Technology and Innovation
Compliance Risk their fit and proper status with regulators. They
shall ensure that only Board members
a) Approve the Company’s code of conduct and who do not tarnish the Wapic’s image
ethics; and reputation remain as members; and
b) Monitor the Company’s compliance with laws g) Ensure that only fit and proper persons are
and regulations, its code of conduct and ethics appointed to senior management positions in the
and corporate governance practices; Company.
c) Ensure new and changed legal and regulatory
requirements are identified, monitored Strategic Risk
and reflected in Company processes;
d) Approve the compliance structure, mechanisms a) Oversee the strategic risk management process.
and processes established by management to b) Ensure that Wapic has in place an appropriate
ensure compliance with current laws, regulations strategic risk management framework
and supervisory requirements; and which suits its own circumstances and needs;
e) Ensure the Company’s has a compliance c) Ensure that the strategic goals and objectives are
culture that contributes to the overall objective of set in line with its corporate mission and values,
risk management. culture, business direction and risk tolerance;
d) Approve the strategic plan (including strategies
Operational Risk contained therein) and any subsequent changes,
and review the plan (at least annually) to ensure
a) Oversee the overall governance of the Company’s its appropriateness;
operational risk management process; e) Ensure the organization’s structure, culture,
b) Set the Company’s operational risk strategy and infrastructure, financial means, managerial
direction in line with the Company’s corporate resources and capabilities, as well as systems
strategy; and controls are appropriate and adequate to
c) Approve the Company’s operational support the implementation of its strategies.
risk management framework; f) Review high-level reports periodically submitted
d) Periodically review the framework to ensure to the Board on the overall strategic risk profile,
its relevance and effectiveness; and ensure that any material risks and
e) Ensure that senior management is performing its strategic implications identified from those
risk management responsibilities; and reports are properly addressed; and
f) Ensure that the Company’s operational g) Ensure that senior management is competent in
risk management framework is implementing strategic decisions approved by the
subject to effective and comprehensive internal Board and supervising such performance
audit by operationally independent, on a continuing basis
appropriately trained and competent staff.
The Board and Management Committees
Reputational Risk
The Board of director is the highest approval authority for
a) Set an appropriate tone and guidelines regarding risk policies and risk appetite setting in Wapic. It carries
the development and implementation of effective out its oversight function through its standing committees
reputation each of which has a charter that clearly defines its purpose,
b) Risk management practices, including an explicit composition, structure, frequency of meetings, duties,
statement of a zero tolerance policy for all tenure, and reporting lines to the Board. In line with best
unethical behaviour; practice, the Chairman of the Board does not sit on any of
c) Approve the Company’s framework for the the Committees. The Board has five standing committees
identification, measurement, control and namely: The Board Risk Management and Governance
management of reputational risk; Committee, the Board Audit and Compliance Committee,
d) Monitor the Company’s compliance with its the Board Establishment and Remuneration Committee,
reputational risk management policies the Board Finance, Investment and General Purpose
and recommend sanctions for material Committee and the Board Information Technology
breaches of internal policies; Committee.
e) Review all exception reports by external parties
such as regulators and auditors; ensure The management committees which exist in the Company
that appropriate sanctions are applied to include: The Executive Committee (EXCO), Enterprise-
erring officers; demand from management wide Risk Management and Governance Committee
appropriate explanations for all exceptional (ERMC), Finance, Investment and General Purpose
items;ensure that management puts in place Management Committee (FIMC), Underwriting and
effective and remedial actions and reports on Claims Management Committee (UCMC), and Information
progress to the Board on an on-going basis; Technology Steering Committee (ITSC). Without prejudice
f) Ensure that Board members do not compromise
to the roles of these committees, the full Board retains
Annual Report & Accounts 2018
ultimate responsibility for risk management.
51
Technology and Innovation
BOARD COMMITTEES FUNCTIONS
Board Audit and Compliance Committee • Oversight of financial reporting and accountin
• Oversight of the external auditor
• Oversight of regulatory compliance
• Monitoring the internal control process
• Oversight of enterprise risk management
Board Enterprise Risk Management and Governance • Assist in the oversight of the review and approval of
Committee the companies’ risk management policy including risk
appetite and risk strategy;
• Review the adequacy and effectiveness of risk management
and controls;
• Oversee management’s process for the identification of
significant risks across the company and the adequacy of
prevention, detection and reporting mechanisms;
• Review of the company’s compliance level with applicable
laws and regulatory requirements that may impact the
company’s risk profile;
• Review changes in the economic and business
environment, including emerging trends and other factors
relevant to the company’s risk profile; and
• Review large underwritten risks for adequacy of
reinsurance and other risk management techniques
including environmental & social management system
• Review and recommend for approval of the Board risk
management procedures and controls for new products
and services.
Board Finance, Investment and General Purpose • Reviews and approves the company’s investment policy
Committee • Approves investments over and above managements’
approval limit
• Ensures that optimum asset allocation is achieved
• Assists the Board on its oversight function of managing
financial risks.
• Review and make recommendation on long term financial
plan for the company.
• Review the company capital appropriation.
• Provides periodic oversight of Boards approved
programs.
Board Establishment and Remuneration • Advises the Board on its oversight responsibilities in
Committee relation to compensation, benefits and all other human
resource matters affecting the directors and employees of
the Company.
• Monitor the Group people-risk universe.
• Ensure the right caliber of executive management is
attracted, retained, motivated and rewarded.
• Provides periodic oversight of Boards approved programs.
Board Information Technology Committee • Advises the Board on its oversight responsibilities in
relation to development and implementation of company’s
information technology strategy
• Monitor company’s investment on technology and
information systems
52 Annual Report & Accounts 2018
Technology and Innovation
Operational risk management Level 1 refers to the oversight function carried out by the
board of directors, board risk committee and the executive
Operational risk is the risk of loss resulting from inadequate management. Responsibilities at this level include
or failed internal processes, people, or systems, or from ensuring effective management of operational risk and
external events. Our definition of operational risk excludes adherence to the approved operational risk policies.
regulatory risks, strategic risks and potential losses related
solely to judgments with regard to taking credit, market, Level 2 refers to the management function carried out
interest rate, liquidity, or insurance risks. by operational risk management group. It has direct
responsibility for formulating and implementing the
It also includes the reputation and franchise risk associated Group’s operational risk management framework
with business practices or market conduct in which the including methodologies, policies and procedures
Group is involved. Operational risk is inherent in the approved by the board.
Group’s global business activities and, as with other risk
types, is managed through an overall framework designed Level 3 refers to the operational function carried out
to balance strong corporate oversight with well-defined by all business units and support functions in the
independent risk management. This framework includes: Group. These units/functions are fully responsible and
accountable for the management of operational risk in
• Recognized ownership of the risk by the businesses; their respective units. They work in liaison with operational
• Oversight by independent risk management; and risk management to define and review controls to mitigate
• Independent review by Corporate Audit. identified risks. Internal audit provides independent
assessment and evaluation of the Group’s operational
We seek to minimize exposure to operational risk, subject risk management framework. This periodic confirmation
to cost trade-offs. Operational risk exposures are managed of the existence and utilization of controls in compliance
through a consistent set of management processes with approved policies and procedures, provide assurance
that drive risk identification, assessment, control and as to the effectiveness of the Group’s operational risk
monitoring. management framework. Importantly, the tools used
to assess, measure and monitor operational risks in the
The goal is to keep operational risk at appropriate levels Group include but are not limited to a loss database of
relative to the characteristics of our businesses, the operational risk events; an effective risk and control
markets in which we operate, our capital and liquidity, and self-assessment process that helps to analyze business
the competitive, economic and regulatory environment. activities and identify operational risks that could affect
Notwithstanding these controls, the Group incurs the achievement of business objectives; and key risk
operational losses. indicators which are used to monitor operational risks on
an ongoing basis.
Our operational risk strategy seeks to minimize the impact
that operational risk can have on shareholders’ value. The Group’s operational risk framework
The Group’s strategy is to: The Group’s current operational risk framework
was implemented to meet internal and regulatory
• Reduce the likelihood of occurrence of expected events requirements. There has been significant investment
and related cost by managing the risk factors and in the implementation of improved measurement
implementing loss prevention or reduction techniques and management approaches for operational risk to
to reduce variation to earnings. strengthen control, improve customer service, improve
process efficiencies and minimize operating losses. The
• Minimize the impact of unexpected and catastrophic Group recognizes the fact that it is neither cost-effective
events and related costs through risk financing nor possible to attempt to eliminate all operational risks.
strategies that will support the Group’s long term Events of small significance are thus expected to occur
growth, cash flow management and balance sheet and are accepted as inevitable with relevant budgeting for
protection. these losses being exercised where appropriate. Events of
material significance are limited and the Group seeks to
• Eliminate bureaucracy, improve productivity, reduce the risk from these extreme events in a framework
reduce capital requirements and improve overall consistent with its agreed risk appetite. Processes are in
performance through the institution of well designed place to monitor management and future mitigation of
and implemented internal controls. such events.
The role of risk department is to establish, implement and
In order to create and promote a culture that emphasizes maintain the operational risk framework for the modelling
effective operational risk management and adherence and managing of the Group’s operational risk, while
to operating controls, there are three distinct levels of reinforcing and enabling operational risk management
operational risk governance structure in the Group. culture throughout the Group. The aim is to integrate,
Annual Report & Accounts 2018 53
Technology and Innovation
based on international norms and best practices, all Risk and Control Self Assessments
operational risk activities and to compile a reliable (RCSA)
operational risk profile contributing to the Group’s
risk- reward profile. The key advantage introduced by In order to pro-actively identify and actively mitigate
the current framework is the financial quantification risks, the operational risk framework utilizes RCSAs.
and modelling of operational risks. This functionality RCSA is used at a granular level to identify relevant
has significantly improved the Group’s operational risk material risks and key controls mitigating these risks. The
measurement and management capabilities. risks and controls are assessed on a quarterly basis and
relevant action plans are put in place to treat, tolerate,
terminate or transfer the risks, taking into account the
Management and Control Responsibilities relevant business risk appetites. The RCSA programme
is extensive and covers the entire Group. The Internal
The first line of governance for managing operational risk Audit further tests the effectiveness of the RCSAs within
rests with business and operational risk management the normal course of auditing and relevant metrics are
that forms part of the day-to-day responsibilities of all monitored and actioned where relevant.
business unit management. Business unit staff report
any identified breakdowns in control and any risk events
that may result in financial loss and/or reputation Key Risk indicators (KRIs)
damage. Amongst others, business management are
responsible to ensure that processes for identifying and A comprehensive set of KRIs are in place across the Group,
addressing ineffective controls and the mitigating of with relevant and agreed thresholds set by the business.
risk events are implemented and executed. Operational KRIs are monitored on a Group as well as business unit
risk teams form the secondary line of governance by level, based on significance. Threshold breaches are
ensuring that processes to identify weaknesses are managed in accordance with an agreed process across
effective and identified weaknesses are acted upon. The the Group.
Group operational risk profile is presented to the Board
quarterly. Control effectiveness is monitored at the Risk Reporting
Management Committee and at the Board; and the multi-
layered system of defenses ensures pro-active operational Business units are required to report on both a regular
risk management. and an event-driven basis. The reports include a profile
of the key risks to their business objectives, RCSA and
Measuring and Managing Operational Risk KRI results, and operational risk events. Risk reports
are presented to executive management and risk
The Group recognizes the significance of operational risk committees.
and is committed to enhancing the measurement and
management thereof. Within the Group’s operational risk Heat Map
framework, qualitative and quantitative methodologies
and tools are applied to identify and assess operational The Heat map provide a snap short summary of the
risks and to provide management information for significant risk and the ratings and probability of
determining appropriate mitigating measures. occurrence within a specific period. This forms the basis
for estimating the potential operational loss allocating
capital to business units. An allocation methodology is
Risk Event Data Collection and Reporting applied for allocating capital to business units. For each
business unit, the allocation takes into consideration not
A standard process is used Group-wide for the only the size of the business unit, but also measures of the
recognition, capture, assessment, analysis and reporting business unit’s control environment. This translates to a
of risk events. This process is used to help identify where risk-sensitive allocation with the opportunity afforded to
process and control requirements are needed to reduce business to identify actions to positively impact on their
the recurrence of risk events. Risk events are loaded onto respective allocated operational risk capital.
a central database and reported monthly to the ERMC.
