Metropolitan Life Insurance Nigeria Limited …METROPOLITAN LIFE INSURANCE NIGERIA LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 DIRECTORS' REPORT 2018 2018 2017

Metropolitan Life Insurance Nigeria Limited

Financial Statementsfor the year ended 31 December 2018

METROPOLITAN LIFE INSURANCE NIGERIA LIMITED

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018

Table of Contents

Page

Corporate information 1

Directors' report 2

Corporate governance report 6

Management commentary and analysis 19

Statement of directors' responsibilities 21

Audit committee report 22

Certificate of actuaries 23

Certification by company secretary 24

Independent auditor's report 25

Significant accounting policies 29

Statement of financial position 42

Statement of comprehensive income 43

Statement of changes in equity 44

Statement of cash flows 45

Notes to the financial statements 46

Statement of value added 87

Five year financial summary 88

METROPOLITAN LIFE INSURANCE NIGERIA LIMITEDFINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018

Corporate information

Directors

Mr. Phillip Matlakala Chairman Mr. Olufemi Olasupo Adeyemo Non-Executive Director / Independent Director

Mr. Charles Egan Non-Executive Director Mrs. Beatrice Ofei Non-Executive Director Mr. Philip Du Preez Non-Executive Director Mr. Dumo Mbethe Non-Executive Director Mr. Livingstone Magorimbo Managing Director / Chief Executive OfficerMr. Henry Ationu Executive Director (resigned, effective 30 June 2018)

Registered office 205B Ikorodu RdObanikoroLagos, Nigeria

Independent auditors PricewaterhouseCoopersLandmark Towers,5B Water Corporation Road, Victoria Island, Lagos

Tel: +234 1 271 1700 www.pwc.com/ng

Company secretary A & O Secretarial Services1 Murtala Muhammed DriveIkoyi

Lagos, Nigeria

Bankers First Bank Nigeria LimitedFirst City Monument Bank PlcGuaranty Trust Bank PlcHeritage Bank PlcProvidus Bank LtdSkye Bank PlcSterling Bank PlcUnited Bank for Africa PlcZenith Bank Plc

Re-insurers Continental Reinsurance Plc8th Floor, St Nicholas House6 Catholic Mission Street

Lagos, Nigeria

Reporting actuary in Nigeria Ernst & Young Nigeria, 4th Floor, UBA House, 57 Marina Street, Lagos.

Asset management advisory services United Capital Plc

12th Floor UBA House57 Marina, Lagos

1

http://www.pwc.com/ng



DIRECTORS' REPORT

Legal form and principal activity

The directors submit their report together with the audited financial statements for the year ended 31 December 2018,

which discloses the state of affairs of the Company.

Metropolitan Life Insurance Nigeria Limited provides life insurance services in the corporate and financial institutional

markets in Nigeria as well as the retail life insurance market. The Company is a specialised life underwriter and was

incorporated as a private limited liability company on 19 August 2004. The Company is ultimately controlled by MMI

Holdings Limited through its subsidiary Metropolitan International Holdings Pty Limited. The National Insurance

Commission licensed the Company on 14 February 2007 to carry on the business of life insurance in Nigeria.

To this end, the Company combines the presence and technical expertise of its parent company to deliver high quality

professional service to its chosen markets and customers through group and credit life value propositions.

Metropolitan Life Insurance Nigeria Limited is one of the top specialised life underwriter in the Nigerian market. The

penetration of the market by life insurance, especially in terms of retail value propositions, remains very low and

presents an enormous opportunity to the Company for which a mass market strategy has been developed and is being

implemented based on voluntary group products.

A significant portion of the profit generated over the years by the Company has been derived from the four funds

approach to investment management that ensures appropriate segregation of policyholder and shareholder funds and

aligns the asset allocations in the fund to the objectives of the fund. The Company managed to maintain superior

investment returns and was largely unaffected by the collapse of the Nigerian equity market, which followed the

deterioration in the macro-economic environment as a result of the significant drop in oil prices in the global market

that subsequently affected the value of the naira against major foreign currencies. Over 90% of the total asset base

comprised assets that generate quality yield.

During the past year and going forward, it is the view of management that the interventions of the regulator in the

structure of the insurance industry will only strengthen the underwriting and distribution of products into the market,

providing increasing comfort to the market as to the value proposition presented. In particular, the continued

enforcement of the "No Premium No Cover" ruling based on the Insurance Act, has resulted in a significant

improvement in premium collections in recent history and in the future it will ensure timely payment of premiums and

will improve overall industry and Company profitability.

2



DIRECTORS' REPORT

Business objectives and strategies

Resources, risks and relationship

31-Dec-18 31-Dec-17

N'000 N'000

Gross premium written 2,265,495 2,006,246

Profit before tax 231,084 156,264

Income tax (12,844) (14,432)

Profit for the year 218,240 141,832

Total comprehensive income for the year 218,240 141,832

Appropriation to contingency reserve 22,655 20,598

Earnings per share - basic/diluted (kobo) 21.82 14.18

It is the stated intent of the Company to remain one of the leading specialist life insurance underwriters in the market.

To this end we combine our technical expertise with high quality people to identify opportunities and market segments

in which we can offer life insurance value propositions profitably and sustainably while meeting the expectations of our

policyholders and shareholders.

The objectives of the business therefore focus on profitable revenue growth, certainty in delivery of benefits to our

policyholders, distribution reach and efficiency and ensuring optimal capital management and returns for shareholders.

The primary resources employed by the Company consist of the intellectual property and spread provided by the parent

company, combined with the professionalism and drive of the high quality people employed in the business which, in

combination, provide the Company with the opportunity to pursue the stated strategy. In addition, the Company's

operations remain self-funding with adequate capital to continue to do so in the foreseeable future while meeting the

capital adequacy requirements of both the regulator and that of the policyholder liabilities with no exposure to premium

debtors due to the ongoing accounting practice of "no premium, no cover ruling".

Risk in the business is managed in terms of the Enterprise Risk Management Guidelines of the regulator and reviewed

on a quarterly basis, while identified risks are actively managed with the objective of maintaining the risk profile of the

Company within the defined risk appetite parameters. The ERM review is endorsed and approved for relevance by the

Enterprise Risk Management, Remuneration and Governance Committee of the Board before submission of the same to

National Insurance Commission.

The ongoing sustainable growth and success of the business are largely dependent on the continued strong support of

our parent company which provides the access and technical know-how, in addition to the strategic direction for the

business. This is augmented by the strong moves of the Commission in sanitising the industry of inappropriate

competitive practices and ensuring deepening penetration and premium settlement, all of which are to the benefit of

both the insurance industry and its consumers in the long term.

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

3



DIRECTORS' REPORT

2018 2018 2017 2017

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

No. of shares % Holding No. of shares % Holding

999,999,999 100 999,999,999 100

1 0 1 0

Acquisition of own shares

Composition of all employees (inclusive of top management) Number Percentage

Female 20 43%

Male 27 57%

Total 47 100%

Board composition by gender

Female 1 13%

Male 6 86%

Total 7 100%

Metropolitan International

Holdings (Pty) Ltd

Directors' interest in contractsNone of the directors has notified the Company for the purpose of section 277 of the Companies and Allied Matters Act

of their direct or indirect interest in contracts or proposed contracts with the Company during the year.

No director has direct or indirect interest in the share capital of the Company (December 2017 :Nil)

1. Report on diversity in employment

The Company operates a non-discriminatory policy in the consideration of applications for employment. The

Company's policy is that the most qualified and experienced persons are recruited for appropriate job levels,

irrespective of an applicant's state of origin, ethnicity, religion, gender or physical condition. We believe diversity and

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

developing solutions to address them.

Post balance sheet eventsThere are no post balance sheet events that require disclosure in this directors' report.

Donations and charitable gifts

Directors' and their interest

Human resources

The Company made no contributions to charitable and non-political organizations during the year (31 December 2017:

Nil).

ShareholdingAccording to the register of members, Metropolitan International Holdings (Pty) and MMI Strategic Investments were

the shareholders and its interest in the issued share capital of the Company as at 31 December 2018 was as follows:

The Company did not purchase any of its own shares during the year (31 December 2017: Nil).

MMI Strategic Investments

(Pty) Ltd

4



CORPORATE GOVERNANCE REPORT

S/N

1

2 Mr. Olufemi Olasupo Adeyemo

3

4

5

6

7

8

*Mr Henry Ationu resigned from the board with effect from 30 June, 2018

Ghanaian

South African

South African

Nigerian

ZimbabweanMr. Livingstone Magorimbo

Mr. Philip Du Preez

Mr. Dumo Mbethe

Mr. Henry Ationu *

Managing Director / Chief

Executive Officer

Non-Executive Director


Executive Director

Mrs. Beatrice Ofei Non-Executive Director

Metropolitan Life Insurance Nigeria Limited (“the Company”) is committed to implementing the best practice

standards of corporate governance. The Company functions under a governance framework that enables the Board to

discharge its role of providing oversight and strategic direction in balance with its responsibility to ensure the

Company’s compliance with regulatory requirements and acceptable risk.

The Board of Directors is the Company’s highest decision making body responsible for governance. It operates based

on the understanding that sound governance practices are fundamental to earning the trust of stakeholders which is

critical to sustainable growth.

The Board composition, is driven by the need to manage costs and at the same time, ensure that the committees have

access to the required skills and competencies from directors. As at 31 December 2018, the Board comprised seven

(7) members made up of six (6) Non-Executive Directors and one (1) Executive Directors, in line with the provisions

of the NAICOM Code of Corporate Governance for Insurance Companies in Nigeria. The full details of the Board

composition is set out below:

Introduction:

The Board:

Composition and role:

Mr. Phillip Matlakala

Mr. Charles Egan

Name Designation Citizenship

South African

Nigerian

Ghanaian

Chairman


/Independent Director


In line with best practice and in accordance with the provisions of all the Codes of Corporate Governance by which

the Company is governed, the roles of the Chairman and Managing Director are assumed by different individuals and

there is a separation of powers and functions between the Chairman and the Managing Director. The Board is able to

reach impartial decisions as its Non-Executive Directors are a blend of Independent and Non-Independent directors

with no shadow or alternate Directors, which ensures that independent thought, is brought to bear on decisions of the

Board. The effectiveness of the Board derives from the diverse range of skills and competences of the Executive and

Non-Executive directors who have exceptional degrees of insurance, financial and broader entrepreneurial

experiences.

The Board carries out its oversight function through its standing committees. In line with best practice, the Chairman

of the Board does not sit on any of the committees. In line with the 2015 NAICOM Corporate Governance Guidelines,

the three Board committees are as follows;

• Finance, Investment and General Purpose Committee (FIGPC);

• Audit and Compliance Committee (ACC); and

• Enterprise Risk Management Remuneration and Governance Committee (ERMRGC)

Board Committees

6




S/N ACC ERMGC FIGPC

1 -

2 C M M

3 M C

4 M C -

5 - M M

6 - - -

7 - - -

Key

C Chairman of Committee

M Member

Mr. Phillip Matlakala

Mr. Charles Egan

Mrs. Beatrice Ofei

Mr. Livingstone Magorimbo

Mr. Olufemi Olasupo Adeyemo

Mr. Dumo Mbethe

Mr. Philip Du Preez

The composition and responsibilities of the Committees are set out below:

Board Audit and Compliance Committee

Audit & Compliance Committee functions:

The functions of the Audit & Compliance Committee are as follows:

• Ensure that an effective system of audit and internal controls are in place to safeguard the assets and income of the

Company and ensure the integrity of the Company’s financial statements.

• Monitor processes designed to ensure compliance in all respect with legal and regulatory requirements, including

disclosure controls and procedures and the impact (or potential impact) of the developments related thereto. Also

ensure compliance with Anti-Money laundering laws, policies and reporting requirements.

• Evaluate annually the independence and performance of the external and internal auditors.

• Review with management and external auditors the annual audited financial statements before its submission to

the Board.

• Select and review appointments of independent external auditors and recommend to the Board for approval prior

to the Board’s recommendation to shareholders for ratification.

• Review management’s internal audit and control reports and recommend controls that will address control lapses

to the Board.

• Review all whistleblowing reports.

• In collaboration with Enterprise Risk Management, Remuneration and Governance Committee, respond to

regulators on behalf of the Board in respect of their audit comments.

• Review and approve audit policies.

• Review and approve internal audit charter.

• Recommend, in line with best practice, the Head Internal Audit for appointment by the Board.

• The Head Internal Audit and the Chief Compliance Officer will report to the Chairman of the Committee and will

be assessed annually by him/her in consultation with the MD/CEO.

• Advise the Board of significant control failures and tracking.

• Act as the disciplinary committee of the Board for the MD/CEO, Executive Director(s) and the Executive

Management Team.

• Review regulators audit reports and ensure that systems are put in place to address any weaknesses.

• Review the activities of the internal audit function and ensure that no unjustified restrictions or limitations are

imposed

• Review the internal audit function’s compliance with its mandate as approved by the Committee

• Consider whether or not the objectives, staffing plans, financial budgets, audit plans and standing of the internal

audit function provides adequate support to enable the Committee to meet its objectives.

Director

7




• Ensure that the internal audit function is subject to an independent quality review, as and when the Committee

determines it appropriate, provided it takes place at intervals not exceeding 5 years at a time, including compliance

with the Institute of Internal Auditors' International Standards for the Professional Practice of Internal Auditing.

• On a regular basis meet separately with the head of internal audit to discuss any matters that the Committee or

internal audit believes should be discussed privately

• Ensure that a formal process to follow up significant internal and external audit recommendations is in place, and

that the Internal Auditor reports to the Audit & Compliance Committee on any slow progress or non-implementation

of these recommendations.

Internal control

The Committee will review the effectiveness of the design and operation of the Company’s system of internal control.

In discharging these responsibilities the Committee will:

• Evaluate whether management is setting the appropriate “control culture” by communicating the importance of

internal control and ensuring that all employees have an understanding of their roles and responsibilities;

• Gain an understanding of whether internal control recommendations made by internal and external auditors have

been implemented by management;

• Review the directors’ responsibility statement in the financial statements on internal controls prior to endorsement

by the Board and, in particular, to review:

i. the procedures for identifying business and financial risk and controlling their impact on the company;

ii. the Company’s procedures for preventing or detecting fraud;

iii. the Company’s procedures for ensuring that relevant regulatory and legal requirements are complied with;

iv. the operational effectiveness of policies and procedures.

• Review the controls over significant financial risks. Assess whether management has controls in place for unusual

types of transactions and/or any potential transactions that may involve an unacceptable degree of risk;

• Review the results of work performed by the internal audit function in relation to financial reporting, corporate

governance, internal control and any significant investigations and that findings and recommendations are received

and discussed on a timely basis;

• Review such significant transactions not directly related to the company’s normal business as the Committee might

deem appropriate;

• Review the report of internal audit to the Committee in providing comfort on internal controls and on any

unmanaged risks and controls;

• Compliance with laws and regulations;

• Review the effectiveness of the system for monitoring compliance with laws and regulations.

• Review the findings of any examinations by regulatory agencies, and any auditor observations.

• Review the process for communicating the code of conduct to Company personnel, and for monitoring compliance

therewith.

• Obtain regular updates from management and company Chief Legal Officer regarding compliance matters.

External audit

• Review the external auditors' proposed audit scope, approach, terms of engagement and audit fee, including

coordination of audit effort with internal audit, and ensure that no undue restrictions or limitations have been placed

on the scope of the audit.

• Review and discuss the external auditor’s proposed report, any matters arising from the audit that the auditors may

wish to raise, as well as the external auditor’s management letter and the management response thereto.

• Review the performance of the external auditors, and make recommendations to the Boards on the appointment or

discharge of the auditors.

8




Authority

Meeting procedures

Attendance

Quorum and voting

• Review and confirm the independence of the external auditors by obtaining statements from the auditors on

relationships between the auditors and the company, including non-audit services, and discussing the relationships

with the auditors.

• On a regular basis, meet separately with the external auditors to discuss any matters that the Committee or

auditors believe should be discussed privately.

In order to meet its responsibilities and fulfil its role, the Committee:

• Acts in terms of the delegated authority of the Board.

• Has the power to investigate any activity within the scope of its Terms of Reference.

• May call upon the Chairmen of the other Board Committees, any of the executive directors, officers or Company

Secretary to provide it with information, subject to following a Board approved process.

• Has reasonable access to the Companies’ records, facilities and any other resources necessary to discharge its

duties and responsibilities.

• May delegate authority to one or more designated members of the Committee.

• Has the right to obtain independent outside professional advice to assist with the execution of its duties, at

companies’ cost, subject to following a Board approved process.

• Makes recommendations to the Board that it deems appropriate on any area within the ambit of its Terms of

Reference where action or improvement is required.

• The Committee will meet on an ad hoc basis but will meet a minimum of four times per annum.

• The chairman of the Committee may meet with the CEO, the Head Internal Audit, and/or the Company Secretary

prior to a Committee meeting to discuss important issues and agree on the agenda.

• The Chairman may invite any member of staff from the Company, including external professional advisors, to

Committee meetings as and when required, provided that a Board approved process is followed. Invitees to meetings

attend by invitation only and they may not vote on matters at the meeting.

• The following persons shall attend Committee meetings as appropriate (but have no voting power):

• MD/CEO

• Chief Compliance Officer;

• Chief Financial Officer;

• Executive Director, Business Development; and

• Internal Auditor

• Committee members will attend all scheduled meetings of the Committee, including meetings called on an ad hoc

basis for special matters, unless prior apology, with reasons, have been submitted to the Chairperson or Committee

Secretary.

• If the nominated Chairperson of the Committee is absent from a meeting, the members present shall elect one of

the members present to act as Chairperson for that meeting.

• The Company Secretary or his/her delegate is the secretary to this Committee.

• A quorum for meetings shall be a simple majority of members.

• Individuals in attendance at Committee meetings by invitation may participate in discussions at meetings but do

not form part of the quorum for Committee meetings, and shall have no voting rights where decisions are to be voted

on;

• Wherever possible the Committee will take decisions on a consensus basis. Where consensus cannot be reached,

voting takes place by a show of hands.

9




Agenda and minutes

Evaluation

Remuneration

Review of terms of reference

Introduction

The purpose of Enterprise Risk Management Remuneration and Governance Committee is to:

Committee members not holding executive office shall be compensated for their services, with the Chairperson being

entitled to an additional fee for his/her service.

The Board will review the contents of this terms of reference each year to ensure that it remains consistent with the

Boards’ objectives and responsibilities.

The Board Enterprise Risk Management, Remuneration and Governance (ERMR&GC) Committee is a Committee of

the Board.

• Discharge the Board’s risk management responsibilities as defined in the Company’s Risk Policies and in

compliance with regulation, law and statute;

• Review and assess the integrity and adequacy of the overall risk management function of the Company;

• Review risk limits and periodic risk reports and make recommendations to the Board;

• Establish procedures for the nomination of directors.

• Advise and recommend to the Board the composition of the Board.

• Approve recruitments, promotions, redeployments, disengagements and succession planning for Executive

Management in line with the approved organization structure of the Company and manning levels and the approved

annual Manpower Plan.

• Approve recruitments, promotions, redeployments and disengagement for Executive Management of Subsidiaries,

where applicable. Recruitments shall be in line with the approved organisation structure of the subsidiary.

• Review and evaluate the skills of members of the Board using the skills matrix found in the Appendix.

• Recommend to the Board compensation for all staff of the Company.

• Advise the Board on corporate governance standards and policies.

• Review and approve all human resources and governance policies for the Company.

• Review and recommend to the Board and Shareholders any changes to the Memorandum and Articles of

Association.

Board Enterprise Risk Management, Remuneration and Governance Committee.

• The Committee shall establish an annual work plan for each year to ensure that all relevant matters are covered by

the agendas of the meetings planned for the year.

• The notice of each meeting of the Committee, confirming the venue, time and date and enclosing an agenda of

items to be discussed, together with the supporting documentation, shall be forwarded to each member of the

Committee not less than five (5) working days prior to the date of the meeting.

• Committee members must be fully prepared for Committee meetings, to provide appropriate and constructive input

on matters discussed.

• The minutes of meetings shall be completed as soon as possible after the meeting and circulated to the Chairperson

for review thereof. The minutes will be formally approved by the Committee at its next scheduled meeting.

The Board, and each member of the Committee, will perform an evaluation of the effectiveness of the Committee

annually.

10




Composition of the Committee

Remuneration and performance management

• The Committee will comprise at least three members of whom the majority will be non-executive, including the

Chairperson of the Audit and Compliance Committee.

• The Chairperson and members of this Committee shall be appointed by the Board, or its duly mandated Board

Committee. Any change to the composition of the Committee shall be considered and approved by the Board, or its

duly mandated Board Committee.

• The Committee’s composition shall be reviewed at least every three years and members may be eligible for re-

appointment.

• The members of the Committee must collectively have sufficient qualifications and experience to fulfil their duties,

be fit and proper, and keep up-to-date with developments affecting the required skills-set.

• The Company Secretary, or any other person so appointed by the Board, duly mandated by the Board Committee,

shall be the secretary to the Committee.

• Risk management

• Approve annual risk management plan and oversee its implementation and monitor performance. This annual

plan should also include a fraud risk plan to consider the Company’s fraud exposure and prevention.

• Ensure that risk assessments are performed on a continual basis and ensure that frameworks and methodologies

are in place to increase the probability of anticipating unpredictable risks.

• Monitor, review and assess the integrity and adequacy of the overall risk management framework of the Company.

