GLICO Life Annual Report 2012-12mb - PDF

1Annual Report & Financial Statements

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27 - 59

Profile of Directors

Top Management

Chairmans Report

Managing Directors Report

Directors Report

Certificate of Solvency

Report of the Auditors

Statement of Profit and Loss Account

Statement of Profit and Loss and Other

Comprehensive Income.

Balance Sheet

Statement of Changes in Equity

Cash Flow Statement

Notes to the Financial Statements

Corporate Information

DIRECTORS

Harry Owusu - Chairman

K. Achampong-Kyei - Director

E. Forkuo Kyei - Managing Director

Stephen Enchill (Dr.) - Director

Eddie Safo Kwakye - Director

Grant Kesse (H.E.) - Director

Sir Daniel Charles Gyimah - Director

SECRETARY

Andrew Achampong Kyei (ESQ)

REGISTERED OFFICE:

GLICO House

47 Kwame Nkrumah Avenue

P. O. Box 4251, Adabraka, Accra

AUDITORS:

Osei Kwabena & Associates

Chartered Accountants

98 Miamona Close

South Industrial Area

P. O. Box 10276

Accra North, Accra

SOLICITORS

Edward J. Mettle-Nunoo (ESQ)

Judina Chambers

Evergreen House

Community 4, Tema

BANKERS

Ghana Commercial Bank Ltd

Intercontinental Bank Ghana Ltd

The Trust Bank Ltd

Prudential Bank Ltd

National Investment Bank Ltd

ACTUARIES

Stallion Consultants Limited

P.O. Box CT 38170

Cantonments, Accra


3

Harry Owusu

Mr. Harry Owusu holds a BA (Education) Degree from the

University of Cape Coast and Graduate Diploma in

Communication Studies from the University of Ghana, Legon.

He received further training at the Economic Development Institute

of the World Bank, USA, the Development Finance Institute of the

Private Development Corporation of the Philippines and the Duke

Center for International Development, Duke University, North

Carolina, USA.

Between August 2001 and April 2009, he was the Executive

Secretary of the Revenue Agencies Governing Board now Ghana

Revenue Authority.

He has held senior management positions in the National

Investment Bank.

He has also served on several boards of corporations including

Rhecah Buffalo Ghana Limited, Accra Markets Limited, Ghana

Highway Authority, Ghana Stock Exchange, the Novotel Hotel,

Accra, the Gaming Commission, GETFUND and GCNet.

BOARD MEMBERS

PROFILE OF DIRECTORS

Annual Report & Financial Statements

4

Edward Forkuo Kyei

Kwame Achampong-Kyei

Mr. Kwame Achampong-Kyei established GLICO LIFE in 1987 as a

specialist life insurance company at a time when life insurance

business in Ghana was dormant. Today, he has organically grown the

component businesses: GLICO GENERAL, GLICO FINANCIAL,

GLICO HEALTHCARE, GLICO PROPERTIES and GLICO

PENSIONS which constitute the GLICO Group.

He is a visionary entrepreneur and a distinguished Insurance

Executive and practitioner with over thirty-five years active

experience in the insurance/financial industry gained through self

development initiatives, commitment to application of modern

insurance concepts and models both locally and internationally.

Mr. Achampong-Kyei has both academic and professional

qualifications and is an accredited recipient of the International

Quality Award as well as the Gold Award in Life Underwriting.

He is also an esteemed member of the Chartered Insurance Institute

and holds a B.Sc Degree in Business Studies, a Post Graduate

Diploma in Management Studies from the United Kingdom.

Mr. Achampong-Kyei serves as Chairman on the Executive Boards

and Committees of the GLICO GROUP. For thirteen years (1993-

2004), he assisted the National Insurance Commission-Ghana, in

establishing the foundations of the current Insurance Trade

Association as a General Secretary.

PROFILE OF DIRECTORS - Contd.

Mr. Edward Forkuo Kyei is the Chief Executive Officer and

Managing Director of GLICO LIFE. Hither to his appointments,

he held varied management positions within GLICO including

that of the Executive Director of GLICO LIFE.

Mr. Forkuo Kyei joined GLICO in 1992 when he was still a

student and has played a pivotal role in the growth and

success of the organization since its inception in 1987.

His wealth of knowledge and expertise spans across two and

half decades of working within the insurance and financial

service industry.

He is an Associate Member of the Chartered Insurance

Institute (UK), a fellow of Ghana Insurance Institute and a

member of the Life Council of the Ghana Insurers Association.

He also holds an MBA in Finance & Advanced Strategic

Management from Cardiff Business School, London (UK).

Further, he holds an M Sc in Insurance & Risk Management

from Cass Business School (UK). He is also a graduate with a

B Sc in Development Planning from the Kwame Nkrumah

University of Science and Technology (KNUST).

Mr. Forkou Kyei is passionate about insurance and has been

instrumental in the quest to advancing life insurance in Ghana;

he is indeed a valued resource for the Ghana Insurance

industry.


5

Eddie Safo Kwakye

Mr. Eddie is an accomplished banker and Financial

Analyst, with extensive knowledge and expertise in Finance and

Management, Corporate and Financial Restructuring and Re-

engineering, Investment Advisory Services, Merger and

Acquisitions and Project Design, Set-up and Management.

He holds an MBA in Finance and Bachelor of Arts in Economics from

the University of Ghana, Legon. He is, in addition, an aluminus of top

academic and professional institutions with Certificates/Diplomas in

several courses with these institutions including the World Bank; the

IMF; Crown Agents (UK); University of Virginia, Darden Business

School, USA; Executive Leadership Training Centre, York

University, Toronto, Canada; and Boulders Institute of Microfinance,

Turin, Italy.

His rich working experience spans across local and international

financial institutions in senior and executive management positions

with SG-SSB Bank and Ecobank Transnational Incorporated (ETI).

In addition, he was Advisor and Coordinator for the Financial Sector

as well as Manager of the Financial Sector Reform Programme

(FINSSP / EMCB - FSR) implementation at the Ministry of Finance

(2001-2008).

As Team Leader, Eddie worked with the World Bank/IMF/Donor

Partners on the FINSSP/FSR implementation and also liaised with

financial sector regulators and several financial institutions in Ghana

and the outside world.

Safo Kwakye

Dr. Stephen Enchill


Dr. Stephen Enchill is a Business Executive and an Entrepreneur by

practice and a Chartered Accountant by profession. He has

acquired extensive experience in diverse business fields, both in

Ghana and internationally.

Dr. Enchill's working experience started from working with Ghana

Ports and Harbours Authority in 1985. He further acquired additional

skills from working as management person in UAC Ghana Limited

(now Uniliver Ghana Limited), PKF (a firm of Chartered

Accountants), Ghana National Petroleum Corporation, Ikam Limited

and GLICO Life Insurance Company Limited.

Dr. Enchill is currently the Executive Vice Chairman of First Capital

Plus Savings and Loan Limited. He also practises as a Chartered

Accountant and is the Senior Partner of Forbes Consult International

(Chartered Accountants and Management Consultants).

Professionally, he holds the finals of ICA (Ghana) and a

Member/Fellow of Institute of Chartered Accountants, Ghana. He is

also a member of the Association of MBAs (UK); after successfully

graduating from IFM of Manchester University and University of

Wales (UK) with an MBA in Finance and Management. He also

holds a Doctorate Degree in Business Administration with SMC

University in Switzerland.

Dr. Enchill has attended several seminars and courses both in Ghana and outside Ghana to enrich his knowledge base that

gives him urge in all his entrepreneurship business endeavours. As part of his drive, he lectured in Accounting and Financial

Management at the tertiary level and he is also an examiner for Institute of Chartered Accountants (Ghana) for the past 12

years.

