Investment & Allied Assurance Plc Financial Statements For The Year Ended 31 December 2013

2

INVESTMENTS AND ALLIED ASSURANCE PLC

FINANCIAL REPORT

For

YEAR ENDED 31 DECEMBER 2013

3

Investments and Allied Assurance Plc

Year ended 31 December 2013

CONTENTS Results at a Glance 4 Corporate Information 5 Statement of Directors responsibilities 6 Chairman’s Statement 7

Report of the Directors 9 Independent Auditors' Report 12 Report of the Audit committee 14

Certification pursuant to section 60 15 Company information and accounting policies 16 Statement of financial position 31 Statement of comprehensive income 32

Statement of changes in equity 33

Statement of Cash Flows 34

Notes to the Financial Statements 35 Risk and capital management frame work 45 Statement of value added 50

Three year financial summary 51

Appendices

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Investments and Allied Assurance Plc

Results at a Glance as at

31 December 2013

2013 2012

12 months 12 months growth

=N= =N= %

Major statement of comprehensive income Items

Gross Premium Written 4,399,175 5,843,465 (25)

Net underwriting Income 4,872,326 20,670,103 (76)

Investment Income 40,945,280 87,029,454 (53)

Net operating profit before tax (127,779,564) 227,295,984 (163)

Retained profit transferred to reserves (205,707,917) 192,249,201 (216)

Major statement of financial position items

Issued and paid share capital 14,000,000,000 14,000,000,000 0

Shareholders fund (955,259,493) (749,551,577) 30

Insurance contract liabilities 89,617,116 86,670,926 3

Total Liabilities 1,309,544,832 1,110,010,130 19

Contingency Reserve 218,469,071 180,048,365 21

Total assets 354,285,340 360,458,554 (2)

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Investments and Allied Assurance Plc.

Annual Report and Financial Statements

For the year ended 31 December, 2013

Corporate Information

Directors

Alhaji Aminu Baba Nabegu Chairman

Abayomi Rufai MD/CEO

Wilfred Ise Erhahon Executive Director

Sabur Babatunde Shogbamu Director

Remi Olaofe Director

Babatunde Bello Director

Nafisatu Yahaya Adamu Director

Company Secretary Ikaar Services Limited

1st Floor, 21 Boyle Street. Onikan. Lagos.

Registrars African Prudential Registrars Plc,

220B, Ikorodu Road. Lagos.

Auditors UHYMaaji & Co (Chartered Accountants)

1 Ilaka Street, Off Coker Road

Ilupeju, Lagos

Head Office 248B Muri Okunola Street, Victoria Island,. Lagos

Branches Benin, Lagos

Bankers Guaranty Trust Bank Plc.

WEMA Bank Plc.

First Bank of Nigeria Limited

Access Bank Plc. [Intercontinental Bank Plc.]

Zenith Bank Plc. First Bank Plc.

First City Monument Bank Plc.

Ecobank [Oceanic Bank International Plc.]

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INVESTMENTS AND ALLIED ASSURANCE PLC

DIRECTORS' RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

For The year ended 31 December 2013

The Directors accept responsibility for the preparation of the annual financial statements that give a true and fair

view of the statement of financial position of the Company at the end of the year and of its comprehensive

income in the manner required by the Companies and Allied Matters Act of Nigeria and the Insurance Act of

Nigeria. The responsibilities include ensuring that the company:

i. Keeps proper accounting records that disclose, with reasonable accuracy, the financial position of the

company and comply with the requirements of the Companies and Allied Matters Act 2004 CAP C20

LFN and the Insurance Act 2003 CAP 17 LFN

ii. Establishes adequate internal controls to safeguard its assets and to prevent and detect fraud and other

irregularities; and

iii. Prepares its financial statements using suitable accounting policies supported by reasonable and prudent

judgements and estimates that are consistently applied.

iv. Prepare its financial statement in compliance with Financial Reporting Council Acts No 6, 2011 and

v. Prepares its financial statements in compliance with the International Financial Reporting Standards

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

The directors accept responsibility for the financial statements, which have been prepared using appropriate

accounting policies supported by reasonable and prudent judgements and estimates and are in compliance

with:

vi. Financial Reporting Council of Nigeria Act No. 6, 2011

vii. International Financial Reporting Standards (IFRS) as issued by the International Accounting

Standards Board (IASB);

viii. Insurance Act 2003 CAP 17 LFN

ix. relevant guidelines and circulars issued by the National Insurance Commission (NAICOM) and

x. the requirements of the Companies and Allied Matters Act 2004 C20 LFN .

The directors are of the opinion that the financial statements give a true and fair view of the financial position of

the company and of the loss for the year. The directors further accept responsibility for the maintenance of

accounting records that may be relied upon in the preparation of financial statements, as well as adequate systems

of internal financial control.

The directors have made assessment of the company’s ability to continue as a going concern, subject to the

success of the on-going recapitalization exercise. The Directors have no reason to believe that the company will

not remain a going concern in the year ahead. Signed on behalf of the Board of Directors by:

... ---------------------------------------

Wilfred Ise Erhahon Abayomi Rufai

FRC/2014/ICAN/00000005736 FRC/2014/CIIN/00000005823

Executive Director Chief Executive Officer

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Chairman’s Statement My Distinguished Shareholders, members of the Board of Directors, gentlemen/women of the press, Ladies

and Gentlemen, it is with great pleasure that I welcome you to this Annual General Meeting (AGM) of our

great company. This AGM is the second after intervention by the National Insurance Commission (NAICOM) in

February 2011 following lapses and misrepresentation observed in 2008 and 2009 financial reports. As

outlined in my statements in 2011 and 2012 annual reports, NAICOM intervened with the objectives to

stabilize, recapitalized and return the company to profitability. I am delighted to present to you the Annual

Reports and Statements of Financial Affairs of your company for the year ended 31 December 2013.

Financial commitments

The Directors have taken adequate care in the preparation of the Annual Reports and the Financial Statements

for the year ended 31 December 2013. In their opinion and to the best of their knowledge, hereby state that

all known liabilities and commitments which are relevant in assessing the company’s state of affairs have been

considered in the preparation of the financial statements as at 31 December 2013.

Post balance Sheet events

There are no significant post balance sheet events known to the Directors, which would have had any material

effects on the statement of financial position and comprehensive income statement for the year ended 31

December 2013, which have not been adequately provided for or disclosed in the financial statements.

Principal Activities

The principal activity of the company under license by NAICOM is underwriting of General (non-life) Insurance

business which includes business acquisition, underwriting, Claims and investments.

Highlight of financial and operational situations.

The following facts which I reported in my statements in the annual reports for years ended 31 December

2011 and 31 December 2012 still remain valid as at 31 December 2013.

(i) The company is still under the intervention and management supervision of NAICOM.

(ii) Your company is still technically insolvent and not presently in operation.

(iii) The Registered Office at no. 248B, Muri Okunlola Street, Victoria Island, which over time has

been a rented office, has been repossessed by the owner.

(iv) The Corporate Office at no. 55 Bishop Oluwole Street, Victoria Island, Lagos has been repossessed

by the Landlady which means that we do not have a corporate office.

(v) Your company is still operating from an emergency office at 23/25 Ijora Causeway, Ijora, Lagos

pending when the company is able to recapitalize and then seek for a new Corporate/Registered

office.

(vi) The N14.7 billion realized from the private placement exercise between 2006 and 2008 is still

missing and has not been accounted for. To the best of my knowledge, the security agents are

still investigating this issue.

(vii) As reported in the 2011 and 2012 accounts, the shares of the company were fully suspended on

15th November 2010 which means that from this date the shares have not been traded at the

floor of the Nigerian stock Exchange.

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(viii) Going forward from here requires a minimum capital injection of N4 billion as the current fully

paid share capital of N14 billion has been lost with no market value and not represented by

assets.

(ix) Unless the company is recapitalized to the statutory minimum shareholders fund, NAICOM may

have to withdraw the license and put it into liquidation. We do not pray for this to happen hence

efforts being made to recapitalize it.

Scheme of capital reduction

As reported in my statement in the annual report for the year ended 31 December 2012, at the AGM held on

18th December 2012, Members passed Resolutions for the Board to work out a proposed scheme of capital

reduction/reconstruction and to embark on the recapitalization of the company by seeking new investors that

would be willing to inject a minimum of N4 billion into the company.

Approvals were received from the regulatory authorities (NAICOM, SEC and NSE) for the proposed Capital

Reduction Scheme. However, the Extraordinary General Meeting (EGM) scheduled for 25 April 2014 for

Members to approve the proposed Capital Reduction Scheme was truncated by two separate Court injunctions

instigated by Mr Funmi Adenmosun and Imperial Capital Assets Managers Limited.

Truncated Extraordinary General Meeting (EGM) Scheduled for 25 April 2014

Following approvals of the Capital Reduction Scheme by the regulatory authorities, an EGM was scheduled for

25 April 2014 for Members to approve the proposed Capital Reduction Scheme. Unfortunately, the EGM could

not hold as a result of Court injunctions on suit no FHC/L/Cs/03/2013 instituted by Mr. Funmi Adenmosun and

suit no FHC/L/CS/552/2014 instituted by Imperial Assets Managers Limited. Approval of Capital reduction

Scheme by Members at the EGM would have paved the way for capital injection of about N4 billion to enable

the company meet the required financial stability with regard to the minimum statutory capital and solvency

levels. The recapitalization would have been concluded in June 2014 and also, the company would have been

back to normal operation.

In my statements in 2011 and 2012 annual reports, Mr. Funmi Adenmosun is held responsible for the missing

N14.7 billion realized from private placement between 2006 and 2008. It would be to his benefit if your

company does not recapitalize and allow it to go into liquidation as he has been unable to account for about

N14.7 billion of your money. Shareholders must therefore resist all attempts by him to force your company

into liquidation.

Recapitalization

The Financial Advisers have confirmed that they have identified prospective investors who are very much

willing to invest in your company. They are anxiously waiting for your approval of the Scheme of Capital

Reduction and immediately this is achieved via AGM or EGM the new investors would be invited to come in

with their capital. We expect that, with your support, the recapitalization exercise shall be concluded in 2015.

Conclusion

I thank you for your support, understanding and patient.

Yours Sincerely

Alhaji Aminu Baba Nabegu, mni

FRC/2014/ICADN/00000006741

Chairman.

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Investments and Allied Assurance PLC Report of the Directors

1. Accounts

The Directors are pleased to submit their report together with the audited financial statements

for the year ended 31 December 2013.

Result for the year

2013 Company total comprehensive Income-loss (N205) million

2012 Company total comprehensive Income-profit N192 million

2. Legal forms - Incorporation and Registered address

The company was incorporated in Nigeria on 4th October 1968 as Milverton Insurance company Limited under the

Companies and Allied Matters and is domiciled in Nigeria. It changed its name to Investments and Allied Assurance

Company Limited on 6th October 1993. On 12th December 2007 it became a public Limited Company and changed

its name to Investments and Allied Assurance Plc. The address of its registered office is:

248B Muri Okunola Street

Victoria Island, Lagos. Nigeria

This registered Office was a rented property and the owner has taken possession of it.

3. Corporate Head Office

The Corporate Head office at No. 55 Bishop Oluwole, Victoria Island, Lagos , was a rented property and the Landlady

has taken possession of the property consequent upon a court order from a suit instigated by Access Bank Plc. The

company is presently operating from 23/25 Ijora Causeway, Ijora, Lagos pending the conclusion of on- going

recapitalization exercise.

4. Principal activities

The principal activities of the company are the underwriting of general insurance business under license from the

National Insurance Commission of Nigeria. The Principal activities comprise

(i) Business acquisition

(ii) Underwriting

(iii) Claims

(iv) Investments

5. The Directors

Alhaji Aminu Baba Nabegu Chairman

Abayomi Rufai MD/CEO

Wilfred Erhahon Executive Director

Sabur Babatunde Shogbamu Director

Remi Olaofe Director

Babatunde Bello Director

NafisatuYahaya Adamu Director

6. Directors Interest in Contracts

None of the Directors has notified the company for the purposes of Section 277 of the Companies and

Allied Matters Act of their direct or indirect interest in contracts or proposed contracts with the Company

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7. Directors Shareholding

None of the directors who held office had any direct or indirect interest in the issued and paid up share capital of the

company.

8. Shareholding Structure

The Company is a Public Limited Company and its shares are widely held by the Nigerian Public.

