DANAWEWN
2019 Annual Report
Page 1 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
CONTENT
Overview................................................. 3 Statement of Profit or Loss and Other
Notice of 22nd Annual General Meeting. 4 Comprehensive Income......................... 57
Corporate Information........................... 5 Statement of Changes in Equity............. 58
Results at a Glance................................. 6 Statement of Cash Flows........................ 59
Financial Highlights................................ 8 Notes to the Financial Statements.......... 60
Chairman's Statement............................ 10 Management's Discussion and
Financial Statements Analysis......................................... 127
Directors' Report.................................... 14 Other National Disclosures
Statement of Directors' Responsibilities 18 Statement of Value Added..................... 134
Corporate Governance Report.............. 19 Financial Summary................................. 135
Report of the Audit Committee............. 25 List of Unpaid Dividend........................ 137
Board Evaluation Report ...................... 26 Proxy Form............................................. 139
Sustainability Report............................. 28 Full Dematerialization Form for
Independent Auditor's Report............... 29 Migration................................................ 141
Statement of Significant Accounting E-Dividend Mandate Activation Form .. 143
Policies ................................................... 33 E-Service/Data Update Form ............... 145
Statement of Financial Position............. 56 Share Portal Application Form .............. 147
SAVINGS | EDUCATION | PROTECTION | ENDOWMENT | MORTGAGE | ANNUITY
Visit: www.armlife.com.ng | Call: 01 271 5002 | Email: [email protected] Living Benefits
Page 3 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
About ARM Life
ARM Life Plc is a life insurance company with a everything we do. We offer Living Benefit solutions
vision to be a leading provider of protection and in two forms Term Life and Whole Life Insurance
wealth creation solutions in Nigeria. Our via life cover packages, critical illness, protection,
customers trust us to safeguard their financial annuities and savings products to cater to any of
security and stay committed to the promises we your life needs.
make. The company is licensed and regulated by
the National Insurance Commission of Nigeria ARM Life's parent company, Asset & Resource
(NAICOM) to underwrite life, annuity and health Management (ARM) Company is Nigeria’s fastest
insurance. growing non-bank financial services firm.
Established in 1994, ARM started operations as a
Our overarching objective is to be a trusted partner traditional asset management company
to our clients, creating unmatched value by specializing in the management of quoted equities
providing effective protection and wealth creation and fixed income securities, today the company
solutions. ARM Life has a good track record in the has evolved into the largest, diversified, asset
group life insurance sector with favourable management Company in Nigeria, with extensive
references across the industry. asset management expertise covering Pension
Fund Administration, Investment Management,
At ARM Life our customer service driven strategy, Real Estate, Trusteeship, Stock brokerage services
drive for operational excellence and value driven and Specialized Funds.
financial products are at the foundation of
Savings Savings Education
Plan Plus Plan
Plan
Annuity Our Memorial
Benefit Plan
Family Plans
Welfare Mortgage
Plan
Plan
Triple Protection
Plan Plan
Cash Back
Plan
Overview
Page 4 ARM Life Plc
Annual Report & Financial Statements
NOTICE OF 22ND ANNUAL For the year ended 31 December 2019
GENERAL MEETING
NOTICE IS HEREBY GIVEN that the 22nd Annual therefore required to appoint a proxy of their choice from the
General Meeting of ARM Life Plc (“the Company”) will be list of nominated proxies below:
held at The Darlington Hall, Plot CDE Industrial Crescent, i. Mr. Dipo Okuribido
Off Town Planning Way, Ilupeju, Lagos, Nigeria on ii. Mr. Ehimare Idiahi
Tuesday, 15th December, 2020 at 10:00am to transact iii. Mr. Osahon Ogiemudia
the following business: iv. Mr. Stephen Alangbo
Ordinary Business Audit Committee
As stipulated by Section 404(6) of the Companies and Allied
1. To receive the Audited Financial Statements for the year Matters Act 2020, any member may nominate a Shareholder
ended December 31, 2019 and the Report of the for election to the Audit Committee by giving notice in
Directors and Auditors thereon; writing of such nomination to the Company Secretary at
least 21 days before the Annual General Meeting. Please note
2. To re-elect Directors; that that the constitution of the audit committee under the
Companies and Allied Matters Act 2020 is five members
3. To authorize the Directors to appoint Auditors for the comprising three shareholders and two non-executive
financial year ending December 31, 2020 and to fix the directors. Any nomination not received prior to the meeting
Remuneration of the Auditors; and as stipulated shall be invalid.
4. To elect members of the Statutory Audit Committee Audited Financial Statements
Copies of the Audited Financial Statements of the Company
Special Business shall be available at www.armlife.com.ng and the underlisted
locations:
1. To ratify the appointment of Mr. Livingstone i. Africa Prudential Plc, 220B, Ikorodu Road, Palmgrove,
Magorimbo as a Director of the Company;
Lagos;
2. To ratify the appointment of Mr. Dipo Okuribido as a ii. ARM Life Living Benefits Center, 22 Funsho Williams
Director of the Company;
Avenue, Alaka, Surulere, Lagos;
3. To ratify the appointment of Mr. Eric Idiahi as a iii. ARM Life Living Benefits Center, 95B Opebi Road,
Director of the Company;
Ikeja, Lagos;
4. To ratify the appointment of Mr. Osahon Ogiemudia iv. ARM Life Living Benefits Center, Prime Plaza, Plot 187,
as a Director of the Company;
Ademola Adetokunbo Crescent, Abuja;
5. To ratify the appointment of Mr. Femi Oyetunji as a v. ARM Life Living Benefits Center, 12 Circular Road,
Director of the Company;
Presidential Estate, GRA Phase II, Port Harcourt.
Proxy
A member of the Company entitled to attend and vote at the Dated this 16th day of November, 2020
Annual General Meeting is entitled to appoint a proxy in his
stead. All instruments of proxy should be completed and By Order of the Board
deposited at the office of the Company's Registrars, Africa For: CLP LEGAL
Prudential Plc, 220B, Ikorodu Road, Palmgrove, Lagos,
Nigeria not later than 48 hours before the time of holding the Mr. Olurotimi Aju
meeting.
A Proxy need not be a member of the company. A proxy form
is printed at the back of the Audited Financial Statements.
Shareholders should note that the Corporate Affairs
Commission has in view of the Covid-19 pandemic and
following the Government's restriction on public gathering
approved that attendance to the Meeting shall only be by
proxy to ensure public health and safety. Shareholders are
Notice of 22nd Annual General Meeting
Page 5 ARM Life Plc
Annual Report & Financial Statements
CORPORATE For the year ended 31 December 2019
INFORMATION
Name of directors: Dapo Oshinusi - Chairman
Stephen Alangbo - Managing Director
Osahon Ogiemudia - Executive Director (Resigned October, 2019)
Femi Ogundeji - Executive Director
Anthony Ikpea - Non-Executive Director
Jumoke Ogundare - Non-Executive Director
Dominic Liber (South African) - Non-Executive Director
Femi Oyetunji (Dr.) - Non-Executive Director
Sadiq Mohammed - Non-Executive Director
Oladimeji Alo (Dr.) - Non-Executive Director (Independent)
Abayomi Sanni - Non-Executive Director (Independent)
Registered office: 22, Funsho Williams Avenue
Surulere, Lagos
RC number: 58532
FRC number: FRC/2013/0000000000538
Company secretary: CLP Legal
FRCN/2014/NBA/00000008430
62, Awolowo Road,
Ikoyi, Lagos
Auditors: Deloitte & Touche
Civic Towers
Plot GA 1, Ozumba Mbadiwe Avenue
Victoria Island
Lagos
Tel: +234 (01) 9041700
www.deloitte.com.ng
Major bankers: Access Bank Plc
First Bank of Nigeria Limited
Guaranty Trust Bank Plc
Heritage Bank Limited
Polaris Bank Plc
Sterling Bank Plc
Unity Bank Plc
Zenith Bank Plc
United Bank for Africa Plc
Custodian: Zenith Pension Custodian Limited
Citibank Incorporated (Custodial services)
Actuary: E&Y Advisory (Actuarial) Services
Reinsurers: Africa Reinsurance Corporation
Continental Reinsurance Plc
Registrar: Africa Prudential Plc
220B, Ikorodu Road, Palmgrove, Lagos
www.africaprudential.com
Corporate Information
Page 6 ARM Life Plc
Annual Report & Financial Statements
RESULT For the year ended 31 December 2019
AT A GLANCE
2019 2018 Change
Comprehensive income statement N'000 N'000 %
Gross premium written
Gross premium Income 9,569,464 5,835,987 64%
Net premium income 9,521,042 5,699,115 67%
Underwriting result 9,123,620 5,378,364 70%
Investment income (3,531,926) 6001%
Net income 3,532,546 59,854 92%
Profit before tax 2,744,947 1,840,569 29%
Profit for the year 1,131,262 2,126,101 49%
Statement of Financial Position 1,069,209 47%
Total assets 759,062
Insurance contract liabilities 725,747
Investment contract liabilites
Total liabilites 32,925,848 21,089,178 56%
Shareholders' funds 22,461,255 12,990,301 73%
4,134,889 3,086,961 34%
27,817,417 17,079,229 63%
5,108,431 4,009,949 27%
Result at a Glance
Page 7 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
NGN 1,131,262,000
Profit Before Tax
NGN 1,069,209,000
Profit After Tax
Institutional Retail Annuity
15% 7% 78%
Result at a Glance
Page 8 ARM Life Plc
Annual Report & Financial Statements
FINANCIAL For the year ended 31 December 2019
HIGHLIGHTS
Gross Prmium Written Gross Premium Income
N'million N'million
3,621,800 3,580,983
2017 2017
5,835,987 2018 5,699,115
2018
9,569,464 9,521,042
2019 2019
Underwriting Result -121,774 59,854 Investment Income
N'million N'million
2017 3,532,546
6000% 2018 92%
2019
-3,531,926 1,364,739
2017
1,840,569
2018
2019
Profit After Tax Shareholders' fund 3,233,939
N'million N'million 4,009,949
5,108,431
453,658 27%
2017 2017
2018
725,747 2019
2018
1,069,209
2019
Financial Highlights
Page 9 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
Total Assets 16,132,394 Policyholders' Fund
N'million 21,089,178 N'million
32,925,848
56% 65%
2017 12,220,317
2018 2017
2019 16,077,262
2018
26,596,144
2019
Insurance Contract Liabilities 22,461,255 Investment Contract Liabilities
N'million N'million
73% 34%
9,690,314 2,530,003
2017 2017
12,990,301 3,086,961
2018 2018
2019 4,134,889
2019
Financial Highlights
Page 10 ARM Life Plc
Annual Report & Financial Statements
CHAIRMAN’S For the year ended 31 December 2019
STATEMENT
Distinguished Shareholders, ladies, and gentlemen, on behalf foreign exchange rates were relatively stable, trading between
of the Board, I welcome you to the 22nd Annual General N360 and N365/$1USD at the official market.
Meeting of ARM Life Plc.