Stephen serves on other boards including GLICO General Insurance Limited, First Capital Plus, Action Aid Ghana and

Ekumfiman Rural Bank.

Eddie has deep and extensive corporate governance experiences from serving on Boards of top-notch and diversified

numerous Corporate and Public Institutions. He presently serves on both GLICO Life and GLICO General Boards.


6

H.E. Grant Ohemeng Kesse

Andrew Achampong-Kyei

Mr. Andrew Achampong-Kyei is a United Kingdom qualified Solicitor

and a Fellow of the Institute of Legal Executives. He has also been

called to the Ghana Bar Association. He is thus qualified to practise

both in Ghana and the United Kingdom.

He has extensive experience as a finance and project lawyer and has

worked with leading law firms in the United Kingdom.

Andrew holds a Bachelor of Law Degree from the University of Kent

(UK) and a Post - Graduate Diploma from the University of

Westminster (UK).

Prior to his appointment, Andrew had been working intermittently with

GLICO throughout schooling, whenever he was in Ghana. He

rejoined GLICO in 2010 as the Head of Legal and Special Risks with

unique skills in Management, Finance and Insurance Business.

Andrew is currently the Company Secretary of GLICO LIFE and sits

on the Executive Committees of the company.


His Excellency (H.E) Grant Ohemeng Kesse, a Planning and

Development Consultant, holds a Post-Graduate Diploma in

Planning (Notts), M.Sc. in Transportation Planning (London) and a

Diploma of Imperial College.

He is a Fellow and Past President of Ghana Institute of Planners.

From 1964 to 1976, H.E. Kesse worked in the Civil Service, rising to

the rank of Deputy Director, Town and Country Planning Department.

From 1976 to June 2006, he was the Chief Consultant of Kesse-

Tagoe & Associates, a firm of Planning and Development

Consultants. He was the Chairman of the Board of Directors of

Gemini Life Insurance Company (now GLICO LIFE) from 1995 to

2006.

He was a Member of Okyeman Lands Commission from 1990 to

2004, a Board Member of Ofori Panyin Secondary School,

Kukurantumi from 1991 to 2003 and the Board Chairman of St. Paul

Technical School, Kukurantumi from 1992 to 2002.

H. E. Kesse was also an external Examiner of the Kwame Nkrumah

University of Science and Technology, KNUST from 1974 to 1988,

and a member of the National Development Planning Commission

from 2002 to 2006.

H.E. Kesse was Ghana's Ambassador to the Federal Republic of

Germany, from July 2006 to February 2009 and is currently a Director

of Adonten Community Bank (New Tafo).


7


Sir. Daniel Charles Gyimah

Sir Daniel Charles Gyimah is a professional Chemical Engineer as

well as a Chartered Banker with over thirty (30) years experience. He

is a Fellow of both the Ghana Institution of Engineers and Chartered

Institute of Bankers (Ghana).

For almost a decade, he was the Private Sector Adviser to the Ghana

Mission of the United States Agency for International Development

(USAID).

Sir Gyimah served as the Managing Director of Eximguaranty

Company (Ghana), a company engaged in Financial Guarantees

business in Ghana, from 1998 to 2001. He also served as the

Managing Director of the National Investment Bank from 2001 to

2009.

He has contributed immensely towards the development of many

institutions outside his normal appointments as the Chairman of the

Board of Directors of the Global Food Processing Company, Nestle

(Ghana) Ltd, and the First Ghana Building Company Ltd.

Additionally, Sir Gyimah was the Chairman of the Metro Mass Transit

Company Ltd, a company which runs intra and Inter-City Transport

Services in Ghana. He held Directorship positions of the Global

Petrochemical Company, the TOTAL (Ghana) Ltd and the AU

Development Company Ltd, a real estate development company.

In the field of academia, he was the Chairman of the Council of the

University for Development Studies, and also served as a member of

the Governing Board of the Catholic University of Ghana for ten (10)

years.

Currently, Sir Gyimah is an independent financial and engineering

consultant in the AS Johnson and Associates.

OUR CUSTOMER SERVICE

At GLICO LIFE, we view every interaction with our

clients as an opportunity to grow their confidence in our

brand.

Our strength lies in our dedicated customer services:

our ability to consistently deliver quality and speedy

service to our clients; our ability to set benchmarked

standards; our ability to settle claims promptly and our

ability to offer precise products and services to manage

clients' unique and evolving risks.

Call our Customer Service Hotline on +233 (0)302 218

500 for absolute peace of mind.

F O C U S


8

MANAGEMENT

Top


9

CHAIRMANS REPORT

The year 2012 was no different from 2011 in terms of global economic outlook. According to the IMF

World Economic Outlook, October 2012, unemployment showed increasing and broad based

economic sluggishness in the first half of 2012 and no significant improvement in the third quarter.

Global manufacturing slowed sharply and the euro area periphery saw a marked decline in activity

driven by financial difficulties. Spillovers from advanced economies and homegrown difficulties held

back activities in emerging markets and developing economies. The results of these developments are

that growth once again had been weaker than projected. Growth has been forecasted at 1.3% for

advanced economies and 5.3% for emerging markets and developing economies. Although emerging

markets are viewed by most analysts, as the mainstay to ensure world economic growth, they are not

however unaffected by the developments in the developed world.

The Ghanaian economy as a result experienced effects of the economic spillovers. Albeit, it performed

remarkably well. With a stable macro-economic environment, GDP growth for 2012 was projected at

7.1% compared to sub-Saharan projected average growth of 4.8% and global projected growth of 3.2%.

The growth was driven by oil revenues, the services sector and the strong export performance of cocoa

and gold. Ghana's medium-term growth outlook remains positive, thanks to large investments in the

extractive industries, public infrastructure and commercial agriculture.

Inflation also had been on a downward trend since it peaked at 20.7% in June 2009. This fall in inflation

has been driven by a stable political and macroeconomic environment although there were

uncertainties with respect to the 2012 elections. Inflation as at May 2012 was 9.3% and ended at a

single digit of 8.8% and this trend is expected to continue in 2013.

The insurance industry still remained competitive in the year 2012 with the entrance of new companies

compounding the already fierce competition. On the whole, however, the industry continued to post

positive growth in gross written premiums. In 2011, the life sector premium income grew by 44.20% from

GH187,343,779 in 2010 to GH270,176,073 in 2011.

It is important to note the rate of growth of the life premiums and to state that for the past three years, the

life insurance business has contributed more to the industry's total premium income than the motor

business.

Economic Environment

Insurance Industry


Harry Owusu

(Chairman)

The year just ended, 2012, was a year of achievements and positive th

milestones as we celebrated in style our 25 anniversary celebrations. Now

GLICO LIFE is an iconic brand and has established itself in the industry as

pacesetters.

GLICO LIFE, Every passing year, GLICO LIFE grows in strength and size; and

I am pleased to report that this year, 2012, we once again achieved impressive

results to the admiration of our stakeholders. Net income before taxation

Overview

amounted to GH 18,505,000 compared to 3,735,000 of the previous year, while total assets increased

from GH 70,838,270 to GH101,209,000 in 2012.

10

CHAIRMANS REPORT - Contd.

If this trend is to continue, it is expected that the life premiums will outgrow the total non-life premiums in

less than five years. Critically, Micro insurance is expected to play a role in the expansion of the life

insurance industry.

The increasing small-and medium-sized informal businesses highlight the need for micro-insurance.

The National Insurance Commission (NIC) in collaboration with the German International Cooperation

(GIZ), have developed specific programs to develop the capacity and provide technical assistance to

companies providing micro-insurance services. Programs have also been designed to develop the

demand side of micro insurance as well.

In this regard, I am confident that there lies a blazing opportunity to penetrate the market and sell more life

insurance policies when the right strategies are adopted.

