aiico insurance plc...mr. edwin igbiti group md / ceo mr. babatunde fajemirokun executive director...

AIICO INSURANCE PLC CONSOLIDATED & SEPARATE FINANCIAL STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30, 2016

AIICO Plc 2016

AIICO Insurance Plc

UNAUDITED REPORT & ACCOUNTS

FOR THE

THIRD QUARTER ENDING 30 SEPTEMBER 2016


AIICO Plc 2016

Contents Page

Corporate Information 3

Consolidated Results at a Glance 5

Statement of Significant Accounting Policies 6

Consolidated and Separate Statement of Financial Position 39

Consolidated and Separate Statement of Profit or Loss and Other Comprehensive Income 40

Consolidated and Separate Statement of Changes in Equity 42

Consolidated and Separate Statement of Cash flows 44

Segment Information 45

Segment Statement of Profit or loss 46

Segment Statement of Financial Position 47

Notes to the Financial Statements 48


AIICO Plc 2016

Corporate Information Directors Mr. Bukola Oluwadiya Chairman

Mr. Edwin Igbiti Group MD / CEOMr. Babatunde Fajemirokun Executive DirectorMr. Sonnie Ayere DirectorMr. Kundan Sainani DirectorMr. Samaila Zubairu DirectorMr. S. D. A Sobanjo DirectorMr. Ademola Adebise Director

Company Secretary Mr. Donald KanuAIICO Insurance Plc AIICO Plaza Plot PC 12, Churchgate Street Victoria Island, Lagos

Registered Office AIICO PlazaPlot PC 12, Churchgate StreetVictoria IslandLagos

RC No 7340

Corporate Head Office AIICO PlazaPlot PC 12, Churchgate street Victoria Island Lagos Tel: +234 01 2792930-59, +234 802 292 1804-5 Fax: +234 01 2799800 Website: //www.aiicoplc.comE-mail: [email protected]

Registrars United Securities Limited10, Amodu Ojikutu Street Off, Bishop Oluwole Street Victoria IslandP.M.B. 12753Lagos


AIICO Plc 2016

Mission “We exist to create and protect wealth for our Customers” Vision ”To become the indisputable leader in all markets we choose to play in” Core Values – STTEP

• Service Excellence • Trust • Team Spirit • Entrepreneurship • Professionalism


AIICO Plc 2016

Financial Position Consolidated Results at a Glance

30-Sep-16 31-Dec-15 Change ChangeN'000 N'000 N'000 %

Cash and cash equivalents 5,501,453 8,451,795 ( 2,950,342 ) ( 35 ) Trade Receivables 422,840 296,514 126,326 43 Reinsurance Assets 2,644,920 2,479,069 165,851 7 Deferred acquisition cost 351,776 264,842 86,934 33 Financial Assets 66,099,427 58,269,318 7,830,109 13 Deferred Tax Asset 1,107,542 1,775,779 ( 668,237 ) ( 38 ) Investment Properties 1,031,000 1,115,000 ( 84,000 ) ( 8 ) Property and Equipment 5,938,757 5,353,657 585,100 11 Other Receivables and Prepayments 358,039 447,464 ( 89,425 ) ( 20 ) Statutory Deposit 530,000 530,000 - - Goodwill and Other Intangible Assets 1,110,128 1,142,720 ( 32,592 ) ( 3 ) Total Assets 85,095,883 80,126,161 4,969,722 6

Insurance Contract Liabilities 56,925,139 55,548,154 1,376,985 2 Investment Contract Liabilities 8,567,957 8,295,046 272,911 3 Trade Payables 1,961,376 1,547,548 413,828 27 Fixed Income liabilities 2,020,105 165,838 1,854,267 1,118 Other Payables and Accruals 1,755,355 2,489,333 ( 733,978 ) ( 29 ) Finance Lease Obligation 11,467 49,854 38,387- 100 Deferred Tax Liability 268,593 269,133 ( 540 ) ( 0 ) Current Tax Payable 1,158,884 592,961 565,923 95 Borrowing 1,893,422 1,134,840 758,582 150 Derivative liabilities 319,274 319,274 Total Liabilities 74,881,571 70,411,981 4,469,590 6

Issued Share Capital 3,465,102 3,465,101 - - Share Premium 2,824,389 2,824,389 - - Revaluation Reserves 1,221,707 1,221,707 - - Available-for-sale Reserve ( 4,574,074 ) ( 2,723,536 ) ( 1,850,538 ) 68 Currency Reserves 14,275 148,521 ( 134,246 ) ( 90 ) Statutory Reserve 64,826 55,240 9,586 100 Contingency Reserve 3,482,076 3,482,076 - - Retained Earnings 3,368,018 898,089 2,469,929 275 Shareholders' Fund 9,866,319 9,371,588 494,731 5

30-Sep-16 30-Sep-15 Change ChangeProfit or Loss and Other Comprehensive Income N'000 N'000 N'000 %

Gross Premium Written 21,002,606 25,075,083 ( 4,072,477 ) ( 16 ) Gross Premium Income 19,232,938 12,714,899 6,518,039 51 Net Premium Income 16,775,226 9,933,982 6,841,244 69 Claim Expenses (Net) ( 10,806,254 ) ( 5,877,852 ) ( 4,928,402 ) 84 Profit / (Loss) Before Taxation 4,818,854 3,129,603 1,689,251 54 Profit / (Loss) After Taxation 3,043,229 2,693,627 349,602 13 Other Comprehensive Income, Net of Tax ( 1,984,784 ) ( 570,532 ) ( 1,414,252 ) 40 Total Comprehensive Income / (Loss) for the year 1,058,445 2,123,094 ( 1,064,649 ) ( 50 )

Earnings per share (Kobo) 43 38 5 13


AIICO Plc 2016

1 Reporting entity

2 Basis of accounting

2.1 Statement of compliance

2.2 Going concern

2.3 Functional and presentation currency

2.4 Basis of measurement

These financial statements have being prepared on the going concern basis. The Group has no intention or need toreduce substantially its business operations.

AIICO Insurance Plc was established in 1963 by American Life Insurance Company and was incorporated in 1970. Itwas converted to a Public Liability Company in 1989 and quoted on the Nigerian Stock Exchange (NSE) in December1990. The Company was registered by the Federal Government of Nigeria to provide insurance services in LifeInsurance Business, Non-Life Insurance Business, Deposit Administration and Financial Services to organizations andprivate individuals. Arising from the merger in the insurance industry, AIICO Insurance Plc acquired Nigerian FrenchInsurance Plc and Lamda Insurance Company Limited in February 2007.

The Company currently has its corporate head office at Victoria Island, Lagos with branches spread across major citiesand commercial centres in Nigeria.

These consolidated financial statements comprise the Company and its subsidiary (together referred to as “the Group”).The Group is primarily involved in the business of providing risk underwriting and related financial services to itscustomers. Such services include provision of life and non-life insurance services to both corporate and individualcustomers.

The financial statements have been prepared in accordance with International Financial Reporting Standards(IFRSs) as issued by the International Accounting Standards Board (IASB). The financial statements comply withthe Companies and Allied Matters Act of Nigeria, Financial Reporting Council of Nigeria Act, the Insurance Actof Nigeria and relevant National Insurance Commission (NAICOM) guidelines and circulars.

These consolidated and separate financial statements are presented in Nigerian Naira, which is the Group's andCompany’s functional and presentation currency. Except as indicated, financial information presented in Naira hasbeen rounded to the nearest thousand.

These consolidated and separate financial statements have been prepared under the historical cost convention, asmodified by the valuation of investment property, available-for-sale financial assets, insurance liabilities, andfinancial assets and liabilities designated at fair value.

These financial statements have been prepared using appropriate accounting policies, supported by reasonablejudgments and estimates. The directors have a reasonable expectation, based on an appropriate assessment of acomprehensive range of factors, that the Group has adequate resources to continue as going concern for theforeseeable future.


AIICO Plc 2016

2.5 Use of estimates and judgement

`

2.6 Regulatory authority and financial reporting

(i)

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

(viii)

(ix)

(x)

The Group is regulated by the National Insurance Commission of Nigeria (NAICOM) under the NationalInsurance Act of Nigeria. The Act specifies certain provisions which have impact on financial reporting asfollows:

The preparation of financial statements in conformity with IFRSs requires management to make judgements,estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities,income and expenses. The estimates and associated assumptions are based on historical experience and variousother factors that are believed to be reasonable under the circumstances, the results of which form the basis ofmaking the judgements about carrying values of assets and liabilities that are not readily apparent from othersources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimatesare recognised in the period in which the estimate is revised, if the revision affects only that period, or in the periodof the revision and future periods, if the revision affects both current and future periods. Information aboutsignificant areas of estimation uncertainty and critical judgements in applying accounting policies that have themost significant effect on the amounts recognised in the financial statements are described in note to the financialstatements below.

Section 20 (1a) provides that provisions for unexpired risks shall be calculated on a time apportionmentbasis of the risks accepted in the year;

Section 20 (1b) requires provision for outstanding claims to be credited with an amount equal to the totalestimated amount of all outstanding claims with a further amount representing 10 percent of the estimatedfigure for outstanding claims in respect of claims incurred but not reported at the end of the year underreview;

Sections 21 (1a) and 22 (1b) require maintenance of contingency reserves for general and life businessesrespectively at specified rates as set out under Note 3.25 to cover fluctuations in securities and variation instatistical estimates;

Section 22 (1a) requires the maintenance of a general reserve fund which shall be credited with an amountequal to the net liabilities on policies in force at the time of the actuarial valuation and an additional 25percent of net premium for every year between valuation date;

Section 24 requires the maintenance of a margin of solvency to be calculated in accordance with the Act;

Section 10(3) requires insurance companies in Nigeria to deposit 10 percent of the minimum paid up sharecapital with the Central Bank of Nigeria;

Section 25 (1) requires an insurance company operating in Nigeria to invest and hold invested in Nigeriaassets equivalent to not less than the amount of policy holders' funds in such accounts of the insurer.

However, section 59 of the Financial Reporting Council Act, 2011 (FRC Act) provides that in matters offinancial reporting, if there is any inconsistency between the FRC Act and other Acts which are listed insection 59(1) of the FRC Act, the FRC Act shall prevail. The Financial Reporting Council of Nigeria actingunder the provisions of the FRC Act has promulgated IFRS as the national financial reporting frameworkfor Nigeria. Consequently, the following provision of the National Insurance Act, 2003 which conflict withthe provisions of IFRS have not been adopted:Section 20(1b) which requires the provision of 10 percent for outstanding claims in respect of claims

incurred but not reported at the end of the year under review. See note 3.23(b) on accounting policy foroutstanding claims.Section 22(1a) which requires additional 25 percent of net premium to general reserve fund. See note

3.22(c) on accounting policy for unexpired risk and unearned premium.


AIICO Plc 2016

2.7 Changes in accounting policies

(i) Employee Contributions (Amendments to IAS 19)

(ii) Recoverable amount disclosures for non-financial assets (amendments to IAS 36)

As a result of the amendment to IAS 36, which clarified the disclosure requirements in respect of fair valueless costs of disposal; the conclusions of the Group's assessment on the amendments as of 1 January 2015did not result in any change from the conclusion reached in prior years. The change in accounting policy didnot have a material impact on the Group's financial statements.

Except for the changes below, the Group has consistently applied the accounting polices as set out in Note 3 to allperiods presented in these consolidated and separate financial statements.The Company has adopted the following new standards and amendments to standards, including any consequentialamendments to other standards, with a date of initial application of 1 January 2015.

The amendment to IAS 19 Employee Benefits (2011) was to clarify the requirements that relate to howcontributions from employees or third parties that are linked to service should be attributed to periods ofservice. In addition, it permits a practical expedient if the amount of the contributions is independent of thenumber of years of service, in that contributions, can, but are not required, to be recognised as a reduction inthe service cost in the period in which the related service is rendered.

The amendment does not have any material impact on the financial position of the Group.

2.8 Segment reporting

For management purposes, the Group is organized into business units based on their products and services and hasfive reportable operating segments as follows:

• The life insurance segment offers savings, protection products and other long-term contracts (both with andwithout insurance risk. It comprises a wide range of whole life, term assurance, guaranteed pensions, pureendowment pensions and mortgage endowment products. Revenue from this segment is derived primarily frominsurance premium, fees and commission income and investment income.

• The non-life insurance segment comprises general insurance to individuals and businesses. Non-life insuranceproducts offered include motor, household, commercial and business interruption insurance. These products offerprotection of policyholder’s assets and indemnification of other parties that have suffered damage as a result ofpolicyholder’s accident.

• Multishield segment is a Health Maintenance Organization for prepaid health plans to cater for the health needs


AIICO Plc 2016

2.9 Fair value measurement‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants at the measurement date in the principal or, in its absence, the mostadvantageous market to which the Group has access at that date. The fair value of a liability reflects its nonperformance risk.

If a market for a financial instrument is not active, then the Group establishes fair value using a valuationtechnique. The chosen valuation technique makes maximum use of market inputs, relies as little as possible onestimates specific to the Group, incorporates all factors that market participants would consider in setting a priceand is consistent with accepted economic methodologies for pricing financial instruments.

The best evidence of the fair value of a financial instrument at initial recognition is the transaction price – i.e. thefair value of the consideration given or received. However, in some cases the initial estimate of fair value of afinancial instrument on initial recognition may be different from its transaction price. If this estimated fair value isevidenced by comparison with other observable current market transactions in the same instrument (withoutmodification or repackaging) or based on a valuation technique whose variables include only data from observablemarkets, then the difference is recognised in profit or loss on initial recognition of the instrument. In other cases,the fair value at initial recognition is considered to be the transaction price and the difference is not recognised inprofit or loss immediately but is recognised over the life of the instrument on an appropriate basis or when theinstrument is redeemed, transferred or sold, or the fair value becomes observable.Fair value of fixed income liabilities is not less than the amount payable on demand, discounted from the first dateon which the amount could be required to be paid.

• AIICO Pension Managers' Segment was licensed as a Pension Fund Administrator by the National PensionCommission on April 13, 2006, provides pension administration services to private and public sector contributors.

• AIICO Capital Limited is registered and licensed by the Securities & Exchange Commission in 2012, to carry out portfolio/fund management services. AIICO Capital Limited commenced full operations in 2014 through theprovision of bespoke wealth solutions for clients, by adopting a research based approach for every investmentdecision.

No operating segments have been aggregated to form the above reportable operating segments.Segment performance is evaluated based on profit or loss which, in certain respects, is measured differently fromprofit or loss in the financial statements. The Company's financing and income taxes are managed on a groupbasis and are not allocated to individual operating segments.

Inter-segment transactions occurred in 2015 as shown in Note 5. Segment income, expenses and results willinclude those transfers between business segments


AIICO Plc 2016

2.10 Disclosures - offsetting financial assets and financial liabilities (Amendment to IFRS 7)

3 Significant accounting policies

As a result of the amendments to IFRS 7, the Group has expanded disclosure about offsetting financial assets andfinancial liabilities.

The Group has consistently applied the following accounting policies to all periods presented in these consolidatedfinancial statements.

3.1 Basis of Consolidation

(a) Business combination and goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured asthe aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the Company has an option to measure any non-controlling interests in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets.

When the Company acquires a business, it assesses the financial assets and liabilities assumed for appropriateclassification and designation in accordance with the contractual terms, economic circumstances and pertinentconditions at the acquisition date. This includes the separation of embedded derivatives in host contracts by theacquiree. No reclassification of insurance contracts is required as part of the accounting for the businesscombination. However, this does not preclude the Company from reclassifying insurance contracts to accord withits own policy only if classification needs to be made on the basis of the contractual terms and other factors at theinception or modification date.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously heldequity interest in the acquiree is re-measured to fair value as at the acquisition date through profit or loss.Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisitiondate. Subsequent changes to the fair value of the contingent consideration, which is deemed to be an asset or aliability, will be recognized as measurement period adjustments in accordance with the applicable IFRS. If thecontingent consideration is classified as equity, it will not be remeasured and its subsequent settlement will beaccounted for within equity.

Goodwill is initially measured at cost, being the excess of the fair value of the consideration transferred over theCompany’s share in the net identifiable assets acquired and liabilities assumed and net of the fair value of anypreviously held equity interest in the acquiree. After initial recognition, goodwill is measured at cost less anyaccumulated impairment losses. For the purposes of impairment testing, goodwill acquired in a businesscombination is allocated to an appropriate cash-generating unit that is expected to benefit from the combination,irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, thegoodwill associated with the operation disposed of is included in the carrying amount of the operation whendetermining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measuredbased on the relative values of the operation disposed of and the portion of the cash-generating unit retained.