(i) Summary of Shareholding Position

Units held at 31 DEC 2013 o/o Units held at 31 DEC

2012

o/o

FunmiAdenmosun and related parties 4,677,599,798 17 4,677,599,798 17

Shell multipurpose west cooperative society ltd 1,044,101,020 4 1,044,101,020 4

AAMLNominees Limited and related parties 1,723,278,979 6 1,723,278,979 6

Other Nigerian individuals and organizations 20,555,020,203 73 20,555,020,203 73

Total 28,000,000,000 100 28,000,000,000 100

The number of shareholders as at 31 December 2013 is about 37,722

(ii) Substantial interest in shares

No individual shareholder other than Mr. .Funmi Adenmosun and related parties held more than 10% of the issued

share capital as at 31 December 2013. However, it is to be noted that they have transferred 4,567,877,263 units

(16.3%) of their shareholding to AMCON (Assets Management Corporation of Nigeria) as collateral for loan

facilities they obtained from financial institutions.

9. Employment of physically disabled persons

The Company maintains a policy of giving fair consideration to applications from physically disabled persons,

bearing in mind their respective aptitudes and abilities. In the event of members of staff becoming disabled, every

effort is made to ensure that their employment with the Company continues and that the appropriate training is arranged.

10. Industrial/Employees relations

The Company places considerable value on the involvement of its employees and keeps them informed on matters affecting

them as employees and the various factors affecting the performance of the Company. This is achieved through

Management's open door policy.

11. Training and development

The Company places great emphasis on the training and development of its staff and believes that its people are its

greatest assets. Training courses are geared towards the developmental needs of staff and the improvement in their skill sets to

face the increasing challenges in the industry. We will continue to invest in our human capital to ensure that our people are

well motivated and positioned to compete in industry.

12. Donations/Charitable gifts

The Company made no donation during the year.

13. Equal employment opportunity

The Company pursues an equal employment opportunity policy. It does not discriminate against any person on the

ground of race, religion, colour, or physical disability.

14. Dividend

The directors do not recommend any dividend for the year.

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15. Audit and compliance Committee

In accordance with Section 359(3) of the Companies and Allied Matters Act Cap C20 LFN 2004, the Audit

Committee members of the company elected at the last Annual General Meeting were as

follows:-

Wilfred Ise Erhahon (Director)

NafisatuYahaya Adamu (Director)

Godwin Anono (Shareholders' representative)

Hamza Ridhwan Boladale (Shareholders' representative)

The functions of the audit committee are as stated in Section 359(6) of the Companies and Allied Matters Act

2004 Cap C20 LFN.

16. Auditors

In accordance with Section 357(2) of the Companies and Matters Act CAP C20 LFN 2004, UHY Maaji and Co (Chartered

Accountants) have indicated their willingness to continue in office as auditors of the Company

By Order of the Board

Abayomi Rufai

FRC/2014/CIIN/00000005823

Director

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Independent Auditor's Report to the members of Investment and Allied

Assurance PLC.

We have audited the Financial Statements of Investment and Allied Assurance PLC

for the year ended 31 December 2013 which comprise the Statements of financial

positions as at 31 December 2013, the statement of comprehensive income,

statement of changes in equity and the Cash Flow Statement for the year ended 31

December 2013 and summary of the significant accounting policies and other

explanatory notes on pages 19 to 49.

Directors Responsibilities for the Financial

Statements

The Directors are responsible for the preparation and fair presentation of these financial

statements in accordance with the International Financial Reporting Standards, Companies

and Allied Matters Act 2004 CAP C20 Laws of the Federation of Nigeria, Nigerian Insurance

Act 2003 CAP17 LFN and the Financial Reporting Council of Nigeria Act No 6, 2011.This

responsibility also includes: designing, implementing and maintaining internal control

relevant to the preparation and fair presentation of financial statements that are free of

material misstatement whether due to fraud or error; selecting and applying appropriate

accounting policies; and making accounting estimates that are reasonable in the

circumstances.

Basis of Audit Opinion.

We conducted our audit in accordance with International Standards on Auditing. An audit

includes examination, on a test basis, of evidence relevant to the amounts and disclosures in

the financial statements. It also includes an assessment of the significant estimates and

judgements made by the Directors in the preparation of the financial statements, and of

whether the accounting policies are appropriate to the company's circumstances,

consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations

which we considered necessary in order to provide us with sufficient evidence to give

reasonable assurance that the financial statements are free from material misstatement,

whether caused by fraud or other irregularity or error. In forming our opinion we also

evaluated the overall adequacy of the presentation of information in the financial statements.

The accompanying financial statements have been prepared assuming that Investments

and Allied Assurance Plc. [IAA] will continue as a going concern, which contemplates

continuity of IAA's operations and realization of its assets and payments of its liabilities in the

ordinary course of business. As more fully described in the notes to the financial statements, in

February 2011, the National Insurance Commission [NAICOM] in exercise of the powers

conferred on it under Part VII of the NAICOM Act 1993 assumed control of management of

Investment and Allied Assurance Plc. to satisfactorily correct material lapses observed.

In accordance with the provision of the Insurance Act, NAICOM assumed control and

appointed an Interim Management to take charge of the affairs of the Company [IAA]. The

uncertainties inherent in the intervention process of the regulatory body and IAA's recurring

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losses from operations and net capital deficiencies raise substantial doubt about IAA's ability

to continue as a going concern. IAA is currently operating its business as a company-in-

possession under the jurisdiction of NAICOM appointed management, and continuation of

IAA as a going concern is contingent upon, among other things, the confirmation of a plan

of reorganization and recapitalisation, IAA's ability to comply with all regulatory requirements

under the Insurance Act 2003 CAP 17 LFN as well as the guidelines and circulars of NAICOM

especially as it relates to the Minimum Capital Requirements for a General Insurance

Company operating in Nigeria, and IAA's ability to generate sufficient cash from operations

and obtain financing sources to meet its future obligations.

If no reorganization and recapitalisation plan is approved/achieved, it is possible that

NAICOM withdraws IAA's Insurance License and IAA's assets may be liquidated. The financial

statements do not include any adjustments to reflect the possible future effects on the

recoverability and classification of assets or the amount and classification of liabilities that

may result from the outcome of these uncertainties.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of

Investment and Allied Assurance Plc. as at 31 December 2013 and of its financial

performance and its cash flows for the period ended in accordance with the Nigerian

Insurance Act 2003, International Financial Reporting Standards, Companies and Allied

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

Council of Nigeria Act, No 6, 2011.

.

REPORT ON OTHER LEGAL REQUIREMENTS

The Companies and Allied Matters act 2004 CAP C20 LFN, requires that in carrying out

our audit, we consider and report to you on the following matters. We confirm that:

1 We have obtained all the information and explanation which, to the best of our knowledge

and belief, were necessary for the purpose of our audit;

2 In our opinion, proper books of account have been kept by the company;

3 The company’s statement of financial position and statement of comprehensive income

are in agreement with the books of account.

UHYMaaji & Co Chartered Accountants FRC/2012/ICAN/00000000105

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Investments and Allied Assurance Plc

Report of the audit committee

for the year ended 31 December 2013

To the members of Investments and Allied Assurance Plc

In compliance with the provision of Section 359(6) of the Companies and Allied Matters Act of

Nigeria, the members of the Audit Committee of Investments and Allied Assurance Plc, hereby report

as follows: -

We have exercised our statutory functions under section 359(6) of the Companies and Allied Matters

Act of Nigeria and acknowledge the co-operation of management and staff in the conduct of these

responsibilities.

We are of the opinion that the accounting and reporting policies of the Company are in compliance

with legal requirements and agreed ethical practices and that the scope and planning of both the

external audit for the year ended 31 December 2013 were satisfactory and reinforce the Company’s

internal control systems.

We have deliberated with the external auditors, who have confirmed that necessary cooperation was

received from Management in the course of their statutory audit and we are satisfied with

Management’ responses to their recommendations for improvement and with the effectiveness of the

Company’s system of accounting and internal control.

Hajia Nafisatu Yahaya Adamu

Chairman Audit Committee

FRC/2014/ICAD/00000007994 Dated this day ---------------------------- 2014

Members of the Audit Committee are: Wilfred Ise Erhahon Executive Director NafisatuYahaya Adamu Director Godwin Anono Representative of shareholders Hamza Ridwan Boladale Representative of shareholders

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Investments and Allied Assurance Plc Certification pursuant to section 60(2) of Investment and Securities act no.29 of 2007

We the undersigned hereby certify the following with regards to our audited reports and financial

statements for the year ended 31 December 2013 that:

a) we have reviewed the report;

b) to the best of our knowledge, the report does not contain:

(i) any untrue statement of a material fact, or

(ii) omit to state a material fact, which would make the statement, misleading in

the light of Circumstances under which such statements were made;

c) to the best of our knowledge, the financial statements and other financial information

included in the report fairly present in all material respects the financial condition and

results of operation of

the company as of, and for the periods presented in the report;

d) we:

(i) are responsible for establishing and maintaining internal controls;

(ii) have designed such internal controls to ensure that material information

relating to the company is made known to such officers by others within

those entities particularly during the period in which the periodic reports are

being prepared;

(iii) have evaluated the effectiveness of the company’s internal controls as of date

within 90 days prior to the report;

(iv) have presented in the report our conclusions about the effectiveness of our

internal controls based on our evaluation as of that date;

e) we have disclosed to the auditors of the company and audit committee:

(i) all significant deficiency in the design or operation of internal controls which

would adversely affect the company’s ability to record, process, summarise

and report financial data and have identified for the company’s auditors any

material weakness in internal controls; and

(ii) any fraud, whether or not material, that involves management or other

employees who have significant role in the company’s internal controls;

f) we have identified in the report whether or not there were significant changes in internal

controls or other factors that could significantly affect internal controls subsequent to the

date of our evaluation, including any corrective actions with regard to significant

deficiencies and material weaknesses.

............. ...........

Wilfred Ise Erhahon Abayomi Rufai

FRC/2014/ICAN/00000005736 FRC/2014/CIIN/00000005823

Executive Director Chief Executive Officer

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Investments and Allied Assurance Plc

Company Information and Accounting policies

For the year ended 31 December 2013

General information

1. Reporting entity

The company was incorporated in Nigeria on 4th October 1968 as Milverton Insurance company Limited

under the Companies and Allied Matters 2004 CAP C20 LFN and is domiciled in Nigeria. It changed its name to

Investments and Allied Assurance Company Limited on 6th October 1993. On 12th December 2007 it became a

public Limited Company and changed its name to Investments and Allied Assurance Plc. The Company’s

capital is presently being restructured with a view to recapitalizing it to the minimum statutory required shareholders

fund. It is expected that the recapitalization exercise will be completed in 2015. The address of its registered office

is:-

248B Muri Okunola Street

Victoria Island, Lagos, Nigeria

This registered Office was a rented property and the owner has taken possession of it. The company is

presently operating from 23/25 Ijora Causeway, Ijora, Lagos pending the conclusion of the on- going

recapitalization exercise.

The principal activities of the company are the underwriting of general insurance business under license from the National Insurance Commission of Nigeria. The principal activities comprise business acquisition, underwriting, claims and investments.

Business acquisition

The company markets its products which subsequently lead to the issuance of policy contracts

Underwriting

The company underwrites general insurance business which includes motor vehicles, marine and

aviation, fire, accident and sundry policies generally classified under miscellaneous insurance policies.

Claims

The company pays claims incurred as part of its business which include claims and claims handling

expenses.

Investments

The company engages in investments of its funds in properties, as well as in listed and unlisted stocks,

bonds, treasury bills and other money market instruments in line with the provisions of the Insurance

Act 2003

Approval of Financial Statements by the Directors

The financial statements which include the Statement of Financial Position, Statement of comprehensive

income, statement of changes in equities, the cash flow statements and their related Notes to the financial

statements and the accounting policies on pages 16 to 30 were authorised for issue by the Directors on 19Th

November 2014

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2. Going concern

These financial statements have been prepared on the going concern basis subject to the success of the on-going

recapitalization exercise. The Management believes that a going concern assumption is appropriate for the

Company due to the on-going recapitalization exercise.

3. Basis of preparation

a) Statement of Compliance

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

Standards (“IFRSs”) as issued by the International Accounting Standards Board (“IASB”) and with

interpretations issued by the International Financial Interpretation Reporting Committee (IFRIC) as

adopted by the Federal Republic of Nigeria through the Financial Reporting Council Act No 6 of 2011.