In 2012, the company realized a net premium of GH36, 022,000 which is a 5% growth over 2011's

performance of GH 34, 421,000.

Net Profit before tax for the year under review was GH 18,505,000. This shows an increase of 395%

when compared to last year's figures of GH 3,735,000.

In 2012, GLICO LIFE paid claims of GH17,199,000. This is a significant increase of 15.94% over the

previous year's claim payment of GH14, 834,000.

With the 2012 net profit position of GH16,374,000, the Board of Directors are proposing dividend of

GH1000, 000.

To boost further our product portfolio and to offer clients value-based solutions, two products Life

Savings Plan and Life Guaranteed Plan were redesigned to meet the exigencies of the markets. The

products are being piloted on the market and a re-launch is expected to take place in 2013.

In 2012, GLICO LIFE further made investments in ICT totaling GH 76,000 to complete the second phase

of its massive upgrade of ICT infrastructure and equipment throughout the organization. Delivery of world

class services to our customers has been greatly enhanced to ensure that we remain the life insurance

company of choice in Ghana

2011 Operating Results

Premium Income

Net Profit Before Tax

Claims

Dividend

New Products

ICT Platform


11

CHAIRMANS REPORT - Contd.

GLICO LIFE's CSR policy focuses on four key areas: sports, health, education and community

relations. These are embedded at the heart of the organization and cut across all business operations.

GLICO LIFE is always looking for innovative ways to create value and provide value-added solutions to

meet its stakeholders satisfaction.

In 2012, the company spent as much as GH 86,876 in fulfilling its social responsiveness. Some of the

beneficiaries included Otumfuo Osei Tutu, Ghana Black Stars, Kumasi Academy School, Joy FM's

Easter Soup Kitchen's project, Ghana Heart Foundation, Ghana Medical Association, the Ghana

Military among others. GLICO LIFE will continue to support the needs of such institutions that meet our

set criteria.

th th

25 January 2012 saw the official launch of the 25 anniversary of GLICO LIFE. The event was

colourful and saw in attendance chieftains from the industry to grace the occasion. Other events that

were celebrated to mark the occasion included the Brokers Forum, organized to deepen and

strengthen business relations with the insurance brokers; Health Screening & Blood Donation Exercise

to the Korle Bu blood bank; Customer Service and CSR Month organized to reward customers.

On behalf of the Board of Directors, I say a very Big Thank You to the planning and implementation

committee who worked zealously for the successful anniversary celebrations.

The year 2013 is expected to be characterized by shocks of the elections amidst increasing concern

with regard to economic stability and peace of the country. The future for GLICO LIFE is bright with

Ghana's impressive growth rate and the opportunities that lie in the life insurance market.

Life insurance penetration rate is at 3% .although competition keeps increasing almost to cut-throat

levels in the market, there are still opportunities yet untapped for GLICO LIFE to steadily attain

impressive results.

GLICO LIFE will continue to focus on its prudent and sound management practices, customer- centric

approaches to services and good investment portfolio to yield maximum customer returns.

On behalf of the Board, I extend our appreciation to management and staff, stakeholders for their

immense contribution towards the GLICO LIFE's success of 2012. We shall continue to work in unity to

cushion our clients for life. To our clients and the uninsured public, we kindly implore you to be part of the

flourishing GLICO LIFE family.

Thank you.

HARRY OWUSU

CHAIRMAN

Corporate Social Responsibility

th

25 Anniversary Celebrations

Outlook for 2013

Acknowledgement


12

MANAGING DIRECTORS REPORT

Group Life accounted for 18.59% of the total gross premium, while Individual Life made premium

contribution of 49% representing a growth of 11% over 2011.

Other lines of business such as Micro-Insurance and Depositor's Administration/Pension

Scheme together accounted for 32.41% of the total premium realised.

Net profit grew by 39.5% in comparison to last year's figure of GH3,735,000.00. It is heart

warming to state that GLICO Life Insurance Company, in the face of keen competition and

macroeconomic challenges, improved generally on all its performance indicators.

The Ghanaian economy performed quite well in spite of challenges with developed economies on the

global front. With a projected GDP growth of 7.1% compared to sub-Saharan projected average growth

of 4.8% and a global projected growth of 3.2%, the Ghanaian economy can be said to have performed

relatively better notwithstanding the fact that 2012 was an election year.

The growth was driven by oil revenues, the services sector and the strong export performance of cocoa

and gold. Ghana's medium-term growth outlook remains positive, thanks to large investments in the

extractive industries, public infrastructure and commercial agriculture.

Inflation witnessed high volatility in the first half of 2012. However, by the third quarter it had stabilized to a

single digit of 8.8% compared to 2011 figure of 8.5% and this trend is expected to continue in 2013.

The fall in inflation has been largely the result of a stable political and macroeconomic environment

although there were uncertainties with respect to the 2012 elections.

Economic Overview


Edward Forkuo Kyei

Managing Director

2012 BUSINESS REVIEW

Fellow Stakeholders,th

2012 was quite an exciting year as it marked the 25 anniversary of our

company's highly successful insurance operations in Ghana. In spite of the

many challenges, we were able to achieve this unprecedented feat in the

annals of our company and we celebrated the milestone achievement in grand

style throughout the year. I am most grateful to all the people whose effort th

ensured a memorable 25 Anniversary celebration. I wish to single out the

Silver Anniversary Committee, which with the support of Management,

planned and implemented all the activities that took place to mark our Silver

Jubilee, for special appreciation.

th

The volume of work regarding the 25 Anniversary Celebrations notwithstanding, we still managed to

work hard to achieve our financial targets and I now have the pleasure to present our financial results to

you.

13

MANAGING DIRECTORS REPORT -

Contd.

Product Development

Competition and Marketing of Products and Services

ICT Infrastructure

Corporate Social Responsibility

th

25 Anniversary Celebrations

I am happy to inform you that the actuarial revision of repackaged products such as Life Guaranteed

Plan, Life Savings Plan and Funeral Policy is gaining remarkable acceptance on the market by

contributing to premium income mobilization. These products contributed 0.33% to the 2012 gross

premium of GH36,022,000.00.

The National Insurance Commission continued the licensing of more underwriters in the year under

review and this continued to deepen the already intense competition within the industry. Having regard

to this kind of competition, our company had to institute re-training programmes to enrich our field

underwriters with refreshed product knowledge for sales to meet the increasing sophistication of

clients.

Satisfactory customer service delivery is the key to success in the life insurance industry and needless

to say, ICT has become the vehicle for effective customer service delivery and for this reason our

Company continued to invest heavily in our ICT infrastructure. Existing software was upgraded and new

ones relevant to our operations were acquired to improve upon our service delivery.

In 2012, our company fulfilled its corporate social responsibilities to the public by continuing to focus on

Sports, Education, Health and Community Development. Some of the beneficiaries of our

programmes, sponsorships and donations included Otumfuo Osei Tutu II Educational Fund, Ghana

Black Stars, Ghana Heart Foundation, Ghana Medical Association, Korle Bu Blood Bank, Multimedia

Group (Joy FM Easter Soup Kitchen) the Ghana Military, Ghana Prisons among others. GLICO LIFE

will continue with the implementation of its effective Corporate Social Responsibility, especially with the

establishment of a Corporate Affairs Department to support GLICO.

As already indicated in the preceding pages, the year under review was a special year in the history of

GLICO LIFE and indeed the entire GLICO GROUP. It was the twenty-fifth year of our successful

insurance operation in Ghana and several activities were carried out to ensure a successful Silver

Jubilee Celebration.

Events organised to mark the year-long celebrations included a grand launch of the celebrations, which

attracted several dignitaries; Brokers Forum organized to deepen and strengthen business relations

with the insurance brokers; Health Screening & Blood Donation Exercise; Customer Service and CSR

Month organized to recognize and reward customers among others.