• Recommend risk approval limits to the Board for approval.

• Review and on a continuous basis update the risk management policies, frameworks and procedures subject to the

approval of the Board.

• Advise the Board on any emerging risks that the Company’s or could be exposed to and recommend mitigation

actions.

• Recommend the organization structure of the Company to the Board for approval.

• Evaluate and appraise the performance of the Board and Board Committees and its members annually in

conjunction with consultants.

• Review management’s performance against pre-set objectives and compliance with human resources policies and

practices.

• Review and recommend for approval to the Board, Company Policies relating to Human Resources risk

management.

The responsibilities and scope of the Enterprise Risk Management Remuneration and Governance Committee are:

• Recommend the entitlements of Directors to the Board for approval.

• Recommend compensation package for the Managing Director/CEO, Executive Director(s) and Executive

Management Team for approval by the Board.

• Define the MD/CEO’s accountabilities and how performance will be appraised.

• Approve the accountabilities and how performance will be appraised for the Executive Management Team.

• Appraise the performance of the MD/CEO, and the Executive Management Team of the Company against Key

Performance Indicators, with a report of the appraisal submitted to the Board of Directors.

• Review and evaluate the MD/CEO’s annual evaluation of the Executive Management Team and decide on their

individual compensation packages in accordance with the remuneration policy for the Executive Management Team.

• Appraise Board performance and oversee the evaluation of the Board.

11




Governance

Authority

• The BERMRGC shall provide a central source of guidance and advice to the Board and Company on matters of

ethics, conflict of interest and good corporate governance.

• Responsible for evaluating the overall system of corporate governance for the Company and proposing any changes

to the Board for approval.

• Recommend to the Board for approval, the Board Governance and Board Committee and Executive Management

Governance frameworks/mechanisms, and conduct its periodic review as it deems appropriate.

• Recommend to the Board for approval, the Policy framework and procedures for the Company.

• Review and recommend to the Board and shareholders any changes to the Memorandum and Articles of

Association.

• Deliberate and respond on behalf of the Board to regulatory reports/comments.

• Organize all Board and Board Committees inductions and trainings. Conduct training for the Board on all aspects

of governance practices and compliance to ensure that it can carry out its decision making and oversight functions

effectively.

• Review the leadership development and training initiatives of executive management and ensure that any

development needs are addressed. Due consideration must be given to the MMI group aspirations to grow talent in

country that could be developed to take on greater responsibility in other parts of the MMI International and MMI

group companies.

• Review and on a continuous basis update the policies, frameworks and procedures of the Company subject to the

approval of the Board;

• Approve the promotion of Head Internal Audit and senior management of the Audit Department, upon

recommendation from the Audit and Compliance Committee. These promotions must be based on approved

promotion eligibility criteria and the approved annual Manpower plan by the Board.

• Approve IT governance framework and delegate to Management the responsibility for the implementation of the IT

governance framework.


• Acts in terms of the delegated authority of the boards.

• Has the power to investigate any activity within the scope of its Terms of Reference.

• May call upon the Chairmen of the other Board Committees, any of the executive directors, officers or company

secretary to provide it with information, subject to following a Board approved process.

• Has reasonable access to the companies’ records, facilities and any other resources necessary to discharge its duties

and responsibilities.



company’s cost, subject to following a Board approved process.

• Makes recommendations to the board that it deems appropriate on any area within the ambit of its Terms of

Reference where action or improvement is required.

• Propose candidates to the Board for all Board positions.

• Propose to the Board, candidates for the position of Managing Director Chief Executive Director(s) and members

of the Executive Management Team for the Company.

• Recommend to the Board, directors for election and re-election.

• Regularly update the Board about the Committee’s activities and make appropriate recommendations in

accordance with Companies’ vision statement and business concept.

• Appointments will be approved as follows:

> Appointments of up to Senior Manager should be approved by the CEO;

> Appointments of Assistant General Manager and above should be approved by ERMRGC;

> Appointments of Company Secretary, Head Internal Audit, and Executive Directors/Non-Executive Directors

should be approved by the Board. Approve the redeployments of the Executive Management.

• Review the Executive Management succession plans and make recommendations to the Board.

• Approve the disengagement (resignation, retirement, termination, dismissal, redundancy and invalidation on

medical grounds) of Executive Management.

12




Meeting procedures

Attendance

Quorum and voting

Agenda and minutes


• The Chairman of the Committee may meet with the CEO, the Risk Officer, Internal Auditor, Head HCM and/or the

Company Secretary prior to a Committee meeting to discuss important issues and agree on the agenda.

• The Chairman may invite any member of staff from the Company, including external professional advisors, to




• The Risk Officer;

• The Head of Internal Audit;

• Head of HCM;

• Chief Financial Officer; and

• Chief Compliance Officer.

The Head HR MMI International may attend the meetings of the Committee but only by invitation.

• Committee members must attend all scheduled meetings of the Committee, including meetings called on an ad hoc


secretary.




• A quorum for meetings shall be a simple majority of Members.



on;


voting shall take place by a show of hands.






• Committee members must be fully prepared for Committee meetings, to provide appropriate and constructive

input on matters discussed.



Evaluation


annually.

Remuneration





Boards’ objectives and responsibilities.

13




Board Finance, Investment and General Purpose Committee (FIGPC)

The purpose of The Finance, Investment and General Purpose Committee is to:

Composition of the Committee

• Formulate and shape the strategy of the Company and make recommendations to the Board accordingly;

• In carrying out its functions, the FIGPC may engage an adviser on behalf of the Board to facilitate an annual review

of the Company’s long term plans and the principal issues that the Company may face in the future.

• Conduct one Board/Management Strategy Retreat a year to formulate the strategy.

• Review and approve the budget of the Company within its limit and make recommendations to the Board for

approvals above its limit.

• Review and approve within its approved limits, the annual manpower plan for the Company as part of the budget

approval process. The manpower plan shall at a minimum include the vacancies, maximum levels, cost implication,

etc.

• Approve within its approved limits the annual estimated number of staff to be promoted based on agreed

promotion eligibility criteria as part of the annual budget exercise.

• Monitor performance of the Company against budget.

• Conduct Quarterly business reviews with Management/Board.

• Concur on compensation for executives.

• Consider and approve expenses (including donations, sponsorships and overseas training) above the limits of the

Executive Management and its organs as specified in the expense empowerment policy.

• Consider and approve significant IT investments and expenditure for the Company.

• Consider and approve extra budgetary expenditure (including donations, sponsorships and overseas training)

above the limits of Executive Management and its organs as specified in the approved expense empowerment policy.

The responsibilities and scope of the Finance, Investment and General Purpose Committee are:

• The Committee comprises at least three members of whom the majority will be non-executive, including the

Chairperson of the Finance, Investment and General Purpose committee.

• The Chairperson and members of this Committee shall be appointed by the Board, or its duly mandated Board

Committee. Any change to the composition of the Committee shall be considered and approved by the Board, or its

duly mandated Board Committee.

• The Committee’s composition shall be reviewed at least every three years and members may be eligible for re-

appointment.

• The members of the Committee must collectively have sufficient qualifications and experience to fulfil their duties,

be fit and proper, and keep up-to-date with developments affecting the required skills-set.

• The Company Secretary, or any other person so appointed by the Board, duly mandated by the Board Committee,

shall be the secretary to the Committee.

• Discharge the Board’s responsibilities with regard to strategic direction and budgeting;

• Provide oversight on financial matters and the performance of the company;

• Review and approve the Company’s policies of a financial and general nature;

• Make financial and investment decisions within its approved limits on behalf of the Board;

• Discharge other related responsibilities of a finance, investment and/or general nature as the name implies.

14




Financial reporting (financial statements)

• Consider and approve income reversals, refunds of fraud losses on customer accounts.

• Review the assets and liability committee reports.

• Develop and review a Board information system needed for the Board to carry out its oversight role.

• Approve financial policies for the Company regarding financial reporting and controls and audits.

• Approve the following other policies of the company:

a. Accounting and Finance Policies;

b. Operations Policies;

c. Expense Policies;

d. Accrual, Depreciation and Amortization Policies;

e. Asset Management/Disposal Policies;

f. Income Generation Policies;

g. Investment Policies;

h. Recommend Dividend Policies to the Board for approval;

i. Insurance Policies;

j. Treasury Policies & Frameworks; and

k. Any Other Policies/Matters relating to the title of the Committee;

• Monitor and evaluate significant IT investments and expenditure.

• Financial Reporting (General)

• Review any legal matters which could significantly impact the financial statements.

• Gain an understanding of the current areas of greatest financial and nonfinancial (operational, strategic and

regulatory) risk that may impact on the reporting, and how management is managing these effectively.

Monitor and evaluate significant IT investments and expenditure.

• Financial Reporting (General)

• Review any legal matters which could significantly impact the financial statements.

• Gain an understanding of the current areas of greatest financial and nonfinancial (operational, strategic and

regulatory) risk that may impact on the reporting, and how management is managing these effectively.

• Communicate with management and the internal and external auditors on the significant risks and exposures and

the plans to minimize such risks.

• Review significant accounting and reporting issues, including recent professional and regulatory pronouncements,

and understand their impact on the financial statements.

• Consider, with the internal and external auditors, any fraud, illegal acts and deficiencies in internal control or other

similar issues.

• Review and approve non-credit products above the level of Executive Management.

• Review the Company’s investment portfolio annually.

• Approve investment/divestment proposals on behalf of the Company within its limit and recommend to the Board

decisions above its limits for approval.

• Review the Company’s investment proposals irrespective of the amount, before presenting to the Board.

• Approve any new business activity irrespective of the amount of capital commitment.

• Review from time to time the capital (debt/equity) requirements of the Company.

• Recommend to the Board for approval the authority limits for all Executives (including all Executive Directors and

Managing Director).

• Review significant accounting and reporting issues, including the definition of materiality, any complex or unusual

transactions and highly judgmental areas.

• Review with management and the external auditors the results of the audit, including any difficulties encountered.

• Review the annual financial statements, and before recommending them to the Board for approval, consider

whether they are complete, consistent with information known to Committee members, follow appropriate

accounting principles, fairly reflect the state of affairs of the companies and that all material legal and regulatory

compliance matters have been considered.

• Review with management and the external auditors all matters required to be communicated to the FIGP under

generally accepted international standards on auditing.

15




Actuarial & financial report

Reporting responsibilities

Other responsibilities

Meeting procedures

• Understand how management develops interim financial information, and the nature and extent of internal and

external auditor involvement.

• Review financial reports with management and the external auditors before filing with regulators, and consider

whether they are complete and consistent with the information known to Committee members. In reviewing financial

reports, consider whether management representations are fair and reasonable.

• Consider whether or not the objectives, staffing plans, financial budgets, audit plans and standing of the internal

audit function provides adequate support to enable the Committee to meet its objectives.

• Receive reports and review such reports and minutes of meetings submitted that relate to finance and actuarial

mandates. Ensure that material risks and concerns are addressed by management.

• Regularly report to the Board about the Committee’s activities and make appropriate recommendations.

• Ensure that the Board is aware of matters which may significantly impact the financial condition or affairs of the

business.

• Perform any other functions as may be requested by the Board; provided that those functions are not management

functions.

• Institute and oversee special investigations as needed.

• Review and assess the adequacy of the Committee terms of reference annually, requesting Board approval for

proposed changes, and ensure appropriate disclosure.

• Confirm annually that all responsibilities outlined in this terms of reference have been carried out.

• Evaluate the Committee's and individual members' performance on a regular basis.


• Acts in terms of the delegated authority of the Board.

• Has the power to investigate any activity within the scope of its terms of reference.

• May call upon the Chairmen of the other Board Committees, any of the executive directors, officers or company

secretary to provide it with information, subject to following a board approved process.

• Has reasonable access to the Company’s records, facilities and any other resources necessary to discharge its duties

and responsibilities.



companies’ cost, subject to following a Board approved process.

• Makes recommendations to the Board that it deems appropriate on any area within the ambit of its terms of

reference where action or improvement is required.


• The Chairman of the Committee may meet with the CEO, the CFO, Chief Technical Officer, Head of Business

Development and/ or the Company Secretary prior to a Committee meeting to discuss important issues and agree on

the agenda.

• The Chairperson may invite any member of staff from the Company, including external professional advisors, to




• Chief Financial Officer;

• Executive Director, Business Development;

• Chief Technical Officer; and

• Internal Auditor

16




Quorum and voting

Agenda and minutes

S/N Director BoD ACC ERMGC FIGPC

4 4 4 4

1 Mr. Phillip Matlakala 4 - - -

2 Mr. Olufemi Olasupo Adeyemo 4 4 4 4

3 Mr. Charles Egan 4 4 - 4

4 Mrs. Beatrice Ofei 4 4 4 -

5 Mr. Philip Du Preez 4 - - -

6 Mr. Livingstone Magorimbo 4 - 4 4

7 Mr. Dumo Mbethe 3 - - -

8 Mr. Henry Ationu* 2 - - -

*Mr. Henry Ationu resigned from the board with effect from 30 June, 2018

Number of Meetings Held

Attendance:

NAME OF DIRECTORS

• A quorum for meetings shall be a simple majority of members.



on.


voting shall take place by a show of hands.






• Committee members must be fully prepared for Committee meetings, to provide appropriate and constructive input

on matters discussed.



• Committee members will attend all scheduled meetings of the Committee, including meetings called on an ad hoc


secretary.




MEETING

Evaluation


annually.

Remuneration





Board’s objectives and responsibilities.

Attendance at Board and Board Committee meetings

Directors' attendance at meetings during the 2018 financial year was as shown below:

17




E-mail

Statement of compliance

234-12772526

[email protected]

Whistle blowing procedure

Dial- in number:

The Company is a private limited liability company and is subject to the relevant provisions of the NAICOM Code of

Corporate Governance.

The Company's Head of Internal Audit is responsible for monitoring and reporting on whistleblowing. Quarterly

reports are rendered to the Board Audit and Compliance Committee.

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

Company and its stakeholders. The Company's Whistle-Blowing Policy covers internal and external whistle-blowers.

Customer, employees and other stakeholders may raise concern about actual or potential infraction of company's

corporate business principles, other ethic related policies or violation of the Company's processes and procedures

such as internal dealing and illegal information brokerage, conflict of interest and abuse of office, improper payment,

compromise of company's health and safety policy, standards, commission of a crime, failure to comply with any legal

obligations, a miscarriage of justice, damage to the environment, fraud and financial irregularities, the deliberate

concealment of information tending to show one of the above mention is occurring or likely to occur.

18

mailto:[email protected]



MANAGEMENT'S COMMENTARY AND ANALYSIS OF THE CURRENT YEAR PERFORMANCE

31-Dec-18 31-Dec-17 ChangeN'000 N'000 %

2,265,495 2,006,246 13 Reinsurance expenses (414,671) (345,265) 20

1,840,507 1,637,982 12 (405,106) (359,095) 13 698,679 1,007,238 (31)

(908,197) (1,137,024) (20) 231,084 156,264 48 218,240 141,832 54 Earnings per share -

basic/diluted (kobo) 21.82 14.18 54

Profit before taxProfit for the year

Performance indicators

Net claims ratio. 2018: 5% (2017:23%)

The net claims experience has been managed, inter alia, by increased facultative reinsurance. The

reinsurance claims recoveries were N629.04 million in 2018 compared to N376.14 million in 2017.

Unprofitable schemes are monitored in respect of loss ratios and pricing adjustments implemented

where feasible. Other policy conditions are also reviewed in instances where the claims experience

warrants such interventions.

Operating results and financial position

Dividend declaration

The Directors do not recommend the payment of a dividend for the year ended 31 December 2018.

Performance measures and indicators

The performance measures applied in the Company focus on the factors that ensure the sustainable

growth of the business in the long term while meeting the requirements and obligations towards both

providers of capital and policyholders. These measures are applied consistently across financial

reporting periods and reviewed by the Board on a quarterly basis with corrective action following any

deviation. The specific performance indicators are as follows:

Growth in gross premium income measured as a percentage of prior year: 2018: 13%

(2017:1%)

After a growth of 1% in the prior year, the economic headwinds currently ravaging Nigeria impacted

the company's business model in 2018. The company sought to achieve renewal ratios of at about 53%

in 2018 (2017: 80%). However, despite achieving the performance in terms of number of schemes, the

renewal levels of premium were diminished because of company downsizing and retrenchments so the

related sums assured commensurately reduced. Premium inflows from Public Sector also diminished

greatly as a consequence of fiscal challenges. The credit life line of business struggles to gain decent

traction in an environment where most financial institutions are curtailing personal lending lines as

the incidence of non-performing loans continually increases.

Reinsurance ratio. 2018:-20% (2017:-6%)

The company still maintain the usage of facultative reinsurance arrangements as part of the policy in

managing the net claims ratio. Facultative reinsurance is utilized as a mitigation strategy in respect of

schemes which exhibit a gross loss ratio which is deemed to be chronic and competitive market forces

militate against repricing of such schemes.

Gross premium written

Net premium incomeUnderwriting expensesInvestment and other incomeManagement expenses

19



MANAGEMENT'S COMMENTARY AND ANALYSIS OF THE CURRENT YEAR PERFORMANCE

The business model employed in 2018 by Metropolitan is optimised for what, in the view of

management, represents the viable life insurance market segments. This includes product

development, distribution, service delivery and administration. However, as the market evolves and

new opportunities present themselves, the company has the capability and capacity to pursue such

opportunities as are viable and attractive. Specific emphasis is being placed on evaluating the mass

retail market and the application of mobile technology for value proposition delivery. Obviously the

fortunes of Metropolitan are inextricably linked to the wellbeing or otherwise of the Nigerian

economy. If recessionary conditions start to ease and sustained progress is maintained in respect of

initiatives to diversify the Nigerian economy, the company's current principal lines of business, being

employee benefits and credit life underwriting, will be well placed to capitalize on any such green

shoots of recovery.

Growth in underwriting expenses 2018:13% (2017:-3%)

The increase in Underwriting Expenses between 2017 and 2018 was as a result increase in premium

written but frequent prudent processes were put around the underwriting processes. As a result of

this, underwriting expenses incurred in previous years have been cut down to the barest minimum

without necessarily compromising the underwriting processes which resulted in increase of 185% in

underwriting profit between 2017 and 2018.

Growth in management expenses 2018:19% (2017:2%)

The relative stability of the naira to dollar exchange rate at N360 to a Dollar assisted a lot in

controlling foreign exchange denominated expenses. More so, Management has been able to put in

place a lot of cost control initiatives to stem the tide in increased cost as it was obtainable in the past

years. Additionally, staff rationalisation exercise was carried out in August 2017 to checkmate

unnecessary overheads hence the company's ability to reduce the management expenses by about 19%

despite inflation and the increasing cost of doing business in Nigeria.

Financial assets reduced by N515 million in 2018 as against an increase of N423 million in 2017 while

insurance contract liabilities increased by N0.53 million primarily as a result of changes in insurance

Contract Liabilities in the year end actuarial valuation. The yield generated by the investment portfolio

reduced by 31% over the previous period as about 57% of the company's investment assets are in

Treasury Bills which realized enhanced returns 2018. The investment portfolio is completely derisked

with the disposal of the equity portfolio in 2017. The rising yield curve did result in an unrealized

revaluation loss of N96 million in respect of the bond and Treasury Bills portfolio.

Investment performance

Forward looking statements

20



SIGNIFICANT ACCOUNTING POLICIES

1 General information

2 Summary of significant accounting policies

2.1 Basis of preparation

2.2 New standards and amendments applicable during the year

IFRS 9- Financial Instruments effective 1 January, 2018.

The Company has its registered office at 205B Ikorodu Road, Obanikoro, Lagos, Nigeria.

Metropolitan Life Insurance Nigeria Limited was incorporated as a private limited liability Company on 19 August 2004.

The National Insurance Commission licensed the Company on 14 February 2007 to carry on the business of life

insurance in Nigeria. The Company is ultimately controlled by MMI Holdings Limited through its subsidiary

Metropolitan International Holdings Pty Limited.

The financial statements of the Company have been prepared and approved by the directors in accordance with

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

the International Financial Reporting Interpretations Committee (IFRIC), Companies and Allied Matters Act, the

Insurance Act of Nigeria and the relevant national regulations. These financial statements comprise the statement of

financial position, the statement of comprehensive income, the statement of changes in equity, the cash flow statement

and the accompanying notes. The accounting policies set out have been consistently applied in preparing the financial

statements for the year ended 31 December 2018.

The financial statements were authorised for issue by the directors on 2 May, 2019.

The principal accounting policies applied in the preparation of these financial statements are set out below. These

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

The financial statements have been prepared in accordance with the going concern principle under the historical cost

convention as modified by the revaluation of financial assets designated as fair value through profit and loss. The

financial statements are presented in Nigerian currency (Naira-which is the Company's functional currency) and all

values are rounded to the nearest thousand except when otherwise indicated.

Metropolitan Life Insurance Nigeria Limited has adopted IFRS 9 as issued by the International Accounting Standard

Board with a date of transition of 1 January 2018. The adoption resulted in changes in accounting policies and

adjustments to the amounts previously recognised in the financial statements.

Adjustments to the carrying amounts of financial assets at the date of transition were applied restrospectively from 1

January 2018, without restating comparative figures, Opening retained earning as at 1 January 2018 was adjusted for

any differences in the carrying amounts of financial instruments. The adoption of IFRS 9 has resulted in changes in the

accounting policies for recognition, classification and measurement of financial assets and financial liabilities and

impairment of financial assets. IFRS 9 also significantly amends other standards dealing with financial instruments such

as IFRS 7 'Financial Instruments: Disclosures'.

