensation from third parties and any subsequent purchase or construction

Each part of an item of property and equipment with a of replacement assets are separate economic events cost that is significant in relation to the total cost of the and are accounted for separately. item shall be depreciated seperately.

Impairment losses recognised in prior periods are Depreciation reduces an asset's carrying value to its assessed at each reporting date for any indications that residual value at the end of its useful life, and is the loss has decreased or no longer exists. An allocated on a straight line basis over the estimated impairment loss is reversed if there has been a change useful lives, as follows: in the estimates used to determine the recoverable

amount. An impairment loss is reversed only to the Leasehold properties are depreciated based on the extent that the asset's carrying amount does not lease period agreed and lower of the unexpired lease exceed the carrying amount that would have been period or 99 years for leasehold lands determined, net of depreciation or amortisation, if no

impairment loss had been recognised. Reversals of Leasehold improvements 20% (or period of primary impairment losses are recognised in profit or loss.

lease where shorter)Office equipment 20% (s) Group Life BusinessComputer equipment 33.33%Motor vehicles 25% An unexpired premium reserve is included for group

life business, with an allowance for acquisition Depreciation method, useful lives and residual values expenses as a percentage of premium. An allowance is are reviewed at each reporting date and adjusted if made for IBNR (Incurred But Not Reported) claims in appropriate. Group Life to take care of the delay in reporting claims.

(iv) De-recognition (t) Investment contract liabilities

Upon disposal of any item of property and Life Savings Plan / Deposit Administrationequipment or when no future economic benefits are expected to flow from its use, such The reserve for life savings plan and deposit items are derecognized from the books. Gains administration fund are taken as the amount standing and losses on disposal of assets are determined to the credit of the policy holders as at valuation date. by comparing proceeds with their carrying Where policies still have active term assurance life amounts and are recognized in the profit or loss covers, these are valued alongside the regular term in the year of de-recognition or disposal. assurance policies as described under the Individual

Business policy above.(q) Statutory deposit

(u) Life insurance contract liabilitiesStatutory deposit represents 10% of required minimum paid-up capital of the Company deposited The life insurance contract liabilities represents the with and held by the Central Bank of Nigeria (CBN) in liability due to policy holders at the end of every pursuant to Section 10 (3) of the Insurance Act of reporting period. The liability in the life fund account is Nigeria. Statutory deposit is measured at ammortised determined by an actuarial valuation using a liability cost. adequacy test model.

(r) Impairment of non-financial assets (v) Individual Business

The carrying amounts of the Company's non-financial Individual risk business comprises term assurance and assets, other than investment property and deferred mortgage protection policies, for which a gross tax assets, are considered to be impaired when there premium method of valuation is adopted.exists any indication that the asset's recoverable amount is less than the carrying amount. Impairment losses are recognised in profit or loss.

2015 ANNUAL REPORT


ENITH Assurance

RC 407202

Reserves are calculated via a cash flow perfected (z) Contingent liabilitiesapproach taking into account future office premiums, expenses and benefit payments ( death). Future cash A contingent liability is a possible obligation that arises flows are discounted back to the valuation date at the from past events and whose existence will be valuation interest rate. confirmed only by the occurrence or non-occurrence

of one or more uncertain future events not wholly (w) Provisions for other liabilities and charges within the control of the Company or the Company has

a present obligation as a result of past events which is A provision is recognized if, as a result of a past event, not recognised because it is not probable that an the Company has a present legal or constructive outflow of resources will be required to settle the obligation that can be estimated reliably, and it is obligation; or the amount cannot be reliably estimated. probable that an outflow of economic benefits will be Contingent liabilities normally comprise of legal claims required to settle the obligation. under arbitration or court process in respect of which a

liability is not likely to crystallise.Provisions are determined by discounting the expected future cash flows at a rate that reflects current market

(aa) Actuarial valuationassessments of the time value of money and the risks specific to the obligation. The unwinding of the amount

Actuarial valuation of the life fund is conducted is recognised as a finance cost.annually to determine the net liabilities on the existing policies and the adequacy of the assets representing (x) Share capital & reservesthe insurance fund as at the date of valuation. All deficits arising therefrom are charged to the profit or Share Capitalloss while the surplus is appropriated to the shareholders and credited to the profit or loss.The Company has only one class of shares, ordinary

shares. Ordinary shares are classified as equity. When VI Required technical and other reserves by new shares are issued, they are recorded in share

NAICOMcapital at their par value. The excess of the issue price over the par value is recorded in the share premium

(a) Contingency reservereserve.

Contingency reserve is credited with the greater of 1% All ordinary shares rank equally with regard to the of gross premiums, or 10% of the profits. This shall Company's residual assets. Holders of these shares are accumulate until it reaches the amount of greater of entitled to dividends as declared from time to time and minimum paid-up capital or 50 percent of net are entitled to one vote per share at general meetings premium.of the Company.

(b) Technical ReserveIncremental costs directly attributable to issue of shares are recognized as deductions from equity net of

These are computed in compliance with the provisions any tax effects.of the Insurance Act of Nigeria as follows:

Dividendsi Reserve for unearned premiums

Dividend distribution to the Company's shareholders is In accordance with Section 20 (1) (a) of Insurance Act recognized as a liability in the financial statements in of Nigeria, the reserve for unexpired risks is calculated the period in which the dividends are approved by the on a time apportionment basis in respect of the risks Company's shareholders. Dividends that are proposed accepted during the year. A provision for the additional but not yet declared are disclosed in the notes to the unexpired risk reserve is recognised for an financial statements.underwriting year where it is envisaged that the estimated cost of claims and expenses would exceed Dividends on the Company's ordinary shares are the unearned premium reserved.recognised in equity in the period in which they are

paid or, if earlier, the period approved by the iii Reserve for outstanding claimsCompany's shareholders.

The reserve for outstanding claims is maintained at the (y) Fair value reservestotal amount of outstanding claims incurred and reported plus claims incurred but not reported (IBNR) The fair value reserve comprises the cumulative net at the reporting date.change in the fair value of available-for-sale financial

assets until the assets are derecognised or impaired.

-

-

2015 ANNUAL REPORT


ENITH Assurance

RC 407202

Statement of profit or loss and other comprehensive income

for the year ended 31 December 2015

2015 2014 Note N'000 N'000

Gross premium written 4 3,363,440 2,325,452Unearned premium 4 (377,193) 67,707 -

Gross premium income 2,986,247 2,393,159 Reinsurance expenses 5 (653,152) (576,200)-

Net premium income 2,333,095 1,816,959 Commission income 6 161,292 125,819 -

Net underwriting income 2,494,387 1,942,778 Claims expenses 7 (1,316,675) (741,263)Underwriting expenses 8 (514,455) (311,639)-

Underwriting profit 663,257 889,876 Investment income 9(a) 890,406 714,241 Net income on investment contracts 9(b) 9,917 327 Impairment of investment securities available for sale 12(b) (422,983) - -

Net income 1,140,597 1,604,444 Management expenses 10 (273,190) (231,354)-

Profit before tax 867,407 1,373,090 Minimum dividend tax 22(b) (425,857) - Income tax credit / (expense) 22(b) 599,187 (241,163)-

Total tax charge for the year 173,330 (241,163)-

Profit for the year 1,040,737 1,131,927

Other comprehensive income:

Items that are or may be reclassified to profit or loss:Fair value changes on available for sale financial assets- Net reclassification adjustment on impairment 27 422,983 - - Unrealised net loss arising during the year 27 (17,943) (59,862)-

Other comprehensive income, net of tax 405,040 (59,862)-

Total comprehensive income for the year 1,445,777 1,072,065 -

Earnings per share for profit attributable to the equity holders of the Company during the year (expressed in kobo per share):-

– Basic (in kobo) 28 52 57

The notes on pages 39 to 80 form an integral part of these financial statements.

2015 ANNUAL REPORT


ENITH Assurance

RC 407202

Statement of Financial Position

As at 31 December 2015

2015 2014 Note N'000 N'000

AssetsCash and cash equivalents 11 1,747,983 1,404,212Investment securities held to maturity 12(a) 5,544,704 5,267,151Investment securities available for sale 12(b) 106,009 123,953Loans and receivables 12(c) 89 - Trade receivables 12(d) 12,958 33,774Reinsurance assets 13 496,708 306,196Other receivables 14 3,225 3,225Deferred tax asset 23 762,599 - Intangible assets 15 18,640 8,549Property and equipment 16 5,405 6,839Statutory deposits 17 200,000 200,000-

Total assets 8,898,320 7,353,899

LiabilitiesInsurance contract liabilities 18 1,854,293 1,429,053 Investment contract liabilities 19 634,392 419,596 Trade payables 20 23,779 34,064 Accruals and other payables 21 2,085,747 924,177 Current income tax liabilities 22 496,333 188,038 Deferred tax liabilities 23 - 972 -

Total liabilities 5,094,544 2,995,900 -

Net assets 3,803,776 4,357,999

EquityShare capital 24 2,000,000 2,000,000 Statutory contingency reserve 25 417,036 312,962 Retained earnings 26 1,383,674 2,447,011 Fair value reserves 27 3,066 (401,974)-

Total equity 3,803,776 4,357,999

These financial statements were approved and authorized by the Board of Directors on 29 March 2016 and signed on behalf of the Board of Directors by the Directors listed below:

Additionally certified by:

Chukwuemeke Igumbor Victor Abulele Rasheed BelloManaging Director Director Chief Financial OfficerFRC/2012/CIIN/00000000475 FRC/2013/ICAN/00000004830 FRC/2014/ICAN/00000008177

Approved by the Board of Directors on 29 March 2016

The notes on pages 39 to 80 from an integral part of these financial statements.

2015 ANNUAL REPORT


ENITH Assurance

RC 407202

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- - - - - - - -

2015 ANNUAL REPORT


ENITH Assurance

RC 407202

Statement of cash flows

for the year ended 31 December 2015

2015 2014 Note N'000 N'000

Premium received from policyholders 3,365,067 2,360,778 Re-insurance premium paid (643,146) (612,043)Commission received 161,292 125,819 Commission paid (515,836) (323,461)Re-insurance receipt in respect of claims 666,653 (552,634)Claims paid (2,144,704) (185,420)Receipts from customers on investment contract liabilities 214,796 365,367 Income received from operations 11,353 69,817Cash (payments)/receipts for operating expenses (305,409) 49,518 Cash paid to and on behalf of employees (97,692) (89,834)Tax paid 22(a) (281,946) (227,871)

Net cash from operating activities 430,428 980,036

Cash flows from investing activities:Purchase of treasury bills (3,415,103) (319,422)Proceeds from liquidation of treasury bills 3,633,019 - Purchase of bond investment - (1,302,963)Interest received on investment 406,403 716,144 Dividend received 3,264 4,430 Proceeds on disposal of AFS investment - 1,432 Acquisition of property and equipment 16 (840) (7,969)Acquisition of intangible assets 15 (13,400) (9,929)

Net cash from/ (used) in investing activities 613,343 (918,277)

Cash flows from financing activities:Dividend paid (700,000) -

Net cash used in financing activities (700,000) -

Net increase in cash and cash equivalents 343,771 61,759 Cash and cash equivalents at beginning of year 1,404,212 1,342,453

Cash and cash equivalents at end of year 11 1,747,983 1,404,212

The notes on pages 39 to 80 form an integral part of these financial statements.

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RC 407202

lThere is clear segregation of duties between NOTES TO THE FINANCIAL STATEMENTS market facing business units and risk management functions.1 Financial risk management

lRisk Management is governed by well defined 1.1. Enterprise risk reviewpolicies which are clearly communicated across the Company.Zenith Life Assurance Company's business operations

are largely diversified and spread across different lRisk related issues are taken into consideration geographical locations. This necessitates the need for

in all business decisions. The Company proper identification, measurement, aggregation and continually strives to maintain a conservative effective management of risks and efficient utilization ba l ance be tween r i s k and revenue of capital to derive an optimal risk and return ratio. consideration.

Risks associated with the business of the Company 1.1.2 . Risk appetiteinclude underwriting insurance risks, operational risks,

financial capital risks, credit risks, liquidity risks, The Company's risk appetite is reviewed by the Board reinsurance risks, claims management risks, regulatory of Directors annually, at a level that minimizes erosion risks, market risks (which includes currency risk, of earnings or capital due to avoidable losses or from interest rate risk and other price risks) as well as other frauds and operational inefficiencies. This reflects the risks such as Legal risks, Reputation risks, Political risks, conservative nature of the Company as far as risk Strategic risks Emerging market risks.taking is concerned.

1.1.1. Risk management philosophy/strategyThe Company employs a range of quantitative indicators to monitor the risk profile. Specific limits

lThe Company considers sound risk management have been set in line with the Company's risk appetite.to be the foundation of a long lasting financial

institution.1.1.3. Key risk appetite parameters

lThe Company continues to adopt a holistic and The Company's Risk Appetite is defined using the integrated approach to risk management and following parameters:therefore, brings all risks together under one or a

limited number of oversight functions.

lRisk management is a shared responsibility. Therefore the Company aims to build a shared perspective on risks that is grounded in consensus.

CATEGORY RISK APPETITE PARAMETERS

Financial Capital Risk

§ Defined margins and tolerance limits for applicable transactions and processes.

§ Capital-at-risk driven by the Company's stakeholder value creation objectives.