The Group also uses a database of external public risk
events and is part of a consortium of other insurance Expected Loss (EL) Budgeting Mitigation
companies that share loss data information anonymously
to assist in risk identification, assessment, modelling and The ERM team developed a database for loss event
benchmarking. collation named Loss Event Register. This register allows
staff to report actual and near-miss (an unplanned event
that did not result in injury, illness, or damage – but had
the potential to do so) loss events. Summary statistics
from the loss event database are used to show trends of
total losses and mean average loss, with analysis by type
of loss and business line.
54 Annual Report & Accounts 2018
Technology and Innovation
Information Security and Continuity of Business linked to the loss database for efficient and effective
tracking of incidents and loss value within the
Information security and the protection of confidential and Company.
sensitive customer data are a priority of Wapic Insurance
Plc. The Group has developed and implemented an • Ensured early identification and effective
Information Security Risk Management framework that management of risk issues by monitoring the
is in line with best practice. The framework is reviewed Company’s performance in line with the approved
and enhanced regularly to address emerging threats to Risk Appetite framework.
customers’ information. •
• Improved monitoring of customers experience at
A critical tool in managing our operational risk is the various customers touchpoints with the Company, to
Business Continuity Plan (BCP) that documents the assess the level of customer satisfaction
procedures to be executed by relevant teams in the event
of a disaster. The Group assesses the feasibility of its BCP • Seamless Implementation of the Company’s
annually by simulating a disaster and gaps noted are succession plan with the sole purpose of ensuring
properly mitigated to ensure that business operations are timely development of key talents to occupy top
not disrupted in the event of a disaster. Furthermore, in managerial positions.
a bid to ensure data security, failover tests are conducted
periodically to ascertain the effectiveness of our secondary
servers as well as the accuracy and completeness of data Credit Risk Management
in the secondary servers.
• Credit risk arises from the failure of a counterparty of
Key improvements made in 2018 include the following: the Group to repay amount due as at an agreed date
or failure to perform as agreed. The Group’s exposure
• Developed and implemented a cyber-risk management to credit risk is primarily derived from the following
activities:
framework to identify, measure, monitor and control
all cyber risk issues in the organization. • Unpaid premium from insured or brokers; and
• Performed vulnerability assessments on the
Company’s underlying network infrastructure to • Non-recovery of claims paid from reinsurers.
discover all the security vulnerabilities within the
network and provided remediation guidelines to
vulnerable entities discovered. • Inability of financial institutions to remit the matured
principal investment and accrued interest
• Conducted a comprehensive Business Continuity
Plan (BCP) test on the core operation activities in
the Organization and its subsidiaries in Nigeria and The Group’s Risk Management philosophy is that
Ghana to ascertain the Company’s ability to carry on moderate and guarded risk attitude will ensure
with its core processes following a major operational sustainable growth in shareholder’s value and reputation.
interruption. The Group’s policy is to set out specific rules for risk
origination and management of the investment portfolio.
• Successful validation of the Company’s data to The plan also sets out the roles and responsibilities of
ascertain the accuracy of the primary and secondary different individuals and committees charged with these
servers by conducting a comprehensive Failover tests responsibilities.
to affirm if data is complete and fully backed up.
The Group is exposed to risk relating to its debt holdings
• The company conducted the 2017 Own Risk and in its investment portfolio, outstanding premiums from
Solvency Assessment Report to ascertain Wapic’s brokers, co-insurance and the reliance on reinsurers
Economic capital adequacy, operating performance, to make payment when certain loss conditions are met.
risk profile and business profile dictating the Following the Nigeria economy exited recession in the
sustainability of its operating performance and its second half 2017 and the downgrade of some Nigerian
exposure to volatility in its capital Banks, Wapic has reviewed its banking counterparties
profiling in line with the current downgrade. Wapic
• Strengthened the efficiency, customer experience and through its governance process increased its monitoring
Turn-Around-Time within the Digital platform to on the banking industry as it observed the developments
boost the creation of opportunities for the Company in the industry with a view to proactively mitigate any
in the digital space. downside risk that may emanate.
• Risk Incident reporting portal was automated and The Group’s investment portfolio and receivables are
exposed to credit risk through its fixed income money
market instruments, trade receivables and reinsurance
receivables.
Annual Report & Accounts 2018 55
Technology and Innovation
The maximum exposures from the Group’s and Company’s financial assets to credit risk are as follows:
31 December 2018
Group Company
In thousands of naira In thousands of naira
Note
Cash and cash equivalents 8 2,888,235 25% Cash and cash equivalents 2,056,736 46%
Fixed income instruments 9 6,691,470 58% Fixed income instruments 1,070,777 24%
Fair value through P or L 9 - 0% Fair value through P or L - 0%
Trade receivables 10 34,962 0% Trade receivables 34,962 1%
Other receivables (excluding 13 1,305,276 11% Other receivables (excluding 973,104 22%
prepayments) prepayments)
Reinsurance assets 11 39,553 0% Reinsurance assets 47,036 1%
Statutory deposit 19 638,044 6% Statutory deposit 300,000 7%
11,597,539 100% 4,482,615 100%
31 December 2017
Group Company
In thousands of naira In thousands of naira
Note
Cash and cash equivalents 8 1,745,342 15% Cash and cash equivalents 911,023 17%
Fixed income instruments 9 7,766,078 66% Fixed income instruments 2,706,063 52%
Held for trading assets 9 1,380 0% Held for trading assets 796 0%
Trade receivables 10 707,489 6% Trade receivables 486,997 9%
Other receivables (excluding 13 924,101 8% Other receivables (excluding 834,519 16%
prepayments) prepayments)
Reinsurance assets 11 47,036 0% Reinsurance assets 9,216 0%
Statutory deposit 19 632,964 5% Statutory deposit 300,000 6%
11,824,390 100% 5,248,614 100%
The Group’s exposure to credit risk is low as fixed income securties (Government bonds and Treasury bills and blue-chip
corporate bonds) and money market investments accounted for 78% of total credit risk exposures as at 31 December
2018 (31 December 2017: 73%).
The Group further manages its exposure to credit risk through counterparty risk via established limits as approved
by the Board. These limits are determined based on credit ratings of the counterparty amongst other factors. All fixed
income investments are measured for performance on a quarterly basis and monitored by management on a monthly
basis.
The Company’s exposures to banks and finance houses as at 31 December 2018 is represented below:
Company portfolio
Counterparty Investment in %
money market
National Banks 191,693 79%
Other Banks 51,236 21%
Total 242,929 100%
56 Annual Report & Accounts 2018
Technology and Innovation
The Company’s exposures to banks and finance houses as at 31 December 2017 is represented below:
Company portfolio Investment in %
Counterparty money market
96%
National Banks 387,226 4%
Other Banks
Total 15,534 100%
402,760
Reinsurance contract is executed only with reinsurers with • The company also developed a model for the profiling
a minimum acceptable credit rating. The creditworthiness of Auto garages to improve service delivery
of all reinsurers is monitored and reported to management
by the Risk Management function by reviewing their
annual financial statements and qualitative observations • The company enhanced and intensified the recovery
through formal and informal communication channels. strategy, which include the engagement of third party
Reinsurance treaties are reviewed annually by management debt recovery agents on Subrogation, Reinsurance and
prior to renewal of the reinsurance contract. Premium receivables. This led to the improvement in
the recovery made during the year.
Aside credit risk exposure from our investment policies,
the Group is also exposed to this risk from its core business
– outstanding premiums from clients. Trade receivables • The company has commenced the development of
are short-term in nature consisting of a large number of
policyholders and are subject to moderate credit risk. C43 report to monitor trade receivable across the
company.
The Group categorizes its exposure to this risk based on
business sources (namely Agents, Brokers and Insurance • Following the increase in non-performing loan, which
Companies) and periodically reviews trade receivable to led to the liquidity crisis in the banking sector, the
ensure credit worthiness. company took a proactive approach by reviewing
Credit risk exposure to trade receivables arises from the counterparty ratings to limit the company’s exposure
30 days’ window given by NAICOM in the “No Premium to financial institution.
No Cover” (NPNC) policy. This gives brokers the latitude
to withhold premiums collected from insured for 30 Market Risk Management
days. However, they are expected to issue their credit
note and remit the premiums at the expiration of the 30 The financial markets of Nigeria and Ghana were
days’ grace period. Brokers who fails to remit are reported adversely affected by volatility in the markets. The
on quarterly basis to NAICOM and are subject to the Group’s ability to meet business objectives was affected
downgrading process in the Group’s Credit Policy Guide. by the adverse changes in the major market risk factors:
The Group’s risk exposure to credit risk is low as the interest rates, foreign exchange rates,non- availability of
receipt of insurance premium from the insured is a pre- FX, rise in inflation, equity prices, and increse in property
condition for the issuance of insurance cover. prices. The Group’s identification, management, control,
measurement and reporting of market risk is designed
The Group has no significant concentration of credit risk along the following major risk factors;
and the carrying amounts of all the financial assets subject
to credit risk represents the maximum exposure of the 1. Interest rate risk
Group to credit risk. 2. Foreign exchange risk
3. Equity price risk
Key improvements made in 2018 include the
following: 1. Interest Rate Risk
• The credit limit for online transactions were set in line Interest rate risk is the exposure of the Group’s financial
with the company’s risk appetite to mitigate the risk condition to adverse movements in interest rates, yield
exposure identified with online transactions. curves and credit spreads. The interest rste risk exposure
arises when a change in interest rate has a potential to
• The company has commenced the implementation of affect the value of the Group’s assets and liabilities. The
unique identifier and automation of payment platforms, Group is exposed to interest rate risk through the floating
which improved the reconciliation process for prompt interest rate bearing assets and liabilities and fixed interest
identification of unpaid credit transactions. bearing financial instruments carried at fair value in the
Group’s books.