Disclosures relating to the impact of the adoption of IFRS 9 on our financial assets are shown below. Further details of

the specific IFRS 9 accounting policies applied in the current period are described in the accounting policies section (see

note 2.6).

29



NOTES TO THE FINANCIAL STATEMENTS

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

a 779,518 - - - (4,404) 775,114

b - 58,343 - - (103) 58,240

c 5,315,962 (58,343) -

- -

5,257,619

70,120 - - - - 70,120

331,166 - - - - 331,166

135,664 - - - - 135,664

478 - - - - 478

200,000 - - - - 200,000

6,832,908 - - - (4,507) 6,828,401

-

2,293,372 - - - - 2,293,372

53,440 - - - - 53,440

- - - - - -

383,198 - - - - 383,198

d 18,015 - - (45) - 17,970

2,748,025 - - (45) - 2,747,980

1,000,000 - - - - 1,000,000

2,494,862 - - - - 2,494,862

272,243 - - - - 272,243

e 317,778 - - 45 (4,507) 313,316

4,084,883 - - 45 (4,507) 4,080,421

-

6,832,908 - - - (4,507) 6,828,401

Summary of reconciliation of transition from IAS 39 to IFRS 9 and significant accounting policies for

the balances in the statement of financial position

Reconciliation of statement of financial position balances from from IAS 39 to IFRS 9 at 1 January 2018

Summary

Note

Ref.

IAS 39

Closing

balance 31

December,

2017

Impact of

classifica-

tion

Impact

of

measur-

ement

Tax impact

of IFRS 9

adoption

Impact of

impair-

ment (ECL)

IFRS 9

Opening

balance as at

1 January,

2018

Financial assets at

amortised cost

Cash and cash

equivalents

Financial assets at fair

value through profit or

loss

Other receivables

Reinsurance assets

Property and equipment

Intangible assets

Statutory deposit

Other payables and

accruals

Total Assets

Liability and equity

Insurance contract

liabilitiesInvestment contract

liabilities

Trade payables

Current income tax

Total Liabilities

Equity

Share capital

Share premium

Contingency reserves

Retained earnings

Total equity

Total equities and

30




Transition reconciliation

Note

Ref Line items

IAS 39

Closing

Balance As

at 31

December,

2017

IFRS 9

Opening

balance as at

1 January,

2018

A Cash and cash equivalent N'000 N'000

Balance as at 31 Dec 2017 (IAS 39) 779,518 779,518

Reclassifications:

Day 1 IFRS 9 adjustment (ECL impairment) (see note 6a) - (4,404)

Balance as at 1 Jan 2018 (IFRS 9) 779,518 775,114

b Financial assets at amortised cost

Balance as at 31 Dec 2017 (IAS 39) - -

Reclassification:

See (c) - from FVTPL - (treasury bill of less than 90 days) - 58,343

Day 1 IFRS 9 adjustment (ECL impairment) (see note 7a) - (103)

Balance as at 1 Jan 2018 (IFRS 9) - 58,240

c Financial assets at fair value through profit or loss

Balance as at 31 Dec 2017 (IAS 39) 5,315,962 5,315,962

Reclassification:

See (b) - (58,343)

Balance as at 1 Jan 2018 (IFRS 9) 5,315,962 5,257,619

d Current income tax liabilities


See (e) Remeasurement on transition to IFRS 9 - (45)


e Retained earnings


See (d) Tax impact on transition to IFRS 9 - 45

See (f) Impairment (ECL Model) - (4,507)


f Reconciliation of impairement loss allowance

IAS as at 31 Dec 2017 (IAS 39) IAS 39

Impairme

nt

allowances

as at 31

December

2017

Change due to

reclassifica -

tion

Change due to

introduction of

IFRS 9 ECL

Model

IFRS

Impairment

allowance as at 1

Jan 2018

Cash and cash equivalents - - (4,404) (4,404)

Financial assets at amortised cost (103) (103)

(4,507) (4,507)

If the company had adopted IFRS 9 in the prior year, the the technology levy which is based on profit before tax would have reduced

by N45 thousand. However, the transition does not affect the corporate tax as the company is subjected to minimum tax in line with

the Company Income Tax Act

Impact of tax on transition from IAS 39 to IFRS 9

- to financial assets at amortised costs - (placement with financial institution

less than 90 days)

31




2.3 Standards and interpretations issued/amended but not yet effective

Title

The company has assessed the classification of its financial instruments carried at fair value through profit or loss (

treasury bills and bonds) and concluded that the business model has not changed significantly compared with the

classification under IAS 39. A significant portion of the companies financial assets are carried at fair value through profit

or loss.

The company's cash and cash equivalents includes short term deposits (i.e call and term deposits with financial

institutions), bank balances with banks and treasury bills with less than 90days maturity. The balances were assessed by

the company in line with IFRS 9 Solely Payments of Principal and Interest (SPPI) test and the placements met the

conditions required for financial assets classified or carried at amortised cost. Hence, the assets have been assessed for

Expected Credit Loss impairment.

IFRS 15 provides a single, principles based five-step model to be applied to all contracts with customers.

The five steps in the model are Identification of the contract with the customer, Identification of the

performance obligations in the contract, Determination of the transaction price, Allocation of the transaction

price to the performance obligations in the contracts, and Recognition of revenue when (or as) the entity

satisfies a performance obligation. The standard permits a modified retrospective approach for the adoption.

Under this approach, entities will recognise transitional adjustments in retained earnings on the date of initial

application without restating comparative period. They will only need to apply the new rules to contracts that

are not completed as of the date of initial application.

Management has assessed the impact of the new rules and identified that the standard does not have significant impact

on the Company's financial statements.

IFRS 15- Revenue from contracts with customers effective 1 January 2018

Key requirements

The IASB issued the new standard for accounting for leases - IFRS 16 Leases in January 2016.

The new standard does not significantly change the accounting for leases for lessors. However it

requires lessees to recognise most leases on their statements of financial position as lease

liabilities, with the corresponding right-of-use assets. Lessees must apply a single model for all

recognised leases, but will have the option not to recognise ‘short-term’ leases and leases of ‘low-

value’ assets. Generally, the profit or loss recognition pattern for recognised leases will be similar

to today’s finance lease accounting, with interest and depreciation expense recognised separately

in the income statement.

Early application is permitted provided the new revenue standard. Lessees must adopt IFRS 16

using either a full retrospective or a modified retrospective approach.

At this stage, the company is not able to estimate the effect of the new rules on the company's

financial statements. The company will make more detailed assessments of he effect over the

next twelve months.

IFRS 16 Leases

(effective 1 January

2019)

As at 31 December 2018, a number of standards and interpretations, and amendments thereto, had been issued by the

IASB which are not yet effective for these financial statements. The following are the standards that may have material

impact on the Company's financial statements. The Company has not early adopted any of these standards.

32




2.4 Foreign currency translation

(a) Functional and presentation currency

(b) Transactions and balances

2.5 Cash and cash equivalents

2.6 Financial instruments

Items included in the financial statements are measured using the currency of the primary economic environment in

which the entity operates (‘the functional currency’). The financial statements are presented in thousands of naira,

which is the Company’s presentation and functional currency.

Foreign currency transactions are transactions denominated, or that require settlement in a foreign currency and are

translated into the functional currency using the exchange rates prevailing at the dates of the transactions.

Monetary items denominated in foreign currency are translated with the closing rate as at the reporting date. If several

exchange rates are available, the forward rate is used at which the future cash flows represented by the transaction or

balance could have been settled if those cash flows had occurred. Non-monetary items measured at historical cost

denominated in a foreign currency are translated with the exchange rate as at the date of initial recognition; non-

monetary items in a foreign currency that are measured at fair value are 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 the

translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are

recognised in the income statement.

Financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity

instrument of another entity.

Metropolitan Life Insurance classifies financial instruments on initial recognition as a financial asset, financial liability

or an equity instrument in accordance with the substance of the contractual arrangement.

IFRS 17 was issued in May 2017 as replacement for IFRS 4 Insurance Contracts. It requires a

current measurement model where estimates are re-measured each reporting period. Contracts

are measured using the building blocks of:

- discounted probability-weighted cash flows;

- an explicit risk adjustment, and

- a contractual service margin (“CSM”) representing the unearned profit of the contract which is

recognised as revenue over the coverage period.

The standard allows a choice between recognising changes in discount rates either in the income

statement or directly in other comprehensive income. The choice is likely to reflect how insurers

account for their financial assets under IFRS 9.

An optional, simplified premium allocation approach is permitted for the liability for the

remaining coverage for short duration contracts, which are often written by non-life insurers.

There is a modification of the general measurement model called the ‘variable fee approach’ for

certain contracts written by life insurers where policyholders share in the returns from

underlying items. When applying the variable fee approach the entity’s share of the fair value

changes of the underlying items is included in the contractual service margin. The results of

insurers using this model are therefore likely to be less volatile than under the general model.

The new rules will affect the financial statements and key performance indicators of all entities

that issue insurance contracts or investment contracts with discretionary participation features.

IFRS 17 Insurance

Contracts (effective

January 1, 2021)

Cash and cash equivalents include cash at bank, call deposits and short term highly liquid financial assets with original

maturities of three months or less from the acquisition date, which are subject to insignificant risk of changes in their

fair value, and are used by the Company in the management of its short-term commitments.

33




2.6.1

Amortised cost and effective interest rate

2.6.2 Off-setting

2.6.3 (a) Financial assets

2.6.3.1 Classification and subsequent measurement

Initial recognition and measurement

Financial assets are classified and measured at initial recognition at fair value, including directly attributable transaction

cost. Subsequent measurement is based on the Company's business model objective of managing the assets as well as the

contractual cash flow characteristics of financial assets.

The Company classifies its financial assets into the following categories: fair value through profit or loss and amortized

cost. The classification is determined by management at initial recognition and depends on the objective of the business

model.

Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions

of the instrument. Regular way purchases and sales of financial assets are recognised on the trade date, the date on

which the Company commits to purchase or sell the asset.

At initial recognition, the Company measures a financial asset or financial liability at its fair value plus or minus, in the

case of a financial asset or financial liability not at fair value through profit or loss (FVTPL), transaction costs that are

incremental and directly attributable to the acquisition or issue of the financial asset or financial liability, such as fees

and commissions. Transaction costs of financial assets and financial liabilities carried at FVTPL are expensed in profit or

loss. Immediately after initial recognition, an expected credit loss (ECL) allowance is recognised for financial assets

measured at amortised cost (AC) and investments in debt instruments measured at fair value through other

comprehensive income (FVOCI).

When the fair value of financial assets and liabilities differs from the transaction price on initial recognition, the entity

recognises the difference as follows:

a. When the fair value is evidenced by a quoted price in an active market for an identical asset or liability (i.e. a Level 1

input) or based on a valuation technique that uses only data from observable markets, the difference is recognised as a

gain or loss.

b. In all other cases, the difference is deferred and the timing of recognition of deferred day one profit or loss is

determined individually. It is either amortised over the life of the instrument, deferred until the instrument’s fair value

can be determined using market observable inputs or realised through settlement.

Financial assets or liabilities are set off and the net amount presented in the statement of financial position only when

the Company has a legal right to set off the amounts and intends either to settle on a net basis or to realise the asset and

settle the liability simultaneously.

AC is the amount at which the financial asset or financial liability is measured at initial recognition minus the principal

repayments, plus or minus the cumulative amortisation using the effective interest method for any difference between

the initial amount and the maturity amount and, for financial assets, adjusted for any loss allowance.

The effective interest rate (EIR) is the rate that exactly discounts estimated future cash payments or receipts through the

expected life of the financial asset or financial liability to the gross carrying amount of a financial asset (i.e. its AC before

any impairment allowance) or to the AC of a financial liability. The calculation does not consider the ECL and includes

transaction costs, premiums or discounts and fees and points paid or received that are integral to the EIR.

When the Company revises the estimates of future cash flows, the carrying amount of the respective financial asset or

financial liability is adjusted to reflect the new estimate discounted using the original EIR. Any changes are recognised in

profit or loss.

34




Business Model Assessment

Solely payments of principal and interest

Where the business model is to hold assets to collect contractual cash flows or to collect contractual cash flows and sell,

the Company assesses whether the financial instruments’ cash flows represent Soley Payment of Principal and Interest

(the SPPI test). In making this assessment, the Company considers whether the contractual cash flows are consistent

with a basic lending arrangement (i.e. interest includes only consideration for the time value of money, credit risk, other

basic lending risks and a profit margin that is consistent with a basic lending arrangement). Where the contractual terms

introduce exposure to risk or volatility that are inconsistent with a basic lending arrangement, the related financial asset

is classified and measured at FVTPL.

The Company reclassifies debt investments when and only when its business model for managing those assets changes.

The reclassification takes place from the start of the first reporting period following the change. Such changes are

expected to be very infrequent, and none occurred during the period. The Company may also irrevocably designate

financial assets at FVTPL if doing so significantly reduces or eliminates a mismatch created by assets and liabilities being

measured on different bases. The Company has determined that an accounting mismatch is reduced if financial assets

backing non-participating life insurance contracts are measured at FVTPL. For these instruments, the Company has

applied the option to designate these financial assets at FVTPL.

Metropolitan Life Insurance classifies its financial assets into the following categories;

a) Fair value through profit or loss

b) Amortised cost

The business model reflects how the Company manages assets in order to generate cash flows. That is, it reflects whether

the Company’s objective is solely to collect the contractual cash flows from assets or to collect both the contractual cash

flows and cash flows arising from the sale of assets. If neither of these is applicable (e.g. financial assets are held for

trading purposes), then the financial assets are classified as part of the other business model and measured at FVTPL.

Factors considered by the Company in determining the business model for a Company of assets include past experience

on how the cash flows for these assets were collected, how the asset’s performance is evaluated and reported to key

management personnel, how risks are assessed and managed and how managers are compensated. The proceeds from

the contractual cash flows of the financial assets are used to settle insurance contract liabilities as they become due. To

ensure that the contractual cash flows from the financial assets are sufficient to settle those liabilities, the Company

undertakes significant buying and selling activity on a regular basis to rebalance its portfolio of assets and to meet cash

flow needs as they arise. Securities held for trading are held principally for the purpose of selling in the near term or are

part of a portfolio of financial instruments that are managed together and for which there is evidence of a recent actual

pattern of short-term profit-taking. These securities are classified in the other business model and measured at FVTPL.

All equity investments in scope of IFRS 9 are measured at fair value in the statement of financial position, with value

changes recognised in profit or loss, except for those equity investments for which the entity has elected to present value

changes in other comprehensive income.

35




Financial assets at fair value through profit or loss

Financial assets at amortised cost

2.6.3.2

Financial assets will be measured at fair value through the income statement if they do not meet the business model

criteria of either “Hold to collect” or “Hold to collect and sell”. All equity instruments and similar securities (unless

designated at inception to fair value through other comprehensive income); and all derivatives are measured at fair value

through profit or loss. An entity have the option to designate a financial asset as measured at fair value through profit or

loss if doing so eliminates or significantly reduces an accounting mismatch.

The company currently designate its financial assets at inception at fair value through profit and loss because they are

held in internal funds to match insurance and investment contracts liabilities that are linked to the changes in fair value

of these assets. The designation of these assets to be at fair value through profit and loss 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; and

whose performance is evaluated and managed on a fair value basis. Fair value gains or losses arising from the financial

assets designated as fair value through profit or loss are recognised in income statement "Fair value gains/(losses)". The

Company's financial assets designated as fair value through profit or loss (comprising treasury bills and bonds).

The Company has undertaken an assessment to determine the potential impact of changes in classification and

measurement of financial assets based on the composition of the company’s statement of financial position as at 31

December 2017. The assessment indicated that the adoption of IFRS 9 will not result in significant changes to existing

asset measurement bases.

Financial assets are measured at amortized cost if they are held within a business model whose objective is to hold for

collection of contractual cash flows where those cash flows represent solely payments of principal and interest. After

initial measurement, debt instruments in this category are carried at amortized cost using the effective interest rate

method. Amortized cost is calculated taking into account any discount or premium on acquisition, transaction costs and

fees that are an integral part of the effective interest rate. Interest income on financial assets at amortised cost is

included in investment income in the statement of comprehensive income.

The company's placement with other financial institutions with original maturities of three months or less from the

acquisition date are measured at amortised cost.

Impairment on financial assets measured at amortized cost is calculated using the expected credit loss approach.

Reclassification of financial assets occurs when the Company changes its business model for managing financial assets

(i.e. previous business model assessment would no longer apply). However, IFRS 9 does not allow reclassification:

• when the fair value option has been elected in any circumstance for a financial asset;

• or equity investments (measured at FVTPL or FVTOCI); or

• for financial liabilities.

If an company reclassifies a financial asset, it is required to apply the reclassification prospectively from the

reclassification date, defined as the first day of the first reporting period following the change in business model that

results in the entity reclassifying financial assets. Previously recognised gains, losses (including impairment gains or

losses) or interest are not restated.

All impairment losses are recognized through profit or loss. If any loss on the financial asset was previously recognized

directly in equity as a reduction in fair value, the cumulative net loss that had been recognized in equity is transferred to

the statement of comprehensive income and is recognized as part of the impairment loss. The amount of the loss

recognized in thestatement of comprehensive income is the difference between the acquisition cost and the current fair

value, less any previously recognized impairment loss.

Reclassification of financial assets

36




2.7 (b) Financial liabilities

Derecognition

2.7.1

2.8

2.9 Reinsurance assets

Contracts entered into by the Company with reinsurers under which the Company is compensated for losses on one or

more contracts issued by the Company and that meet the classification requirements for insurance contracts are

classified as reinsurance contracts held. The benefits to which the Company is entitled under its reinsurance contracts

held are recognised as reinsurance assets. These assets consist of short-term balances due from reinsurers (classified as

receivables), as well as longer term receivables (classified as reinsurance assets) that are dependent on the expected

claims and benefits arising under the related reinsured insurance contract. Amounts recoverable from or due to

reinsurers are measured consistently with the amounts associated with the reinsured insurance contracts and in

accordance with the terms of each reinsurance contract. The aggregate value of reinsurance contracts is determined

actuarially.

If there is objective evidence that the reinsurance asset is impaired, the Company reduces the carrying amount of the

reinsurance asset to its recoverable amount and recognises that impairment loss in the income statement.

Classification and subsequent measurement

In both the current and prior period, financial liabilities are classified and subsequently measured at AC, except for

insurance contract liabilities which is measured at FVTPL.

The Company’s main valuation techniques incorporate all factors that market participants would consider and make

maximum use of observable market data. The fair value of 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 end of the reporting period by the unit value for the same date.

When the investment contract has an embedded put or surrender option, the fair value of the financial liability is never

less than the amount payable on surrender, discounted for the required notice period where applicable.

Changes in the fair value of financial liabilities measured at FVTPL related to own credit risk are presented in OCI, while

all other fair value changes are presented in the consolidated statement of profit or loss.

Other payables are initially recognised at fair value and subsequently measured at amortised cost.

Other payables and accurals

Other receivables

Other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective

interest rate method less any allowance for impairment.

Financial liabilities are derecognised when they are extinguished (i.e. when the obligation specified in the contract is

discharged, cancelled or expires).

The exchange between the Company and its original lenders of debt instruments with substantially different terms, as

well as substantial modifications of the terms of existing financial liabilities, are accounted for as an extinguishment of

the original financial liability and a recognition of a new financial liability. The terms are substantially different if the

discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and

discounted using the original EIR, is at least 10% different than the discounted present value of the remaining cash flows

of the original financial liability. In addition, other qualitative factors, such as the currency that the instrument is

denominated in, changes in the type of interest rate, new conversion features attached to the instrument and changes in

covenants, are also taken into consideration. If an exchange of debt instruments or a modification of terms is accounted

for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If

the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying

amount of the liability and are amortised over the remaining term of the modified liability.

37




2.10 Statutory deposit

2.11 Intangible assets (computer software)

2.12 Property and equipment

2.13

Share capital

Share premium

Retained earnings

2.14 Contingency reserve

The statutory deposit represents 10% of the paid up capital of the Company deposited with the Central Bank of Nigeria

(CBN) as mandated by the Insurance Act 2003. The deposit is measured at cost and interest is paid twice annually at

rates determined by the CBN.

The retained earnings represent the amount available for dividend distribution to the equity shareholders of the

Company. Refer to the statement of changes in equity for the movements in retained earnings.

Computer software is reviewed for impairment losses whenever events or changes in circumstances indicate that the

carrying amounts may not be recoverable. An impairment loss is recognised for the amount by which the carrying

amount of the asset exceeds its recoverable amount, the latter being the higher of the fair value less cost to sell, and the

value in use.

Property and equipment is stated at historical cost less accumulated 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 costs are charged to the income statement during the

financial period in which they are incurred.

All assets are depreciated using the straight-line method to allocate their cost less their residual values over their

estimated useful lives, as follows:

Leasehold Improvements - 5 years

Motor vehicles - 4 years

Computer equipment - 5 years

Furniture and fittings - 5 years

Gains and losses on disposal of property and equipment are determined by comparing proceeds with carrying amounts

and are included in other operating income in the income statement in the year of disposal.

Equipment is reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying

amounts may not be recoverable. An impairment loss is recognised immediately for the amount by which the carrying

amount of the asset exceeds its recoverable amount, the latter being the higher of the fair value less cost to sell of the

asset and its value in use.