§ Earnings variance and growth per business division

§ Maintenance of sustainable risk-adjusted returns

Market Risk

§ Value-at-Risk (VaR) limits§ Concentration limits§ Stop-loss limit and Trading limit§ Daily position limits

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RC 407202

CATEGORY RISK APPETITE PARAMETERS

Underwriting Risk

§ 100% registration of polices issued within 24hours§ Error in polices under 2%§ 100% underwriting guidelines compliance§ Review of underwriting guidelines if loss ratio exceeds

20% of the forecasted levels§ Tracking of all insurance premiums and paid claims within

90 days payment term§ Internal audit of underwriting policies monthly§ Quarterly review of portfolio§ All contracts to be issued within company limits§ 100% reinsurance accuracy, zero tolerance for contract

errors.§ Monitoring reinsurance placements (Treaty and

Facultative)§ Monitoring reinsurer's treaty§ Zero tolerance for administrative delays in claims

settlement/payment.§ Zero appetite for disputes between departments

responsible for approval and/or payment of claims§ Monthly monitoring of reporting process and

reconciliation.§ Review of all claims exceeding N20m.§ 100% reporting of all claims, complaint, soliciting on

weekly basis.

Credit Risk

§ Defined re-insurers and co-insurers ratings i.e. dealing only with re-insurance and co-insurance companies that are investment grade (BBB+) and upwards;

§ Aggregate credit limit to re-insurers, co-insurers and brokers

§ Approved payment plan§ Aggregate bad debt limit for re-insurers, co-insurers,

brokers and clients.

Reputational Risk

§ Unqualified reports from external auditors§ Zero tolerance for any statements, by our directors or

employees that may impact negatively on the Company's reputation.

§ Zero appetite for association with disputable individual brokers, co-insurers, re-insurers and other organizations

§ Zero appetite for unethical, illegal or unprofessional conduct by our directors, employees and vendors.

Operational Risk

§ Zero tolerance for fraud§ Percentage of earnings reduction or losses due to

operational deficiencies and inefficiencies.§ Aggregate limit for expected losses due to fraud and

operational inefficiencies.

Regulatory RiskZero tolerance for infractions and non-compliance with regulatory and statutory requirements

Liquidity Defined liquidity ratios

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ENITH Assurance

RC 407202

1.1.4 Risk Management Approach The Company continually modifies and enhances its risk management policies and systems to reflect

The Company addresses the challenge of risks changes in markets, products and international best comprehensively through an enterprise-wide risk practices. Training, individual responsibility and management framework by applying leading practices accountability, together with a disciplined and cautious that is supported by a robust governance structure culture of control, lie at the heart of the Company's consisting of board level and enterprise Risk management of risk.management committees. The Board drives the risk governance and compliance process through its The Board of Directors is committed to managing committees. The Board committee provides oversight compliance with a robust compliance framework to on the systems of internal control, financial reporting enforce compliance with applicable laws, rules and and compliance. The Board Risk Committee sets the standards issued by the industry regulators and other risk philosophy, policies and strategies as well as law enforcement agencies, market conventions, codes provides guidance on the various risk elements and of practices promoted by industry associations and their management. internal policies.

The Board Risk Control Functions are supported by The compliance function, under the leadership of the various management committees that help it develop Chief Compliance Officer of the Company has put in and implement various risk strategies. The enterprise place a robust compliance framework, which includes:Risk Management committee drives the management lComprehensive compliance manual, the manual of the financial risks (Market, Liquidity and Credit Risk), details the roles and responsibilities of all operational risks as well as strategic and reputational stakeholders in the compliance process,risks. l Review and analysis of all relevant laws and

regulations, which are adopted into policy In addition, the Company manages its risks in a statements to ensure business is conducted structured, systematic and transparent manner professionally;through a global risk policy which embeds lReview of the Insurance's Anti Money comprehensive risk management processes into the Laundering Policy in accordance with changes in organizational structure and risk measurement and the Money Laundering Prohibition Act 2011 and monitoring activities. This structure ensures that the Anti Terrorism Act 2011;Company's overall risk exposures are within the l Incorporation of new guidelines in the parameters set by the Board. Insurance's Know Your Customer policies in line

with the increasing global trend as outlined in the Central Bank of Nigeria's Anti Money

The key features of the Company's risk management Laundering/Combating Finance of Terrorism policy are: Compliance Manual.

lThe Board of Directors provides overall risk The Company's culture emphasizes high standard of management direction and oversight. ethical behavior at all levels of the Insurance. Therefore

lThe Company's risk appetite is approved by the the Insurance's Board of Directors promotes sound Board of Directors. organization.

lRisk management is embedded in the Company as an intrinsic process and is a core competency 1.1.5 Methodology for risk ratingof all its employees.

lThe Company manages its credit, market, The risk management strategy is to develop an operational and liquidity risks in a coordinated integrated approach to r isk assessments , manner within the organization. measurement, monitoring and control that captures all

lThe Company's risk management function is risks in all aspects of the Company's activities.independent of the business divisions.

lThe Company's internal audit function reports to All activities in the Company have been profiled and the Board Audit Committee and provides the key risk drivers and threats in them identified. independent validation of the business units' Mitigation and control techniques are then determined compliance with risk policies and procedures in tackling each of these threats. These techniques are and the adequacy and effectiveness of the risk implemented as risk policies and procedures that drive management framework on an enterprise-wide the strategic direction and risk appetite as specified by basis. the Board. Techniques employed in meeting these

objectives culminate in the following roles for the risk control functions of the Company:

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RC 407202

lDevelop and implement procedures and The Company has dedicated credit standards, policies practices that translate the Board's goals, and procedures to control and monitor intrinsic and objectives, and risk tolerances into operating concentration risks through all credit levels of standards that are well understood by staff. selection, underwriting, administration and control.

lEstablish lines of authority and responsibility for Some of the policies are:managing individual risk elements in line with the lCredit is only extended to suitable and well Board's overall direction. identified customers and never where there is

lRisk identification, measurement, monitoring any doubt as to the ethical standards and record and control procedures. of the intending borrower.

lEstablish effective internal controls that cover lExposures to any industry or customer will be each risk management process. determined by the regulatory guidelines, clearly

lEnsure that the Company's risk management defined internal policies, debt service capability processes are properly documented. and balance sheet management guidelines.

lCreate adequate awareness to make risk lCredit is not extended to direct customers.management a part of the corporate culture of lCredit is not given to a customers (Brokers or the Company. Insurance Companies) where the ability of the

lEnsure that risk remains within the boundaries customer to meet obligations is based on the established by the Board. most optimistic forecast of events. Risk

lEnsure that business lines comply with risk considerations will always have priority over parameters and prudent limits established by the business and profit considerations.Board. lThe primary source of repayment for all credits

must be from an identifiable cash flow from the The NAICOM Guidelines on Risk Management counterparty's normal premium collections from prescribes quantitative and qualitative criteria for the the insured.identification of significant activities and sets a lThe consequences for non-compliance with the threshold of contributions for determining significant credit policy and credit indiscipline are activities in Insurance and its subsidiaries. This practice communicated to all staff and implemented.is essentially to drive the risk control focus of financial institutions. 1.2.1 Credit Metrics and Measurement Tools

Zenith Life Assurance applies a mix of qualitative and Over the years, Zenith Life Assurance and its quantitative techniques in the determination of its subsidiaries have been able to devote resources and significant activities under the prescribed broad harness its credit data into developing models to headings. The criteria used in estimating the materiality improve the determination of economic and financial of each activity is essentially based on the following: threats due to credit risk. As a result some key factors lThe strategic importance of the activity and are considered in credit risk measurement.

sector. 1. Adherence to the strict credit selection criteria l The contribution of the activity/sector to the which includes defined target market, credit

total assets of the Insurance. history, the capacity and character of customers. lThe net income of the sector.lThe risk inherent in the activity and sector. 2. The possibility of failure to pay over the period

stipulated in the contract. Risk Management structures and processes are continually reviewed to ensure, their adequacy and 3. The size of the credit limit in case default occurs.appropriateness for the Company's risk and opportunities profile as well as bringing them up to 4. Estimated Rate of Recovery which is a measure of date with changes in strategy, business environment, the portion of the debt that can be regained evolving thoughts and trends in risk management. through freezing of assets and collateral should

default occur.1.2. Credit Risk

1.2.2. Credit Risk Management Credit risk is defined as the likelihood that a customer or counterparty is unable to meet the contracted This is the risk that the insurer may be unable to financial obligations resulting in a default situation manage the settlement process by which insurers and/or financial loss. Credit exposures arise principally fulfils their contractual obligation to policyholders. All in credit-related risk that is embedded in premium insurers should have in place a claims management credits and investments. policy and procedure for ensuring that claims are

handled fairly and promptly.

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RC 407202

In establishing and maintaining effective claims counterparties or related entities, counterparties in handling systems and procedures, Zenith Life specific geographical locations, industry sectors, Assurance considers the following factors: specific products etc.

§ Appropriate systems and controls shall be Counterparty Risk: This is the risk that a counterparty maintained to ensure that all liabilities or is not able or willing to meet its financial obligations to potential liabilities notified to the insurer are the Company's as they fall due.recorded promptly and accurately. Accordingly, the systems and controls in place should ensure The Company has established principles, policies and that a proper record is established for each processes and structure for the management of credit notified claim; risk.

§ Suitable controls shall be maintained to ensure that estimates for reported claims and additional (a) Other debt instrumentsestimates based on Guideline For Developing A Risk Management Framework For Insurers And With respect to other debt instruments, the Company Reinsurers In Nigeria statistical evidence are takes the following into consideration in the appropriately made on a consistent basis and are management of the associated credit risk:properly categorized; - External ratings of such instruments/institutions

§ Regular reviews of the actual outcome of the by rating agencies like Fitch; Standard & Poor's; estimates made shall be carried out to check for Agusto & Co. etc.inconsistencies and to ensure that procedures - Internal and external research and market remain appropriate. The reviews should include intelligence reportsthe use of statistical techniques to compare the - Regulatory agencies reportsestimates with the eventual cost of settling the claims, after deducting the amounts already paid In addition to the above, we have put in place a at the time the estimates were made; conservative limits structure which is monitored from

§ A functional systems shall be in place to ensure time to time in order to limit our risk exposures on these that claim files without activity are reviewed on a securities.regular basis;

§ Appropriate systems and procedures should be Control mechanisms for the credit risk rating systemin place to assess the validity of notified claims by reference to the underlying contracts of The Company's credit risk rating system is reviewed insurance and reinsurance treaties; periodically to confirm that the rating criteria and

§ Suitable systems shall be adopted to procedures are appropriate given the current portfolio accommodate the use of suitable experts such as and external conditions. As all models materially loss adjusters, lawyers, actuaries, accountants impacting the risk rating process are reviewed in etc. as and when appropriate, and to monitor accordance with the Company's model risk policy. their use; and

§ Appropriate procedures shall be put in place to Furthermore, the ratings accorded to customers are identify and handle large or unusual claims, regularly reviewed, incorporating new financial including system to ensure that senior information available and the experience in the management are involved from the outset in the development of the Insurance relation. The regularity processing of claims that are significant because of the reviews increases in the case of clients who of their size or nature. reach certain levels in the automatic warning systems.

1.2.3. Categories Of Credit Risks 1.2.4. Credit processes

Zenith Life Assurance is exposed to the following Zenith Life Assurance operates a well defined credit categories of credit risk. evaluation, credit analysis and approval process

system. Credits are or ig inated from the Direct Default Risk: This is the risk that the Company branches/business units and subjected to reviews at will not receive the cash flows or assets to which it is various levels.entitled because brokers, clients and other receivables which the Company has a bilateral contract defaults on As part of credit appraisal process, the Company will their obligations. have to satisfy itself in the following areas:

a) Ensure that only credit requests that meet the Concentration Risk: This is the exposure to losses due approved risk acceptance criteria shall be to excessive concentration of business activities to processed;individual counterparties, groups of individual

2015 ANNUAL REPORT


ENITH Assurance

RC 407202

b) Take a formal written request for all credit lConcentrations together with mitigation applications. strategies are continuously assessed.

c) The track record of the premium debtor.d) Assess/evaluate the repayment capacity of the lEarly warning system is continually validated and

premium debtor. modified to ensure proper functioning for risk e) The proposed terms and conditions and identification.

covenants.f) Comply with the guidelines for the building lSystematic and objective credit risk rating

credit relationships and creating quality assets in methodologies that are based on quantitative, accordance with the Company's r isk qualitative and expert judgment.management policies.

g) Approval from appropriate authority. lSystematic credit limits management enabling the Insurance to monitor its credit exposure on

1.2.5. Company Credit Risk Management daily basis at country, borrower, industry, credit risk rating and credit facility type levels.

The Company's dynamic and proactive approach in managing credit risk is a key element in achieving its lSolid documentation and collateral management strategic objective of maintaining and further process with proper coverage and top-up enhancing its asset quality and credit portfolio risk triggers and follow-ups.profile. The conservative, prudent and well-established credit standards, policies and procedures, risk lAnnual and interim individual credit reviews to methodologies and framework, solid structure and ensure detection of weakness signs or warning infrastructure, risk monitoring and control enable the signals and considering proper remedies.Company to deal with the emerging risks and challenges with a high level of confidence and Our rigorous credit processes are supplemented by determination. sectorial portfolio reviews focused on countries,

regions or specific industries as well as multiple stress The framework for credit risk at Zenith Life Assurance testing scenarios.

is well defined and institutionally predicated on: These are intended to identify any inherent risks in the

portfolios resulting from changes in market conditions lClear tolerance limits and risk appetite set at the and are supplemented by independent reviews from

Board level, well communicated to the business our Company's Internal Audit.units and periodically reviewed and monitored to adjust as appropriate. Additionally, the Company continues to upgrade and

fine-tune the above in line with the developments in lWell-defined target market and risk asset the financial services industry environment and

acceptance criteria. technology.

lRigorous financial, credit and overall risk analysis for each customer/transaction.

lPortfolio quality examined on regular basis according to key performance indicators mechanism and periodic stress testing.