I am grateful to all the stakeholders who contributed in diverse ways for us to have an all-year-long th

impressive 25 Anniversary celebrations.

ncrease attests to our operational efficiency in spite of keen competition. i


14

MANAGING DIRECTORS REPORT -

Contd.

Financial Results

The Future

Gratitude

The year 2012 was a tough one for business growth amidst economic hardships and the uncertainty that

surrounded the general elections. That notwithstanding, we managed to post very commendable results

in spite of the challenges:

Net premium income grew by 5% from GH34,421,000 in 2011 to GH36,022,000 in 2012. The

ncrease attests to our operational efficiency in spite of keen competition.

Investment income also continued to grow impressively. Through prudent investments, we

registered 98% increase over previous year's figures in spite of declining government security

rates.

On the other hand, cost control measures were strictly adhered to by Management, in spite of the th

25 Anniversary celebrations and broadened operational activities to ensure increased premium,

we managed to maintain operating cost at 20% of Gross Premiums, same as 2011.

With our knack for astute and strategic long-term investments, we invested in real estate and this

has resulted in an increase in our asset base. Total assets grew substantially by 39.44% from

GH72,587.000 in 2011 to GH101,209,000 in 2012.

Expectedly and in much the same vein, shareholders value also had a marginal growth with total

shareholders' funds increasing by 51.57% from GH31,101,000 to GH47,142,000 for the

period under review compared to 14.20% in 2010/2011 year.

In 2013 and beyond, we shall continue to consolidate the structures put in place to enable us efficiently

and effectively handle the keen competition in the industry. This would include the continuous upgrading

of our ICT systems to enable us provide speedy, effective and efficient service to our numerous policy

holders. We shall also continue to develop products that meet the needs of the insuring public.

With our commitment to customer service delivery, we shall continue to pursue excellence in service

delivery by re-engineering our sales force, training employees in the value chain to equip them with the

requisite skills for satisfactory service delivery.

In conclusion, my sincere gratitude goes to the Board for their direction and support towards building a

profitable GLICO LIFE. To all Management, Staff, Sales Executives, your commitment and dedication to

duty is greatly appreciated.

Finally, the Almighty God has been most merciful and He deserves the paramount gratitude.

Thank you.

E. FORKUO KYEI

MANAGING DIRECTOR

i


15

The Directors submit their report together with the audited financial

statements of GLICO Life Insurance Company Limited for the year ended 31

December 2012, which disclose the state of affairs of the company.

The Ghana Companies Code 1963 (Act 179) requires the directors to

prepare financial statements for each financial year which give a true and fair

view of the state of affairs of the company at the end of the financial year and

of the profit or loss of the company for that year.

The Directors believe that in preparing the financial statements, they have

used appropriate accounting policies, consistently applied and supported by

reasonable and prudent judgements and estimates and that all international

accounting standards which they consider to be appropriate have been

followed.

The Directors are responsible for ensuring that the company keeps

accounting records which disclose with reasonable accuracy the financial

position of the company and which enable them to ensure that the financial

statements comply with the Companies Code, 1963 (Act 179) and Insurance

Act 2010 (Act 724).

They are also responsible for taking such steps as are reasonable to

safeguard the assets of the company and to prevent and detect fraud and

other irregularities.

The above statements which should be read in conjunction with the

statement of the auditors responsibilities on page 18 is made with a view to

distinguishing for shareholders the respective responsibilities of the

directors and the auditors in relation to the financial statements.

The principal activities of the company continued to be the undertaking of the

business of insurance and other business incidental thereto.

Statement of Directors' Responsibilities

Principal Activities

2012

Financial Results GH'000

The balance brought forward on income surplus account at 1 January was 10,636

To which must be added:

Profit for the year after charging all expenses, depreciation and taxation of 16,374

Revaluation gains on property, plant and equipment disposed (net of tax) -

27,010

From which is made an appropriation to contingency reserve of (360)

26,650

Dividend Paid (1,000)

Leaving a balance to be carried forward on income surplus account of 25,650

2011

GH'000

7,040

3,678

260

10,978

(342)

10,636

-

10,636

DIRECTORS' REPORT


16

Dividend

Auditors

The directors propose the payment of dividend of GH 1,000,000 for the

year ended 31 December 2012.

In accordance with section 134(5) of the Companies Code 1963, (Act

179) the auditors, Messrs. Osei Kwabena & Associates, will continue in

office as auditors of the company.

By order of the board

Director: .............................................

Director: .............................................

......................... 2013

DIRECTORS' REPORT - Contd.

TH

13 AUGUST,


17

We have conducted an actuarial valuation of the life assurance business of

GLICO Life Insurance Company Ltd. as at 31 December 2012.

The valuation was conducted in accordance with generally accepted

actuarial principles and in accordance with the requirements of the

Insurance Act, 2006 (Act 724). Those principles require prudent provision

for future outgo under contracts, generally based upon the assumptions

that current conditions will continue. Provision is therefore not made for all

possible contingencies.

In completing the actuarial valuation, I have relied upon the financial

statements of the Company.

In our opinion, the Life Assurance business of the Company was (not)

financially sound and the actuarial value of the liabilities in respect of all

classes of life insurance business did (not) exceed the amount of funds of

the life assurance business at 31 December 2012.

Signed: ............................................................

Date: ...............................................................

Name of Actuary: Stallion Consultants Limited

CERTIFICATE OF SOLVENCY

(CHARTERED ACCOUNTANTS)

OSEI KWABENA & ASSOCIATES

TH

29 APRIL, 2013


TO THE MEMBERS OF GLICO LIFE INSURANCE CO. LTD.

Report on Financial Statements

Directors' Responsibility for the Financial Statements

Auditors' Responsibility

We have audited the accompanying financial statements of GLICO Life

Company Limited, as at 31 December, 2012, set out on pages 20 to 59,

which have been prepared on the basis of the significant accounting policies

on page 27 to 39 and other explanatory notes on pages 40 to 59.

The directors are responsible for the preparation and fair presentation of

these financial statements in accordance with the Companies Code 1963,

(Act 179) and the Insurance Act 2006 (Act 724). These responsibilities

include: designing, implementing and maintaining internal control relevant to

the preparation and fair presentation of financial statements that are free

from material misstatement, whether due to fraud or error; selecting and

applying appropriate accounting policies; and making accounting estimates

that are reasonable in the circumstances.

Our responsibility is to express an opinion on these financial statements

based on our audit. We conducted our audit in accordance with International

Standards on Auditing.

Those standards require that we comply with ethical requirements and plan

and perform the audit to obtain reasonable assurance as to whether the

f inancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the

amounts and disclosures in the financial statements. The procedures

selected depend on the auditor's judgement, including the assessment of

the risks of material misstatement of the financial statements, whether due to

fraud or error.

In making those risk assessments, the auditor considers internal control

relevant to the entity's preparation and fair presentation of the financial

statements in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the entity's internal control. An audit also includes

evaluating the appropriateness of accounting policies used and the

reasonableness of accounting estimates made by management, as well as

evaluating the overall presentation of the financial statements.

INDEPENDENT

AUDITORS' REPORT


We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our audit opinion.

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

financial position of the company as at 31 December 2012, and of its

financial performance and cash flow for the year then ended and are drawn

up in accordance with the International Financial Reporting Standards,

issued by the International Accounting Standards Board.

Opinion

Report on Other Legal and Regulatory Requirements

The Ghana Companies Code, 1963 (Act 179) requires that in

carrying out our audit work we consider and report on the following

matters. We confirm that:

We have obtained all the information and explanations which to

the best of our knowledge and belief were necessary for the

purposes of our audit;

In our opinion proper books of accounts have been kept by the

company, so far as appears from our examination of those

books; and

The balance sheet and income statement of the company are

in agreement with the books of accounts.