The Insurance Sector
I am happy to announce that your Company posted decent The Insurance sector recorded relatively slow growth of 7%
results in 2019, and an improved performance over previous in 2019 with a contribution to total GDP of N558 Billion.
years. I hereby present to you a review of our operating This total premium recorded by the insurance industry as a
environment and a summary of our Company's performance sub-sector of the financial services sector represented 14% of
for the financial year ended 31st December 2019. the sector's total output in real terms as at the end of Q4 2019.
Towards the end of the 2019 financial year, the National
Review of the Operating Environment Insurance Commission (NAICOM) re-introduced a new
In 2019, the global economy grew by 2.9%, a moderate recapitalisation policy after the Tier Based Minimum
growth when compared with the 3.6% recorded in 2018, Solvency Capital (TBMSC) policy was suspended in 2018.
arising from a slowdown in both advanced and emerging This new policy prescribed the attainment of N8 Billion
markets. The resultant weakness in the external sector borne capital for a Life Insurance Company like your company by
out of the trade war rhetoric between the US and China, 31st December 2020. The policy is aimed at expanding the
aided by weakened investments, led to the year-on-year capital base of insurance companies with the goal of
slowdown in the global economy. In emerging and developing enhancing their risk-bearing capacities.
markets, economic growth slowed to 3.7% in 2019 (FY 2018:
4.5%) mainly on the lingering trade rift, which led to Highlights of our Performance
deceleration in growth, as global demand and investments Despite the challenges and stunted growth in the economy on
weakened during the year. Other factors such as the the domestic front, your Company recorded a strong financial
geopolitical tensions in Iran and Venezuela as well as weather performance. The gross premium written increased by 64%
related disasters in the Caribbean, Eastern and Southern to N9.56 billion from N5.83 billion in 2018, primarily driven
African further amplified the gloomy growth picture. In sub- by the annuity business, and to a lesser extent, the growth of
Saharan Africa, economic growth slowed to 3.1% from 3.2% the individual and group life segments. Claims ratio as a
recorded in 2018, following the downward trajectory of the proportion of premium income increased marginally from
global economy. 9% in 2018 to 10% in 2019, demonstrating the sustained
success of the disciplined underwriting and risk management
The Nigerian economy grew by 2.3% in 2019 outperforming practices the Company introduced in previous years despite
the 1.93% growth experienced in 2018. The uptick was a the growth in premium. Robust investment management
reflection of expansion in both oil and non-oil sectors with strategies and a growing portfolio also resulted in increased
growth of 4.6% and 2.1% respectively. In specific terms, investment income relative to previous years, despite reduced
higher crude production along with growth in Services and yields, boosting your company's overall revenue performance
Agricultural sectors anchored the improved economic by 92%. The Company returned a profit before tax of N1.13
growth. In addition, an interplay of factors such as increased billion for the year 2019 against N0.759 billion in 2018,
food production, relative stability in premium motor spirit representing an increase of 49% over the previous year.
(PMS) prices amongst others drove average inflation rate Similarly, total assets and shareholders' funds grew by 56%
lower at 11.39% in 2019 (FY 18: 12.2%). On monetary and 27% to N32.9 billion and N5.11 billion respectively – up
policies, the Central Bank of Nigeria (CBN) reduced the from N21.1 billion and N4.01 billion in 2018. Other details of
official monetary policy rate by 50 basis points to 13.5% early the company's financial performance are provided in the
in 2019, turning to a more dovish monetary stance to support financial statements.
economic growth. This was further fuelled by the restriction
of domestic non-bank investors from its Open Market Board changes
Operations (OMO). The Nigerian Stock Exchange index was In the course of the year, Mr. Osahon Ogiemudia, Executive
down 14.6% in 2019, with market capitalisation at Director, Corporate Services, resigned from the company.
N12.97trillion at the end of 2019. In the course of the year, Mr Ogiemudia, who joined the Board in January 2017, has
Chairman's Statement
Page 11 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
been renominated to the Board as a Non-Executive Director December 2020, while the N8 billion capital base will be
subject to NAICOM's approval. achieved by 30 September 2021 via a merger with another
company in the Life Insurance Sector. This will be facilitated
Looking Ahead by the conclusion of the divestment of controlling shares held
by ARM Traditional Asset Management Company to
The outbreak of the novel coronavirus (COVID-19) poses a Tangerine Life Insurance Limited.
significant threat to the Nigerian economy. The pandemic has We remain optimistic for the future of your company as it goes
left consumer spending depressed, oil prices plummeted and through a new phase in the recapitalisation and merger
increased surge in unemployment rate. Consequently, the process and be rest assured that we will continue to deliver
International Monetary Fund (IMF) expects the Country's unparalleled and seamless services to our esteemed clients.
economy to contract by 5.4% in 2020. This impact will be
materially felt by individuals and institutions in the small and On a final note, the Board assures you of its continued
medium enterprise (SME) sectors whose disposable income obligation to the delivery of optimal returns.
and revenue respectively continue to be depleted by the rising
inflation rate accompanying the impact of the pandemic. I thank all our shareholders, customers and employees for
The new Minimum Capital requirement which was initially their unflinching support and dedication to our company.
suspended in 2019 by NAICOM has been reintroduced via a
segmented compliance model. Thus, a life insurance Mr. Dapo Oshinusi
company is expected to have a minimum paid up capital of Chairman
N4 billion by 31 December 2020 and N8 billion by 30
September 2021. Your company currently has adequate paid-
up capital to meet up with the requirement of N4 billion by 31
Chairman's Statement
USSD Codes
Simply dial
*737*50*Amount*25#
Savings | Education | Protection | Endowment | Mortgage | Annuity
Visit: www.armlife.com.ng | Call: 01 271 5002 | Email: [email protected] Living Benefits
Page 13 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
FINANCIAL STATEMENTS
AND DIRECTORS’
& AUDITORS’ REPORTS
Directors' Report.................................... 14
Statement of Directors' Responsibilities 18
Corporate Governance Report.............. 19
Report of the Audit Committee............. 25
Board Evaluation Report ...................... 26
Sustainability Report............................. 28
Independent Auditor's Report............... 29
Statement of Significant Accounting
Policies ................................................... 33
Statement of Financial Position............. 56
Statement of Profit or Loss and Other
Comprehensive Income......................... 57
Statement of Changes in Equity............. 58
Statement of Cash Flows........................ 59
Notes to the Financial Statements.......... 60
Management's Discussion and
Analysis......................................... 127
Page 14 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
DIRECTORS’
REPORT
For the year ended 31 December 2018
The directors are pleased to present their report on the affairs of ARM Life Plc, together with the audited financial statements
and the auditor's report for the year ended 31 December 2019.
Legal form and principal activity:
ARM Life Plc was incorporated in Nigeria on 13th October 1983 under the Companies and Allied Matters Act as First Nigeria
Life Insurance Company. The Company obtained its certificate of registration as an insurer in November 1983. It commenced
operations in October 1989 and changed its name in 1998 to Equity Life Insurance Company Limited. In 2008, the Company
changed its name to CrystaLife Assurance Plc and became a Public Limited Liability Company in February 2010. Following the
acquisition of majority shareholding by Asset & Resource Management Company Limited, the Company changed its name and
corporate identity to ARM Life Plc in July 2013.
Effective 1 January 2015, the Company transferred the shares held by Asset & Resource Management Company Limited in
ARM Life Plc to ARM Traditional Asset Management Company Limited.
The address of its registered office is 22, Funsho Williams Avenue, Alaka, Surulere, Lagos.
The principal business of the Company is providing risk underwriting, annuities and claims settlement for group businesses and
individuals in Nigeria. ARM Life is authorised and regulated by the National Insurance Commission (RIC No 012).
Operating results:
The following is a summary of the Company's operating results:
31-Dec-2019 31-Dec-2018
N'000 N'000
Gross premium written 9,569,464 5,835,987
Profit before taxation 1,131,262 759,062
Taxation (62,053) (33,315)
Profit after taxation 1,069,209 725,747
Transfer to contingency reserve (111,901) (56,991)
Changes in IFRS 9 impairment provision 25,496 (97,290)
Retained surplus for the year 571,466
Retained deficit beginning of year 982,804 (3,133,968)
(2,562,502)
Retained deficit end of year (1,579,698) (2,562,502)
Earnings per share – basic and diluted (in kobo) 11 8
Directors’ Report
Page 15 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
Directors and their interests:
The directors of the Company who held office during the year were as follows:
Dapo Oshinusi - Chairman
Stephen Alangbo - Managing Director
Osahon Ogiemudia - Executive Director (Resigned October, 2019)
Femi Ogundeji - Executive Director
Anthony Ikpea - Non-Executive Director
Jumoke Ogundare - Non-Executive Director
Dominic Liber (South African) - Non-Executive Director (South African)
Femi Oyetunji (Dr.) - Non-Executive Director
Sadiq Mohammed - Non-Executive Director
Oladimeji Alo (Dr.) - Non-Executive Director (Independent)
Abayomi Sanni - Non-Executive Director (Independent)
Directors shareholding
The following Directors have direct/indirect shareholding in the Company:
Direct Shareholding Indirect Shareholding
Number of 50k ordinary shares held
2019 2018 2019 2018
800,000,000 800,000,000
Anthony Ikpea -- 7,195,283,207 5,335,667,823
Jumoke Ogundare and Sadiq Mohammed
--
Major shareholding
According to the Register of Members, no shareholder other than the under-mentioned held more than 5% of the issued share
capital of the Company as at 31 December 2019:
2019 2019 2018 2018
No. of Shares % Holding No. of Shares % Holding
'000 '000
ARM Traditional Asset Management Company 7,195,283 75.16 5,335,668 75.16
Platinum Capital Limited 1,000,000 10.45 1,000,000 10.45
Cashcraft Asset Management Limited 5.85 8.36
560,000 800,000
Analysis of shareholding
The analysis of the distribution of the shares of the Company at the end of the financial year is as follows:
Share range No. of % of No. of
Shareholders Holdings Holdings
Local Shareholders 216 8.55 818,637,
1 - 500,000,000 2 16.29 1,560,000,000
585500,000,001 - 1,000,000,000 1 75.16 7,195,283,207
1,000,000,001 - Above
Total 219 100 9,573,920,792
Directors’ Report
Page 16 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
Directors' interest in contracts:
None of the directors has notified the Company, for the purpose of section 277 of the Companies and Allied Matters Act, of their
direct or indirect interest in contracts or proposed contracts with the Company during the year.
Property and equipment:
Information relating to changes in property and equipment during the year is given in Note 25 to the financial statements.
Donations and charitable gifts:
The Company made no donations during the year (2018: nil)
Employment of disabled persons:
The Company operates a non-discriminatory policy on recruitment. Applications by disabled persons are always fully
considered, bearing in mind the respective aptitudes and abilities of the applicants concerned.
In the event of members of staff becoming disabled, every effort is made to ensure that their employment with the Company
continues and that appropriate training is arranged. It is the policy of the Company that the training, career development and
promotion of disabled persons should, as far as possible, be identical with those of other employees. During the year under review,
there was one disabled person in the Company's employment.
Health, safety and welfare of employees:
The Company's employees are adequately insured against occupational hazards. In addition, medical facilities at specified limits
are provided to employees and their immediate families at the Company's expense.