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RC 407202

1.2.5 .1 "No premium no cover policy" In compliance with this policy, all insurance policies written during the year were provided on a strict "no

As a result of the growing challenges arising from huge premium no cover basis". levels of outstanding premium reported in the financial statements of insurance Companies, a revised The following table breaks down the Company's main guideline dated 1 January 2013 was issued by credit exposure at their gross amounts, as at 31 NAICOM on Insurance premium collection and December 2015 and 2014 respectively. For this table, remittance in which it was specified that there shall be the Company has allocated exposures to each no outstanding premium in the books of any insurer as classification based on the nature of the outstanding covers granted on credit are not recognized by the law. trade and other receivables.

Impairment flows, management makes judgments about a debtor's financial situation and the net realizable value of

Specific Impairment expected cash flow and underlying collateral (if possible). Each impaired asset is assessed on its merits,

The specific component of the total allowance for and the workout strategy and estimate of cash flows impairment applies to staff loans evaluated individually considered recoverable are independently approved for impairment and is based upon management's best by the credit review team.estimates of the present value of the cash flows that are expected to be received. In estimating this cash

Trade and other receivables

At 31 December 2015 2014 Note N'000 N'000

Trade receivables 12(d) 12,958 33,774Staff loans 12(c) 1,482 1,393 Other receivables 14 3,225 3,225Reinsurance assets 13 496,708 306,196

501,415 310,814

At 31 December 2015, the ageing of trade and other receivables that were not impaired was as follows:

In thousands on Naira 2015 2014

Neither past due nor impaired 500,022 309,421Past due 1-30 daysPast due 31-90 daysPast due 91-120 days - -

500,022 309,421

Credit quality

At 31 December 2015 Notes Staff Loans Total N'000 N'000

Individual impaired 1,393 1,393Collectively impaired - -

Gross 1,482 1,393

Impairment allowanceSpecific impairment 1,393 1,393 Collective impairment - -

1,393 1,393

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Movement in Specific Impairment on staff loans 2015 2014

Balance as at 1 January 1,393 - Impairment loss recognised - 1,393

Balance as at 31 December 1,393 1,393 -

Collective impairment Debt securities

Collective impairment for are for premium debts for The Company limits its exposure to credit risk by which no objective evidence of impairment exists. investing only in liquid debt securities and only with

counterparties that have a very high credit rating. The Cash and cash equivalents maximum exposure to credit risk for debt securities

calssified as held-to-maturity at the reporting date per The Company held cash and cash equivalents of geo-political region was as follows:N1.7billion at 31 December 2015 (2014: N1.4billion). The cash and cash equivalent are held with reputable banks and financial institutions.

2015 2014In thousands of nairaNorth East - - North Central - - North West - - South East - - South South - - South West 5,544,704 5,267,151

5,544,704 5,267,151-

The Company did not have any debt securities that outcome of the credit analysis and evaluation and the were past due but not impaired as at 31 December financial and operational viability of the clients. 2015 or 2014

These limits shall be reviewed on a periodic basis to 1.2.6. Company Credit Risk Limits take into account changes in the client's credit strength

and economic conditions demands.In managing credit risk, the Company applies credit risk limits, among other techniques. This is the practice of 1.2.7. Company Credit Risk Monitoringstipulating a maximum amount that the individual or counterparty can obtain as credit. Internal and The Company's exposures are continuously monitored regulatory limits are strictly adhered to. through a system of triggers and early-warning signals

aimed at detecting symptoms which could result in The Company continues to focus on its concentration deterioration of credit risk quality. The triggers and and intrinsic risks and further manage them to a more early-warning systems are supplemented by a review comfortable level. This is very important due to the of upcoming credit facility expiration and market serious risk implications that intrinsic and intelligence to enable timely corrective action by concentration risk pose to the Company. A thorough management. The results of the monitoring process analysis of economic factors, market forecasting and are reflected in the internal rating process in a quarterly prediction based on historical evidence is used to review activity.mitigate the crystallization of these risks.

Credit risk is monitored on an ongoing basis with The Company has in place various portfolio formal weekly, monthly and quarterly reporting to concentration limits (which is subject to periodic ensure senior management awareness of shifts in review) .These limits are closely monitored and credit quality and portfolio performance along with reported on from time to time. changing external factors such as economic and

business cycles.The size of the limits will be based on the type of clients, industry segments of the clients, their ratings,

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RC 407202

The capabilities of the credit review team has been 1. The individuals who take or manage risk clearly strengthened in order to improve the facility understand it.monitoring activity and assure good quality Risk Assets 2. The Company's risk exposure is within established Portfolio across the Company. limits.

3. Risk taking decisions are in line with business A specialized and focused loan recovery and workout strategy and objectives set by the Board of team handles the management and collection of Directors.problem credit facilities. 4. The expected payoffs compensate for the risks

taken.1.3. Market risk 5. Sufficient capital, as a buffer, is available to take

risk.The Company undertakes activities which give rise to a considerable level of market risks exposures(i.e. the The Company proactively manages its Market risk risk that the fair value of future cash flows of our exposures within the acceptable levels.trading and investment positions or other financial instrument will fluctuate because of changes in market The Company currently does not offer very complex prices). Market risks can arise from adverse changes in derivative products. However, we are already building interest rates, foreign exchange rates, equity prices, capacity ( both systems and training/knowledge base) commodity prices and other relevant factors such as to enable us handle these products as at when they are Market volatilities. The objective of market risk introduced. Financial assets/liabilities exposed to management activities is to continually manage and market risks are disclosed in Note 3.control market risk exposure within acceptable parameters, while optimizing the return on risks taken. 1.3.2. Interest Rate Risk

1.3.1. Management of market risk The Company is exposed to a considerable level of interest rate risk i.e. the risk that the future cash flows

The Company has an independent Market Risk of a financial instrument will fluctuate because of Management unit which assesses, monitors , manages changes in market interest rates. Similar to the last and reports on market risk taking activities across the financial year, interest rate was fairly volatile. These Company. We have continued to enhance our Market changes could have a negative impact on the Net Risk Management Framework. The operations of the Interest Income, if not properly managed. The unit is guided by the mission of "inculcating enduring Company however, has a significant portion of its market risk management values and culture, with a liabilities in non-rate sensitive liabilities. This greatly view to reducing the risk of losses associated with assists it in managing its exposure to interest rate risks.market risk-taking activities, and optimizing risk-reward trade-off.” Sensitivities analysis are carried out from time to time

to evaluate the impact of rate changes on the net The Company's market risk objectives, policies and interest income( ranging from 100 basis point to 500 processes are aimed at instituting a model that basis points). The assessed impact has not been objectively identifies, measures and manages market significant on capital or earnings of the Company.risks in the Company and ensure that:

Exposure to interest rate risk

2015 2014 Note N'000 N'000

Fixed rate instruments

Placements with financial institutions 11 1,651,929 1,261,636 Investment security - HTM 12(a) 5,544,704 5,267,151 Loans and receivables - Staff loans 12(c) 89 -Investment contract liabilities 19 (634,392) (419,596)

6,562,330 6,109,191-

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RC 407202

Fair value sensitivity for fixed-rate instruments Cash flow sensitivity for fixed-rate instruments

The Company does not account for any fixed rate A reasonably possible change of 100 basis points in financial assets or financial liabilities at fair value interest rates at the reporting date would be increased through profit or loss. Therefore a change in interest (decreased) equity and profit or loss by the amounts rates at the reporting date would not affect profit or shown below. This analysis assumes that all other loss. variables, in particular foreign currency exchange rates,

remain constant.

Profit or loss Equity, net of tax Effect in thousands on naira 100 bp 100bp 100 bp 100bp

increase decrease increase decrease

31 December 2015Financial instruments 65,623 (65,623) - - 65,623 (65,623) - -

31 December 2014Financial instruments 61,092 (61,092) - -

61,092 (61,092) - -

Foreign Currency Risk

The Company is exposed to currency risk to the extent that there is a mismatch between the currencies in which premium, claims are denominated. The functional currency of the Company is the Nigerian naira. The currencies in which these transactions are primarily denominated are the Nigerian naira. However, the Company receives some premium in foreign currencies and also pays some claims in foreign currencies. The foreign currencies the Company transacts in include British pound and united states dollars.

Exposure to foreign currency risk

The summary quantitative data about the Company's exposure to currency risks as reported to the management of the Company is as follows.

31 December 2015 31 December 2014 USD GBP USD GBP

Cash and cash equivalent 69,798 2,487 90,435 -

Net statement of financial position exposure 69,798 2,487 90,435 -

The following significant exchange rates have been applied. Year-end spot rate

Naira 2015 2014

USD 1 196.5 167.5GBP 1 291.19 -

Sensitivity Analysis

A reasonably possible strengthening (weakening) of the euro, US dollar or sterling against all other currencies at 31 December would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. This amount assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.

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1.3.3. Equity price risk (iv) Other assets

The Company is exposed to equity price risk by holding Other assets represent monetary assets which investments quoted on the Nigerian Stock Exchange usually has a short recycle period and as such the (NSE) and other non-quoted investments. Equity fair values of these balances approximate their securities quoted on the NSE is exposed to movement carrying amount. based on the general movement of the all share index and movement in prices of specific securities held by Fair value and fair value hierarchythe Company. For such investments classified as available for sale, a 2% increase in the share price of The determination of fair value for financial assets and equities at the reporting date would have increased financial liabilities for which there is no observable equity by N1.5million after tax. An equal change in the market price requires the use of certain valuation opposite direction would have reduced equity by techniques.N1.5million after tax.

For financial instruments that trades infrequently and 1.3.4. Fair valuation methods and assumptions have little price transparency, fair value is less

objective, and requires varying degrees of judgment (i) Cash balance with central Bank depending on liquidity, concentration, uncertainty of

market factors, pricing assumptions and other risks Cash amount with Central Bank of Nigeria affecting the specific instrument.represent cash held (mandatory central bank statutory deposit requirements of 2015: N200 The Company measures fair value using the following million, 2014: N200 million) . The fair value of this fair value hierarchy that reflects the significance of the balance is the carrying amount. inputs used in making the measurement.

(ii) Trade receivables Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.

Trade receivables represents balances with contract holders, reinsurers and co-insurers. The Level 2: Valuation techniques based on observable fair value of this balance is the carrying amount. inputs, either directly -i.e. as prices - or indirectly - i.e.

derived from prices in active markets for similar (iii) Treasury bills and investment securities instruments; quoted prices for identical or similar

Treasury bills represent short term instruments instruments in markets that are considered less than issued by the Central Bank of Nigeria. The fair active; or other valuation techniques where all value of treasury bills and bonds at fair value significant inputs are directly or indirectly observable through profit or loss are determined with from market data. reference to quoted prices (unadjusted) in active markets for identical assets. The estimated fair Level 3: Valuation techniques using significant value of treasury bills and bonds at amortized cost unobservable inputs. This category includes all represents the discounted amount of estimated instruments where the valuation techniques includes future cash flows expected to be received. inputs not based on observable data and unobservable Expected cash flows are discounted at current inputs have a significant effect on the instrument's market rates to determine fair value. valuation. This category includes instruments that are

valued based on quoted prices for similar instruments The fair values of quoted equity securities are where significant unobservable adjustments or determined by reference to quoted prices assumptions are required to reflect differences (unadjusted) in active markets for identical between the instruments. instruments.

Profit or loss Equity, net of taxEffect in thousands on naira

31 December 2015USD (10% movement) 1371 (1371) 1371 (1371)GBP (10% movement) 72 (72) 72 (72)

31 December 2014USD (10% movement) 1,515 (1515) 1,515 (1515)

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RC 407202

In some cases, if the inputs used to measure the fair The table below analyses financial instruments value of an asset or a liability is categorised in different measured at fair value at the end of the reporting levels of the fair value hierarchy, then the fair value period, by the level of the fair value hierarchy into measurement is categorized in its entirety in the same which the fair value measurement is categorized.level of the fair value hierarchy as the lowest level of input that is significant to the entire measurement.