Share capital, share premium and retained earnings

The residual values and useful lives of the assets are reviewed at each reporting date and adjusted if appropriate.

Any amounts received over and above the par value of shares issued are classified as 'share premium' in equity.

The Company maintains a contingency reserve in accordance with the provisions of the Insurance Act to cover

fluctuations in statistical estimates as prescribed by the Act in respect of life insurance business. The contingency reserve

is credited with an amount equal to 1% of gross premium or 10% of the profits after tax (whichever is greater) and

accumulated until it reaches the amount of the minimum paid-up capital.

Shares are classified as equity when there is no obligation to transfer cash or other assets. Incremental costs directly

attributable to the issue of equity instruments are shown in equity as a deduction from the proceeds, net of tax.

Acquired computer software licenses are capitalised on the basis of the cost incurred to acquire and bring to use the

specific software. These costs are amortised on the basis of an expected useful life of five years, which is assessed

annually, using the straight-line method. Included in acquired computer software is the Exergy system license which is

amortised over an expected useful life of 5 years.

38




2.15 Insurance and investment contracts

2.15.1

Investment contracts

2.16

2.17

2.18.1 Gross premium income

Classification of contracts

The Company issues contracts that transfer insurance risk or financial risk or both. For the purposes of valuations and

profit recognition, contracts are divided into investment and insurance contracts. Insurance contracts are those

contracts that transfer significant insurance risk to the Company, whereas investment contracts transfer financial risk.

Investment contracts are comprised of the liabilities on policies in force as actuarially computed on the reporting date.

Current income tax is assessed at 30% and is tax payable on the taxable profit for the period determined in accordance

with the Company Income Tax Act (CITA). Education tax is assessed at 2% of the chargeable profit. Income tax is

recognised as an expense/(income) for the period except to the extent of current tax related to items that are charged or

credited in other comprehensive income or directly to equity. In these circumstances, current tax is charged or credited

to other comprehensive income or to equity (for example, current tax on available-for-sale asset).

Unearned premiums

Revenue recognition

Only insurance premiums and annuity considerations received from insurance contracts are recognised as revenue in

the income statement, gross of commission and reinsurance premiums and excluding taxes and levies. Premiums are

earned from the date of attachment of risk, over the policy cover period, based on the pattern of risk underwritten.

Receivables are only recognised in respect of individual life contracts while the 30 days NAICOM grace period is

operative.

Metropolitan Life Insurance revenue streams comprise gross premium income, claims recoveries from reinsurance

companies, investment income and other operating income. Revenue are recognised as follows:

Investment contracts with guaranteed returns (interest linked) and other business of a savings nature are recognized as

liabilities. Interest accruing to the life assured from investment of the savings is recognized in the income statement

account in the year it is earned while interest paid and due to depositors is recognized as an expense. The net result of

the deposit administration revenue account is transferred to the income statement of the Company.

Company income tax

Current income tax liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or

prior reporting periods, that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from

profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been

enacted or substantively enacted by the end of the reporting period.

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

reporting date. They are computed separately for each insurance contract using a time proportionate basis, or another

suitable basis for uneven risk contracts.

A contract is classified as an insurance contract where the Company accepts significant insurance risk by agreeing with

the policyholder to pay benefits if a specified uncertain future event (the insured event) adversely affects the

policyholder or other beneficiaries. Significant insurance risk exists where it is expected that for the duration of the

policy or part thereof, policy benefits payable on the occurrence of the insured event will exceed the amount payable on

early termination, before allowance for expense deductions at early termination. Once a contract has been classified as

an insurance contract, the classification remains unchanged for the remainder of its lifetime, even if the insurance risk

reduces significantly during this period.

Insurance contract liabilities

Life insurance policy claims received up to the last day of each financial period and claims incurred but not reported

(IBNR) are provided for and included in the policy liabilities. Past claims experience is used as the basis for determining

the extent of the IBNR claims.

Income from reinsurance policies is recognised concurrently with the recognition of the related policy benefit. Insurance

liabilities are presented without offsetting them against related reinsurance assets.

Insurance liabilities are retained in the statement of financial position until they are discharged or cancelled and/or

expire. The Company performs a liability adequacy test to determine the recognised insurance liabilities and an

impairment test for reinsurance assets held at each reporting date.

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

contracts comprise interest linked funds. Interest linked investment contracts are measured at amortised cost.

39




2.18.2 Claims recoveries from reinsurance companies

2.18.3 Investment income

(a) Interest income

(b) Dividend income

2.18.4 Other operating income

2.19

2.20

2.21

2.22

2.22.1

2.22.2

Dividends received are recognised in income statement when the right to receive payment is established.

Short term benefits

Claims and loss adjustment expenses are charged to income as incurred based on the estimated liability for

compensation owed to policyholders and/or beneficiaries. They include direct and indirect claims settlement costs and

arise from events that have occurred up to the end of the reporting period even if they have not yet been reported to the

Company.

The Company does not discount its liabilities for unpaid claims. Liabilities for unpaid claims are estimated using the

input of assessments for individual cases reported to the Company and statistical analyses for the claims incurred but

not reported, and to estimate the expected ultimate cost of more complex claims that may be affected by external factors.

No provisions are made for possible claims under contracts that are not in existence at the end of the reporting period.

Underwriting expenses comprise acquisition expenses and maintenance expenses. Acquisition expenses comprise all

direct and indirect costs arising from the writing of insurance contracts. Examples of these costs include, but are not

limited to, commission expense, and other technical expenses. Maintenance expenses are those incurred in servicing

existing policies/contract. These expenses are charged in the income statement.

Insurance premium ceded to reinsurers

Insurance premium ceded to reinsurers also described as reinsurance expenses represents outward premium paid to

reinsurance companies less the unexpired portion as at the end of the accounting year.

Claims

Wages, salaries, paid annual leave and, bonuses are recognised as employee benefit expenses and accrued when the

associated services are rendered by the employees of the Company.

The Company operates a defined contributory pension scheme for eligible employees. Employees and the Company

contribute 8% and 10% respectively for each of the qualifying staff's salary in line with the provisions of the Pension

Reform Act. The Company pays contributions to the employee - nominated Pension Fund Administrator (PFA) on a

mandatory basis. The Company has no further payment obligations once the contributions have been paid. The

contributions are recognised as employee benefits expense when they are due.

Defined contribution plan

Reinsurance recoveries are accounted for in the same period as the related claim.

Investment income comprise dividend income and interest income.

Interest income is recognised in the income statement, using the effective interest rate method, and taking into account

the expected timing and amount of cash flows. Interest income includes the amortisation of any discounts or premiums

or other difference between the initial carrying amount of an interest-bearing instrument and its amount at maturity,

calculated on an effective interest rate method.

Other operating income comprises profit from disposal of property and equipment and recoveries from assets previously

written off. The income is recognised when it is earned by the Company.

Underwriting expenses

Employee benefit expenses

40




2.22.3

2.19

Management expenses are expenses other than claims, employee benefit, expenses for marketing and administration

and supervisory levies. They include professional fee, depreciation expenses and other non- technical expenses.

Management expenses are accounted for on accrual basis and recognized in the income statement upon utilization of the

service or at the date of their origin.

Management expenses

Share based payment

The Company operates a cash-settled share based compensation plan. The share-based payment transactions are settled

in cash based on the equity of the parent, the Company measures the goods or services received as cash-settled share-

based payment transactions by assessing the nature of the awards and its own rights and obligations.

The Company recognises the value of the services received (expense), and the liability to pay for those services, as the

employees render service. The liability is measured, initially and at each reporting date until settled, at the fair value

appropriate to the scheme, taking into account the terms and conditions on which the rights were granted, and the

extent to which the employees have rendered service to date, excluding the impact of any non market-related vesting

conditions. Non market-related vesting conditions are included in the assumptions regarding the number of units

expected to vest. These assumptions are revised at every reporting date. The impact of the revision of original estimates,

if any, is recognised in the income statement, and a corresponding adjustment is made to the liability.

41



STATEMENT OF COMPREHENSIVE INCOME

Restated *

31-Dec-18 31-Dec-17

Notes N'000 N'000


Gross premium income 22 2,255,178 1,983,247

Reinsurance expenses 23 (414,671) (345,265)

Net premium income 1,840,507 1,637,982

Changes in insurance contract liabilities 14 (8,335) 5,024

Claims expenses 24 (1,616,035) (1,373,975)

Claims recoveries from reinsurance companies 25 629,037 376,114

Underwriting expenses 26 (405,106) (359,095)

Net underwriting income 440,068 286,050

Investment income 27b 750,012 842,439

Profit on investment contracts 28 48,794 19,375

Fair value (losses)/gains 29 (95,548) 136,173

Other operating (loss)/income 30 (4,580) 9,251

Net expected credit loss 31 535 -

Management expenses 32 (908,197) (1,137,024)


Income tax 18 (12,844) (14,432)

Profit for the year 218,240 141,832

Total comprehensive income for the year 218,240 141,832

Total comprehensive income attributable to:

Owners of the Company 218,240 141,832

Earnings per share - basic/diluted (kobo) 33 21.82 14.18

* See note 40 for details regarding the restatement

43

METROPOLITAN LIFE INSURANCE NIGERIA LIMITEDFINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018

STATEMENT OF CHANGES IN EQUITY

Share capital Share

Premium

Contingency

Reserve

Retained

earnings

Total equity

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

Balance at 1 January 2018 1,000,000 2,494,862 272,243 317,778 4,084,883

Day 1 IFRS 9 adjustment (ECL impairment)(see note 6a) - - - (4,507) (4,507)

Day 1 tax impact of IFRS adoption (see note 18a) - - - 45 45

Adjusted 1 January 2018 1,000,000 2,494,862 272,243 313,316 4,080,421

Profit for the year - - - 218,240 218,240

Total comprehensive income for the year - - - 218,240 218,240

Transfer to contingency reserves - - 22,655 (22,655) -

Balance at 31 December 2018 1,000,000 2,494,862 294,898 508,901 4,298,661

Balance at 1 January 2017 1,000,000 2,494,862 251,645 196,544 3,943,051

Correction of errors (net of tax) - - - - -

Restated total equity at the beginning of the financial year 1,000,000 2,494,862 251,645 196,544 3,943,051

Profit for the year - - - 141,832 141,832

Total comprehensive income for the year - - - 141,832 141,832

Transfer to contingency reserves - - 20,598 (20,598) -

Balance at 31 December 2017 1,000,000 2,494,862 272,243 317,778 4,084,883

44



STATEMENT OF CASH FLOWS

Note 31-Dec-18 31-Dec-17

Cash flows from operating activities: N'000 N'000

Premium received from policyholders 2,265,495 2,006,246

Deposit for premium in advance 16 210,229 -

Cash received from in investment contracts liabilities 15a 49,324 53,555

Cash withdrawals from in investment contracts liabilities 15a (234,712) (161,337)

Reinsurance premium paid (459,996) (364,285)

Underwriting expenses 26 (405,106) (359,095)

Claims recovered from reinsurance 577,391 284,042

Claims paid 24 (1,581,367) (1,325,696)

Payment to and on behalf of employees (295,814) (318,372)

Other operating cash payments (649,809) (538,714)

Other operating cash receipts - 2,003

Income tax paid 18 (13,602) (12,198)

Net cash outflow used in operating activities (537,967) (733,851)

Cash flows from investing activities:

Proceeds from disposal of equity investment - 178,758

Purchase of treasury bills (4,845,660) (8,418,042)

Proceeds from maturities of treasury bills 6,141,128 7,636,821

Purchase of bonds - (313,688)

Proceeds from bonds redemption - 250,000

Net money market placements with banks (590) (55,377)

Purchase of property and equipment 11 (12,609) (21,162)

Purchase of intangible assets 12 (361) -

Proceeds from disposal of property and equipment 9,316 2,880

Interest received from investments 777,005 1,063,330

Dividend received 27 347 6,347

Net cash from/(used in) investing activities 2,068,576 329,867

Net decrease in cash and cash equivalents 1,530,609 (403,984)

Cash and cash equivalents at beginning of year 779,518 1,183,502

Cash and cash equivalents at end of year 6 2,310,127 779,518

45




3

3.1

(i)

(ii)

(iii)

(v)

(vi)

3.2

Insurance risk

Underwriting risk

Severity of claims

The risk under any insurance contract is the possibility that the insured event occurs and the uncertainty of the amount of the

resulting claim. By the very nature of an insurance contract, this risk is random and therefore unpredictable.

For a portfolio of insurance contracts where the theory of probability is applied to pricing and provisioning, the principal risk

that the Company faces under its insurance contracts is that the actual claims and benefit payments exceed the carrying

amount of the insurance liabilities. This could occur because the frequency or severity of claims and benefits are greater than

estimated. Insurance events are random, and the actual number and amount of claims and benefits will vary from year to year

from the level established using statistical techniques.

Experience shows that the larger the portfolio of similar insurance contracts, the smaller the relative variability about the

expected outcome will be. In addition, a more diversified portfolio is less likely to be affected by a change in any subset of the

portfolio. The Company has developed its insurance underwriting strategy to diversify the type of insurance risks accepted and

within each of these categories to achieve a sufficiently large population of risks to reduce the variability of the expected

outcome. Factors that aggravate insurance risk include lack of risk diversification in terms of type and amount of risk. This

section summarises the nature and management of these risks.

Underwriting risk relates mainly to the uncertainty that the insured event will occur. The nature of an insurance contract is

that the timing and size of claims are uncertain and therefore unpredictable. The principal underwriting risk is the risk that

the actual outcome of mortality, morbidity and medical claims will result in volatile profits from one year to the next. Such

volatility may result from large concentrations of risk or from charging inadequate premiums relative to the severity or

incidence of the risk accepted. Inadequate policy wording may fail to protect the insurer from claims that were not envisaged

when the product was priced. Insurance events are random and the actual number and amount of underwriting benefits will

vary from the best estimates established from statistical techniques and taking cognisance of past experience. The Company

manages these risks through its underwriting strategy, reinsurance arrangements and claims handling processes.

All long-term insurance product additions and alterations are required to pass through the approvals framework that

forms part of the governance process. The statutory actuary approves the financial soundness of new and revised

products.

The following policies and practices are used by the Company as part of its underwriting strategy to mitigate underwriting risk:

The Company's underwriting strategy aims to ensure that the underwriting risks are well diversified in terms of type

(medical, occupational, financial) and amount of risk covered. Whilst this is difficult to measure at underwriting stage,

the success or failure of the strategy may be measured by the historical stability of profits emerging from the book of

business.

Premium rates are required to be certified by the statutory actuary as being financially sound, prior to issuance.

The right to re-rate premiums is retained as far as possible, although this is limited by competitive pressure.

Investigations into mortality and morbidity experience are conducted at least half yearly to ensure that corrective action is

taken where necessary.

The company reduces the severity of claims it may suffer by setting underwriting limits to enforce appropriate risk selection

criteria through reinsurance arrangements. The effect of such reinsurance arrangements is that the Company should not suffer

net insurance losses of more than N5 million per group life business and N3 million per individual life businesses on any

policy. The Company has specialised claims units dealing with the mitigation of risks surrounding claims. This unit

investigates and adjusts all claims. The claims are reviewed individually on a quarterly basis and adjusted to reflect the latest

information on the underlying facts, contractual terms and conditions, and other factors. The Company actively manages and

pursues early settlements of claims to reduce its exposure to unpredictable developments.

46




3.3 Concentration risks

Gross

liability

Re-

Insurance

Net liability

N000 N000 N000

13,388 - 13,388

52,458 (9,539) 42,919

476,104 (144,365) 331,739

8,785 (4,442) 4,343

610,802 (171,592) 439,210

Claims reported and loss adjustment expenses 150,410 - 150,410

1,311,947 (329,938) 982,009

Gross

liability

Re-

Insurance

Net liability

N000 N000 N000

5,052 - 5,052

176,806 (28,751) 148,055

329,987 (62,950) 267,037

20,238 (3,304) 16,934

593,619 (149,584) 444,035


1,258,625 (244,589) 1,014,036

Gross

liability

Re-

Insurance

Net liability

N000 N000 N000

10,078 - 10,078

965,805 - 965,805

191,413 (56,113) 135,300

285,767 (19,872) 265,895

26,851 - 26,851

618,936 (125,137) 493,799


2,158,177 (201,122) 1,957,055

3.4

3.5 Valuation methods

01-Jan-17

Class of business

Individual traditional

Individual savings

Group credit life

Group life – UPR

Group life – AURR

Group life – IBNR

The insurance liabilities was based on the following valuation methodologies:

Sources of uncertainty in the estimation of future claim payments

Class of business


Group credit life

Group life – UPR

Group life – AURR

Group life – IBNR

Group credit life

Group life – UPR

Group life – AURR

Group life – IBNR

Uncertainty in the estimation of future benefits payments and premium receipts for life insurance contracts arises from the

unpredictability of long-term changes in overall levels of mortality and the variability in policyholders' behaviour.

Valuation Method

Gross premiumDeposit reserve: Account balance at valuation dateRisk reserve: Discounted cashflowUPR + IBNR UPR

Individual risk businessIndividual deposit based (savings) business

Group life Group credit life

Type of Business

The Company uses appropriate and acceptable base tables of standard mortality according to the type of contract being

written.


The concentration of insurance risk before and after reinsurance by class of business in relation to the type of insurance risk

accepted is summarised below, with reference to the carrying amount of the estimated insurance liabilities (gross and net of

reinsurance) arising from insurance contracts:

31-Dec-18

31-Dec-17

Class of business

47




3.5.1 Individual risk business

3.5.2 Individual savings business

3.5.3 Group business

The group business portfolio includes group life and group credit life.

3.6

The assumptions used for the insurance contracts disclosed in this note are as follows:

3.6.1

Process used to decide on assumptions

Valuation interest rate

For all whole of life and term assurance policies the gross premium method of valuation was used. This includes the life cover

provider, family funeral provider and keyman cover provider.

Reserves were calculated using the cashflow projection approach, taking into account future office premiums, expenses and

benefit payments (death and disability). Future cashflows were discounted back to the valuation date at the valuation rate of

interest. Reserves were calculated for each life covered under the multiple life products (i.e. family funeral provider).

The individual risk business contains some legacy mortgage protection business for which premiums are no longer received.

These contracts have been valued as term assurances, with no credit taken for future premiums.

For all Savings business, unit and non-unit reserves have been held. Unit reserves have been taken as the face value of the

policyholder unit funds at the valuation date. Where this fund is negative it has been set to zero, taking into account the

minimum surrender value terms.

Non-unit reserves have been calculated via a cashflow projection of charges (determined from a projection of unit funds),

expenses and benefit payments in excess of the fund balances (on death and disability). Future cashflows were discounted

back to the valuation date at the valuation rate of interest. Negative non-unit reserves have been permitted. However these

have been limited such that the total unit plus non-unit reserve for each policy is at least as high as its surrender value.

An unexpired risk premium reserve was included for group life business, after deducting the loadings for initial expenses and

profit. A test was performed to assess the need for an additional unexpired risk reserve (AURR) in the event of any

inadequacies in the UPR for meeting claims in respect of the unexpired period. The claim rates underlying the AURR were

based on pooled historical scheme claims experience.

No assets have been established in respect of deferred acquisition costs (DAC) as these are typically insignificant in size. Any

costs incurred are absorbed as part of the underwriting expenses.

An allowance was made for incurred but not reported claims (IBNR) in group life to take care of the delay in reporting claims.

This was based on a loss ratio approach, where the underlying rates are based on an analysis of historical claims experience.

An unexpired premium reserve was held for credit life business, after deducting the initial expense and profit loadings. As a

result of the high premium rates underlying the business, the UPR is expected to be sufficient to meet all future claim and

expenses, including those relating to IBNR claims. Therefore no separate reserve for IBNR was calculated.

The valuation interest rate (VIR) is based on current market risk-free yields with adjustments. The use of a risk-free rate also

implies that future investment margins (in excess of the risk-free return) will not be capitalised upon. Further the result is a

"fair value" liability calculation which aids the comparability of accounts between insurers.

A net valuation interest rate of 14.21% pa was adopted for all businesses, applied as a single long term rate of return. The VIR

is calculated based on the weighted average of gross redemption yield (GRY) on long term FGN Bond as at 29 December 2018.

For the purpose of determining the valuation interest rate on non-annuity business, we have considered a 0.25% deduction

from the long term yield to arrive at a gross valuation interest rate of 15.12%. This makes some allowance for the volatility of

the "risk free" yields.

48




These are summarised in the table below:

Current

valuation

Previous

valuation

15.37% 14.00%

-0.25% -0.25%

15.12% 13.75%

-0.91% -0.83%

14.21% 12.93%

The valuation interest rates for the individual risk products are as follows:

Current

valuation

Previous

valuation

14.21% 13.00%

14.21% 13.00%

3.6.2

Investment

return

Managed

fund asset

mix

Classic fund

asset mix

18.87% 40% 10%

15.37% 50% 30%

12.87% 10% 60%

- 16.52% 14.22%

3.6.3

(a)

(b)

The equity and cash returns are based on assumed long-term yield gaps around the FGN bond yield. The assumed gaps were

+3.5% and -2.5% respectively.

Future maintenance expenses

The Company has maintained expense assumptions based on a functional cost analysis performed by the Company based on

experience, expense budgets and expected business volumes. The expense assumptions for the current valuation are those

adopted in the previous valuation, uplifted by inflation as follows:

Risk business including annuity

Savings Business

Supplementary benefits

Expenses

The Company makes provisions for expenses in its mathematical reserves of an amount which is not less than the amount

expected to be incurred in fulfilling its long-term insurance contracts. Claims handling expenses need to be considered as

incidental to fulfilling the insurance contracts.