In accordance with section 78(1) (a) of the Insurance Act, 2006, (Act

724), the company has kept accounting records that are sufficient to

explain its transactions and financial position with respect to its

insurance businesses and any other business that it carries on.

i.

ii.

iii.

..

Partner Number: .........

.....................................2013

INDEPENDENT

AUDITORS' REPORT - Cond

19

TH

29 APRIL, 2013

I CAG / P / 1161

(CHARTERED ACCOUNTANTS)

OSEI KWABENA & ASSOCIATES


2012 2011

Note Gh000 Gh000

Insurance Premium Revenue 6

Insurance Premium Ceded to Reinsurers 6

Increase in Life Fund

Investment Income 7

Insurance Claims 9

Ordinary Life Surrenders

Net Insurance Benefits and Claims

Operating and Other Expenses 10

Results of Operating Activities

Finance costs

36,022

(52)

(10,908)

6,131

20

STATEMENT OF PROFIT

AND LOSS ACCOUNT

34,421

(206)

(10,854)

3,097

14,149

3,050

19,135

7,648

12,858

1,976

16,069

6,958

3,854

(119)

18,948

(443)

Net Insurance Premium Revenue 35,970 34,215

Other Operating Income 8

Net Income

14,538

9,761

45,731

423

(7,334)

26,881

Commissions 1,936 1,235

Expenses 26,783 23,027

Profit Before Tax

Income Tax Expense 11

Profit for the Year

3,735

(57)

3,678

18,505

(2,131)

16,374


Change in Available-for-sale Financial Assets

Fair Value Gains on Property, Plant and Equipment

Profit for the year

2012 2011

Note Gh000 Gh000

21

STATEMENT OF PROFIT AND LOSS

AND OTHER COMPREHENSIVE INCOME

-

314

16,374

(154)

-

3,678

Total Comprehensive Income for the Year

16,688 3,524


Note 2012 2011

GH'000 GH'000

Assets

Property, Plant and Equipment 12

Investment Property 13

Equity Securities 14

Debt Securities 15

Loans and Receivables 16

Insurance Receivables 17

Bank and Cash Balances 19

1,317

51,883

12,556

23,694

7,200

1,918

2,641

Equity and Liabilities

Stated Capital 20

Contingency Reserve

Other Reserves 22

Income Surplus

22

BALANCE SHEET

31,461

11,585

16,901

1,364

7,388

1,577

2,311

17,989

2,200

1,303

25,650

17,989

10,636

1,840

637

Total Assets 101,209 72,587

Total Equity 47,142 31,101


Approved on .. 2013

.... Director ....... Director

Liabilities

Insurance Liabilities 24

Borrowings 25

Trade and Other Payables 26

Deferred Income Tax 18

Current Income Tax Liabilities 11


BALANCE SHEET - Contd.

48,117

-

3,190

2,730

30

37,209

1,192

2,458

599

28

th

15 August,

Total Liabilities 54,067 41,486

Total Equity and Liabilities 101,209 72,587

Company

Stated

Capital

Contingency

Reserve Other Reserves

Income Surplus

Account Total

Gh000 Gh000 Gh000 Gh000 Gh000

Balance at 1 January 2012 17,989 1,840 637 10,636 31,102

Profit / (loss) for the Year - - - 16,374 16,374

Net Change in Fair Value of -

Available-for-sale Financial Assets, Net of Tax 352 352

Revaluation Gains on Property, Plant and -

Equipment 314 314

360 (360) -

(1,000) (1,000)

STATEMENT OF CHANGES IN EQUITY

17,989 2,200 1,303 25,650 47,142

Transfer from Income Surplus

Dividends to Company Shareholders

Balance at 31 December 2012


STATEMENT OF CHANGES IN EQUITY

Balance at 1 January 2011 17,989 1,497 1,050 7,041 27,577

Profit / (loss) for the Year - - 3,678 3,678

Net Change in Fair Value of -

Available-for-sale Financial Assets, Net of Tax - (154) - (154)

Revaluation Gains on Property, Plant and -

Equipment Disposed, Net of Tax (260) 260

Transfer From Income Surplus

Dividends to Company Shareholders

STATEMENT OF CHANGES IN EQUITY - Contd.

Company

Stated

Capital

Contingency

Reserve Other Reserves

Income Surplus

Account Total

Gh000 Gh000 Gh000 Gh000 Gh000

- -

342 - (342) -

- - - - -

17,989 1,840 637 10,636 31,101Balance at 31 December 2011


STATEMENT OF CHANGES IN EQUITY - Contd.

Note

Cash Generated from Operating Activities

Profit Before Taxation

Adjusted for:

Loss on Disposal of Property, Plant and Equipment 12

Depreciation and Amortisation 12

Change in Fair Value of Investment Property 13

Change in Provision for Bad Loans 16

Foreign Exchange Gain 8

Change in Provision for Life Fund 24

Operating Cash Flow Before Investment in Working Capital

Increase in Loans and Receivables 16

Increase in Insurance Receivables 17

Increase in Trade and Other Payables 26

Tax Paid 11

Cash Flows from Investing Activities

Addition to Investment Properties 13

Disposals of Investment Properties 13

Purchases of Property, Plant and Equipment 12

Proceeds from Sale of Property, Plant and Equipment 12

Purchases of Equity Securities 14

Cash Flows from Financing Activities

Proceeds from Borrowings 25

Repayments of Borrowings 25

Dividends Paid to Company's Shareholders

Increase in Cash and Cash Equivalents

Cash and Bank Overdrafts at Beginning of Year 27

2011

GH'000

(99)

(153)

2012

GH'000

18,505

-

605

(14,133)

7

(15)

10,908

15,877

181

(341)

732

(1)

(6,266)

-

(243)

-

(624)

-

(1,192)

(1,000)

7,123

19,212

26

STATEMENT OF CASHFLOWS

3,735

357

549

(110)

10

-

10,854

15,395

(688)

(1,672)

(61)

(4,778)

1,296

(393)

140

-

(968)

(812)

7,207

12,005

Net Cash (used in) / from Financing Activities

(2,192) (1,780)

Cash and Bank Overdrafts at End of Year 27

26,335 19,212

Net Cash used in Investing Activities

(7,133) (3,888)

Net Cash from Operating Activities

16,448 12,875


1. GENERAL INFORMATION

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Preparation

(b) Insurance Contracts

I. Classification

The Company is a limited liability company incorporated in Ghana under the Companies Code 1963,

(Act 179) and domiciled in Ghana. The address of its registered office is GLICO House, No.47

Kwame Nkrumah Avenue, Accra.

The company's main business is Life assurance. Life assurance business relates to the underwriting

of risks relating to death of an insured person, and includes contracts subject to the payment of

premiums for a term dependent on the termination or continuance of the life of an insured person.

The principal accounting policies adopted in the preparation of these financial statements are set out

below. These policies have been consistently applied to all years presented, unless otherwise stated.

The financial statements are prepared in compliance with International Financial Reporting

Standards (IFRS). Additional information required by the Companies Code, 1963, (Act 179) and the

insurance act 2006 (Act 724) are included where appropriate. The measurement basis applied is the

historical cost basis, except as modified by the revaluation of land and buildings, investment property,

available-for-sale financial assets, and financial assets and financial liabilities at fair value through

income. The financial statements are presented in Ghana Cedis (GH).

The preparation of financial statements in conformity with IFRS requires the use of estimates and

assumptions. It also requires management to exercise its judgement in the process of applying the

Company's accounting policies. The areas involving a higher degree of judgement or complexity, or

where assumptions and estimates are significant to the financial statements, are disclosed in Note 3.