In thousands of naira: Note2015

Level 1 Level 2 level 3 Total Equity securities 12(b) 85,740 20,269 - 106,009

85,740 20,269 - 106,009

In thousands of naira: Note2014

Level 1 Level 2 level 3 Total Equity securities 12(b) 102,239 21,714 - 123,953

102,239 21,714 - 123,953

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Financial instruments not measured at fair value include fair value information for financial assets and financial liabilities not measured at fair value if the

The following table sets out the fair values of financial carrying amount is a reasonable approximation of fair instruments not measured at fair value and analyse value.them by the level in the fair value hierarchy into which each fair value measurement is categorised. It does not

In thousands of naira:2015

Note Carrying amount Level 1 Level 2 Level 3 Fair value

AssetsCash and equivalents 11 1,747,983 - - - - Investment securities HTM 12(a) 5,544,704 5,548,034 - - 5,548,034 Loans and receivables 12(c) 89 - - - - Trade receivables 12(d) 12,958 - - - - Other receivables 14 3,225 - - - -

Liabilities Investment contact liabilities 19 634,392 - - - - Trade payables 20 23,779 - - - -

In thousands of naira:2014

Note Carrying amount Level 1 Level 2 Level 3 Fair value

AssetsCash and cash equivalents 11 1,404,212 - - - - Investment securities HTM 12(a) 5,267,151 5,092,987 - - 5,092,987 Trade receivables 12(d) - - - - - Other receivables 14 - - - - -

Liabilities Investment contract liabilities 19 419,596 - - - - Trade payables 20 34,064 - - - -

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ENITH Assurance

RC 407202

1.4. Liquidity risk d. Managing the concentration and profile of debt maturities;

Liquidity risk is the potential loss arising from the Company's inability to meet its obligations as they fall e. Monitoring depositor concentration in order to due or to fund increases in assets without incurring avoid undue reliance on large individual depositors unacceptable cost or losses. Liquidity risk is not viewed and ensure a satisfactory overall funding mix;in isolation, because financial risks are not mutually exclusive and liquidity risk is often triggered by f. Maintaining liquidity and funding contingency consequences of other risks such as insurance claims plans. These plans identify early indicators of risk, credit, market and operational risks. stress conditions and describe actions to be taken

in the event of difficulties arising from systemic or 1.4.1. Liquidity risk management process other crises while minimizing any adverse long-

term implications for the business.The Company has a sound and robust liquidity risk management framework that ensures that sufficient g. Regular conduct of stress testing, coupled with liquidity, including a cushion of unencumbered and testing of contingency funding plans from time to high quality liquid assets are maintained at all times, to time. enable the Company withstand a range of stress events, including those that might involve significant The Maximum Cumulative Outflow has remained claim loss or impairment of funding sources. positive all through the short tenor maturity buckets.

Assessments are carried out on Contractual and The Company's liquidity risk exposure is monitored Behavioural bases. These reveal very sound and robust and managed by the financial control unit on a regular liquidity position of the Company.basis. This process includes:

The Company maintains adequate liquid assets and a. Projecting cash flows and considering the level of liquid assets necessary in relation thereto; marketable securities sufficient to manage any liquidity

stress situation. The liquidity ratio is far above the b. Monitoring statement of financial position liquidity regulatory limits.

rat ios against internal and regulatory requirements;

c. Maintaining a diverse range of funding sources with adequate back-up facilities;

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ENITH Assurance

RC 407202

The table below sets out the Company's classification of each class of financial assets and liabilities, and their maturity profiles:

31 December 2015 Carrying 1-3 4-6 7-12 1-5 Above 5Note amount months months months Years Years Total

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

Cash and cash equivalents 11 1,747,983 1,747,983 - - - - 1,747,983Debt securities 12(a) 5,544,704 1,980,445 723,741 1,901,528 938,990 - 5,544,704 Equity securities 12(b) 106,009 - - - - 106,009 106,009Loans and receivables 12(c) 89 - - 89 - - 89 Trade receivables 12(d) 12,958 12,958 - - - - 12,958Reinsurance assets 13 496,708 105,250 111,049 30,699 249,710 - 496,708 Statutory deposit 17 200,000 - - - - 200,000 200,000Other receivables 14 3,225 3,225 - - - - 3,225Deferred tax assets 23 762,599 762,599 - - - - 762,599

4,612,460 834,790 1,932,316 1,188,700 1,188,700 8,874,275

Investment contract liabilities 19 634,392 129,035 165,021 133,080 207,256 - 634,392 Trade payables 20 23,779 23,779 - - - - 23,779Accruals and other payables 21 2,085,747 2,085,747 - - - - 2,085,747

2,238,561 165,021 133,080 207,256 - 2,743,918

31 December 2014 Carrying 1-3 4-6 7-12 1-5 Above 5Note amount months months months Years Years Total

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

Cash and cash equivalents 11 1,404,212 1,404,212 - - - - 1,404,212Debt securities 12(a) 5,267,151 2,221,310 483,747 647,309 1,914,786 - 5,267,152Equity securities 12(b) 123,953 - - - - 123,953 123,953Trade receivables 12(d) 33,774 33,774 - - - - 33,774Reinsurance assets 13 306,196 306,196 - - - - 306,196Statutory deposit 17 200,000 - - - - 200,000 200,000Other receivables 14 3,225 3,225 - - - - 3,225

3,968,717 483,747 647,309 1,914,786 323,953 7,338,512

Investment contract liabilities 19 419,596 29,035 100,021 103,284 187,256 - 419,596Trade payables 20 34,064 34,064 - - - - 34,064Accruals and other payables 21 924,177 924,177 - - - - 924,177

987,276 100,021 103,284 187,256 - 1,377,837

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2015 ANNUAL REPORT


ENITH Assurance

RC 407202

1.5. Underwriting risk § We shall exercise caution when underwriting discrete (one-off) risks, particularly where there

Underwriting is the process by which an insurer is no requisite experience or know-how;appraises a risk being presented by the proposer and § We shall ensure compliance with NAICOM's decides whether or not to accept the risk and the guideline on KYC.consideration (premium) to receive. Weaknesses in the systems and controls surrounding the underwriting The Company develops own products through its process can expose an insurer to the risk of unexpected research and development unit. We always ensure that losses which may threaten the capital adequacy of the our marketers interact with our customers in order to insurer. The Company's underwriting process is get a feedback. These feedbacks guide us in developing subjected to internal audit and peer review process to product that meets their individual / corporate needs. ensure effectiveness. The limits, standard and exposure are guided by

prudent underwriting procedure and Reinsurance In addition, there is a process for assessing brokers' treaties.procedures and systems to ensure that the quality of information provided to the Company is of a suitable 1.5.2. Underwriting Responsibilities:standard; and in the case of reinsurers, audits of ceding companies to ensure that reinsurance assumed is in The Underwrit ing unit has the fol lowing accordance with treaties. responsibilities:

§ Ensure adherence to reinsurance strategy and The government through the Nigerian Oil and Gas delegated limits;Industry development Act has empowered life insurers § Manage risk appetite by adhering to delegated to underwrite 100 per cent of risks in the country, authority standards;which has also paved way for insurers to improve their § Ensure compliance with the underwriting plan, operations. The factors that the Company uses to policies and manuals and implement correct classify risks is considered highly objective and clearly sign-off process for variations;related to the likely cost of providing coverage, § Manage underwriting risk exposure and ensure a practical to administer, consistent with applicable law, high quality policy standards;and designed to protect the long-term viability of the § To put in place, records of all exposures in the insurance program. different lines of insurance business;

§ Demonstrate skills and capability in executing Underwriting Process Risk – This is risk from exposure underwriting activities;to financial losses related to the selection and § Review the suitability of cover and contact acceptance of risks to be insured. terms, and ensure that all words used are

correct, appropriate and authorized.Mispricing Risk – Risk that insurance premium will be too low to cover the Company's expenses related to The overall strategy motive that form the basis for the underwriting, claim handling and administration. Company underwriting policies is to achieve growth in

gross written premium/market share and also to price Brokers' - Underwriting Risk – This is the risk that (underwrite) risks to ensure that the Company makes a brokers may: targeted return on equity.

(i) Be inadequately trained to assess the risk and 1.5.3. Underwriting Risk Management and Control:offer professional advise to the client.

(ii) Fail to remit premium collected to the Insurer Risk management and Control department of Zenith Life Assurance is responsible for the following:

1.5.1. Underwriting Risk Appetite lEnsure compliance with the regulatory requirements at it relates to underwriting;

The following factors constitute the basis for the lCoordinate issues tracking activities and ensure Company's underwriting risk appetite: action plans are developed for all identified gaps;§ Risk not understood shall not be underwritten; lCollaborate with the underwriting risk § We will not underwrite unquantifiable risks; committee to develop appetite and tolerance § Extreme caution shall be taken underwriting risk limits;

with low safety standards or businesses with lIdent i fy and manage the company's excessively high risk profile; underwriting risk;

§ Businesses and Opportunities that can create lReview and approve reinsurance and systemic risk exposure will be adequately retrocession arrangements as mandated by evaluated; NAICOM.

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ENITH Assurance

RC 407202

1.5.4. Risk Pricing Processes controls and measures to ensure that only acceptable risks are accepted and risks are appropriately priced:

Good and prudent pricing is a key element of an · Underwriting controls, with risk classification insurance underwriting process. Stakeholders and based on the above risk factors;decision takers in underwriting are made to know the · Regular review of premium rates; andprofit implications of underwriting pricing decisions. It · Appropriate policy conditions, including any is important to know that appropriate pricing is exclusion on the cover on the individual's life.necessary to maintain the quality of insurance portfolio in terms of risk underwritten. Although all risks can be Premium rates are guaranteed for the period up to the priced, but not all risks should be underwritten. renewal of a policy, typically, after (1) one year.

Risk Reporting And Monitoring (b) Deposit administration

There is regular reporting and monitoring process for Premium rating on deposit administration policies each class of insurance business. This is to evaluate the distinguishes between the ages and genders of level of performance of each of the insurance portfolio. prospective policyholders. Annual premiums, payable The level of information reported ranges from a up-front, are repriced at renewal of the deposit Profit/Loss account to reporting on risk segments. administration policies.Some of the elements that reported are listed below:

(c) Company life productslGross Premium written;lTypes of risks written; Underwriting on Company business is much less lLines of Business written stringent than for individual business, as there is lPolicy volume typically less scope for anti-selection. The main reason lAlso monitoring activities include: for this is that participation in the Company's schemes lPeer review processes established within the is normally compulsory, and members have limited

underwriting department; choice in the level of the benefits.l Risk management and control reviewl Monthly underwriting Risk Committee meetings Company policies are priced using standard mortality

where results and performances are discussed tables. The price for an individual scheme is adjusted for the following risk factors:

1.5.5. Insurance risk · Region;· Salary structure;

Insurance risk is the risk that future risk claims and · Gender structure; and expenses will exceed the value placed on insurance · Industry.liabilities. It occurs due to the uncertainty of the timing and amount of future cash flows arising under For large schemes, a scheme's past experience is a insurance contracts. The timing is specifically crucial input in setting rates for the scheme. The larger influenced by future mortality, longevity, morbidity, the scheme the more weight is given to the scheme's persistency and expenses about which assumptions past experience. Rates are guaranteed for one year and are made in order to place a value on the liabilities. reviewable at the renewal of the policy.Deviations from assumptions will result in actual cash flows differing from those projected in the policyholder (d) Short-term insurance productsliability calculations. As such, each assumption represents a source of uncertainty. Underwriting on short-term insurance products takes

the form of the insurance applicant completing a 1.5.6. Insurance premium rating proposal form. The following risk factors are used in the

risk classification:(a) Individual life products – Term-assurance, · Age and gender of the insured driver or operator;

Mortgage protection and Savings Plan · Value of the item(s) to be covered;The price for an individual life product is adjusted · Use of the item(s) to be insured, for example, for the following risk factors: premium rates distinguish business and personal

· Age; use for vehicle cover; · Gender; · Physical condition of the item(s) to be insured;· Smoker status; · Safety and security features installed; and· Medical conditions; · Past claims experience, for example, the · Financial condition; and premium rate payable on vehicle cover reflects · Hazardous pursuits. the past claims experience on the vehicle and

driver to be insured.The Company employs the following additional

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ENITH Assurance

RC 407202

Where the value of the item(s) to be insured exceeds a (b) Company life products pre-specified limit, the underwriting becomes more stringent. This is particularly the case for marine and Employee benefit products provide life cover to aviation cover. In this case the Company makes use of members of a Company, such as employees of specialist underwriting agents to assess the risks and companies or members of trade unions.set an appropriate premium for cover.

An aggregate stop-loss reinsurance agreement is in Premium rates are guaranteed for the period up to the place to ensure that the Company's exposure to the renewal of a policy, typically, after (1) one year. aggregate mortality risk in its Company life business is

managed and limited to a specified limit.1.6. Mortality and morbidity risks

In addition, there is a catastrophe reinsurance treaty in The risk that actual experience in respect of the rates of place for both Company business and individual mortality and morbidity may vary from what is assumed business. Such a treaty is particularly important for the in pricing and valuation, depending on the terms of Company life business as there are considerably more different products. The material classes of business concentrations of risks compared to individual most affected by these risks are discussed below. business.

(a) Individual life products – Term assurance, (c) AnnuityMortgage protection, Savings Plan

This contract provides a guaranteed life annuity Products are sold directly to individuals providing a conversion at the maturity of the contract. The benefit on death. The main insurance risk relates to the mortality risk in this case is that the policyholders may possibility that rates of death may be higher than live longer than assumed in the pricing of the contract. expected. This may be due to: This is known as the risk of longevity.