AIICO Plc 2016

(b) Subsidiaries

Acquisition-related costs are expensed as incurred

Subsidiaries are investees controlled by the Group. The Group controls an investee when it is exposed to, or hasrights to, variable returns from its involvement with the investee and has the ability to affect those returns throughits power over the investee. The financial statements of subsidiaries are included in the consolidated financialstatement from the date on which the date on which control commences until the date on which control ceases.

The financial statements of subsidiaries are consolidated from the date the Group acquires control, up to the datethat such effective control ceases. For the purpose of these financial statements, subsidiaries are entities overwhich the Group, directly or indirectly, is exposed, or has rights, to variable returns from its involvement with theentity and has the ability to affect those returns through its power over the entity.

If the business combination is achieved in stages, fair value of the acquirer’s previously held equity interest in theacquiree is re-measured to fair value at the acquisition date through profit or loss.

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equitytransactions (transactions with owners). Any difference between the amount by which the non-controlling interestis adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed tothe Group.

Inter-company transactions, balances and unrealised gains on transactions between companies within the Groupare eliminated on consolidation. Unrealised losses are also eliminated in the same manner as unrealised gains, butonly to the extent that there is no evidence of impairment. Accounting policies of subsidiaries have been changedwhere necessary to ensure consistency with the policies adopted by the Group.

In the separate financial statements, investments in subsidiaries and associates are measured at cost.

Disposal of subsidiaries

On loss of control, the Group derecognises the assets and liabilities of the subsidiary, any controlling interests andthe other components of equity related to the subsidiary. Any surplus or deficit arising from the loss of control isrecognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest ismeasured at fair value at the date that control is lost. Subsequently, that retained interest is accounted for as anequity-accounted investee or as an available-for-sale financial asset depending on the level of influence retained.

(c)Non-controlling Interest (NCI) are measured at their proportionate share of the acquiree's identifiable net assets at the acquisition date. Changes in the Group's interest in a subsidiary that do not result in a loss of control areaccounted for as equity transactions.


AIICO Plc 2016

(d) Transaction eliminated on consolidation

3.2 Foreign currency transactions

-

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at thedates 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 foreigncurrencies are recognised in profit or loss.

Monetary items denominated in foreign currency are translated with the closing rate as at the reporting date. Non-monetary items measured at historical cost denominated in a foreign currency are translated with the exchangerate as at the date of initial recognition; non-monetary items in a foreign currency that are measured at fair valueare translated using the exchange rates at the date when the fair value was determined.

Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from thetranslation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies arerecognised in profit or loss, except when deferred in equity as gains or losses from qualifying cash flow hedginginstruments or qualifying net investment hedging instruments.

Foreign exchange gains and losses are presented in profit or loss within ‘Other operating income’ or ‘Otheroperating expenses’. In the case of changes in the fair value of monetary assets denominated in foreign currencyclassified as available-for-sale, a distinction is made between translation differences resulting from changes inamortised cost of the security and other changes in the carrying amount of the security. Translation differencesrelated to changes in the amortised cost are recognised in profit or loss, and other changes in the carrying amount,except impairment, are recognised in other comprehensive income.

However, foreign currency differences arising from the translation of the following items are recognised in othercomprehensive income (OCI):

available-for-sale equity investments (except on impairment, in which case foreign currency differences thathave been recognised in OCI are reclassified to profit or loss,

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-grouptransactions, are eliminated in preparing the consolidated financial statements. Unrealized gains arising fromtransactions with equity-accounted investees are eliminated against the investment to the extent of the Group’sinterest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to theextent that there is no evidence of impairment.


AIICO Plc 2016

3.3 Cash and cash equivalents

3.4 Financial instruments

(a) Non-derivative financial assets and financial liabilities- recognition and derecognition

Cash and cash equivalents comprise cash at bank and in hand and short-term deposits with an original maturity of threemonths or less in the consolidated statement of financial position.For the purpose of the consolidated statement of cash flow, cash and cash equivalents consist of cash and cash equivalentsas defined above, net of outstanding bank overdrafts.

The group classifies non-derivative financial assets into the following categories: financial assets at fair value through profit orloss, held to maturity financial assets, loans and receivables and available for sale financial assets.The Group classifies non-derivative financial liabilities into the following categories: financial liabilities at fair value throughprofit or loss and other financial liabilities category.

The group initially recognises loans and receivables and debt securities issued on the date when they are originated. Allother financial assets and financial liabilities are initially recognised on the trade date when the entity becomes a partyto the contractual provisions of the instrument.The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or ittransfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks andreward of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risksand rewards of ownership and does not retain control over the transferred asset. Any interest in such derecognisedasset financial asset that is created or retained by the Group is recognised as a separate asset or liability.The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.Financial assets and financial liabilities are offset and the net amount presented in the statement of the financial positionwhen, and only when, the Group currently has a legally enforceable right to offset the amounts and intends either tosettle them on a net basis or to realize the asset and settle the liability simultaneously.


AIICO Plc 2016

(b) Non-derivative financial assets -measurement

Financial assets at fair value through profit or loss

Held-to-maturity financial assets

Loans and receivables

Available-for-sale financial assets

These assets are initially measured at fair value plus any directly attributable transaction costs.Subsequent to initial recognition, they are measured at amortised cost using the effective interestmethod.

A financial asset is classified as at fair value through profit or loss if it is classified as held-for-trading or is designated as such on initial recognition. Directly attributable transaction costs arerecognised in profit or loss as incurred. Financial asset at fair value through profit or loss aremeasured at fair value and changes therein, including any interest expense or dividend income,are recognised in profit or loss.

These assets are initially measured at fair value plus any directly attributable transaction costs.Subsequent to initial recognition, they are measured at amortised cost using the effective interestmethod. When more than an insignificant amount of held-to-maturity financial assets are sold, reclassifiedor transferred, the Group is prohibited from classifying any financial assets as held-to-maturity for a period of two (2) years.

These assets are initially measured at fair value plus any directly attributable transaction costs.Subsequent to initial recognition, they are measured at fair value and changes therein, other thanimpairment losses and foreign currency differences on debt instruments see 4(a), are recognisedin OCI and accumulated in the fair value reserve. When these assets are derecognised, the gainor loss accumulated in equity is reclassified to profit or loss.

(c) Non-derivative financial liabilities - measurement

A financial liability is classified at fair value through profit or loss if it is classified as held-for-trading or designated assuch on initial recognition. Directly attributable transaction costs are recognised in profit or loss as incurred. Financialliabilities at fair value through profit or loss are measured at fair value and changes therein, including any interestexpense, are recognised in profit or loss.Other non-derivative financial liabilities are initially measured at fair value less any directly attributable transactioncosts. Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interestmethod.


AIICO Plc 2016

(d) Non-derivative financial assets - impairmentFinancial assets not classified as at fair value through profit or loss, including an interest in an equity-accountedinvestee, are assessed at each reporting date to determine whether there is objective evidence of impairment. Objective evidence that financial assets are impaired includes;- default or delinquency by a debtor;- restructuring of an amount due to the Group on terms that the Group would consider otherwise;- indications that a debtor or issuer will enter bankruptcy;- adverse changes in the payment status of borrowers or issuers;- the disappearance of an active market for a security because of financial difficulties; or - observable data indicating that there is a measurable decrease in the expected cash flows from a group of financialassets.

For an investment in equity security, objective evidence of impairment includes a significant or prolonged decline in itsfair value below its cost.

Financial assets measured at amortised cost

The Group considers evidence of impairment for these assets at both an individual asset and acollective level. All individually significant asset are individually assessed for impairment. Thosefound not to be impaired are then collectively assessed for any impairment that has been incurredbut not yet individually identified. Assets that are not individually significant are collectivelyassessed for impairment. Collective assessment is carried out by grouping together assets withsimilar risk characteristics.

In assessing collective impairment, the Group uses historical information on the timing ofrecoveries and the amount of loss incurred, and makes an adjustment if current economic andcredit conditions are such that the actual losses are likely to be greater or lesser than suggestedby historical trends.

An impairment loss is calculated as the difference between an asset's carrying amount and thepresent value of the estimated future cash flows discounted at the asset's original effectiveinterest rate. Losses are recognised in profit or loss and reflected in an allowance account. Whenthe Group considers that there are no realistic prospect of recovery of the asset, the relevantamount written off. If the amount of impairment loss subsequently decreases and the decreasecan be related objectively to an event occurring after the impairment was recognised, then thepreviously recognised impairment loss is reversed through profit or loss.


AIICO Plc 2016

Available- for-sale financial assets

Impairment losses on available-for-sale financial assets are recognised by reclassifying the lossesaccumulated in the fair value reserve to profit and loss. The amount reclassified is the differencebetween the acquisition cost (net of any principal repayment and amortisation) and the currentfair value, less any impairment loss previously recognised in profit or loss. If the fair value of animpaired available-for-sale debt security subsequently increases and the increase can be relatedobjectively to an event occurring after the impairment loss was recognised, then the impairmentloss is reversed through profit or loss. Impairment losses recognised in profit or loss for aninvestment in an equity instrument classified as available-for-sale are not reversed through profitor loss.

(e) Derivative liabilities

3.5 Trade receivablesTrade receivables arising from insurance contracts represent premium receivable with determinable payments that are not quoted in an active market and the Company has no intention to sell. Premium receivables are those for which credit notes issued by brokers are within 30days, in conformity with the “NO PREMIUM NO COVER” policy. Trade receivables are classified as loans and receivables.

Derivatives maybe embedded in another contractual arrangement (a host contract).The Group accounts for an embedded derivative separately from the host contract when: - the host contract is not itself carried at fair value through profit or loss - the terms of embedded derivative would meet the definition of a derivative if they were contained in a separate contract and; - the economic characteristics and risks of the embedded derivative are not closely related to the economic charcteristics and risks of the host contract.

Separated embedded derivatives are measured at fair value, with all changes in fair value recognised in profit or loss unless they form part of a qualifying cash flow or net investment hedging relationship.

3.6 Reinsurance assets

The group cedes insurance risk in the normal course of business on the bases of our treaty and facultative agreements.Reinsurance assets represent balances due from reinsurance companies. Amounts recoverable from reinsurers areestimated in a manner consistent with settled claims associated with the reinsurer’s policies and are in accordance withthe related reinsurance contract.


AIICO Plc 2016

(a)

The Group assesses its reinsurance assets for impairment at each reporting date or more frequently when an indicationof impairment arises during the reporting year. If there is objective evidence that the reinsurance asset is impaired, theGroup reduces the carrying amount of the reinsurance asset to its recoverable amount and recognises that impairmentloss in the profit or loss. The Group gathers the objective evidence that a reinsurance asset is impaired using the sameprocess adopted for financial assets measured at amortised cost. The impairment loss is calculated using the incurredloss model for these financial assets.

Premiums, losses and other amounts relating to reinsurance treaties are recognized over the period from inception of atreaty to expiration of the related business.

Ceded reinsurance arrangements do not relieve the Company from its obligations to policyholders.

Reinsurance assets or liabilities are derecognized when the contractual rights are extinguished or expire or when thecontract is transferred to another party.

Reinsurance contracts that do not transfer significant insurance risk are accounted for directly through the statement offinancial position. These are deposit assets that are recognised based on the consideration paid less any explicitidentified premiums or fees to be retained by the reinsured.

Investment income on these contracts is accounted for using the effective interest rate method when accrued.

Impairment of reinsurance assets

3.8 Other payables and accruals

Other payables and accruals are recognised initially at fair value and subsequently measured at amortised cost usingthe effective interest method. The fair value of a non-interest bearing liability is its discounted repayment amount.Discounting is omitted for payables that are less than one year as the effect is not material. A financial liability isderecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financialliability is replaced by another from the same lender on substantially different terms, or the terms of an existing liabilityare substantially modified, such an exchange or modification is treated as a derecognition of the original liability and therecognition of a new liability, and the difference in the respective carrying amounts is recognised in the profit or loss.Gains and losses are recognised in the profit or loss when the liabilities are derecognized. Other payables arerecognised as financial liabilities.


AIICO Plc 2016

3.9 Deferred expenses

(a)

(b) Deferred expenses-Reinsurance commissions

3.10 Other receivables and prepayment

3.11 Income tax

(a) Current tax

Deferred acquisition costs (DAC)

Those direct and indirect costs incurred during the financial period arising from the writing or renewing of insurancecontracts and are deferred to the extent that these costs are recoverable out of future premiums. All other acquisitioncosts are recognized as an expense when incurred.

DAC for life insurance are expensed as incurred. Subsequent to initial recognition, DAC for general insurance areamortized over the period in which the related revenues are earned. Changes in the expected useful life or theexpected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing theamortization period and are treated as a change in an accounting estimate. DAC are derecognized when the relatedcontracts are either settled or disposed of.

Commissions receivable on outwards reinsurance contracts are deferred and amortized on a straight line basis over theterm of the expected premiums payable.

Other receivables are carried at amortised cost using the effective interest rate less accumulated impairment losses.Prepayments are carried at cost less accumulated amortization and impairment losses and are amortized on a straightline basis to the profit or loss account.

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and anyadjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable orreceivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to theincome taxes, if any. It is measured using tax rate enacted or substantively enacted at the reporting date. Current taxalso includes any tax arising from dividends received by the Company.

Income tax expense comprises current and deferred tax. It is recognised in the profit and loss except to the extent thatthis relates to a business combination, or items recognized directly in equity or OCI.

(b) NITDA Levy

The National Information Technology Development Agency Act (2007) empowers and mandates the Federal InlandRevenue Service (FIRS) to collect and remit 1% of profit before tax of Companies with turnovers of a minimum of₦100million under the third schedule of the Act.


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(c) Deferred income taxation

-

-

-

temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that theGroup is able to control timing of the reversal of the temporary differences and it is probable that they will not reversein the foreseeable future; and

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilitiesfor financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for: temporary differences arising on the initial recognition of assets or liabilities in a transaction that is not a businesscombination and that affects neither accounting nor taxable profit;

taxable temporary difference arising on the initial recognition of goodwill.

Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences tothe extent that its probable that future taxable profits will be available against which they can be used. Future taxableprofits are determined based on business plans for individual subsidiaries in the Group. Deferred tax assets arereviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefitwill be realised; such reductions are reversed when the probability of future taxable profit improves.

Unrecognised deferred tax asset are reassessed at each reporting date and recognised to the extent that it has becomeprobable that future taxable profits will be available against which they can be used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse,using tax rates enacted or substantially enacted at the reporting date.

The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Groupexpects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. For thispurpose, the carrying amount of investment property measured at fair value presumed to be recovered through sale,and the Group has not been rebutted this presumption.Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities andassets, and they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities,but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realisedsimultaneously.

3.12 Investment property

3.13 Intangible assets and goodwill(a) Goodwill

Goodwill arising on acquisition of subsidiaries is measured at cost less accumulated impairment losses

Investment property is initially measured at cost and subsequently at fair value with any change therein recognised inprofit or loss. Any gain or loss on disposal of investment property (calculated as the difference between the netproceeds from disposal and the carrying amount of the item) is recognised in profit or loss.


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(b) Intangible asset

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangibleassets are carried at cost less any accumulated amortization and any accumulated impairment losses. Internallygenerated intangible assets, excluding capitalized development costs, are not capitalized and expenditure is reflected inthe profit or loss in the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed to be either finite or indefinite.

Intangible assets with finite lives are amortized over the useful economic lives, using a straight line method, andassessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortizationperiod and the amortization method for an intangible asset with a finite useful life are reviewed at least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of future economic benefitsembodied in the asset are accounted for by changing the amortization period or method, as appropriate, and are treatedas changes in accounting estimates. The amortization expense on intangible assets with finite lives is recognized in theprofit or loss in the expense category consistent with the function of the intangible asset.

Computer software, not integral to the related hardware acquired by the Group, is stated at cost less accumulatedamortisation and accumulated impairment losses.

Costs associated with maintaining computer software programmes are recognised as an expense as incurred.Subsequent expenditure on computer software is capitalised only when it increases the future economic benefitsembodied in the specific asset to which it relates. The estimated useful life is 5 years.

Intangible assets are derecognized on disposal or when no future economic benefits are expected from their use ordisposal. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net


AIICO Plc 2016

(c) Present value of acquired in-force business (PVIF)When a portfolio of insurance contracts is acquired, whether directly from another insurance company or as part of abusiness combination, the difference between the fair value of insurance rights acquired and insurance obligationassumed are measured using the Company’s existing accounting policies and is recognized as the value of the acquiredin-force business.

Subsequent to initial recognition, the intangible asset is carried at cost less accumulated amortization and accumulatedimpairment losses. The intangible asset is amortized over the useful life of the acquired in-force policy during whichfuture premiums are expected, which typically varies between five and fifty years. Changes in the expected useful lifeor the expected pattern of consumption of future economic benefits embodied in the asset are accounted for bychanging the amortization period and they are treated as a change in an accounting estimate. An impairment review isperformed whenever there is an indication of impairment. When the recoverable amount is less than the carrying value,an impairment loss is recognized in the profit and loss. PVIF is also considered in the liability adequacy test for eachreporting period.