Employee training and development:
The Company places considerable value on the involvement of its employees and has continued its practice of keeping them
informed on matters affecting them as employees and the various factors affecting the performance of the Company. This is
achieved through regular meetings between management and staff of the Company. Furthermore, the Company provides
training and development opportunities for its employees within and outside the shores of Nigeria.
Gender analysis:
The number and percentage of male and female employed during the financial year vis-à-vis total workforce was as follows::
31 December 2019: Male Female Male Female
Employees Number Number
Percentage Percentage
91 83
52% 48%
Gender analysis of the board and top 10 1 91% 9%
management is as follows:
Board 5 0 100% 0%
Top Management
Detailed analysis of the top management 1 0 100% 0%
is as follows:
Managing Director 2 0 100% 0%
Executive Director
General Manager 2 0 100% 0%
Directors’ Report
Page 17 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
31 December 2018: Male Female Male Female
Employees Number Number
Percentage Percentage
73 44
62% 38%
Gender analysis of the board and top management is as follows:
Board 10 1 91% 9%
- 100% 0%
Top Management 5
Detailed analysis of the top management is as follows: 1 - 100% 0%
Managing Director 2 - 100% 0%
Executive Director 2 - 100% 0%
General Manager
Acquisition of own shares:
The Company did not purchase any of its own shares during the year.
Auditors:
The Auditors, Messrs. Deloitte & Touche were re-appointed during the year as Auditors of the company in line with S.357(1) of
CAMA CAP C20 LFN 2004. The Auditors, having satisfied the requirement of NAICOM and the company, have indicated their
willingness to continue in office during the year.
BY ORDER OF THE BOARD
For: CLP Legal (Company Secretary)
Mr. Rotimi Aju
FRCN/2014/NBA/00000008430
62, Awolowo Road,
Ikoyi, Lagos
04 March, 2020
Directors’ Report
Page 18 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
STATEMENT OF DIRECTORS’
RESPONSIBILITIES
in relation to the financial statements for the year ended 31 December 2019
The Directors accept responsibility for the preparation of the financial statements that give a true and fair view of the
statement of the financial position of the Company at the reporting date and of its comprehensive income in the
manner required by the Companies and Allied Matters Act of Nigeria and the Nigerian Insurance Act. The
responsibilities, include ensuring that the Company:
i. keeps proper accounting records that disclose, with reasonable accuracy, the financial position of the
Company and comply with the requirements of the Companies and Allied Matters Act and the Insurance Act;
ii. establishes adequate internal controls to safeguard its assets and to prevent and detect fraud and other
irregularities; and
iii. prepares its financial statements using suitable accounting policies supported by reasonable and prudent
judgments and estimates, that are consistently applied.
The Directors accept responsibility for the financial statements, which have been prepared using appropriate
accounting policies supported by reasonable and prudent judgments and estimates, in compliance with:
l· International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards
Board (IASB);
l· the requirements of the Insurance Act;
l· relevant guidelines and circulars issued by the National Insurance Commission (NAICOM);
l· the requirements of the Companies and Allied Matters Act; and
l· Financial Reporting Council of Nigeria Act.
The Directors further accept responsibility for the maintenance of accounting records that may be relied upon in the
preparation of financial statements, as well as adequate systems of internal financial control.
The Directors have assessed the Company's ability to continue as a going concern and have no reason to believe that
the Company will not remain a going concern in the year ahead.
SIGNED ON BEHALF OF THE BOARD OF DIRECTORS BY:
___________________________ ____________________________
Stephen Alangbo Dapo Oshinusi
(Managing Director) (Chairman)
FRC/2017/CIIN/00000016217 FRC/2013/IODN/00000004529
04 March, 2020 04 March, 2020
Directors’ Report
Page 19 ARM Life Plc
Annual Report & Financial Statements
CORPORATE For the year ended 31 December 2019
GOVERNANCE REPORT
a. Introduction:
ARM Life Plc has in place an effective governance mechanism that ensures proper over-sight of its business, by the
directors and other principal organs of the Company, and also carries on its business in a manner that engenders public
trust and confidence while meeting the expectations of all stakeholders.
In pursuit of this objective, we consistently reappraise our processes to ensure that the Company operates in line with the
global standards of corporate governance at all times.
b. Shareholding:
The Company is a subsidiary of ARM Traditional Asset Management Company Limited.
c. Board of Directors:
The tone for proper corporate governance by the Company is set by the Board.
Besides possessing the requisite academic qualifications and experience in Board affairs, directors are kept abreast of their
responsibilities and are conversant with the Company's business.
The directors are, therefore, able to exercise sound judgment on matters relating to the Company's business.
d. Board structure :
The Board is made up of a Chairman, a Managing Director, two (2) Executive Directors and seven (7) Non-Executive
Directors. Two of the directors were appointed on the basis of independence in compliance with extant corporate
governance practice.
The Managing Director is responsible for the day to day running of the Company, assisted by the Management
Committee.
e. Responsibilities of the Board:
The effectiveness of the Board is achieved through a mix of seasoned and highly skilled individuals who have the required
skills and professional success to bring independent and valued contribution to the Board meeting.
The directors are responsible for the following:
l Ensuring that the Company's financial statements reflect a true and fair view of the Company's financial position,
financial performance and cash flow.
l Compliance with all statutory regulations relating to the Company's business.
l Appointments of key management personnel in the Company.
l Implementing an effective organizational structure with clearly stated job descriptions, authority levels and working
relationships.
l Approval of quarterly, half-yearly and full year financial statements (whether audited or unaudited) and any
significant change in accounting policies and/or practices.
l Creating an appropriate board structure, size and composition; including, but not limited to, appointment and
removal of directors, determining board committee membership and succession planning for the board and senior
management.
l Approval in relation to major changes to the Company's corporate structure and business activities.
Corporate Governance Report
Page 20 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
The Board members who served during the financial year were as follows:
Board of Directors:
Dapo Oshinusi - Chairman
Stephen Alangbo - Managing Director
Osahon Ogiemudia - Executive Director (Resigned October, 2019)
Femi Ogundeji - Executive Director
Anthony Ikpea - Non-Executive Director
Jumoke Ogundare - Non-Executive Director
Dominic Liber (South African) - Non-Executive Director
Femi Oyetunji (Dr.) - Non-Executive Director
Sadiq Mohammed - Non-Executive Director
Abayomi Sanni - Non-Executive Director (Independent)
Oladimeji Alo (Dr.) - Non-Executive Director (Independent)
The Board meets at least every quarter but may hold extra-ordinary sessions to address urgent matters requiring its
attention.
Separation of role of Chairman from the Managing Director:
The way and manner the company structured the roles of the Chairman and the Managing Director has assisted in
averting overlaps of roles. The Chairman, who is first among equals is responsible for the overall leadership of the Board
and for creating enabling environment for the effectiveness of individual directors, while the Managing Director is
responsible for the day-to-day running of the company to achieve overall efficiency of management controls. This is in
accordance with the NAICOM's guidelines on Code of Good Corporate Governance for Insurance Industry and the
National Code of Corporate Governance (as amended).
f. Board Committees:
The Board carries out its oversight functions using its various committees. This method makes for efficiency and allows for
a deeper attention to specific matters. The committees are set up in line with statutory and regulatory requirements and
are consistent with global best practices.
Membership of the committees of the board is intended to make the best use of the skills and experience of Non-
Executive Directors in particular.
The committees have well defined terms of reference and charters defining their scope of responsibilities in such a way as
to avoid overlap of functions.
The committees of the Board meet quarterly but may hold extraordinary sessions as the business of the Company
demands.
The following are the current standing Committees of the Board:
i. Finance, Investment and General Purpose Committee:
This committee is made up of six (6) members. The committee is responsible for financial strategy and
management, and monitors performance, procurement and other administrative matters. It also oversees the
Company's investment activities, ensures adherence to policies and guidelines, approve investment benchmarks,
review investment performance and provide oversight over investment risk management.
Corporate Governance Report
Page 21 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
The membership of the Committee is as follows:
Jumoke Ogundare - Non- Executive Director (Chairman)
Stephen Alangbo - Managing Director
Osahon Ogiemudia - Executive Director (Resigned October, 2019)
Femi Ogundeji - Executive Director
Anthony Ikpea - Non- Executive Director
Sadiq Mohammed - Non- Executive Director
ii. Enterprise Risk Management and Governance Committee:
This Committee is made up of eight (8) members. It oversees and reviews Company's risk profile, risk management
and corporate governance frameworks, and the risk reward strategy determined by the Board. It is also charged
with the responsibility of nominating and appointing of Board members, conducting board evaluation, succession
planning, developing appropriate policies on the remuneration of Directors; and overseeing the recruitment,
compensation, promotion and disciplinary processes affecting senior officers of the Company.
The membership of the Committee is as follows:
Femi Oyetunji (Dr.) - Non-Executive Director (Chairman)
Stephen Alangbo - Managing Director
Osahon Ogiemudia - Executive Director (Resigned October, 2019)
Femi Ogundeji - Executive Director
Dominic Liber (South African) - Non-Executive Director
Sadiq Mohammed - Non-Executive Director
Jumoke Ogundare - Non-Executive Director
Oladimeji Alo (Dr.) - Non-Executive Director (Independent)
iii. Audit and Compliance Committee:
The Committee is established in line with Section 359(6) of the Companies and Allied Matters Act. The
Committee has oversight responsibility for the Company's financial statements. The Committee comprises 6
members, headed by a Chairman, with 5 Members, containing 2 Non-Executive Directors and 3 shareholders.
The tenure of the members of this committee is renewed annually.
The Committee reviews established Company procedures to reveal irregularities and ensure the accuracy of data
and information provided in audited financial statements. The Committee also reviews
the internal audit report on a regular basis at least quarterly. The Committee ensures that the audited financial
statements are in compliance with statutory requirements and the relevant accounting and reporting framework.
The Committee chairman reports formally to the board on its proceedings after each meeting on all matters within
its functions and responsibilities. The committee makes recommendations to the board as it deems appropriate on
any area within its purview where action and / or improvement is needed.
The Committee has oversight responsibility for the internal and external audit function and the adequacy of the
control environment. The Chief Internal Auditor has access to this Committee and makes quarterly presentations
to its members.
Corporate Governance Report
Page 22 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
The membership of the Committee is as follows:
Abayomi Sanni - Chairman (Independent Non-Executive Director)
Oladimeji Alo (Dr.) - Member (Independent)
Anthony Ikpea - Member (Non-Executive Director)
Gozie Alozieuwa - Member (replaced Temitayo Sogbola in July 2019)
Godwin Eboigbe - Member
Julius Araga - Member
v. Management Committees:
These are Committees comprising of senior management of the Company. They are set to ensure that all risk
limits as contained in Board and regulatory policies are complied with at all times. They provide inputs for the
respective Board Committees and also ensure that recommendations of the Board Committees are effectively and
efficiently implemented. They also deal with specific matters relating to the Company as the circumstances
arise.
The Committees are risk driven as they are set up to identify, analyse, synthesize and make recommendations on
risks arising from within the Company's operating environment.