· Normal statistical variation due to the random nature of the insured events; The Company manages this risk by allowing for

· Natural catastrophes such as floods, and improvements in mortality when pricing and valuing unnatural catastrophes such as acts of terrorism; the contracts. The Company also performs more

· The impact of HIV/AIDS or other health detailed actuarial experience investigations and adjusts epidemics; assumptions in pricing for new contracts and valuation

· Anti-selection such as where a policyholder with of existing contracts when necessary. a pre-existing condition or disease purchases a product where a benefit will be paid on death; 1.7. Claims management risk

· The effect of selective withdrawal; and· Concentration risk, which is the risk of a large This is the risk that the insurer may be unable to

number of claims from a single event or in a manage the settlement process by which insurers particular geographical area. fulfils their contractual obligation to policyholders. All

insurers are required to have in place a claims For contracts with fixed and guaranteed benefits (such management policy and procedure for ensuring that as the minimum death benefits available on savings claims are handled fairly and promptly. In establishing plan policies) and fixed future premiums, there are no and maintaining effective claims handling systems and mitigating terms that reduce the risk accepted by procedures, the Company considers the following Company. The Company therefore employs some factors: underwriting controls to ensure that only acceptable risks are accepted. · Appropriate systems and controls shall be

maintained to ensure that all liabilities or The following additional controls and measures are in potential liabilities notified to the insurer are place in order to ensure that the Company manages its recorded promptly and accurately. Accordingly, exposure to mortality risk: the systems and controls in place should ensure

- Claims assessment processes to ensure only that a proper record is established for each valid claims are paid; notified claim;

- Reinsurance to limit liability on particularly large claims or substandard risks; and · Suitable controls shall be maintained to ensure

- Concentration risk is reduced by diversification that estimates for reported claims and additional of business over a large number of independent estimates based on Guideline For Developing a lives, as well as by taking out catastrophe Risk Management Framework For Insurers and reinsurance. Reinsurers in Nigeria statistical evidence are

appropriately made on a consistent basis and are properly categorized;

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ENITH Assurance

RC 407202

· Appropriate systems and procedures are in place for determining all aspects of a reinsurance to assess the validity of notified claims by programme.reference to the underlying contracts of § Senior management that should review an insurance and reinsurance treaties; insurer's reinsurance management systems on a

regular basis.· Suitable systems are adopted to accommodate

the use of suitable experts such as loss adjusters, 1.10. Capital managementlawyers, actuaries, accountants etc. as and when appropriate, and to monitor their use; and The strategy for assessing and managing the impact of

our business plans on present and future regulatory · Appropriate procedures are put in place to capital forms an integral part of the Company's

identify and handle large or unusual claims, strategic plan. Specifically, the Company considers including system to ensure that senior how the present and future capital requirements will management are involved from the outset in the be managed and met against projected capital processing of claims that are significant because requirements. This is based on the Company's of their size or nature. assessment and against the supervisory/regulatory

capital requirements taking account of the Company 1.8. Claims experience risk business strategy and value creation to all its stakeholders.In terms of the short-term insurance contracts held by the Company, the claims experience risk for these The Company prides itself in maintaining very healthy policies is that the number of claims and/or the solvency and capital adequacy ratio in all its areas of monetary claim amounts are worse than that assumed operations. Capital levels are determined either based in the pricing basis. on internal assessments or regulatory requirements.

The Company manages this risk by charging premiums The solvency and Capital Adequacy of the Company is which are appropriate to the risks under the insurance reviewed regularly to meet regulatory requirements contracts. and standard of international best practices in order to

adopt and implement the decisions necessary to Under the short-term insurance products, the maintain the capital at a level that ensures the Company also holds a concentration risk, which is the realisation of the business plan with a certain safety risk of a large number of claims from a single event or in margin.a particular geographical area. This risk is reduced by diversifying over a large number of uncorrelated risks, The Company undertakes a regular monitoring of its as well as taking out catastrophe reinsurance. solvency and capital adequacy and the application of

regulatory capital by deploying internal systems based 1.9. Reinsurance risk on the guidelines provided by the National Insurance

Commission (NAICOM) for supervisory purposes. This is the risk of inadequate reinsurance cover which may be triggered by a situation such as the insolvency The Company has consistently met and surpassed the of a reinsurer, omission to cede risk to the treaty, minimum capital adequacy requirements applicable in wrong cession to the treaty, assumption of risks all areas of operations during the period.without reinsurance cover , acceptance of risks above automatic capacity and there is already market Most of the Company's capital is Tier 1 (Core Capital) saturation and non-payment of reinsurance premium which consists of essentially share capital, and reserves as at when due. The Company ensures that it maintains are created by appropriations of retained earnings. adequate reinsurance arrangements and treaties in respect of the classes or category of insurance business authorized to transact. The Company has put The Company's capital plan is linked to its business in place a documented policy stating: expansion strategy which anticipates the need for

growth and expansion in its branch network and IT § Systems for the selection of reinsurance brokers infrastructure. The capital plan sufficiently meets

and other reinsurance advisers; regulatory requirements as well as provides adequate § Systems for selecting and monitoring cover for the Company's risk profile. The Company's

reinsurance programmes; capital adequacy remains strong and the capacity to § Clearly defined managerial responsibilities and generate and retain reserves continues to grow.

controls;§ Presence of a well resourced reinsurance

department that prepares clear methodologies

2015 ANNUAL REPORT


ENITH Assurance

RC 407202

The sources of fund available to the Company to meet Regulatory capital requirementits capital growth requirements are mainly:

NAICOM requires that the Company maintains a 1. Profit from Underwriting Operations :The minimum capital base of N2 billion. The Company's

Company has consistently reported good Capital base was N3.804 billion as at reporting period underwriting profit which can easily be retained (2014: N4.358 billion).to support the capital base.

The Company engaged an external actuary in 2. Profit from Investments :The Company has determining the valuation of gross life insurance

consistently reported good investment income contract liabilities and the estimated reinsurance which can easily be retained to support the recoverables. The results of the valuation done as at capital base. year end are presented below:

Adequate provisions have been made in the statement Operational risk objectives includes the following: of financial position for these obligations/ . To provide clear and consistent direction in all recoverables. operations of the Company

. To provide a standardised framework and 1.11. Operational risk appropriate guidelines for creating and

managing all operational risk exposuresOperational Risk is the risk of loss resulting from . To enable the Company identify and analyse inadequate and /or failed internal processes, people events (both internal and external) that impact and systems or from external events, including legal on its business.risk and any other risks that is deemed fit on an ongoing basis but excludes reputation and strategic risk. The basic principles that guide the operational risk Operational risk exists in all products and business activities include:activities. Operational Risk is considered as a critical . Operational risks are identified by the risk faced by the Company. assessments covering risks facing each business

unit and risks inherent in processes, activities The Company proactively identifies, assesses and and products.manages all operational risks by aligning the people, . Risk assessment incorporates a regular review of technology and processes with best risk management risks identified to monitor significant changes.practices towards enhancing stake holders' value and . Risk mitigation, including insurance, is sustaining industry leadership. considered where this is cost-effective.

2015 2014 2013 2012 N'000 N'000 N'000 N'000

Gross life insurance contract liabilities:

Unearned premium reserve (see note 18(d)) 699,231 322,037 389,744 223,360 Incurred but not reported (see note 18(d)) 653,958 651,252 424,894 769,018

1,353,189 973,289 814,638 992,378

Reinsurance recoverables:

Travel reinsurance 31,344 - - - Unearned premium reserve (see note 13) 43,956 62,866 51,408 45,072 Incurred but not reported (see note 13) 198,634 152,208 46,372 61,693

273,934 215,074 97,780 106,765

Net liability (see note 18(d)) 1,079,255 758,215 716,858 885,613

Investment contract liabilities

Life Savings Plan (see note 19) 305,365 199,444 100,981 60,256 Deposit Administration (see note 19) 329,027 220,152 112,227 -

634,392 419,596 213,208 60,256

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2015 ANNUAL REPORT


ENITH Assurance

RC 407202

The Operational Risk Unit constantly identifies and 1.14. Reputational risk assesses the operational risk inherent in all material products, activities, processes and systems. It also It is recognised that the Company's reputation may ensures that before new products, activities, processes suffer adversely due to bad publicity, non-compliance and systems are introduced or undertaken, the with regulatory rules and legislation, which may lead to operational risk inherent in them is identified clearly a significant drop in new business and/or a significant and subjected to adequate assessment procedures. increase in the number of lapses and/or withdrawals.

The techniques employed by the Company in its The Company promotes sound business ethics among measurements include the following: Key Control Self its employees.Assessment (KCSA), Key Risk Indicators (KRIs) and the Risk Register. These tools have been quite useful in the The Company also strives to maintain quality customer identification, measurement and analyses of services and procedures, and business operations that operational risk in the Company. These are subject to enable compliance with regulatory rules and legislation review from time to time. in order to minimise the risk of a drop in the reputation

of the Company.Training and sensitisation on operational risk is carried out on an ongoing basis across the Company. The Company did not record any issue with major There was no significant operational risk incidence reputational effect in the financial year.during the financial year.

1.15. Taxation risk1.12. Strategic risk

Taxation risk refers to the risk that new taxation laws Strategic risk examines the impact of design and will adversely affect the Company and/or the loss may implementation of business models and decisions, on arise due to non-compliance with tax laws.earnings and capital as well as the responsiveness to industry changes. This responsibility is taken quite The taxation risk is managed by monitoring applicable seriously by the Board and Executive management of tax laws, maintaining operational policies that enable the Company and deliberate steps are taken to ensure the Company to comply with taxation laws and, where that the right models are employed and appropriately required, seeking the advice of tax specialists.communicated to all decision makers in the Company. The execution, processes and constant reviews This risk is well managed across the Company.ensures that strategic objectives are achieved. This has essentially driven the Company's sound insurance 1.16. Regulatory riskculture and performance record to date.

The Company manages the regulatory risk which it is 1.13. Legal risk potentially exposed to by monitoring new regulatory

rules and applicable laws, and the identification of Legal risk is defined as the risk of loss due to defective significant regulatory risks. The Company strives to contractual arrangements, legal liability (both criminal maintain appropriate procedures, processes and and civil) incurred during operations by the inability of policies that enable it to comply with applicable the organisation to enforce its rights, or by failure to regulation.address identified concerns to the appropriate authorities where changes in the law are proposed. The Company has continued to maintain zero

tolerance posture for any regulatory breaches in all its The Company manages this risk by monitoring new area of operations.legislation, creating awareness of legislation amongst employees, identifying significant legal risks as well as The strengthening of compliance by the Company assessing the potential impact of these. during the financial year has further enhanced the

process of management of regulatory risk across the Legal risks management in the Company is also being Company.enhanced by appropriate product risk review and management of contractual obligations via well documented Service Level Agreements and other contractual documents.

The Company also has a team of well experienced professionals who handle legal issues across the Company.

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ENITH Assurance

RC 407202

1.16.1. Persistency risk then lead to intervention by the Regulator and may further lead to a fall in the reputation of the Company

Persistency risk relates to the risk that policyholders (see Reputational risk above for further details). At an may withdraw their benefits and terminate their extreme, the Regulator may require the Company to contracts prior to the contractual maturity date of the close new business. This will have a further negative contract. Expenses such as commission and acquisition impact on the Company.expenses are largely incurred at the outset of the contract. These upfront costs are expected to be This risk is monitored and assessed by performing recouped over the term of a contract from fees and annual valuations on the life insurance liabilities by an charges from the contract. Therefore, if the contract is independent valuation actuary, calculating the terminated before the contractual date, expenses outstanding claims reported (OCR) and Incurred But might not have been fully recovered, resulting in losses Not Reported (IBNR) contingency reserves, monitoring being incurred. any regulatory rules applying to the assets and the

adequacy of the assets to back the liabilities and Where a surrender benefit is payable, the benefit adopting an investment strategy which is aimed at amount on withdrawal normally makes provision for investing in admissible assets and maintaining recouping any outstanding expenses. However, losses adequate capital.may still occur if the expenses incurred in respect of the policy exceed the value of the policy, or where the 1.16.5. Asset liability matching risk withdrawal benefit does not fully allow for the recovery of all unrecouped expenses. This may either Due to the short-term nature of the Company's be due to a regulatory minimum surrender benefit insurance business, most of the liability cash flows will applying, or because of product design. be of short-term nature. The asset liability matching

risk lies in the risk that the cash inflows from the assets held will not match liability cash outflows in terms of

1.16.2. Expense risk timing and/or amounts. Therefore, the risk arises that the Company will be unable to meet policyholder

There is a risk that the Company may experience a loss obligations. In this case, the asset liability mismatch risk due to actual expenses being higher than those is similar to liquidity risk described under liquidity risk assumed when pricing and valuing policies. This may be (section 1.4).due to inefficiencies, higher than expected inflation, lower than expected volumes of new business or 1.16.6. Assumption risk higher than expected terminations resulting in smaller in-force policies. In determining the value of insurance liabilities,

assumptions need to be made regarding future rates of To manage this risk, the Company performs expense mortality, morbidity, termination rates, expenses and investigations annually and sets pricing and valuation investment performance. The uncertainty of these assumptions to be in-line with the actual expenses rates may result in actual experience being different experience, with allowance for inflation. from that assumed and hence actual cash flows being

different from those projected, and, in the extreme, The Company's exposure to unexpected increases in that the actual claims and benefits exceed the liabilities. the inflation rate is expected to be minimal due to the The risk is mitigated to an extent through:short-term nature of their business and their ability to review premium rates at renewals (typically on an The addition of margins, specifically where there is annual basis). evidence of moderate or extreme variation in

experience;1.16.3. Business volume risk

The use of appropriate sources of data; and There is a risk the Company may not sell sufficient volumes of new business to meet the expenses Regular actual versus expected investigations.associated with distribution and administration. A significant portion of the new business acquisition 1.16.7. Data risk costs are variable and relate directly to sales volumes.