The Group is significantly exposed to interest-rate risk as
the percentage of floating interest yielding assets to AUM
Annual Report & Accounts 2018 57
Technology and Innovation
is 14.77% (2017 was 15.59%). In addition, the Group is In the third and fourth quarter of the year, the country
exposed to interest rate risk through its Life underwriting witnessed a marginal improvement in the economy, which
investment policies that have guaranteed interest rate. grew by 1.8% year-on-year from 1.5% expansion in the
As a result, the Group’s investment income moves in the prior period as non-oil sector improved faster than the
direction of interest rate in the short and medium term. The growth witnessed in the oil sector. Despite the significant
plan of Central Bank of Nigeria (CBN) to retain Monetary drop in the country inflation rate (which dropped from
Policy Rate (MPR) at 14% through 2018 consolidating on 15.90% in Q4’17 to 11.28 in Q4’18), the currency witnessed
its tight monetary policies and regulatory supervision. significant revenue challenges. This enables the country
This development presented an opportunity for the Group to adopt significant steps of fiscal consolidation and
in terms of generating more revenue on its investment international borrowing to implement some of her capital
portfolio to support the Group’s income aspiration for the projects. We expect interest rate to remain stable in 2019
year. due to the continuous intervention of CBN to focus more
on reducing the impact of inflation on interest rate in
However, the country experienced a marginal 2019.
improvement in economic growth in the first quarter of
the year but slowed down in the second quarter of the year. A summary of the Group’s interest rate gap position on
non-trading portfolios was as follows:
Market Risk
Re-pricing period
Carrying No stated 1-3 3 -6 6 - 12 Above 1
amount maturity months months months year
Group 2,888,235 -
23,286 -
31 December 2018 - 1,449,726
- -
Assets
In thousands of Naira
Cash and cash equivalents 2,888,235 - --
- 2,576,134
Debt securities - at amortised 2,571,929 -
cost - 2,669,816
Debt securities - at fair value 4,119,541 - - 638,044
through OCI
Statutory deposit 638,044 -
10,217,749 - 2,911,520 1,449,726 - 5,883,994
Liabilities
Liabilities on investment 1,170,785 1,170,785 - - - -
contracts
1,170,785 1,170,785 - - - -
Total interest re-pricing gap 9,046,964 2,911,520 1,449,726 - 5,883,994
Cumulative 9,046,964 (1,170,785) 1,740,735 3,190,461 3,190,461 9,074,455
Increase by 100bp 90,470 (1,170,785) 29,115 14,497 - 58,840
Increase by 500bp (11,708) 72,486 -
Decrease by 100bp 452,348 (58,539) 145,576 - 294,200
Decrease by 500bp (90,470) 11,708 (29,115) (14,497) - (58,840)
(452,348) 58,539 (145,576) (72,486) (294,200)
58 Annual Report & Accounts 2018
Technology and Innovation
Re-pricing period
Carrying No stated 1-3 3 -6 6 - 12 1 - 5 years
amount maturity months
months months
Group
31 December 2017
Assets
In thousands of Naira
Cash and cash equivalents 1,745,342 - 1,745,342 - - -
Debt securities - Held to maturity 5,461,742 - 3,183,452 - - 2,278,290
Debt securities - Available for sale 2,304,336 - - 118,028 - 2,186,308
Statutory deposit 632,964 - -- - 632,964
10,144,384 - 4,928,794 118,028 - 5,097,562
Liabilities 1,063,860 1,063,860 -- - -
Liabilities on investment contracts 1,063,860 1,063,860 -- - -
Total interest re-pricing gap 9,080,524 (1,063,860) 4,928,794 118,028 - 5,097,562
Cumulative 9,080,524 (1,063,860) 3,864,934 3,982,962 9,080,524
3,982,962
Increase by 100bp 90,805 (10,639) 49,288 1,180 - 50,976
Increase by 500bp 454,026 (53,193) 246,440 5,901 - 254,878
Decrease by 100bp (90,805) 10,639 (49,288) (1,180) - (50,976)
Decrease by 500bp (454,026) 53,193 (246,440) (5,901) - (254,878
Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss.
Therefore, only a change in interest rates at the end of the reporting period would affect profit or loss.
Annual Report & Accounts 2018 59
Technology and Innovation
The table below shows the impact on the Group’s profit before tax if interest rates on financial instruments had
increased 2000 basis points or decreased by 1000 basis points, with all other variables held constant.
In thousands of Naira 31-Dec-2018 31-Dec-2017
Increase in interest rate by 2000 basis points 222,438 246,273
Decrease in interest rate by 1000 basis points (111,219) (123,136)
Interest rate movements affect reported equity through impact of increase or decrease in net interest income on the
retained earnings.
Interest bearing Instruments: 31-Dec-2018 31-Dec-2017
Assets:
Short-term bank deposits 668,555 811,760
Treasury bills 1,473,011 3,301,480
Government bonds 5,883,994 5,097,562
8,025,560 9,210,802
Interest earned:
Short-term bank deposits 44,984 68,205
Treasury bills & Government bonds 1,127,718 1,221,147
1,172,701 1,289,352
Average Interest rate: 15% 14%
Increase in interest rate by 2000 basis points (+20%) 18% 17%
Decrease in interest rate by 1000 basis point (-10%) 13% 13%
Liabilities: 1,640,340 1,173,544
Investment contract liabilities 60,511 57,988
Interest expenses 4% 5%
Average interest rate 4% 6%
Increase in interest rate by 2000 basis points (+20%) 3% 4%
Decrease in interest rate by 1000 basis point (-10%)
60 Annual Report & Accounts 2018
Technology and Innovation
A summary of the Company’s interest rate gap position on non-trading portfolios was as follows:
Market Risk
Re-pricing period
Carrying No stated 1-3 3 -6 6 - 12 1-5
months years
amount maturity months months
- -
Company - 786,547
- 260,945
31 December 2018 - 300,000
Assets
In thousands of Naira
Cash and cash equivalents 2,056,736 - 2,056,736 -
Debt securities - at amortised cost 809,832 - 23,286 -
Debt securities - at fair value 260,945 - - -
through OCI
Statutory deposit 300,000 - - -
3,427,514 - 2,080,022 - - 1,347,492
Liabilities -- ----
Liabilities on investment contracts
-- ----
Total interest re-pricing gap 3,427,514 - 2,080,022 - - 1,347,492
Cumulative 3,427,514 - 2,080,022 2,080,022 2,080,022 3,427,514
Increase by 100bp - 20,800 - -
Increase by 500bp 34,275 - 104,001 - - 13,475
Decrease by 100bp 171,376 - (20,800) - - 67,375
Decrease by 500bp (34,275) - (104,001) - - (13,475)
(171,376) (67,375)
Annual Report & Accounts 2018 61
Technology and Innovation
Re-pricing period
Carrying No stated 1-3 3 -6 6 - 12 1-5
years
amount maturity months months months
Company 911,023 - 911,023 - --
31 December 2017 1,004,463 - 983,179
Assets 1,701,600 - 21,284 - - 1,583,572
In thousands of Naira - 300,000
Cash and cash equivalents 300,000 - - 118,028
Debt securities - Held to maturity
Debt securities - Available for sale - --
Statutory deposit
3,917,086 - 932,307 118,028 - 2,866,751
Liabilities -- ----
Liabilities on investment contracts
-- ----
Total interest re-pricing gap 3,917,086 - 932,307 118,028 - 2,866,751
Cumulative 3,917,086
Increase by 100bp - 932,307 1,050,335 1,050,335 3,917,086
Increase by 500bp 39,171
Decrease by 100bp 195,854 - 9,323 1,180 - 28,668
Decrease by 500bp (39,171)
(195,854) - 46,615 5,901 - 143,338
- (9,323) (1,180) - (28,668)
- (46,615) (5,901) - (143,338)
Fair value sensitivity analysis for fixed rate instruments
The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss.
Therefore, only a change in interest rates at the end of the reporting period would not affect profit or loss.
The table below shows the impact on the Company’s profit before tax if interest rates on financial instruments had
increased by 2000 basis points or decreased by 1000 basis points, with all other variables held constant.
In thousands of Naira 31-Dec-2018 31-Dec-2017
Increase in interest rate by 2000 basis points 92,917 60,203
Decrease in interest rate by 1000 basis points (46,458) (30,101)
Interest rate movements affect reported equity through impact of increase or decrease in net interest income on the
retained earnings.
62 Annual Report & Accounts 2018
Technology and Innovation
Interest bearing Instruments: 31-Dec-2018 31-Dec-2017
Assets:
Short-term bank deposits 242,929 402,760
Treasury bills 23,286 139,312
Government bonds 1,355,119 2,866,751
1,621,333 3,408,823
Interest earned:
Short-term bank deposits 21,150 15,267
Treasury bills & Government bonds 443,435 285,747
464,585 301,014
Average Interest rate: 29% 9%
Increase in interest rate by 2000 basis points (+20%) 34% 11%
Decrease in interest rate by 1000 basis point (-10%) 26% 8%
Foreign Exchange Risk
Foreign exchange risk is quantified using the net balance
Foreign exchange risk is the risk that the fair value or of assets and liabilities in each currency, and their total
future cash flows of an exposure will fluctuate because of sum.
changes in foreign exchange rates.
The Group is exposed to foreign exchange risk through
Foreign exchange risk exposure of the Group’s financial cash balances maintained in foreign currency.
condition is due to adverse movements in exchange rates.
The Group is exposed to foreign exchange currency risk The Group is not exposed to significant risk of adverse
primarily through transactions denominated in foreign movements in foreign exchange rates. The financial
currency. The Group is also exposed to foreign currency position of the company has no significant sensitivity to
fluctuation in its investments in unquoted equity, dollar- foreign exchange risk.
denominated bond instruments, fixed deposits and bank
balances in other foreign currencies.
Annual Report & Accounts 2018 63
Technology and InnovationThe table below summaries the Group’s financial instruments at carrying amount, categorised by currency:
64 Annual Report & Accounts 201831 December 2018 Total Naira Us Dollar Euro Pound Gh Cedi Others
Group Notes
In thousands of Naira
Assets 8 2,888,235 1,508,504 1,033,943 3,762 10,656 331,370 -
Cash and cash equivalents 9 5,272,266 3,469,475 1,724,384 - - 78,407 -
Equity securities - at fair value through OCI 9 2,571,929 (326,700) 1,940,904 - - 957,725 -
Debt securities - at amortised cost 9- - - -
Non pledged trading assets 10 34,962 - - - - - -
Trade receivables 11 39,553 34,962 - - - - -
Reinsurance assets 13 1,305,276 39,553 - - - - -
Other receivables (excluding prepayments) 19 638,044 591,766 578,567 - - 134,943 -
Statutory deposit 505,080 - 132,964 -
Total financial assets 12,750,263 5,822,639 5,277,798 3,762 10,656 1,635,409
-
Liabilities 21 1,170,785 1,170,785 - - - - -
Investment contract liabilities 22 255,384 171,261 - - - 84,123 -
Trade payables 23 1,758,007 - - - 305,498 -
Other payables (excluding non-financial liabilities) 1,452,509 - - - 389,621 -
Total financial liabilities 3,184,176 2,794,555 5,277,798 3,762 10,656 1,245,788
Net financial assets/liabilities 9,566,087 3,028,084 -
- -
Insurance contract liabilities 20 9,621,473 9,621,473 - 3,762 --
Net policyholders’ assets/(liabilities) 10,656 1,245,788
(55,386) (6,593,389) 5,277,798
Annual Report & Accounts 2018 31 December 2017 Total Naira Us Dollar Euro Pound Gh Cedi Others
Group Notes
In thousands of Naira
Assets 8 1,745,342 (122,102) 753,453 9,341 729 1,103,921 -
Cash and cash equivalents 9 4,032,813 3,519,070 430,793 - - 82,950 -
Equity securities - FVTOCI 9 5,461,742 4,352,329 849,811 - - 259,602 -
Debt securities - Held to maturity 9 1,380 - -- -
Non pledged trading assets 10 707,489 1,380 - - -- -
Trade receivables 11 47,036 707,489 - - -- -
Reinsurance assets 13 924,101 - - - 83,131 -
Other receivables (excluding prepayments) 19 632,964 47,036 504,691 - - 117,632 -
Statutory deposit 336,279 - -
Total financial assets 13,552,866 515,332 2,538,748 9,341 729 1,647,236
9,356,813 -
Liabilities --
Investment contract liabilities 21 1,063,860 1,063,860 - - -
- - 59,377 -
Trade payables 22 516,371 456,994 - - - 202,905 -
Other payables (excluding non-financial liabilities) 23 1,354,731 1,151,826 - - - 262,282 -
Total financial liabilities 2,672,680 - 9,341 729 1,384,954
Net financial assets/liabilities 2,934,962 6,684,133 2,538,748 -
- - 1,025,529 -
Insurance contract liabilities 10,617,904 9,341 729 359,425
Net policyholders’ assets/(liabilities)
20 7,141,465 6,115,936 - Technology and Innovation
3,476,439
568,197 2,538,748
65
Technology and Innovation
The table below summaries the Company’s financial instruments at carrying amount, categorised by currency:
31 December 2018
Total Naira Us Dollar Euro Pound Others
Company Notes
In thousands of Naira
Assets
Cash and cash equivalents 8 2,056,736 1,856,571 202,235 (2,215) 145 -
Equity securities - at fair value 9 1,413,091 (17,437) 1,430,528 -- -
through OCI
Debt securities - at amortised 9 809,832 (173,347) 983,179 -- -
cost
Non pledged trading assets 9 - - - -- -
Trade receivables 10 34,962 34,962 - -- -
Reinsurance assets 11 47,036 47,036 - -- -
Other receivables (excluding 13 973,104 394,537 578,567 -- -
prepayments)
Statutory deposit 19 300,000 300,000 - -- -
Total financial assets 5,634,760 2,442,322 3,194,509 (2,215) 145 -
Liabilities 22 162,970 162,970 -- - -
Trade payables 23 2,524,952 2,524,952 -- - -
Other payables (excluding non-
financial liabilities) 2,687,922 2,687,922 - - - -
Total financial liabilities 2,946,839 (245,600) 3,194,509 (2,215) 145 -
Net financial assets/liabilities
Insurance contract liabilities 20 5,629,277 5,629,277 - - - -
3,194,509 (2,215) 145 -
Net policyholders’ assets/ (2,682,439)
(liabilities) (5,874,877)
31 December 2017
Total Naira Us Dollar Euro Pound Others
Company Notes 911,023 957,911 (56,958) 9,341 729 -
In thousands of Naira 3,351,670 3,141,043 210,627 - - -
Assets 8 1,004,463 849,811
Cash and cash equivalents 9 154,652 - - -
Equity securities - Available-for- 796 796 -
sale 9 486,997 - - - -
Debt securities - Held to 486,997 - - - -
maturity 9 9,216 9,216 504,691 - - -
Non pledged trading assets 10 834,519 - - - -
Trade receivables 11 300,000 329,828 1,508,171
Reinsurance assets 13 6,898,684 300,000 - - -
Other receivables (excluding 5,380,443 9,341 729 -
prepayments) 19
Statutory deposit
Total financial assets
66 Annual Report & Accounts 2018
Technology and Innovation
Liabilities 22 415,414 415,414 - - - -
Trade payables - - - -
Other payables (excluding non- 23 1,324,350 1,324,350
financial liabilities) - - - -
Total financial liabilities 1,739,764 1,739,764 1,508,171 9,341 729 -
Net financial assets/liabilities 5,158,920 3,640,679
- - - -
Insurance contract liabilities 20 3,817,332 3,817,332 1,508,171 9,341 729 -
Net policyholders’ assets/ 1,341,588 (176,653)
(liabilities)
Equity price risk
The Group is exposed to equity price risks arising from equity investments. This exposure is managed through the
adherence to investment in good fundamentals equities approved by the Board and in line with NAICOM investment
guidelines.