The Committees meet as frequently as risk issues occur to immediately take actions and decisions within the
confines of their powers. The Committees include the Executive Management Committee and Management
Investment Committee and Management Risk Committee.
v (a) Executive Management Committee:
The Executive Management Committee comprises Managing Director, Executive Director (Technical), Executive
Director (Corporate services), Chief Finance Officer and Chief Sales Officer. The management team meets
fortnightly to discuss matters relating to the business and activities of the Company, the implementation of the
Board's policies and decisions and also to deal with specific matters relating to the Company as the circumstances
arise.
The management team meets to discuss issues relating to the different units and the Company as a whole.
v (b) Management Investment Committee (MIC):
This Committee reports to the Board Investment Committee on the investment activities of the Company. The
Committee meets monthly to discuss and review the investment portfolio of the Company.
The Committee members are as follow:
Managing Director - Chairperson
Executive Director, Corporate services - Member
Chief Financial Officer - Member
Head, Internal Audit - Member
Head, Risk Management - Ex-officio
Investment Officer - Ex-officio (Secretary)
v (c) Management Risk Committee:
The purpose of the Management Risk Committee is to perform a centralized oversight and policy setting of risk
Corporate Governance Report
Page 23 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
management activities and to provide communication to the Management of the Company regarding important
risks and related risk management activities.
The Committee assists Management in fulfilling its responsibilities in relation to the oversight of risk and
adherence to internal risk management policies and procedures.
The Committee members include:
Managing Director - Chairperson
Executive Director, Technical - Member
Executive Director, Corporate Services - Member
Chief Financial Officer - Member
Chief Sales Officer - Member
Head, Technical Operations - Member
Head, ICT - Member
Head, Internal Audit - Member
Head, Internal Control - Member
Head, Actuarial - Member
Head, Customer Experience - Member
Risk Management (Secretary) - Member
BOARD AND BOARD COMMITTEES MEETINGS
The table below shows the frequency of the meetings of the Board of Directors, Board Committees and members' attendance at
these meetings during the year under review:
Directors Board Finance, Enterprise Risk
Investment & Management &
General Purpose
Governance
Committee Committee
Number of Meetings 5 44
Attendance 5 N/A N/A
Dapo Oshinusi
Stephen Alangbo 5 44
Osahon Ogiemudia
Jumoke Ogundare 5 44
Oladimeji Alo (Dr.)
Dominic Liber (South African) 5 44
Anthony Ikpea
Femi Oyetunji (Dr.) 5 N/A 4
Sadiq Mohammed
Abayomi Sanni 4 N/A 2
Femi Ogundeji
4 4 N/A
5 N/A 4
5 44
5 N/A N/A
5 44
The table below shows the frequency of the meetings of the Audit Committee and members' attendance at these meetings during
the year under review:
Corporate Governance Report
Page 24 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
Members Audit & Compliance Committee
Number of Meetings 5
Attendance 5
Oladimeji Alo (Dr.) 4
Anthony Ikpea 2
Gozie Alozieuwa (Appointed July 2019) 3
Temitayo Sogbola (Resigned July 2019) 5
Godwin Eboigbe 5
Abayomi Sanni 5
Julius Araga
g. Relationship with shareholders:
The members of the Company have the overall decision-making powers in respect of the Company. At the Annual
General Meeting, members are given the opportunity to air their views and give advice on issues relating to the Company's
overall performance for the year. The meeting is conducted in a fair and transparent manner where the regulators such as
the National Insurance Commission, the Corporate Affairs Commission and the external auditors are invited.
h. Protection of shareholders rights:
The Board ensures the protection of the statutory and general rights of shareholders at all times, particularly their right to
attend and vote at general meetings. All shareholders are treated equally, regardless of volume of shareholding or social
status.
i. Communication policy:
The Board of Directors at its meetings receives updates and information from management to enable the Board make
deliberations, discuss issues, pass resolutions and advise management on internal operations.
Furthermore, the Board and the management of the Company ensures that communication and dissemination of
information regarding the operations and management of the Company to shareholders, stakeholders and the general
public is timely, accurate and continuous, to give a balanced and fair view of the Company's financial and non-financial
matters.
The Company's website: www.armlife.com.ng is updated regularly to provide information to the shareholders,
stakeholders and the general public on the activities of the Company.
In order to reach its overall goal on information dissemination, the Company is guided by certain principles, legislation
and codes of corporate governance of the jurisdiction within which it operates. These legislations and codes of corporate
governance include the Insurance Act, the NAICOM Operational Guidelines, the Companies and Allied Matters Act
(CAMA) and the Codes of Corporate Governance issued by NAICOM and Financial Reporting Council of Nigeria.
The principles that guide the Company's information dissemination include the following;
l Accuracy: The Company uses modern communication technologies to ensure that the information provided on its
website are accurate and reflect a fair view of the Company's financial position.
l Transparency: The Company appreciates the responsibility entrusted to it by its clients and stakeholders and as
such providing the necessary information is a responsibility the Company cherishes whilst not undermining the
confidentiality of information between the Company and clients.
l Simplicity: The information provided by the Company is clear, straightforward and without ambiguity.
l Criticism: The opinion of stakeholders is taken into consideration by the Company, upon the receipt of same.
Corporate Governance Report
Page 25 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
REPORT OF THE AUDIT
AND COMPLIANCE COMMITTEE
To the members of ARM Life Plc
In accordance with the provisions of Section 359 (6) of the Companies and Allied Matters Act of Nigeria, the members of the
Audit Committee of ARM Life Plc hereby report on the financial statements for the year ended 31 December, 2019, as follows:
l We have exercised our statutory functions under Section 359 (6) of the Companies and Allied Matters Act of Nigeria and
acknowledge the co-operation of management and staff in the conduct of these responsibilities.
l We are of the opinion that the accounting and reporting policies of the Company conform to the legal requirements and
agreed ethical practices and that the scope and planning of both the external and internal audits for the year ended 31
December, 2019 were satisfactory and reinforce the Company's internal control systems.
l We have deliberated with the external auditors, who have confirmed that necessary cooperation was received from
management in the course of their statutory audit and we are satisfied with management's responses to the External Auditor's
recommendations on accounting and internal control matters and with the effectiveness of the Company's system of
accounting and internal control.
Abayomi Sanni (Chairman)
FRC/2013/ICAN/00000000788
27 February, 2020
Members of the Committee
Abayomi Sanni - Chairman
Oladimeji Alo (Dr.) - Member
Anthony Ikpea - Member
Godwin Eboigbe - Member
Gozie Alozieuwa - Member (Appointed July 2019)
Temitayo Sogbola - Member (Resigned July 2019)
Julius Araga - Member
Report of The Audit Committee
BOARD EVALUATION REPORT
For The Board Of ARM Life Plc
EXECUTIVE SUMMARY
The Society for Corporate Governance Nigeria was engaged to conduct an independent evaluation/assessment of the
performance of the Board of ARM Life Plc for 2019 as part of stipulated regulatory requirement.
ARM Life Plc, a subsidiary of the ARM group, is a life insurance company duly licensed by the National Insurance Commission
(NAICOM) with its governance structures & policies guided by the minimum Governance requirements outlined by the Nigerian
Insurance Commission (NAICOM), Securities and Exchange Commission (SEC) and Nigerian codes of corporate governance.
Based on this, the Board & Board committees were evaluated along ten pillars of corporate governance as stipulated by principles
of the regulatory codes and four (4) basic recommended best practices for board & corporate governance effectiveness.
Below is a summary of our findings:
Leadership: The Chairman of the Board has fostered an environment that encourages and supports the active participation
and contribution of board members at meetings, adequately presiding over meeting & providing guidance & leadership for the
Board. He does not serve as chairman or member of any board committees as required by extant governance codes. According to
our analysis the Chairman has been rated 90% in facilitating effective leadership for the Board.
Board Composition & Capacity: The Board has an adequate balance of skills, gender, cultural mix and appropriate mix of
executive, non-executive and independent directors needed to effectively govern the company without compromising
competency, independence & integrity. The structure and composition of the Board is rated 100% in effectiveness in fulfilling its
mandate of overseeing, monitoring, directing, and controlling company's activities.
Board Meetings: The Board met four (04) times in the year. Directors were fully participatory and demonstrated time
commitment to the business of the company, by achieving an aggregate attendance of 95%. Board Meetings were rated 100% as
meetings held were constructive, aligned to the agenda set out and focused on the business of the company.
Board Committees: The Committees on the board include Board Finance, Enterprise & General-Purpose Committee, Board
Audit and Risk Assessment Committee, Board Nomination, Governance & Remuneration committee. All committees with an
aggregate score of 90% were well structured and relevant to enhancing efficiency in Board processes.
Board oversight Functions: The Board has formulated all necessary policies, documents, Charters & Terms of Reference to
effectively guide the activities of the Board & the company. Whilst some policy documents have been identified as requiring
updating/reviewing, the Board has obtained a score of 80% in its oversight functionality.
Strategy and Planning: The Board is proactive in formulating strategies and plans to ensure the company achieves its
objectives for enhanced and sustained corporate performance and adequately oversight to ensure implementation of strategies.
The Board is hereby rated 100% in Strategy & Planning.
Transparency and Accountability: The Board has established a system for regular dialogue with stakeholders, facilitating
full disclosure of all information material in its processes and activities of the company to stakeholders. It has therefore obtained a
score of 100%.
Director Development: Directors have demonstrated commitment to continual development and attending trainings
relevant to improving their skills for effectively discharging their duties. ARM Life has scored 90% in continuous improvement of
its directors.
Risk Management & Compliance: The Board has constituted a sound framework for managing risks and ensuring an
effective internal control system. Its risk management & compliance capacity is rated 100% in its efficiency.
Company Secretariat Efficiency: The Company Secretary as an integral part of board effectiveness, has ensured timely delivery
of minutes and board papers. Although improvement is required, the Secretariat has been rated 60% in its performance.
Board Information Structure & Dynamics: The board has a sufficient system for ensuring adequate information flow
between executive directors and non-executive directors and scored 100% in this aspect.
Board Processes & Functionality: The Board processes are seamless in ensuring that directors work together and continue
to contribute satisfactorily to the achievement of company's objectives.
Corporate Governance Framework: The Board has institutionalized a system for ensuring its Governance framework and
standards are adequate and functional.
The Board has obtained an overall score of (91.8%) 'Excellent' in regulatory compliance and effectiveness.
In our opinion, most directors take their oversight functions seriously and are committed to the business of the Company. This is
demonstrated by their attendance at Board and Committee meetings and the depth of discussions and resolutions arrived at
during these meetings.
In conducting the evaluation, nothing came to our attention to make us believe that the performance of the Board of Directors
has not been consistent with the criteria set out in the codes of corporate governance.
Overall, the Board has done excellently well in providing strategic leadership as well as promoting ethical culture and responsible
corporate citizenship demonstrating commitment to the principles and practice of good corporate governance and therefore
certified effective.
For: SOCIETY FOR CORPORATE GOVERNANCE NIGERIA
Hilda Nkor (Mrs.)
Chief Executive Officer
FRC/2016/NIM/00000015618
Board Evaluation Report
Page 28 ARM Life Plc
Annual Report & Financial Statements
SUSTAINABILITY For the year ended 31 December 2019
REPORT
ARM Life Plc is passionate and dedicated to meeting Stakeholder needs, the Company conducts her business while contributing
to an environmentally, socially, and economically sustainable future.