Data risk is the risk that data used in the policyholders' 1.16.4. Capital adequacy risk liabilities valuation calculations are inaccurate or

incomplete and, therefore, are not a true and accurate There is a risk that the capital held by the Company to view of the insurance contracts held by the Company. back to its insurance liabilities may prove to be inadequate on a regulatory solvency basis. This may

2015 ANNUAL REPORT


ENITH Assurance

RC 407202

The data could be inaccurate or incomplete due to environmental impact is of concern. The Company incorrect data or valuation extracts between the policy goes beyond concerted efforts to minimise energy administration system and the actuarial valuation usage internally and dispose of waste responsibly, to model and/or incorrect capturing of data on the policy also having in place lending policies that promote administration system. sustainable lending and ensure high environmental

standards. This risk is managed by the Company through regular data integrity testing in order to assess the 1.17.2. Internal Principlesappropriateness, accuracy and credibility of the various data sets as well as investigations into data exceptions (a) Waste Reduction & Recyclingreported.

The Insurance company continually promotes reduced Where insufficient internal data is available, the paperless culture where employees are encouraged to Company makes use of external sources to derive its use electronic communications, online approvals and pricing and valuation assumptions. Frequent other web- based applications, and to print documents monitoring of these external sources is performed, only when required. Document workflows are including actual versus expected investigations. automated, which minimizes paper usage.

1.16.8. Model risk (b) Employee Relations

There is a risk that the Company may suffer a loss if the Zenith Life Assurance believes that its people are the model used to calculate the insurance liabilities does driving force behind its success and the main not project expected cash flows under the insurance competitive advantage that positions it ahead of contracts accurately. The expected cash flow competition. The Company is of the view that its future projections may be inaccurate either due to the model lies in a committed team of individuals who are itself being incorrect, inappropriate to the policies convinced of their future at the organisation.being valued or inaccurate and/or the underlying assumptions used in the model being inappropriate. To this end, the Company remains committed to

creating a healthy, safe and fulfilling work environment The Company makes use of an independent valuation that supports personal growth, encourages actuary to value its liabilities. The models being used to individuality and instigates team spirit. The Company value the liabilities are, therefore, not internal to but organizes numerous training programs covering soft belong to an external third party. The model risk skills, negotiation skills to personality development and underlying the use of third party models are addressed encourages all staff to participate actively. by:

. Regular actual versus expected cash flow © Diversityinvestigations to assess the appropriateness of the external models; and Zenith Life Assurance recognizes the need to promote

a diverse workforce as a means to attracting top-flight . Detailed investigations are performed annually talent and enhancing its competitive advantage. It

to ensure the integrity of the data used in the further recognizes that each employee brings to the valuation process. workplace experiences and capabilities that are as

unique as the individual. 1.17. Sustainability report

The Company treats all employees fairly and the Zenith Life Assurance is committed to sustainable Company does not discriminate on the basis of gender, development and the responsible stewardship of race, colour, nationality, religious belief or any other resources. This implies developing solutions that link distinctive attribute. Furthermore, we take steps to economic success with social responsibility, which assure that employees continue to have access to requires balancing short and long term goals and available opportunities within the organisation and that interests and integrating economic, environmental and they are upwardly mobile within the system at all social considerations into business decisions across the managerial levels within the Company.board.

(d) Occupational Health & Safety1.17.1. External Principles

The health and safety of employees, customers and (a) Sustainable Practices other stakeholders is of paramount importance to the Sustainability of the environment is central to the Company. Zenith Life Assurance, and its wider social and

2015 ANNUAL REPORT


ENITH Assurance

RC 407202

The Company constantly seeks to identify and reduce their own social and environmental risks, particularly the potential for accidents or injuries in all its those firms which have more significant impacts than it operations. There is ongoing training of health and does and those in countries, where the regulatory safety officers in line with the Company's health and framework is sometimes not as stringent as our safety policy. There is also adequate communication standards. The Company is also committed to treating of the health and safety policies across the Company to its suppliers with respect, especially in areas such as ensure staff are conversant with its content. contract terms and conditions and payment terms.

(e) Supply Chain Management

The Company will continue to work in active partnership with its suppliers to help them manage

2015 ANNUAL REPORT


ENITH Assurance

RC 407202

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2015 ANNUAL REPORT


ENITH Assurance

RC 407202

3. 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 financial liabilities, and their fair values.

31 December 2015 Loans and Available- Held to Other Financial Total carrying Fair Note receivables for-sale maturity Liabilities amount value

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

Cash and cash equivalents 11 96,054 - 1,651,929 - 1,747,983 1,747,983Debt securities 12(a) - - 5,544,704 5,544,704 5,548,034Equity securities 12(b) - 106,009 - - 106,009 106,009 Trade receivables 12(d) 12,958 - - - 12,958 12,958 Reinsurance assets 13 496,708 - - - 496,708 496,708 Other receivables 14 3,225 - - - 3,225 3,225Statutory deposit 17 200,000 - - - 200,000 200,000

808,945 106,009 7,196,644 8,111,587 8,114,917

Investment contract liabilities 19 - - - 634,392 634,392 634,392 Trade payables 20 - - - 23,779 23,779 23,779 Provisions and other payables 21 - - - 2,085,747 2,085,747 2,085,747

- - - 2,743,918 2,743,918 2,743,918

31 December 2014 Loans and Available- Held to Other Financial Total carrying Fair Note receivables for-sale maturity Liabilities amount value

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

Cash and cash equivalents 11 142,576 - 1,261,636 1,404,212 1,404,212Debt securities 12 - - 5,267,151 5,267,151 5,092,987Equity securities 12 - 102,239 - 102,239 102,239 Trade receivables 12(d) - - - - - Reinsurance assets 13 306,196 - - 306,196 306,196 Other receivables 14 3,225 - - 3,225 3,225 Statutory deposit 17 200,000 - - 200,000 200,000 -

651,997 102,239 6,528,787 7,283,023 7,108,859

Investment contract liabilities 19 - - - 419,596 419,596 419,596 Trade payables 20 - - - 34,064 34,064 34,064 Provisions and other payables 21 - - - 924,177 924,177 924,177

- - - 1,377,837 1,377,837 1,377,837

-

-

-

-

2015 ANNUAL REPORT


ENITH Assurance

RC 407202

4. Gross premium income

Analysis of gross premium income per class of business is as follows: 2015 2014 N'000 N'000

Group life premium 3,329,739 2,295,809 Single life premium 566 82 Savings plan premium (See note(a)) below 1,791 2,077 Travel insurance (See note(b)) below 31,344 27,484

Gross premium written 3,363,440 2,325,452

Unearned premium reserve (377,193) 67,707

Gross premium income 2,986,247 2,393,159

(a) Savings plan premium is the premium charged for the life component of the Zenith Life Savings Plan, an Investment linked product. The life investment product/contract has been unbundled into the life and investment component and the related income reported as part of gross premium.

(b) Travel insurance is the premium charged for the life component/death benefit on the travel insurance product. The premium received on the travel insurance product is reported as part of gross premium.

5. Reinsurance expenses

Reinsurance expenses are analysed as follows: 2015 2014 N'000 N'000

Re-insurance premium ceded 634,242 532,970 Movement in prepaid insurance - 54,688 Unexpired reinsurance premium 18,910 (11,458)

653,152 576,200

6. Commission income Commission received comprises commission earned from reinsurance ceeded by the Company during the financial year.

2015 2014 N'000 N'000

Commission received 161,292 125,819

161,292 125,819

7. Claims expenses The claims incurred is analysed as follows:

2015 2014 N'000 N'000

Claims paid 2,144,704 670,414 Increase in claims outstanding 45,340 200,167 Claims recovery (876,075) (355,676) Movement in IBNR 2,706 226,358

1,316,675 741,263

8. Underwriting expenses Underwriting expenses comprises commission expenses paid on contracts written during the year.

2015 2014 N'000 N'000

Commission expense 514,455 311,639

514,455 311,639

-

-

-

-

-

-

-

2015 ANNUAL REPORT


ENITH Assurance

RC 407202

9 Investment income

9(a) Investment income comprise: 2015 2014 N'000 N'000

Interest income on held to maturity financial assets 698,929 546,067 Loss on disposal of equity investment - (6,333)Dividend income on available for sale equity investments 3,264 4,430 Interest income on cash and cash equivalents 153,742 132,342 Interest income on statutory deposits 23,118 37,735 Other income (see note (I) 11,353 -

890,406 714,241

Other income comprises contract cancellation fees, discounts on subscription fee, excess business acquisition costs refunded, interest on personnel loan and management fees charged to coinsurers.

9(b) Net income on investment contracts:

2015 2014 N'000 N'000

Interest income 56,544 22,420 Interest on investment contract liability (30,462) (17,862)Expenses related to deposit administration (16,165) (4,231)

9,917 327

10(a) Depreciation and ammortisation

2015 2014 N'000 N'000

Depreciation (see note 16) 2,274 1,130 Amortisation (see note 15) 3,309 2,131

5,583 3,261

10(b) Management expenses

2015 2014 N'000 N'000

Personnel expenses (see 10(c) below) 97,603 89,834 Auditor's remuneration 14,000 14,000 Directors allowance 37,100 5,850 Professional expenses 42,089 38,007 Subscription and filing fees 2,485 4,821 NAICOM levy 27,579 19,428 Corporate branding 27,909 36,835 Advertisement and publicity 3,320 1,779 Administrative expenses 15,522 16,146 Impairment loss on loans and receivables - 1,393

267,607 228,093

Total 273,190 231,354

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2015 ANNUAL REPORT


ENITH Assurance

RC 407202

(10(c) Personnel expenses Personnel expenses comprise of short term employee's compensation incurred during the year

2015 2014 N'000 N'000

Wages and salaries 89,831 83,423 NSITF & ITF 1,419 961 Pension costs 6,353 5,450 -

97,603 89,834

11. Cash and cash equivalents(a) Cash and cash equivalents comprise:

2015 2014 N'000 N'000

Balances held with banks in Nigeria 96,054 142,576 Placements with financial institutions (see (b) below) 1,651,929 1,261,636

1,747,983 1,404,212

(b) Placement with financial institutions comprises term deposits with maturity of less than 90 days from the value date of the instruments.

12. Financial assets - Investment securitiesThe Company's financial assets are summarised below by measurement category in the table below.

2015 2014 N'000 N'000

Investment securities- held to maturity (see 12(a) below) 5,544,704 5,267,151 Investment securities- available for sale (see 12(b) below) 106,009 102,239

5,650,713 5,369,390

Maturity profile of financial assets 2015 2014 N'000 N'000

Current 5,544,704 5,267,151 Non-Current 106,009 102,239

5,650,713 5,369,390

12(a) Investment securities- held to maturity 2015 2014 N'000 N'000

Debt securities – fixed interest:Quoted debt securities - Bonds (see (I) below) 1,897,901 1,914,786 Quoted debt securities - Treasury bills (Federal Government of Nigeria) 3,646,803 3,352,365

5,544,704 5,267,151

(i) Quoted debt securities - Bonds. The bonds comprise:

2015 2014 N'000 N'000

13.05% Federal Government of Nigeria 16 AUG 2016 938,990 932,569 15.10% Federal Government of Nigeria 27 APR 2017 958,911 982,217

1,897,901 1,914,786

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-

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-

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2015 ANNUAL REPORT


ENITH Assurance

RC 407202

(ii) Movement to Held-to-Maturity investment securities 2015 2014 N'000 N'000

Balance, beginning of the year 5,267,151 3,644,767 Additions 277,553 1,622,384 Fair value gain/loss - - Disposal during the year - - Balance, end of the year - -

5,544,704 5,267,151

12(b) Investment securities- available for sale 2015 2014 N'000 N'000

Equities listed on the Nigerian Stock Exchange:Cost 493,195 493,195 Impairment loss - Income Statement (410,521) -Mark-to-market loss - Reserves 3,066 (390,956)

85,740 102,239

Unquoted equity securities - Mutual funds Cost 32,731 32,731 Impairment loss P&L (12,462) - Mark-to-market loss - Reserves - (11,017)

20,269 21,714

Total investment securities - available for sale 106,009 123,953

Movement in impairment on available for sale financial assetBalance, beginning of year - -

Charge to income statement:Quoted 410,521 - Unquoted 12,462 -

Balance, end of year 422,983 -

The movement in available for sale financial asset during the year was as follows 2015 2014 N'000 N'000

Balance, beginning of the year 123,952 191,578 Addition during the year - - Disposal during the year - (7,764)Fair value changes during the year (17,943) (59,862)

Balance, end of the year 106,009 123,952

Maturity profile of Investment securities 2015 2014 N'000 N'000

Current 4,585,793 3,352,365 Non-Current 1,064,920 2,017,025

5,650,713 5,369,390

-

-

-

-

-

-

-

-

-

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2015 ANNUAL REPORT


ENITH Assurance

RC 407202

12(c) Loans and receivables 2015 2014 N'000 N'000

Staff loans 1,482 1,393 Less specific impairment (1,393) (1,393)

89 -

Maturity profile of Loans and receivables

2015 2014 N'000 N'000

Current 89 - Non-Current - - 89 -

12(d) Trade receivables 2015 2014 N'000 N'000

Trade receivables comprise:Due from brokers 12,958 33,774 12,958 33,774

Trade receivables represent premium receivable due from brokers within 30 days in line with the NAICOM guideline on premium. Hence no impairment.

(i) Maturity profile of trade receivables

2015 2014 N'000 N'000

Within 30 days 12,958 33,774 Above 30 days - -

12,958 33,774

Premium receivables/trade receivables are not admissible by NAICOM (National Insurance Commission) for the purpose of solvency margin determination.

There is no concentration of credit risk with respect to trade receivables, as the Company has a non-systematical portfolio dispersed across many industries in Nigeria.