(d) De-recognition

(e) Reclassification to investment property

3.15 Statutory deposit

An item of property 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 netdisposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset isderecognised.

When the use of a property changes from owner- occupied to investment property, the property is remeasured to fairvalue and reclassified accordingly. Any gain arising on this remeasurement is recognised in profit or loss to the extentthat it reverses a previous impairment loss on the specific property, with any remaining gain recognised in OCI andpresented in the revaluation reserve. Any loss is recognised in profit or loss.

Statutory deposit represent 10% of required minimum paid up capital of AIICO Insurance PLC. The amount is held by CBN (Central Bank of Nigeria) pursuant to Section 10(3) of the Insurance Act 2003. Statutory deposit is measured at cost.


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3.16 Insurance contract liabilities

(a) Life insurance contract liabilities

Life insurance liabilities are recognised when contracts are entered into and premiums are charged. These liabilities aremeasured by using the gross premium valuation method. The liability is determined as the sum of the discounted valueof the expected future benefits, claims handling and policy administration expenses, policyholder options andguarantees, which are directly related to the contract, less the discounted value of the expected premiums that wouldbe required to meet the future cash outflows based on the valuation assumptions used. The liability is calculatedadopting current financial and decrement assumptions. A separate reserve for longevity may be established andincluded in the measurement of the liability. Furthermore, the liability for life insurance contracts comprises theprovision for claims outstanding.

At each reporting date, an assessment is made of whether the recognized life insurance liabilities are adequate bycarrying out a liability adequacy test. The liability value is adjusted to the extent that it is insufficient to meet expectedfuture benefits and expenses. In performing the adequacy test, current best estimates of future contractual cash flows,including related cash flows such as claims handling and policy administration expenses, policyholder options andguarantees, as well as investment income from assets backing such liabilities, are used. Discounted cash flows model isused in the valuation.

The interest rate applied is based on management’s prudent expectation of current market interest rates. Anyinadequacy is recorded in the profit or loss by establishing an additional insurance liability for the remaining loss. Insubsequent periods, the liability for a block of business that has failed the adequacy test is based on the assumptions


AIICO Plc 2016

(b)

(c)

Guaranteed annuityGuaranteed annuity is recognised as an insurance contract.Annuity premium are recognised as income when received from policy holders, payments to policy holders arerecognised as an expense when due.The amount of insurance risk under contracts with guaranteed annuity is also dependent on the number of contractholders that will exercise their option (‘option take-up rate’). This will depend significantly on the investment conditionsthat apply when the options can be exercised. The lower the current market interest rates in relation to the ratesimplicit in the guaranteed annuity rates, the more likely it is that contract holders will exercise their options. Continuingimprovements in longevity reflected in current annuity rates will increase the likelihood of contract holders exercisingtheir options as well as increasing the level of insurance risk borne by the Company under the annuities issued. TheGroup does not have sufficient historical data on which to base its estimate of the number of contract holders whoexercise their option.

Non-life insurance contract liabilities Non-life insurance contract liabilities include the outstanding claims provision, the provision for unearned premium andthe provision for premium deficiency. The outstanding claims provision is based on the estimated ultimate cost of allclaims incurred but not settled at the reporting date, whether reported or not, together with related claims handling.Delays can be experienced in the notification and settlement of certain types of claims, therefore, the ultimate cost ofthese cannot be known with certainty at the reporting date. The liability is calculated at the reporting based on empirical data and current assumptions that may include a margin for adverse deviation. The liability is not discounted for thetime value of money. No provision for equalization or catastrophe reserves is recognized. The liabilities arederecognized when the obligation to pay a claim expires, is discharged or is cancelled.

The provision for unearned premiums represents that portion of premiums received or receivable that relates to risksthat have not yet expired at the reporting date. The provision is recognized when contracts are entered into andpremiums are charged, and is brought to account as premium income over the term of the contract in accordance withthe pattern of insurance service provided under the contract.

At each reporting date, the Company reviews its unexpired risk and a liability adequacy test is performed to determinewhether there is any overall excess of expected claims and deferred acquisition costs over unearned premiums. Thiscalculation uses current estimates of future contractual cash flows after taking account of the investment returnexpected to arise on assets relating to the relevant non-life insurance technical provisions. If these estimates show thatthe carrying amount of the unearned premiums (less related deferred acquisition costs) is inadequate, the deficiency isrecognized in the profit or loss by setting up a provision for premium deficiency.


AIICO Plc 2016

(d) Investment contract liabilities Investment contract liabilities are recognized when contracts are entered into and premiums are charged. Theseliabilities are initially recognized at fair value, this being the transaction price excluding any transaction costs directlyattributable to the issue of the contract. Subsequent to initial recognition investment, contract liabilities are measured atamortized cost.

Deposits and withdrawals are recorded directly as an adjustment to the liability in the statement of financial positionand are not recognised as gross premium in the consolidated profit or loss.

The liability is derecognized when the contract expires, is discharged or is cancelled.

When contracts contain both a financial risk component and a significant insurance risk component and the cash flowsfrom the two components are distinct and can be measured reliably, the underlying amounts are unbundled. Anypremiums relating to the insurance risk component are accounted for on the same basis as insurance contracts and theremaining element is accounted for as a deposit through the statement of financial position as described above.

3.17 Portfolio under Management

3.18 Leases

(a)

The Group acts in other fiduciary capacities that results in holding or placing of assets on behalf of individuals and other institutions. These assets and arising thereon are excluded from these financial statement as they are not assets of the Group.However, fee income earned and fee expenses incurred by the Group relating to the Group's responsibilities from fiduciary activities are recognised on profit or loss.

Determining whether an arrangement contains a lease

At inception of an arrangement, the Group determines whether the arrangement is or contains a lease. At inception oron reassessment of an arrangement that contains a lease, the Group separates payments and other considerationrequired by the arrangement into those for the lease and those for other elements on the basis of their relative fairvalues. If the Group concludes for a finance lease that it is impracticable to separate the payments reliably, then anasset and a liability are recognised at an amount equal to the fair value of the underlying asset; subsequently, theliabilityis reduced as payments are made and an imputed finance cost on the liability is recognised using the Group’sincremental borrowing rate.


AIICO Plc 2016

(b) Leased assets

(c) Lease payments

3.19 Borrowing CostsBorrowing costs are interest and other costs incurred by the Group directly attributable to the acquisition andconstruction of qualifying assets which are assets that necessarily takes a substantial period of time to get ready for itsintended use or sale.

Borrowing costs are capitalized as part of the cost of a qualifying asset only when it is probable that they will result infuture economic benefits to the Group and the costs can be measured reliably. Other borrowing costs are recognizedas 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 netrealizable value, the carrying amount is written down or written off. Investment income earned on the temporaryinvestment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costseligible for capitalization.

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of thelease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of thelease.Minimum lease payments made under finance leases are apportioned between the finance expense and the reductionof the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce aconstant periodic rate of interest on the remaining balance of the liability.

Leases of property, plant and equipment that transfer to the Group substantially all of the risks and rewards ofownership are classified as finance leases. The leased assets are measured initially at an amount equal to the lower oftheir fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the assets areaccounted for in accordance with the accounting policy applicable to that asset.Assets held under other leases are classified as operating leases and are not recognised in the Group’s statement offinancial position.

3.20 Derivative Liabilities

Derivatives may be embedded in another contractual arrangement (a host contract). The Group accounts for anembedded derivative separately from the host contract when:

Separated embedded derivatives are measured at fair value, with all changes in fair value recognised in profit orloss unless they form part of a qualifying cash flow or net investment hedging relationship.

- the host contract is not itself carried at fair value through profit or loss;- the terms of embedded derivative would meet the definition of a derivative if they were contained in aseparate contract and;-the economic characteristics and risks of the embedded derivative are not closely related to theeconomic characteristics and risks of the host contract.


AIICO Plc 2016

3.21 Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of apast event, and it is probable that an outflow of resources embodying economic benefits will be required tosettle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Companyexpects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset, butonly when the reimbursement is virtually certain. The expense relating to any provision is presented in the profitor loss net of any reimbursement. If the effect of the time value of money is material, provisions are discountedusing a current pre-tax rate that reflects, where appropriate, the risks specific to the liability.Where discounting is used, the increase in the provision due to the passage of time is recognised as a financecost.

3.22 Share capital(a) Ordinary shares

(b) Dividends on ordinary share capital

(c)

Dividends on ordinary shares are recognised as a liability and deducted from retained earnings when they areapproved by the Company’s shareholders. Interim dividends are deducted from retained earnings when they are paid. Dividends for the year that are approved after the reporting date are dealt with as a non-adjusting eventafter the reporting date.

The Group classifies share premium as equity when there is no obligation to transfer cash or other assets.

Share Premium

The Company’s issued ordinary shares are classified as equity instruments. Incremental external costs that aredirectly attributable to the issue of these shares are recognized in equity.

Asset Revaluation Reserve

Subsequent to initial recognition, an item of property, plant and equipment and intangible is carried using costmodel, may be revalued to fair value. However, if such an item is revalued, the whole class of asset to whichthat asset belongs has to be revalued. The revaluation surplus is recognised in equity, unless it reverses adecrease in the fair value of the same asset which was previously recognised as an expense, in which case it isrecognised in profit or loss. A subsequent decrease in the fair value is charged against this reserve to the extentthat there is a credit balance relating to the same asset, with the balance being recognised in profit or loss.

3.24 Available-for-Sale Reserve

The available-for-sale reserve comprises the cumulative net change in the fair value of the group’s available-for-sale investments. Net fair value movements are recycled to profit or loss if an underlying available-for-saleinvestment is either derecognized or impaired.


AIICO Plc 2016

3.25 Technical reserves

(a) General Insurance Contracts

(b) Reserves for Outstanding Claims

(c) Reserves for Unexpired Risk

(d) Life BusinessGeneral Reserve Fund

(e) Liability Adequacy Test

3.26 Statutory Reserve

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

Reserves for unearned premium In compliance with Section 20 (1) (a) of Insurance Act 2003, the reserve forunearned premium is calculated on a time apportionment basis in respect of the risks accepted during the year.

The reserve for outstanding claims is maintained at the total amount of outstanding claims incurred and reportedplus claims incurred but not reported (“IBNR”) as at the reporting date. The IBNR is based on the liabilityadequacy test.

A provision for additional unexpired risk reserve (AURR) is recognized for an underwriting year where it isenvisaged that the estimated cost of claims and expenses would exceed the unearned premium reserve (UPR)”

This is made up of net liabilities on policies in force as computed by the actuaries at the time of the actuarialvaluation.

At each end of the reporting period, liability adequacy tests are performed by an Actuary to ensure theadequacy of the contract liabilities net of related deferred acquisition cost (DAC) assets. In performing thesetests, 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 immediatelyrecognised in profit or loss initially by writing off DAC and by subsequently establishing a provision for lossesarising from liability adequacy tests “the unexpired risk provision”.

The provisions of the Insurance Act 2003 requires an actuarial valuation for life reserves only. However, IFRS4 requires a liability adequacy test for both life and non-life insurance reserves. Hence, the Company carries out actuarial valuation on both life and non-life insurance businesses.

In accordance with the provisions of Section 69 of the Pension Reform Act 2004, the statutory reserve iscredited with an amount equivalent to 12.5% of net profit after tax or such other percentage of the net profit asthe National Pension Commission may from time to time stipulate.


AIICO Plc 2016

3.27 Contingency Reserves (a)

(b)

3.28 Retained EarningsThis account accumulates profits or losses from operations.

3.29 Preference share capital

The Company's non-redeemable preference shares are classified as equity, because they bear discretionarydividends, do not contain any obligations to deliver cash or other financial assets and do not require settlement ina variable number of the Company’s equity instruments. Discretionary dividends thereon are recognised asequity distributions on approval by the Company’s shareholders.

Non-life businessIn compliance with Section 21 (2) of Insurance Act 2003, the contingency reserve is credited with the greaterof 3% of total premiums, or 20% of the net profits. This shall accumulate until it reaches the amount of greaterof minimum paid-up capital or 50 percent of net premium.

In compliance with Section 22 (1) (b) of Insurance Act 2003, the contingency reserve is credited with thehigher of 1% of gross premiums or 10% of net profit and accumulated until it reaches the amount of theminimum paid up capital – NAICOM ACT 22 (1)(b).

3.30 Revenue recognition

(a) Gross premium income

Gross recurring premiums on life are recognised as revenue when payable by the policyholder. For singlepremium business, revenue is recognised on the date on which the policy is effective.Gross general insurance written premiums comprise the total premiums receivable for the whole period of cover provided by contracts entered into during the accounting period. They are recognised on the date on which thepolicy commences. Premiums include any adjustments arising in the accounting period for premiums receivablein respect of business written in prior accounting periods. Rebates that form part of the premium rate, such asno-claim rebates, are deducted from the gross premium; others are recognised as an expense. Premiumscollected by intermediaries, but not yet received, are assessed based on estimates from underwriting or pastexperience and are included in premiums written.

Unearned premiums are those proportions of premiums written in a year that relate to periods of risk after thereporting date. Unearned premiums are calculated on a daily pro rata basis. The proportion attributable tosubsequent periods is deferred as a provision for unearned premiums.


AIICO Plc 2016

(b)

(c)

Gross reinsurance premiums on life and investment contracts are recognised as an expense on the earlier of thedate when premiums are payable or when the policy becomes effective.

Gross general reinsurance premiums written comprise the total premiums payable for the whole cover providedby contracts entered into the period and are recognised on the date the policy becomes effective.

Premiums includes any adjustments arising in the accounting period in respect of reinsurance contracts thatcommenced in prior accounting periods.Unearned reinsurance premiums are those proportions of premiums written in a year that relate to periods ofrisk after the reporting date. Unearned reinsurance premiums are deferred over the term of the underlyingdirect insurance policies for risks-attaching contracts and over the term of the reinsurance contract for lossesoccurring contracts.

Reinsurance premium

Insurance and investment contract policyholders are charged for policy administration services, investmentmanagement services, surrenders and other contract fees. The administration fee is calculated as a flat chargepayable monthly from contributions received while the fund management fee is an asset based fee charged as apercentage of the opening net assets value of the pension fund investment. These fees are recognized asrevenue over the period in which the related services are performed. If the fees are for services provided infuture periods, then they are deferred and recognized over those future periods.

Fees and commission income

(d)

(e)

Investment income

Interest income is recognized in the profit or loss as it accrues and is calculated by using the effective interestrate method. Fees and commissions that are an integral part of the effective yield of the financial asset orliability are recognized as an adjustment to the effective interest rate of the instrument. Investment income alsoincludes dividends when the right to receive payment is established. For listed securities, this is the date thesecurity is listed as ex-dividend.

Realized gains and lossesRealized gains and losses recorded in the profit or loss on investments include gains and losses on financialassets and investment property. Gains and losses on the sale of investments are calculated as the differencebetween net sales proceeds and the original or amortized cost and are recorded on occurrence of the saletransaction.

(f) Investment property rental incomeRental income from investment property is recognised as revenue on a straight line basis over the term of thelease. Lease incentives granted are recognised as an integral part of the total rental income, over the term ofthe lease. Rental Income from other property is recognised as other income.


AIICO Plc 2016

(f) Investment property rental incomeRental income from investment property is recognised as revenue on a straight line basis over the term of thelease. Lease incentives granted are recognised as an integral part of the total rental income, over the term ofthe lease. Rental Income from other property is recognised as other income.

3.31 Benefits, claims and expenses recognition (a) Gross benefits and claims

(b)

(c) Reinsurance Expenses

Gross benefits and claims for life insurance contracts include the cost of all claims arising during the year,including internal and external claims handling costs that are directly related to the processing and settlement ofclaims. Changes in the gross valuation of insurance are also included.

Death claims and surrenders are recorded on the basis of notifications received. Maturities and annuitypayments are recorded when due. General insurance claims include all claims occurring during the year,whether reported or not, related internal and external claims handling costs that are directly related to theprocessing and settlement of claims, a reduction for the value of salvage and other recoveries, and anyadjustments to claims outstanding from previous years.

Reinsurance claimsReinsurance claims are recognized when the related gross insurance claim is recognized according to the termsof the relevant contract.

Reinsurance cost represents outward premium paid to reinsurance companies less the unexpired portion as atthe end of the accounting year.


AIICO Plc 2016

3.32 Underwriting Expenses

3.33 Other operating income

3.34 Employee benefits(a)

(b)

Underwriting expenses comprise acquisition costs and other underwriting expenses. Acquisition costs compriseall direct and indirect costs arising from the writing of insurance contracts. Examples of these costs include, butare not limited to, commission expense, supervisory levy, superintending fees and other technical expenses.Other underwriting expenses are those incurred in servicing existing policies/ contract. These expenses arerecognised in the accounting year in which they are incurred.