The regulatory maintenance expenses are derived from the best estimate maintenance expenses plus a prudence margin for

adverse deviations. The best estimate maintenance expenses are calculated as the sum of the following:

Returns on unit funds

The policyholder unit funds for the individual savings policies will be projected in order to determine the expected future

income from the fund charges that are applied. The assumed long term return on unit funds are:

Previous valuation

N5,381 per policy per p.a.

N272 p.a.


Risk products (excluding annuity)

Risk reserves for deposit-based policies

Class of investments

Equity

Bonds

Cash

Assumed fund returns


N241 p.a.

Per policy maintenance charges

Details

Assumed average yield based on long-term FGN bond

Less prudent margin

Gross valuation interest rate

Less tax (6%)

Net valuation interest rate

Details

Type of Business

Company income tax in Nigeria is 30% of income minus expenses on non-annuity business, with some specific investment

income being exempt from tax. However this calculation is subjected to a minimum tax, which is payable on 20% of gross

incomes, with no exemptions or deductions. This is equivalent to tax payable of 6% of gross investment income. The minimum

tax test implies that tax will always be payable, and as such the payment of future tax needs to be allowed for. Therefore, the

company deducted 6% of the gross valuation interest rate, to arrive at net rates to adopt for valuation purposes.

Current Valuation

Allocated operating expenses


49




3.6.4

3.6.5

3.6.6

3.6.7

Commission Overriding

commission

Expenses Profit Total

9.00% 1.38% 10.00% 2.50% 22.88%

10.00% 0.00% 3.00% 15.00% 28.00%

10.00% 0.00% 1.50% 0.00% 11.50%

3.6.8 Reinsurance agreements

3.6.9 Insurance risks sensitivities

The sensitivity analysis of insurance and market risk is used as it provides a detailed understanding of the risks inherent in the

business and to help develop a risk monitoring and management framework to ensure the risks remain within limits, taking

into account the risk tolerance levels of the Company.

The table below shows the impacts of changes in key variables of the insurance liability valuation on the insurance liabilities.

The sensitivity analysis was performed using the under-listed variables:

Previous valuation

45% of premium

2.8 per mille

2.0 per mille

Current valuation

45% of premium

2.5 per mille

1.65 per mille

45% of premium

45% of premium

Expense inflation

Schemes with missing sum at risk data

Credit life-Renewal premium

Mortality

Employee benefit

Credit life-Single premium

Group life

Federal Head of Service schemes

Reinsurance is allowed for in the valuation by having gross and reinsurance ceded records in the policy files. All reserves has

been reported gross of reinsurance, with the value of the reinsurance asset reported separately.

The above expenses are subject to inflation at 12.9% per annum and is consistent with the assumption used for the internal

Metropolitan Life valuation. Consumer price inflation at December 2018 was 11.44%. The company anticipates an upward

trend and consider the high levels witnessed over the last few months to be as a result of the harsh economy at the time and

hence, not the true reflection of long-term future experience. Both the expense inflation and expense assumption will be

actively reviewed in subsequent valuations once more experience data and an expense analyses are available.

There has been no change to the mortality assumptions since the previous valuation. The mortality table for the current

valuation remains at the UK's Mortality of Assured Lives 1967-70 (A6770) without adjustment for individual risk business. The

industry analysis shows that the A6770 table appears prudent based on recent experience. Furthermore, the reserves are less

sensitive to the mortality basis - with discount rate and expense being more dominant assumptions.

Unexpired premium reserves (UPR) are reduced by a margin representing acquisition expenses, as these have been loaded

into rates yet they have already been incurred. The Company has used acquisition expense ratio of 20% of gross premium.

Group life commission is commonly paid at 9% of premium. Other acquisition costs include a NAICOM (regulatory) fee of 1%

of premium, payment of stamp duty and other administrative costs. The additional margin in the 20% assumption is an

allowance for these other costs.

Unexpired premium reserves (UPR) are based on the risk premium only, after the removal of margins in respect of the initial

expense and profit loadings. The following table summarises the margins removed in order to arrive at the risk premiums:

The following average loss ratios were adopted for AURR estimation and IBNR reserving purposes, based on the group life

coverage for 2018. The rates below are reflective of recent mortality investigation conducted on the group life business using

the industry data.

The lapse rates have been maintained at the levels adopted at the previous valuation. The lapse assumptions were determined

from an adjusted pricing basis.

Group life

Average schemes

Large private oil schemes

Group life businesses

Withdrawals

50




0.93 1.15 1.48 0.27 2.86 0.67 1.24 1.00 1.02 0.97

13,389 13,106 13,752 16,823 10,014 14,162 12,733 13,308 13,508 13,419 13,296

977,911 977,911 977,911 977,911 977,911 977,911 977,911 977,911 977,911 977,911 977,911

53,440 53,440 53,440 53,440 53,440 53,440 53,440 53,440 53,440 53,440 53,440

150,410 150,410 150,410 150,410 150,410 150,410 150,410 150,410 150,410 150,410 150,410

52,458 52,458 52,458 52,458 52,458 52,458 52,458 52,458 52,458 52,458 52,458

476,104 476,104 476,104 476,104 476,104 476,104 476,104 476,104 476,104 476,104 476,104

8,785 8,785 8,785 8,785 8,785 8,785 8,785 8,785 8,785 8,785 8,785

610,802 610,802 610,802 610,802 610,802 610,802 610,802 610,802 610,802 610,802 610,802

2,343,299 2,343,016 2,343,662 2,346,733 2,339,924 2,344,072 2,342,643 2,343,218 2,343,418 2,343,329 2,343,206

(329,938) (329,938) (329,938) (329,938) (329,938) (329,938) (329,938) (329,938) (329,938) (329,938) (329,938)

2,013,361 2,013,078 2,013,724 2,016,795 2,009,986 2,014,134 2,012,705 2,013,280 2,013,480 2,013,391 2,013,268

-0.01% 0.03% 0.15% -0.34% 0.21% -0.07% 0.03% 0.01% 0.00% -0.01%

1,044,740 1,044,457 1,045,103 1,048,175 1,041,365 1,045,514 1,044,085 1,044,659 1,044,859 1,044,770 1,044,647

968,620 968,620 968,620 968,620 968,620 968,620 968,620 968,620 968,620 968,620 968,620

2,013,360 2,013,077 2,013,723 2,016,795 2,009,985 2,014,134 2,012,705 2,013,279 2,013,479 2,013,390 2,013,267

-0.01% 0.03% 0.15% -0.34% 0.21% -0.07% 0.03% 0.01% 0.00% -0.01%

Mortality

-5%

Mortality

+5%

% change in liability

Lapses +10%

Lapses -

10%

Net liability

Group life

Expense

Inflation -

2%

Summary Base

Interest rate

+1%

Interest rate -

1%

Expenses

+10%

Expenses

-10%

Expense

Inflation +2%

Variable Rate for sensitivity

Valuation interest rates +/- 1%

Expense +/- 10%

Expense inflation +/- 2%

Mortality +/- 5%

Summary of sensitivity analysis - 31 December 2018

Lapses +/- 10%

HEIRS

Sensitivity of liabilities to changes in valuation assumptions - 31 December 2018

Mortality

-5%


Individual savings

Mortality

+5%

Reinsurance

Credit life

Group life-UPR

Individual business

Lapses -

10%

Base Interest rate

+1%

Interest rate -

1%

Expenses

+10%

Expenses

-10%

Summary

Group life-AURR

Insurance &

investment contracts

liabilities

Group life-IBNR

Net liability


Claims provision

Expense

Inflation +2%

Expense

Inflation - Lapses +10%

51




5,052 4,716 5,411 7,988 2,134 6,101 4,067 5,045 5,059 5,140 4,963

1,034,748 1,034,748 1,034,748 1,034,748 1,034,748 1,034,748 1,034,748 1,034,748 1,034,748 1,034,748 1,034,748

53,440 53,440 53,440 53,440 53,440 53,440 53,440 53,440 53,440 53,440 53,440

132,923 132,923 132,923 132,923 132,923 132,923 132,923 132,923 132,923 132,923 132,923

176,806 176,806 176,806 176,806 176,806 176,806 176,806 176,806 176,806 176,806 176,806

329,986 329,986 329,986 329,986 329,986 329,986 329,986 329,986 329,986 329,986 329,986

20,238 20,238 20,238 20,238 20,238 20,238 20,238 20,238 20,238 20,238 20,238

593,619 593,619 593,619 593,619 593,619 593,619 593,619 593,619 593,619 593,619 593,619

2,346,812 2,346,476 2,347,171 2,349,748 2,343,894 2,347,861 2,345,827 2,346,805 2,346,819 2,346,900 2,346,723

(244,589) (244,589) (244,589) (244,589) (244,589) (244,589) (244,589) (244,589) (244,589) (244,589) (244,589)

2,102,223 2,101,887 2,102,582 2,105,159 2,099,305 2,103,272 2,101,238 2,102,216 2,102,230 2,102,311 2,102,134

-0.02% 0.03% 0.12% -0.28% 0.19% -0.10% 0.05% 0.00% 0.00% -0.01%

1,226,163 1,225,827 1,226,521 1,229,099 1,223,244 1,227,211 1,225,177 1,226,156 1,226,170 1,226,251 1,226,074

876,060 876,060 876,061 876,060 876,061 876,061 876,061 876,060 876,060 876,060 876,060

2,102,223 2,101,887 2,102,582 2,105,159 2,099,305 2,103,272 2,101,238 2,102,216 2,102,230 2,102,311 2,102,134

-0.02% 0.03% 0.12% -0.28% 0.19% -0.10% 0.05% 0.00% 0.00% -0.01%

Individual savings

Claims provision

Credit life

Group life-UPR

Group life-AURR

Group life-IBNR

HEIRS


Lapses +10%

Lapses -

10%

Mortality

+5%

Mortality

-5%

Sensitivity of liabilities to changes in valuation assumptions - 31 December 2017

Summary Base Interest rate

+1%

Interest rate -

1%

Expenses

+10%

Expenses

-10%

Expense

Inflation +2%

Expense

Inflation - Lapses +10%

Lapses -

10%

Mortality

+5%

Mortality

-5%


Summary

Net liability

Summary of sensitivity analysis - 31 December 2017

Base

Expense

Inflation +2%

Expense

Inflation -

2%

Interest rate

+1%

Interest rate -

1%

Expenses

+10%

Expenses

-10%

Reinsurance

Insurance &

investment contracts

liabilities

Net liability


Individual business

Group life

52




4

4.1

(i)

4.2 Credit risk

31-Dec-18 31-Dec-17

N'000 N'000

Cash and cash equivalents 2,310,127 779,518

Financial assets at amortised cost 65,091 58,343

Financial assets at fair value through profit or loss 4,010,451 5,257,619

Other receivables - 742

Reinsurance assets 116,215 86,577

Statutory deposit 200,000 200,000

6,701,884 6,382,799

The Company's maximum credit risk exposure is as follows:

Within Nigeria’s jurisdictions, there is little rated paper, apart from government bonds. Local investments made within

Nigeria's jurisdictions must be executed with counterparties that are accorded the high credit grades. No exposure is

permitted to leveraged credit instruments, e.g. instruments where exposure to an entity or small group of entities can cause

greater losses across the portfolio than the proportionate share of the defaulting entity or entities.

The Company's exposures to credit risk arise from: cash at banks, placements with financial institutions, treasury bills, FGN

bonds, other receivables and reinsurance assets (i.e. reinsurers' share of insurance liabilities, amounts due from reinsurers for

claims already paid).

Financial risk management

Responsibility for risk management

The board is ultimately responsible for risk management. The board has delegated the assessment of the quality, integrity and

reliability of the Company’s risk management processes to the board enterprise risk management, remuneration and

governance committee (ERMRGC).

The Company’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (including foreign

exchange risks, interest risk and equity price risks). The Company’s overall risk management programme seeks to minimise

potential adverse effects on the Company’s financial performance.

The ERMRGC provides executive oversight and review of the information presented by the risk officer (RO).

The Chief Executive Officer is accountable to the board for the management of risks facing the Company and is

supported in the management of these risks by business unit executives and line management.

The Risk Officer acts on behalf of the board and the board ERMRGC to provide guidance and oversight over the

implementation of risk management processes in specialized risk disciplines as well as to coordinate risk reporting at

corporate level.

The asset managers provide specialized guidance to the board ERMRGC in respect of all investment strategies and the

optimization of investment returns and the management of related risks.

The asset managers execute all investment related decisions in accordance with fund mandates and oversight from the

board ERMRGC and the custodianship of all investments vests in nominee accounts managed by assets custodian.

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to

discharge an obligation.

The Company takes on exposure to credit risk, which is the risk that one party will cause a financial loss for the other party by

failing to discharge an obligation. The Company has no significant concentration of credit risk. All debt investments

represent public debt investments executed in accordance with the objective of the Company.

(iv)

(v)

(ii)

(iii)

53




4.2.1Concentration of risks of financial assets with credit risk exposure

(a) Geographical sectors

(b) Industry sectors

The Company is exposed to various industries as shown below:

Financial

institution

Public

Sector and

othersTotal

N'000 N'000 N'000

Cash and cash equivalents 2,310,127 - 2,310,127

Financial assets at amortised cost 65,091 - 65,091

Financial assets at fair value through profit or loss - 4,010,451 4,010,451

Reinsurance assets 116,215 - 116,215

Statutory deposit 200,000 - 200,000

Total 2,691,433 4,010,451 6,701,884

Financial

institution

Public

Sector and

othersTotal

N'000 N'000 N'000

Cash and cash equivalents 779,518 - 779,518


Financial assets at fair value through profit or loss - 5,257,619 5,257,619

Other receivables 742 - 742



Total 1,125,180 5,257,619 6,382,799

4.2.2Credit quality of financial assets

All credit risk exposures (without taking into account any collateral held or other credit support) are maintained within

Nigeria.

All of the Company's financial assets are neither past due nor impaired. The credit quality of the Company's financial assets

that are neither past due nor impaired can be assessed by reference to external credit rating (Fitch Ratings Inc.). The risk of

default is considered low.

31-Dec-17

31-Dec-18

54




B - to BBB+ Unrated Total

N'000 N'000 N'000

Cash and cash equivalents 2,186,159 123,968 2,310,127

Financial assets at amortised cost - 64,909 64,909

Financial assets at fair value through profit or loss 4,010,451 - 4,010,451

Reinsurance assets - 116,215 116,215

Statutory deposit - 200,000 200,000

Total 6,196,610 505,092 6,701,702

B - to BBB+ Unrated Total

N'000 N'000 N'000

Cash and cash equivalents 626,154 153,364 779,518

Financial assets at amortised cost - 58,343 58,343


Other receivables - 742 742

Reinsurance assets - 86,577 86,577

Statutory deposit - 200,000 200,000

Total 5,883,773 499,026 6,382,799

No financial asset of the Company is either past due or impaired.

4.3 Liquidity risk

Liquidity risk is the risk that the Company does not have sufficient financial resources to meet its obligation as they fall due or

will have to meet the obligations at excessive costs. This risk could arise from mismatches in the timing of cash flows. In

extreme circumstances, lack of liquidity could result in reductions in the statement of financial position and sales of assets, or

potentially an inability to fulfil policyholder commitments. The risk that the Company will be unable to do so is inherent in all

insurance operations and can be affected by a range of institution-specific and market-wide events including, but not limited

to, credit events, merger and acquisition activity, systemic shocks and natural disasters.

31-Dec-18

31-Dec-17

All policyholder funds are invested in appropriate assets to meet the reasonable benefit expectations of policyholders, which

include the expectation that funds will be available to pay out benefits as required by the policy contract. The Company

employs the service of an asset manager who helps to implement the Company's investment strategies. The value for

policyholders' liabilities and the assets backing them are as per the carrying amount in the statement of the financial position.

The Company's liquidity risk arises from investment contract liabilities, trade payables and other payables and accruals. The

table below analyses the Company’s non-derivative financial liabilities into relevant maturity groupings based on the

remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the

contractual undiscounted cash flows.

55




4.3.1

Carrying

amount

Gross

nominal

0 - 3 months 3- 6 months 3- 9 months 9 months -

1 year

>1 year

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

Investment contract liabilities 1,031,352 1,031,352 53,440 977,912 - - -

Trade payables 241,400 241,400 241,400 - - - -

Other payables and accruals 264,360 264,360 264,360 - - - -

Total financial liabilities 1,537,112 1,537,112 559,200 977,912 - - -

Cash and cash equivalents 2,310,127 2,319,573 2,319,573 - - -

Financial assets at amortised cost 65,091 65,233 65,233

Financial assets at fair value through profit or loss 4,010,451 4,178,722 23,310 28,000 2,976,102 828,000 323,310

Reinsurance assets 116,215 116,215 116,215 - - - -

Statutory deposit 200,000 200,000 - - - - 200,000

Total financial assets 6,701,884 6,879,743 2,524,331 28,000 2,976,102 828,000 523,310

Net financial assets 5,164,772 5,342,631 1,965,131 (949,912) 2,976,102 828,000 523,310

Insurance contract liabilities 1,311,947 1,311,947 777,372 125,774 216,176 138,722 53,903

Net policyholders' assets/(liabilities) 3,852,825 4,030,684 1,187,759 (1,075,686) 2,759,926 689,278 469,407

Carrying

amount

Gross

nominal

0 - 3 months 3- 6 months 3- 9 months 9 months -

1 year

>1 year

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

Investment contract liabilities 1,088,187 1,088,187 53,440 1,034,746 - - -

Trade payables 7,774 7,774 7,774

Other payables and accruals 362,736 362,736 362,736 - - - -

Total financial liabilities 1,458,697 1,458,697 423,950 1,034,746 - - -

Cash and cash equivalents 779,518 799,091 799,091 - - - -

Financial assets at amortised cost 58,343 58,376 58,376

Financial assets at fair value through profit or loss 5,257,619 5,774,689 364,930 4,132,519 23,310 28,000 1,225,930

Other receivables 742 742 742 - - - -

Reinsurance assets 86,577 86,577 86,577 - - - -

Statutory deposit 200,000 200,000 - - - - 200,000

Total financial assets 6,382,798 6,919,475 1,309,716 4,132,519 23,310 28,000 1,425,930

Net financial assets/(liabilities) 4,924,102 5,460,778 885,766 3,097,773 23,310 28,000 1,425,930

Insurance contract liabilities 1,258,625 1,258,625 777,953 43,830 124,007 180,674 132,162

Net policyholders' assets/(liabilities) 3,665,477 4,202,153 107,813 3,053,943 (100,697) (152,674) 1,293,768

Maturity analysis (contractual undiscounted cashflow basis)

Undiscounted contractual cash flows-31 Dec-2017

The liquidity gap analysis tables above show that with the exception of liabilities falling due with 3 - 6 months in 2018, the Company contractually has surplus assets to

meet its contractual obligations as they fall due.

The table below analyses the Company’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to

the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Undiscounted contractual cash flows- 31-Dec-2018

56




4.4 Market risks

4.4.1Foreign exchange risks

4.4.2Equity price risks

4.4.3Price sensitivity analysis on bonds and treasury bills

Fair value through profit or loss: T-bills 2,930,616 (1,294) 942

Fair value through profit or loss: Bonds 1,079,835 16,208 (72,911)

4.5 Capital management

The table below shows the impact of likely movement in yields on the value of bonds and treasury bills.

This relates to the financila instruments at FVTPL and FVTOCI. Since an increase in yields would lead

to decline in market values of bonds and treasury bills, the analysis was carried out to show the likely

impact of 5% increase or decrease in market yields.

Impact of

increasing

yield by 5%

Impact of

reducing

yield by 5%

Carrying

value

The Company however, monitors the contribution of individual stock to the total stocks holding in a portfolio. The company

has no exposure to equity price risks arising from investments in equity securities as at 31 December 2018. Hence there was

there was no impact on profit before tax and equity with respect to changes in equity prices.

The Company's monthly management accounts are subjected to models which simulate the actuarial process so that the board

is continually aware of the actuarial consequences of the Company's financial results. This process, inter alia, ensures that the

maintenance of regulatory minimum capital is constantly monitored.

The Company is exposed to market risk through the use of financial instruments and specifically to foreign exchange risks and

equity price risks.

The Company holds very minimal assets denominated in currencies other than the functional currency. The exchange rate

ruling at the date of preparation of the financial statement is used to ascertain the net position of the foreign currency. The

financial unit monitors the Company's foreign currency position on a monthly basis.

The Company’s exposure to foreign exchange risk is limited, to the US dollar domiciliary account balance of N79.3 million (31-

Dec-17: N87.66 million) and N92.82 million technical and support fees payable to MMI Holdings Limited (31-Dec-17:

N191.88 million). Changes in exchange rates relative to these foreign currency balances will not have material impact in the

financial statements.

The Company is required to maintain a minimum regulatory capital base of N2 billion by NAICOM. The Company has

complied with this requirement as the total capital contribution was N4.3 billion as at December 2018 (2017: N4.08 billion).

The Company's capital adequacy ratio (CAR) is also appraised twice annually by its actuaries, on the basis of the Professional

Guidance Note 104 of the Actuarial Society of South Africa. It is a risk-based capital measure that is intended to provide a

reasonable confidence level that insurers will be able to meet their existing liabilities. This report indicate that the Company

holds sufficient assets over liabilities to absorb any unforeseen circumstances and hence protect its solvency and the interests

of the policyholders.