The policy is designed in compliance with ISO 26000 guideline which serves as a guide for maintaining best practice
implementation of sustainability in business processes with emphasis on:
- Accountability & Transparency: The Board of Directors, through the MD/CEO ensures the Company's continuous
compliance with any relevant legislation, to meet new business requirements and to identify areas in need of improvement.
- Human Rights: The Firm operates a zero-tolerance level for harsh or inhumane treatment including sexual abuse,
corporal punishment, mental or physical coercion or verbal abuse of employees; nor is there to be the threat of any such
treatment. Also, the Firm believes in open communication amongst Management and staff as the most effective way
communicating concerns and disputes resolution
- Labour Practices: The Firm's labour practices uphold the rights of our employees and ensure that every employee is
treated with dignity and respect. This applies to all employees including temporary, contract, agency, direct and any other
type of worker.
- The Environment: Global warming has become an increasing threat to our environment in recent times; not only locally
but internationally, owing to carbon emissions and radiations. We strive to reduce our energy use, manage our carbon
footprint and decrease our overall exposure to this environmental threat. Among other things, the Firm is committed to
protect the environment by striving to prevent and minimize our contribution to pollution of land, air, and water by
ensuring the appropriate disposal of waste generated during the cause of Business.
- Fair Operating Practices: Our Procurement Policy and Vendor Management practices ensure that diverse suppliers
have the ability to compete in the procurement process and to do business with the Firm; in addition, we ensure that the
social, environmental and ethical commitments of ARM Life are reflected in all customers and suppliers we work with.
- Consumer Issues: ARM Life recognizes the importance of understanding the needs and expectations of our clients. We
want to ensure an enjoyable customer experience at all of our touch points. Our process for monitoring client satisfaction
encompasses regular and frequent communication with the client
- Community Involvement & development: ARM Life constantly draw ideas and opinions from its host communities
and act on them by designing products and services that suit their needs. The Firm is active in community participation and
encourages and supports employee participation in service activities that contribute to our communities.
- Business Ethics and Transparency: Firm upholds the highest standards of ethics. We pride ourselves on maintaining
the highest standards of business integrity in all business interactions. We have a zero-tolerance policy of any and all forms
of bribery, corruption, extortion and embezzlement.
- Health and Safety: ARM Life recognizes that in addition to minimizing the incidence of work-related accidents and
illness, a safe and healthy work environment enhances the quality of products and services, consistency of
production/performance and employee retention and morale.
P.O. Box 965 Deloitte & Touche
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Lagos
Nigeria
Tel: +234 (1) 904 1700
www.deloitte.com.ng
INDEPENDENT
AUDITOR'S REPORT
To the Members of ARM Life Plc
Report on the Audit of the financial statements
Opinion:
We have audited the accompanying financial statements of ARM Life Plc which comprise the statement of financial position as
at 31 December 2019, the statement of profit or loss and other comprehensive income, statement of changes in equity, statement
of cash flow for the year then ended, and the notes to the financial statements including a summary of significant accounting
policies.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of ARM Life Plc as at
31 December, 2019 and the financial performance and cash flows for the year then ended in accordance with the International
Financial Reporting Standards, the Companies and Allied Matters Act Cap C20 LFN 2004, Insurance Act I17 LFN 2004 and
the Financial Reporting Council of Nigeria Act, 2011.
Basis for Opinion:
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those
standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report.
We are independent of the Company in accordance with the Institute of Chartered Accountants of Nigeria (ICAN) Professional
Code of Conduct and Guide for Accountants and other independence requirements applicable to performing audits of financial
statements in Nigeria. We have fulfilled our other ethical responsibilities in accordance with the ICAN Code and in accordance
with other ethical requirements applicable to performing audits in Nigeria. The ICAN Code is consistent with the International
Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (Parts A and B). We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matter:
Key audit matter is the matter that, in our professional judgment, was of most significance in our audit of the financial statements
of the current year. The matter was addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on the matter.
Key Audit Matter How the matter was addressed in the audit
Valuation of Insurance Contracts Loss Reserve
Under IFRS 4, the Company is required to perform Our procedures included the following among others:
liability adequacy test on its insurance contract We assessed and tested the design and operating
liabilities to ensure the carrying value of the liabilities effectiveness of selected key controls over actuarial
is adequate. methodology, integrity of data used in the actuarial
valuation, and the assumptions setting and governance
As disclosed in note 27 to the financial statements, processes used by management related to the valuation
the insurance contract liabilities of the Company of general insurance reserves.
amounted to N22.46 billion [2018: N12.99 billion].
This represents about 81% of the Company total In relation to the particular matters set out above, our
liabilities as at 31 December 2019. substantive testing procedures included the following:
Ø Tested the completeness and accuracy of
Independent Auditor's Report
P.O. Box 965 Deloitte & Touche
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Key Audit Matter How the matter was addressed in the audit
Reserves for losses and loss adjustment expenses underlying claims data utilized by the company's
represent estimates of future payments of reported actuaries in estimating general insurance loss
and unreported claims for losses and related expenses reserves.
as at 31 December 2019. This involves exercise of Ø Utilized information technology audit techniques
significant judgement and use of key inputs and to analyze claims through claims data plausibility
assumptions such as inflation, claims development checks and recalculation of claims development
patterns and regulatory changes. Specifically, long-tail patterns.
lines of business, which often have low frequency, Ø Involved Deloitte's actuarial specialists to
high severity claims settlements, are generally more independently test management's general
difficult to project and subject to greater uncertainties insurance loss reserve studies and evaluate the
than short-tail, high frequency claims. Further, not all reasonableness of the methodology and
catastrophic events can be modelled using actuarial assumptions used against recognized actuarial
methodologies, which increases the degree of practices and industry standards.
judgment needed in estimating general insurance loss Ø Performed independent re-projections on selected
reserves. product lines, particularly focusing on the largest
and most uncertain general insurance reserves.
At the end of each financial year, management For these product lines, our actuarial specialists
employs the services of an external actuary in the compared their re-projected reserves to those
determination of its insurance liability after recorded by the company, and sought to
considering the accuracy and integrity of data used in understand any significant differences.
the valuation. Necessary adjustments are made in the Ø Performed sensitivity testing and evaluated the
financial statements to reflect the liabilities appropriateness of any significant adjustments
determined by the actuary made to management's general insurance reserve
estimates.
Based on the work performed, we determined
whether the methodology and assumptions used by
management in the valuation of insurance contract
liabilities reserves are reasonable and in line with
financial reporting requirements and industry
accepted practice.
Other Information:
The directors are responsible for the other information. The other information comprises the Corporate Governance Report,
Management Commentary, Enterprise Risk Management Report, Directors' Report, Chairman's Statement, Results at a glance
and MD/CEO's review, which we obtained prior to the date of this auditor's report. The other information does not include the
financial statements and our auditor's report thereon.
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated.
Independent Auditor's Report
P.O. Box 965 Deloitte & Touche
Marina Civic Towers
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Nigeria Victoria Island
Lagos
Nigeria
Tel: +234 (1) 904 1700
www.deloitte.com.ng
If, based on the work we have performed on the other information that we obtained prior to the date of this auditor's report, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report in this regard.
Responsibilities of the directors for the Financial Statements:
The directors are responsible for the preparation and fair presentation of the financial statements in accordance with
International Financial Reporting Standards and the requirements of the Companies and Allied Matters Act CAP C20 LFN
2004, Insurance Act I17 2004 and Financial Reporting Council Act, 2011 and for such internal control as the directors determine
is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, the directors are responsible for assessing the Company's ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Statements:
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout
the audit. We also:
l Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
l Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
l Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by the directors.
l Conclude on the appropriateness of the directors' use of the going concern basis of accounting and based on the audit
evidence obtained, whether a material uncertainty exists relating to events or conditions that may cast significant doubt on
the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's
report. However, future events or conditions may cause the Company to continue as a going concern.
l Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether
the company's financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
We communicate with the Audit Committee and the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit
We also provide the Audit Committee and directors with a statement that we have complied with relevant ethical requirements
Independent Auditor's Report
P.O. Box 965 Deloitte & Touche
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regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related safeguards.
From the matters communicated with the audit committee and/or the directors, we determine those matters that were of most
significance in the audit of the financial statements of the current year and are therefore the key audit matters. We describe these
matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing
so would reasonably be expected to outweigh the benefits derivable by the public from such communication.
Report on Other Legal and Regulatory Requirements:
In accordance with the Sixth Schedule of the Companies and Allied Matters Act CAP C20 LFN 2004, and Section 28(2) of the
Insurance Act 117 LFN 2004, we expressly state that:
i) We have obtained all the information and explanation which to the best of our knowledge and belief were necessary for the
purpose of our audit.
ii) The Company has kept proper books of account, so far as appears from our examination of those books.
iii) The Company's statement of financial position and its statement of profit or loss and other comprehensive income are in
agreement with the books of account.
The Company contravened certain sections of the Investment and Securities Act LFN 2007 during the year. The particulars
thereof and penalty paid are as disclosed in Note 44 to the financial statements.
For: Deloitte & Touche
Chartered Accountants
Lagos, Nigeria
16 June, 2020
Engagement partner: David Achugamonu
FRC/2013/ICAN/00000000840
Independent Auditor's Report
Page 33 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
STATEMENT OF SIGNIFICANT
ACCOUNTING POLICIES
I Reporting entity
ARM Life Plc is a public limited liability company incorporated on 13 October 1983 to carry on the business of life
assurance. The Company is a subsidiary of ARM Traditional Asset Management Company Limited. The Company is
incorporated in and domiciled in Nigeria.
The registered office of the Company is: 22, Funsho Williams Avenue, Alaka Bus stop, Alaka, Surulere, Lagos. The
principal business of the Company is providing risk underwriting, annuities and claims settlement for group businesses
and individuals in Nigeria.
II Statement of compliance with International Financial Reporting Standards
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs)
as issued by the International Accounting Standards Board (IASB) and its interpretation committee effective and
available as at 31 December 2019. These financial statements complies with the Companies and Allied Matters Act of
Nigeria, the Insurance Act of Nigeria, relevant National Insurance Commission (NAICOM) guidelines and circulars
and the Financial Reporting Council of Nigeria (FRC) Act, 2011.
The financial statements were authorized for issue by the directors on 04 March, 2020.
III Basis of preparation
(a) Reporting period
The statement of financial position has been prepared for a 12 month period.
(b) Going Concern
The financial statements have been prepared using appropriate accounting policies, supported by reasonable
judgments and estimates. The directors have a reasonable expectation, based on an appropriate assessment of
a comprehensive range of factors, that the Company has adequate resources to continue as going concern for
the foreseeable future.
(c) Functional and presentation currency
The financial statements are presented in Naira, which is the Company's functional currency; except where
indicated, financial information presented in Naira has been rounded to the nearest thousands.
(d) Basis of measurement
The financial statements have been prepared on the historical cost basis except for the following:
l financial instruments at fair value through profit or loss are measured at fair value.
l financial instruments initially measured at fair value and subsequently at amortised cost
l financial instruments at fair value through other comprehensive income are measured at fair value.
l investment properties are measured at fair value.
l insurance and investment contract liabilities are based on actuarial valuations.