Other operating income comprises of income from realised profits on sale of securities, fair value gain or loss on investment property, realised foreign exchange gains and other sundry income.

Short term employee benefits are expensed as the related service is provided. A liability is recognised for theamount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as aresult of past service provided by the employee and the obligation can be estimated reliably.

Short Term Employee Benefit

Defined contribution plans

Obligations for contributions to defined contribution plans are expensed as the related service is provided.Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in futurepayments is available.


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(c)

The defined benefit plan was discontinued by the Group as at 30 April 2014.

Defined benefit plans

The Group’s net obligation in respect of defined benefit plans is calculated separately for each plan byestimating the amount of future benefit that employees have earned in the current and prior periods, discountingthat amount and deducting the fair value of any plan assets.

The calculation of defined benefit obligations is performed annually by a qualified actuary using the projectedunit credit method. When the calculation results in a potential asset for the Group, the recognised asset is limitedto the present value of economic benefits available in the form of any future refunds from the plan or reductionsin future contributions to the plan. To calculate the present value of economic benefits, consideration is given toany applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return onplan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognisedimmediately in OCI. The Group determines the net interest expense (income) on the net defined benefit liability(asset) for the period by applying the discount rate used to measure the defined benefit obligation at thebeginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes inthe net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Netinterest expense and other expenses related to defined benefit plans are recognised in profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relatesto past service or the gain or loss on curtailment is recognised immediately in profit or loss. The Grouprecognises gains and losses on the settlement of a defined benefit plan when the settlement occurs.

3.35 Other operating expenses

3.36 Finance costInterest paid is recognized in the profit or loss as it accrues and is calculated by using the effective interest ratemethod. Accrued interest is included within the carrying value of the interest bearing financial liability.

Expenses are decreases in economic benefits during the accounting period in the form of outflows, depletion ofassets or incurrence of liabilities that result in decrease in equity, other than those relating to distributions toequity participants. Other operating expenses are accounted for on accrual basis and recognized in the profit or loss upon utilizationof the service or at the date of their origin.


AIICO Plc 2016

3.37 Earnings per share

3.38 Standards issued but not yet effective

The Group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated bydividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average numberof ordinary shares outstanding during the period, excluding treasury shares held by the Group. Diluted EPS isdetermined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average numberof ordinary shares outstanding for the effects of all dilutive potential ordinary shares.

A number of new standards, amendments to standards and interpretations are effective for annual periodsbeginning after 1 January 2016 and have not been applied in preparing these financial statements. Those whichmay be relevant to the Company are set out below. The Company does not plan to early adopt these standards.These will be adopted in the period that they become mandatory unless otherwise indicated:


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New or amended

standards

IFRS 9 Financial Instruments

IFRS 15 Revenue from Contracts with Customers

• IFRS 14 Regulatory Deferral Accounts.• Accounting for Acquisitions of Interests in Joint Operations (Amendments to IFRS 11)• Clarification of Acceptable Methods of Depreciation and Amortization (Amendments to IAS 16 and IAS 38)• Equity Method in Separate Financial Statements (Amendments to IAS 27) • Defined Benefit Plans: Employee Contributions (Amendments to IAS 19).• Annual Improvements to IFRSs 2010 – 2012 Cycle.• Annual Improvements to IFRSs 2011 – 2013 Cycle.• Annual Improvements to IFRSs 2012 – 2014 Cycle.• Disclosure Initiative (Amendments to IAS 1)

The following new or amended standards are not expected to have a significant impact on the Group'sconsolidated financial statements:

Summary of the requirementsPossible impact on consolidated financial statements

IFRS 9 published in July 2014, replaces the existingguidance in IAS 39 Financial Instrument: Recognitionand Measurement. IFRS 9 includes revised guidance onthe classification and measurement of financialinstruments, a new expected credit loss model forcalculating impairment on financial assets, and newgeneral hedge accounting requirements. It also carriesforward the guidance on recognition and derecognitionof financial instruments from IAS 39. IFRS 9 is effective for annual reporting periodsbeginning on or after 1 January 2018, with early adoption permitted.

The Group is assessingthe potential impact on itsconsolidated financialstatements resulting fromapplication of IFRS 9

IFRS 15 establishes a comprehensive framework fordetermining whether, how much and when revenue isrecognised. It replaces existing revenue recognitionguidance, including IAS 18 Revenue, IAS 11Construction Contract and IFRIC 13 Customer Loyalty Programmes. IFRS 15 is effective for annual reporting periodsbeginning on or after 1 January 2018, with early adoption permitted.

The Group is assessingthe potential impact on itsconsolidated financialstatements resulting fromapplication of IFRS 15


AIICO Plc 2016

The ultimate liability arising from claims made under insurance contracts

Impairment of available-for-sale equity financial assetsThe Group determines that available for sales equity financial assets are impaired when there has been a significantor pro longed decline in the fair value below its cost. This determination of what is significant or prolonged requiresjudgement. In making this judgment, the Group evaluates among other factors, the normal volatility in share price,the financial health of the investee industry and sector performance and operational and financing cash flow. In thisrespect, a decline of 30% or more is regarded as significant, and a period of 12 months or longer is considered to beprolonged. If any such quantitative evidence exists for available-for-sale financial assets, the asset is considered forimpairment, taking qualitative evidence into account.

The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial year. Estimates and judgements are continually evaluated and based on historical experience and otherfactors, including expectations of future events that are believed to be reasonable under the circumstances.

The estimation of the ultimate liability arising from claims made under insurance contracts is one of the Group’smost critical accounting estimate. There are several sources of uncertainty that need to be considered in theestimate of the liability that the Group will ultimately pay for such claims.

The ultimate cost of outstanding claims is estimated by using a standard actuarial claims projection techniques calledthe Basic Chain Ladder (BCL).The main assumption underlying these technique is that the Group’s past claims development experience can beused to project future claims development and hence ultimate claims costs. As such, this method extrapolates thedevelopment of paid and incurred losses, average costs per claim and claim numbers based on the observeddevelopment of earlier years and expected loss ratios. Historical claims development is mainly analysed by accidentyears and the assumptions used are those implicit in the historical claims development data on which the projectionsare based. Additional qualitative judgment is used to assess the extent to which past trends may not apply in future,(for example to reflect one-off occurrences, changes in external or market factors such as public attitudes toclaiming, economic conditions, levels of claims, inflation, judicial decisions and legislation, as well as internal factorssuch as portfolio mix, policy features and claims handling procedures) in order to arrive at the estimated ultimatecost of claims that present the likely outcome from the range of possible outcomes, taking account of all theuncertainties involved.

Financial instruments held to maturity are carried by the group at amortised cost. The quoted prices for thedetermination of the fair value of such instruments are readily available for quoted instruments. Fair values areestimated from observable data with respect to similar financial instruments.

Fair value of held-to-maturity (HTM) financial instruments


AIICO Plc 2016

Fair value of financial instruments

The determination of fair value for financial assets and financial liabilities for which there is no observable marketprice requires the use of valuation techniques. For financial instruments that trade infrequently and have little pricetransparency, fair value is less objective, and requires varying degrees of judgment depending on liquidity,concentration, uncertainty of market factors, pricing assumptions and other risks affecting the specific instrument.

The Group measures fair values using the following fair value hierarchy that reflects the significance of the inputsused in making the requirements.

- Level 1: Quoted market price in an active market for an identical instrument.

- Level 2: Valuation techniques based on observable inputs. This category includes instruments valued using: quotedmarket prices in active markets for similar instruments; quoted prices for similar instruments in markets that areconsidered less than active; or other valuation techniques where all significant inputs are directly or indirectlyobservable from market data.- Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments wherethe valuation technique includes inputs not based on observable data and the unobservable inputs have a significanteffect on the instruments valuation. This category includes instruments that are valued based on quoted prices forsimilar instruments where significant unobservable adjustments or assumptions are required to reflect differencesbetween the instruments.Fair values of financial assets and financial liabilities that are traded in active markets are based on quoted marketprices or dealer price quotations.

The fair value of financial instruments where no active market exists or where quoted prices are not otherwiseavailable are determined by using valuation techniques. In these cases the fair values are estimated from observabledata in respect of similar financial instruments or using models. Where market observable inputs are not available,they are estimated based on appropriate assumptions. Where valuation techniques (for example, models) are used todetermine fair values, they are validated and periodically reviewed by qualified personnel independent of those thatsourced them.

All models are certified before they are used, and models are calibrated to ensure that outputs reflect actual dataand comparative market prices. To the extent practical, models use only observable data; however, areas such ascredit risk (both own credit risk and counterparty risk), volatilities and correlations require management to makeestimates.


AIICO Plc 2016

Fair value of unquoted equity financial instruments

Liabilities arising from life insurance contracts

Depreciation and carrying value of property and equipment

Determination of impairment of property and equipment and intangible assets

Income taxes

The Group's investment in unquoted equity financial instrument could not be fair valued as there were no observabledata for which the entity could be fair valued, the carrying amount was based on cost. The investment is tested forimpairment by comparing the cost of investment with the share of net assets in the investee Group. Other factorssuch as whether the Group is making profits from its operations and returns on the investment in form of dividendreceived are also considered.

Investments in unquoted equity financial instrument should be measured at fair value, however, where the fair value cannot be reliably estimated, it is carried at cost less impairment loss.

Management is required to make judgements concerning the cause, timing and amount of impairment. In theidentification of impairment indicators, management considers the impact of changes in current competitiveconditions, cost of capital, availability of funding, technological obsolescence, discontinuance of services and othercircumstances that could indicate that impairment exists. This requires management to make significant judgementsand estimates concerning the existence of impairment indicators, separate cash generating units, remaining usefullives of assets, projected cash flows and net realisable values. Management’s judgement is also required whenassessing whether a previously recognised impairment loss should be reversed.

The Group is subject to income taxes in the local jurisdiction. Significant judgement is required in determining theprovision for income taxes. There are many transactions and calculations for which the ultimate tax determination isuncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issuesbased on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income taxassets and liabilities in the period in which such determination is made.

The liabilities for life insurance contracts are estimated using appropriate and acceptable base tables of standardmortality according to the type of contract being written. Management make various assumptions such as expensesinflation, valuation interest rate, mortality and further mortality improved in estimating the required reserves for lifecontracts

The estimation of the useful lives of assets is based on management’s judgement. Any material adjustment to the estimated useful lives of items of property and equipment will have an impact on the carrying value of these items.


AIICO Plc 2016

Sensitivity analysis

Determining control over investee entities

The Group tests annually whether premium receivables have suffered any impairment. With this policy, all premium transactions are paid for immediately except in the cases of broker transactions. For broker transactions, the period is extended for 30 days if credit notes have been received from the broker.

Impairment for receivables

Management applies its judgement to determine whether the Group has control over subsidiaries or significant influence over an investee company as set out in Note 3.1(b).The Group has determined that it exercises control and significant influence over certain investee companies due to its representation on the Board of such companies and its significant participation in the Companies' operating and financial policies

The sensitivity analysis reflects the impact, on profit or loss and equity, of changes in the relevant risk variables that are reasonably possible at the reporting date.


AIICO Plc 2016

Group Statements of Financial Position Group Parent

Sep-16 Dec-15 Sep-16 Dec-15Assets Notes N'000 N'000 N'000 N '000Cash and Cash Equivalents 4 5,501,453 8,451,795 2,914,214 6,437,403 Financial Assets 5 66,099,427 58,269,318 64,136,364 57,903,833 Trade Receivable 6 422,840 296,514 167,538 123,848 Reinsurance Assets 7 2,644,920 2,479,069 2,644,920 2,479,069 Deferred acquisition cost 8 351,776 264,842 351,776 264,842 Other Receivables and Prepayments 9 358,039 447,464 292,077 282,805 Deferred Tax Asset 10b(i) 1,107,542 1,775,779 1,026,109 1,707,077 Investment In Subsidiaries 11 - - 2,308,690 2,308,690 Investment Properties 12 1,031,000 1,115,000 1,031,000 1,115,000 Goodwill and Other Intangible Assets 13 1,110,128 1,142,720 1,096,425 1,120,871 Property and Equipment 14 5,938,757 5,353,657 5,554,384 5,111,828 Statutory Deposit 15 530,000 530,000 530,000 530,000 Total Assets 85,095,883 80,126,161 82,053,496 79,385,266

Liabilities and EquityLiabilitiesInsurance Contract Liabilities 16 56,925,139 55,548,154 56,742,810 55,379,977 Investment Contract Liabilities 17 8,567,957 8,295,046 8,567,957 8,295,046 Trade Payables 18 1,961,376 1,547,548 1,945,669 1,547,548 Other Payables and Accruals 19 1,755,355 2,489,333 1,678,224 2,432,087 Fixed Income Liabilities 20 2,020,105 165,838 Current Tax Payable 10(a) 1,158,884 592,961 1,029,363 518,443 Deferred Tax Liability 10b(ii) 268,593 269,133 263,422 263,422 Finance Lease Obligation 21 11,467 49,854 11,467 49,854 Derivative Liability 22(b) 319,274 319,274 319,274 319,274 Borrowing 22(a) 1,893,422 1,134,840 1,893,422 1,134,840 Total liabilities 74,881,571 70,411,981 72,451,607 69,940,491

Equity Issued Share Capital 23 3,465,102 3,465,102 3,465,102 3,465,102 Share Premium 24 2,824,389 2,824,389 2,824,389 2,824,389 Revaluation Reserves 25 1,221,707 1,221,707 1,221,707 1,221,707 Available-For-Sale Reserve 26 ( 4,574,074 ) ( 2,723,536 ) ( 4,574,074 ) ( 2,723,536 ) Exchange gain reserve 27 14,275 148,521 14,275 148,521 Statutory Reserve 28 64,826 55,240 - - Contingency Reserve 29 3,482,076 3,482,076 3,482,076 3,482,076 Retained Earnings 30 3,368,018 898,089 3,168,414 1,026,516 Shareholders Funds 9,866,319 9,371,588 9,601,889 9,444,775

Non Controlling Interest 11(e) 347,992 342,592 - - Total equity of the Group 10,214,311 9,714,180 9,601,889 9,444,775

Total liabilities and equity 85,095,883 80,126,161 82,053,496 79,385,266 0- 0-

These Financial Statements were approved by the Board on 27 October 2016 and signed on its behalf by:0 0-

Mr. Bukola Oluwadiya Mr. Edwin Igbiti Mr. Ayodele BamideleChairman Group MD/CEO Group Chief Financial OfficerFRC/2013/CISN/00000005132 FRC/2013/CIIN/00000005551 FRC/2013/ICAN/00000004332


AIICO Plc 2016

Three (3) months Statement of Comprehensive Income

Group ParentJuly - Sept

2016July - Sept

2015July - Sept

2016July - Sept

2015N'000 N '000 N'000 N '000

Gross Premium Written 5,414,492 8,843,911 5,288,425 8,379,540

Gross Premium Income 7,208,411 3,904,276 7,091,425 3,439,904 Reinsurance Expenses ( 799,469 ) ( 954,773 ) ( 799,469 ) ( 954,773 ) Net Premium Income 6,408,942 2,949,503 6,291,955 2,485,131

Fees and Commission Income Insurance contract 713,211 736,389 164,706 302,067 Net Underwriting Income 7,122,153 3,685,892 6,456,661 2,787,199

Claims Expenses:Claims expenses (Gross) 4,132,917 982,030 4,078,094 982,030 Claims expenses recovered from reinsurer ( 367,365 ) ( 125,616 ) ( 367,365 ) ( 125,616 ) Claims expenses (Net) 3,765,551 856,414 3,710,729 856,414 Underwriting Expenses 842,520 936,356 809,569 710,280 Total underwriting expenses 4,608,071 1,792,771 4,520,299 1,566,695

Underwriting Profit 2,514,082 1,893,122 1,936,363 1,220,504

Investment Income 2,025,858 1,642,477 1,919,484 1,563,606 Investment Income on Deposit Administration 78,934 47,797 78,934 47,797 Net Realised Gains/(Losses) 1,019 348,355 5,102 348,357 Net Gains/(Losses) on Assets at fair value - - - - Other Operating Income 489,828 39,789 486,243 ( 22,419 ) Employee Benefits Expense ( 666,906 ) ( 788,204 ) ( 468,471 ) ( 473,671 ) Other Operating Expenses ( 1,919,130 ) ( 1,051,967 ) ( 1,921,749 ) ( 856,814 ) Finance cost ( 71,700 ) 51,204 ( 71,700 ) 51,204