57




The key objectives of the Company's capital management programme are as follows:

(i)

(ii)

(iii) That the level of capital reflects the Company's risk appetite;

(iv)

(iv) To ensure that there is sufficient capital available for profitable business growth.

4.5.1Solvency margin

To maintain an optimal level of capital in the most cost efficient way. This is achieved through balancing the needs of the

regulators and the policyholders;

To manage the levels of capital across the Company to keep them in line with the long term capital requirements of the

Company;

To optimise the level of capital, the investment of capital and the future use of the capital for the benefits of all

stakeholders; and

Insurance industry regulator measures the financial strength of insurers using a solvency margin model. This test compares

insurers' capital against the risk profile. The solvency margin shall not be less than 15 percent of the gross premium income

less reinsurance premiums expenses and the minimum paid-up capital, whichever is higher. The Company has complied with

this capital requirement. Refer to the computation in the subsequent page

58




Admissible Inadmissible Total Admissible Inadmissible Total

Admissible assets N'000 N'000 N'000 N'000 N'000 N'000

Cash and cash equivalents 1,831,996 474,274 2,306,270 779,518 - 779,518

Financial assets at amortised cost 64,976 - 64,976 58,343 - 58,343

Financial assets at fair value through profit or loss 4,010,451 - 4,010,451 5,257,619 - 5,257,619

Other receivables - 59,511 59,511 742 69,378 70,120

Reinsurance assets 446,154 - 446,154 331,166 - 331,166

Property and equipment 95,580 - 95,580 135,664 - 135,664

Intangible assets - 289 289 - 478 478

Statutory deposit 200,000 - 200,000 200,000 - 200,000

Total admissible assets (a) 6,649,157 534,074 7,183,231 6,763,052 69,856 6,832,908

Insurance contract liabilities 1,311,947 - 1,311,947 1,258,625 - 1,258,625

Investment contract liabilities 1,031,352 - 1,031,352 1,088,187 - 1,088,187

Trade payables 241,400 - 241,400 7,774 - 7,774

Other payables and accruals 282,659 - 282,659 375,424 - 375,424

Current income tax liabilities 17,212 - 17,212 18,015 - 18,015

Total admissible liabilities (b) 2,884,570 - 2,884,570 2,748,025 - 2,748,025

Solvency margin (a-b) 3,764,587 534,074 4,298,661 4,015,027 69,856 4,084,883

Gross premium income 2,255,178 1,983,247

Less: Reinsurance expenses (414,671) (345,265)

Net premium income 1,840,507 1,637,982

Subject to higher of:

15% of net premium income or 276,076 245,697

Minimum capital requirement 2,000,000 2,000,000Gross solvency ratio 188% 201%

4.5.2Policyholders' Assets and Liabilities Management (PALM)

Excluded from admissible assets (cash and cash equivalents) are Metropolitan Life's investment of more than 20% of the total current accounts balances

and bank placements placed in one bank in accordance with Section 24 of the Insurance Act. The amount excluded was N474.27 million.

The Company is regulated in Nigeria by the National Insurance Commission (NAICOM) under the National Insurance Act of Nigeria. Section 25 (1) of the Act

requires an insurance Company operating in Nigeria to invest and hold investments in Nigeria assets equivalent to not less than the amount of policy holders'

funds in such accounts of the insurer.

As at 31 December 2018, the company has N2.413 billion (2017: N2.648 billion) admissible assets representing the policyholders fund and the total

policyholders' fund was N2.343 billion (2017: N2.346 billion), made up of insurance contract liabilities of N2.29 billion (2017: N2.293 billion) and

investment contract liabilitiesof N53.44 million (2017: N53.44 million) thereby having surplus asset of N70.56 million for the year (2017: N301.96 million).

See note 4.5.2(i)

31-Dec-18 31-Dec-17

59




4.5.2 (i) Hypothecation

Assets N’000 N’000 N’000 N’000 N’000 N’000 N’000 N’000

398,651 - 1,433,345 1,831,996 377,427 - 402,091 779,518

Financial assets at amortised

cost 64,976 - - 64,976 58,343 - - 58,343

914,268 1,035,959 2,060,225 4,010,451 1,124,816 1,088,187 3,044,616 5,257,619

- - 59,511 59,511 - - 70,122 70,122

- - 446,154 446,154 - - 331,166 331,166

Property and equipment - - 95,580 95,580 - - 135,665 135,665

- - 289 289 - - 478 478

- - 200,000 200,000 - - 200,000 200,000

1,377,895 1,035,959 4,295,104 6,708,957 1,560,586 1,088,187 4,184,138 6,832,911

1,311,947 - - 1,311,947 1,258,625 - - 1,258,625

- 1,031,352 - 1,031,352 - 1,088,187 - 1,088,187

- - 241,400 241,400 - - - -

- - 282,659 282,659 - - 383,198 383,198

- - 17,212 17,212 - - 18,017 18,017

1,311,947 1,031,352 541,271 2,884,570 1,258,625 1,088,187 401,215 2,748,026

Surplus 65,948 4,607 3,753,833 3,824,387 301,961 0 3,782,923 4,084,884

Total liabilities

Statutory deposit

Other receivables

Total assets

Liabilities

Insurance contract liabilities

Investment contract liabilities

Reinsurance assets

Trade payable

Other payables and accruals

Tax payable

Intangible assets

Total

31-Dec-18 31-Dec-17

Total

Policy

holders fund

-Insurance

Contract

Policy holders

fund -

Investment

Contract

Shareholders

fund

Policy

holders fund -

Insurance

Contract

Policy holders

fund -

Investment

Contract

Cash and cash equivalents

Financial assets at fair value

through profit or loss

Shareholders

fund

60




4.6

IAS 39 IFRS 9

AC AC

FVTPL AC

FVTPL FVTPL

FVTPL FVTPL

AC AC

FVTPL FVTPL

AC AC

Designated, accounting mismatch

4. The Company also assessed its trade and other receivables balances and concluded that the payments meet the SPPI criterion and

based on the Company’s business model for holding the balances, concluded that they remain valued at amortised cost as was the

case under IAS 39.

Impact of IFRS 9 on the Company's solvency positionThe impact of IFRS 9 on the company's solvency position is two-fold. As the standard covers classification and measurement of both

financial assets and liabilities:

Changes in the measurement of financial assets in scope for IFRS 9 and defined as admissible under the risk based capital as

detailed in the prudential guidelines set by the NAICOM may result in a decline in the asset value through ECL.

Changes in the impairment of financial instruments in scope for IFRS 9 and defined as admissible liabilities under the NAICOM

prudential guidelines have resulted in an increase in allowance provisions and consequently admissible liabilities/ decrease in

admissible assets.

The changes in measurement of financial instruments may also affect the amount of capital available to meet the regulator's

minimum capital requirement. This will probably have an adverse effect on the insurers' solvency position, though not material.

Investment contract

liabilitiesOther payables


SPPI, hold to collect business model

Reason

Summary of classification and measurement categories



1. The Company has assessed the classification of its financial instruments and conclude that the business model has not changed

significantly compared with the classification under IAS 39. The Company is not likely to be exposed to any significant volatility in

assets and capital following the full adoption of IFRS 9 earlier than 2022 when IFRS 17 will be adopted. In line with the Company’s

business model, all financial assets and financial liabilities are matched through profit or loss.

2. As of 1 January 2018, the Company’s analysis highlighted the components of its cash and cash equivalents as including short term

deposit (i.e. placements), bank accounts balances held with banks and cash in hand. The balances meet the SPPI criterion and these

were classified as financial assets carried at amortised cost.

3. The Company assessed its investment securities (treasury bills and federal government bonds) measured at fair value through

profit or loss under IAS 39 and retained its classification, as the financial liabilities were also measured through profit or loss.

Expected credit lossess

Treasury Bills

Other receivables

Cash and cash

Financial assets at

fair value through

profit or loss:

Placement with

financial institutions

(above 90day maturity)FGN Bonds

The transition from IAS 39 to IFRS 9 resulted into accumulated expected credit impairment loss on the company's

placements to the tune of N3.97 million in the year (2017: N4.51 million), (see note 6).



The company classifies its financial instruments into the following categories:

Type of financial

instrument

61




Impairment

Model for expected credit loss

Staging of financial assets

Stage 2: This stage comprise of assets that have significant increases in credit risk. In instances where credit risk has

increased significantly since initial recognition, the company measures a loss allowance at an amount equal to full

lifetime expected credit losses. That is, the expected credit losses that result from all possible default events over the life

of the financial instrument. For these debt instruments, interest income recognition will be based on the effective

interest rate multiplied by the gross carrying amount.

Stage 3: This stage comprise of assets that are credit impaired. For debt instruments that have both a significant

increase in credit risk plus observable evidence of impairment.

The company assess changes in credit risk by comparison of probability of default at the reporting date and probability

of default at initial recognition. The company also consider other qualitative elements and backstop indicators.

No impairment reserve is set on financial assets measured at fair value through profit and loss.

The impairment model under IFRS 9 reflects expected credit losses, as opposed to incurred credit losses under IAS 39.

Consequently, the company recognize credit losses before actual credit event occurs. The amount of expected credit

losses are updated at each reporting date to reflect changes in credit risk since initial recognition.

The Company recognizes loss allowances for Expected Credit Losses (ECL) on financial assets measured at amortised

cost (i.e. placements) and recognizes interest income on risk assets based on the following stages:

Stage 1: This stage comprise of assets that are performing. If credit risk is low as of the reporting date or the credit risk

has not increased significantly since initial recognition, the comany recognize a loss allowance at an amount equal to 12-

month expected credit losses. This amount of credit losses is intended to represent lifetime expected credit losses that

will result if a default occurs in the 12 months after the reporting date, weighted by the probability of that default

occurring.

IFRS 9 outlines a three-stage model for impairment based on changes in credit quality since initial recognition as summarised

below:

• A financial instrument that is not credit-impaired on initial recognition is classified in Stage 1 and has its credit risk continuously

monitored by the Company.

• If a SICR since initial recognition is identified, the financial instrument is moved to Stage 2 but is not yet deemed to be credit-

impaired.

• If the financial instrument is credit-impaired, the financial instrument is then moved to Stage 3.

• Financial instruments in Stage 1 have their ECL measured at an amount equal to the portion of the lifetime ECL that results from

default events possible within the next 12 months. Instruments in Stages 2 or 3 have their ECL measured based on the ECL on a

lifetime basis.

• A pervasive concept in measuring the ECL in accordance with IFRS 9 is that it should consider forward-looking information.

• Purchased or originated credit-impaired financial assets are those financial assets that are credit-impaired on initial recognition.

Their ECL is always measured on a lifetime basis (Stage 3).

The following diagram summarises the impairment requirements under IFRS 9 (other than purchased or originated credit-impaired

financial assets):

The Company assesses on a forward-looking basis the ECL associated with its debt instrument assets carried at AC and FVOCI. The

Company recognises a loss allowance for such losses at each reporting date. The measurement of the ECL reflects:

a. an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes;

b. the time value of money; and

c. reasonable and supportable information that is available without undue cost or effort at the reporting date about past events,

current conditions and forecasts of future economic conditions.

62




Financial assets and liabilitiesThe carrying amounts of the financial assets and liabilities held by the Company are:

AC FVTPL TotalN'000 N'000 N'000

2,310,127 - 2,310,127 Financial assets at amortised cost 65,091 - 65,091

- 1,079,835 1,079,835 - 2,930,616 2,930,616

2,375,218 4,010,451 6,385,669

AC FVTPL TotalN'000 N'000 N'000

779,518 - 779,518 Financial assets at amortised cost 58,343 - 58,343

- 1,041,290 1,041,290 - 4,216,329 4,216,329

837,861 5,257,619 6,095,480

Definition of default and credit-impaired assets

(Initial recogniton)

(Significant increase in

credit risk since initial

recognition)

(Credit-impaired assets)

12-month expected credit losses Lifetime expected credit losses Lifetime expected credit losses

The Company defines a financial instrument as in default, which is fully aligned with the definition of credit-impaired, when it

meets one or more of the following criteria:

Quantitative criteria

The borrower is more than 90 days past due on its contractual payments

Qualitative criteria

The borrower meets the unlikeliness to pay criteria, which indicates the borrower is in significant financial difficulty.

These are instances where:

• the borrower is in long-term forbearance;

• the borrower is insolvent;

• the borrower is in breach of (a) financial covenant(s);

• an active market for that financial asset has disappeared because of financial difficulties;

• concessions have been made by the lender relating to the borrower’s financial difficulties;

• it is becoming probable that the borrower will enter bankruptcy; or

• financial assets are purchased or originated at a deep discount that reflects the incurred credit losses.

The criteria above have been applied to all financial instruments held by the Company and are consistent with the definition of

default used for internal credit risk management purposes. The default definition has been applied consistently to model the

probability of default (PD), exposure at default (EAD) and loss given default (LGD) throughout the Company’s expected loss

calculations.

An instrument is considered to no longer be in default (i.e. to have cured) when it no longer meets any of the default criteria for a

consecutive period of six months. This period of six months has been determined based on an analysis that considers the likelihood

of a financial instrument returning to default status after cure using different possible cure definitions.

FGN bondsTreasury bills investmentTotal investment assets and Cash and cash

equivalents

Total investment assets and Cash and cash

equivalents

31-Dec-17

Financial assets at fair value:

Cash and cash equivalents

Financial assets at fair value:

31-Dec-18

FGN bondsTreasury bills investment

Cash and and bank balances

Stage 1 Stage 2 Stage 3

63




Measuring ECL - Explanation of inputs, assumptions and estimation techniques

Significant increase in credit risk

Backstop criteria

Low credit risk debt instruments

A backstop is applied and the debt financial instrument considered to have experienced a SICR if the borrower is more than 30 days

past due on its contractual payments.

The Company has used the low credit risk exemption for financial instruments when they meet the following conditions:

• the financial instrument has a low risk of default;

• the borrower is considered to have a strong capacity to meet its obligations in the near term; and

• the Company expects, in the longer term, that adverse changes in economic and business conditions might, but will not

necessarily, reduce the ability of the borrower to fulfil its obligations.

The Company defines low credit risk financial assets as financial assets that are “investment grade” at the reporting date, based on

the Company’s credit grading policies. For such instruments, the SICR is not assessed, and the impairment allowance is calculated

and the financial asset is measured using the 12M ECL, as long as the financial asset meets the criteria above.

The ECL is measured on either a 12-month (12M) or lifetime basis depending on whether a SICR has occurred since initial

recognition or whether an asset is considered to be credit-impaired. The ECL is the discounted product of the PD, EAD and LGD,

defined as follows:

• The PD represents the likelihood of a borrower defaulting on its financial obligation (as per definition of default and credit-

impaired assets above), either over the next 12 months (12M PD) or over the remaining lifetime (Lifetime PD) of the obligation.

• The EAD is based on the amounts the Company expects to be owed at the time of default, over the next 12 months or over the

remaining lifetime.

• The LGD represents the Company’s expectation of the extent of loss on a defaulted exposure. The LGD varies by type of borrower,

type and seniority of claim and availability of collateral or other credit support. The LGD is expressed as a percentage loss per unit

of exposure at the time of default (EAD). The LGD is calculated on a 12M or lifetime basis, where the 12M LGD is the percentage of

loss expected to be made if the default occurs in the next 12 months and the lifetime LGD is the percentage of loss expected to be

made if the default occurs over the remaining expected lifetime of the loan.

The ECL is determined by projecting the PD, LGD and EAD for each future month and for each individual exposure or collective

segment. These three components are multiplied together and adjusted for the likelihood of survival (i.e. the exposure has not

prepaid or defaulted in an earlier month). This effectively calculates an ECL for each future month, which is then discounted back to

the reporting date and summed. The discount rate used in the ECL calculation is the original EIR or an approximation thereof.

The Lifetime PD is developed by applying a maturity profile to the current 12M PD. The maturity profile looks at how defaults

develop on a financial instrument portfolio from the point of initial recognition throughout the lifetime of the financial instrument.

The maturity profile is based on historical observed data and is assumed to be the same across all assets within a portfolio and credit

grade band. This is supported by historical analysis.

The assumptions underlying the ECL calculation are monitored and reviewed on a quarterly basis.There have been no significant

changes in estimation techniques or significant assumptions made during the reporting period.

The Company considers a financial instrument to have experienced a SICR when one or more of the following quantitative,

qualitative or backstop criteria have been met:

Quantitative criteria

Thresholds have been established to determine whether the remaining Lifetime PD at the reporting date has increased significantly

compared to the residual Lifetime PD expected at the reporting date when the exposure was first recognised.

Qualitative criteria

For debt instruments securities, if the instrument meets one or more of the following criteria:

• significant increase in credit spread;

• significant adverse changes in business, financial and/or economic conditions in which the borrower operates;

• actual or expected forbearance or restructuring;

• actual or expected significant adverse change in operating results of the borrower; and

• significant change in collateral value (secured facilities only) that is expected to increase risk of default.

The assessment of a SICR incorporates forward-looking information and is performed at the borrower level and on a

periodic basis. The criteria used to identify a SICR are monitored and reviewed periodically for appropriateness by the independent

risk management officer in the company.

64




Forward-looking information incorporated in the ECL models

Sensitivity of estimates used in IFRS 9 ECL

Probability of default (PD)

Sensitivity of the ECL estimates to changes in PDs

31-Dec-18 31-Dec-17Increase/(decrease) on probability of default N'000 N'000+ 10% 4,377 4,967 No change 3,972 4,506

- 10% 3,567 4,048

Loss given default (LGD)

Sensitivity of the ECL estimates to changes LGDs

31-Dec-18 31-Dec-17Increase/(decrease) on probability of default N'000 N'000+ 10% 4,357 4,944 No change 3,972 4,506

- 10% 3,586 4,069

Forward looking macroeconomic indicators

- 10% Change + 10%

N'000 N'000 N'000

2018 3,628 3,972 4,315

2017 4,178 4,506 4,894

Inflation

The Company has used the low credit risk exemption for financial instruments when they meet the following conditions:

• the financial instrument has a low risk of default;

• the borrower is considered to have a strong capacity to meet its obligations in the near term; and

• the Company expects, in the longer term, that adverse changes in economic and business conditions might, but will not

necessarily, reduce the ability of the borrower to fulfil its obligations.

The Company defines low credit risk financial assets as financial assets that are “investment grade” at the reporting date, based on

the Company’s credit grading policies. For such instruments, the SICR is not assessed, and the impairment allowance is calculated

and the financial asset is measured using the 12M ECL, as long as the financial asset meets the criteria above.

The calculation of the ECL both incorporate forward-looking information. The Company has performed historical analysis and

identified the key economic variables impacting credit risk and the ECL for each portfolio.

These economic variables and their associated impact on the PD, EAD and LGD vary by financial instrument. Expert judgement has

also been applied in this process. Forecasts of these economic variables (the base economic scenario) are provided by the Company’s

risk management officer on a quarterly basis and provide the best estimate view of the economy over the next five years. After five

years, to project the economic variables out for the full remaining lifetime of each instrument, a mean reversion approach has been

used, which means that economic variables tend to have either a long run average rate or a long run average growth rate. The

impact of these economic variables on the PD, EAD and LGD has been determined by performing statistical regression analysis to

understand the impact changes in these variables have had historically on default rates and on the components of the LGD and

EAD.

In addition to the base economic scenario, the Company’s risk management officer also provides other possible scenarios along with

scenario weightings. The number of other scenarios used is set based on the analysis of each major product type to ensure non-

linearities are captured. The number of scenarios and their attributes are reassessed at each reporting date. The assessment of a

SICR is performed using the Lifetime PD under each of the bases and the other scenarios, along with qualitative and backstop

indicators. This determines whether the whole financial instrument is in Stage 1, Stage 2 or Stage 3 and hence whether the 12M or

lifetime ECL should be recorded. Following this assessment, the Company measures the ECL as either a probability weighted 12M

ECL (Stage 1) or a probability weighted lifetime ECL (Stages 2 and 3). These probability weighted ECLs are determined by running

each scenario through the relevant ECL model and multiplying it by the appropriate scenario weighting (as opposed to weighting

the inputs).

As with any economic forecasts, the projections and likelihoods of occurrence are subject to a high degree of inherent uncertainty

and therefore the actual outcomes may be significantly different to those projected. The Company considers these forecasts to

represent its best estimate of the possible outcomes and has analysed the non-linearities and asymmetries within the Company’s

different portfolios to establish that the chosen scenarios are appropriately representative of the range of possible scenarios.

In establishing sensitivity of the ECL estimates to macroeconomic factors for placements, Inflation was considered.

The table below outlines the total ECL for Placements as at 31 December 2018, if the assumptions used to measure ECL remain as

expected (amount as presented in the statement of financial position), as well as if each of the key assumptions used change by plus

or minus 10%. The responsiveness of the ECL estimates to variation in macroeconomic variables have been presented below.

Estimation uncertainty in measuring impairment loss

The tables below shows information on the sensitivity of the carrying amounts of the Company’s financial assets to the methods,

assumptions and estimates used in calculating impairment losses on those financial assets at the end of the reporting period.

Changes to these methods, assumptions and estimates may result in material adjustments to the carrying amounts of the Company’s

financial assets.

Year

65




4.7 Fair value of financial assets and liabilities

Level 3: Inputs, for the asset or liability, that are not based on observable market data.