The Directors have assessed the relevance of the new standard and interpretations, and

amendments to existing standards with respect to the Company's operations and concluded that

they will not have any impact on the Company's financial statements, other than for the amendments

to IAS 1 - Presentation of Financial Statements, which will require non-owner changes in equity to be

presented in a 'Comprehensive Statement of Income'.

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

contracts are those contracts that transfer significant insurance risk. Such contracts may also

transfer financial risk. As a general guideline, the Company defines as significant insurance risk, the

possibility of having to pay benefits on the occurrence of an insured event that are at least 10% more

than the benefits payable if the insured event did not occur.

Investment contracts are those contracts that transfer financial risk with no significant insurance risk.

See accounting policy for these contracts under Note 2(d).

Insurance contracts and investment contracts are classified into two main categories, depending on

the duration of risk and in accordance with the provisions of the Insurance Act 2006 (Act 724).

28

NOTES TO THE FINANCIAL

STATEMENTS - Contd.


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

(b) Insurance Contracts - Continued

II. Recognition and Measurement

i. Premium Income

ii. Claims and Policy Holder Benefits Payable

iii. Commissions Payable

The company therefore is engaged in only Life insurance business.

Life insurance business Includes insurance business of all or any of the following classes, namely, life

assurance business, superannuation business, industrial life assurance business and bond

investment business and business incidental to any such class of business;

Life assurance business means the business of, or in relation to, the issuing of, or the undertaking of

liability to pay money on death (not being death by accident or in specified sickness only) or on the

happening of any contingency dependent on the termination or continuance of human life (either with

or without provision for a benefit under a continuous disability insurance contract), and include a

contract which is subject to the payment of premiums for term dependent on the termination or

continuance of human life and any contract securing the grant of an annuity for a term dependent

upon human life.

Superannuation business means life assurance business, being business of, or in relation to, the

issuing of or the undertaking of liability under superannuation, group life and permanent health

insurance policy.

For Life insurance business, premiums are recognised as revenue when they become payable by the

contract holder. Premiums are shown before deduction of commission.

Some life insurance contracts contain both an insurance component and a deposit component. The

insurance company is required to unbundle the deposit components from the insurance components.

Unbundling should however not be done where the deposit component cannot be separately

measured. (The NIC however requires life insurance companies to design all life products such that is

will be possible to separately measure the deposit component).

For Life insurance business, benefits are recorded as an expense when they are incurred. Claims

arising on maturing policies are recognised when the claim becomes due for payment. Death claims

are accounted for on notification. Surrenders are accounted for on payment.

A proportion of commission's payable is deferred and amortised over the period in which the related

premium is earned.

29


STATEMENTS - Contd.



(b) Insurance Contracts - Continued

iv. Receivables and Payables Related to Insurance Contracts

v. Salvage and Subrogation Reimbursements

(c) Revenue Recognition

(i) Insurance Premium Revenue

(ii) Commissions

(iii) Interest Income

Receivables and payables are recognised when due. These include amounts due to and from agents,

brokers and insurance contract holders. If there is objective evidence that the insurance receivable is

impaired, the Company reduces the carrying amount of the insurance receivable accordingly and

recognises that impairment loss in the income statement. The Company gathers the objective evidence

that an insurance receivable is impaired using the same process adopted for loans and receivables.

The impairment loss is also calculated under the same method used for these financial assets. These

processes are described in Note 2 (j).

Some insurance contracts permit the Company to sell (usually damaged) property acquired in settling a

claim (for example, salvage). The Company may also have the right to pursue third parties for payment

of some or all costs (for example, subrogation).

Estimates of salvage recoveries are included as an allowance in the measurement of the insurance

liability for claims, and salvage property is recognised in other assets when the liability is settled. The

allowance is the amount that can reasonably be recovered from the disposal of the property.

Subrogation reimbursements are also considered as an allowance in the measurement of the

insurance liability for claims and are recognised in other assets when the liability is settled. The

allowance is the assessment of the amount that can be recovered from the action against the liable third

party.

For all insurance contracts, premiums are recognised as revenue (earned premiums) proportionally

over the period of coverage. The portion of premium received on in-force contracts that relates to

unexpired risks at the balance sheet date is reported as the unearned premium liability. Premiums are

shown before deduction of commission and are gross of any taxes or duties levied on premiums.

Commissions receivable are recognised as income in the period in which they are earned.

Interest income for all interest-bearing financial instruments, including financial instruments measured

at fair value through income statement is recognised within 'investment income' (Note 7) in the income

statement using the effective interest rate method. When a receivable is impaired, the Company

reduces the carrying amount to its recoverable amount, being the estimated future cash flow

discounted at the original effective interest rate of the instrument, and continues unwinding the discount

as interest income.

30


STATEMENTS - Contd.



(iv) Dividend Income

(d) Investment Contracts

Dividend income for equities is recognised when the right to receive payment is established - this

is the ex-dividend date for equity securities.

The Company issues investment contracts without fixed terms (unit-linked) and investment contracts

with fixed and guaranteed terms (fixed interest rate). The investment contracts include funds

administered for a number of retirement benefit schemes.

Investment contracts without fixed terms are financial liabilities whose fair value is dependent on the

fair value of underlying financial assets, derivatives and/or investment property (these contracts are

also known as unit-linked investment contracts) and are designated at inception as at fair value

through profit or loss. The Company designates these investment contracts to be measured at fair

value through income statement because it eliminates or significantly reduces a measurement or

recognition inconsistency (sometimes referred to as 'an accounting mismatch') that would otherwise

arise from measuring assets or liabilities or recognising the gains and losses on them on different

bases.

The best evidence of the fair value of these financial liabilities at initial recognition is the transaction

price (i.e. the fair value received) unless the fair value of that instrument is evidenced by comparison

with other observable current market transactions in the same instrument or based on a valuation

technique whose variables include only data from observable markets. When such evidence exists,

the Company recognises profit on day 1. The Company has not recognised any profit on initial

measurement of these investment contracts because the difference is attributed to the prepayment

liability recognised for the future investment management services that the Company will render to

each contract holder.

Financial liabilities for investment contracts without fixed terms is determined using the current unit

values in which the contractual benefits are denominated. These unit values reflect the fair values of

the financial assets contained within the Company's unitised investment funds linked to the financial

liability. The fair value of the financial liabilities is obtained by multiplying the number of units attributed

to each contract holder at the balance sheet date by the unit value for the same date.

For investment contracts with fixed and guaranteed terms, the amortised cost basis is used. In this

case, the liability is initially measured at its fair value less transaction costs that are incremental and

directly attributable to the acquisition or issue of the contract.

Subsequent measurement of investment contracts at amortised cost uses the effective interest

method. This method requires the determination of an interest rate (the effective interest rate) that

exactly discounts to the net carrying amount of the financial liability, the estimated future cash

payments or receipts through the expected life of the financial instrument or, when appropriate, a

shorter period if the holder has the option to redeem the instrument earlier than maturity.

31


STATEMENTS - Contd.



(d) Investment Contracts - Continued

(e) Property and Equipment

Buildings 33 years

Leasehold Property 17 years

Furniture and Fittings 10 years

Office Equipment 5 years

5 years Motor Vehicles

Computer Equipment 3 years

The Company re-estimates at each reporting date the expected future cash flows and recalculates

the carrying amount of the financial liability by computing the present value of estimated future cash

flows using the financial liability's original effective interest rate. Any adjustment is immediately

recognised as income or expense in the income statement.