The accounting policies have been applied consistently to all periods presented in these financial

statements. b. Presentation and Functional Currency

The Company’s functional and presentation currency is the Nigerian naira. All values are rounded to one

naira unless otherwise indicated.

Foreign Currency Translation -Transactions and balances:

Foreign currency transactions are translated into the functional currency using the exchange rates

prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the

settlement of such transactions and from the translation at year-end exchange rates of monetary assets

and liabilities denominated in foreign currencies are recognised in the income statement.

Translation differences on non-monetary items, such as equities held at fair value through profit or

loss, are reported as part of the fair value gain or loss. Translation differences on non-monetary items,

such as equities classified as available-for-sale financial assets, are included in the fair value reserve in

equity.

c. Use of estimates and judgements

The preparation of financial statements in conformity with IFRS requires management to make judgements,

estimates and assumptions that affect the application of accounting policies and the reported amounts of assets,

liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying

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

which the estimate is revised if the revision affects only that period or in the period of the revision and the

future periods if the revision affects both current and future periods.

d. Basis of measurement

The company prepares its financial statements under the historical cost convention as modified by the fair value

and revaluation of its investments and buildings.

4) Implementation of IFRSs

The date of transition to IFRSs is effectively, 1 January 2011, which represents the start of the earliest period of

comparative information presented. The accounting policies have been applied consistently to all periods

presented in these financial statements, and have been applied consistently by company. Details of explanation of

the Company’s transition to IFRS were fully stated in the 2012 Financial Reports.

5. New Standards and amendments

(a) New standards and amendments issued but not effective for the financial year beginning 01 January 2013

and not early adopted are as follows:-

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(i) IFRS 9- Financial instruments IFRS 9 requires financial assets to be classified into two measurement categories: those measured at

fair value and those measured at amortised cost. The determination is made at initial recognition. The

classification depends on the entity’s business model for managing its financial instruments and the

contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains

most of the IAS 39 requirements. The main change is that, in cases where the fair value options is taken

for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in

other comprehensive income rather than the income statement, unless this creates a qualitative

mismatch. The adoption of the first phase of IFRS 9 will have an effect on the classification and

measurement of the Company’s financial assets, we will now have two main categories of financial

assets i.e. fair value and amortised cost (as opposed to the four categories prescribed by IAS 39 - fair

value through profit and loss, loans and receivables, held to maturity and available for sale financial

assets) but will potentially have no impact on classification and measurements of financial liabilities.

The company intends to adopt IFRS 9 not later than the accounting period beginning 1 January, 2015. (ii) IFRS 13 - Fair value measurement IFRS 13 provides a single source of guidance on how fair value is measured, and replaces the fair value

measurement guideline that was dispersed throughout IFRS. The company intends to adopt IFRS 13

not later than the accounting period beginning 1 January, 2014

(iii) Annual improvements 2011 (a)These annual improvements, address six issues in the 2009- 2012 reporting cycle. It includes

changes to:

IFRS 1 First time adoption IAS 1 Financial statement presentation IAS 16 Property plant and equipment IAS 32 Financial instruments, presentation IAS 34 Interim financial reporting

19

6. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are as set out below. These policies have been applied consistently to all years presented, unless otherwise stated.

6.1 Cash and cash equivalents

Cash and cash equivalents include cash in hand and at bank, call deposits and short term highly liquid

financial assets (including money market funds) with original maturities of less than three months, which

are subject to insignificant risk of changes in their fair value, and are used by the company in the

management of its short-term commitments.

6.2 Financial assets

The company does not have any carrying amount in the financial statements for financial assets as at

the various reporting dates as their carrying amount are fully impaired as disclosed in the Notes to the

financial statements. However, the impaired financial assets are categorised under the Available for

Sale financial assets and Loans & Receivables for Trade Receivables.

(i) Recognition

Financial assets are initially recognized at fair value, which includes transaction costs. Subsequent to

initial measurement, financial instruments are measured either at fair value or amortised cost,

depending on their classification.

(ii) Classification

The company classifies its financial assets into available-for-sales and Loans and Receivables

(a)Available-for-sale financial assets Available-for-sale investments are financial assets that are intended to be held for an indefinite period of

time, which may be sold in response to needs for liquidity or changes in interest rates, exchange rates or

equity prices or that are not classified as loans and receivables, held-to-maturity investments or financial

assets at fair value through profit and loss. They comprise investments in quoted equity instruments and

quoted debt securities investments in private (unquoted) companies.

These investments are initially recorded at fair value. Subsequent to initial recognition these

investments are measured at fair value and unrealised gains and losses arising from changes in the fair

value of available- for-sale financial assets are recognised in other comprehensive income while the

investment is held and are subsequently transferred to the income statement upon sale or de-recognition

of the investment. However, where the fair value cannot be reliably measured, these investments are

measured at cost less impairment.

Dividend Income -received on available-for-sale instruments are recognised in income statement when the

Company’s right to receive payment has been established.

b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are

not quoted in an active market other than those that the Company intends to sell in the short term or that

it has designated as at fair value through profit and loss or available for sale.

Loans and receivables consist primarily of Trade Receivables which arise in the ordinary course of

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business. Trade Receivables are when due from policyholders. These includes amount due from agents,

brokers and insurance contract holders. Trade receivables are stated at cost less impairments. The

company assess at each reporting date whether there is objective evidence that a trade receivable is

impaired. If there is objective evidence that the trade receivable is impaired, the carrying amount of the

trade receivable is reduced accordingly through an allowance account and recognised as impairment

loss in the income statement.

(iii) Measurement of financial assets

The best evidence of the fair value of financial assets on initial recognition is the transaction price, i.e.

the fair value of the consideration paid or received, unless the fair value is evidenced by comparison

with other observable current market transactions in the same instrument, without modification or

repackaging, or based on discounted cash flow models.

Subsequent to initial recognition, the fair values of financial instruments are based on quoted market

prices or dealer price quotations for financial instruments traded in active markets. If the market for a

financial asset is not active or the instrument is an unlisted instrument, the fair value is determined by

using applicable valuation techniques. These include the use of recent “arms” length transactions”,

discounted cash flow analyses, pricing models and valuation techniques commonly used by market

participants.

Where discounted cash flow analyses are used, estimated cash flows are based on management’s best

estimates and the discount rate is a market-related rate at the balance sheet date from a financial asset

with similar terms and conditions.

Where pricing models are used, inputs are based on observable market indicators at the balance sheet

date and profits or losses are only recognised to the extent that they relate to changes in factors that

market participants will consider in setting a price.

(iv). Impairment of financial assets

a. Financial assets carried at amortised cost

The company assesses at the end of the reporting period whether there is objective evidence that a financial asset

or group of financial assets is impaired

A financial asset or group of financial assets is impaired and impairment losses are incurred only if there is

objective evidence of impairment as a result of one or more events that have occurred after the initial

recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash

flows of the financial asset or group of financial assets that can be reliably estimated. Objective evidence that a

financial asset or group of assets is impaired includes observable data that comes to the attention of the company

about the following events:

Significant financial difficulty of the issuer or debtor;

A breach of contract, such as a default or delinquency in payments;

It becoming probable that the issuer or debtor will enter bankruptcy or other financial reorganisation;

The disappearance of an active market for that financial asset because of financial difficulties; or observable data

indicating that there is a measurable decrease in the estimated future cash flow from a group of financial assets

since the initial recognition of those assets, although the decrease cannot yet be identified with the individual

financial assets in the company including:- adverse changes in the payment status of issuers or debtors in the

Group; or national or local economic conditions that correlate with default on the assets in the company.

The company first assesses whether objective evidence of impairment exists individually for financial assets that

are individually significant. If the company determines that no objective evidence of impairment exists for an

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individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets

with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually

assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a

collective assessment of impairment

If there is objective evidence that an impairment loss has been incurred on loans and receivables or held-to-

maturity investments carried at amortised cost, the amount of the loss is measured as the difference between the

asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that

have been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the

asset is reduced, and the amount of the loss is recognised in the income statement. If a held-to- maturity

investment or a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current

effective interest rate determined under contract. As is practically expedient, the Company may measure

impairment on the basis of an instrument’s fair value using an observable market price.

For the purpose of a collective evaluation of impairment, financial assets are grouped on the basis of similar credit

risk characteristics. Those characteristics are relevant to the estimation of future cash flows for groups of such

assets by being indicative of the issuer’s ability to pay all amounts due under the contractual terms of the debt

instrument being evaluated.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related

objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss

is reversed by adjusting the assets. The amount of the reversal is recognised in the income statement.

b. Assets classified as available for sale

The company assesses at each date of the statement of financial position whether there is objective evidence that

a financial asset or a group of financial assets is impaired. In the case of equity investments classified as

available for sale, a significant or prolonged decline in the fair value of the security below its cost is an

objective evidence of impairment resulting in the recognition of an impairment loss. In this respect, a decline of

10% or more is regarded as significant, and a period of 1 year or longer is considered to be prolonged. If any

such quantitative evidence exists for available-for-sale financial assets, the asset is considered for impairment,

taking qualitative evidence into account. The cumulative loss - measured as the difference between the

acquisition cost and the current fair value, less any impairment loss on those financial assets previously

recognised in profit or loss - is removed from equity and recognised in the income statement. Impairment losses

recognised in the income statement on equity instruments are not reversed through the income statement. If in a

subsequent period the fair value of a debt instrument classified as available for sale increases and the increase

can be objectively related to an event occurring after the impairment loss was recognised in profit or loss, the

impairment loss is reversed through the income statement.

v. Derecognition of financial instruments

The company derecognises a financial asset when the contractual rights to the cash flows from the asset expire,

or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which

substantially all the risks and rewards of ownership of the financial asset are transferred, or has assumed an

obligation to pay those cash flows to one or more recipients, subject to certain criteria.

Any interest in transferred financial assets that is created or retained by the Group is recognized as a separate

asset or liability. The Company derecognises a financial liability when its contractual obligations are

discharged, cancelled or expired.

6.3 Trade Receivable

Trade receivables are receivable arising from insurance contract, these include amounts due from agents, brokers

and insurance contract holders.

They are initially recognised at fair value and subsequently measured at amortised cost less provision for

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impairment. A provision for impairment is made when there is objective evidence such as the probability of

solvency or significant financial difficulties of the debtors) that the company will not be able to collect the entire

amount due under the original terms of the invoice. Allowance is made based on an impairment model which

consider the loss given default for each debtor, probability of default for the sectors in which the debtor belongs

and emergence period which serves as an impairment trigger based on the age of the debt. Impaired debts are

derecognised when they are assessed as uncollectible. If in a subsequent period the amount of the impairment

loss decreases and the decrease can be related objectively to an event occurring after the impairment was

recognised, the previously recognised impairment loss is reversed to the extent that the carrying value of the

asset does not exceed its amortised cost at the reversed date. Any subsequent reversal of an impairment loss is

recognised in the income statement.

6.4Deferred acquisition costs (DAC)

Commissions and other acquisition costs that are related to securing new contracts and renewing existing

contracts are capitalised as Deferred Acquisition Costs (DAC). The DAC is computed using the percentage

method in view of the difficulties of obtaining detailed data in the present circumstance of the company and the

cost effectiveness of obtaining the unexpired risk values from independent professionals. All other costs are

recognised as expenses when incurred. The DAC is subsequently amortised over the life of the contracts in line

with premium revenue using assumptions consistent with those used in calculating future policy benefit liabilities.

6.5Other receivables and prepayment Other receivables and prepayment are recognised when due and at amortised cost less provision for

impairment. These include receivables from suppliers, rent receivables and prepayment and other receivable

other than those classified as trade receivable and loans and receivables.

If there is objective evidence that the receivable is impaired, the company reduces the carrying amount of the

other receivable and prepayment accordingly and recognises that loss in the income statement. The company

gathers the objective evidence that an item of other receivable and prepayment is impaired using the same

methodology adopted for financial assets held at amortised cost. These processes are described in accounting

policy 6.3.

6.6Property Plant and equipment

i. Recognition and measurement Items of property, plant and equipment comprise mainly outlets and offices occupied by the company. They are

carried at cost less accumulated depreciation and impairment losses. Cost includes expenditures that are directly

attributable to the acquisition of the asset.