Asset allocation to investment in equity is shown below
Group Company
31-Dec-2018 31-Dec-2018
Allocation Target Quoted Equities Unquoted Quoted Equities Unquoted
Equities Equities
Insurance and investment contract 9% 2% 17% 3%
fund
Shareholders fund 0% 0% 0% 0%
Allocation Target Group Unquoted Company Unquoted
Insurance fund 31-Dec-2017 Equities 31-Dec-2017 Equities
Quoted Equities Quoted Equities
2% 5%
19% 39%
Shareholders fund 0% 0% 0% 0%
The equity price changes are monitored by the investment committee and the holdings are adjusted when there
deviations from the investment policy. The Group manages its exposure to equity price risk using sensitivity analysis to
assess potential changes in the value of investment in equities and the impact of such changes on the Group’s investment
income. There have been no major changes from prior period in the exposure to risk or policies, procedures and methods
used to monitor and measure the Group equity price risk.
Annual Report & Accounts 2018 67
Technology and Innovation
Below is the Group and Company equity price sensitivity:
Group Company
2018 2017 2018 2017
31-Dec 31-Dec 31-Dec 31-Dec
Increase/ Increase/ Increase/ Increase/
Decrease by Decrease by Decrease by Decrease by
200Bp 200Bp 200Bp 200Bp
Listed Equities at fair value - 55 - 32
through profit or loss/HFT
38,303 61,939 38,279 58,803
Listed Equities at fair value
through OCI/AFS 7,806 7,200 7,806 7,200
Unlisted Equities through OCI/ - 55 - 32
AFS - (17) - (10)
Impact on profit before tax
Tax charge of 30%
Impact on profit after tax - 39 - 22
Impact on equity 46,109 69,178 46,086 66,025
Group Group Company Company
2018 2017 2018 2017
Instruments: - 1,380 - 796
Assets: 957,563 1,548,487 956,985 1,470,080
Listed Equities (HTF) 195,161 195,161
Listed Equities (AFS) 1,152,725 179,990 1,152,147 179,990
Unlisted Equities (AFS) 1,729,857 1,650,866
- -
- -
Price movement: - 1,408 - 812
Increase in price by 200 basis 976,714 1,579,457 976,125 1,499,482
points (+2%) 199,065 199,065
Listed Equities (HTF) 183,590 183,590
Listed Equities (AFS)
Unlisted Equities (AFS)
Decrease in price by 200 basis - 1,352 - 780
points (-2%) 938,412 1,517,517 937,846 1,440,678
191,258 176,390 191,258
Listed Equities (HTF) 176,390
Listed Equities (AFS)
Unlisted Equities (AFS)
68 Annual Report & Accounts 2018
Technology and Innovation
Liquidity Risk Management dates (whichever is earlier) of financial assets matched with
financial liabilities.
Liquidity risk is the risk that the Group may be unable to
meet its obligations associated with financial liabilities that Quantifications
are settled by delivering cash or another financial assets. The Group adopts both qualitative and quantitative
This usually occurs due to the inability to convert a security approaches to measuring liquidity risk. Specifically, the
or hard asset to cash without a loss of capital and/or income Company uses the following techniques;
in the process. The Group mitigates this risk by monitoring
cash activities and expected outflows. The Group’s current a) Funding and Liquidity plan;
liabilities arise as claims are made and clients request b) Gap Analysis; and
for termination of their investment-linked products. The c) Ratio Analysis.
Group has zero tolerance for liquidity risk and is committed
to meeting all liabilities as they fall due. The Funding and Liquidity plan defines the Group’s sources
and channels of utilization of funds. The funding liquidity
The Board approves the Group’s liquidity policy and risk limit is quantified by calculating liquidity ratios and
contingency funding plan, including establishing liquidity measuring/monitoring the cumulative gap between our
risk tolerance levels. The Board and its committees, assets and liabilities. The Liquidity Gap Analysis quantifies
monitors the liquidity position and reviews the impact the monthly and cumulative gap in a business environment.
of strategic decisions on the Group’s liquidity. Liquidity The gap for any given tenor bucket represents the liabilities
positions are measured by calculating the Group’s net to, or placements made, the market required to replace
liquidity gap. maturing liabilities or assets. The Group monitors the
cumulative gap as a ±20% of the total risk assets and the
Below is a summary of the contractual re-pricing or maturity gap as a ±20% of total liabilities.
The following table shows the undiscounted cash flows on the Group’s financial assets and liabilities and insurance
liabilities, as well as on the basis of their earliest possible contractual maturity. The Gross nominal inflow / (outflow)
disclosed in the table is the contractual, undiscounted cash flow on the financial asset and liability and insurance
liability.
Residual contractual maturities of financial assets and liabilities
Carrying Gross 1-3 3 -6 6 - 12 1-5
months months months years
amount nominal
inflow/
(outflow)
Group
31 December 2018
In thousands of Naira
Assets
Cash and cash equivalents 2,888,235 2,888,235 2,888,235 - --
Financial assets at fair value 5,272,266 5,272,266 5,272,266 - --
through OCI
Financial assets at fair value -- - - --
through profit or loss
Financial assets at amortised 2,571,929 2,571,929 13,971 9,314 -
cost 2,548,643
Trade receivables 34,962 34,962 34,962 - --
Reinsurance assets 39,553 39,553 39,553 - --
Other receivables (excluding 1,305,276 1,305,276 726,709 - - 578,567
prepayment)
Statutory deposit 638,044 638,044 - - - 638,044
Total financial assets 12,750,263 12,750,263 8,975,694 9,314 - 3,765,254
Annual Report & Accounts 2018 69
Technology and Innovation
Liabilities 1,170,785 1,170,785 1,170,785 - --
255,384 255,384 255,384 - --
Investment contracts - --
1,758,007 1,758,007 1,758,007
Trade payables - --
3,184,176 3,184,176 3,184,176 9,314 - 3,765,254
Other payables (excluding non- 9,566,087 9,566,087 5,791,519
financial liabilities)
Total financial liabilities
Gap - Net financial assets/
liabilities
Insurance liabilities 9,621,473 9,621,473 9,621,473 - - -
- 3,765,254
Gap - Net policyholders’ assets/ (55,386) (55,386) 9,314 (3,820,640)
(liabilities) (3,829,954) (55,386)
6 - 12
Cumulative liquidity gap (55,386) (55,386) (3,829,954) (3,820,640) months 1-5
years
-
- -
Residual contractual maturities of financial assets and liabilities - -
- -
Carrying Gross 1 - 3 3 -6 months - 2,278,290
months 47,036 -
amount nominal - -
- 504,691
inflow/ 47,036 632,964
(outflow) 3,415,945
Group
31 December 2017
In thousands of Naira
Assets
Cash and cash equivalents 1,745,342 1,745,342 1,745,342 -
Securities - Available for sale 4,032,813 4,032,813 4,032,813 -
Investment at fair value 1,380 1,380 1,380 -
through profit or loss
Held to maturity 5,461,742 5,461,742 1,910,071 1,273,381
Trade receivables 707,489 707,489 707,489 -
Reinsurance assets 47,036 47,036 - -
Other receivables (excluding 924,101 924,101 419,410 -
prepayment)
Statutory deposit 632,964 632,964 - -
Total financial assets 13,552,867 13,552,867 8,816,505 1,273,381
Liabilities 1,063,860 1,063,860 1,063,860 - --
516,371 516,371 516,371 - --
Financial liabilities: - --
1,354,731 1,354,731 1,354,731
Investment contracts -
2,934,962 2,934,962 2,934,962 1,273,381 - -
Trade payables 10,617,905 10,617,905 5,881,543 47,036 3,415,945
Other payables (excluding non-
financial liabilities)
Total financial liabilities
Gap - Net financial assets/
liabilities
Insurance liabilities 7,141,465 7,141,465 7,141,465 - - -
Gap - Net policyholders’ assets/ 3,476,440 1,273,381 47,036 3,415,945
(liabilities) 3,476,440
Cumulative liquidity gap 3,476,440 (1,259,922) 13,459 60,495 3,476,440
70 3,476,440 (1,259,922)
Annual Report & Accounts 2018
Technology and Innovation
The following table shows the undiscounted cash flows on the Company’s financial assets and liabilities, as well as on
the basis of their earliest possible contractual maturity. The Gross nominal inflow / (outflow) disclosed in the table is
the contractual, undiscounted cash flow on the financial asset or liability.