Profit/(Loss) before share of associate profit 2,451,984 2,182,572 1,964,205 1,878,564 Share of associate profit - - - - Profit/(loss) before Taxation 2,451,984 2,182,572 1,964,205 1,878,564 Income Taxes ( 799,930 ) ( 268,861 ) ( 784,165 ) ( 162,813 ) Profit/(loss) after Taxation 1,652,054 1,913,711 1,180,040 1,715,751

Attributable to Shareholders 1,639,776 1,871,519 1,180,040 1,715,751 Attributable to Non-Controlling Interest 12,278 42,192 - -

1,652,054 1,913,711 1,180,040 1,715,751 Other Comprehensive Income, Net of TaxItems within OCI that may be reclassified to the P&L * Net gain/(loss) on available-for-sale asset ( 1,627,637 ) ( 1,100,507 ) ( 1,627,637 ) ( 1,100,507 ) * Revaluation gain on property & equipment - - - - * Actuarial loss on defined benefit plan - - - - * Income tax relating to other comprehensive income - - - - Total Other Comprehensive Income ( 1,627,637 ) ( 1,100,507 ) ( 1,627,637 ) ( 1,100,507 )

Total Comprehensive Income/(Loss) for the year 24,417 813,204 ( 447,597 ) 615,244

Attributable to Shareholders 12,139 771,013 ( 447,597 ) 615,244 Attributable to Non-Controlling Interest 12,278 42,192 - -

24,417 813,205 ( 447,597 ) 615,244 Earnings per shareBasic Earnings Per Share (Kobo) 30 27 23 25Diluted Earnings Per Share (Kobo) 22 27 16 25


AIICO Plc 2016

Group Statement of Comprehensive Income Group Parent

Notes 30-Sep-16 30-Sep-15 30-Sep-16 30-Sep-15N'000 N '000 N'000 N '000

Gross Premium Written 31 21,002,606 25,075,083 20,472,478 24,418,058

Gross Premium Income 32(a) 19,232,938 12,714,899 18,848,520 12,057,873 Reinsurance Expenses 32(b) ( 2,457,712 ) ( 2,780,917 ) ( 2,457,712 ) ( 2,780,917 ) Net Premium Income 16,775,226 9,933,982 16,390,807 9,276,956

Fees and Commission Income Insurance contract 33 1,742,939 1,179,442 555,882 544,904 Net Underwriting Income 18,518,165 11,113,424 16,946,689 9,821,861

Claims Expenses:Claims expenses (Gross) 34(a) 12,012,612 7,058,024 11,785,799 7,058,024 Claims expenses recovered from reinsurer 34(b) ( 1,206,357 ) ( 1,180,172 ) ( 1,206,357 ) ( 1,180,172 ) Claims expenses (Net) 10,806,254 5,877,852 10,579,442 5,877,852 Underwriting Expenses 35 2,351,546 2,747,083 2,291,249 2,421,891 Total underwriting expenses 13,157,800 8,624,935 12,870,692 8,299,744

Underwriting Profit 5,360,365 2,488,489 4,075,998 1,522,117

Investment Income 36 5,369,696 4,182,868 5,076,601 4,058,674 Investment Income on Deposit Administration 36(d) 116,748 122,690 116,748 122,690 Net Realised Gains/(Losses) 37 22,951 348,355 16,848 348,355 Net Gains/(Losses) on Assets at fair value 37(b) 6,000 - 6,000 - Other Operating Income 38 656,122 418,959 616,170 356,386 Employee Benefits Expense 39 ( 2,048,502 ) ( 2,003,554 ) ( 1,456,269 ) ( 1,457,538 ) Other Operating Expenses 40 ( 4,540,127 ) ( 2,412,031 ) ( 4,189,557 ) ( 2,170,603 ) Finance cost 41 ( 124,398 ) ( 16,173 ) ( 124,398 ) ( 15,422 )

Profit/(Loss) before share of associate profit 4,818,854 3,129,603 4,138,140 2,764,659 Share of associate profit - - - - Profit/(loss) before Taxation 4,818,854 3,129,603 4,138,140 2,764,659 Income Taxes 10 ( 1,775,625 ) ( 435,976 ) ( 1,649,731 ) ( 312,703 ) Profit/(loss) after Taxation 3,043,229 2,693,627 2,488,409 2,451,956

Attributable to Shareholders 3,004,437 2,639,055 2,488,409 2,451,956 Attributable to Non-Controlling Interest 38,791 54,571 - -

3,043,229 2,693,626 2,488,409 2,451,956 Other Comprehensive Income, Net of TaxItems within OCI that may be reclassified to the P&L * Net gain/(loss) on available-for-sale asset 26 ( 1,850,538 ) ( 570,532 ) ( 1,850,538 ) ( 570,532 ) * Revaluation gain on property & equipment - - - - * Exchange gain / (loss) on AFS assets & Convertible loan 27 ( 134,246 ) - ( 134,246 ) - * Income tax relating to other comprehensive income - - - - Total Other Comprehensive Income / (loss) ( 1,984,784 ) ( 570,532 ) ( 1,984,784 ) ( 570,532 )

Total Comprehensive Income/(Loss) for the year 1,058,445 2,123,094 503,625 1,881,424

Attributable to Shareholders 1,019,653 2,068,523 503,625 1,881,424 Attributable to Non-Controlling Interest 38,792 54,571 - -

1,058,445 2,123,094 503,625 1,881,424 Earnings per shareBasic Earnings Per Share (Kobo) 42 43 38 36 35Diluted Earnings Per Share (Kobo) 42 33 38 27 35


AIICO Plc 2016

Group Statement of Changes in Equity

Issued Share Capital Share Premium Retained

EarningsContingency

Reserve Available-for-Sale Reserve

Revaluation Reserve Statutory Reserve

Cumulative Irredeemable

convertible preference shares

Exchange gain reserve

Shareholders' Equity

Non Controlling

Interest Total equityN'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000

At January 1 2016 3,465,102 2,824,389 898,089 3,482,076 (2,723,536) 1,221,707 55,240 - 148,521 9,371,588 342,592 9,714,180

Total Comprehensive Income for the yearProfit for the year - - 3,004,437 - - - - 3,004,437 38,792 3,043,229 Other comprehensive income for the year- Net loss on available-for-sale asset - - - - (1,850,538) - - (1,850,538) (1,850,538)Exchange Loss - (134,246) (134,246) (134,246)Total comprehensive income for the year - - 3,004,437 - (1,850,538) - - (134,246) 1,019,653 38,792 1,058,445

Transactions with owners, recorded directly in equityTransfer to contingency reserve - - - - - - - - - - Transfer to statutory reserve - - - - - - 9,586 - 9,586 - 9,586 Dividend paid to ordinary shareholders - - (416,333) - - - - (416,333) - (416,333)Prior year adjustment - - (118,175) - - - - (118,175) (33,392) (151,567)Total contributions by and distributions to equity holders - - (534,508) - - - 9,586 - (524,921) (33,392) (558,313)

Balance as at 30 September 2016 3,465,102 2,824,389 3,368,018 3,482,076 ( 4,574,074 ) 1,221,707 64,827 - 14,275 9,866,319 347,992 10,214,311

At January 1 2015 3,465,102 2,824,389 275,503 3,019,230 581,971 1,221,707 14,629 50,000 - 11,452,531 244,578 11,697,109

Total Comprehensive Income for the yearProfit for the year - - 2,639,055 - - - - - - 2,639,055 54,571 2,693,626 Other comprehensive income for the year: - Net loss on available-for-sale asset - - - - (571,102) - - - - (571,102) - (571,102) - Actuarial gain/(loss) on defined benefit plan - - - - - - - - - Prior year adjustment - - (339,873) (25,646) - - - (365,519) - (365,519)

Total other comprehensive income for the year - - (339,873) (25,646) (571,102) - - (936,621) - (936,621)

Total comprehensive income for the year - - 2,299,182 (25,646) (571,102) - - - - 1,702,434 54,571 1,757,005

Transactions with owners, recorded directly in equityTransfer to contingency reserve - - - - - - - - - - Adjustments to reserve - - - - - - (14,629) - 14,629- - (14,629)Loss on conversion of preference shares - - - - - - - - (34,604) (34,604)Transfer of preference shares - - - - - - (50,000) - (50,000) 129,339 79,339

Total contributions by and distributions to equity holders - - - - - - (14,629) (50,000) (64,629) 94,735 30,106 Balance as at 30 September 2015 3,465,102 2,824,389 2,574,685 2,993,584 10,869 1,221,707 - - - 13,090,335 393,884 13,484,219


AIICO Plc 2016

Parent Statement of Changes in Equity

Issued Share Capital Share Premium Retained

EarningsContingency

ReserveAvailable-for-Sale

ReserveRevaluation

ReserveExchange gain

reserve Total equityN'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000

At January 1 2016 3,465,102 2,824,389 1,026,516 3,482,076 (2,723,536) 1,221,707 148,521 9,444,775

Total Comprehensive Income for the yearProfit for the year - - 2,488,409 - - - - 2,488,409 Other comprehensive income for the year: - Net loss on available-for-sale asset - - - - (1,850,538) - - (1,850,538) - Exchange Loss - - - - - - (134,246) (134,246) Total comprehensive income for the year - - 2,488,409 - (1,850,538) - (134,246) 503,625

Transfers within equityTransfer to contingency reserve - - - - - - - - Dividend paid to ordinary shareholders - - (346,510) - - - - (346,510)

Total contributions by and distributions to equity holders - - (346,510) - - - (346,510) Balance as at 30 September 2016 3,465,102 2,824,389 3,168,414 3,482,076 (4,574,074) 1,221,707 14,275 9,601,889

1,883,667 (4,574,074) At January 1 2015 3,465,102 2,824,389 548,546 2,993,584 581,400 1,221,706 11,634,727

Total Comprehensive Income for the yearProfit/(Loss) for the year - - 2,451,956 - - - 2,451,956 Other comprehensive income for the year: - Net gain on available-for-sale asset - - - - (570,532) - (570,532)

Total comprehensive income for the year - - 2,451,956 - (570,532) - 1,881,424

Transactions with owners, recorded directly in equityTransfer to contingency reserve - - - - - - -

Total contributions by and distributions to equity holders - - - - - - - Balance as at 30 September 2015 3,465,102 2,824,389 3,000,498 2,993,584 10,868 1,221,706 13,516,148


AIICO Plc 2016

Group Statement of Cash Flows

30-Sep-16 30-Sep-15 30-Sep-16 30-Sep-15N'000 N '000 N'000 N '000

Operating activities:Total premium received 20,876,279 25,553,510 20,428,788 24,280,361 Commission received 1,742,939 1,179,442 555,882 544,904 Commission paid (2,179,972) (2,356,106) (2,119,675) (2,030,914) Reinsurance premium paid (2,562,345) (3,199,341) (2,562,345) (3,199,341) Gross benefits and claim paid net of recoveries (10,721,854) (6,060,463) (10,677,371) (6,060,464) Payments to employees (2,048,502) (2,003,554) (1,456,269) (1,457,538) Other operating cash payments (4,353,310) (6,694,041) (4,057,300) (5,459,680) Other income received 772,870 752,301 732,918 812,418 Tax paid (569,747) (431,628) (457,843) (431,628) Net cashflow from operating activities 956,358 6,740,120 386,784 6,998,119 Investing activities:Investment income received 5,375,696 4,182,868 5,139,093 4,058,674 Purchase of property and equipment (1,108,012) (491,796) (873,110) (434,750) Purchase of Intangibles (36,835) (103,889) (35,711) (96,299) Proceed from sale of property and equipment 182,049 5,720 175,746 18,898 Net (purchase)/sale of AFS (7,987,264) 265,605 (8,053,480) 101,789 Net (Purchase)/sale of HTM - (6,911,749) - (7,251,194) Proceed from sale of investment property 84,000 - 84,000 (240,000) Net cash flows from investing activities (3,490,366) (3,053,241) (3,563,463) (3,842,882)

Financing activities:Convertible Loan - 1,392,650 - 1,392,650 Dividend paid to equity holders (416,333) - (346,510) - Net cash flows from financing activities (416,333) 1,392,650 (346,510) 1,392,650

Net increase/(decrease)in cash and cash equivalents (2,950,341) 5,079,529 (3,523,190) 4,547,887 Cash and cash equivalents at 1 January 8,451,795 7,954,370 6,437,403 6,577,102 Cash and cash equivalents at 30 September 5,501,453 13,033,899 2,914,214 11,124,986

Group Parent


AIICO Plc 2016

Segment Information

•

•

•

•

•

For management purposes, the Group is organized into business units based on their products and services and has four reportable operating segments as follows:

The life insurance segment offers savings, protection products and other long-term contracts (bothwith and without insurance risk). It comprises a wide range of whole life, term assurance, guaranteedpensions, pure endowment pensions and mortgage endowment products. Revenue from thissegment is derived primarily from insurance premium, fees and commission income and investmentincome.The non-life insurance segment comprises general insurance to individuals and businesses. Non-lifeinsurance products offered include motor, household, commercial and business interruption insurance.These products offer protection of policyholder’s assets and indemnification of other parties that havesuffered damage as a result of policyholder’s accident.

Multishield segment is a Health Maintenance Organization for prepaid health plans to cater for the healthneeds of individuals and corporate organizations. The company became a full subsidiary of AIICOInsurance Plc on July 1, 2012.

Pension Manager Segment was licensed as a Pension Fund Administrator by the National PensionCommission on April 13, 2006 provides pension administration services to private and public sectorcontributors.AIICO Capital Limited is registered and licensed by the Securities & Exchange Commission in 2012, tocarry out portfolio/fund management services. AIICO Capital Limited commenced full operations in 2014through the provision of bespoke wealth solutions for clients, by adopting a research based approach forevery investment decision. AIICO Capital Limited offers portfolio management services, structuredinvestments and mutual funds to suit the investment needs of corporate and individual clients.

No operating segments have been aggregated to form the above reportable operating segments.

Segment performance is evaluated based on profit or loss which, in certain respects, is measured differentlyfrom profit or loss in the financial statements. The Company's financing and income taxes are managed on aGroup basis and are not allocated to individual operating segments.


AIICO Plc 2016

Segment Statement of Profit and Loss and Other Comprehensive Income for the period ended 30 September 2016

Life General Health

Management Pensions Asset

Management

Elimination of inter-segment

transactions 30-Sep-16 30-Sep-15N'000 N'000 N'000 N'000 N'000 N'000 N'000

Gross Premium Written 14,259,863 6,212,615 530,128 - - - 21,002,606 25,075,083 Gross Premium Income 13,338,869 5,509,651 384,418 - - 19,232,938 12,714,899 Reinsurance Expenses ( 246,660 ) ( 2,211,052 ) - - - - ( 2,457,712 ) ( 2,780,917 ) Net premium Income 13,092,209 3,298,599 384,418 - - - 16,775,226 9,933,982 Fees and Commission Income - Insurance Contract 73,517 482,365 252,900 - - - 808,782 544,904 Pension and other Contract - - - 721,066 359,323 ( 146,232 ) 934,157 634,538 Net Underwriting Income 13,165,725 3,780,964 637,318 721,066 359,323 ( 146,232 ) 18,518,165 11,113,425 Claims Expenses:Claims Expenses (Gross) 8,743,261 3,042,538 226,812 - - - 12,012,612 7,058,024 Claims Expenses Recovered from Reinsurer ( 222,669 ) ( 983,689 ) - - - - ( 1,206,357 ) ( 1,180,172 ) Claims Expenses (Net) 8,520,592 2,058,850 226,812 - - - 10,806,254 5,877,852

Change in life fund - - - - - - - - Underwriting Expenses 1,565,688 725,562 43,421 16,875 - - 2,351,546 2,747,083 Total underwriting expenses 10,086,280 2,784,411 270,233 16,875 - - 13,157,800 8,624,935

Underwriting Profit 3,079,445 996,553 367,085 704,191 359,323 ( 146,232 ) 5,360,365 2,488,487

Investment Income 4,469,453 607,147 13,315 82,070 197,710 - 5,369,696 4,182,868 Investment Income on Deposit Administration 116,748 - - - - - 116,748 122,690 Net Realised Gains and Losses 16,222 626 100 2,968 3,035 - 22,951 348,355 Net Gains/(Losses) on Assets at fair value - 6,000 - - ( 11,924 ) - ( 5,924 ) - Other Operating Income 521,707 94,464 5,496 372 34,084 - 656,122 418,959 Employee Benefits Expense ( 713,572 ) ( 742,697 ) ( 168,153 ) ( 317,713 ) ( 106,367 ) ( 2,048,502 ) ( 2,003,554 ) Other Operating Expenses ( 1,975,465 ) ( 2,214,092 ) ( 142,309 ) ( 272,012 ) ( 82,481 ) 146,232 ( 4,540,127 ) ( 2,412,031 ) Finance Costs ( 60,955 ) ( 63,443 ) - - - - ( 124,398 ) ( 16,173 )