(ii) Aging analysis of trade receivablesThe age analysis of trade receivables as at the end of the year are as follows:

2015 2014 N'000 N'000

0-90 days 12,958 33,774 91 – 180 days - - Above 180 days - -

12,958 33,774

(iii) The Company's loans and receivables has no collateral as security. The Company has no loans or receivables that is past due but not impaired. Insurance receivables are to be settled on demand and the carrying amount is not significantly different from the fair value. As at 31 December 2015, the Company had no insurance receivables that were past due or impaired whose terms were renegotiated. Hence no impairment.

-

-

2015 ANNUAL REPORT


ENITH Assurance

RC 407202

13. Reinsurance assets 2015 2014 N'000 N'000

Reinsurance prepaid - UPR 43,956 62,866 Reinsurance recoverable - IBNR (see note(a)) 198,634 152,208 Reinsurance recoverable - Travel insurance 31,344 -

Reinsurance recoverables on outstanding claims 273,934 215,074 Reinsurance recoverables due on claims paid 222,774 91,122

496,708 306,196

Reinsurance recoverables are estimated recoveries from reinsurance companies based on the actuarially determined liabilities under the Life fund account.

Maturity profile of reinsurance assets 2015 2014 N'000 N'000

Within 12 months 254,118 91,122 After 12 months 242,590 215,074

496,708 306,196

14. Other receivables 2015 2014 N'000 N'000

Receivable from IHI Bupa (see note (a) below) 3,214 3,214 Receivables from Zenith Securities Limited 11 11

3,225 3,225

a Receivable from IHI Bupa represents a refundable deposit made by the Company to IHI Bupa in relation to an alliance agreement both parties have on Zenith travel insurance business. IHI Bupa is a branch of an established international insurance company with experience in the design, marketing, selling and underwriting of international healthcare and travel insurance.

Maturity profile of other receivables 2015 2014 N'000 N'000

Within 12 months - - After 12 months 3,225 3,225

3,225 3,225

15. Intangible assets 2015 2014 N'000 N'000

Computer software:CostBalance, beginning of year 25,578 15,649 Additions during the year 13,400 9,929

Balance at year end 38,978 25,578

Accumulated amortisation:Balance, beginning of year 17,029 14,898 Charge for the year 3,309 2,131


Net book value:Balance end of year 18,640 8,549 Balance, beginning of year 8,549 751

The intangible assets held by the Company are computer softwares.

.

.

-

-

-

-

-

-

-

-

-

-

2015 ANNUAL REPORT


ENITH Assurance

RC 407202

16. Property and equipment 2015 Motor Computer Office

Vehicle Equipment Equipment TOTAL N' 000 N' 000 N' 000 N' 000

CostBalance as at 1 January 2015 1,820 4,997 3,147 9,964Additions - - 840 840

Balance, end of year 1,820 4,997 3,987 10,804

Accumulated depreciationBalance as at 1 January 2015 1,820 833 472 3,125 Charge for the year - 1,666 608 2,274


Net book value Balance as at 31 December 2015 - 2,498 2,907 5,405

2014 Motor Computer Office Vehicle Equipment Equipment TOTAL

N' 000 N' 000 N' 000 N' 000 Cost Balance as at 1 January 2014 1,820 - 175 1,995 Additions - 4,997 2,972 7,969


Accumulated depreciationBalance as at 1 January 2014 1,820 - 175 1,995 Charge for the year - 833 297 1,130

Balance, end of year 1,820 833 472 3,125

Net book value Balance as at 31 December 2014 - 4,164 2,675 6,839

i. No leased assets are included in the above property and equipment account (2014:Nil)ii. The Company had no capital commitments as at the reporting date (2014: Nil)

17 Statutory deposit

This represents amounts deposited with the Central Bank of Nigeria (CBN) pursuant to Section 10(3) of the Insurance Act of Nigeria. 2015 2014

N'000 N'000

Life business statutory deposit 200,000 200,000

The Statutory deposit balance represents restricted cash balance held with the Central Bank of Nigeria and is not available for use in the day to day activities of the Company.

Maturity profile of statutory deposit

2015 2014 N'000 N'000

Within 12 months - - After 12 months 200,000 200,000 200,000 200,000

-

-

-

-

.

2015 ANNUAL REPORT


ENITH Assurance

RC 407202

18. Insurance contract liabilities(a) Insurance contract liabilities comprise: 2015 2014

N'000 N'000Outstanding claims (see (c) below) 501,104 455,764 Gross ordinary life insurance contract liabilities (see (d) below) 1,353,189 973,289

1,854,293 1,429,053

(b) Maturity profile of insurance contract liabilities 2015 2014

N'000 N'000Within 12 months 1,275,070 1,033,761 After 12 months 579,223 395,292

1,854,293 1,429,053

(c) Outstanding claims: represents the estimated ultimate cost of settling all claims arising from incidents occurring as at the reporting date.

The aging analysis for claims reported and loss adjusted for life insurance contracts

2015 2014 N'000 N'000

Days0- 90 117,587 179,020 91- 180 81,227 80,941 181-270 97,304 17,725 271-360 24,493 15,229 Above 360 180,493 162,849

501,104 455,764

(d) Life insurance contract liabilities: Life insurance contract liabilities is assessed every year by qualified consulting actuaries in accordance with the Company's accounting policy.

Life insurance contract liabilities comprises:

2015 2014 N'000 N'000

Group life IBNR claims 653,958 651,252 Travel Insurance 31,344 - Unearned premium reserves including AURR 658,496 317,443 Individual traditional 9,391 4,594

Gross liability 1,353,189 973,289 Reinsurance recoverables on outstanding claims (see Note 13) (273,934) (215,074)

Net liability 1,079,255 758,215

-

-

-

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2015 ANNUAL REPORT


ENITH Assurance

RC 407202

(I) For individual business, reserves were calculated (vi) No specific adjustment has been made for via a cashflow projection approach, taking into expenses after premiums have been ceased in account future office premiums, expenses and the case of limited payments policies i.e. they benefit payments (death). Future cashflows have been allocated the same level of expenses were discounted back to the valuation date at as premium paying policies.the valuation rate of interest.

(vii) There are no policies on the books that are The valuation age has been taken as age at last entitled to surrender. No allowance has been birthday at the valuation date. The period to made in the valuation for the reinstatement of maturity has been taken as the full term of the policies that lapsed before the valuation date. policy less the expired term. Full credit has been taken for premiums due between the valuation (viii) Where negative reserves were calculated, these date and end of the premium paying term. were set to zero to prevent policies being treated

as assets.(ii) An unexpired premium reserve was included for

Group life business after allowing for acquisition (ix) Any policies issued according to substandard expenses at a ratio of 20% of premium. An terms were valued using the same method and Additional Unexpired Risk Reserve (AURR). was basis as standard policies.also held to allow for any inadequacies in the UPR for meeting claims in respect of the (x) The mortality table used in the valuation is the unexpired period. UK's mortality of assured lives 1967-70 (A6670)

without adjustment.(iii) The claims rates underlying the AURR were

based on pooled historical scheme experience. (xi) The rate of interest used in the valuation is 10.25% per annum. (31 December 2014:

(iv) The valuation of the liabilities was made on the 14.75%) assumption that premiums have been credited to the accounts as they fall due, according to the (xii) Expenses for individual life business were frequency of the particular payment. reserved explicitly at N5,420 (31 December

2014: N4,950) per annum increasing with (v) No specific adjustment has been made for inflation at 9.5% per annum. (31 December

immediate payment of claims. 2014: 8%)

Actuarial valuation

The latest available actuarial valuation of the life business funds was as at 31 December 2015. The actuarial value of the net liability of the fund was N1,713,646,277 (31 December 2014: N1,177,810,423).

The analysis of the gross liability due to the fund holders and amount recoverable from reinsurance is stated below:

2015 2014 N'000 N'000

Gross liability - Individual 9,391 4,594 - Group life 1,301,954 940,950 - Travel insurance 31,344 27,484

Additional reserves 10,500 261

1,353,189 973,289

Deposit administration (see Note 19) - Individual 305,365 199,444 - Group 329,027 220,152

Gross liability 1,987,581 1,392,885 Reinsurance recoverable (273,934) (215,074)

Net liability 1,713,647 1,177,811

The valuation of the Company's life business fund as at 31 December 2015 was carried out by HR Nigeria Limited consultant and actuaries. The valuation was done based on the following principles:

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(xiii) An additional reserve of N10,500,000 (31 actuarially calculated net liability (net of reinsurance recoverable) is ? 1,713,646,277 December 2014: N261,142) representing a

cautionary contingent reserve against adverse (31 December 2014: ? 1,177,810,423).mortality experience and expense overrun is made, for individual business over the 12 Information on Actuarymonths following the valuation date. O.O Okpaise

Associate, Society of Actuaries, USA(xiv) The solvency level at the valuation date was Fellow Insistute of Actuaries England

100% (31 December 2014: 130.9%). That is, FRC/NAS/00000000738assets representing the Life and Deposit Administration funds on the Company's balance sheet amount of ? 2,488,684,329 (31 December 2014: ? 1,723,943,471) were 100% (31 December 2014: 180%) of the value of the

19. Investment contract liabilities 2015 2014

N'000 N'000

Life Savings Plan (see (a) below) 305,365 199,444 Deposit Administration (see (b) below) 329,027 220,152

634,392 419,596

a. Life Savings Plan 2015 2014

N'000 N'000

Balance, beginning of the year 199,444 100,981 Additions 248,672 157,008 Withdrawals (157,612) (68,076)Guaranteed investment income on savings plan 14,861 9,531


2015 2014 N'000 N'000

b. Deposit Administration

Balance, beginning of the year 220,152 112,227 Addition 141,989 112,351 Withdrawals (43,141) (10,367)Guaranteed investment income on deposit administration 10,027 5,941


Life Savings plan: These are receipts from individuals and employers (on behalf of their employees), respectively, of a savings nature. They are treated as liabilities in the Company's statement of financial position.

Maturity Profile of Investment contract liabilities 2015 2014

N'000 N'000

Within 12 months 232,340 232,340 After 12 months 402,052 187,256

634,392 419,596

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20. Trade payables 2015 2014

N'000 N'000

Commission payable 2,268 3,649 Reinsurance payable 21,511 30,415

23,779 34,064

Maturity profile of Trade payables 2015 2014

N'000 N'000

Within 12 months 23,779 34,064 After 12 months - -

23,779 34,064

21. Accruals and Other payables 2015 2014

N'000 N'000Accruals and other payables comprise:Auditors fees accruals 14,500 14,000 PAYE, VAT payable 1,643 1,505 WHT payable 200,000 - Intercompany payable (see (I) below) 24,302 157,986 Premium payable to IHI Bupa Travel & ZGIC 5,336 2,012 NAICOM Levy 27,479 17,458 Dividend payable 1,800,000 700,000 ITF payable 1,343 961 NSITF payable 75 - National Housing Fund payable 4 - Premium deposits (see note (ii)) 11,065 30,255

2,085,747 924,177

(i) Intercompany payable represents amounts owed to parent Company; Zenith General Insurance Company Limited with respect to cash disbursements made by the parent on behalf of the Company. All outstanding balances with these related parties are to be settled in cash within twelve months of the reporting date. None of the balances are secured nor bear interest.

(ii) Premium deposits represents unreconciled credit deposits relating to premium into the Company's accounts.

Maturity profile of accruals and other payables 2015 2014

N'000 N'000

Within 12 months 2,085,747 924,177 After 12 months - -

2,085,747 924,177

22. Current income tax liabilities

22(a) The movement in this account during the year was as follows: 2015 2014

N'000 N'000

Balance beginning of year 188,038 175,470 Minimum dividend tax 425,857 - Charge for the year (see note (b) below) 164,384 239,916

778,279 415,386 Payments during the year (281,946) (227,348)


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22(b) Minimum and Income tax expense recognised in income statement 2015 2014

N'000 N'000

i Minimum dividend tax 425,857 -ii Corporate income tax charge

Company income tax - 212,076 Tertiary education tax - 14,245 NITDA levy 8,588 13,595 Prior year under provision 155,796 -

164,384 239,916

Deferred tax credit for the year (763,571) 1,247

Income tax expense / (credit) (599,187) 241,163

Total income tax expense (173,330) 241,163

Excess Dividend Taxation

Excess dividend tax of N425.86million was recognised in the current year from reserves of N2.45billion included in the amount of N2billion declared as interim dividend based on the fact that an amount of N508.48million has already been subjected to tax in previous years.