Residual contractual maturities of financial assets and liabilities
Carrying Gross 1 - 3 months 3 -6 6 - 12 1-5
amount nominal months months years
inflow/
(outflow)
Company
31 December 2018
In thousands of Naira
Assets
Cash and cash equivalents 2,056,736 2,056,736 2,056,736 - --
- --
Financial assets at fair 1,413,091 1,413,091 1,413,091
value through OCI - --
Financial assets at fair --- 9,314 - 786,547
value through profit or loss - --
- --
Financial assets at 809,832 809,832 13,971 - - 578,567
amortised cost
- - 300,000
Trade receivables 34,962 34,962 34,962 9,314 - 1,665,114
Reinsurance assets 47,036 47,036 47,036
Other receivables 973,104 973,104 394,537
(excluding prepayment)
Statutory deposit 300,000 300,000 -
Total financial assets 5,634,760 5,634,760 3,960,332
Liabilities 162,970 162,970 162,970 - --
2,524,952 2,524,952 2,524,952 - --
Trade payables
2,687,922 2,687,922 2,687,922 - --
Other payables (excluding 2,946,839 2,946,839 1,272,411 9,314 - 1,665,114
non-financial liabilities)
Total financial liabilities
Gap - Net financial assets/
liabilities
Insurance liabilities 5,629,277 5,629,277 5,629,277 - --
(2,682,439) (2,682,439) (4,356,867) 9,314 - 1,665,114
Gap - Net policyholders’
assets/(liabilities) (2,682,439) (2,682,439) (4,356,867) (4,347,552) (4,347,552)
(2,682,439)
Cumulative liquidity gap
Annual Report & Accounts 2018 71
Technology and Innovation
Residual contractual maturities of financial assets and liabilities
Carrying Gross 1 - 3 months 3 -6 6 - 12 1-5
amount nominal months months years
inflow/
(outflow)
Company
31 December 2017
In thousands of Naira
Assets
Cash and cash equivalents 911,023 911,023 911,023 - --
- --
Equity securities - 3,351,670 3,351,670 3,351,670
Available for sale -
Investment at fair value 796 796 796 8,514 --
through profit or loss -
-
Held to maturity 1,004,463 1,004,463 12,770 - - 983,179
- -
Trade receivables 486,997 486,997 486,997 - 9,216 -
8,514 -
Reinsurance assets 9,216 9,216 - 504,691
Other receivables 834,519 834,519 329,828
(excluding prepayment)
Statutory deposit 300,000 300,000 - - 300,000
9,216 1,787,870
Total financial assets 6,898,684 6,898,684 5,093,084
Liabilities 415,414 415,414 415,414 - --
1,324,350 1,324,350 1,324,350 - --
Trade payables
1,739,764 1,739,764 1,739,764 - - -
Other payables (excluding 5,158,920 5,158,920 3,353,320 8,514 9,216 1,787,870
non-financial liabilities)
Total financial liabilities
Gap - Net financial assets/
liabilities
Insurance liabilities 3,817,332 3,817,332 3,817,332 - - -
1,341,588 1,341,588 (464,012) 8,514 9,216 1,787,870
Gap - Net policyholders’
assets/(liabilities) 1,341,588 1,341,588 (464,012) (455,498) (446,282) 1,341,588
Cumulative liquidity gap
72 Annual Report & Accounts 2018
Technology and Innovation
The following table shows amount expected to be recovered or settled after more than twelve months (non-current) for
each asset and liability line item and the amounts expected to be recovered or settled no more than twelve months after
the reporting period (current).
Group
31 December 2018 31 December 2017
Current Non- Carrying Current Non- Carrying
current amount
current amount
In thousands of Naira
ASSETS
Cash and cash equivalents 2,888,235 - 2,888,235 1,745,342 - 1,745,342
7,217,645 2,278,290 9,495,935
Financial assets 5,295,552 2,548,643 7,844,195
707,489 - 707,489
Trade receivables 34,962 - 34,962 1,586,301 - 1,586,301
-
Reinsurance assets 3,692,142 - 3,692,142 530,793 504,691 530,793
556,840 1,061,531
Deferred acquisition cost 749,174 - 749,174
Other receivables and 856,757 578,567 1,435,324
prepayments
Investment property - 253,480 253,480 - 312,750 312,750
- 8,264,440 8,264,440
Investment in associates - 8,763,246 8,763,246 -
- - -
Investment in subsidiaries --- - 479,683 479,683
- 3,787,381 3,787,381
Intangible assets - 481,009 481,009 12,344,410 632,964 632,964
16,260,199 28,604,609
Property and equipment - 3,481,328 3,481,328
Statutory deposit - 638,044 638,044
TOTAL ASSETS 13,516,821 16,744,317 30,261,138
LIABILITIES 9,476,488 144,985 9,621,473 7,005,744 135,721 7,141,465
Insurance contract liabilities 1,170,785 - 1,170,785 1,063,860 - 1,063,860
Investment contract liabilities - -
Trade payables 255,384 - 255,384 516,371 - 516,371
Other payables 1,946,741 - 1,946,741 1,458,748 - 1,458,748
Current income tax -
Deferred income tax 258,901 258,901 263,793 202,547 263,793
liabilities - - - 202,547
TOTAL LIABILITIES
13,108,299 144,985 13,253,284 10,308,516 338,268 10,646,784
GAP 408,522 16,599,332 17,007,854 2,035,894 15,921,931 17,957,825
-
Annual Report & Accounts 2018 73
Technology and Innovation
The following table shows amount expected to be recovered or settled after more than twelve months (non-current)
for each asset and liability line item and the amounts expected to be recovered or settled no more than twelve months
after the reporting period (current).
Company
31 December 2018 31 December 2017
Current Non- Carrying Current Non- Carrying
current amount current amount
In thousands of Naira
ASSETS
Cash and cash equivalents 2,056,736 - 2,056,736 911,023 - 911,023
Financial assets 1,436,377 786,547 2,222,923 3,373,750 983,179 4,356,929
Trade receivables 34,962 - 34,962 486,997 - 486,997
Reinsurance assets 2,187,984 - 2,187,984 838,139 - 838,139
Deferred acquisition cost 598,828 - 598,828 317,832 - 317,832
Other receivables and 438,745 578,567 1,017,312 366,547 504,691 871,238
prepayments
Investment property - 253,480 253,480 - 312,750 312,750
Investment in associates - 5,059,810 5,059,810 - 5,059,810 5,059,810
Investment in subsidiaries - 5,360,915 5,360,915 - 3,876,571 3,876,571
Intangible assets - 465,961 465,961 - 476,144 476,144
Property and equipment - 3,256,892 3,256,892 - 3,521,507 3,521,507
Statutory deposit - 300,000 300,000 - 300,000 300,000
TOTAL ASSETS 6,753,631 16,062,171 22,815,803 6,294,288 15,034,652 21,328,940
LIABILITIES 5,629,277 - 5,629,277 3,817,332 - 3,817,332
Insurance contract liabilities 162,970 - 162,970 415,414 - 415,414
Trade payables - 2,697,095 1,417,790 -
Other payables 2,697,095 - 139,103 115,315 - 1,417,790
Current income tax 139,103 - -- 202,548 115,315
Deferred income tax liabilities - - 8,628,445 5,765,851 202,548
TOTAL LIABILITIES 202,548
8,628,445 5,968,399
GAP (1,874,814) 16,062,171 14,187,358 528,437 4,832,104 15,360,541
74 Annual Report & Accounts 2018
Technology and Innovation
Underwriting, Claims & Reinsurance risk • Extreme caution is taken when underwriting risk with
low safety standards or businesses with excessively
Underwriting involves appraising risk exposure and high risk profile;
determining the premium required to be charged to
insure the risk. The Insurer decides how much coverage • We exercise caution when underwriting discrete
the client should receive, how much they should pay for (one-off) risks, particularly where there is no
it, or whether to even accept the risk and insure them. requisite experience or know-how;
The information used to evaluate the risk of an applicant
for insurance will be obtained from the proposal form • The limits, standard and exposure are guided by
filled by the proposer. prudent underwriting procedure and reinsurance
treaties.
Underwriting is the process in which an insurer appraises
a risk being presented by the proposer and deciding • The Company adheres fully with all extant laws and
whether or not to accept the risk and the consideration
(premium) to receive. Weaknesses in the systems and regulations, including NAICOM’s guideline on know
controls surrounding the underwriting process can
expose an insurer to the risk of unexpected losses which your customer (KYC).
may threaten the capital adequacy of the insurer. The
Company’s underwriting process is subject to internal
audit.
Underwriting Risk Management and Control
In addition, there is a process for assessing brokers’
procedures and systems to ensure that the quality of
information provided to the Company meet suitable
standard; and in the case of reinsurers, audits of ceding For effective management of the underwriting exposures,
companies to ensure that reinsurance assumed is in
accordance with treaties. Risk management and control function is responsible
The factors that the Company uses to classify risks is for the following:
highly objective, clearly related to the likely cost of
providing coverage, practical to administer, consistent
with applicable law, and designed to protect the long-
term viability of the insurance program. • Ensure that underwriting standards are never
Underwriting process risk – This is the risk from compromised due to pressure from various
exposure to financial losses related to the selection and
acceptance of risks to be insured. stakeholders.
Mispricing risk – Risk that insurance premium will
be too low to cover the Company’s expenses related to
underwriting, claim handling and administration. • Analysis of insurance exposures, continuous analysis
Brokers’ underwriting risk – This is the risk that brokers of claims, product profitability analysis and other
may:
relevant risk issues.
i. Be inadequately trained to assess the risk and offer
professional advice to the client.
ii. Fail to remit premium collected to the Insurer. • Investigate unusual claims, large sums assured and
Underwriting risk appetite high variability in quotations submitted to the clients
The following factors constitute the basis for the and make sure that unnecessary risks are not taken.
Company’s underwriting risk appetite:
• Wapic does not underwrite risk not fully understood
• Ensure compliance with the regulatory requirements
• We will not underwrite unquantifiable risks.
as it relates to underwriting.
• Coordinate issues tracking activities and ensure
action plans are developed for all identified gaps.
• Collaborate with the underwriting risk committee to
develop appetite and tolerance limits.
• Identify and manage the Company’s underwriting
risk.
• Review and approve reinsurance and retrocession
arrangements as mandated by NAICOM.
Insurance risk
Insurance risk is the inherent uncertainty regarding
the pricing, adverse selection, product design, net
retention, reserving, occurrence, amount or timing of
insurance liabilities. It also covers the future risk claims
and expenses exceeding the value placed on insurance
liabilities. The timing is specifically influenced by
persistency and expenses about which assumptions are
made in order to place a value on the liabilities.
Annual Report & Accounts 2018 75
Technology and Innovation
The Company assesses and monitors insurance risks have limited choice in the level of the benefits.
through thorough data analysis and stress-testing etc. It Group’s policies are priced using standard mortality tables.
mainly evaluates the impacts of actuarial assumptions, The price for an individual scheme is adjusted for the
such as the discount rate, investment yield and expense following risk factors:
ratio, on our reserve, solvency and profit. We manage
and monitor consistently within acceptable limits those • Region;
exposures assumed in the course of providing insurance • Salary structure;
cover to insured risks. • Gender structure; and
• Industry.
Managing pricing risk For large schemes, a scheme’s past experience is a crucial
input in setting rates for the scheme. Rates are guaranteed
Pricing risk is effectively managed in the company through for one year and reviewable at the renewal of the policy.
efficient insurance premium rating controls embedded in
its process. (d) Short-term insurance (general insurance) products
Pricing risk is effectively managed in the company through Underwriting on short-term insurance products takes the
efficient insurance premium rating controls embedded in form of the insurance applicant completing a proposal
its process. This amongst others include but not limited to: form. The company uses identified risk factors to classify
the risk and charge the appropriate premium.
(a) Individual life products – Term-assurance and savings
plan Where the value of the item(s) to be insured exceeds a pre-
The price for an individual life product is adjusted for the specified limit, the underwriting consideration becomes
following risk factors: more stringent. This is particularly the case for marine
and aviation cover. In this case the Company makes use
• Age; of specialist to assess the risks and set an appropriate
• Gender; premium for cover.
• Smoker status;
• Medical conditions;
• Financial condition; and Mortality and morbidity risks
• Hazardous pursuits.