(e) Use of estimates and judgment
The preparation of financial statements requires management to make judgments, estimates and assumptions
that affect the application of policies and reported amounts of assets and liabilities, income, and expenses. The
estimates and associated assumptions are based on historical experience and various other factors that are
believed to be reasonable under circumstances, the results of which form the basis of making judgments about
carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates.
Statement of Significant Accounting Policies
Page 34 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting
estimates are recognised thus:
Ÿ ·in the period in which the estimate is revised, if the revision affects only that period, or
Ÿ ·in the period of the revision and future periods, if the revision affects both current and future periods.
Judgments made by management in the application of IFRSs that have significant effect on the financial
statements and estimates with a significant risk of material adjustment are disclosed in note 4 to the financial
statements.
(f) New standards and interpretation not yet adopted
i. Amendments to IFRSs that are mandatorily effective for annual periods beginning on or
after 1 January 2019
A number of standards, interpretations and amendments thereto, had been issued by the IASB which are
effective but do not impact on these financial statements as summarised below:
IFRS 16 Leases
IFRS 16 introduces new or amended requirements with respect to lease accounting. It introduces
significant changes to lessee accounting by removing the distinction between operating and finance lease
and requiring the recognition of a right-of-use asset and a lease liability at commencement for all leases,
except for short-term leases and leases of low value assets. In contrast to lessee accounting, the requirements
for lessor accounting have remained largely unchanged.
The change in definition of a lease mainly relates to the concept of control. IFRS 16 determines whether a
contract contains a lease on the basis of whether the customer has the right to control the use of an
identified asset for a period of time in exchange for consideration. This is in contrast to the focus on 'risks
and rewards' in IAS 17 and IFRIC 4.
Unlike other recent Standards (e.g. IFRS 15), for entities that adopt the new Standard using a full
retrospective approach, IFRS 16 does not provide an exception from the requirement of IAS 8:28(f) to
present the effect of the new Standard on the current period amounts.
Amendments to IFRS 9 Prepayment Features with Negative Compensation
The amendments to IFRS 9 clarify that for the purpose of assessing whether a prepayment feature meets
the 'solely payments of principal and interest' (SPPI) condition, the party exercising the option may pay or
receive reasonable compensation for the prepayment irrespective of the reason for prepayment. In other
words, financial assets with prepayment features with negative compensation do not automatically fail
SPPI.
Amendments to IAS 28 Long-term Interests in Associates and Joint Ventures
The amendment clarifies that IFRS 9, including its impairment requirements, applies to other financial
instruments in an associate or joint venture to which the equity method is not applied. These include long-
term interests that, in substance, form part of the entity's net investment in an associate or joint venture.
The Company applies IFRS 9 to such long-term interests before it applies IAS 28. In applying IFRS 9, the
Company does not take account of any adjustments to the carrying amount of long term interests required
by IAS 28 (i.e., adjustments to the carrying amount of long term interests arising from the allocation of
losses of the investee or assessment of impairment in accordance with IAS 28).
Statement of Significant Accounting Policies
Page 35 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
Annual Improvements to IFRS Standards 2015–2017 Cycle Amendments to IFRS 3
Business Combinations, IFRS 11 Joint Arrangements, IAS 12 Income Taxes and IAS 23
Borrowing Costs
The Annual Improvements include amendments to four Standards:
IAS 12 Income Taxes
The amendments clarify that the Company should recognise the income tax consequences of dividends in
profit or loss, other comprehensive income or equity according to where the Company originally
recognised the transactions that generated the distributable profits. This is the case irrespective of whether
different tax rates apply to distributed and undistributed profits.
IAS 23 Borrowing Costs
The amendments clarify that if any specific borrowing remains outstanding after the related asset is ready
for its intended use or sale, that borrowing becomes part of the funds that an entity borrows generally when
calculating the capitalisation rate on general borrowings.
IFRS 3 Business Combinations
The amendments clarify that when the Company obtains control of a business that is a joint operation, the
Company applies the requirements for a business combination achieved in stages, including remeasuring
its previously held interest (PHI) in the joint operation at fair value. The PHI to be remeasured includes any
unrecognised assets, liabilities and goodwill relating to the joint operation.
IFRS 11 Joint Arrangements
The amendments clarify that when a party that participates in, but does not have joint control of, a joint
operation that is a business obtains joint control of such a joint operation, the Company does not remeasure
its PHI in the joint operation.
Amendments to IAS 19 Employee Benefits Plan Amendment, Curtailment or Settlement
The amendments clarify that the past service cost (or of the gain or loss on settlement) is calculated by
measuring the defined benefit liability (asset) using updated assumptions and comparing benefits offered
and plan assets before and after the plan amendment (or curtailment or settlement) but ignoring the effect
of the asset ceiling (that may arise when the defined benefit plan is in a surplus position). IAS 19 is now clear
that the change in the effect of the asset ceiling that may result from the plan amendment (or curtailment or
settlement) is determined in a second step and is recognised in the normal manner in other comprehensive
income.
IFRIC 23 Uncertainty over Income Tax Treatments
IFRIC 23 sets out how to determine the accounting tax position when there is uncertainty over income tax
treatments. The Interpretation requires the Company to:
- determine whether uncertain tax positions are assessed separately or as a Company; and
- assess whether it is probable that a tax authority will accept an uncertain tax treatment used, or
proposed to be used, by an entity in its income tax filings:
- If yes, the Company should determine its accounting tax position consistently with the tax
treatment used or planned to be used in its income tax filings.
- If no, the Company should reflect the effect of uncertainty in determining its accounting tax
position using either the most likely amount or the expected value method.
Statement of Significant Accounting Policies
Page 36 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
ii. New standards, interpretations and amendments to existing standards that are not yet
effective
At the date of authorisation of these financial statements, the Company has not applied the following new
and revised IFRS Standards that have been issued but are not yet effective;
IFRS 17: Insurance Contracts
IFRS 17 establishes the principles for the recognition, measurement, presentation and disclosure of
insurance contracts and supersedes IFRS 4 Insurance Contracts.
IFRS 17 outlines a general model, which is modified for insurance contracts with direct participation
features, described as the variable fee approach. The general model is simplified if certain criteria are met
by measuring the liability for remaining coverage using the premium allocation approach.
The general model uses current assumptions to estimate the amount, timing and uncertainty of future cash
flows and it explicitly measures the cost of that uncertainty. It takes into account market interest rates and
the impact of policyholders' options and guarantees.
The Standard is effective for annual reporting periods beginning on or after 1 January 2021, with early
application permitted. It is applied retrospectively unless impracticable, in which case the modified
retrospective approach or the fair value approach is applied. An exposure draft Amendments to IFRS 17
addresses concerns and implementation challenges that were identified after IFRS 17 was published. One
of the main changes proposed is the deferral of the date of initial application of IFRS 17 by one year to
annual periods beginning on or after 1 January 2022.
For the purpose of the transition requirements, the date of initial application is the start if the annual
reporting period in which the entity first applies the Standard, and the transition date is the beginning of
the period immediately preceding the date of initial application.
IFRS 10 and IAS 28 (amendments): Sale or Contribution of Assets between an Investor and
its Associate or Joint Venture
The amendments to IFRS 10 and IAS 28 deal with situations where there is a sale or contribution of assets
between an investor and its associate or joint venture. Specifically, the amendments state that gains or losses
resulting from the loss of control of a subsidiary that does not contain a business in a transaction with an
associate or a joint venture that is accounted for using the equity method, are recognised in the parent's
profit or loss only to the extent of the unrelated investors' interests in that associate or joint venture.
Similarly, gains and losses resulting from the re-measurement of investments retained in any former
subsidiary (that has become an associate or a joint venture that is accounted for using the equity method) to
fair value are recognised in the former parent's profit or loss only to the extent of the unrelated investors'
interests in the new associate or joint venture. The effective date of the amendments has yet to be set by the
IASB; however, earlier application of the amendments is permitted. The directors of the Company
anticipate that the application of these amendments may have an impact on the Company's financial
statements in future periods should such transactions arise.
Amendments to IFRS 3: Definition of a business
The amendments clarify that while businesses usually have outputs, outputs are not required for an
integrated set of activities and assets to qualify as a business. To be considered a business an acquired set of
activities and assets must include, at a minimum, an input and a substantive process that together
significantly contribute to the ability to create outputs.
Statement of Significant Accounting Policies
Page 37 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
Additional guidance is provided that helps to determine whether a substantive process has been acquired.
The amendments introduce an optional concentration test that permits a simplified assessment of whether
an acquired set of activities and assets is not a business. Under the optional concentration test, the acquired
set of activities and assets is not a business if substantially all of the fair value of the gross assets acquired is
concentrated in a single identifiable asset or Company of similar assets.
The amendments are applied prospectively to all business combinations and asset acquisitions for which
the acquisition date is on or after the first annual reporting period beginning on or after 1 January 2020,
with early application permitted.
Amendments to IAS 1 and IAS 8: Definition of material
The amendments are intended to make the definition of material in IAS 1 easier to understand and are not
intended to alter the underlying concept of materiality in IFRS Standards. The concept of 'obscuring'
material information with immaterial information has been included as part of the new definition.
The threshold for materiality influencing users has been changed from 'could influence' to 'could
reasonably be expected to influence'.
The definition of material in IAS 8 has been replaced by a reference to the definition of material in IAS 1.
In addition, the IASB amended other Standards and the Conceptual Framework that contain a definition
of material or refer to the term 'material' to ensure consistency.
The amendments are applied prospectively for annual periods beginning on or after 1 January 2020, with
earlier application permitted.
Amendments to References to the Conceptual Framework in IFRS Standards
Together with the revised Conceptual Framework, which became effective upon publication on 29 March
2018, the IASB has also issued Amendments to References to the Conceptual Framework in IFRS
Standards. The document contains amendments to IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS 8, IAS
34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC 20, IFRIC 22, and SIC-32.
Not all amendments, however, update those pronouncements with regard to references to and quotes from
the framework so that they refer to the revised Conceptual Framework. Some pronouncements are only
updated to indicate which version of the Framework they are referencing to (the IASC Framework adopted
by the IASB in 2001, the IASB Framework of 2010, or the new revised Framework of 2018) or to indicate
that definitions in the Standard have not been updated with the new definitions developed in the revised
Conceptual Framework.
The amendments, where they actually are updates, are effective for annual periods beginning on or after 1
January 2020, with early application permitted.
(g) Foreign currency transactions
Transactions in foreign currencies are translated into the functional currency of the Company at the exchange
rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the
exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign
currency are translated into the functional currency at the exchange rate when the fair value was determined.
Non-monetary items that are measured based on historical cost in a foreign currency are translated at the
exchange rate at the date of the transaction. Foreign currency differences are generally recognised in profit or loss.
Statement of Significant Accounting Policies
Page 38 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
However, foreign currency differences arising from the translation of the following items are recognised in OCI:
Ÿ ·Fair value through OCI equity investments (except on impairment, in which case foreign currency differences
that have been recognised in OCI are reclassified to profit or loss).