Profit Before Tax 5,453,583 ( 1,315,443 ) 75,534 199,877 393,380 - 4,806,930 3,129,602 Income Tax Expense ( 2,044,364 ) 394,633 ( 22,660 ) ( 59,963 ) ( 43,271 ) ( 1,775,625 ) ( 435,976 ) Profit for The Year 3,409,219 ( 920,810 ) 52,874 139,914 350,107 - 3,031,303 2,693,626 Attributable to Shareholders of the Parents 3,409,219 ( 920,810 ) 42,764 111,231 350,107 - 2,992,511 2,639,055 Attributable to Non-Controlling Interest - - 10,109 28,682 - - 38,792 54,571

Other Comprehensive IncomeNet Gain/(Loss) on Available-for-Sale Asset ( 1,503,954 ) ( 346,584 ) - - - - ( 1,850,538 ) ( 570,532 ) Actuarial Loss on Defined Benefit Plan - - - - - - - - Revaluation gain on property & equipment - - - - - - - - Income Tax Relating To Other Comprehensive Income - - - - - - - - Other Comprehensive Income for the Year, Net of Tax ( 1,503,954 ) (346,584) - - - - ( 1,850,538 ) ( 570,532 )

- Total Comprehensive Income for The Year, Net of Tax 1,905,265 ( 1,267,394 ) 52,874 139,914 350,107 - 1,180,765 2,123,094


AIICO Plc 2016

Segment Statement of Financial Position as at 30 September 2016

Life General Health Management Pensions Asset

Management

Elimination of inter-segment transactions 30-Sep-16 30-Dec-15

Assets N'000 N'000 N'000 N'000 N'000 N'000 N'000 N'000Cash and Cash Equivalents 2,277,492 636,722 52,480 75,794 2,822,831 ( 363,865 ) 5,501,453 8,451,795 Trade Receivable - 167,538 76,708 125,355 234,761 ( 181,521 ) 422,840 296,514 Reinsurance Assets 232,908 2,412,011 - - - 2,644,920 2,479,069 Deferred acquisition cost - 351,776 - - - 351,776 264,842 Financial Assets 57,887,334 6,249,030 513,226 902,136 647,700 ( 100,000 ) 66,099,427 58,269,318 Deferred Tax Asset 1,026,109 - 12,757 68,677 - - 1,107,542 1,775,779 Investment In Subsidiaries 1,506,958 801,732 - - - ( 2,308,690 ) - - Investment Properties 643,000 388,000 - - - 1,031,000 1,115,000 Property and Equipment 4,017,730 1,536,654 58,190 256,792 69,391 5,938,757 5,353,657 Other Receivables and Prepayments 2,537,487 77,911 19,744 37,699 8,520 ( 2,323,321 ) 358,039 447,464 Statutory Deposit 230,000 300,000 - - - 530,000 530,000 Goodwill and Other Intangible Assets 245,659 850,766 - 5,072 8,631 1,110,128 1,142,720 Total Assets 70,604,677 13,772,140 733,104 1,471,525 3,791,834 ( 5,277,398 ) 85,095,883 80,126,161

Liabilities and EquityLiabilitiesInsurance Contract Liabilities 50,412,529 6,330,280 182,329 - - - 56,925,139 55,548,154 Investment Contract Liabilities 8,567,957 - - - - - 8,567,957 8,295,046 Trade Payables 1,288,237 657,433 15,707 - - - 1,961,376 1,547,548 Fixed Income Liablity - - - - 2,483,970 ( 463,865 ) 2,020,105 165,838 Dividend Payable - - - - - - - - Other Payables and Accruals 1,142,730 2,858,816 99,552 62,665 93,380 ( 2,501,788 ) 1,755,355 2,489,333 Current Tax Payable 1,386,697 ( 357,335 ) 22,660 63,590 43,271 - 1,158,884 592,961 Deferred Tax Liability - 263,421 - - 5,172 - 268,593 269,133 Convertible Loan 1,893,422 - - - - - 1,893,422 1,134,840 Derivative Liability 319,274 - 319,274 319,274 Finance Lease Obligation - 11,467 - - - - 11,467 49,854 Total liabilities 65,010,846 9,764,081 320,248 126,255 2,625,793 ( 2,965,653 ) 74,881,571 70,411,980

Equity Issued Share Capital 1,838,863 1,626,239 400,000 1,078,777 500,000 ( 1,978,777 ) 3,465,102 3,465,102 Share Premium 2,046,073 778,316 47,494 40,365 - ( 87,860 ) 2,824,389 2,824,389 Revaluation Reserves 876,793 344,914 - - - - 1,221,707 1,221,707 Available-For-Sale Reserve ( 3,718,236 ) ( 855,838 ) - - - - ( 4,574,074 ) ( 2,723,536 ) Exchange gain reserve 14,275 - - - - - 14,275 148,521 Statutory Reserve - - 9,589 55,236 - - 64,826 55,240 Contingency Reserve 1,470,827 2,011,249 - - - - 3,482,076 3,482,076 Retained Earnings ( 343,983 ) 1,023,988 ( 97,102 ) 30,978 315,934 ( 593,100 ) 336,715 898,089 Current year profit 3,409,219 ( 920,810 ) 52,874 139,914 350,107 - 3,031,303 - Shareholders Funds 5,593,832 4,008,057 412,856 1,345,270 1,166,041 ( 2,659,737 ) 9,866,319 9,371,590

Non Controlling Interest - - - - - 347,992 347,992 342,592 Total equity of the Group 5,593,832 4,008,057 412,856 1,345,270 1,166,041 ( 2,311,745 ) 10,214,311 9,714,182

Total liabilities and equity 70,604,678 13,772,140 733,104 1,471,525 3,791,834 ( 5,277,398 ) 85,095,883 80,126,161


AIICO Plc 2016

Notes to the Financial Statements

4 Cash and Cash EquivalentsSep-16 Dec-15 Sep-16 Dec-15

N'000 N '000 N'000 N '000Cash at hand and bank 2,775,244 3,415,825 2,548,803 2,925,735 Short-term deposits 2,726,210 5,035,970 365,411 3,511,668 Total Cash and Cash Equivalents 5,501,454 8,451,795 2,914,214 6,437,403

Group Parent

Short–term deposits are made for varying periods of between one day and three months, depending on the immediate cash requirements of the Company. All deposits are subject to an average interest rate of 12%. The carrying amounts disclosed above reasonably approximate fair value at the reporting date.

5 Financial AssetsThe Company's financial assets are summarised by categories as follows:

Sep-16 Dec-15 Sep-16 Dec-15N'000 N '000 N'000 N '000

Available-for-Sale Financial Assets (Note 5a) 34,258,779 56,391,789 32,369,569 56,081,834 Loans and receivables (Note 5b) 2,057,110 1,877,529 1,983,258 1,821,999 Held to maturity financial assets (Note 5c) 29,783,538 - 29,783,538 -

Total financial instruments other than derivative financial instruments 66,099,427 58,269,318 64,136,364 57,903,833

(a) Available-for-Sale Financial AssetsSep-16 Dec-15 Sep-16 Dec-15

N'000 N '000 N'000 N '000Equity securities 3,980,004 2,757,398 2,090,794 2,757,398 Debt securities 27,732,047 51,315,892 27,732,047 51,107,997 Fixed Placement 387,513 387,513 Total at fair value 31,712,052 54,460,803 29,822,842 54,252,908 Unquoted Equity Securities 2,546,727 1,930,986 2,546,727 1,828,926 Total available-for-sale financial assets 34,258,779 56,391,789 32,369,569 56,081,834

(a)(i) Available-for-Sale Financial Assets Sep-16 Dec-15 Sep-16 Dec-15For Policyholders: N'000 N '000 N'000 N '000Quoted Equities 3,980,004 2,757,398 2,090,794 2,757,398 Treasury Bills and Federal Govt. Bonds 27,732,047 51,315,892 27,732,047 51,107,997 Fixed Placement 387,513 387,513 Total at Fair Value 31,712,052 54,460,803 29,822,842 54,252,908 Unquoted Equity Securities - - - - Total available-for-sale financial assets 31,712,052 54,460,803 29,822,842 54,252,908

Group Parent

Group Parent

Group Parent


AIICO Plc 2016

Notes to the Financial Statements (Cont’d)

(a)(ii) Available-for-Sale Financial Assets Sep-16 Dec-15 Sep-16 Dec-15For Shareholders: N'000 N '000 N'000 N '000Quoted Equities - - - - Treasury Bills and Federal Government Bonds - - - - Total at Fair Value - - - - Unquoted Equity Securities 2,546,727 1,930,986 2,546,727 1,828,926 Total available-for-sale financial assets 2,546,727 1,930,986 2,546,727 1,828,926

(b) Loans and receivablesSep-16 Dec-15 Sep-16 Dec-15

Amortised cost N'000 N '000 N'000 N '000Loans to policyholders 1,027,762 898,838 1,027,762 898,508 Finance lease receivable 626,559 641,384 626,559 645,822 Other loans 402,789 349,314 328,937 289,676

2,057,110 1,889,536 1,983,258 1,834,006 Less allowance for impairment (12,007) (12,007) Net loans and receivables 2,057,110 1,877,529 1,983,258 1,821,999

Group Parent

Group Parent

5b(i) Policy Loans

The Group grants cash loans to policyholders in line with the policy provisions (terms and conditions). The maximum loan amount that could be granted to policyholders is 90% of the policy cash value. The cash value (worth of the policy as determined by the actuary) is the cash amount due to policyholder upon cancellation of the insurance contract as at the date of determination and it is used as collateral on policy cash loan granted.

The tenor of the loan is not beyond the policy duration and such policy must be in force and has acquired cash value before loan application can be considered. A pre-determined interest rate (compounded daily) is applied on the loan. The rate is currently 12% per annum and it is reviewed periodically. The rate is determined after due consideration on the interest rate used by the actuary for premium benefit calculation, allowance for documentation and other expenses on the policy, margin for contingencies and profit loadings. Policy Loans are not impaired as balances are set-off against benefits accruable to the policyholder.

(c) Held to Maturity Financial AssetsFor Policyholders: Sep-16 Dec-15 Sep-16 Dec-15Amortised Cost N'000 N '000 N'000 N '000Treasury Bills and FGN Bonds 29,783,538 - 29,783,538 - State Govt. and Corporate Bonds - - - - Total Held to Maturity Financial Assets 29,783,538 - 29,783,538 -

Group Parent

Investment in FGN Bonds (2027 & 2034 Series) were designated as Held to Maturity from Inception to back up the Annuity Portfolio which has a long term of an average of 15 – 20years.


AIICO Plc 2016


Hypothecation of Assets Life Fund AnnuityInvestment

Contract LiabilitiesInsurance Contract

LiabilitiesShareholders'

Fund TotalCash and Cash Equivalents 1,297,098 - 839,992 636,722 140,402 2,914,214 Bonds 11,659,227 38,161,450 2,348,756 5,010,866 335,285 57,515,585 Quoted equities 875,991 51,330 499,910 474,276 189,286 2,090,794 Unquoted equities 68,322 - 247,807 39,362 2,191,237 2,546,728 Loans & receivables 858,358 - 960,875 164,024 - 1,983,257 Investment In Subsidiaries - - - - 2,308,690 2,308,690 Investment Properties 85,000 - 558,000 268,800 119,200 1,031,000 Property and Equipment 2,813,298 - 723,191 545,682 1,472,213 5,554,384 Statutory Deposit - - - - 530,000 530,000 Other Assets (See A below) 232,908 - - 2,931,325 2,414,610 5,578,844

17,890,202 38,212,781 6,178,532 10,071,057 9,700,924 82,053,497

Other AssetsTrade Receivable - - - 167,538 - 167,538 Reinsurance Assets 232,908 - - 2,412,011 - 2,644,920 Deferred acquisition cost - - - 351,776 - 351,776 Other Receivables and Prepayments - - - - 292,077 292,077 Deferred Tax Asset - - - - 1,026,109 1,026,109 Goodwill and Other Intangible Assets - - - - 1,096,425 1,096,425

232,908 - - 2,931,325 2,414,610 5,578,844

6 Trade Receivables

(a) Sep-16 Dec-15 Sep-16 Dec-15N'000 N '000 N'000 N '000

Due from Insurance brokers 165,163 118,917 165,163 118,917 Due from Insurance companies 1,899 - 1,899 - Due from Agents 483 4,931 483 4,931 Due from Direct Client 255,295 172,666 (7) - Due from Reinsurance Companies - - - - Gross total 422,840 296,514 167,538 123,848

Allowance for impairment - - - -

Total insurance receivables 422,840 296,514 167,538 123,848

(b) Analysis of Trade Receivables Sep-16 Dec-15 Sep-16 Dec-15N'000 N '000 N'000 N '000

Life contract trade receivables 255,295 - - - Non-Life contract trade receivable 167,545 296,514 167,538 123,848

422,840 296,514 167,538 123,848

ParentGroup

Group Parent


AIICO Plc 2016


Sep-16 Dec-15 Sep-16 Dec-15(c) Non-life business N'000 N '000 N'000 N '000

Due from Insurance brokers 165,163 118,917 165,163 118,917 Due from Insurance companies 1,899 - 1,899 - Due from Agents 483 4,931 483 4,931 Due from Direct insured/customers 255,295 172,666 (7) - Due from Reinsurance Companies - -

422,840 296,514 167,538 123,848

Sep-16 Dec-15 Sep-16 Dec-15Non-life business (Net Outstanding) N'000 N '000 N'000 N '000Insurance brokers 165,163 118,917 165,163 118,917 Insurance companies 1,899 - 1,899 - Agents 483 4,931 483 4,931 Direct Insured 255,295 172,666 (7) - Reinsurance Companies - - -

422,840 296,514 167,538 123,848


Under 30 days 422,840 296,514 167,538 123,848 Above 30days - - - -

422,840 296,514 167,538 123,848

The age analysis of trade receivable as required in the NAICOM 2011 Operational guidelines. These are as follows:

Group Parent

Group Parent

Group Parent

7 Reinsurance Assets

(a) Reinsurance assets can be broken down into:


Recoverables on Claims paid 369,314 291,525 369,314 291,525 Reinsurance Prepaid 973,472 868,839 973,472 868,839 Estimated Recoveries from Outstanding Claims 1,302,133 1,318,705 1,302,133 1,318,705 Provissions for Impairment - - - -

Balance as at 30 September 2,644,920 2,479,069 2,644,920 2,479,069

(b) The movement in prepaid reinsurance is as follows;Sep-16 Dec-15 Sep-16 Dec-15

N'000 N '000 N'000 N '000Balance at January 1, 868,838 774,414 868,838 774,414 Reinsurance paid during the year 2,457,712 3,756,587 2,457,712 3,756,587 Changes during the year (2,353,078) (3,662,162) (2,353,078) (3,662,162) Balance as at 30 September 973,472 868,839 973,472 868,839

Group Parent

ParentGroup


AIICO Plc 2016


8 Deferred Acquisition Cost

Sep-16 Dec-15 Sep-16 Dec-15

N'000 N '000 N'000 N '000Balance at January 1, 264,842 443,945 264,842 443,945 Additions for the year (86,934) (3,113,418) (86,934) (3,113,418) Ammortization for the period 173,868 2,934,315 173,868 2,934,315 At 30 September 351,776 264,842 351,776 264,842

Sep-16 Dec-15 Sep-16 Dec-15(a) Deferred Expenses By Class N'000 N '000 N'000 N '000

Fire 87,944 66,211 87,944 66,211 Motor 119,604 90,046 119,604 90,046 Workmen compensation 14,071 10,594 14,071 10,594 Marine 52,766 39,726 52,766 39,726 Personal accident 24,624 18,539 24,624 18,539 Casualty accident 35,178 26,484 35,178 26,484 Oil and Gas 17,589 13,242 17,589 13,242

351,776 264,842 351,776 264,842

9 Other Receivables and Prepayments Sep-16 Dec-15 Sep-16 Dec-15N'000 N '000 N'000 N '000

Prepayments 243,463 259,484 192,498 206,359 Agents Advances 14,281 15,766 14,281 15,766 Other Receivables 100,295 172,217 85,298 60,680

358,039 447,464 292,077 282,805

Impairment - - - -

358,039 447,464 292,077 282,805

The analysis of deferred acquisition costs (DAC) which represents commission paid during the period on unearned premium received among different classes of business is shown below:

Group Parent

ParentGroup


AIICO Plc 2016

Notes to the Financial Statements (Cont’d) 10 Taxation

(a) Current income tax liabilitiesThe movement in this account during the year was as follows:


Balance, beginning of year 592,961 558,874 518,443 492,279 Prior year under/(over) provision 41,014 - - - Payments during the year (569,747) (450,413) (457,843) (431,664)