The risk that actual experience in respect of the rates of
The Group employs the following additional controls and mortality and morbidity may vary from what is assumed in
measures to ensure that only acceptable risks are accepted pricing and valuation, depending on the terms of different
and risks are appropriately priced: products. The material classes of business most affected by
these risks are discussed below.
· Underwriting controls, with risk classification based on
the above risk factors; (a) Individual life products – Term assurance and Savings
Plan Products are sold directly to individuals providing
· Regular review of premium rates; and a benefit on death. The main insurance risk relates to
the possibility that rates of death may be higher than
· Appropriate policy conditions, including any exclusion on expected.
the cover of the subject matter of insurance.
For contracts with fixed and guaranteed benefits (such
· Premium rates are guaranteed for the period up to the as the minimum death benefits available on savings plan
renewal of a policy, typically, after 1 year. policies) and fixed future premiums, the Group employs
additional underwriting controls and measures to manage
(b) Deposit administration its exposure to mortality risk. This includes but not limited
to:
Premium rating on deposit administration policies
distinguishes between the ages and gender of prospective • Ensure that only acceptable risks are accepted.
policyholders. Annual premiums, payable up front, are re- • Claims assessment processes to ensure only valid
priced at renewal of the deposit administration policies. claims are paid;
• Purchased reinsurance to limit liability on particularly
(c) Group life products large claims or substandard risks; and
• Concentration risk is reduced by diversification of
Underwriting of Group business is much less stringent than business over a large number of independent lives, as
for individual business, as there is typically less scope for well as by taking out catastrophe reinsurance.
anti-selection. The main reason for this is that participation
in the Group schemes is normally compulsory and members
76 Annual Report & Accounts 2018
Technology and Innovation
(b) Group life products • Regular reviews of the actual outcome of the estimates
made is carried out to check for inconsistencies and
Employee benefit products provide life cover to members to ensure that procedures remain appropriate. The
of a group, such as employees of companies or members of reviews include the use of statistical techniques to
trade unions. compare the estimates with the eventual cost of settling
An aggregate stop-loss reinsurance agreement is in place to the claims, after deducting the amounts already paid at
ensure that the Group’s exposure to the aggregate mortality the time the estimates were made;
risk in its group life business is managed and limited to a
specified limit. • A functional system is in place to ensure that claim files
without activity are reviewed on a regular basis;
In addition, there is a catastrophe reinsurance treaty in
place for both group business and individual business. Such • Appropriate systems and procedures are in place to
a treaty is particularly important for the group life business assess the validity of notified claims by reference to
as there are considerably more concentrations of risks the underlying contracts of insurance and reinsurance
compared to individual business. treaties;
(c) Deposit administration • Suitable systems are adopted to accommodate the
use of suitable experts such as loss adjusters, lawyers,
Deposit administration contracts provide a guaranteed actuaries, accountants etc. as and when appropriate,
life annuity conversion at the maturity of the contract. The and to monitor their use; and
mortality risk in this case is that the policyholders may live
longer than assumed in the pricing of the contract. This is • Appropriate procedures are in place to identify and
known as the risk of longevity. handle large or unusual claims, including system to
ensure that senior management are involved from the
The Group manages this risk by allowing for improvements outset in the processing of claims that are significant
in mortality when pricing and valuing the contracts. The because of their size or nature.
Group also performs more detailed actuarial experience
investigations and adjust assumptions in pricing for
new contracts and valuation of existing contracts when Claims experience risk
necessary.
In terms of the short-term insurance contracts held by
the Company, the claims experience risk for these policies
Outstanding claims is that the number of claims and/or the monetary claim
amounts are worse than that assumed in the pricing basis.
This represents the estimated ultimate cost of settling all The Company manages this risk by charging premiums
claims arising from incidents occurring as at the date of the which are appropriate to the risks under the insurance
statement of financial position. contracts.
Under the short-term insurance products, the Company
Claims management risk also holds a concentration risk, which is the risk of a large
number of claims from a single event or in a particular
This is the risk that the insurer may be unable to manage the geographical area. The Company reduced this risk by
settlement process by which insurers fulfil their contractual diversification over a large number of uncorrelated risks,
obligation to policyholders. The Company has in place a as well as arranged catastrophe reinsurance cover.
claims management policy and procedure for ensuring that
claims are handled fairly and promptly. In establishing
and maintaining effective claims handling systems and Reinsurance risk
procedures, the Company considers the following factors:
This is the risk of inadequate reinsurance cover which
• Appropriate systems and controls to ensure that all may be triggered by a situation such as the insolvency of a
liabilities or potential liabilities notified to the insurer reinsurer, omission to cede risk to the treaty, wrong cession
are recorded promptly and accurately. Accordingly, to the treaty, assumption of risks without reinsurance
the systems and controls in place ensure that proper cover, acceptance of risks above automatic capacity and
records are established for each notified claim; there is already market saturation and non-payment
of reinsurance premium as at when due. The Company
• Suitable controls are maintained to ensure that ensures that it manages reinsurance risk by maintaining
estimates for reported claims and additional estimates adequate reinsurance arrangements and treaties in respect
are appropriately made on a consistent basis and are of the classes or category of insurance business authorized
properly categorized; to transact. The Company particularly put in place a
documented policy stating:
Annual Report & Accounts 2018 77
Technology and Innovation • Senior management that review the Company’s
reinsurance management systems on a regular basis.
• Systems for the selection of reinsurance brokers and • Reinsurers were profiled and categorized into tiers
other reinsurance advisers; in determining the company’s exposure limit to
• Systems for selecting and monitoring reinsurance reinsurers.
programmes;
Clearly defined managerial responsibilities and controls;
Technical Reserving Methods
• Presence of a well-resourced reinsurance department
that prepares clear methodologies for determining all
aspects of a reinsurance programme.
The provision for outstanding claims, including IBNR, was
determined for each line of business on both gross and net
of reinsurance basis. A yearly cohort from year 2007 has
been adopted in building the historical claims. The UPR was
calculated using a time – apportionment basis, in particular, the 365ths method. The UPR is calculated on the assumption
that risk will occur evenly during the duration of the policy.
Description of insurance reserves by segment:
IBNR
Group Company
Gross Gross Gross Gross
IBNR IBNR IBNR IBNR
In thousands of Naira 31-Dec-18 31-Dec-17 31-Dec-18 31-Dec-17
Class of business
Aviation 41,244 47,632 41,244 47,632
- 340
Bonds - 340
60,235 38,747
Engineering 96,147 51,774 156,545 23,585
149,263 298,236
Fire 316,794 81,713 27,824 36,457
78,469 137,581
General Accident 209,060 312,676 346,207 394,862
Marine 46,966 43,400 - -
859,788 977,440
Motor 471,977 280,320
Oil and Energy 801,037 559,845
Group Life 824,342 828,917
Total 2,807,567 2,206,617
UPR and Life fund Group Gross UPR Company Gross UPR
Gross UPR 31-Dec-17 Gross UPR 31-Dec-17
In thousands of Naira 31-Dec-18 31-Dec-18
Class of business
Aviation 37,062 36,324 37,062 36,324
Bonds - 430 - 430
Engineering
Fire 1,955,037 659,113 1,955,037 659,113
General Accident 171,021 144,571 115,367 136,321
Marine 474,679 457,204 447,063 450,209
Motor 132,874 156,563 125,228 155,759
Oil and Energy 711,123 603,470 288,899 329,031
Group Life 615,074 125,630 613,110 123,339
Life Fund 691,199 771,308 -
Total 144,985 135,721 - -
3,090,334 -
4,933,053 3,581,766 1,890,526
78 Annual Report & Accounts 2018
Technology and Innovation
Sensitivity Analysis A sensitivity analysis was done to determine how the
IBNR reserve amount would change if we were to consider
Sensitivity analyses are performed to test the variability the 75th percentile as opposed to our best estimate figures
around the reserves that are calculated at a best estimate included in reserve reviews as at 31 December 2018. The
level. The estimated claim amounts can never be an exact 75th percentile is a generally accepted level of prudency.
forecast of future claim amounts and therefore looking
at how these claim amounts vary provides valuable
information for business planning and risk appetite
considerations.
The results based on fitting a Normal distribution to the best estimate IBNR reserves as at 31 December 2018 are as
follows:
In thousands of Naira Best Estimate Gross IBNR Best Net IBNR
75th percentile Estimate 75th percentile
Class of business
Aviation 41,244 52,044 39,915 50,367
Bonds - -- -
Engineering 60,235 76,008 33,790 42,639
Fire 156,545 197,536 74,776 94,356
General Accident 149,263 188,348 86,038 108,567
Marine 27,824 35,110 18,808 23,732
Motor 78,469 99,017 69,915 88,223
Oil and Energy 346,207 436,862 346,207 436,862
Total 859,788 1,084,925 669,448 844,745
Key Developments in the Group 2018 management process by intensifying the
salvage, subrogation and reinsurance
Key improvements made in 2018 include the following: recovery strategies. Performance
targets were set for each class of recovery, third
1. Created a survey workflow into the Company’s party recovery agents were engaged and
core insurance application (WapX) to enable delinquent outstanding were restructured which
monitoring of Underwriters implementation of turned the most of the debts into an active status.
survey review, rating, risk profiling and c. Implemented the Betterment (contribution)
automated mail notification of Clause specified in the policy, such that the
survey requirements. insured contributes towards the replacement
of an old damaged item with a new item.
2. Optimized the reinsurance arrangement to d. Declination of businesses offered with either
improve the value for money to enhance balance adverse risk selection, poor loss experience,
in capital reserve, reinsurance cost, retention poor pricing, or not within the company’s
and profit in line with the Company’s strategy underwriting appetite.
and risk tolerance level. e. The Company ceased automatic Excess Buy-Back
(EBB) clause condition to insured, however
3. In a view to increase the Company’s market exception are given on case-by-case
share, we developed and commenced basis to insured with profitable account
the sale of Travel insurance product to both our over an average of 3 years.
existing customers and new prospective clients.
5. In a view to enhance operational efficiency
4. In a bid to maximize profit, the Company and enjoyable customer experience, the following
incorporated the following: developments were initiated:
a. Collaborated through partnership with a. The Technical Division is segmented into two
third parties vendors (such as Loss adjusters, divisions; Retail - to service personal
loss investigators, auto garages, spare parts lines, and Corporate - to service the corporate
dealers) to improve claims settlement process organizations.
whilst reducing fraud elements.
b. Enhanced the Recoveries aspect of the claims
Annual Report & Accounts 2018 79
Technology and Innovation
b. Transformed the Technical Division with Claims Paid Triangulations as at December 2018
automation of its processes and ensuring that
redundancies processes are eliminated. The claims paid triangulations is presented below for the
c. Digitalization of various products and channels five classes where triangulation methods were used, i.e. for
to enable sales and payments made Engineering, Fire, General Accident, Marine and Motor.
through the Company’s online platform. The triangulations is based on the Company’s claims paid
d. Revised all underwriting policies to meet global data as at 31 December 2018 which formed the basis of the
best practices. results of the actuarial valuation of the insurance contract
claims liabilities carried-out by Ernst & Young Consulting.
The triangulations have excluded large claims (all figures
are in thousand naira).