Properties are measured at cost less accumulated depreciation on leasehold land and building and impairment

losses recognised after the date of the revaluation.

ii. Subsequent costs

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of

the item if it is probable that the future economic benefits embodied within the part will flow to the Company

and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are

recognised in profit or loss as incurred.

iii. Depreciation

Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of

an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and

their useful lives. Depreciation begins when an asset is available for use and ceases at the earlier of the date that

the asset is derecognised or classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale

and Discontinued Operations

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Land is not depreciated, depreciation on the building and other items of property, plant and equipment is

calculated using the straight-line method to allocate their cost or re-valued amounts over their estimated useful lives.

The depreciation rates used for the current and comparative period are as follows:

Building 2%

Motor Vehicle 25%

Furniture & Fittings 20%

Office Equipments 20%

Capital work- in- progress are not depreciated. The asset’s residual values and useful lives are reviewed at the end

of each reporting period and adjusted, if appropriate. An asset’s carrying amount is written down immediately to

its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gain or loss

arising from the disposal of fixed assets is included in the comprehensive income statement.

(iv) De-recognition An item of property, plant and equipment is derecognised on disposal or when no future economic benefits are

expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the

difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in

the year the asset is derecognised.

6.6.1 Impairment of non-financial assets

The carrying amounts of the Company’s non-financial assets other than deferred tax assets are reviewed at each

reporting date to determine whether there is any indication of impairment. If any such indication exists, then the

asset’s recoverable amount is estimated.

An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its

recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that

are largely independent from other assets and groups. Impairment losses are recognised in the income statement.

Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying

amount of any intangible asset allocated to the units and then to reduce the carrying amount of the other assets in

the unit (group of units) on a pro rata basis.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less

costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using

a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to

the asset.

Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss

has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates

used to determine the recoverable amount. An impairment loss is reversed only to the extent that the Asset’s

carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or

amortisation, if no impairment loss had been recognised. Reversals of impairment losses are recognised in profit

or loss.

6.7 Statutory deposit

Statutory deposit represents deposit on paid up capital of the company deposited with the Central bank of

Nigeria (CBN) pursuant to Section 10(3) of the Insurance Act, 2003.

6.8 Insurance contracts

The Company issues contracts that transfer insurance risk or financial risk or both. Insurance contracts are those

contracts that transfer significant insurance risk. Such contracts may also transfer financial risk. As a general

guideline, the Group defines as significant insurance risk, the possibility of having to pay benefits on the

occurrence of an insured event that is at least 10% more than the benefits payable if the insured event did not

occur.

a) General business insurance contracts

These contracts are accident and casualty and property insurance contracts

Accident and casualty insurance contracts protect the company’s customers against the risk of causing harm to

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third parties as a result of their legitimate activities. Damages covered include contractual and non- contractual

events. The typical protection offered is designed for employers who become legally liable to pay compensation

to injured employees (employer’s liability) and for individual and business customers who

become liable to pay compensation to a third party for bodily harm or property damage (public liability).

Property insurance contracts mainly compensate the company’s customers for damage suffered to their properties

or for the value of property lost. Customers who undertake commercial activities on their premises could also

receive compensation for the loss of earnings caused by the inability to use the insured properties in their

business activities (business interruption cover).

Non-life insurance contracts protect the company’s customers from the consequences of events (such as death or

disability) that would affect the ability of the customer or his/her dependants to maintain their current level of

income. Guaranteed benefits paid on occurrence of the specified insurance event are either fixed or linked to

the extent of the economic loss suffered by the policyholder. There are no maturity or surrender benefits.

6.8.1 Recognition and measurement of insurance contracts

a) Insurance contract liabilities

Technical reserves These are computed in compliance with the provisions of Section 20, 21 and 22 of the Insurance Act 2003

CAP17 LFN as

follows: -

(i) General business

Reserves for unearned premium In compliance with Section 20 (1) (a) of Insurance Act 2003 CAP17 LFN, the reserve for unearned premium is

calculated on a time apportionment basis in respect of the risks accepted during the year. However, in this

financial statement under review, the unexpired premium (risk) element of the insurance contract liabilities is

computed using the percentage method in view of difficulties in obtaining detailed data in present circumstance

of the company and the cost effectiveness of obtaining the unexpired risk values from independent professionals.

Reserves for outstanding claims

The reserve for outstanding claims is maintained as the total amount of outstanding claims incurred and

reported plus claims incurred but not reported ("IBNR") as at the balance sheet date. The outstanding claims

represent the estimated ultimate cost of settling all claims arising from incidents occurring prior to the end of

reporting date, but not settled at that date. A provision is made for claims incurred but not reported (IBNR) as at

the end of financial year. The IBNR is based on the liability adequacy test.

Reserves for unexpired risk A provision for additional unexpired risk reserve (AURR) is recognised for an underwriting year where it is

envisaged that the estimated cost of claims and expenses would exceed the unearned premium reserve (UPR).

(ii) Liability adequacy test

At the end of each reporting period, liability adequacy tests are performed to ensure the adequacy of the

contract liabilities net of related Deferred Acquisition Cost (DAC) assets. In performing these tests, current

best estimates of future contractual cash flows and claims handling and administration expenses, as well as

investment income from the assets backing such liabilities, are used. Any deficiency is immediately charged to

profit or loss initially by writing off DAC and by subsequently establishing a provision for losses arising from

liability adequacy tests (the unexpired risk provision). The Directors consider that in preparing the financial

statements they have taken into account all information that could reasonably be expected to be available in

arriving at the reasonable estimates of liabilities arising from the insurance contract issued to the policyholders.

b. Insurance contract revenue and expenses

i) Premium

General business In the non-life insurance business, the company offers fire, general accident, and workmen compensation,

marine and aviation, engineering all risk, credit and goods in transit policies or insurance undertaking services.

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Gross written premiums comprise the premiums on insurance contracts entered into during the year,

irrespective of whether they relate in whole or in part to a later accounting period. Premiums are disclosed

gross of commission to intermediaries. Premiums written include adjustments to premiums written in prior

accounting periods.

Premiums on reinsurance inward are included in gross written premiums and accounted for as if the

reinsurance was considered direct business, taking into account the product classification of the reinsured

business.

Outward reinsurance premiums are accounted for in the same accounting period as the premiums for the related

direct insurance or reinsurance business assumed. The earned portion of premiums received is recognised as

revenue. Premiums are earned from the date of attachment of risk, over the indemnity period, based on the

pattern of risk underwritten. Outward reinsurance premiums are recognized as an expense in accordance with the

pattern of indemnity received.

ii) Salvages Some non-life insurance contracts permit the Company to sell (usually damaged) property acquired in the process

of settling a claim. The Company may also have the right to pursue third parties for payment of some or all costs

of damages to its clients' property (i.e. subrogation right). Salvage recoveries are used to reduce the claim expense

when the claim is settled.

iii) Subrogation Subrogation is the right for an insurer to pursue a third party that caused an insurance loss to the insured. This

is done as a means of recovering the amount of the claim paid to the insured for the loss. A receivable for

subrogation is recognised in other assets when the liability is settled and the company has the right to receive

future cash flow from the third party.

iv) Claims Claims and other benefits are recorded as an expense when they are incurred

6.9 Borrowings

Borrowings are recognised initially at face value, net of transaction costs involved. Borrowings are subsequently stated at

amortized cost, any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the

income statement over the period of the borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are recognised as transaction cost o the loan to the extent that it is probable

that some or all of the facilities will be drawn down. In this case the fees deferred until the draw down occurs. To the extent

that there is no evidence that it is probable that some or all of the facility will be drawn down, the fees is capitalised as a

pre-payment for liquidity services and amortised over the period of the facility to which it relates.

Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the

liabilities for at least 12 months after the date of the statement if financial position.

6.9.1 Borrowing costs.

Borrowing costs that are directly attributable to the acquisition, construction and production of a qualifying asset

are capitalised as part of the cost of the asset over the period up to the time such asset is substantially ready for

its intended use. Other borrowing cost are recognised as an expense in the period in which they are incurred.

When the carrying amount or the expected ultimate cost of the qualifying asset exceeds its recoverable amount

or net realisable value, the carrying amount is written down or written off. Investment income earned on the

temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the

borrowing costs eligible for capitalisation.

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6.10 Provisions and other payables

(i) Provisions

A provision is recognized only if, as a result of a past event, the Company has a present legal or constructive

obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required

to settle the obligation. The provision is measured at the best estimate of the expenditure required to settle the

obligation at the reporting date.

Provisions are normally made for restructuring costs and legal claims.

(ii) Restructuring

A provision for restructuring is recognised when the company has approved a detailed and formal

restructuring plan and the restructuring plan has either commenced or been formally communicated.

(iii) Onerous Contracts

A provision for onerous contracts is recognised when the expected benefits to be derived by the company from a

contract are lower than unavoidable costs of meeting obligations under the contract. The provision is measured

at the present value of the lower of expected costs of terminating the contract and the expected costs of continuing

the contract. Before a provision is established, the company recognises any impairment loss on the assets

associated with that contract.

6.11. Income tax expense Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income

statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised

in equity or in other comprehensive income.

Current income tax is the estimated income tax payable on taxable income for the year, using tax rates enacted or

substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability differs from its

tax base. Deferred taxes are recognized using the balance sheet liability method, providing for temporary

differences between the carrying amounts of assets and liabilities for financial reporting purposes and the

amounts used for taxation purposes (tax bases of the assets or liability). The amount of deferred tax provided is

based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities using

tax rates enacted or substantively enacted at the reporting date.

Additional income taxes that arise from the distribution of dividends are recognised at the same time as the

liability to pay the related dividend is recognised.

6.12Share capital Shares are classified as equity when there is no obligation to transfer cash or other assets.

6.13Share premium reserve Share premium reserve represent surplus on the par value price of share issued. Incremental costs directly

attributable to the issue of new shares are shown in equity (short premium reserve) as a deduction.

6.14Contingency reserve In compliance with Section 21(2) of Insurance Act 2003, the contingency reserve is credited with the greater of

3% of total premiums, or 20% of the net profits. This shall accumulate until it reaches the amount of greater of

minimum paid-up capital or 50 percent of net premium.

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6.15 Retained earnings

Revenue recognition Revenue comprises the fair value for services, net of value-added tax, and is recognised as follows: -

a) Gross premium

Gross general insurance written premiums comprise the total premiums receivable for the whole period of cover

provided by contracts entered into during the accounting period. They are recognised on the date on which the

policy commences. Premiums include any adjustments arising in the accounting period for premiums

receivables in respect of business written in prior accounting periods. Rebates that form part of the premium rate,

such as no-claim rebates, are deducted from the gross premium; others are recognised as an expense. Premiums

collected by intermediaries, but not yet received, are assessed based on estimates from underwriting or past

experience and are included in premiums written.

Unearned premiums are those proportions of premiums written in a year that relate to periods of risk after the

reporting date. The unexpired premium (risk) element of the insurance contract liabilities is computed using the

percentage method. This method is used in view of the difficulties of obtaining detailed data in the circumstance

of the company and the cost effectiveness of obtaining the unexpired values from independent professionals

(a) Investment income

Interest income is recognised in the income statement as it accrues and is calculated by using the effective

interest rate method. Fees and commissions that are an integral part of the effective yield of the financial asset or

liability are recognised as an adjustment to the effective interest rate of the instrument.

Investment income also includes dividends when the right to receive payment is established. For listed

securities, this is the date the security is listed as ex-dividend.

(b) Realized gains and losses

Realised gains and losses recorded in the income statement on investments include gain and losses on financial

assets and investment properties. Gains and losses on the sale of investments are calculated as the difference

between net sales proceeds and the original or amortised cost and are recorded on occurrence of the sale transaction.

d)Dividend income

Dividend income is recognised when the right to receive income is established. Dividends are reflected as a

component of net trading income, net income on other financial instruments at fair value or other operating

income depending on the underlying classification of the equity instrument.

e) Interest

Interest income and expense for all interest bearing financial instruments, except for those classified at fair value

through profit or loss, and are recognised within interest income and interest expense in the income statement

using the effective interest method. The effective interest rate is the rate that exactly discounts the estimated

future cash payments and receipts through the expected life of the financial asset or liability (or, where

appropriate, a shorter period) to the net carrying amount of the financial asset or liability. The effective interest rate

is calculated on initial recognition of the financial asset and liability and is not revised subsequently.