(h) Segment reporting
An operating segment is a distinguishable component of the Company that is engaged in providing products or
services (business segment), or in providing products or services within a particular economic environment
(geographical segment), which is subject to risks and rewards that are different from those of other segments and
whose operating results are regularly reviewed by the entity's Chief Operating Decision Maker (i.e the Board of
Directors) to make decisions about resources to be allocated to the segment and assess its performance, and for
which discrete financial information is available. The Company's primary format for segment reporting is based
on business segments.
(i) Insurance contracts
The Company issues contracts that transfer insurance risk or financial risk or both.
Contracts under which the Company accepts significant insurance risk from another party (the policy holder) by
agreeing to compensate the policy holder or other beneficiary if a specified uncertain future event (the insured
event) adversely affects the policy holder or other beneficiary are classified as insurance contracts. Insurance risk is
risk other than financial risk, transferred from the holder of the contract to the issuer.
Investment contracts are those contracts that transfer financial risk with no significant insurance risk. See
accounting policy for these contracts under 'Investment contracts' note V (d).
Insurance contracts and investment contracts of the Company consists majorly of life assurance business which
includes annuity and transaction incidental to any such class of business.
(j) Recognition and measurement
(i) Gross premium written
Gross premiums comprise the premiums on insurance contracts entered into during the year, irrespective
of whether they relate in whole or in part to a later accounting period. It is recognised at the point of
attachment of risk to a policy before deducting cost of reinsurance cover and unearned portion of the
premium.
Gross premium on life contract are recognised in the profit or loss account when paid by the policy holder
and are recorded on the date of inception of the policy.
Premiums on reinsurance inward are included in gross written premiums and accounted for as if the
reinsurance was considered direct business, taking into account the product classification of the reinsured
business.
Outward reinsurance premiums are accounted for in the same accounting period as the premiums for
the related direct insurance or reinsurance business assumed.
(ii) Gross premium income
This represents the earned portion of premium received and is recognized as revenue including changes in
unearned premium. Premiums are earned from the date of attachment of risk, over the insurance period,
based on the pattern of risk underwritten. Outward reinsurance premiums are recognized as an expense in
Statement of Significant Accounting Policies
Page 39 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
accordance with the pattern of risk reinsured.
(iii) Unearned premiums
Unearned premiums are those proportions of premiums written in the year that relate to periods of risks
after the reporting date. It is computed separately for each insurance contract using a time proportionate
basis, or another suitable basis for uneven risk contracts.
(iv) Claims expense
Claims expenses consist of all claims arising during the year, together with the movements in the provision
for outstanding claims and the changes in the gross valuation of insurance contract liabilities. Claims
expenses are charged to profit or loss.
(v) Guaranteed annuity
Guaranteed annuity is recognised as an insurance contract.
Annuity premium are recognised as income when received from policy holders, payments to policy holders
are recognised as a reduction in the liability when paid. The amount of insurance risk under contracts with
guaranteed annuity is also dependent on the number of contract holders that will exercise their option
('option take-up rate'). This will depend significantly on the investment conditions that apply when the
options can be exercised. The lower the current market interest rates in relation to the rates implicit in the
guaranteed annuity rates, the more likely it is that contract holders will exercise their options. Continuing
improvements in longevity reflected in current annuity rates will increase the likelihood of contract holders
exercising their options as well as increasing the level of insurance risk borne by the Company under the
annuities issued.
(vi) Claims and policy holders benefit payable
For long term insurance business comprising group life, annuity and individual life insurance schemes,
benefits are recorded as an expense when they are incurred. Claims arising on maturing policies are
recognized when the claim becomes due for payment. Death claims are accounted for on notification.
Surrenders are accounted for on payment. A liability for contractual benefits that are expected to be
incurred in the future is recorded when the premiums are recognized. The liability is determined as the sum
of the expected discounted value of the benefit payments and the future administration expenses that are
directly related to the contract, less the expected discounted value of the theoretical premiums that would
be required to meet the benefits and administration expenses based on the valuation assumptions used (the
valuation premiums). The liability is based on assumptions as to mortality, persistency, maintenance
expenses and investment income that are established at the time the contract is issued.
Where insurance contracts have a single premium or a limited number of premium payments due over a
significantly shorter period than the period during which benefits are provided, the excess of the premiums
payable over the valuation premium is deferred and recognized as income in line with the decrease of
unexpired insurance risk of the contracts in-force or, for annuities in force, in line with the decrease of the
amount of future benefits expected to be paid, the liabilities are recalculated at each reporting date using
the assumptions established at the inception of the contracts.
(vii) Commissions and deferred acquisition costs ("DAC") - see accounting policy (e) and (f)
(viii) Liability adequacy test
At each reporting date, liability adequacy tests are performed to ensure the adequacy of the contract
liabilities net of related DAC. In performing these tests, current best estimates of future contractual cash
flows and claims handling and administration expenses, as well as investment income from the assets
Statement of Significant Accounting Policies
Page 40 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
backing such liabilities, are used. Any deficiency is immediately charged to profit or loss initially by writing
off DAC and by subsequently establishing a provision for losses arising from liability adequacy tests. DAC
are not restated on subsequent measurement of liability adequacy test.
(ix) Reinsurance
The Company cedes reinsurance in the normal course of business for the purpose of limiting its net loss
potential on policies written. Premium ceded comprise written premiums ceded to reinsurers, adjusted for
the reinsurers' share of the movement in the provision for the unearned premiums. Reinsurance
arrangements do not relieve the Company from its direct obligations to its policyholders.
Premium ceded, claims reimbursed and commission recovered are reported directly in profit or loss.
Reinsurance assets
Reinsurance assets represent balances due from reinsurance contracts. Reinsurance assets consist of short-
term balances due from reinsurers, as well as longer term receivables that are dependent on the expected
claims and benefits arising under the related reinsured insurance contracts. Amounts recoverable from or
due to reinsurers are measured consistently with the amounts associated with the reinsured insurance
contracts and in compliance with the terms of each reinsurance contracts.
Prepaid reinsurance
Prepaid reinsurance are those proportions of premiums written in a year that relate to periods of risk after
the statement of financial position date and is reported under reinsurance assets in the statement of
financial position. Prepaid reinsurance premiums are deferred over the term of the underlying direct
insurance policies for risks-attaching contracts and over the term of the reinsurance contract for losses-
occurring contracts.
Reinsurance claims recoveries
Reinsurance recoverable are estimated in manner consistent with the outstanding claims provision and
claims incurred associated with the reinsurer's polices and are in accordance with the related insurance
contract. They are measured at their carrying amount less impairment charges. Amounts recoverable
under reinsurance contracts are assessed for impairment at each reporting date. If there is objective
evidence of impairment, the Company reduces the carrying amount of its insurance assets to its
recoverable amount and recognizes the impairment loss in profit or loss as a result of an event that occurred
after its initial recognition, that the Company may not recover all amounts due and that the event has a
reliably measurable impact on the amounts that the Company will receive from the reinsurer.
(x) Underwriting expenses
Underwriting expenses are made up of acquisition and maintenance expenses comprising commission and
policy expenses and insurance supervision levy.
Underwriting expenses for insurance contracts and investment contracts are recognized as a charge against
profit or loss when incurred except for commission expenses which are deferred to the extent that the costs
are recoverable out of future premiums.
(k) Investment contracts
The Company issues investment contracts with fixed and guaranteed terms (fixed interest rate). The investment
contracts include funds administered for a number of retirement benefit schemes (refer to note Z (ii) on unbundling
of deposit component)
Statement of Significant Accounting Policies
Page 41 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
For investment contracts with fixed and guaranteed terms, the amortized cost basis is used. In this case, the liability
is initially measured at its fair value less transaction costs that are incremental and directly attributable to the
acquisition or issue of the contract.
Subsequent measurement of investment contracts at amortized cost uses the effective interest method. This
method requires the determination of an interest rate (the effective interest rate) that exactly discounts to the net
carrying amount of the financial liability, the estimated future cash payments or receipts through the expected life
of the financial instrument or, when appropriate, a shorter period if the holder has the option to redeem the
instrument earlier than maturity.
The Company re-estimates at each reporting date the expected future cash flows and recalculates the carrying
amount of the financial liability by computing the present value of estimated future cash flows using the financial
liability's original effective interest rate. Any adjustment is immediately recognized as income or expense in profit
or loss.
(l) Fees and commission income
Fees and Commission income is recognized on fees received with respect to ceding businesses in co-assurance and
re-insurance transactions.
(m) Deferred acquisition costs
Deferred acquisition cost are those commission incurred during the financial period arising from the underwriting
or renewing of insurance contracts and/or investment contracts and are deferred to the extent that these costs are
recoverable out of future premiums. All other acquisition costs are recognized as expense when incurred.
(n) (i) Investment income
Investment income comprises interest income earned on financial assets measured at amortised cost and
income earned on trading of securities including all realized and unrealized fair value changes and
dividends. Investment income, other than interest income, is recognized at fair value and on an accrual
basis.
Interest income is recognised in profit or loss as it accrues and is calculated using the effective interest rate
method. The 'effective interest rate' is the rate that exactly discounts the estimated future cash payments
and receipts through the expected life of the financial asset to the carrying amount of the financial asset.
When calculating the effective interest rate, the Company estimates future cash flows considering all
contractual terms of the financial instrument, but not future credit losses. Fees and commissions that form
an integral part of the issue or acquisition of a financial instrument are recognised as an adjustment to the
effective interest rate of the instrument.
(ii) Net trading income
Net trading income comprises gains less losses related to trading assets and liabilities, and includes all
realised and unrealised fair value changes. It also includes the net gain or loss on the disposal of available for
sale financial assets.
(iii) Other operating income
Other operating income comprise income of a secondary nature in relation to the Company's activities,
including gains on disposal of property and equipment, realised foreign exchange gains and other sundry
income.
Statement of Significant Accounting Policies
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Annual Report & Financial Statements
For the year ended 31 December 2019
(h) Dividend income
Dividend is recognised as earned in the period in which the right of receipt is established.
(i) Employee benefits/personnel expenses
Short-term benefits
Short-term employee benefit obligations include wages, salaries and other benefits which the Company has
a present obligation to pay, as a result of employees' services provided up to the reporting date. The accrual
is calculated on an undiscounted basis, using current salary rates.
A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing
plans if the Company has a present legal or constructive obligation to pay this amount as a result of past
service provided by the employee and the obligation can be estimated reliably.
Benefits
Defined contribution plan:
The Company operates a defined contributory retirement scheme as stipulated in the Pension Reform Act
2014. Under the defined contribution scheme, the Company pays fixed contributions of 10% to a separate
entity – Pension Fund Administrators; employees also pay a fixed contribution of 8% to the same entity.
Once the contributions have been paid, the Company retains no legal or constructive obligation to pay
further contributions if the Fund does not hold enough assets to finance benefits accruing under the
retirement benefit plan. The Company's obligations are recognized in profit or loss.
Termination Benefits
Termination benefits are recognised as an expense when the Company is demonstrably committed,
without realistic possibility of withdrawal, to a formal detailed plan to terminate employment before the
normal retirement date. Termination benefits for voluntary redundancies are recognised if the Company
has made an offer encouraging voluntary redundancy, it is probable that the offer will be accepted, and the
number of acceptances can be estimated reliably.