80 Annual Report & Accounts 2018
Annual Report & Accounts 2018 Engineering
Accident 1 2 3 Development Year 6 7 89 10
year 45 9,288
2009 2,361 9,012 9,219 9,288 9,288
2010 7,609 16,165 23,288 9,219 9,219 24,277 24,277 9,288 9,288
2011 4,973 13,150 20,584 24,277 24,277 20,586 20,586 24,277 24,277
2012 8,605 14,023 14,534 20,586 20,586 14,534 14,534 20,586
2013 9,976 12,977 17,927 14,534 14,534 17,958
9,028 9,764 11,276 17,927 17,927
2014 2,143 5,512 11,291
2015 11,520 24,396 5,924 11,289
2016 10,375 47,666 28,026 5,924
2017 58,045
2018
Fire
Accident 1 Development Year 5 6 7 89 10
year 234 61,074
2009 32,093 61,074 61,074
2010 13,044 56,400 61,065 61,065 61,074 27,208 27,208 61,074 61,074
2011 2,393 24,562 26,662 27,208 27,208 14,920 14,920 27,208 27,208
2012 6,956 12,567 12,972 14,744 14,920 24,920 24,920 14,920
2013 24,580 24,920 24,920 24,920 20,563
2014 5,542 19,438 20,375 20,563 20,563
2015 3,418 11,582 14,141 14,141 14,352 Technology and Innovation
2016 24,041 49,522 50,510 53,667
2017 21,305 70,617 109,541
2018 30,432 86,247
105,926
General Accident
Development Year
81
Technology and InnovationAccident1 2345678 9 10
Year
82 Annual Report & Accounts 2018200937,225131,772153,970166,748171,581172,740 173,976 174,202 174,202 174,202
2010 59,010 124,834 148,881 156,477 163,014 163,157 163,868 164,207 164,207
2011 31,185 112,058 134,784 143,712 144,559 149,592 152,220 152,336
2012 30,812 100,499 127,426 136,935 145,118 145,415 145,857
2013 54,269 94,349 111,835 116,201 116,203 116,203
2014 28,862 86,289 105,015 106,182 109,081
2015 69,250 177,389 192,729 235,745
2016 96,985 216,254 251,290
2017 99,273 198,213
2018 52,040
Marine Accident
year
2009 1 234 5 67 Development Year
2010 8 9 10
2011 21,351 50,075
2012 28,954 43,896 49,571 50,075 47,303 50,075 50,136 50,136 50,136 50,136
2013 33,979 46,032 46,032 47,303 78,261 47,303 47,303 47,303 47,303
2014 14,364 70,853 73,741 78,261 20,674 81,196 81,196 81,196
2015 20,500 20,500 20,500 10,344 20,674 49,009
2016 7,603 10,280 10,280 18,877 10,344
2017 9,020 13,527 13,707 10,w
2018 15,805 24,999 28,283 15,361
19,062 38,169 38,272 28,283
22,455 33,017
23,180
Annual Report & Accounts 2018 Motor
Accident 1 Development Year 5 67 8 9 10
year 23 4
193,926
2009 123,525 259,038 261,383 261,383 262,193 262,193 262,193 262,193 263,509 263,509
2010 112,492 165,504 171,134 172,517 173,019 173,073 173,111 173,133 173,133
2011 68,219 152,506 154,377 155,282 155,689 155,689 155,689 155,689
2012 63,079 97,111
2013 80,395 97,103 97,111 97,111 97,111 97,111
2014 158,510 79,374 79,677 79,677 79,677 79,677
2015 264,867 105,426 108,431 108,640 108,640
2016 421,738 191,747 194,142 194,167
2017 454,713 302,273 302,850
2018 549,250
83 Technology and Innovation
Technology and Innovation
84 Annual Report & Accounts 2018
The claims paid triangulations is presented below for the five classes where triangulation methods were used, i.e. for Engineering, Fire, General Accident, Marine and Motor. The
triangulations is based on the Company’s claims paid data as at 31 December 2017 which formed the basis of the results of the actuarial valuation of the insurance contract claims
liabilities carried-out by QED Actuaries. The triangulations have excluded large claims.
Engineering
Development Year
Accident 0 1 2 3456 78 9
Year
2008 1,183,499 9,781,557 20,000,023 20,000,023 20,000,023 20,000,023 20,000,023 20,000,023 20,000,023 20,000,023
2009 2,360,909 43,629,952 43,836,452 43,836,452 43,836,452 43,904,984 43,904,984 43,904,984 43,904,984
2010 7,608,992 37,059,857 63,710,125 64,698,811 64,698,811 64,698,811 64,698,811 64,698,811
2011 16,696,398 24,873,634 40,152,598 40,154,377 40,154,377 40,154,377 40,154,377
2012 46,746,703 52,164,231 52,674,992 52,674,992 52,674,992 52,674,992
2013 19,127,818 20,836,534 25,786,648 25,786,648 25,786,648
2014 9,028,198 9,764,664 11,276,393 11,276,393
2015 2,142,843 5,511,960 5,565,341
2016 11,520,379 19,016,049
2017 10,311,579
Fire
Accident Development Year 78 9
Year 0 1 2 3456
2008
2009 64,227,677 127,911,623 139,232,653 139,232,653 139,232,653 139,232,653 139,232,653 139,232,653 139,232,653 139,232,653
2010 40,937,273 114,548,121 119,212,960 119,212,960 119,221,760 119,221,760 119,221,760 119,221,760 119,221,760
2011 14,058,843 25,577,128 28,222,647 28,222,647 28,222,647 28,222,647 28,222,647
2012 39,764,583 27,677,117
2013 8,850,612 46,860,967 40,169,587 41,941,919 42,117,672 42,117,672 42,117,672
2014 6,956,337 54,436,925 47,200,550 47,200,550 47,200,550 47,200,550
2015 5,541,845 11,581,843 55,374,297 55,562,486 55,562,486
2016 3,417,765 54,129,152 14,140,656 14,140,656
2017 24,041,289 86,090,669 54,398,806
57,529,892
68,692,122
Annual Report & Accounts 2018 General
Accident
Accident Development Year 78 9
Year 0 1 2 34 56
2008
95,246,249 231,689,063 287,336,184 294,342,361 299,209,041 300,519,001 300,943,829 300,943,829
2009 300,943,829
2010 48,806,069 212,396,320 245,761,687 268,392,329 273,225,211 300,485,824 275,620,104
2011 72,051,700 243,040,104 267,087,136 289,460,687 295,997,513 274,384,268 296,851,193 275,846,569 275,846,569
58,395,892 265,524,431 274,452,742 275,299,783 296,140,581 282,450,341
2012 280,333,199 297,189,903
2013 208,905,420 220,670,585
2014 37,324,821 193,808,821 174,350,335 229,483,213 237,666,709 237,666,709
2015 82,796,310 149,999,875 143,357,380 178,716,416 178,716,416
2016 28,862,114 124,631,290 273,897,748 143,804,629
2017 108,959,894 268,393,237
117,719,787 160,358,285
119,275,845
Marine
Accident Development Year 78 9
Year 0 1 2 34 56
2008
2009 10,041,349 42,853,371 103,708,212 103,953,649 103,953,649 103,953,649 103,953,649 103,953,649 103,953,649 103,953,649
2010 31,537,216 64,874,539 100,050,600 100,554,119 100,554,119 100,554,119 100,615,612 100,615,612 100,615,612
2011 28,954,132 45,973,224 47,302,856 47,302,856 47,302,856 47,302,856 47,302,856
2012 50,333,949 99,423,651 46,031,767 119,373,293 119,373,293 157,367,366 157,367,366
2013 14,363,632 44,204,968 114,853,221 44,204,968 44,378,736 44,378,736
2014 41,397,922 44,075,404 44,204,968 44,138,904 44,138,904
2015 9,019,667 13,527,085 44,075,404 13,706,887
2016 20,647,833 37,559,314 13,706,887 Technology and Innovation
2017 47,309,022 63,592,694 39,267,348
45,342,989
85
Motor Technology and Innovation
86 Annual Report & Accounts 2018Accident Development Year 78 9
Year 0 1 2 34 56
2008
2009 442,931,617 656,874,254 672,336,910 673,417,360 674,312,064 674,312,064 674,312,064 674,312,064 674,312,064 674,312,064
421,152,839 587,874,584 595,920,840
2010 595,920,840 596,608,840
2011 256,770,668 387,863,521 396,260,808 596,608,840 596,608,840 596,608,840 596,608,840
227,594,911 295,665,676 299,592,255
2012 397,537,546 398,039,789 398,093,921 398,131,921 398,137,423
2013 120,160,436 172,810,134 172,818,234
2014 113,637,984 144,895,313 148,603,342 300,496,940
2015 118,670,920 188,724,175 197,407,441 300,904,358 300,904,358 300,904,358
2016 250,904,197 327,618,530 328,166,397
2017 400,498,448 415,630,356 172,818,234 172,818,234 172,818,234
593,889,705
148,603,342 148,603,342
199,647,459
Annual Report & Accounts 2018 Sensitivity Analysis
Sensitivity of liabilities to changes in long term valuation assumptions
31 December 2018
In thousands of
Naira
N’000m Base Interest Interest Expenses Expenses Expense Expense Lapses Lapses Mortality Mortality
-10% Inflation Inflation +10% -10% +5% -5%
rate +1% rate -1% +10%
130,236 +2% -2% n/a n/a 136,265 128,818
Individual 135,721 129,889 141,909 139,247
Traditional 1,007,273 1,007,273 1,007,273 135,721 135,151 1,007,273
1,007,273 1,007,273
Individual 54,472 1,007,273 1,007,273 n/a n/a 1,007,273 54,472
Investment 54,472 54,472 581,310 581,310
Linked 581,310 54,472 54,472 581,310 824,342 54,472 54,472 n/a n/a 54,472 824,342
824,342 581,310 581,310 824,342 52,048 52,048
Group DA 52,048 824,342 824,342 52,048 581,310 581,310 n/a n/a 581,310
52,048 52,048 - -
Group Life – UPR - - 824,342 824,342 n/a n/a 824,342
(137,178) (137,178)
Group Life – AUR (137,178) (137,178) 2,512,502 52,048 52,048 52,048 2,511,084
2,517,987 2,521,513
Group Life – -- -0.2% - - n/a n/a - -0.3%
IBNR
(137,178) (137,178) (137,178) (137,178) n/a n/a (137,178)
Additional 2,512,155 2,524,175
reserves 2,517,987 n/a n/a 2,518,532
Reinsurance
Net liability
2,517,417
% change in - -0.2% 0.2% 0.1% 0.0% 0.0% n/a n/a 0.0%
liability
Summary Base Interest Interest Expenses Expenses Expense Expense Lapses Lapses Mortality Mortality
rate +1% rate -1% +10% -10% Inflation Inflation +10% -5%
Individual -10% +5%
Group 1,137,509 +2% -2% n/a 1,136,091
Net liability 1,142,994 1,137,162 1,149,182 1,146,520 1,374,993 n/a n/a 1,143,538 1,374,993 Technology and Innovation
% change in 1,374,993 1,374,993 1,374,993 1,374,993 2,512,502 1,142,994 1,142,424 n/a n/a 1,374,993 2,511,084
liability 2,517,987 2,512,155 2,524,175 2,521,513 n/a n/a 2,518,532
-0.2% 1,374,993 1,374,993 n/a 0.0% -0.3%
- -0.2% 0.2% 0.1%
2,517,987 2,517,417
0.0% 0.0%
87
Sensitivity Analysis Technology and Innovation
Sensitivity of liabilities to changes in long term valuation assumptions88 Annual Report & Accounts 2018
31 December 2017
In thousands of
Naira
N’000m Base Interest Interest Expenses Expenses Expense Expense Lapses Lapses Mortality Mortality
-10% Inflation Inflation +10% -10% +5% -5%
rate +1% rate -1% +10%
147,644 +2% -2% n/a n/a 154,867 152,860
Individual 153,863 150,432 154,223 160,086
Traditional 865,681 865,681 865,681 154,314 153,416 865,681
865,681 865,681
Individual 54,472 865,681 865,681 n/a n/a 865,681 54,472
Investment 54,472 54,472 399,085 399,085
Linked 399,085 54,472 54,472 399,085 54,472 54,472 n/a n/a 54,472
399,085 399,085 33,495 33,495
Group DA 33,495 33,495 642,476 399,085 399,085 n/a n/a 399,085 642,476
642,476 642,476
Group Life – 33,495 33,495 2,345 33,495 33,495 n/a n/a 33,495 2,345
AURR 2,345 642,476 642,476 2,345
(19,487) 642,476 642,476 n/a n/a 642,476 (19,487)
Group Life – UPR (19,487) (19,487) 2,125,711 2,130,927
2,131,930 2,345 2,345 2,138,152 2,345 2,345 n/a n/a 2,345
Group Life – -0.3% 0.0%
IBNR - (19,487) (19,487) 0.3% (19,487) (19,487) n/a n/a (19,487)
2,128,499 2,132,290
Additional 2,132,381 2,131,483 n/a n/a 2,132,933
reserves -0.2% 0.0%
0.0% 0.0% n/a n/a 0.0%
Reinsurance
Net liability
% change in
liability
Summary Base Interest Interest Expenses Expenses Expense Expense Lapses Lapses Mortality Mortality
-10% Inflation Inflation +10% -10% +5% -5%
Individual 1,021,889 rate +1% rate -1% +10%
Group 1,110,041 1,015,670 +2% -2% n/a n/a 1,022,892 1,020,886
Net liability 2,131,930 1,018,458 1,022,249 1,028,111 1,110,041 n/a n/a 1,110,041 1,110,041
% change in 1,110,041 1,110,041 1,110,041 2,125,711 1,022,340 1,021,442 n/a n/a 2,132,933 2,130,927
liability - 2,128,499 2,132,290 2,138,152 n/a n/a
-0.3% 1,110,041 1,110,041 0.0% 0.0%
-0.2% 0.0% 0.3%
2,132,381 2,131,483
0.0% 0.0%