The effective interest rate includes all fees paid or received, transaction costs, and discounts or premiums that are

an integral part of the effective interest rate. Transaction costs are incremental costs that are directly attributable

to the acquisition, issue or disposal of a financial asset or liability. Interest income and expense on all trading

assets and liabilities are considered to be incidental to the company’s trading operations and are presented

together with all other changes in the fair value of trading assets and liabilities in net trading income. Interest

income and expense presented in the income statement include interest on financial assets and liabilities at

amortised cost on an effective interest rate basis.

Fair value changes on other financial assets and liabilities carried at fair value through profit or loss, are

presented in net income from other financial instruments and carried at fair value in the income statement.

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f) Net trading income

Net trading income comprises gains less losses related to trading assets and liabilities, and includes all realised

and unrealised fair value changes, interests, dividends and foreign exchange differences.

g) Other operating revenues

This comprises revenue earned by the company during the year that is directly from insurance operation and

not accounted for under any other separate leads on the financial statements.

6.16 Contingent Liabilities and assets

(i) Contingent liabilities

A contingent liability is disclosed, unless the possibility of an outflow of resources embodying economic

benefits is remote. Where the company is jointly and severally liable for an obligation, the part of the obligation

that is expected to be met by other parties is treated as a contingent liability. The entity recognises a provision for

the part of the obligation for which an outflow of resources embodying economic benefits is probable, except in

the extremely rare circumstances where no reliable estimate can be made. Contingent liabilities are assessed

continually to determine whether an outflow of resources embodying economic benefits has become probable. If it

becomes probable that an outflow of future economic benefits will be required for an item previously dealt with

as a contingent liability, a provision is recognised in the financial statements of the period in which the change in

probability occurs except in the extremely rare circumstances where no reliable estimate can be made

ii) Contingent assets

Contingent assets arising from unplanned or other unexpected events giving rise to the possibility of an inflow of

economic benefits are disclosed in the financial statements. Contingent assets are assessed continually to

ensure that developments are appropriately reflected in the financial statements. If it has become virtually

certain that an inflow of economic benefits will arise, the asset and the related income are recognised in the

financial statements of the period in which the change occurs. If an inflow of economic benefits has become

probable, an entity discloses the contingent asset.

6.17 Gross Written premium

Gross written premium is recognized at the point of attachment of risk to a policy before deducting cost of

reinsurance cover. All written premium relating to risk for the year not falling within the accounting year is

carried forward as unearned premium.

6.18 Reinsurance expenses

Reinsurance cost represents outward premium paid to reinsurance companies less the unexpired portion as at the

end of the accounting year.

6.19 Claims paid

Claims paid consist of claims and claims handling expenses paid during the financial year. All claims paid are

charged against revenue as expense when incurred. Claims handling expenses are charged against revenue

when incurred.

6.20 Changes in outstanding Claims reserve

Changes in outstanding claims reserve comprise changes in outstanding claims between the opening balance at

the beginning of the year and closing balance at the end of the year and the changes in the opening balance in

IBNR at the beginning of the year and the IBNR computed at the end of the year.

Reserve for outstanding claims –in accordance with section 20(1)(b) of insurance act 2004, the reserve for

outstanding claims is maintained at the total amount of outstanding claims incurred and reported plus 10%

thereof to cover claims incurred but not reported (IBNR) as the financial position date.

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6.21Underwriting expenses

Underwriting expenses comprise acquisition costs and other underwriting expenses. Acquisition costs comprise

all direct and indirect costs arising from the writing of insurance contracts. Examples of these costs include, but

are not limited to, commission expense, supervisory levy, supervising fees and other technical expenses. Other

underwriting expenses are those incurred in servicing existing policies/contract. These expenses are charged in

the income statement.

6.22 Investment income and expenses Investment income and expenses for all interest-bearing financial instruments including financial instrument

measured at fair value through profit or loss, are recognised within investment income and finance cost in the

income statement using the effective interest rate method. When a receivable is impaired, the Group reduces

the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original

effective interest rate of the instrument, and continues unwinding the discount as interest income

6.23 Management expenses Management expenses are expenses other than claims, investment expenses, employee benefits, expenses for

marketing and administration and underwriting expenses. They include wages, professional fee, depreciation

expenses and other non-operating expenses. Other Operating expenses are accounted for on accrual basis and

recognised in the income statement upon utilization of the service or at the date of their origin.

6.23.1 Employees Benefit

6.23.2 Pension obligations: The company operates a defined contribution plan. A defined contribution plan is a pension plan under which the

group pays fixed contributions to a separate entity. The company has no legal or constructive obligations to

pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating

to employee service in the current and prior periods. For defined contribution plans, the group makes

contributions on behalf of qualifying employees to a mandatory scheme under the provisions of the Pension

Reforms Act of 2004. The group has no further payment obligations once the contributions have been paid.

The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are

recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.

6.24 Dividend on ordinary shares. Dividends on the Company’s ordinary shares are recognised in equity in the period in which they are paid or, if

earlier, approved by the Company’s shareholders.

Dividends for the year that are declared after the date of the statement of financial position are dealt with in the

subsequent events note.

6.25 Earnings per share The Company presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by

dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average

number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or

loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for

the effects of all dilutive potential ordinary shares

6.26 Hypothecation of assets

The company hypothecates its non-life business assets into those belonging to the policy holders, other creditors

and shareholders’ fund in accordance with section 26(i) of the Insurance Act/SC1.10E(3) operational guideline.

6.27 Segment Reporting

A business segment is a group of assets and operations engaged in providing products or services that are

subject to risks and returns that are different from those of other business segments. A geographical segment is

engaged in providing products or services within a particular economic environment that are subject to risks

and returns and are different from those of segments operating in other economic environments. Segment

30

results, assets and liabilities include items directly attributable to segment as well as those that can be

allocated on a reasonable basis.

For Investments and Allied Assurance plc, no geographical segment information is reported as the company’s

primary geographical segment is Nigeria. Business segment is presented in respect of the Company’s non-life

businesses and is based on the company’s management and reporting structure.

31

INVESTMENTS AND ALLIED ASSURANCE PLC STATEMENT OF FINANCIAL POSITION AS AT 31 December 2013

Notes 2013 2012

=N= =N=

Assets 12 months 12 months

Cash and cash equivalent 1 7,288,328 19,830,535

Financial assets 2 0 0

Trade receivables 3 0 0

Deferred Acquisition Costs 4 377,787 143,177

Other receivable and prepayments 5 0

Property & Motor Vehicles 6 26,769,225 20,634,842

Statutory deposit 7 319,850,000 319,850,000

Total Assets 354,285,340 360,458,554

Liabilities

Insurance contract liabilities 8 89,617,116 86,670,926

Borrowings 9 4,501,156 4,496,879

Provision and other payable 10 913,443,292 794,787,411

Income tax payable 11 301,983,268 224,054,915

Total Liabilities 1,309,544,832 1,110,010,130

Equity

Issued and paid capital 12 14,000,000,000 14,000,000,000

Share premium 13 134,551,904 134,551,904

Statutory Contingency Reserve 14 218,469,071 218,322,901

Retained earnings 15 (15,308,280,468) (15,102,426,381)

Shareholders’ funds (955,259,493) (749,551,576)

Total liabilities and equities 354,285,340 360,458,554

Contingent liabilities 16 10,710,000 10,710,000

..................................... ....................................... --------------------------------------

Wilfred Ise Erhahon Abayomi Rufai Alhaji Aminu Baba Nabegu

FRC/2014/ICAN/00000005736 FRC/2014/CIIN/00000005823 FRC/2014/ICADN/00000006741

Executive Director Chief Executive Officer Chairman

The accounting policies on pages 16 to 30 and the notes on pages 35 to 49 form part of the financial statements.

32

Investments and Allied Assurance Plc

Statement of Comprehensive income for the year ended 31 December 2013

31 December 2013

31 December 2012

Notes 12 months 12 MONTHS

Gross Written Premium 17 4,399,175 5,843,465

Reinsurance premium 0 0

Changes in Unearned premium reserve 8(iii) 473,151 14,826,638

Gross premium income 4,872,326 20,670,103

Reinsurance expenses 18 0 0

Net premium income 4,872,326 20,670,103

Fee and commission income 0 0

Net underwriting Income 4,872,326 20,670,103

Claims Paid 19 (1,419,000) (49,500)

Changes in outstanding claims reserve 8(i) (3,419,343) 7,823,988

Claim expenses (4,838,343) 7,774,488

Claims recovered from reinsurer 0 0

Net claim expenses 20 (4,838,343) 7,774,488

UNDERWRITING EXPENSES 21 (1,133,361) (1,975,679)

Total underwriting expenses (5,971,704) 5,798,810

Underwriting profit (1,099,378) 26,468,913

Investment Income 22 40,945,280 87,029,454

Management expenses 23 (169,498,713) (130,987,214)

Impairment losses 24 0 0

Depreciation and amortization 25 (2,765,617) (540,617)

Reversal of impairment losses and provisions 26 4,638,864 245,325,449

Net operating profit before tax (127,779,564) 227,295,984

Income tax expense 10 (77,928,353) (35,046,783)

Profit/(Loss) After Tax (205,707,917) 192,249,201

Other comprehensive Income:

Revaluation gain on property, plant and equipment

0 0

Net fair value gain on available for sales financial assets 0 0

Total Comprehensive income for the year (205,707,917) 192,249,201

Earnings per 50k share-(basic) (0.007) 0.007

..................................... ....................................... --------------------------------------

Wilfred Ise Erhahon Abayomi Rufai Alhaji Aminu Baba Nabegu

FRC/2014/ICAN/00000005736 FRC/2014/CIIN/00000005823 FRC/2014/ICADN/00000006741

Executive Director Chief Executive Officer Chairman

The accounting policies on pages 16 to 30 and the notes on pages 35 to 49 form part of the financial statements.

33

Investments and Allied Assurance Plc

Statement of Changes in equity as at 31 December 2013

ordinary share share premium Contingency Retained Total

capital

reserve earnings

=N= =N= =N= =N= =N=

Balance as at 31 December 2011 14,000,000,000 134,551,904 179,873,061 (15,256,225,742) (941,800,777)

Transfer from income statement-2012 0 0 0 192,249,201 192,249,201

Transfer to contingency reserve-2012 0 0 38,449,840 (38,449,840) 0

Balance as at 31 December 2012 14,000,000,000 134,551,904 218,322,901 (15,102,426,381) (749,551,576)

Transfer from income statement-2013

(205,707,917) (205,707,917)

Transfer to contingency reserve-2013

146,170 (146,170) 0

Balance as at 31 December 2013 14,000,000,000 134,551,904 218,469,071 (15,308,280,468) (955,259,493)

The accounting policies on pages 16 to 30 and the notes on pages 35 to 49 form part of the financial statements

34

Investments and Allied Assurance Plc

Statements of Cash flow as at 31 December 2013 2013 2012

31-Dec-13 31-Dec-12

12 months 12 months

Total Comprehensive income for the year (205,707,917) 192,249,201

Add back:

Taxation Expenses 77,928,353 35,046,783

operating profit (127,779,564) 227,295,984

Adjustments for items not involving cash:

Depreciation 2,765,617 540,619

Reversal of provision for bad debt no longer required 0 (5,627,898)

Remeasurement of trade payable 0 3,477,898

Remeasurement of other receivables and prepayment 0 2,150,000

Remeasurement of Bank Balances 4,278 0

Changes in working capital:

Changes in trade Receivable 0 4,022,102

Changes in Deferred acquisition cost (234,610) 1,402,973

Changes in provision and other liabilities 118,655,881 (193,074,227)

Changes in insurance contract liabilities 2,946,190 (22,650,626)

Net cash from operating activities (3,642,208) 17,536,825

Fund from Investing activities;

Purchase of motor vehicles (8,900,000) 0

Fund from Financing Activities 0 0

Net increase in cash and cash equivalent (12,542,208) 17,536,825

Cash and cash equivalent as at 1st January 19,830,536 2,293,711

cash and cash equivalent as at 31 December 7,288,328 19,830,536

35

INVESTMENTS AND ALLIED ASSURANCE PLC

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 31 December 2013

2013 2012

=N= =N=

31 Dec 2013 31Dec 2012

1. Cash and cash equivalent

Cash in Hand 0 0

Balances Held with Banks in Nigeria:-

Main street Bank 137,339 137,339

WEMA Bank Plc 94,706 94,706

Access Bank [Intercontinental Bank Plc] 21,994 21,994

Access Bank [Intercontinental Bank Plc] 40,862 40,862

Access Bank Plc 4,788 4,788

First Bank Plc - 4,278

FCMB 101,670 101,670

Zenith Bank 1,391,957 3,443,707

Ecobank [Oceanic Bank] 46,179 46,179

Ecobank [Oceanic Bank] 4,476 4,476

fixed deposit (Note 1.1) 4,994,118 15,480,298

Domiciliary Account USD:- =N= =N=

First bank Plc 161,025 161,025

First bank Plc 137,619 137,619

Guaranty Trust Bank 0 0

Access Bank 151,595 151,595

Total 7,288,328 19,830,535

1.1. The verified amount of =N=4,994,118 represents the Principal Fixed Deposits

Investments with Zenith Bank of =N=4,480,298 plus accrued interest of =N=513,820

2013 2012

2. Financial Assets - Available for Sale

Placements with banks and Discount Houses 5,068,081,900 5,068,081,900

Investment in quoted securities 1,000,000 1,000,000

Investment in unquoted securities (Note 2.1) 6,105,616,000 6,105,616,000

11,174,697,900 11,174,697,900

Impairment Losses-for the year 0 0

impairment loss b/w 11,174,697,900 11,174,697,900

impairment loss c/f 11,174,697,900 11,174,697,900

Asset value at end of year 0 0

Available for sale financial assets are carried at cost less impairment as their proof of ownership and existence could not be ascertained.