Current tax expense (see note (i) below) 1,094,656 484,500 968,763 457,828

Balance at end of period 1,158,884 592,961 1,029,363 518,443

(i) Current tax expense for the year comprises:Corporate income tax charge 1,094,656 434,063 968,763 417,486 Tertiary education tax - 33,036 - 26,004 Information technology levy - 17,401 - 14,338

1,094,656 484,500 968,763 457,828

(ii) Deferred tax expense 680,969 119,188 680,969 23,790

Total income tax expense 1,775,625 603,688 1,649,731 481,618

(b) Deferred taxation

Sep-16 Dec-15 Sep-16 Dec-15(i) Assets N'000 N '000 N'000 N '000

Employee benefit deficit 79,078 79,078 79,078 79,078 Property, Plant and Equipment 128,819 53,097 47,386 47,386 Unrelieved losses 817,065 1,707,256 817,065 1,644,265 Unrealized exchange gain of AFS assets (63,652) (63,652) (63,652) (63,652) Deferred tax asset 961,310 1,775,779 879,877 1,707,077

(ii) LiabilitiesEmployee benefit deficit 47,045 47,045 47,045 47,045 Property, Plant and Equipment (304,881) (304,881) (304,881) (304,881) Unrelieved losses (5,171) (5,711) - - Investment Property (5,586) (5,586) (5,586) (5,586) Deferred tax liability (268,593) (269,133) (263,422) (263,422)

Group Parent

Group Parent


AIICO Plc 2016


11 Investment in Subsidiaries Sep-16 Dec-15 Sep-16 Dec-15N'000 N '000 N'000 N '000

Balance at January 1, - - 2,308,690 2,133,417 Increase/(Decrease) in the year - - - 175,273 Consolidation adjustments - - - - At 30 September - - 2,308,690 2,308,690


(a) Summary of Investment in SubsidiariesAIICO Pension Fund Administrator Limited - - 1,365,042 1,365,042 Multishield Health Management Organisation - - 443,648 443,648 AIICO Capital Limited - - 500,000 500,000

- - 2,308,690 2,308,690

(b) AIICO Pension Fund Managers LimitedBalance at January 1, - - 1,365,042 1,189,769 Additions - - - 240,000 Disposals - - - (64,727) At 30 September - - 1,365,042 1,365,042

Group Parent

Group Parent

The Company has 79.5% interest in AIICO Pension Managers Limited, which is involved in Pension Administration Services to private and public sector contributors. AIICO Pension was incorporated as a Limited Liability Company on February 1, 2005 under the Company and Allied Matter Act, 1990 and licensed as a Pension Fund Administrator by National Pension Commission on April 13, 2006. AIICO Pension Managers is domiciled in Nigeria and its registered office is at Plot 2 Oba Akran Avenue, Ikeja Lagos.

Sep-16 Dec-15 Sep-16 Dec-15(c) Multishield Health Management Organisation N'000 N '000 N'000 N '000

Balance at January 1, - - 443,648 443,648 Transfer from Associates Company - - - Additions - - - - Disposals - - - - At 30 September - - 443,648 443,648

Group Parent


AIICO Plc 2016

The Company has 80.88% interest in Multishield Limited. Multishield Limited is involved in health management insurance. It is a private entity that is not listed on any public exchange and there are no published price quotations for the fair value of this investment. In accordance with IAS 27, this investment is stated at cost. Notes to the Financial Statements (Cont’d)

Sep-16 Dec-15 Sep-16 Dec-15

(d) AIICO Capital Limited N'000 N '000 N'000 N '000Balance at January 1, - - - - Additions - - 500,000 500,000

Disposals - - - - At 30 September - - 500,000 500,000

Group Parent

The Company holds 100% interest in AIICO Capital Limited. AIICO Capital Limited is registered and licensed by the Securities & Exchange Commission in 2012, to carry out portfolio/fund management services. AIICO Capital Limited commenced full operations in 2014 through the provision of bespoke wealth solutions for clients, by adopting a research based approach for every investment decision. AIICO Capital Limited offers portfolio management services, structured investments and mutual funds to suit the investment needs of corporate and individual clients.

(e) Non - Controlling Interest Sep-16 Dec-15 Sep-16 Dec-15

N'000 N '000 N'000 N '000Aiico Pension Managers Limited 269,054 261,402 - - Multishield 78,938 81,190 - - At 30 September 347,992 342,592 - -

ParentGroup

12 Investment Property Sep-16 Dec-15 Sep-16 Dec-15For Policy Holders N'000 N'000 N'000 N'000Opening Balance 1,115,000 1,203,000 1,115,000 1,203,000 Additions/(disposal) during the year (84,000) - (84,000) - Fair value gain - - - - Revaluation Deficit - (88,000) - (88,000)

1,031,000 1,115,000 1,031,000 1,115,000

13 Goodwill and Other Intangible Assets Sep-16 Dec-15 Sep-16 Dec-15N'000 N '000 N'000 N '000

Intangible Assets (Note 13a) 309,266 341,857 295,562 320,008 Goodwill (Note13b) 800,863 800,863 800,863 800,863

1,110,128 1,142,720 1,096,425 1,120,871

Group Parent

Group Parent


AIICO Plc 2016


(a) Intangible Assets Sep-16 Dec-15 Sep-16 Dec-15Computer Software N'000 N'000 N'000 N'000CostOpening Balance 536,449 223,784 387,899 121,050 Additions during the year 36,835 25,160 35,711 108,501 Transfer from Property and Equipment - 18,600 - 176,285 Derecognition in the year - - - - Closing Balance 573,284 536,449 423,612 387,898

AmortisationOpening Balance 194,592 98,547 67,891 - Amortisation 69,427 47,336 60,157 35,147 On derecognition (252) - (252) - Adjusted Item - - - - Closing Balance 263,767 194,592 127,796 67,890 Carrying amount 309,518 341,857 295,815 320,008

(b) Goodwill Sep-16 Dec-15 Sep-16 Dec-15N'000 N '000 N'000 N '000

Cost:At 1 January 800,863 800,863 800,863 800,863

Accumulated impairmentAt 1 January - - - - Impairment loss - - - - At June - - - -

Carrying amountAt 30 September 800,863 800,863 800,863 800,863

Group Parent

Group Parent


AIICO Plc 2016


14 Property and Equipment(a) Group

Leasehold Land & Buildings

Capital Work in Progress

Furniture & Equipment Motor Vehicles

Leased Motor Vehicles Total

Cost N'000 N'000 N'000 N'000 N'000 N'000At 1 January 2016 4,863,704 262,482 1,729,239 873,387 104,890 7,833,702 Additions - 495,884 381,939 230,190 - 1,108,012 Disposals - (145,764) (69,833) (88,432) - (304,029) Reclassification - - - - - - Prior year adjustment - - - Revaluation - - - - - - At 30 September 2016 4,863,704 612,602 2,041,345 1,015,145 104,890 8,637,685

Accumulated depreciationAt 1 January 2016 548,024 - 1,324,317 581,121 26,584 2,480,046 Depreciation for the period 86,536 - 149,745 114,542 12,989 363,812 Disposals - - (58,923) (86,008) - (144,931) Prior year adjustment - - - Reclassification - - - - At 30 September 2016 634,560 - 1,415,139 609,655 39,573 2,698,927

At 30 September 2016 4,229,144 612,602 626,206 405,489 65,317 5,938,757 At 1 January, 2016 4,315,680 262,482 404,922 292,266 78,306 5,353,656

(b) Property and Equipment - Parent

Leasehold Land & Buildings

Capital Work in Progress

Furniture & Equipment Motor Vehicles

Leased Motor Vehicles Total

Cost N'000 N'000 N'000 N'000 N'000 N'000At 1 January 2016 4,863,704 262,482 1,467,786 548,531 104,890 7,247,394 Additions - 495,884 305,638 71,589 - 873,110 Disposals - (145,764) (68,031) (44,921) - (258,716) Reclassification (see note 13a) - - - - - - Revaluation - - - - - - At 30 September 2016 4,863,704 612,602 1,705,392 575,199 104,890 7,861,787

Accumulated depreciationAt 1 January 2016 548,024 - 1,136,769 424,189 26,584 2,135,566 Depreciation for the period 86,536 - 112,071 60,060 12,989 271,656 Disposals - - (57,548) (42,270) - (99,818) Written-off - - - - - - At 30 September 2016 634,561 - 1,191,292 441,979 39,573 2,307,405


AIICO Plc 2016


15 Statutory Deposit


Amount Deposited 530,000 530,000 530,000 530,000 530,000 500,000 530,000 500,000

Group Parent

This represents the amount deposited with the Central Bank of Nigeria as at 30 September, 2016 in accordance with section 9(1) and section 10(3) of Insurance Act 2003 interest income earned on this deposit is included in the investment income.

16 Insurance Contract Liabilities


Life insurance contract 50,594,859 50,103,692 50,412,529 50,103,692 Non–life insurance contract 6,330,280 5,444,462 6,330,280 5,276,285 Total insurance contract liabilities 56,925,139 55,548,154 56,742,810 55,379,977

Sep-16 Dec-15 Sep-16 Dec-15(a) Insurance contract liabilities N'000 N '000 N'000 N '000

Liability on Long Term Insurance Contract Fund 48,795,034 47,854,907 48,612,705 47,854,907 48,795,034 47,854,907 48,612,705 47,854,907

Provision for outstanding claims + IBNR 1,799,825 2,248,785 1,799,825 2,248,785 50,594,859 50,103,692 50,412,529 50,103,692

Sep-16 Dec-15 Sep-16 Dec-15(a)(i) Liability on Long Term Insurance Contract Fund N'000 N '000 N'000 N '000

Annuity 30,058,316 32,700,431 30,058,316 32,700,431 Group Life 1,696,235 1,149,730 1,696,235 1,149,730 Ordinary Life 16,858,153 14,004,746 16,858,153 14,004,746 Others 182,329 - At 30 September 48,795,034 47,854,907 48,612,705 47,854,907

Sep-16 Dec-15 Sep-16 Dec-15(a)(ii) Total Insurance contract liabilities N'000 N '000 N'000 N '000

Liability on Long Term Insurance Contract Fund 48,190,630 47,418,680 48,008,301 47,250,503 Unearned Premium 3,356,702 2,653,739 3,356,702 2,653,739 Outstanding claim provision 4,294,589 4,497,480 4,294,589 4,122,725 Incurred but not reported (IBNR) 1,083,217 978,255 1,083,217 1,353,010

56,925,139 55,548,154 56,742,810 55,379,977

Sep-16 Dec-15 Sep-16 Dec-15(a)(iii) Life contract outstanding claim provision N'000 N '000 N'000 N '000

At 1 January 47,854,907 27,700,687 47,854,907 27,700,687 Movement in the period 940,127 20,154,220 757,798 20,154,220 At 30 September 48,795,034 47,854,907 48,612,705 47,854,907

Sep-16 Dec-15 Sep-16 Dec-15(a)(iv) Life contract outstanding claim provision N'000 N '000 N'000 N '000

At 1 January 2,248,785 2,696,800 2,248,785 2,696,800 Claims incurred in the current period/year 8,743,262 9,379,290 8,743,262 9,379,290 Claims paid during the year (9,192,222) ( 9,827,305 ) (9,192,222) ( 9,827,305 ) At 30 September 1,799,825 2,248,785 1,799,825 2,248,785

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AIICO Plc 2016


(b) Non-life insurance contract liabilities Sep-16 Dec-15 Sep-16 Dec-15N'000 N '000 N'000 N '000

Provision for reported claims by policyholders 2,674,747 2,499,142 2,674,747 2,499,142 Provision for claims incurred but not reported (IBNR) 903,235 727,808 903,235 727,808 Outstanding claims provision 3,577,982 3,226,950 3,577,982 3,226,950 Provision for unearned premiums 2,752,298 2,217,512 2,752,298 2,049,335 Provision for premium deficiency - - - Total non life insurance contract liabilities 6,330,280 5,444,462 6,330,280 5,276,286

(b)(i) Outstanding claims provision Sep-16 Dec-15 Sep-16 Dec-15N'000 N '000 N'000 N '000

At 1 January 3,226,950 2,285,706 3,226,950 2,285,706 Claims incurred in the current accident period/year 3,042,538 3,662,163 3,042,538 3,662,163 Claims paid during the period/year (2,691,507) (2,720,919) (2,691,507) (2,720,919)At 30 September 3,577,982 3,226,950 3,577,982 3,226,950

(b)(ii) Provision for unearned premiums - Non Life Sep-16 Dec-15 Sep-16 Dec-15N'000 N '000 N'000 N '000

At 1 January 2,217,512 2,388,108 2,049,335 2,345,922 Changes in Health Insurance Unearned Premium - 125,991 - - Premiums written in the period/year 6,212,615 8,669,496 6,212,615 8,199,952 Premums earned during the period/year (5,677,828) (8,966,083) (5,509,651) (8,496,539)Provision for premium deficiency - - - - At 30 September 2,752,298 2,217,512 2,752,298 2,049,335

Group Parent

Group Parent

Group Parent

17 Investment contract liabilitiesSep-16 Dec-15 Sep-16 Dec-15

N'000 N '000 N'000 N '000Deposit administration 3,016,835 2,909,940 3,016,835 2,909,940 Other investment contract liabilities 5,551,123 5,385,106 5,551,123 5,385,106 Total investment contract liabilities 8,567,957 8,295,046 8,567,957 8,295,046

(a) Deposit administration is stated at amortised cost and this is analysed as follows:


At 1 January 2,909,940 2,968,448 2,909,940 2,968,448Deposits 41,523 1,599,101 41,523 1,599,101Withdrawals (55,816) ( 1,741,434 ) (55,816) ( 1,741,434 ) Fees and other deductions (2,820) ( 80,691 ) (2,820) ( 80,691 ) Credit of interest and other income 124,008 164,516 124,008 164,516At 30 September 3,016,835 2,909,940 3,016,835 2,909,940

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AIICO Plc 2016


(b) Other investment contract liabilities are stated at amortised cost and the amount is analysed as follows:


At 1 January 5,385,106 3,639,677 5,385,106 3,639,677 Deposits 166,017 1,745,429 166,017 1,745,429 Withdrawals - - - - Fees and other deductions - - - - Credit of interest and other income - - - - At 30 September 5,551,123 5,385,106 5,551,123 5,385,106

18 Trade Payables


Due to Reinsurers 745,004 351,195 745,004 351,195 Due to Policy holders 1,216,373 1,196,353 1,200,666 1,196,353

1,961,377 1,547,548 1,945,670 1,547,548

MovementSep-16 Dec-15 Sep-16 Dec-15

N'000 N '000 N'000 N '000At 1 January 643,762 643,762 643,762 643,762 Changes during the year 1,317,615 903,786 1,301,908 903,786 At 30 September 1,961,377 1,547,548 1,945,670 1,547,548

19 Other Payables and AccrualsSep-16 Dec-15 Sep-16 Dec-15

N'000 N '000 N'000 N '000At 1 January 2,489,333 3,702,330 2,432,087 3,399,891 Changes during the year (733,978) (1,212,997) (753,863) (967,804) At 30 September 1,755,355 2,489,333 1,678,224 2,432,087

Other Payables and AccrualsSep-16 Dec-15 Sep-16 Dec-15

N'000 N '000 N'000 N '000Accrued expenses 285,244 206,246 158,006 166,575 Agents provident fund 88,116 21,654 88,116 21,654 Premium received in advance 484,785 791,373 484,785 791,373 Gratuity payable 406,937 419,448 406,937 419,448 Deferred income 244,247 194,609 244,247 194,609 Other payables (see note (i) below) 235,393 250,549 107,035 68,741 Other credit balances (see note (ii) below) 10,630 605,454 10,630 605,454 Payables to subsidiaries 0 178,467 164,233

1,755,355 2,489,333 1,678,224 2,432,087

Group

This represents the amount payable to reinsurance companies. The carrying amounts disclosed below approximate fair value at the reporting date

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AIICO Plc 2016


20 Fixed Income Liabilities


Guaranteed income notes (see (i) below) 2,020,105 165,838 - - 2,020,105 165,838 - -

(i) AIICO Capital Limited, a subsidiary company, manages a guaranteed income product, held as fixed income liabilities.

21 Finance Lease Obligation

(i)


At 1 January 49,854 49,230 49,854 49,230 Finance lease obtained during the year - 29,832 - 29,832 Payments during the period (38,387) (29,208) (38,387) (29,208)

At 30 September 11,467 49,854 11,467 49,854

(ii) The analysis of the finance lease obligations was as follows:


Amount due within one year 11,467 42,486 11,467 42,486 Amount due after one year - 7,368 - 7,368

11,467 49,854 11,467 49,854

Group Parent

Group Parent

The movement in the finance lease account was as follows:

Group Parent

The asset held under this arrangement are in the name of AIICO Capital Limited and the underlying risk are retained by the company

It is the Group's policy to lease certain of its property, plant and equipment under finance leases . The average lease term is four years. For the period to 30 September 2016, the average effective borrowing rate was 20%. Interest rates are fixed at the date of contract date. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental payments. All lease obligations are denominated in Naira. The fair value of the Group's obligations under finance leases are secured by the asset to which the leases relate.