4.7.1Financial instruments measured at fair value

Level 1 Level 2 Total

balance

N'000 N'000 N'000


4,010,451 - 4,010,451


balance

N'000 N'000 N'000


5,257,619 - 5,257,619

4.7.2Financial instruments not measured at fair value

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e

as prices) or indirectly (i.e. derived from prices). This hierarchy requires the use of observable market data when available.

The Company considers relevant and observable market prices in its valuations where possible.

The table below analyses financial instruments and other assets and liabilities measured at fair value at the end of the year, by

the level in the fair value hierarchy into which the fair value measurement is categorised:

The following table sets out the fair value of financial instruments not measured at fair value and analyses them by the level in

the fair value hierarchy into which each fair value measurement is categorised:

The Company measures fair values using the following fair value hierarchy, which reflects the significance of the inputs used

in making the measurements:

31-Dec-17

31-Dec-18

66





balance

N'000 N'000 N'000

Cash and cash equivalents 2,310,127 - 2,310,127




2,691,433 - 2,691,433

Investment contract liabilities 1,031,352 - 1,031,352

Trade payable 241,400 - 241,400

Other payables and accruals 264,360 - 264,360

1,537,112 - 1,537,112


balance

Cash and cash equivalents 779,518 - 779,518


Reinsurance assets 86,577 86,577

Statutory deposits 200,000 - 200,000

Other receivables 742 - 742

1,125,180 - 1,125,180

Investment contract liabilities 1,088,187 - 1,088,187

Trade payable 7,774 - 7,774

Other payables and accruals 362,736 - 362,736

1,458,697 - 1,458,697

4.7.3Fair value methods and assumptions

(i) Cash and cash equivalents:

(ii) Reinsurance assets and statutory deposit

(iii) Trade payables and other payables

(iv) Investment contract liabilities

Investment contracts are those that do not transfer significant insurance risk from the contract holder to the issuer. The

Company's balance of investment contract liabilities are payable on demand. Hence, the carrying amount of investment

contract liability is a reasonable approximation of fair values.

The carrying amount of trade payables and other payables are reasonable approximation of their fair value as they are

all short term in nature.

31-Dec-18

The estimated fair value of receivables with no stated maturity which includes no interest receivable is the amount is

received on demand. The carrying amounts are a reasonable approximation of fair value.

The fair value for financial assets and liabilities that are not carried at fair value were determined respectively as follows:

31-Dec-17

Included in the balances of cash and cash equivalents are cash and balances with banks and short-term placement. The

carrying amount of cash and cash equivalent is reasonable approximation of fair value.

There was no transfer between levels during the year under review.The carrying amounts of cash and cash equivalents, and

other financial assets and other financial liabilities approximate their fair value.

67




5 Critical accounting estimates and judgements

(i) Actuarial valuation of insurance contracts liabilities

(ii) Share based payment

(iii) Classification and measurement of financial instruments under IFRS 9.

Judgement Description

The liabilities for life insurance contracts are estimated using appropriate and acceptable base tables of standard

mortality according to the type and nature of the insurance contracts. Assumptions such as expenses inflation, valuation

interest rate, mortality and claims experience are considered in estimating the required reserves for individual life

contracts fund and the incurred but not reported claims under the group life contracts.

The Company operates a cash-settled share based compensation plan for its management personnel. The share-based

payment transactions are settled in cash based on the equity of the parent. The Company measures the goods or services

received as cash-settled share-based payment transactions by assessing the nature of the awards and its own rights and

obligations.

The liability is re-measured at each reporting date and at settlement date at fair value. Any changes in the fair value of

the liability are recognized as personnel expense in profit or loss. The factors considered in the valuation include the

forfeiture rate (i.e. estimated percentage of options granted that are expected to be forfeited or cancelled before

becoming fully vested based on historical experience) and share price of the parent Company (MMI Holdings Limited).

The amount of the share based as at 31 December, 2018 was N18.3 million (2017: N12.69 million).

Critical accounting judgements made in applying the Company’s accounting policies include:

This note provides an overview of the areas that involve a higher degree of judgement or complexity. More detailed

information about these judgements is included in the notes.

The Company has made judgements in applying the business model criteria to its

portfolio of debt instruments.

The Company has also applied judgement as to whether designating debt instruments at

FVTPL significantly reduces an accounting mismatch.

Classification of financial

instruments

Expected credit loss A number of significant judgements are required in applying the accounting

requirements for measuring

the ECL, such as:

a. determining criteria for a significant increase in credit risk (SICR);

b. adopting a lifetime PD term structure from the Standard & Poor Global Default Rate

Study for Corporate entities;

c. adopting Moody's average observed recoveries of global corporate bonds and loans

from 2003 to 2017. Statistical estimates were used to determine upturn and downturn

scenarios.

d. establishing the number and relative weightings of forward-looking scenarios for each

type of product/market and the associated the ECL; and

e. establishing Companys of similar financial assets for the purposes of measuring the

ECL.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It

also requires management to exercise its judgement in the process of applying the Company’s accounting policies. Changes in

assumptions may have a significant impact on the financial statements in the period the assumptions change. The

Management believe that the underlying assumptions are appropriate and that the Company’s financial statements therefore

present the financial position and results fairly.

Management makes estimates and assumptions that affect the reported amounts of assets and liabilities. The underlying

judgments of the selection and disclosure of the Company’s critical accounting policies and estimates, and the application of

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

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

68




Estimates

Fair value of financial instruments

Expected credit loss

The preparation of financial statements requires the use of accounting estimates, which, by definition, will seldom equal the

actual results. This note provides an overview of items which are more likely to be materially adjusted due to changes in

estimates and assumptions in subsequent periods. Detailed information about each of these estimates is included in the below

notes together with information about the basis of calculation for each affected line item in the consolidated financial

statements. In applying IFRS 9 measurement requirements, the following inputs and methods were used that include

significant estimates.

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The

Company uses its judgement to select a variety of methods and make assumptions that are mainly based on market conditions

existing at the end of each reporting period.

The measurement of the ECL allowance for financial assets measured at AC and FVOCI is an area that requires the use of

complex models and significant assumptions about future economic conditions and credit behaviour (e.g. the likelihood of

customers defaulting and the resulting losses).

69




6 Cash and cash equivalents 31-Dec-18 31-Dec-17

N'000 N'000

Cash at bank 894,641 89,562

Placements with financial institutions (less than 90day

maturity) 1,224,409 688,321

Treasury bills of less than 90 days maturity 191,077 1,635

2,310,127 779,518

Impairment (ECL) (See note 6a) (3,857) -

2,306,270 779,518

6a Movement in expected credit loss on cash and cash equivalents

Day 1 IFRS 9 adjustment (ECL impairment) (4,404) -

Impairment (ECL) write back during the year (see note 31) 547 -

Closing balance (3,857) -

7 Financial assets at amortised cost 31-Dec-18 31-Dec-17

N'000 N'000

Placements with financial institutions (above 90day

maturity) 65,091 58,343

Impairment (ECL) (See note 7a) (115) -

64,976 58,343

7a Movement in expected credit loss on placements with financial institution

Day 1 IFRS 9 adjustment (ECL impairment) (103) -

Impairment charge during the year (see note 31) (12) -

Closing balance (115) -

8

Financial assets at fair value through profit or

loss 31-Dec-18 31-Dec-17

N'000 N'000

Equity securities - -

FGN bonds (see note 8a) 1,079,835 1,041,290

Treasury bills investments (see note 8b) 2,930,616 4,216,329

4,010,451 5,257,619

31-Dec-18 31-Dec-17

8a Bonds movement: N'000 N'000

Bonds as at 1 January 1,041,290 901,518

Purchase of bonds investments - 313,688

Matured bonds investment - (250,000)

Interest received on matured bond investment (89,193) (88,471)

Interest income on bonds 161,510 136,897

Fair value (loss)/gain (33,772) 27,658

Treasury bills as at 31 December 1,079,835 1,041,290

31-Dec-18 31-Dec-17

8b

N'000 N'000

Treasury bills as at 1 January 4,216,329 3,475,118

Purchase of treasury bills 4,845,660 8,418,042

Matured treasury bills (6,141,128) (7,636,821)

Interest received on matured treasury bill (525,650) (858,505)

Interest income on treasury bills 597,181 775,972

Fair value (loss)/gain (61,776) 42,523

Treasury bills as at 31 December 2,930,616 4,216,329

The balance above relates to placement with financial institution above 90 days tenor.

Treasury bills investments of more than 90 days

maturity movement:

70




9 Other receivables 31-Dec-18 31-Dec-17

N'000 N'000

Prepayment 59,511 69,378

Other receivables - 742

59,511 70,120

Current 59,511 70,120

10 Reinsurance assets 31-Dec-18 31-Dec-17

N'000 N'000

Prepaid reinsurance (see note 10(i)) 158,347 95,005

Reinsurance share of IBNR (see note 10(ii)) 171,592 149,584

Balance per Actuarial Estimate 329,939 244,589

Reinsurance share of claims paid (see note 10(iii)) 116,215 86,577

446,154 331,166

Current 446,154 331,166

(i) Movement in prepaid reinsurance cost 31-Dec-18 31-Dec-17

N'000 N'000

Balance, beginning of year 95,005 75,985

Changes during the year (see note 23) 63,342 19,020

Balance, end of year 158,347 95,005

(ii) Movement in reinsurance share of IBNR 31-Dec-18 31-Dec-17

N'000 N'000


Changes during the year as actuarially determined (see

note 25) 22,008 24,447

Balance, end of year (see note 14f) 171,592 149,584

(iii) Movement in reinsurance share of claim paid 31-Dec-18 31-Dec-17

N'000 N'000


Changes during the year 29,638 67,625


The prepayment consists of prepaid rent of N49.34 million (2017: N60.91 million), prepaid asset insurance

costs of N5.34 million (2017: N5.45 million) and prepaid Medical/HMO of N4.83 million (2017: N3.02

million).

71




11 Property and equipment

Leasehold Motor Computer Furniture Total

improvement vehicle equipment and fittings

Cost N'000 N'000 N'000 N'000 N'000

At 1 January 2018 69,398 164,827 103,289 82,252 419,766

Additions - - 10,942 1,667 12,609

Disposals - (11,200) - - (11,200)

At 31 December 2018 69,398 153,627 114,231 83,919 421,175

Accumulated depreciation

At 1 January 2018 42,567 105,344 88,417 47,774 284,102

Charge for the year 7,222 25,273 9,008 9,103 50,606

Disposals - (9,113) - - (9,113)

At 31 December 2018 49,789 121,504 97,425 56,877 325,595

Carrying amount

At 31 December 2018 19,609 32,123 16,806 27,042 95,580

Leasehold Motor Computer Furniture Total

improvement vehicle equipment and fittings

Cost N'000 N'000 N'000 N'000 N'000

At 1 January 2017 69,398 166,815 102,261 80,830 419,304

Additions - 18,712 1,028 1,422 21,162

Disposals - (20,700) - (20,700)

At 31 December 2017 69,398 164,827 103,289 82,252 419,766

Accumulated depreciation

At 1 January 2017 35,345 103,076 78,412 39,769 256,602

Charge for the year 7,222 22,968 10,005 8,005 48,200

Disposals - (20,700) - - (20,700)

At 31 December 2017 42,567 105,344 88,417 47,774 284,102

Carrying amount

At 31 December 2017 26,831 59,483 14,872 34,478 135,664

31-Dec-2018

31-Dec-2017

72




12 Intangible assets 31-Dec-18 31-Dec-17

N'000 N'000

Cost:


Additions 361 -


Accumulated amortisation:


Amortisation charge 550 851


Net book value:

Balance 289 478

13 Statutory deposit

31-Dec-18 31-Dec-17

N'000 N'000

Statutory deposit 200,000 200,000

Non-current 200,000 200,000

Restated Restated

14 Insurance contract liabilities 31-Dec-18 31-Dec-17 1-Jan-17

N'000 N'000 N'000

Individual life fund 13,388 5,053 10,077

Group life fund 1,298,559 1,253,572 1,182,294

1,311,947 1,258,625 1,192,371

Restated

The insurance contract liabilities are made up of:

31-Dec-18 31-Dec-17

Change

during the

year

N'000 N'000 N'000

Unearned Premium Reserve (UPR) (see note 14(a)) 537,347 527,030 10,317

Outstanding claims (see note 14(b)) 150,410 132,923 17,487

IBNR reserves (see note 14( c) 610,802 593,619 17,183

Individual life fund (see note 14(d)) 13,388 5,053 8,335

1,311,947 1,258,625 53,322

Restated Restated

Change

during the

year31-Dec-17 1-Jan-17

N'000 N'000 N'000Unearned Premium Reserve (UPR) (see note 14(a)) 527,030 504,031 22,999 Outstanding claims (see note 14(b)) 132,923 59,327 73,596 IBNR reserves (see note 14( c) 593,619 618,936 (25,317) Individual life fund (see note 14(d)) 5,053 10,077 (5,024)

1,258,624 1,192,371 66,254

14a Movement in Unearned Premium Reserve (UPR) 31-Dec-18 31-Dec-17N'000 N'000

At the beginning 527,030 504,031 Change during the year (see note 14a(i)) 10,317 22,999 At the end 537,347 527,030

The Company's intangible assets relates to its computer software.

This represents amounts deposited with the Central Bank of Nigeria (CBN) pursuant to the Insurance Act. The deposits

are not available for use by the Company in the normal course of day to day business. The amount is 10% of minimum

regulatory capital of N2 billion for life insurance business.

* Individual life savings have been appropriately reclassified from insurance contract liabilities to investment contract liabilities .

73




14b Movement in outstanding claims 31-Dec-18 31-Dec-17N'000 N'000

At the beginning 132,923 59,327 Change during the year 17,487 73,596 At the end 150,410 132,923

14c Movement in IBNR reserves 31-Dec-18 31-Dec-17N'000 N'000

At the beginning 593,619 618,936 Change during the year 17,183 (25,317)At the end 610,802 593,619

14d The movement in individual life fund at amortised cost during the year was as follows:

31-Dec-18 31-Dec-17

N'000 N'000

At the beginning 5,053 10,077

Change during the year 8,335 (5,024)

At the end 13,388 5,053

14e

31-Dec-18 31-Dec-17

N'000 N'000

Balance at beginning of year 1,253,572 1,182,294

Increase/(decrease) in UPR reserves (see note 22) 10,316 22,999

Decrease in IBNR reserves (see note 24) 17,183 (25,317)

17,487 73,596

Balance, end of year 1,298,558 1,253,572

14f Reinsurer's share of insurance contract liabilities 31-Dec-18 31-Dec-17 1-Jan-17

N'000 N'000 N'000

Additional unexpired risk reserve 4,441 3,304 -

UPR Reserves 153,905 91,701 75,985

IBNR Reserves 171,592 149,584 125,137

329,938 244,589 201,122

Restated Restated

14g Net insurance contract liabilities 31-Dec-18 31-Dec-17 1-Jan-17

N'000 N'000 N'000

Individual risk business 13,388 5,053 10,077

Additional unexpired risk reserve 4,343 16,934 26,851

UPR Reserves 374,657 415,091 401,195

IBNR Reserves 439,210 444,036 493,799

Claims reported and loss adjustment expenses 150,410 132,923 59,327

982,008 1,014,036 991,249

Increase/(decrease) in claims reported and loss adjustment

expenses (see note 24)

The movement in group life fund at amortised cost during the year was as follows:

All outstanding claims reported are payable within 30 days from reporting date.

74




14h The ageing analysis of claims reported and loss adjustment expenses is as follows: Restated Restated

31-Dec-18 31-Dec-17 1-Jan-17

N'000 N'000 N'000

0-90 days 96,507 79,020 5,424

365 days and above 53,903 53,903 53,903

150,410 132,923 59,327

Restated Restated

15 Investment contract liabilities 31-Dec-18 31-Dec-17 1-Jan-17

N'000 N'000 N'000

Individual savings contract (see note 15(a)) 977,912 1,034,747 965,806

HEIRS 53,440 53,440 53,440

1,031,352 1,088,187 1,019,246

Non-current 1,031,352 1,088,187 1,019,246

15a Movement in investment contract liabilities

As at 1 January 1,088,187 1,019,246

Additions during the year 49,324 53,555

Withdrawals during the year (234,712) (161,337)

Interest charge 128,553 176,723

As at 31 December 1,031,352 1,088,187

Restated Restated

16 Trade payables 31-Dec-18 31-Dec-17 1-Jan-17

N'000 N'000 N'000

Reinsurance payable (see note 16(a)) 18,017 - -

Deposit for premium received in advance (see note 16(b)) 210,229 - -

Commission due to sales agents - - 3,103

Other sundry items (see note 16(c) below) 13,154 7,774 -

241,400 7,774 3,103

16a

16b

16c

17 Other payables and accruals Restated Restated

31-Dec-18 31-Dec-17 1-Jan-17

Financial liabilities N'000 N'000 N'000

92,824 191,887 69,917

Accrued expenditure (see note (b, d & e) below) 171,536 170,849 132,568

Total financial liabilities 264,360 362,736 202,485

Share based payment liabilities (see note (c) below) 18,299 12,688 -

282,659 375,424 202,485

Current 282,659 375,424 202,485

The deposit for premium received in advance relates to premium received from clients prior to commencement of cover

in 2019.

The reinsurance payable relates amount of premium ceded payable to reinsurance as at the end of the year.

The claims of 365 days and above relates to provision for claims notification from the erstwhile company (Heirs Life

Assurance Limited) which are yet to be settled due to non-availability of full documentation by claimants since 2007.

Other sundry items comprise of inflows from clients into the company's bank account that the details of the depositors

are yet to be determined as at 31 December, 2018.

Intercompany account with MMI Holdings (Pty) Limited (see note

(17a) below)

* Individual life savings have been appropriately reclassified to investment contract liabilities from insurance contract liabilities .

* Funds received into the Company's bank accounts with incomplete details from clients have been appropriately reclassified from other payables

(operational costs accruals) to trade payables.

* Funds received into the Company's bank accounts with incomplete details from clients have been appropriately reclassified to trade payables from

other payables (operational costs accruals).

75




17a

17b Breakdown of accrued expenditure is analysed below: 31-Dec-18 31-Dec-17 1-Jan-17

Levies and stamp duties 21,225 19,877 21,930

Audit, actuarial asset management and tax 50,635 31,930 27,220

Accrued WHT and VAT - 7,624 11,672

Operational cost accruals (see note 17(f)) 22,696 36,630 19,706

Liability for stale cheques (see note 17(d) below) 76,980 74,789 52,040

171,536 170,850 132,568

17c

17d

17e

17f This relates accrual on staff leave allowance and other management expenses accrual.

18 Current income tax liabilities

18a The movement in this account during the year was as follows: 31-Dec-18 31-Dec-17

N'000 N'000


Day 1 tax impact of IFRS 9 adoption (see note 21) (45) -

Charge for the year (see note (b) below) 12,844 14,432

Payments during the year (13,602) (12,198)


18b The tax charge for the year comprises: 31-Dec-18 31-Dec-17

N'000 N'000

Corporate income tax charge 10,533 12,876

Technology levy 2,311 1,556

12,844 14,432

18c Reconciliation of effective tax rate

Effective tax

rate N'000

Effective tax

rate N'000


Tax at 30% 69,325 46,879

Tax effect of amount not deductible (or taxable):

Income not subject to tax (1,049,697) (1,065,808)

Deductible expenses 990,906 1,031,805

IT tax 2,311 1,556

6% 12,844 9% 14,432

Liability for stale cheques comprise of cheques issued to policy holders as claims which are yet to be presented for

payment for a period of more than six months.

In the 2018 financial year, the company introduced a cash-settled share based compensation plan for its management

staff. The share-based payment transactions are settled in cash, based on the equity of the parent. The number of shares

allocated to each participant is split into performance units and retention units. This split varies by individual grant. In

order for the performance units to become payable, the staff has to meet certain performance criteria. Vesting conditions

are determined for each participant specifically. The plans vest 3 years after the offer dates. The details of the cash settled

share based scheme are shown in note 38(b)

The intercompany balance relates to actuarial, technical fees and insurance system license fees payable to MMI Holdings

Limited. This has been further shown in the related party disclosure in note 36 (d).

The intercompany balance relates to actuarial, technical fees and insurance system license fees payable to MMI Holdings

Limited. This has been further shown in the related party disclosure in note 38(d).

31-Dec-18

The company had an assessable loss in 2018 and 2017 year of assessment. Hence the education tax of 2% of the

assessable profit for each year of assessment is not applicable.

31-Dec-17

76




`

18d Unrecognised deferred tax assets

19 Share capital

Share capital comprises: 31-Dec-18 31-Dec-17

N'000 N'000

19a Authorized capital

1,000,000,000 units of ordinary shares of N1 each 1,000,000 1,000,000

19b Issued and fully paid shares

Nominal value of shares in issue, ordinary shares of N1 each 1,000,000 1,000,000

Share premium 2,494,862 2,494,862

17c The movement in this account during the year was as follows:

Balance, beginning of year 1,000,000 1,000,000

Balance, end of year 1,000,000 1,000,000

20 Contingency reserves

The movement in this account during the year was as follows: 31-Dec-18 31-Dec-17

N'000 N'000


Transfer from income statement 22,655 20,598


21

The movement in this account during the year was as follows: 31-Dec-18 31-Dec-17

N'000 N'000


(4,404) -

(103) -

Day 1 tax impact of IFRS adoption 45 -

Transfer from profit and loss account 218,240 141,832

Transfer to contingency reserve (see note 20) (22,655) (20,598)


22 Gross premium income Restated

31-Dec-18 31-Dec-17

Gross premium revenue arising from insurance contracts issued: N'000 N'000

Group life 2,140,694 1,787,422

Credit life 124,801 218,824


Increase/(decrease) in UPR reserves (see note 14a) (10,317) (22,999)

Gross premium income 2,255,178 1,983,247

Deferred tax asset of N1.055 billion (2017: N1.59 billion) is not recognized because there is little probability of any future

tax benefit emanating from this deferred tax assets.