36

2.1 Investment in unquoted equities

IAA Investments & Trust Coy 3,052,700,000 3,052,700,000

IAA Assets Mgt Co Ltd 2,035,200,000 2,035,200,000

IAA Properties 1,017,700,000 1,017,700,000

Total 6,105,600,000 6,105,600,000

Available for sales financial assets of N11, 174,679,900 purportedly represents the proceeds of the Private Placement of 2007. However according to SEC investigation into the private placement process especially the allotment and accounting for the proceeds of the private placement, these sums were kept in accounts that were wholly controlled by the Vice Chairman - Mr. Funmi Adenmosun. All reasonable process to verify the proceeds and transactions failed hence the full provision made by management and supported by our audit process.

2013 2012

3. Trade Receivable-falling due within 12 months

Amount due from agents and brokers 68,410,243 68,410,243

Additions 0 0

68,410,243 68,410,243

impairment loss brought forward 68,410,243 68,410,243

Recovered in the year 2013 (4,638,863) 0

impairment loss carried forward 63,771,379 68,410,243

Asset value at end of year 0 0

4. Deferred Acquisition cost/underwriting expenses

Dec-13 Dec-12

Opening balance at 01 Jan 143,177 1,546,149

Acquisition cost paid in the year 1,367,971 572,706

1,511,148 2,118,855

underwriting expense in 2013 (1,133,361) (1,975,679)

deferred acquisition cost at 31 Dec 2013 377,787 143,176

Motor Marine Fire Accident Total

Opening balance at 01 Jan 2013 126,002 0 0 17,175 143,177

Acquisition cost paid in the year in 2013 126,024 0 288,779 953,168 1,367,971

252,026 0 288,779 970,343 1,511,148

Deferred acquisition cost as at 31 Dec 2013 63,007 0 72,195 242,586 377,787

underwriting expenses in 2013 (189,020) 0 (216,584) (727,757) (1,133,361)

37

5. Other receivables and payments-falling due within 12 months

2013 2012

Prepayment - Rent 4,429,830 4,429,830

Surplus Treaty 1,561,152 1,561,152

VAT Receivable 485,557 485,557

Rent Receivable - Ijora Property 2,750,000 2,750,000

9,226,539 9,226,539

Impairment Losses-for the year 0 0

impairment loss brought forward 9,226,539 9,226,539

impairment loss carried forward 9,226,539 9,226,539

Asset value at end of year 0 0

Other receivables and prepayment of N9,226,539 could not be verified, hence their full impairment

6. Property and motor vehicles

Building Motor Vehicles

Total

Cost

At 01 Jan 2013 27,030,870 0 27,030,870

Additions 0 8,900,000 8,900,000

Balance at 31.DEC 2013 27,030,870 8,900,000 35,930,870

Balance at 1 December 2012 27,030,870 0 27,030,870

Depreciation

At 01 Jan 2012 6,396,028 0 6,396,028

Charge in 2013 540,617 2,225,000 2,765,617

Balance at 31.DEC 2013 6,936,645 2,225,000 9,161,645

Balance as at 31 Dec 2012 6,396,028 0 20,634,842

Carrying amount as at 31 December 2013 20,094,225 6,675,000 26,769,225

Carrying amount as at 31 December 2012 20,634,842 0 20,634,842

8. Insurance Contract liabilities

2013 2012

Unearned Premium Reserve 1,099,794 1,572,945

Outstanding Claims Reserve 80,470,293 77,361,801

IBNR 8,047,029 7,736,180

Total 89,617,116 86,670,926

The unexpired risk element of the insurance contract liabilities is computed using the percentage method. This method is used in view of difficulties of obtaining detailed data in the present circumstance of the company and the cost

7. Statutory Deposit

Deposit with Central Bank of Nigeria 319,850,000 319,850,000

38

effectiveness of obtaining the unexpired risk values from independent professionals. Although the Liability Adequacy Test was not carried out by an independent actuary, but the Directors consider that in preparing the financial statements they have taken into accounts all information that could reasonably be expected to be available in determining reasonable estimates of insurance contract liabilities due to policyholders. Secondly, due to the current financial status of the company, the management is of the opinion that the cost of hiring an independent actuary to carry out liability adequacy test is higher than the benefit to be derived from such valuation.

Insurance contract liabilities

31 Dec 2013 31 Dec 2012

MOTOR 40,944,665 39,799,750

MOTOR 3,554,462 1,689,006

MARINE 20,988,398 21,148,867

FIRE 24,129,590 24,033,303

89,617,116 86,670,926

Changes in outstanding Claims as at 31 Dec 2013 outstanding

claim outstanding claims movement in IBNR 31 Dec 2012 movement 31 Dec 2013 31 Dec

2013 31 Dec 2012 31 Dec 2013 outstanding

Claims 31 Dec 2013 IBNR in IBNR Outstanding

CLAIM + IBNR claims

provision 31 Dec 2013 31 Dec

2013

MOTOR 35,264,079 36,676,701 (1,412,622) 3,667,670 3,526,408 (141,262) 40,344,372 (1,553,885)

MARINE 1,535,459 3,231,330 (1,695,871) 323,133 153,546 (169,587) 3,554,462 (1,865,458)

FIRE 19,078,089 19,078,089 0 1,907,809 1,907,809 0 20,985,898 0

ACCIDENT 21,484,172 21,484,173 (1) 2,148,417 2,148,417 0 23,632,590 1

77,361,799 80,470,293 (3,108,494) 8,047,029 7,736,180 (310,849) 88,517,322 (3,419,343)

Changes in Unearned Premium Reserves 31 Dec 2013 31 Dec 2012 31 Dec 2013

Unexpired Unexpired Changes in

Risk Risk unexpired risk

MOTOR 600,294 1,009,263 (408,969)

MARINE 0 0 0

FIRE 2,500 162,969 (160,469)

ACCIDENT 497,000 400,713 96,287

ENG 0 0 0

1,099,794 1,572,945 (473,151)

9. Bank Borrowing-falling due within 12 months Bank borrowings 4,501,156 4,496,879

Bank borrowings represents debit in bank account balances with First Bank and Guaranty Trust Bank as at the reporting date. These are bank overdrafts obtained in 2009 and 2010 but included among creditors and accruals in the respective years.

39

10. Provisions and other payables-falling due within 12 months 2013 2012

Nigerian Stock Exchange -listing fee 11,613,000 0

FBN Capital Limited- 80,000,000 0

Ikaar Services LLP-Secretariat 1,787,500 0

NAICOM 21,175,000 21,175,000

Assbifi Control Acct 385,203 939,442

Withholding Tax 12,376 12,376

Financial Reporting council 5,500,000 5,500,000

PAYE on Accrued Salaries 8,159,809 9,921,134

Ken Ohore (Chartered Accountants) 400,000 400,000

staff Terminal Benefit 95,655,441 95,655,441

African Prudential Registrars Plc 19,097,328 19,097,329

Access Bank Contingent Liability 452,870,361 452,870,361

Partnerships Limited - Fees 3,000,000 3,000,000

Nnena Okereke Gladdys 36,222,378 36,222,378

Accrued Salary- May 2010 to 31 Dec 2013 126,678,506 87,145,501

Legal fee - Ohioma on properties 750,000 750,000

Audit Fee - Mathew Sadoh 0 3,485,000

Tax Fee - Mathew Sadoh 0 1,970,000

Ikeyi & Arifayan-litigation 1,812,500 0

Recapitalization Fee - Ikeyi Arifayan 3,930,000 4,930,000

Financial Adviser - Recapitalization 0 5,000,000

Land Assignment Fee - Lagos State 3,000,000 3,000,000

Tenement Rate - Apapa Iga 85,956 85,956

Staff Accrued Pension on unpaid salaries 33,674,085 40,368,644

Commission - Zenith Gen Insurance 26,355 26,355

Commission - Vanguard Nig Limited 5,701 5,701

Commission - Bible Society 18,931 18,931

Commission - E.B. Osoba 18,000 18,000

Commission - Kelsan Ins Brokers 89,594 89,594

B A C - Crown Insurance Brokers 5,375 5,375

B A C - Crown Insurance Brokers 10,034 10,034

Nigerian Insurance Association 2,000,000 2,000,000

Adedapo Fashanu & Co 594,860 594,860

UHY Maaji & Co (Chartered Accountants) 1,375,000 0

FBN Securities – Recapitalization Fee 3,000,000 0

Yuler International - Ibadan Branch Rent 490,000 490,000

913,443,292 794,787,411

10b. Explanatory notes 10b(i) Nigerian Stock Exchange-N11,613,000 This represents accumulated listing fee from 2007 to date

40

10b (ii) FBN Capital Limited N80,000,000 This represents provision for fee for the recapitalization of the company with capital injection of N4 billion for the purpose of making its negative Net Asset Value and recapitalizing it to the N3 billion requirements set for General Insurance companies by NAICOM. This amount is not liable for payment unless the capital of N4 billion is injected. 10b (iii) NAICOM-N21,175,000 This represents the emoluments paid by NAICOM to Interim Management on behalf of the company in 2011 and 2012. 10b (iv) Terminal Benefits-N95,655,441 This represents terminal benefits accrued to staff of the Company after the retrenchment exercise calculated in line with agreements reached with the union. 10b (v) African Prudential Registrars Plc-N19,097,328 This represents fees in respect of registrar work carried out by African Prudential Registrars Plc after the listing of the Company at the Nigerian Stock Exchange. 10b(vi) Access Bank Plc Contingent liability-N452,870,360 This represents a liability resulting from a tripartite debenture by the Ex- Vice Chairman- Mr. Funmi Adenmosun for a bank loan granted to his company, Home Trust Savings and Loans Limited by Access bank Plc using fixed and floating assets of Investments and Allied Assurance Plc as collateral. Home Trust Savings and Loans Limited is not related in any way to Investments and Allied Assurance plc and is defunct as the operating licence has been withdrawn by the Central Bank of Nigeria (CBN). 10b(viii) Nnena Gladys Okereke –N36,222,378 This is a judgement creditor and represents claims made against the company for payment in lieu of shares share allotment by unsuccessful prospective investors in the company’s private placement in 2007 and 2008. She went to court and obtained judgement against the company. 11. Taxation-falling due within 12 months (11a) Income Tax

Balance Brought forward-Jan 01, 2013 224,054,915 189,008,132

Provision for the year 35,046,783 35,046,783

Under-provision in prior years 25,916,403 0

Balance as at 31 Dec 2013 285,018,101 224,054,915

This represents Tax computation at the Minimum Tax rates on account of the losses incurred by the company during the year

(11b) Value added tax (VAT) 16,965,167 0

This represents vat assessments for 2009 N2, 921,205; 2010 N11,932,402 and 2011 N2,111,560 (11c) - Total tax provision for the year 77,928,353 35,046,783