22(c) The effective tax reconciliation is as follows:Rate 2015 Rate 2014

% N' 000 % N' 000

Profit before tax 867,407 1,373,090Tax using the statutory corporation tax rate 30% 260,222 30% 411,927Non-deductible expenses 123% 1,067,294 0% 5,591 Non-exempt income -153% (1,327,516) -15% (204,195)Change in recognised deductible temporary differences -88% (763,571) 0% - Tertiary education Tax 0% - 1% 14,245NITDA 1% 8,588 1% 13,595 Prior year under provision 18% 155,796 1% - Minimum dividend tax 49% 425,857 0% -

-20% (173,330) 18% 241,163

23. Deferred taxation

(a) Deferred tax liability account 2015 2014

N'000 N'000

Balance, beginning of year 972 (275)Reclassification to deferred tax asset (972) - Deferred tax charge for the year - 1,247

Balance, end of year - 972

(b) Deferred tax asset account 2015 2014

N'000 N'000Balance, beginning of year - - Reclassification from deferred tax liability account (972) - Deferred tax credit for the year recognised in profit or loss 763,571 -

Balance, end of year 762,599 972

No deferred tax was recognised in OCI during the year

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(c) Analysis of deferred tax liability as at year end is as follows 2015 2014

N'000 N'000

Property and equipment 766 972

766 972

(d) Analysis of deferred tax asset as at year end is as follows 2015 2014

N'000 N'000

Unrelieved losses 762,863 - Unutilized capital allowance 502 -

763,365 -

Maturity profile of deferred tax asset 2015 2014

N'000 N'000Within 12 months - - After 12 months 762,599 - -

762,599 -

Maturity profile of deferred tax liability 2015 2014

N'000 N'000Within 12 months - - After 12 months - 972

- 972 24. Share capital

Share capital comprises: 2015 2014

N'000 N'000Authorized:2,000,000,000 Ordinary shares of N1 each 2,000,000 2,000,000

Issued and fully paid: 2,000,000,000 Ordinary shares of N1 each In issue at 1 January 2,000,000 2,000,000

In issue at 31 December 2,000,000 2,000,000

25. Statutory contingency reservesThe movement in this account during the year is as follows:

2015 2014 N'000 N'000

Balance, beginning of year 312,962 199,769 Transfer from retained earnings 104,074 113,193

Balance, end of year 417,036 312,962

The statutory contingency reserve is prescribed under Section 21 (1&2) of the Insurance Act of Nigeria. The Company is mandated to maintain a statutory contingency reserve to cover for the fluctuations in securities and variations in statistical estimates.

The statutory contingency reserve is credited with an amount of not less than 1% of the gross premium or 10% of the net profits (whichever is greater) and the amount shall accumulate until it reaches the amount of the minimum paid-up capital. An amount of 10% of net profit being higher was credited to statutory contigency reserves during the year (2014: 10% of net profit)

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26. Retained earnings

(a) The movement in this account during the year is as follows: 2015 2014

N'000 N'000

Balance, beginning of year 2,447,011 2,128,277 Interim dividend declared (2,000,000) (700,000)Profit for the year 1,040,737 1,131,927

1,487,748 2,560,204

Transfer to contingency reserves (104,074) (113,193)

Balance, end of year 1,383,674 2,447,011

On 7 October 2015, the directors declared an interim dividend of N1.00 (2014: N0.35) per share on issued paid up capital of 2,000,000,000 ordinary shares amounting to N2billion (2014: N700million).

Excess Dividend Taxation

Excess dividend tax of N425.86million was recognised in the current year from reserves of N2.45billion included in the amount of N2billion declared as interim dividend based on the fact that an amount of N508.48million has already been subjected to tax in previous years.

27. Fair value reserves

The fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets until assets are derecognised or impaired.

The movement in this account during the year is as follows: 2015 2014

N'000 N'000

Balance, beginning of year (401,974) (342,112)Fair value loss on available for sale shares (17,943) (59,862)Transfer to Income Statement - Impairment on AFS securities (see note 12b) 422,983 -

Balance, end of year 3,066 (401,974)

28. Earnings per shareBasic earnings per share is calculated by dividing the profit attributable to shareholders by the number of the shares.

2015 2014 N'000 N'000

Profit attributable to shareholders 1,040,737 1,131,927Number of shares in issue 2,000,000 2,000,000

Basic earnings per share (in kobo) 52 57

The Company has no diluted earnings per share since there are no potentially delusive instruments.

29. Related party transactions:

The Company is controlled by Zenith General Insurance Company Limited which owns approximately 100% of the issued share capital. During the year, the Company entered into commercial transaction with Zenith Bank Plc (formerly the ultimate parent)), and other related parties. The amounts outstanding in respect of related party transaction as at reporting date to companies in which the directors have interest are set out below:

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I. TRANSACTIONS 2015 2014

N'000 N'000(a) Interest income comprises:Interest earned on term deposits with Zenith Bank Plc 5,659 13,136

(b) Premium written from related parties comprises:Cyberspace Networks Limited 4,018 3,886 Zenith Bank Plc 341,962 348,328 Zenith Medicare Limited 2,917 2,523 Zenith Trustees Limited 10 9 Zenith Capital Limited 492 148 Zenith Securities Limited 309 263 Zenith Pensions Custodian Limited 992 838 Veritas Registrars Limited 1,167 1,170 People Plus Management Services Limited 61,693 51,815 Visafone Communications Limited 7,213 7,990 Oviation Limited 14,416 - Zenith Asset Management Limited 20 - Quantum Markets Limited 116 - Quantum Petrochemical Processing Plant Limited 86 -

435,411 416,970

II. ACCOUNT BALANCES

(c) Claims paid :

Zenith Bank Plc 73,260 26,406 People Plus Management Services Limited 13,387 11,756 Visafone Communications Limited 14,345 -

100,992 38,162

(d) Bank Accounts :

Zenith Bank Plc 96,053 142,577

(e) Term Deposits :

Zenith Bank Plc 197,009 -

(f) Investment in managed fund :

Zenith Capital Limited 12,731 12,731

(g) Intercompany receivable :

Zenith General Insurance Company Limited - - Zenith Securities Limited 12 12 -

12 12

(h) Intercompany payable

Zenith General Insurance Company Limited 24,302 157,986 Dividend payable to Zenith General Insurance Company Limited 2,000,000 700,000

2,024,302 857,986

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(h) Federal Government Treasury Bills and BondsInvestment in treasury bills 3,642,717 3,352,365 Investment in bonds 1,897,901 1,914,786

5,540,618 5,267,151

The Company purchased Federal Government Treasury bills and Bonds through the former parent Company, Zenith Bank Plc during the year.

30. LitigationsThere were no pending litigation against the Company as at 31 December 2015 (31 December, 2014: Nil)

31. Events after reporting dateThere were no events after reporting date that requires disclosure or adjustment in the financial statement that has not been disclosed or adjusted.

32. Directors and employees

(a) Directors The remuneration paid to the directors of the Company were: 2015 2014

N'000 N'000Fees and allowancesFees and other emoluments (excluding pension contributions)disclosed above include amounts paid to :

The Chairman 4,563 2,250 The highest paid director (non-executive) 4,713 2,250

The number of other directors who received fees and other emoluments (excluding pension contributions) in the following ranges were : 2015 2014

NUMBER NUMBER130,000 - 150,000150,001 - 200,000 - - Above 200,000 5 5

5 5

(b) Employees 2015 2014

NUMBER NUMBER

The average number of persons employed (excluding Directors) in the Company during the year was 26 20

The staff costs for the above persons was: 2015 2014

NUMBER NUMBER

Salaries and wages 89,831 83,423NSITF & ITF 1,419 961Pension costs 6,353 5,450

97,603 89,834

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(c) The number of employees of the Company, other than Directors, who received emoluments in excess of N100,000 are shown in the following ranges:

2015 2014 NUMBER NUMBER

600,001 - 900,000 10 4900,001 - 2,000,000 1 12,000,001 - 3,000,000 3 43,000,001 - 4,000,000 0 44,000,001 - 5,000,000 3 3Above 5,000,000 9 4

26 20

(d) Key management personnel compensation for the year comprises:

2015 2014 N'000 N'000

Salaries and short term benefit 16,304 13,525 Pension cost 1,323 1,323 Allowances and benefits 2,312 2,966 Fees as Directors 2,250 5,850

22,189 23,664

33. Contravention of laws and regulations

During the year under review, the Company contravened some regulations during the year and appropriate penalties were paid. Details are:

Details Contravention(a) The Company was fined for restatement of its 2014 Restatement of accounts

Financial Statements. A fine of N100,000 was paid by the Company to NAICOM

(b) The Company was fined for failure to remit outstanding Failure to remit or deduct taxestax liability during 2015/2014 with respect to PAYE, Withholding taxes, State development levy and Business Premises levy. The Company paid a fine of N666,833.73 for the contravention of failure to remit taxes to LIRS

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Other National Disclosures

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Hypothecation

Assets allocation was done in accordance with NAICOM guidelines in force to meet the minimum requirement of Section 26(1)(c)of the Insurance Act of Nigeria for hypothecation of investments representing the insurance funds.

Company Company 2015 2014

Note N'000 N'000

(a) Investment in placements - AllocationShareholders funds 1,232,075 884,888 Insurance funds 419,854 376,748

1,651,929 1,261,636

Assets Cash and cash equivalents 11 1,651,929 1,261,636Investment securities- held to mature 12(a) - -

1,651,929 1,261,636

2015 2014 Note N'000 N'000

(b) Investment in treasury bills - AllocationShareholders funds 1,711,867 2,456,079Insurance funds 1,934,936 896,286

3,646,803 3,352,365

Assets Quoted debt securities - Treasury bills 12(a) 3,646,803 3,352,365

3,646,803 3,352,365

2015 2014 Note N'000 N'000 (c) Investment in bonds - Allocation

Shareholders funds 1,897,901 1,293,398Insurance funds - 621,388

1,897,901 1,914,786

Assets Quoted debt securities - Bonds 12(a) 1,897,901 1,914,786

1,897,901 1,914,786 2015 2014 Note N'000 N'000

(d) Total assets allocated to the insurance fund:Placements 419,854 376,748 Treasury bills 1,934,936 896,286 Bonds - 621,388

2,354,790 1,894,422

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2015 2014 Note N'000 N'000

(e) Insurance contracts liability & Investment contract liability accountsLife insurance contract liabilities 18 1,854,293 1,429,053Investment contract liabilities 19 634,392 419,596

2,488,685 1,848,649Reinsurance Recoverables 18(d) (273,934) -

2,214,751 1,848,649

The total asset of N2.355 billion are allocated to insurance liability of N2.215 billion for the current year (2014: total asset of N1.894billion allocated to N1.849billion).

Asset allocation was done in accordance with NAICOM guidelines in force to meet the minimum requirements of the Section 26(1)(c) of the Insurance Act of Nigeria for hypothecation of investment representing the insurance funds.

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VALUE ADDED STATEMENT

for the year ended 31 December 2015 2015 2014

N'000 N'000

Net premium income 2,333,095 1,816,959Investment income & Commission received 1,061,615 840,060Claims incurred, commissions paid and operating expenses (2,424,117) (1,191,162)

Value added 970,593 1,465,858 Distribution: % %Applied to pay:Employees (Staff cost) 97,603 10% 89,834 6%Government (Taxes) (173,330) -18% 241,163 16%

Retained in business:Depreciation and amortisation 5,583 1% 3,261 0%To augment reserves 1,040,737 107% 1,131,927 77%

Value added 970,593 100% 1,466,185 100%

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Financial Summary

for the year ended 31 December 2015Restated

31 Dec- 2015 31 Dec -2014 31 Dec- 2013 31 Dec- 2012 31 Dec- 2011 N'000 N'000 N'000 N'000 N'000

Cash and cash equivalents 1,747,983 1,404,212 1,342,453 1,284,479 986,459

Financial assets:Investment securities held to maturity 5,544,704 5,267,151 3,644,767 2,740,461 1,980,059 Investment securities available for sale 106,009 123,953 191,579 140,179 102,107 Loans and receivables 89 - 1,393 1,568 1,555 Trade receivables 12,958 33,774 - 198,756 113,719 Reinsurance assets 496,708 306,196 152,468 107,628 65,979 Other receivables and prepayments 3,225 3,225 73,042 5,344 38,087 Deferred tax asset 762,599 - 275 1,391 - Statutory deposits 200,000 200,000 200,000 200,000 200,000 Property and equipment 5,405 6,839 1 1 26 Intangible asset 18,640 8,549 751 3,881 7,011

Total assets 8,898,320 7,353,899 5,606,729 4,683,688 3,495,002

LiabilitiesTrade payables 23,779 34,064 124,959 198,863 45,414 Other payables and liabilities 2,085,747 924,177 36,923 32,274 29,550 Insurance contract liabilities 1,854,293 1,429,053 1,070,235 1,243,907 609,816 Investment contract liabilities 634,392 419,596 213,208 60,256 58,658 Current income tax liabilities 496,333 188,038 175,470 48,472 59,094 Deferred tax liability - 972 - - 1,200

Total liabilities 5,094,544 2,995,900 1,620,795 1,583,772 803,732

Net assets 3,803,776 4,357,999 3,985,934 3,099,916 2,691,270

EquityShare capital 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 Retained earnings 1,383,674 2,447,001 2,128,277 1,371,530 650,521 AFS valuation reserves 3,066 (401,974) (342,112) (387,300) (37,880)Statutory contingency reserve 417,036 312,962 199,769 115,686 78,629

Total equity 3,803,776 4,357,999 3,985,934 3,099,916 2,691,270 Profit and loss account

2015 2014 2013 2012 2011 N'000 N'000 N'000 N'000 N'000

Gross premium earned 2,986,247 2,393,159 1,356,346 1,877,004 1,002,860

Net premium earned 2,494,387 1,942,778 1,142,318 1,567,555 620,282

Profit before taxation 867,407 1,373,090 981,553 381,057 444,057 Taxation 173,330 (241,162) (140,723) (10,483) (23,326)

Profit after taxation 1,040,737 1,131,927 840,830 370,574 420,731 Transfer to contingency reserve (104,074) (113,193) (84,083) (37,057) (42,073)

Transfer to retained earnings 936,663 1,018,734 756,747 333,517 378,658

Earnings per share (basic) 52k 57k 42k 19k 21k

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2015 Zenith Assurance · Professor Oyewusi Ibidapo-Obe Independent Non-executive director Dividend...

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