Annual Report & Accounts 2018 Claims Paid Triangulations as at December 2018
Accident 01 2 Development Year 5 67 8 9
Year 34 477,141,815
2009 281,424,502 464,592,107 464,592,107 472,098,371 477,109,263 477,109,263
2010 180,162,677 380,188,154 401,717,216 468,586,368 471,323,561 471,568,305 484,853,581 500,500,485 505,589,923
2011 153,644,033 254,274,204 321,915,739 457,712,600 471,789,466 480,321,754 361,881,546 369,549,891
2012 52,027,718 280,745,091 312,542,468 331,645,092 350,755,232 353,656,121 347,910,067
2013 196,586,494 401,417,665 432,510,562 319,215,664 331,063,753 338,470,106
2014 46,477,074 145,131,119 218,115,996 436,466,007 436,504,689 436,539,635
2015 160,334,381 393,577,318 471,697,519 232,589,064 250,489,372
2016 278,606,005 623,045,424 735,682,370 522,307,531
2017 533,119,661
2018 1,103,175,468
867,708,489
Claims Paid Triangulations as at December 2017
Accident 0 1 2 Development Year 5 6 7 8
Year 34
281,424,502 464,592,107 464,592,107 477,109,263 477,141,815
2009 180,162,677 380,188,154 401,717,216 468,586,368 471,323,561 471,568,305 472,098,371 520,545,794 -
153,644,033 254,274,204 321,915,739 457,712,600 471,789,466 -
2010 349,462,441 370,136,520 499,808,895 504,340,721 -
-
2011 325,067,235 337,508,527 373,537,409 - -
440,646,782 441,201,971 382,400,353 - -
244,773,673 - -
2012 53,378,309 283,111,111 314,908,488 - 350,022,591 - - -
2013 196,586,494 401,417,665 436,403,443 - - - -
2014 147,211,665 220,533,127 - - -- -
2015 47,109,502 412,614,454 500,383,514 - -
2016 165,537,238 722,029,575 -- Technology and Innovation
2017 312,958,358 -
642,455,377 - - --
--
--
89
Technology and Innovation
Capital Management model, risk is measured and steered based on the risk
profile underlying our regulatory capital requirement. By
Capital risk is the risk of company’s capital diminishing that we allow for a consistent view on risk steering and
or attaining below the minimum capital requirement level capitalization under the Solvency II framework. This is
due to the occurrence of certain loss or risk event. The supplemented by economic scenarios and sensitivities.
Group’s objectives with respect to capital management
are to maintain a capital base that is structured to The company steers its portfolio using a comprehensive
exceed regulatory and to best utilize capital allocations. view of risk and return, i.e. results based on the internal
management are to maintain a capital base that is structured risk model, including scenario-based analysis, are actively
to exceed regulatory and to best utilize capital allocations. used for decision making. On one hand, economic risk and
concentrations are actively restricted by means of limits. On
Insurance industry regulator measures the financial the other hand, return on risk capital (RORC) is a key input
strength of Non-life insurers using a solvency margin in the Company. The latter allows us to identify profitable
model, NAICOM generally expect non-life insurers to lines of business on a sustainable basis, which provide
comply with this capital adequacy requirement. This test reasonable profits on allocated risk capital. Therefore, it is
compares insurers’ capital against the risk profile. Section a key criterion for Wapic’s capital allocation decisions.
24 (1) of the Insurance Act, 2003 requires that an insurer
shall in respect of its business other than its life insurance As a Group holding company with presence in Ghana, we
business, maintain at all times a margin of solvency being consider diversification across different business segments
the excess of the value of its admissible assets in Nigeria and geographic regions as a key element in managing
over its liabilities in Nigeria. The solvency margin shall not our risks efficiently by limiting the economic impact of
be less than 15 per centum of the gross premium income any single event and by contributing to relatively stable
less reinsurance premiums paid out during the year results and risk profile in general. Therefore, our aim
under review or the minimum paid-up capital whichever is to maintain a balanced risk profile without bearing
is greater. During the year, the Company has consistently any disproportionately large risk concentrations and
exceeded this minimum. The regulator has the authority to accumulations.
request more extensive reporting and can place restrictions
on the Company’s operations if the Company falls below During the year, the company complied with the minimum
this requirement as deemed necessary. capital requirements and the statutory regulatory solvency
margin requirement. The company continued to maintain its
Wapic is exposed to a variety of risks through its holding established risk-based capitalization position and a linked
company and reinsurance activities. These include market, dividend policy. The company has commenced to link its
credit, underwriting, business, operational, strategic, risk management framework with its capital management
liquidity and reputational risks. With Solvency II being in order to have an optimize capital allocation.
the binding regulatory regime approval of our internal
90 Annual Report & Accounts 2018
Technology and Innovation
The solvency margin for the Company as at 31 December 2018 was as follows;
N’000 N’000
Excess of Assets (Admissible assets) over Liabilities -Solvency Margin 6,629,860
Higher of: 10,372,722
Gross premium written (4,131,014)
Less: Reinsurance paid during the year
Net Premium 6,241,708
15% of Net premium 936,256
Minimum capital base- Non life 3,000,000
The higher thereof:
3,000,000
Surplus in Solvency Margin over minimum capital base
3,629,860
Solvency Ratio
121%
The solvency margin for the Company as at 31 December 2017 was as follows;
N’000 N’000
Excess of Assets (Admissible assets) over Liabilities -Solvency Margin 11,543,390
Higher of: 6,388,069
Gross premium written -2,742,273
Less: Reinsurance paid during the year 3,645,796
Net Premium
15% of Net premium 546,869
Minimum capital base- Non life 3,000,000
The higher thereof:
3,000,000
Surplus in Solvency Margin over minimum capital base 8,543,390
Solvency Ratio 285%
The Company further developed an internal capital adequacy model that assesses the risk of assets, policy liabilities
and other exposures by applying various factors. The model calculates the capital required for each class of the broad
risks identified by the Company and aggregates through co-variance methodology that considers the relationship
among these risk categories.
Annual Report & Accounts 2018 91
Technology and Innovation
92 Annual Report & Accounts 2018
Technology and Innovation
03.
GOVERNANCE
The Board 96
Management Team 100
Subsidiaries 102
Directors, Officers and Professional Advisors 103
Director’s Report 104
Corporate Governance 110
Directors’ Responsibilities 126
Report of the Statutory Audit Committee 127
Customers Complaints Feedback 128
Non Dealing Period Policy 129
Whistle Blowing Policy 134
Annual Report & Accounts 2018 93
Technology and Innovation
The Board
94 Annual Report & Accounts 2018
Technology and Innovation
Annual Report & Accounts 2018 95
Technology and Innovation
AIGBOJE
AIG-IMOUKHUEDE
Chairman
Appointed November 3, 2011
ADAMU
ATTA
Non-Executive Director
Appointed January 1, 2013
Board Committee Membership:
Board Establishment & Remuneration Committee
Board Enterprise Risk Management & Governance Committee
Board Finance, Investment & General Purpose Committee
BABABODE
OSUNKOYA
Independent Non-Executive Director
Appointed January 1, 2013
Board Committee Membership:
Board Audit & Compliance Committee
Board Establishment & Remuneration Committee
Board Enterprise Risk Management & Governance Committee
Board Finance, Investment & General Purpose Committee
Board Information Technology Committee
96 Annual Report & Accounts 2018
Technology and Innovation
BARNABAS
OLISE
Non-Executive Director
Appointed November 3, 2011
Board Committee Membership:
Board Audit & Compliance Committee
Board Enterprise Risk Management & Governance Committee
Board Finance, Investment & General Purpose Committee
Board Information Technology Committee
CHIZOBA
UFOEZE
Non-Executive Director
Appointed January 16, 2014
Board Committee Membership:
Board Audit & Compliance Committee
Board Establishment & Remuneration Committee
Board Enterprise Risk Management & Governance Committee
Board Finance, Investment & General Purpose Committee
IFEYINWA
OSIME
Independent Non-Executive Director
Appointed April 30, 2014
Board Committee Membership:
Board Establishment & Remuneration Committee
Board Enterprise Risk Management & Governance Committee
Board Finance, Investment & General Purpose Committee
Board Information Technology Committee
Annual Report & Accounts 2018 97
Technology and Innovation
OLUSEGUN
OGBONNEWO
Non-Executive Director
Appointed October 25, 2017
Board Committee Membership:
Board Establishment & Remuneration Committee
Board Enterprise Risk Management & Governance Committee
Board Finance, Investment & General Purpose Committee
Board Information Technology Committee
MUTIU
SUNMONU
Non-Executive Director
Appointed January 30, 2019
Board Committee Membership:
Board Enterprise Risk Management & Governance Committee
Board Finance, Investment & General Purpose Committee
ADEYINKA
ADEKOYA
Managing Director/Chief Executive Officer
Appointed November 1, 2015
Board Committee Membership:
Board Enterprise Risk Management & Governance Committee
Board Finance, Investment & General Purpose Committee
Board Information Technology Committee
98 Annual Report & Accounts 2018
Technology and Innovation
FEMI
OBALEKE
Executive Director
Appointed January 16, 2014
Board Committee Membership:
Board Finance, Investment & General Purpose Committee
PETER
EHIMHEN
Executive Director, Technical Operations
Appointed October 26, 2016
Board Committee Membership:
Board Enterprise Risk Management & Governance Committee
Board Finance, Investment & General Purpose Committee
BODE
OJENIYI
Executive Director
Appointed January 16, 2014
Board Committee Membership:
Board Enterprise Risk Management & Governance Committee
Board Finance, Investment & General Purpose Committee
Annual Report & Accounts 2018 99
Technology and Innovation
Management Team
Adeyinka Adekoya Oyebode Ojeniyi Olufemi Obaleke
Managing Director Executive Director, Sales and Executive Director,
Sales and Distribution
Distribution
Peter Ehimhen Aina Akintonde Patrick Osadebe
Executive Director, Group Head, Service and Group Head, Retail Sales and
Technical Operations
Fulfilment Distribution Division
100 Annual Report & Accounts 2018
The words you are searching are inside this book. To get more targeted content, please make full-text search by clicking here.
Wapic 2018 Annual Report mon
Discover the best professional documents and content resources in AnyFlip Document Base.
Search