(11d)- Tax liability carried forward 301,983,268 224,054,915

12. Share Capital Authorized ordinary shares of 50 kobo each (units) 30,400,000,000 30,400,000,000

Authorized ordinary shares of 50 kobo each (naira) 15,200,000,000 15,200,000,000

Issued and fully paid ordinary share capital of 50 kobo each (units)

28,000,000,000 28,000,000,000

Issued and fully paid ordinary share capital of 50 kobo each (naira)

14,000,000,000 14,000,000,000

Transactions in IAA’s shares have been suspended on the floor of the Nigerian Stock Exchange since November 2010. This is pursuant to failure to submit audited accounts for years 2008 and 2009 and several infractions as detailed in a draft SEC report of investigations into the Private Placement offer of IAA’s shares which commenced in 2006 as well as the subsequent allocation of its shares when it went public

41

13. Share Premium 134,551,904 134,551,904

14. Contingency Reserves

. Balance at 1 January 2013 218,322,901 179,873,061

Transferred from comprehensive income statement 146,170 38,449,840

218,469,071 218,322,901

15. Retained Earnings The movement in this account during the year was as follows: Balance as at 1 Jan ( Beginning of year) (15,102,426,381) (15,256,225,742)

Transfer from comprehensive income (205,707,917) 192,249,201

Transfer to contingency reserve (146,170) (38,449,840)

Balance as at 31 December ( yearend) (15,308,280,468) (15,102,426,381)

On 22 February 2011, the National Insurance Commission [NAICOM] in exercise of the powers conferred on it under Part VII of the NAICOM Act 1993 assumed control of management of Investment and Allied Assurance Plc. to satisfactorily correct material lapses observed. In accordance with the provision of the Insurance Act, NAICOM assumed control and appointed an Interim Management to take charge of the affairs of the Company [IAA]. The uncertainties inherent in the intervention process of the regulatory body and IAA's recurring losses from operations raise substantial doubt about IAA's ability to continue as a going concern. IAA is currently operating its business as a company-in-possession under the jurisdiction of NAICOM appointed management, and continuation of IAA as a going concern is contingent upon, among other things, the confirmation of a plan of reorganization and recapitalisation, IAA's ability to comply with all regulatory requirements under the Insurance Act 2003 [as amended] as well as the guidelines and circulars of NAICOM especially as it relates to the Minimum Capital Requirements for a General Insurance Company operating in Nigeria, and IAA's ability to generate sufficient cash from operations and obtain financing sources to meet its future obligations. If no reorganization and recapitalisation plan is approved/achieved, it is possible that NAICOM withdraws IAA’s Insurance License and IAA's assets may be liquidated. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amount and classification of liabilities that may result from the outcome of these uncertainties.

16. Contingent Liability

Intercom UK Ltd Vs Investments & Allied Assurance Plc 10,710,000 10,710,000

This case involving Intercom UK Ltd cannot be verified by the Interim Management.

17. Gross Premium written 2013 2012

Motor 2,401,175 3,588,737

Marine 0 0

Fire 10,000 651,875

General Accident 1,988,000 1,602,853

4,399,175 5,843,465

Changes in provision for unearned premium reserve 473,151 14,938,716

Gross Premium Income 4,872,326 20,782,181

42

Products Segmental Reporting 2013 2012

Motor Marine Fire Accident Total Total

=N= =N= =N= =N= =N= =N=

Gross Written Premium 2,401,175 0 10,000 1,988,000 4,399,175 5,843,465

Reinsurance premium 0 0 0 0 0 0

Changes in provision for Unearned premium reserve

408,969 0 160,469 (96,287) 473,151 14,826,638

gross premium income 2,810,144 0 170,469 1,891,713 4,872,326 20,670,103

Reinsurance expenses 0 0 0 0 0 0

Net premium income 2,810,144 0 170,469 1,891,713 4,872,326 20,670,103

Fee and commission income 0 0 0 0 0 0

Net underwriting Income 2,810,144 0 170,469 1,891,713 4,872,326 20,670,103

Claims

Claims paid (210,000) (960,000) 0 (249,000) (1,419,000) (49,500)

Changes in outstanding claims reserve (1,553,885) (1,865,458) 0 (1) (3,419,343) 7,823,988

Claims recovered from reinsurer 0 0 0 0 0 0

Net claim expenses (1,763,885) (2,825,458) 0 (249,001) (4,838,343) 7,774,488

UNDERWRITING EXPENSES (189,020) 0 (216,584) (727,757) (1,133,361) (1,975,679)

Total underwriting expenses (1,952,904) (2,825,458) (216,584) (976,758) (5,971,704) 5,798,809

Underwriting profit 857,240 (2,825,458) (46,115) 914,955 (1,099,378) 26,468,912

18. Reinsurance expenses

0 0

19. Claim expenses

Claims Paid (1,419,000) (49,500)

20. Net claim expenses

Claims paid (1,419,000) (49,500)

Changes in outstanding claims reserve (3,419,343) 7,823,988

Claims recovered from reinsurer 0 0

Net claim expenses (4,838,343) 7,774,488

21. Underwriting expenses - Acquisition cost

2013 2012

Opening balance at 01 Jan 143,177 1,546,149

Acquisition cost paid in the year 1,367,971 572,706

1,511,148 2,118,855

Charge for the year 1,133,361 1,975,679

closing balance at 31 Dec 377,787 143,176

22. Investment Income

Rent from property 850,000 1,380,299

Interest on bank deposit 513,820 0

Interest on Statutory deposit 39,581,460 85,649,155

40,945,460 87,029,454

43

23. Management expenses 23.1 Management expenses

2013 2012

=N= =N=

Directors emolument 30,896,166 30,896,166

Employees benefits/ emoluments 19,664,371 32,734,480

Auditor's Remuneration 2,390,000 2,500,000

Bank charges 262,296 459,553

Financial adviser fee 80,000,000 0

Nigerian stock Exchange listing fee 11,613,000 0

Secretariat expenses 2,500,000 0

Legal expenses 3,000,000 0

Other expenses 19,172,880 64,397,015

Total management expenses 169,498,713 130,987,214

23.1. Chairman's emoluments

Fees nil nil

Emoluments of highest paid Director (executive)-excluding pension contribution and other allowances

17,587,000 17,587,000

23.3 Number of directors excluding chairman whose emoluments were within the following range number numbers

N850,001 -N3,600,000 0 0

N3,600,001 and above 2 2

23.4. Compensation to key management personnel The summary of compensation is as follows: 2013 2012

=N= =N=

Salaries 35,305,641 34,979,259

Sitting allowance 0 0

Fees 0 0

Executive compensation 0 0

Other short term employment Benefits

0 0

Post employment pension benefits 35,305,641 34,979,259

The related staff costs =N= =N=

Wages and salaries 48,517,584 61,387,366

Staff training 0 0

Staff terminal benefits 0 0

staff welfare and medical expenses 272,830 93,810

Pension fund charge 2,042,953 2,243,280

50,833,367 63,724,456

44

24. Impairment losses 0 0

This represent corrections of accounting errors in order to reflect the true financial position of the company

25. Depreciation 2013 2012

property 540,617 540,617

motor vehicle 2,225,000 0

2,765,617 540,617

26. Reversal of impairment losses & Other write backs

Recovery of rent on Ijora property 0 2,150,000

Recovery of bad debt debtor- premium debtors 4,638,864 0

Recovery from Deposit with main street bank 0 137,339

Reversal of provision for dividend 0 242,800,000

Proceed from Sales of Motor Vehicle written-off 0 60,000

Error in opening bank balance 0 178,110

4,638,864 245,325,449

Provision for Dividend:

The reversal of dividend in 2012 is based on the resolution pass by shareholders at 2012 AGM held on 18th December 2012.

45

27. Risk and capital management framework

a. Government framework

The main objective of the company’s risk management structure is to protect the company’s shareholders from the

adverse effects of events that hinder the sustainable achievement of financial performance objective, including

failing to exploit opportunities. Key management recognise the critical importance of having efficient and effective

risk management systems in place.

b. Capital management objectives, policies and approach

The company has established the following capital management objectives, policies and approach to managing the

risks that affect its capital position.

to maintain the required level of stability of the company thereby providing a degree of security to

policyholders

to maintain the required level of stability of the company thereby providing a degree of security to

policyholders

to allocate capital efficiently and support the development of business by ensuring that returns on capital

employed meet the requirements of its capital providers and of its shareholders.

to retain financial flexibility by maintaining strong liquidity and access to a range of capital markets.

to align the profile of assets and liabilities taking account of risks inherent in the business.

to maintain financial strength to support new business growth and to satisfy the requirements of the

policyholders, regulators and stakeholders.

to maintain strong credit ratings and healthy capital ratios in order to support its business objectives

and maximise shareholders value.

In reporting financial strength, capital and solvency are measured using the rules prescribed by the National

Insurance Commission. These regulatory capital tests are based upon required levels of solvency, capital and a series

of prudent assumptions in respect of the type of business written

Agreement to capital management

The company seeks to optimise the structure and source of capital to ensure that it consistently maximises returns to

the shareholders and policyholders.

The company’s approach to managing capital will involve managing assets, liabilities and risks in a coordinated way,

assessing shortfall between reported and required capital levels on a regular basis and taking appropriate action to

influence the capital position of the company in the light of changes in economic conditions and risk characteristics.

The company’s approach to managing capital will involve managing assets, liabilities and risks in a coordinated way,

assessing shortfall between reported and required capital levels on a regular basis and taking appropriate action to

influence the capital position of the company in the light of changes in economic conditions and risk characteristics.

The primary source of capital used by the company is equity shareholder’s funds and capital generated from operations.

The company has had no significant changes in its policies and processes to its capital structure during the past year

from previous years.

Available Capital Resources

2013 2012 %

N N Change

Issued and paid Capital 14,000,000,000 14,000,000,000 0

Share premium 134,551,904 134,551,904 0

Statutory Contingency reserve 218,469,071 218,322,901 0

Retained earnings (15,308,280,468) (15,102,426,383) 1

Shareholders’ Funds (955,259,493) (749,551,578) 27

NAICOM measures the financial strength of non-life insurers using a solvency margin model. It generally

expects non-life insurers to comply with this capital adequacy. Section 24 of the Insurance Act 2003 define

solvency margin of a non-life insurers as the difference between the admissible assets and liabilities and

this shall be not less than 15% of the net premium income (Gross premium Income less reinsurance

premium paid ) or the minimum capital base (N3 billion) whichever is higher.

46

This test comprises insurers’ capital against the risk profile. The regulator indicated that insurers should

produce a minimum solvency margin of 100%. During the year, the company has consistently failed to

meet these minimum capital requirements. The regulator has the authority to request more extensive

reporting and can place restriction on the Company’s operations if the Company falls below these

requirements.

Solvency margin for the year ended 31 December2013 is as follows: 2013 2012 %

N N Change

Assets

Cash and cash equivalent 7,288,328 19,830,535 (63)

Trade receivables 0 0 0

Deferred acquisition cost 377,787 143,177 164

Property and Motor Vehicles 26,769,225 20,634,842 30

Statutory Deposit 319,850,000 319,850,000 0

354,285,340 360,458,554 (2)

Liabilities

Insurance Contract liabilities 89,617,116 86,670,926 3

Borrowings 4,501,156 4,496,879 0

Provisions and other payables 913,443,292 794,787,411 15

Income tax payables 301,983,268 224,054,915 35

1,309,544,832 1,110,010,130 18

Solvency Margin (955,259,493) (749,551,577) 27

The Higher of 15% net premium

income and shareholders fund 3,000,000,000 3,000,000,000 0

Solvency Ratio (32) (25) 27

Based on the solvency margin statement, the Company does not meet the minimum capital and solvency

requirements. A minimum of N4 billion capital injections is required to return the company to the required

capital and solvency level.

.

Regulatory Framework

Regulators are mainly interested in protecting the rights of policyholders and monitor them closely to

ensure that the company is satisfactorily managing affairs for their benefit. At the same time, regulators

are also interested in ensuring that the company maintains an appropriate solvency position to meet

unforeseen liabilities arising from economic shocks or natural disasters.

The operation of the company is subject to regulatory requirements within the jurisdictions in which it

operates. Such regulations not only prescribe approval and monitoring of activities, but also impose

certain restrictive provisions (e.g. capital adequacy) to minimise the risk of default and insolvency on the

part of insurance companies to meet unforeseen liabilities as these arise.

47

Disclosure on Capital base, solvency margin (current status and implication of non compliance and

effort made so far) intervention by NAICOM, capital restructuring and recapitalisation.