All categories of property and equipment are initially recorded at cost. Buildings and freehold land are

subsequently shown at fair value, based on periodic, but at least triennial, valuations by external

independent valuers, less subsequent depreciation for buildings. All other property and equipment is

stated at historical cost less depreciation. Historical cost includes expenditure that is directly

attributable to the acquisition of the items.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as

appropriate, only when it is probable that future economic benefits associated with the item will flow to

the Company and the cost of the item can be measured reliably. All other repairs and maintenance are

charged to the income statement account during the financial period in which they are incurred.

Increases in the carrying amount arising on revaluation are credited to other comprehensive income.

Decreases that offset previous increases of the same asset are charged against the revaluation

surplus in the other comprehensive income; all other decreases are charged to the income statement

account. Each year the difference between depreciation based on the revalued carrying amount of

the asset (the depreciation charged to the income statement account) and depreciation based on the

asset's original cost is transferred from the revaluation surplus to retained earnings.

Free hold land is not depreciated. Leasehold land that qualify as a finance lease, have lease

payments amortised over the period of the lease. Depreciation on other assets is calculated using the

straight line method to allocate their cost or revalued amounts less residual values over their

estimated useful lives, as follows:

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at

each balance sheet date.

32


STATEMENTS - Contd.



(e) Property and Equipment - Continued

(f) Investment Properties

(h) Impairment of Non-Financial Assets

An asset's carrying amount is written down immediately to its estimated recoverable amount if the

asset's carrying amount is greater than its estimated recoverable amount (see 2 (h) below).

Gains and losses on disposal of property and equipment are determined by reference to their carrying

amount and are included in the income statement account. On disposal of revalued assets, amounts

in the revaluation surplus relating to that asset are transferred to income surplus.

Buildings, or part of a building, (freehold or held under a finance lease) and land (freehold or held

under an operating lease) held for long term rental yields and/or capital appreciation and are not

occupied by the Company are classified as investment property. Investment property is carried at fair

value, representing open market value determined annually by external valuers. Changes in fair

values are included in other operating income in the income statement account.

Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and

bring to use the specific software. These costs are amortised over their estimated useful lives (three

to five years).

Costs associated with developing or maintaining computer software programmes are recognised as

an expense as incurred. Costs that are directly associated with the production of identifiable and

unique software products controlled by the Company, and that will probably generate economic

benefits exceeding costs beyond one year, are recognised as intangible assets. Direct costs include

the software development employee costs and an appropriate portion of relevant overheads.

Computer software development costs recognised as assets are amortised over their estimated

useful lives (not exceeding five years).

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for

impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or

changes in circumstances indicate that the carrying amount may not be recoverable. An impairment

loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable

amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in

use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which

there are separately identifiable cash flows (cash-generating units). Non-financial assets other than

goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each

reporting date.

33


STATEMENTS - Contd.



(i) Financial Assets

(i) Financial Assets at Fair Value Through Profit or Loss

(ii) Loans, Advances and Receivables

(iii) Held-to Maturity

(iv) Available-for-Sale

The Company classifies its financial assets into the following categories: financial assets at fair value

through profit or loss; loans, advances and receivables; held-to-maturity financial assets; and available-

for-sale assets. Management determines the appropriate classification of its financial assets at initial

recognition.

This category has two sub-categories: financial assets held for trading, and those designated at fair value

through profit or loss at inception. A financial asset is classified as held for trading if acquired principally for

the purpose of selling in the short term. Derivatives are also categorised as held for trading. Financial

assets are designated at fair value through profit or loss when:

- doing so significantly reduces or eliminates a measurement inconsistency; or

- they form part of a group of financial assets that is managed and evaluated on a fair value basis in

accordance with a documented risk management or investment strategy and reported to key management

personnel on that basis.

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

that are not quoted in an active market, other than: (a) those classified as held for trading and those that the

Company on initial recognition designates as at fair value through income statement; (b) those that the

Company upon initial recognition designates as available-for-sale; or (c) those for which the holder may

not recover substantially all of its initial investment, other than because of credit deterioration.

Held-to-maturity assets are non-derivative financial assets with fixed or determinable payments and fixed

maturities that management has the positive intention and ability to hold to maturity. Were the Company to

sell more than an insignificant amount of held-to-maturity assets, the entire category would have to be

reclassified as available for sale.

Available-for-sale assets are non-derivatives that are either designated in this category or not classified in

any other categories.

Regular way purchases and sales of financial assets at fair value through profit or loss, held-to-maturity

and available-for-sale are recognised on trade-date - the date on which the Company commits to purchase

or sell the asset.

Financial assets are initially recognised at fair value plus, for all financial assets except those carried at fair

value through profit or loss, transaction costs. Financial assets are derecognised when the rights to

receive cash flows from the financial assets have expired or where the Company has transferred

substantially all risks and rewards of ownership.

34


STATEMENTS - Contd.



(I) Financial Assets - Continued

(j) Impairment of Financial Assets

Loans, advances and receivables and held-to-maturity financial assets are carried at amortised cost

using the effective interest method. Available-for-sale financial assets and financial assets at fair

value through profit or loss are carried at fair value. Gains and losses arising from changes in the fair

value of 'financial assets at fair value through profit or loss' are included in the income statement

account in the period in which they arise. Gains and losses arising from changes in the fair value of

available-for-sale financial assets are recognised directly in equity until the financial asset is

derecognised or impaired, at which time the cumulative gain or loss previously recognised in equity is

recognised in the profit or loss account. However, interest calculated using the effective interest

method is recognised in the income statement account. Dividends on available-for-sale equity

instruments are recognised in the income statement account when the Company's right to receive

payment is established.

Fair values of quoted investments in active markets are based on current bid prices. Fair values for

unlisted equity securities are estimated using valuation techniques. These include the use of recent

arm's length transactions, discounted cash flow analysis and other valuation techniques commonly

used by market participants. Equity securities for which fair values cannot be measured reliably are

recognised at cost less impairment.

The Company assesses at each balance sheet date whether there is objective evidence that a

financial asset or a group of financial assets is impaired. A financial asset or a group of financial

assets is impaired and impairment losses are incurred only if there is objective evidence of

impairment as a result of one or more events that occurred after initial recognition of the asset (a 'loss

event') and that loss event (or events) has an impact on the estimated future cash flows of the financial

asset or group of financial assets that can be reliably estimated. The criteria that the Company uses

to determine that there is objective evidence of an impairment loss include:

- Delinquency in contractual payments of principal or interest;

- Cash flow difficulties experienced by the borrower (for example, equity ratio, net income

percentage of sales);

- Breach of loan covenants or conditions;

- Deterioration of the borrower's competitive position; and

- Deterioration in the value of collateral;

The estimated period between a loss occurring and its identification is determined by management

for each identified portfolio. In general, the periods used vary between 6 and 12 months.

35


STATEMENTS - Contd.



(j) Impairment of Financial Assets - Continued

(ii) Assets Carried at Fair Value

(iii) Renegotiated Loans

(k) Accounting for Leases

(l) Cash and Cash Equivalents

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

related objectively to an event occurring after the impairment was recognised (such as an

improvement in the debtor's credit rating), the previously recognised impairment loss is reversed by

adjusting the allowance account. The amount of the reversal is recognised in the income statements.

In the case of equity investments classified as available for sale, a significant or prolonged decline in

the fair value of the security below its cost is considered in determining whether the assets are

impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss -

measured as the difference between the acquisition cost and the current fair value, less any

impairment loss on that financial asset previously recognised in profit or loss - is removed from equity

and recognised in the income statement account. Impairment losses recognised in the income

statement account on equity instruments are not reversed through the income statement account. If,

in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases

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

recognised in profit or loss, the impairment loss is reversed through the income statement.

Loans that are either subject to collective impairment assessment or individually significant and whose

terms have been renegotiated are no longer considered to be past due but are treated as new loans. In

subsequent years, the renegotiated terms apply in determining whether the asset is considered to be

past due.