AIICO Plc 2016


22(a) Borrowings Sep-16 Dec-15 Sep-16 Dec-15N'000 N'000 N'000 N'000

IFC Loan 1,893,422 1,134,840 1,893,422 1,134,840

(i)


Long term debt measured at amortised cost 1,893,422 1,134,840 1,893,422 1,134,840 Derivative liability measured at fair value (see note (21b)) 319,274 319,274 319,274 319,274

2,212,695 1,454,114 2,212,695 1,454,114

22(b) Derivative Liabilities Sep-16 Dec-15 Sep-16 Dec-15N'000 N '000 N'000 N '000

Option in Convertible Debt - IFC 319,274 319,274 319,274 319,274 319,274 319,274 319,274 319,274

The loan, which is a hybrid financial instrument was split into debt and derivative liability components based on subsequent measurement, is as follows:

The amount represents the part disbursement of the foreign currency convertible interest bearing loan of N3.8billion ($20 million), from the International Finance Corporation (IFC), a member of the World Bank Group for infrastructure development and expansion of retail business. The loan was obtained on 23 December 2014 (''the agreement date'') at an interest rate of 6.5% plus 6-month LIBOR for a period of 7 years.The loan has an embedded derivative (a conversion option) whereby each of the IFC entities have the right to convert all or a portion of the outstanding principal amount into the equivalent number of shares of the Company.This option may be exercised 3 years from 23 December 2016 or in the event of a change in control or sale of a substantial part of the Company's assets or business.

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Group Parent

This represents the embedded options to convert the outstanding notional amount of the borrowing granted by the International Finance Corporation (IFC), into shares. (see further details on note 22).

23 Issued Share Capital

Sep-16 Dec-15 Sep-16 Dec-15Authorised shares N'000 N '000 N'000 N '00015,000,000,000 Ordinary Shares of 50 kobo each 7,500,000 7,500,000 7,500,000 7,500,000

7,500,000 7,500,000 7,500,000 7,500,000

Ordinary shares issued and fully paid Sep-16 Dec-15 Sep-16 Dec-15N'000 N '000 N'000 N '000

6,930,204,480 ordinary shares at 50 kobo each 3,465,102 3,465,102 3,465,102 3,465,102 3,465,102 3,465,102 3,465,102 3,465,102

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AIICO Plc 2016


24 Share Premium Sep-16 Dec-15 Sep-16 Dec-15N'000 N '000 N'000 N '000

Share premium 2,824,389 2,824,389 2,824,389 2,824,389 2,824,389 2,824,389 2,824,389 2,824,389

25 Revaluation Reserves Sep-16 Dec-15 Sep-16 Dec-15N'000 N '000 N'000 N '000

Opening Balance 1,221,707 1,221,707 1,221,707 1,221,707 Fair value gain on revalued land and building - - - -

1,221,707 1,221,707 1,221,707 1,221,707

26 Available-For-Sale Reserve Sep-16 Dec-15 Sep-16 Dec-15N'000 N '000 N'000 N '000

Opening Balance (2,723,536) 581,971 (2,723,536) 581,400 Other Comprehensive Income (1,850,538) (3,305,507) (1,850,538) (3,304,936)

(4,574,074) (2,723,536) (4,574,074) (2,723,536)

27 Exchange Gain Reserve Sep-16 Dec-15 Sep-16 Dec-15N'000 N '000 N'000 N '000

Opening Balance 148,521 - 148,521 - Other Comprehensive Income (134,246) 148,521 (134,246) 148,521

14,275 148,521 14,275 148,521

28 Statutory Reserve Sep-16 Dec-15 Sep-16 Dec-15N'000 N '000 N'000 N '000

Opening Balance 55,240 14,629 - - Transfer from retained earnings 9,586 40,611 - -

64,826 55,240 - -

29 Contingency Reserve Sep-16 Dec-15 Sep-16 Dec-15N'000 N '000 N'000 N '000

Opening Balance 3,482,076 3,019,230 3,482,076 2,993,584 Transfer from retained Earnings - 462,846 - 488,492

3,482,076 3,482,076 3,482,076 3,482,076

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The Company retranslated the $7million IFC loan obtained in 2015 due to the foreign exchange fluctuation at N315/$1.

Contingency reserve is calculated, in the case of non-life business, at the rate of the higher of 3% of total premium receivable during the period or 20% of the net profits in accordance with Section 21(2) of Insurance Act, 2003 and, in respect of Life Insurance Business, at the rate of the higher of the higher of 1% of the gross premium and 10% of net profits, in accordance with Section 22(1)(b) of the Insurance Act 2003.

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AIICO Plc 2016


30 Retained Earnings Sep-16 Dec-15 Sep-16 Dec-15N'000 N '000 N'000 N '000

Opening Balance 898,088 275,503 1,026,515 548,547Prior year adjustment (118,175) - - -Dividend paid to ordinary shareholders (416,333) - (346,510) -Transfer from Statement of profit or loss and Other Comprehensive Income 3,004,437 1,220,000 2,488,409 966,461Transfer to contingency reserve - (462,846) - (488,492)Transfer to statutory reserve - (40,611) - -Dividend paid to preference shareholders - - - -Loss on conversion of preference shares - (39,769) - -Negative goodwill on consolidation - - - -Loss on transaction with NCI - (54,188) - -

3,368,018 898,088 3,168,414 1,026,516

Group Parent

31 Gross Premium Written Sep-16 Sep-15 Sep-16 Sep-15N'000 N '000 N'000 N '000

Total Gross Premium Written 21,002,606 25,075,083 20,472,478 24,418,058

Gross Premium Written by BusinessNon-life 6,212,615 7,056,227 6,212,615 7,056,227 Life (Individual and group) 10,573,732 8,328,181 10,573,732 8,328,181 Annuity 3,686,131 9,033,649 3,686,131 9,033,649 Health Management 530,128 657,025 - -

21,002,606 25,075,082 20,472,478 24,418,057

(a) Premium received Sep-16 Sep-15 Sep-16 Sep-15N'000 N '000 N'000 N '000

Gross written premium per income statement 21,002,606 25,075,083 20,472,478 24,418,058 Less (increase) / decrease in trade receivables (126,326) (156,111) (43,690) (137,697) Impairment of insurance receivable charged during the year - - - - Premium received 20,876,279 24,918,972 20,428,788 24,280,361

32 Net Premium Income

(a) Gross Premiums on Insurance Contracts Sep-16 Sep-15 Sep-16 Sep-15

N'000 N '000 N'000 N '000Gross Premium Written 21,002,606 25,075,083 20,472,478 24,418,058 Change in Unearned Premiums (1,769,667) (12,360,185) (1,623,958) (12,360,185) Gross Premium Income 19,232,938 12,714,898 18,848,520 12,057,873

(b) Premiums Ceded to Reinsurers on Insurance Contracts Sep-16 Sep-15 Sep-16 Sep-15

N'000 N '000 N'000 N '000Reinsurance Cost (2,457,712) (2,780,917) (2,457,712) (2,780,917) Premium Ceded to Reinsurers (2,457,712) (2,780,917) (2,457,712) (2,780,917)

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AIICO Plc 2016


33 Fees and commission income Sep-16 Sep-15 Sep-16 Sep-15N'000 N'000 N'000 N'000

Reinsurance commission income 555,882 544,904 555,882 544,904 Other commission income 1,187,057 634,538 - - Total fees and commission income 1,742,939 1,179,442 555,882 544,904

34 Gross benefits and claims (a) Gross benefits and claims paid Sep-16 Sep-15 Sep-16 Sep-15

N'000 N '000 N'000 N '000Life insurance contracts 8,970,073 4,072,537 8,743,261 4,072,537 Non-life insurance contracts 3,042,538 2,985,488 3,042,538 2,985,488 Total gross benefits and claims paid 12,012,612 7,058,024 11,785,799 7,058,024

(i) Gross change in life claimsGross benefit paid 4,817,355 3,245,749 4,590,543 3,245,749 Gross claims paid 4,333,862 826,787 4,333,862 826,787 Change in outstanding claims reserve (181,144) - (181,144) -

8,970,073 4,072,536 8,743,261 4,072,536

(ii) Gross change in non-life claimsGross claims paid 2,686,247 2,509,636 2,686,247 2,509,636 Change in outstanding claims reserve 206,292 475,852 206,292 475,852

2,892,538 2,985,488 2,892,538 2,985,488

Sep-16 Sep-15 Sep-16 Sep-15(b) Claims ceded to reinsurers N'000 N '000 N'000 N '000

Life insurance contracts (222,669) (178,643) (222,669) (178,643)Non-life insurance contracts (983,689) (1,001,528) (983,689) (1,001,528)Total claims ceded to reinsurers (1,206,357) (1,180,171) (1,206,357) (1,180,171)

35 Underwriting Expenses Sep-16 Sep-15 Sep-16 Sep-15N'000 N '000 N'000 N '000

Acquisition Costs 2,093,037 2,463,644 2,032,741 2,138,452 Maintenance Expenses 258,508 283,439 258,508 283,439

2,351,546 2,747,083 2,291,249 2,421,891

Group Parent

Group Parent

Group Parent

Group Parent

Sep-16 Sep-15 Sep-16 Sep-15(a) Acquisition Costs N'000 N '000 N'000 N '000

Commission paid during the year 1,945,807 2,245,990 1,945,807 2,245,990 Net movement in deferred acquisition cost 86,934 (107,538) 86,934 (107,538) Commission incurred 2,032,741 2,138,452 2,032,741 2,138,452 Providers capitation fee and other direct expenses 60,296 325,192 - -

2,093,037 2,463,644 2,032,741 2,138,452

Group Parent


AIICO Plc 2016


Sep-16 Sep-15 Sep-16 Sep-15(a)(i) Commission Incurred N'000 N '000 N'000 N '000

Life 1,369,181 1,238,991 1,369,181 1,238,991 Non Life 723,856 1,224,653 663,560 899,461

2,093,037 2,463,644 2,032,741 2,138,452

Sep-16 Sep-15 Sep-16 Sep-15(b) Maintenance Expenses N'000 N '000 N'000 N '000

Policy Administration Expenses 224,048 195,814 224,048 195,814 Tracking Expenses 10,261 26,155 10,261 26,155 Service Charge 24,199 61,470 24,199 61,470

258,508 283,439 258,508 283,439

Group Parent

Group Parent

Sep-16 Sep-15 Sep-16 Sep-1536 Investment Income N'000 N '000 N'000 N '000

Investment Income Attributable to Policyholders' Funds 1,260,569 1,292,399 1,260,569 1,292,399 Investment Income Attributable to Annuity Funds 3,208,884 2,215,867 3,208,884 2,215,867 Investment Income Attributable to Shareholders' Funds 900,243 674,602 607,147 550,407

5,369,696 4,182,868 5,076,601 4,058,673

Sep-16 Sep-15 Sep-16 Sep-1536a Investment Income Attributable to Policyholders' Funds N'000 N '000 N'000 N '000

Interest income on loans and recievables - - - - Available for sale financial assets interest income 981,164 892,065 981,164 892,065 Cash and cash equivalents interest income 86,538 102,493 86,538 102,493 Income from structured investments 66,198 50,383 66,198 50,383 Available for sale dividend income 126,669 247,458 126,669 247,458

1,260,569 1,292,399 1,260,569 1,292,399

Sep-16 Sep-15 Sep-16 Sep-1536b Investment Income Attributable to Annuity Funds N'000 N '000 N'000 N '000

Available for sale financial assets interest income 3,128,269 2,097,237 3,128,269 2,097,237 Interest income on loans and recievables - - Cash and cash equivalents interest income 52,489 77,415 52,489 77,415 Income from structured investments - 32,020 - 32,020 Available for sale dividend income 28,127 9,195 28,127 9,195

3,208,884 2,215,867 3,208,884 2,215,867

Sep-16 Sep-15 Sep-16 Sep-1536c Investment Income Attributable to Shareholders N'000 N '000 N'000 N '000

Interest income on loans and recievables - - - Available for sale financial assets interest income 342,435 397,733 342,435 397,733 Cash and cash equivalents interest income 399,136 25,172 106,041 25,172 Income from structured investments 29,568 49,650 29,568 49,650 Available for sale dividend income 129,104 202,047 129,104 77,852

900,243 674,602 607,147 550,407

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AIICO Plc 2016


Sep-16 Sep-15 Sep-16 Sep-1536d Investment Income Attributable to Shareholders' Funds N'000 N '000 N'000 N '000

Profit from Deposit Administration 116,748 122,690 116,748 122,690 116,748 122,690 116,748 122,690

Sep-16 Sep-15 Sep-16 Sep-1537a Net Realised Gains and Losses N'000 N '000 N'000 N '000N'000 N'000

Property and equipment:Realised gains 22,951 348,355 16,848 348,355 Total net realised gains 22,951 348,355 16,848 348,355

Sep-16 Sep-15 Sep-16 Sep-1537b Net Gains/(Losses) on Assets at fair value N'000 N '000 N'000 N '000

Fair value gain on Investment Property 6,000 - 6,000 - 6,000 - 6,000 -

38 Other Operating Income Sep-16 Sep-15 Sep-16 Sep-15N'000 N '000 N'000 N '000

Sundry income 619,860 407,740 579,908 345,167 Exchange gains/(loss) 36,263 11,219 36,263 11,219 Total other operating Income 656,122 418,959 616,170 356,386

39 Employee Benefits ExpenseSep-16 Sep-15 Sep-16 Sep-15

N'000 N '000 N'000 N '000Employee benefits 1,094,601 610,632 645,536 325,015 Other employee benefits 953,901 1,392,922 810,734 1,132,523 Current service cost (retirement benefit obligation) - - - - Total employee benefits expense 2,048,502 2,003,554 1,456,269 1,457,538

Sep-16 Sep-15 Sep-16 Sep-1540 Other Operating Expenses N'000 N '000 N'000 N '000

Subsistence & Travels 309,836 242,300 254,111 183,596 Occupancy Expenses 397,856 223,329 345,562 283,330 Data and Communication expenses 241,145 194,495 216,024 147,783 Dues and subscriptions 39,137 42,777 35,844 36,536 Office Supplies and Stationeries 66,846 45,114 59,609 41,199 Fees and Assessmets 1,177,376 1,045,931 1,216,928 947,948 Back duty assesment (see note (i) below) 603,185 - 603,185 - Auditors Remuneration 45,000 29,250 45,000 29,250 Other administrative expenses (see note (ii) below) 912,335 64,018 809,763 46,082 Depreciation & Amortisation 433,239 352,712 331,813 306,186 Expenses for Marketing & Administrtion 314,172 172,107 271,718 148,693

4,540,127 2,412,031 4,189,557 2,170,603

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AIICO Plc 2016


(i) Back duty assessment include additional CIT,VAT and WHT on tax assement by FIRS for 2012-2014 accounting years.

(ii)

Sep-16 Sep-15 Sep-16 Sep-1541 Finance Cost N'000 N '000 N'000 N '000

124,398 16,173 124,398 15,422 124,398 16,173 124,398 15,422

42 Earnings per share

The following reflects the income and share data used in the basic earnings per share computations:

Sep-16 Sep-15 Sep-16 Sep-15N'000 N '000 N'000 N '000

Net profit attributable to ordinary shareholders for basic and diluted earnings 3,004,437 2,639,055 2,488,409 2,451,956Dividend paid to preference shareholders - -

3,004,437 2,639,055 2,488,409 2,451,956

Number of shares in issue 6,930,204 6,930,204 6,930,204 6,930,204

Dilutive effect of IFC loan conversion option 2,205,000 - 2,205,000 - Net 9,135,204 6,930,204 9,135,204 6,930,204

Basic earnings per share (kobo) 43 38 36 35 Diluted earnings per share (kobo) 33 38 27 35

by the weighted average number of ordinary shares outstanding at the reporting date.Basic earnings per share amounts is calculated by dividing the net profit for the year attributable to ordinary shareholders

Group Parent

Group Parent

Other administrative expenses includes a payment of N755m to Addax Petroleum Limited in respect of a pending case which commenced in 2006. The case relates to a Pension Shceme operated with AIICO Insurance Plc which was subsequently terminated but repayment was not conclusive following a delay from PENCOM on the implementation of the Pension Reform Act 2004.

aiico insurance plc...mr. edwin igbiti group md / ceo mr. babatunde fajemirokun executive director...

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