On 22 February 2011, the National Insurance Commission (NAICOM) in exercise of the powers conferred

on it under part VII of the NAICOM Act 1997 assumed control of management of Investments and

Allied Assurance Plc to satisfactorily correct material lapses observed.

The company is technically insolvent and has not been in business operation since June 2010.The

shareholders fund as at 31 December 2013 is in negative of about N955 million and about N749 million

negative as at 31 December 2012. The total liability as at 31 December 2013 is about N1, 309 million and

about N1, 110 million as at 31 December 2012.

For the company to correct the insolvency position and avoid liquidation, a minimum capital injection of

N4 billion is required to meet the N3 billion statutory capital level set for non-life insurance business in

view of the negative shareholders fund of about N1 billion. The company is presently undergoing the

process of reorganization and recapitalization. For New investors to come in with their funds, the existing

shareholding has to be restructured to create a window for new funds. To this effect, the shareholders at the

Annual General Meeting (AGM) held on December 18, 2012, passed a resolution mandating the Board and

management to restructure the existing capital shareholdings to create a window for the new capital to be

raised from new investors.

At the Annual General Meeting (AGM) of the shareholders of the Company held on Tuesday, 18

December 2012 the following resolution was proposed and duly passed:-“That the board of directors

of the Company be and is hereby authorized to prospect a scheme for capital injection and

reconstruction of the shares of the Company, which scheme shall be presented to the shareholders of

the Company for their consideration and approval.”

As part of its intervention, NAICOM has indicated its support for the company to continue in operation

subject to its ability to shore up its capital base through an injection of share capital. This will take the

Company back to a solvent financial position and enable it to continue its insurance business in a profitable

manner. The management is working with the regulatory authorities to recapitalize the Company with a

Capital injection of at least N4 billion from potential investors. Approvals have been obtained from

NAICOM, Nigeria Stock Exchange (NSE) and Securities & Exchange Commission (SEC) to carry out a

Capital Reduction Scheme to pave the way for the recapitalization. The objective of a Capital Reduction

Scheme is to eliminate the paid up share capital not represented by any asset to create a window for new

capital injection. Barring any unforeseen circumstance, it is expected that the recapitalization of the

company will be concluded in 2015. The Company is liaising with the regulatory authority of the insurance

industry, NAICOM, on this development

Suspension by the Nigerian Stock Exchange (NSE)

On the 9th of May 2008, the company’s issued and fully paid share capital of 28 billion units of ordinary shares of 50

kobo each were listed and quoted at the floor of the Nigerian Stock Exchange (NSE). However, the company failed to

get the National Insurance Commission (NAICOM) approval for its 2008 and 2009 audited accounts due to

irregularities observed in them. This made it impossible for the audited accounts for the years 2008 and 2009 to be

submitted to the Nigerian Stock Exchange. Consequently, the NSE temporarily suspended the trading in the company’s

shares and applied full suspension on 15th November 2010. The implication of this is that the shares of the company

cannot be traded at all on the floor of the Exchange.

Insurance and financial risk

Insurance risk The principal risk the company faces under insurance contracts is the actual claims and benefit payments or the

timing thereof, differ from expectations. This is influenced by the frequency of claims, severity of claims, actual

benefits paid and subsequent development of long-term claims. Therefore, the objective of the company is to ensure

that sufficient reserves are available to cover these liabilities.

The risk exposure is mitigated by diversification across a large portfolio of insurance contracts and geographical

areas. The variability of risks is also improved by careful selection and implementation of underwriting strategy

48

guidelines, as well as the use of reinsurance arrangements.

The company purchases reinsurance as part of its risk mitigation programme. Reinsurance ceded is placed on both a

proportional and non-proportional basis. The majority of proportional reinsurance is quota-share reinsurance which

is taken out to reduce the overall exposure of the company to certain classes of business. Non-proportional

insurance is primarily excess-of-loss reinsurance designed to mitigate the company’s net exposure to catastrophe

losses. Retention limits for the excess-of-loss reinsurance vary by product line and territory.

Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding claims provision

and are in accordance with the reinsurances contracts. Although the company has reinsurance arrangements, it is not

relieved of its direct obligations to its policyholders and thus a credit exposure exists with respect to ceded

insurance, to the extent that any reinsurer is unable to meet its obligations assumed under such reinsurance

agreements. The company’s placement of reinsurance is diversified such that it is neither dependent on a single

reinsurer nor are the operations of the company substantially dependent upon any single reinsurance contract.

Non-life insurance contract (which comprise general insurance) The company principally issues the following types of general insurance contracts: fire, motor, casualty, workman

compensation, personal accident, marine and oil and gas. Risks under non-life insurance policies usually cover

twelve months duration.

For general insurance contracts, the most significant risk arises from climate changes, natural disasters and terrorist

activities. For longer tail claims that take some years to settle, there is also inflation risk.

The above risk exposure is mitigated by diversification across a large portfolio of insurance contracts and

geographical areas. The variability of risks is improved by careful selection and implementation of underwriting

strategies, which are designed to ensure that risks are diversified in terms of type of risk and level of insured

benefits. This is largely achieved through diversification across industry sectors and geography. Furthermore, strict

claim review policies to assess all new and ongoing claims, regular detailed review of claims handling procedures

and frequent investigation of possible fraudulent claims are all policies and procedure put to reduce the risk exposure

of the company. The company further enforces a policy of activity managing and promptly pursuing claims, in order

to reduce its exposure to unpredictable future developments that can negatively impact the business. Inflation risk is

mitigated by taking expected inflation into account when estimating insurance contract liabilities.

The company has also limited its exposure by imposing maximum claim amounts on certain contracts as well as the

use of reinsurance arrangements in order to limit exposure to catastrophic events (e.g. insurance, earthquakes and

flood damage).

The purpose of these underwriting and reinsurance strategies is to limit exposure to catastrophes based on the

company’s risk appetite as decided by management.

Sensitivities The non-life insurance claim liabilities are sensitive to the key assumptions that follow. It has not been possible to

quantify the sensitivity of certain assumptions such as legislative changes or uncertainty in the estimation process.

Niger to disclose for 2012 and 2011 the impact of changes in assumptions, impact on gross liabilities, impact on

profit before tax and impact on equity of 10% increase in average claim cost, average number of claims and average

claim settlement period.

Financial risks

Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss to the other party by falling

to discharge an obligation at the due date.

Credit risk is the risk of loss arising from the failure of a client or counterparty to fulfil its obligations to Niger

Insurance Plc. This Credit Risk Management framework being part of Enterprise Risk Management framework has

been prepared and approved to provide broad guidelines for management of credit risk in the insurance company.

In addition to credit risks arising out of investments and transactions with clients, Niger actively assumes credit risk

through the writing of insurance business and the approval and issuance of loans. Credit risk can arise when a client

defaults on loan payments or settlement of premium payments and can also arise when its own repayment capacity

decreases.

Investments and Allied Assurance plc an strategy as insurance company does not entail the elimination of credit risk

but rather to take on credit risk in a well-controlled, planned and targeted manner pursuant to its business objectives

49

its approach to measuring credit risk is therefore designed to ensure that it is assessed accurately in all its forms, and

that relevant, timely and accurate credit risk information is available to the relevant decision makers at an

operational and strategic level at all times. At a strategic level, IAA manages its credit risk profile within the

constraints of its overall risk appetite and structured its portfolio so that it provides optimal returns for the level of

risk taken. Operationally, the insurance company credit risk management is governed by the overall risk appetite

framework and aims to ensure that the risk inherent to individual exposures or certain business portfolios are

appropriately managed through the economic cycle.

The organization is committed to

a. Create, monitor and manage credit risk in a manner that complies with all applicable laws and

regulations

b. Identify credit risk in each investment, loan or other activity of the insurance company;

c. Utilize appropriate, accurate and timely tools to measure credit risk;

d. Set acceptable risk parameters;

e. Maintain acceptable levels of credit risk for existing individual credit exposures;

f. Maintain acceptable levels of overall credit risk for IAA’s portfolio; and

g. Coordinate credit risk management with the management of other risks inherent in IAA’s business

activities.

Unsecured exposures to high risk obligors, transactions with speculative cash flows, loans in which the insurance

company will hold an inferior or subordinate position are some of the credit exposures that are considered

undesirable by the company.

Credit exposure The company’s maximum exposure to credit risk for the components of the statement of financial position at 31

December, 2012 and 2011 is the carrying amounts as presented in the note.

The credit risk analysis below is presented in line with how the company manages the risk. The company manages

its credit exposure based on the carrying value of the financial instruments.

Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial

instruments. In respect of catastrophic events there is also a liquidity risk associated with the timing differences

between gross cash out-flows and expected reinsurance recoveries.

This is the potential for loss to the company arising from either its inability to meet its obligations or to fund

increases in liabilities as they fall due without incurring unacceptable cost or losses. The liquidity risk management

framework which is a segment of ERM framework manual ensures that IAA is not unduly exposed to Liquidity

Risk and is in compliance with regulatory requirements and international best practice with respect to Liquidity Risk

Management.

28. Explanation on transition to IFRS

The company’s first financial statements prepared in compliance with IFRS was as at 1st January 2011. In preparing

its opening IFRS statement of financial position, the company has adjusted amounts reported previously in the

financial statements under Nigerian GAAP. An explanation on how the transition from previous Nigerian GAAP to

IFRS has affected the company’s financial position and financial performance were stated in the financial report for the

year ended 31 December 2012.

50

Investments and Allied Assurance plc

Value added statement for six months period to 31 December 2013

2013 2012

N % N

12 months 12 months

Net underwriting income 4,872,326 20,670,104

Investment and other income 40,975,716 87,029,454

Reversal of impairment losses & Other write backs

4,638,864 245,325,449

50,456,470 353,025,006

Underwriting expenses and other overhead cost (137,527,736) (59,459,425)

Value added (87,071,266) 100 293,565,581

Application as follows:

1. In payment of employee:

Personnel cost 37,942,681 (44) 65,728,979 2. In payment to government:

Income tax expenses 77,928,353 (89) 35,046,783

3. Retained for maintenance of assets: Depreciation and amortization 2,765,617 (3) 540,617

4. Retained for expansion of business:

Retained profit/loss (205,707,917) (264) 192,249,201

Value added (87,071,266) 100 293,565,581

51

Investments and Allied Assurance Plc

Four years Financial summary IFRS IFRS IFRS IFRS

2013 2012 2011 2010

Sources of fund N N N N

Issued and fully paid capital 14,000,000,000 14,000,000,000 14,000,000,000 14,000,000,000

Share premium 134,551,904 134,551,904 134,551,904 134,761,904

statutory contingency reserve 218,469,071 180,048,365 179,873,061 178,735,265

Retained earnings (15,308,280,468) (15,064,151,846) (15,256,225,744) (14,605,188,109)

(955,259,493) (749,551,577) (941,800,779) (291,690,940)

Uses of Fund

cash and cash equivalents 7,288,328 19,830,535 2,293,711 533,553

Financial assets 0 0 0 0

Trade receivables 0 0 4,022,102 0

Deferred Acquisition costs 377,787 143,177 1,546,149 4,940,481

Other receivables and prepayments 0 0 0 0

Property, plant and equipments 26,769,225 20,634,842 21,175,459 39,605,133

Statutory Deposit 319,850,000 319,850,000 319,850,000 300,000,000

354,285,340 360,458,554 348,887,421 345,079,167

Deduct:

Borrowings 4,501,156 4,496,879 4,496,879 15,424,278

Provision and other payables 913,443,292 794,787,411 987,861,638 425,159,419

Income tax liabilities 301,983,268 224,054,915 189,008,132 153,961,349

1,219,927,716 1,023,339,205 1,181,366,649 594,545,046

(865,642,377) (662,880,651) (832,479,227) (249,465,880)

Insurance contract liabilities (89,617,116) (86,670,926) (109,321,552) (42,225,060)

(955,259,493) (749,551,577) (941,800,779) (291,690,940)

Turnover and profits:

Gross premium income 4,399,175 6,291,778 37,926,530 100,752,164

Profit/(loss) before tax (127,779,564) 227,295,984 (614,853,055) (14,672,316,734)

profit/(loss) after tax (205,707,917) 192,249,201 (649,899,838) (14,678,086,151)

Earnings per 5ok share-basic-(kobo) (0.007) 0.014 (0.046) (1.048)