Leases of property, plant and equipment where the Company assumes substantially all the risks and

rewards of ownership are classified as finance leases. Assets acquired under finance leases are

capitalised at the inception of the lease at the lower of their fair value and the estimated present value

of the underlying lease payments. Each lease payment is allocated between the liability and finance

charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental

obligations, net of finance charges, are included in non-current liabilities. The interest element of the

finance charge is charged to the income statement account over the lease period. Property, plant and

equipment acquired under finance leases is depreciated over the estimated useful life of the asset.

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor

are classified as operating leases. Payments made under operating leases are charged to the income

statement account on a straight-line basis over the period of the lease.

Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short term

highly liquid investments with original maturities of three months or less.

36


STATEMENTS - Contd.



(m) Employee Benefits

(i) Retirement Benefit Obligations

(ii) Other Entitlements

(n) Current and Deferred Income Tax

(o) Dividends

The Company operates a defined contribution retirement benefit scheme for its employees. The

Company and all its employees also contribute to the National Social Security Fund, which is a

defined contribution scheme. A defined contribution plan is a retirement benefit plan under which the

Company pays fixed contributions into a separate entity. The Company has no legal or constructive

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

the benefits relating to employee service in the current and prior periods.

The assets of all schemes are held in separate trustee administered funds, which are funded by

contributions from both the company and employees.

The Company's contributions to the defined contribution schemes are charged to the income

statement account in the year in which they fall due.

The estimated monetary liability for employees' accrued annual leave entitlement at the balance

sheet date is recognised as an expense accrual.

Income tax expense is the aggregate of the charge to the income statement account in respect of

current income tax and deferred income tax. Tax is recognised in the income statement account

unless it relates to items recognised directly in equity, in which case it is also recognised directly in

equity.

Current income tax is the amount of income tax payable on the taxable profit for the year determined

in accordance with the Internal Revenue Act 2000 (Act 592).

Deferred income tax is recognised using the liability method, on all temporary differences arising

between the tax bases of assets and liabilities and their carrying values for financial reporting

purposes. However, the deferred income tax is not accounted for if it arises from the initial recognition

of an asset or liability in a transaction other than a business combination that at the time of the

transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined

using tax rates and laws that have been enacted or substantively enacted at the balance sheet date

and are expected to apply when the related deferred income tax liability is settled.

Dividends payable to the company's shareholders are charged to equity in the period in which they

are declared.

37


STATEMENTS - Contd.



(m) Employee Benefits

(i) Retirement Benefit Obligations

(ii) Other Entitlements

(n) Current and Deferred Income Tax

(o) Dividends

The Company operates a defined contribution retirement benefit scheme for its employees. The

Company and all its employees also contribute to the National Social Security Fund, which is a

defined contribution scheme. A defined contribution plan is a retirement benefit plan under which the

Company pays fixed contributions into a separate entity. The Company has no legal or constructive

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

the benefits relating to employee service in the current and prior periods.

The assets of all schemes are held in separate trustee administered funds, which are funded by

contributions from both the company and employees.

The Company's contributions to the defined contribution schemes are charged to the income

statement account in the year in which they fall due.

The estimated monetary liability for employees' accrued annual leave entitlement at the balance

sheet date is recognised as an expense accrual.

Income tax expense is the aggregate of the charge to the income statement account in respect of

current income tax and deferred income tax. Tax is recognised in the income statement account

unless it relates to items recognised directly in equity, in which case it is also recognised directly in

equity.

Current income tax is the amount of income tax payable on the taxable profit for the year determined

in accordance with the Internal Revenue Act 2000 (Act 592).

Deferred income tax is recognised using the liability method, on all temporary differences arising

between the tax bases of assets and liabilities and their carrying values for financial reporting

purposes. However, the deferred income tax is not accounted for if it arises from the initial recognition

of an asset or liability in a transaction other than a business combination that at the time of the

transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined

using tax rates and laws that have been enacted or substantively enacted at the balance sheet date

and are expected to apply when the related deferred income tax liability is settled.

Dividends payable to the company's shareholders are charged to equity in the period in which they

are declared.



STATEMENTS - Contd.


(p) Stated Capital

(q) Cash and Cash Equivalents

Ordinary shares are classified as equity where the company has no obligation to deliver cash or other

assets to shareholders. All shares are issued at no par value.

For the purposes of the cash flow statement, cash and cash equivalents comprise cash in hand,

balances with banks with less than three months' maturity from the date of acquisition, including:

cash, treasury bills and other eligible bills, loans and advances to banks, amounts due from other

banks and short-term government securities less bank overdrafts.

39


STATEMENTS - Contd.


3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING ACCOUNTING

POLICIES

(a) Estimate of Future Benefit Payments and Premiums Arising from Long-Term Insurance

Contracts.

(b) Impairment of Available For-Sale Equity Investments

(c) Fair Value of Financial Instruments

The Company makes estimates and assumptions concerning the future. Estimates and judgements

are continually evaluated and are based on historical experience and other factors, including

expectations of future events that are believed to be reasonable under the circumstances. The resulting

accounting estimates will, by definition, seldom equal the related actual results. The estimates and

assumptions that have a significant risk of causing a material adjustment to the carrying amounts of

assets and liabilities within the next financial year are addressed below.

The determination of the liabilities under long-term insurance contracts is dependent on estimates made

by the Company. Estimates are made as to the expected number of deaths for each of the years in which

the Company. is exposed to risk. The Company bases these estimates on standard industry and national

mortality tables that reflect recent historical mortality experience, adjusted where appropriate to reflect

the Company own experience. For contracts that insure the risk of longevity, appropriate but not

excessively prudent allowance is made for expected mortality improvements.

The estimated number of deaths determines the value of the benefit payments and the value of the

valuation premiums. The main source of uncertainty is that epidemics such as AIDS, and wide-ranging

lifestyle changes, such as in eating, smoking and exercise habits, which could result in future mortality

being significantly worse than in the past for the age groups in which the Company has significant

exposure to mortality risk. However, continuing improvements in medical care and social conditions

could result in improvements in longevity in excess of those allowed for in the estimates used to

determine the liability for contracts where the Company is exposed to longevity risk.

The Company determines that an available-for-sale equity investment is impaired when there has been

a significant or prolonged decline in its fair value below its cost. This determination of what is significant

or prolonged requires judgement. In making this judgement, the Company evaluates among other

factors, the normal volatility in share price. In addition, impairment may be appropriate when there is

evidence of deterioration in the financial health of the investee, industry and sector performance,

changes in technology, and operational and financing cash flows.

The carrying amounts of available for sale investments at end of the current and previous year are set

out in note 15.

The fair value of financial instruments where no active market exists or where quoted prices are not

otherwise available are determined by using valuation techniques. In these cases the fair values are

estimated from observable data 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 to determine fair values, they are validated

and periodically reviewed by qualified personnel independent of those that sourced them. All models are

certified before they are used, and models are calibrated to ensure that outputs reflect actual data and

comparative market prices. To the extent practical, models use only observable data; however, areas

such as credit risk (both own credit risk and counterparty risk), volatilities and correlations require

management to make estimates.

40


STATEMENTS - Contd.


4. CHANGES IN ACCOUNTING POLICY AND DISCLOSURES

New and Amended Standards and Interpretations

The accounting policies adopted are consistent with those of the previous financial year, except for

the following new and amended IFRS and IFRIC interpretations effective as of 1 January 2011:

The Adoption of the Standards or Interpretations is Described Below:

IAS 24 Related Party Disclosures (amendment) effective 1 January 2011.

IAS 32 Financial Instruments: Presentation (amendment) effective 1 February 2010.

IFRIC 14 Prepayments of a Minimum

Documents

GLICO Life Annual Report 2012-12mb - PDF