Retained earnings

Day 1 IFRS 9 ECL impairment adjustment (Placements with

financial institutions)

Day 1 IFRS 9 ECL impairment adjustment (cash and cash

equivalent)

Contingency reserve for life assurance business is calculated in accordance with the Nigerian Insurance Act. The reserve

is calculated at the higher of 1% of gross premiums and 10% of net profits of the business for the year. An appropriation of

1% of gross premium was made during the year.

77




23 Reinsurance expenses 31-Dec-18 31-Dec-17

N'000 N'000

Reinsurance premium incurred 414,671 345,265

Movement in reinsurance expenses 31-Dec-18 31-Dec-17

N'000 N'000

Reinsurance cost during the year 478,013 364,285

Change in prepaid reinsurance (see note 10(i)) (63,342) (19,020)

Reinsurance expenses 414,671 345,265

Restated

24 Claims expenses 31-Dec-18 31-Dec-17

N'000 N'000

Death and disability claims paid 1,581,366 1,325,696

Surrenders/terminations paid - -

Withdrawal benefits paid - -

Gross claims paid during the year 1,581,366 1,325,696

Changes in outstanding claims 17,487 73,596

Change in IBNR reserves 17,182 (25,317)

Gross claims expense 1,616,035 1,373,975

25 Claims recoveries from reinsurance companies 31-Dec-18 31-Dec-17

N'000 N'000

Recoveries on claims paid 607,029 351,667

Increase in reinsurance share of IBNR (see note 10(ii)) 22,008 24,447

629,037 376,114

26 Underwriting expenses 31-Dec-18 31-Dec-17

N'000 N'000

Acquisition expenses 278,747 224,533

Maintenance expenses 126,359 134,562

405,106 359,095

Restated

27 Investment income 31-Dec-18 31-Dec-17

Dividend income on equities 347 6,347

Interest income on cash and cash equivalents 137,589 89,152

Interest income on treasury bills investment

597,181 775,972


Interest income on statutory deposit 30,732 30,169

927,359 1,038,537

27a Investment income attributable to:

Policyholders 242,160 232,329

Shareholders 507,852 610,110

See note 27b 750,012 842,439

Investment contract liabilities (see note 29) 177,347 196,098

927,359 1,038,537

Underwriting expenses are subdivided into acquisition and maintenance expenses. Acquisition expenses relate to

commission expenses incurred in obtaining and renewing insurance contracts. Maintenance expenses are underwriting

expenses incurred during bidding and tendering and other incidental cost.

The investment income attributable to investment contracts have been transferred to profit/(loss) on investment

contract appropriately. (See note 28)

78




27b The investment income attributable to shareholders and policyholders are made up of:

Dividend income on equities 292 5,286

Interest income on cash and cash equivalents 115,677 74,244

Interest income on treasury bills investment 502,076 646,216


Interest income on statutory deposit 25,837 114,006

779,671 864,876

Restated

28 Profit/(loss) on investment contracts 31-Dec-18 31-Dec-17

Investment income attributable to investment contract 177,347 196,098

Interest charge (128,553) (176,723)

48,794 19,375

29 Fair value gains/(losses) 31-Dec-18 31-Dec-17

N'000 N'000

-Equity investment - 65,992

-Bonds (33,772) 27,658

-Treasury bills (61,776) 42,523

(95,548) 136,173

Restated

30 Other operating (loss)/income 31-Dec-18 31-Dec-17

N'000 N'000

Net foreign exchange (losses)/gains (13,959) 1,264

Gain on disposal of property and equipment 7,228 2,880

Recoveries of staff advance previously written off. 2,151 5,107

(4,580) 9,251

31 Net expected credit loss 31-Dec-18 31-Dec-17

N'000 N'000

ECL Impairment on cash and cash equivalents 547 -

ECL Impairment on Placements with financial

institution

(12) -

535 -

* This relates to stage 1 expected credit loss on financial asset at amortised cost namely placement with other financial

institution. There has been no significant increase in credit risk from prior financial period. Hence all placements are still

held in stage 1.

79




Restated

32 Management expenses 31-Dec-18 31-Dec-17

N'000 N'000

Personnel costs - operations staff (see note 34(b)) 169,506 179,428

Asset management advisory fees (see note 32 (a) below ) 37,000 30,831

Auditors’ remuneration 17,000 16,000

Bank charges 907 913

Consulting fees 6,636 1,325

Information technology expenses 33,762 18,293

Business marketing costs 107,888 274,894

Directors emoluments (See note 35) 134,069 151,632

Legal services fee 11,197 18,309

Fines & Penalty (see note 32 (d) below) 5,500 600

Other office administrative expenses 37,589 37,749

Printing & stationaries 4,850 4,930

Professional fee to consultants 14,319 17,582

Redundancy cost - 9,443

Rent and rates 92,256 104,041

Repairs and maintenance expenses 51,684 50,633

Subscriptions 8,726 12,637

Support staff cost (see note 32 (b) below) 26,014 31,373

Technical Support Fees (see note 32 (c )) 78,730 98,376

Depreciation (see note 11) 50,606 48,200

Software amortization (see note 12) 550 851

Travel and entertainment expenses 19,408 28,984

908,197 1,137,024

32a

32b

32c

32d

33 Earnings per share - basic/diluted

31-Dec-18 31-Dec-17

N'000 N'000

Profit/(loss) for the year (N'000) 218,240 141,832

Weighted average number of ordinary shares in issue (N'000) 1,000,000 1,000,000

21.82 14.18 Basic/diluted earnings per share (in kobo per share)

The asset management advisory fee relates to the cost incurred in getting fund management advisory services while asset

custodian fees relates to cost incured on assets management advisory services. United Capital Plc acted as fund

management consultants and advisers while UBA Custodian acted as the asset custodian consultants.

This relates to fines from Financial Reporting Council of Nigeria (FRCN) forfailure to comply with filing and disclosure

requirements on the Financial Statements.

The Asset management advisory fees consist of Asset management advisory fee expenses of N22.3 million (2017: N17.852

million) and Asset custodian fee expenses of N14.7 million (2017: N12.979 million) incurred during the year.

The technical support fee relates to amount payable to MMI Holdings Limited (parent company) for advisory services

rendered to Metropolitan Life Insurance which include product research and competitor analysis, product design,

product specifications, product pricing, system testing and marketing support & actuarial services.

The support staff cost are expenses incurred by the company in respect of outsourced services. The outsourced services

include office drivers, cleaners and other office assistants.

Basic earnings per share is calculated by dividing the profit(loss) attributable to equity holders of the Company by the

weighted average number of ordinary shares in issue during the year, excluding own ordinary shares purchased by the

Company. Diluted earnings per share is computed by dividing the profit/(loss) attributable to equity holders of the

Company by the weighted average number of ordinary shares outstanding after adjusting the effects of all dilutive

ordinary shares.

80




34 Employees:

a)

31-Dec-18 31-Dec-17

N500,001-N1,000,000 - 1

N1,000,001-N1,500,000 2 1

N1,500,001-N2,000,000 7 7

N2,000,000-N2,500,000 6 8

N2,500,001-N3,000,000 5 5

N3,000,001-N3,500,000 4 1

N3,500,001-N4,000,000 1 4

N4,000,001-N5,000,000 6 3

N5,000,001-N6,000,000 1 2

N6,000,001-N7,000,000 3 4

N7,000,001-N8,000,000 3 -

N8,000,000 and above 9 10

47 46

b) Breakdown of employee benefit N'000 N'000 N'000 N'000

Operations Marketing Operations Marketing

Staff cost ` 161,279 77,590 171,387 76,633

Pension cost 8,227 4,331 8,041 4,456

169,506 81,921 179,428 81,089

35 Directors' remuneration:

31-Dec-18 31-Dec-17

N'000 N'000

Non-Executive directors' fees and sitting allowances 15,425 14,748

Executive directors salaries 111,883 123,199

Pension costs - defined contribution plan 1,149 998

Share based scheme 5,612 12,687

134,069 151,632

The emoluments of all other directors fell within the following range:

31-Dec-18 31-Dec-17

N'000 N'000

N200,001 - N500,000 - -

N500,001 - N5,000,000 2 2

N5,000,001 - N10,000,000 1 1

N10,000,001 - N20,000,000 - -

N20,000,000- Above 2 2

5 5

31-Dec-18

The number of employees of the Company, other than directors, who received emoluments in the following ranges was:

31-Dec-17

The Company does not make any form of payment to the chairman and as such no separate disclosure was made with

respect to the chairman's allowances.

Remuneration paid to the directors of the Company was as follows:

The staff salaries are split into that of operational and sales marketing staff. The sales marketing staff salaries have been

included as part of the underwriting cost in line with the Company's policy while that of the operations staff were

maintained as part of the Company's management expenses (personnel cost - operations staff).

The executive director's salaries and the managing directors salaries have been included in the directors fees as contained

in note 34 below.

81




36 Compliance with laws and regulations

37 Contingent liabilities and commitments

Contingent tax liabilities

38 Related parties

(a) Ultimate parent and parent companies

(b) Key management personnel compensation

31-Dec-18 31-Dec-17

N'000 N'000

Non- executive directors' fees and sitting allowance 15,425 14,748

Salaries and other benefits paid to executive directors 111,883 124,197

Post-employment benefits paid to executive directors 1,149 998

Share based scheme for executive director 5,612 12,687

Salaries of key management personnel other than executive directors 25,356 48,911

159,425 201,541

Staff share schemes

Vesting requirements

Key management personnel includes directors (executive and non executive) and other number of the executive

management of the Company (i.e. the chief financial officer and the chief technical officer). The compensation paid or

payable to key management personnel for employee services is shown below:

The Company operates a cash-settled share based compensation plan for its management staff. The share-based payment

transactions are settled in cash, based on the equity of the parent. The number of shares allocated to each participant is

split into performance units and retention units. This split varies by individual grant. In order for the performance units

to become payable, the MMI Group has to meet certain performance criteria. Vesting conditions are determined for each

participant specifically. The plans vest 3 years after the offer dates.

The Company is controlled by MMI Holdings Limited (incorporated in South Africa), through its subsidiary Metropolitan

International Holdings Pty Limited, which owns approximately 100% of the Company's shares. A number of transactions

were entered into with related parties in the normal cause of the business.

In 2015 FIRS conducted tax audit for the years 2009 to 2012. In the summary of the audit findings received on 14 May

2015, FIRS indicated additional tax liability for N23.935 million in respect of underpaid company income tax. The

Company's liability for income tax emanates from section 16.9.c of CITA and is a minimum tax levied on 20% on the

taxable income of the Company (effective tax charge equals 6%, being a 30% tax rate on 20% of taxable income).

However, a Government Gazette issued in 2012 granted exemption for 10 years from any taxation imposed by CITA on a

variety of FGN securities and bonds and consequently resulting in a dilutive impact on the provision of minimum tax. On

1 June 2015, the Company issued a letter of objection to FIRS based on the failure of FIRS to apply the above detailed

exemptions. FIRS are yet to respond to this letter of objection, and until such a response is received, the board cannot

make a determination on any future course of action. The tax computations for the years 2013 to 2017 have also been

based on the exemptions granted under the 2012 Gazette.

The three(3) South african directors don’t receive any emolument from the company and as such were not included in the

analysis above.

The Company paid a fine of N5.5 million to Financial Reporting Council of Nigeria during the year with respect to errors

noted in the 2016 audited financials statements (2017: N0.6 million to NAICOM on the same account with respect to

errors noted).

The only vesting requirement for retention units is that the employee remains in employment of MMI Group until the

vesting period expires whilst the Vesting of the performance units is dependent on the achievement of the group's

minimum Return on Embedded Value (ROEV) of Nominal GDP + 3% per annum over the vesting period, with 100%

vesting achieved if the ROEV meets or exceeds Nominal GDP + 6% per annum.

82




Settlement of the staff share schemes

31-Dec-18 31-Dec-17

N'000 N'000

Cash settled share based expense/liability 18,299 12,688

31-Dec-18 31-Dec-17

No of shares No of shares

Share based plan granted in the year 89,409 193,827

Share based balance at 31 December 89,409 193,827

The carrying amount of liabilities for cash-settled share based payments includes:

31-Dec-18 31-Dec-17

N'000 N'000

Balance, beginning of period 12,688 -

Effect of changes in fair value of share acqusition rights at period end 5,611 -

Share rights granted during the period - 12,688

Balance, end of period 18,299 12,688

(c) Transactions with other related parties

31-Dec-18 31-Dec-17

N'000 N'000

Parent 78,730 98,376

Parent 26,577 34,041

(d) Outstanding balances due to related parties:

31-Dec-18 31-Dec-17

N'000 N'000

Current payables to MMI Holdings 92,824 191,887

Actuarial and technical fees to MMI Holdings (Pty)

Insurance system license fees to MMI Holdings (Pty)

The following balances are outstanding at the end of the reporting period in relation to transactions with related parties.

Relationship

The following transactions occurred with related parties:

In the current financial year MMI group didn't meet its performance criteria. Hence a reduction in the units held in 2018

when compared to 2017 financial year.

Participants will receive in cash the full value of the shares (less PAYE on the full benefit) on the vesting date. The cash

amount to be paid out is computed by multiplying the number of participation units that have vested in a participant by

the fair market value of a share on the vesting date. The details of the cash settled share based scheme is as follows:

83




39 Reconciliation of operating profit to cash flow from operating activities Restated

31-Dec-18 31-Dec-17

Cash flows from operating activities: N'000 N'000

Profit / (Loss) before tax 231,084 156,264

Adjustments:

Depreciation charge 50,606 48,200

Software amortization charges 550 851

Impairment on financial assets (535) -

Profit on disposal of equipment (7,228) (2,880)

Unrealized portion net fair value (gains) / Loss

on financial assets

95,548 (136,173)

Interest income (927,012) (1,032,190)

Dividend income (347) (6,346)

Changes in operating assets and liabilities:

(Increase) in reinsurance assets (114,989) (111,092)

Increase / (decrease) in insurance contract

liabilities

53,322 66,251

Increase / (decrease) in investment contract

liabilities

(56,834) 68,942

Decrease in Other receivables 10,609 48,909

(Decrease) in trade payables 233,626 4,671

(Decrease) / Increase in other payables

accruals

(92,765) 172,939

(524,365) (721,653)

Tax paid (13,602) (12,198)

Net cash flow from operating activities (537,967) (733,851)

40 Restatement

(i) Insurance contract liabilities 31-Dec-17 1-Jan-17

N'000 N'000

Amount previously reported 2,293,372 2,158,177

Reclassification to investment contract liabilities (individual savings contracts) (1,034,747) (965,806)

Restated amount (see note 14) 1,258,625 1,192,371

(ii) Investment contract liabilities 31-Dec-17 1-Jan-17

N'000 N'000

Amount previously reported 53,440 53,440

Reclassification from insurance contract liabilities (individual savings contracts) 1,034,747 965,806

Restated amount (see note 15) 1,088,187 1,019,246

Reclassification of individual savings contracts:

The individual savings contracts balance were reclassified from insurance contract liability to investment contract

liability in 2018. Accordingly, the comparative numbers were also reclassified as shown below:

84




(iii) Trade payables 31-Dec-17 1-Jan-17

N'000 N'000

Amount previously reported - 3,103

Reclassification from other payables and accurals (other sundry trade payables) 7,774 -

Restated amount (see note 16) 7,774 3,103

(iv) Other payables and accruals 31-Dec-17 1-Jan-17

Financial liabilities N'000 N'000

Amount previously reported 383,198 202,485

Reclassification to trade payables (Operational cost accrual) (7,774) -

Restated amount (see note 17) 375,424 202,485

Reclassification of client deposit from other liabilities to trade payable

(v) Gross premium income 31-Dec-17 1-Jan-17

N'000 N'000

Amount previously reported 2,036,802

Reclassification to profit or loss on investment contracts (53,555)

Restated amount (see note 22) 1,983,247


(vi) Claims expenses 31-Dec-17

N'000





(vii) Changes in insurance contract liabilities 31-Dec-17

N'000

Amount previously reported (63,917)

Reclassification to profit or loss on investment contracts 68,941

Restated amount (see note 14) 5,024

(viii) Investment income 31-Dec-17

N'000



Restated amount (see note 27 (c) ) 842,439

Reclassification of investment income attributable to investment contract to profit on investment contract

The above relates to reclassification of client deposit from other liabilities to trade payable

Reclassification of client sundry deposit from other payables and accurals to trade payables:

Client sundry deposits were reclassified from other payables and accurals in 2018. Accordingly, the comparative numbers

were also reclassified as shown below:

Reclassification of transactions relating to investment contracts

The net impact of transaction relating to investment contract were reclassified to profit/loss on investment contracts in

2018. Accordingly, the comparative numbers were also reclassified as shown below:

85




(ix) Profit/(loss) on investment contracts 31-Dec-17

N'000

Amount previously reported -

Reclassification from investment income 196,098

Reclassification from gross premium income 53,555

Reclassification from changes in insurance contract liabilities (68,941)

Reclassification from claims expenses (161,337)


(x) Other operating income 31-Dec-17

N'000

Amount previously reported 7,987

Reclassification from management expenses 1,264


31-Dec-17

(xi) Management expenses N'000


Reclassification to other operating income 1,264


Reclassification of net foreign exchange gain from management expenses to other operating income.


Reclassification of investment income attributable to investment contract and interest charged on investment contract to

profit on investment contract


There was a reclassification net foreign exchange gain from management expenses to other operating income in 2018.

Accordingly, the comparative numbers were also reclassified as shown below:

86


OTHER NATIONAL DISCLOSURES

STATEMENT OF VALUE ADDED

31-Dec-18 % 31-Dec-17 %

N'000 N'000

Net premium income 1,840,507 285 1,637,982 278

Investment income 750,012 116 842,439 144

Other income (100,127) (15) 145,424 25

Claims incurred, commissions paid and operating expenses (local) (1,738,386) (270) (1,933,605) (329)

Operating Expenses (foreign) (105,307) (16) (103,210) (18)

Value added 646,699 100 589,030 100

Applied to pay

Employee benefit expense 364,459 56 383,715 66

Government taxes 12,844 2 14,432 2

Retained in the business:

Depreciation of property and equipment 50,606 8 48,200 8

Amortisation of intangible assets 550 0 851 0

Profit/(loss) retained in the business 218,240 34 141,832 23

Value added 646,699 100 589,030 100

87


OTHER NATIONAL DISCLOSURES

FIVE YEAR FINANCIAL SUMMARY

STATEMENT OF FINANCIAL POSITION

31-Dec-18 31-Dec-17 31-Dec-16 31-Dec-15 31-Dec-14

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

Assets

Cash and cash equivalents 2,306,270 779,518 1,183,502 2,430,532 1,650,318

Financial assets at amortised cost 64,976 58,343 - - -

Financial assets at fair value through profit or

loss

4,010,451 5,257,619 4,489,401 3,751,089 3,811,274

Trade receivable - - - 737 9,417

Other receivables 59,511 70,120 119,029 35,163 39,666

Reinsurance assets 446,154 331,166 220,074 261,251 217,295

Property and equipment 95,580 135,664 162,702 69,759 57,698

Intangible assets 289 478 1,329 2,205 3,081

Statutory deposit 200,000 200,000 200,000 200,000 200,000

Total assets 7,183,231 6,832,908 6,376,037 6,750,736 5,988,749

LIABILITIES

Insurance contract liabilities 1,311,947 1,258,625 2,158,177 2,452,731 2,406,243

Investment contract liabilities 1,031,352 1,088,187 53,440 53,440 53,440

Trade payables 241,400 7,774 3,103 1,762 2,840

Other payables and accruals 282,659 375,424 202,485 194,243 157,717

Current income tax liabilities 17,212 18,015 15,781 24,542 19,380

Total liabilities 2,884,570 2,748,024 2,432,986 2,726,718 2,639,620

Net asset 4,298,661 4,084,884 3,943,051 4,024,018 3,349,129

EQUITY

Share capital 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000

Share Premium 2,494,862 2,494,862 2,494,862 2,494,862 2,494,862

Contingency reserves 294,898 272,243 251,645 231,280 163,791

Retained Earnings 508,901 317,778 196,544 297,876 (309,524)

Shareholder's fund 4,298,661 4,084,883 3,943,051 4,024,018 3,349,129

STATEMENT OF COMPREHENSIVE INCOME

31-Dec-18 31-Dec-17 31-Dec-16 31-Dec-15 31-Dec-14

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

Net premium income 1,840,507 1,637,982 1,712,068 1,844,658 1,618,408

Profit/(loss) before tax 231,084 156,264 (68,783) 695,901 255,008

Taxation (12,844) (14,432) (12,185) (21,012) (15,869)

Profit/(loss) after tax 218,240 141,833 (80,968) 674,889 239,139

88

Documents

Metropolitan Life Insurance Nigeria Limited …METROPOLITAN LIFE INSURANCE NIGERIA LIMITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2018 DIRECTORS' REPORT 2018 2018 2017