(o) Management expenses
Management expenses are expenses other than claims and underwriting expenses. They include depreciation
expenses and other expenses. They are accounted for on an accrual basis.
(p) Income tax expense
Income tax expense comprises current and deferred tax. Income tax expense is recognised in profit or loss except to
the extent that it relates to items recognised directly in equity, in which case it is recognised in OCI.
The Company is subject to the Companies Income Tax Act (CITA). Total amount of tax payable under CITA is
determined based on the higher of two components, namely company income tax (based on taxable income (or
loss) for the year; and minimum tax (determined based on total profit calculated as 20% of gross income).
Taxes based on taxable profit for the period are treated as current income tax in line with IAS 12; whereas taxes
which are based on gross amounts is outside the scope of IAS 12 and therefore are not treated as current income
tax. Where the minimum tax is higher than the company income tax (CIT), a hybrid tax situation exists. In this
situation, the CIT is recognised in the income tax expense line in the profit or loss and the excess amount is
presented above income tax line as minimum tax.
Statement of Significant Accounting Policies
Page 43 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
The Company Income Tax (CIT) is derived from 30% of the taxable profit, while the National Information
Technology Development Agency (NITDA) levy and Tertiary Education Tax (TET) are derived from 1% of
accounting profits and 2% of assessable profit respectively.
(i) Current tax
Current tax is the expected tax payable or receivable on the taxable income or loss for the year and any
adjustment to tax payable in respect of previous years, using tax rates enacted or substantively enacted at
the reporting date. Current tax also includes any tax arising from dividends.
(ii) Deferred income taxation
Deferred taxation, which arises from timing differences in the recognition of items for accounting and tax
purposes, is calculated using the liability method. Deferred taxation is provided fully on timing differences,
which are expected to reverse at the rate of tax likely to be in force at the time of reversal. A deferred tax
asset is recognized to the extent that it is probable that future taxable profits will be available against which
the associated unused tax losses and deductible temporary differences can be utilized. Deferred tax assets
are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Deferred tax is not recognised for the following temporary differences:
Ÿ the initial recognition of assets or liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit or loss;
Ÿ differences relating to investments in subsidiaries to the extent that they probably will not reverse in the
foreseeable future and differences arising from investment property measured at fair value whose
carrying amount will be recovered through use; and
Ÿ initial recognition of goodwill.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
Additional income taxes that arise from the distribution of dividends are recognised at the same time as the
liability to pay the related dividend is recognised.
Current and deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current
tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable
entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or
their tax assets and liabilities will be realised simultaneously.
(q) Earnings per share
The Company presents basic and diluted earnings per share for its ordinary shares. Basic earnings per share (EPS)
is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted
average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit
or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for
the effects of all dilutive potential ordinary shares.
(r) Cash and cash equivalents
Cash and cash equivalents include notes and coins on hand, unrestricted balances held with banks and highly
liquid financial assets with original maturities of three months or less from the acquisition date that are subject to
an insignificant risk of changes in their fair value, and are used by the Company in the management of its short
term commitments.
Statement of Significant Accounting Policies
Page 44 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
(s) Financial assets and liabilities
(i) Financial assets
Financial assets are classified into the following categories: fair value through profit or loss, fair value
through comprehensive income and amortised cost. The classification by the Company is determined by
management at initial recognition and depends on the purpose for which the investments were acquired.
Classification of financial assets:
(i) Financial assets at fair value through profit or loss:
Financial assets designated at fair value through profit or loss upon initial recognition.
Other financial assets designated as at fair value through profit or loss at initial recognition are those that
are:
Ÿ Separate assets held to match insurance and investment contracts liabilities that are linked to the
changes in fair value of these assets. The designation of these assets to be at fair value through profit or
loss eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred
to as 'an accounting mismatch') that would otherwise arise from measuring assets or liabilities or
recognising the gains and losses on them on different bases; and
Ÿ Managed and whose performance is evaluated on a fair value basis. Information about these financial
assets is provided internally on a fair value basis to the Company's key management personnel. The
Company's investment strategy is to invest in equity and debt securities and to evaluate them with
reference to their fair values. Assets that are part of these portfolios are designated upon initial
recognition at fair value through profi or loss.
Financial assets at FVTPL:
Financial assets at FVTPL are:
Ÿ assets with contractual cash flows that are not SPPI; or/and
Ÿ assets that are held in a business model other than held to collect contractual cash flows or held to collect
and sell; or
Ÿ Assets designated at FVTPL using the fair value option.
These assets are measured at fair value, with any gains/losses arising on remeasurement recognised in
profit or loss.
(ii) Debt instruments at amortised cost or at FVTOCI:
The Company assesses the classification and measurement of a financial asset based on the contractual
cash flow characteristics of the asset and the Company's business model for managing the asset.
For an asset to be classified and measured at amortised cost or at FVTOCI, its contractual terms should give
rise to cash flows that are solely payments of principal and interest on the principal outstanding (SPPI).
For the purpose of SPPI test, principal is the fair value of the financial asset at initial recognition. That
principal amount may change over the life of the financial asset (e.g. if there are repayments of principal).
Interest consists of consideration for the time value of money, for the credit risk associated with the
principal amount outstanding during a particular period of time and for other basic lending risks and costs,
as well as a profit margin. The SPPI assessment is made in the currency in which the financial asset is
denominated.
Contractual cash flows that are SPPI are consistent with a basic lending arrangement. Contractual terms
Statement of Significant Accounting Policies
Page 45 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
that introduce exposure to risks or volatility in the contractual cash flows that are unrelated to a basic
lending arrangement, such as exposure to changes in equity prices or commodity prices, do not give rise to
contractual cash flows that are SPPI. An originated or an acquired financial asset can be a basic lending
arrangement irrespective of whether it is a loan in its legal form.
An assessment of business models for managing financial assets is fundamental to the classification of a
financial asset. The Company determines the business models at a level that reflects how group of financial
assets are managed together to achieve a particular business objective. The Company's business model does
not depend on management's intentions for an individual instrument, therefore the business model
assessment is performed at a higher level of aggregation rather than on an instrument-by-instrument basis.
The Company has more than one business model for managing its financial instruments which reflect how
the Company manages its financial assets in order to generate cash flows. The Company's business models
determine whether cash flows will result from collecting contractual cash flows, selling financial assets or
both.
The Company considers all relevant information available when making the business model assessment.
However this assessment is not performed on the basis of scenarios that the Company does not reasonably
expect to occur, such as so-called 'worst case' or 'stress case' scenarios. The Company takes into account all
relevant evidence available such as:
Ÿ how the performance of the business model and the financial assets held within that business model are
evaluated and reported to the entity's key management personnel;
Ÿ the risks that affect the performance of the business model (and the financial assets held within that
business model) and, in particular, the way in which those risks are managed; and
Ÿ how managers of the business are compensated (e.g. whether the compensation is based on the fair
value of the assets managed or on the contractual cash flows collected).
At initial recognition of a financial asset, the Company determines whether newly recognised financial
assets are part of an existing business model or whether they reflect the commencement of a new business
model. The Company reassess its business models each reporting period to determine whether the business
models have changed since the preceding period. For the current and prior reporting period the Company
has not identified a change in its business models.
When a debt instrument measured at FVTOCI is derecognised, the cumulative gain/loss previously
recognised in OCI is reclassified from equity to profit or loss. In contrast, for an equity investment
designated as measured at FVTOCI, the cumulative gain/loss previously recognised in OCI is not
subsequently reclassified to profit or loss but transferred within equity.
Debt instruments that are subsequently measured at amortised cost or at FVTOCI are subject to
impairment. See note 5b (iii).
In the current and prior reporting period the Company has applied the fair value option and so has
designated debt instruments that meet the amortised cost or FVTOCI criteria as measured at FVTPL.
(iii) Credit-impaired financial assets
A financial asset is 'credit-impaired' when one or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have occurred. Credit-impaired financial assets are
referred to as Stage 3 assets. Evidence of credit-impairment includes observable data about the following
events:
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Annual Report & Financial Statements
For the year ended 31 December 2019
Ÿ significant financial difficulty of the borrower or issuer;
Ÿ a breach of contract such as a default or past due event;
Ÿ the lender of the borrower, for economic or contractual reasons relating to the borrower's financial
difficulty, having granted to the borrower a concession that the lender would not otherwise consider;
Ÿ the disappearance of an active market for a security because of financial difficulties; or
Ÿ the purchase of a financial asset at a deep discount that reflects the incurred credit losses.
It may not be possible to identify a single discrete event—instead, the combined effect of several events may
have caused financial assets to become credit-impaired. The Company assesses whether debt instruments
that are financial assets measured at amortised cost or FVTOCI are credit-impaired at each reporting date.
To assess if sovereign and corporate debt instruments are credit impaired, the Company considers factors
such as bond yields, credit ratings and the ability of the borrower to raise funding.
A loan is considered credit-impaired when a concession is granted to the borrower due to a deterioration in
the borrower's financial condition, unless there is evidence that as a result of granting the concession the
risk of not receiving the contractual cash flows has reduced significantly and there are no other indicators
of impairment. For financial assets where concessions are contemplated but not granted the asset is deemed
credit impaired when there is observable evidence of credit-impairment including meeting the definition
of default. The definition of default (see below) includes unlikeliness to pay indicators and a back-stop if
amounts are overdue for 90 days or more.
(iv) Definition of default
Critical to the determination of ECL is the definition of default. The definition of default is used in
measuring the amount of ECL and in the determination of whether the loss allowance is based on 12-
month or lifetime ECL, as default is a component of the probability of default (PD) which affects both the
measurement of ECLs and the identification of a significant increase in credit risk.
The Company considers the following as constituting an event of default:
Ÿ the borrower is past due more than 90 days on any material credit obligation to the Company; or
Ÿ the borrower is unlikely to pay its credit obligations to the Company in full.
The definition of default is appropriately tailored to reflect different characteristics of different types of
assets. Overdrafts are considered as being past due once the customer has breached an advised limit or has
been advised of a limit smaller than the current amount outstanding.
When assessing if the borrower is unlikely to pay its credit obligation, the Company takes into account both
qualitative and quantitative indicators. The information assessed depends on the type of the asset. The
Company uses a variety of sources of information to assess default which are either developed internally or
obtained from external sources.
(v) Significant increase in credit risk
The Company monitors all financial assets, issued loan commitments and financial guarantee contracts
that are subject to the impairment requirements to assess whether there has been a significant increase in
credit risk since initial recognition. If there has been a significant increase in credit risk the Company will
measure the loss allowance based on lifetime rather than 12-month ECL. The Company's accounting
policy is not to use the practical expedient that financial assets with 'low' credit risk at the reporting date are
deemed not to have had a significant increase in credit risk. As a result the Company monitors all financial
assets, issued loan commitments and financial guarantee contracts that are subject to impairment for
significant increase in credit risk.
Statement of Significant Accounting Policies
Page 47 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
In assessing whether the credit risk on a financial instrument has increased significantly since initial
recognition, the Company compares the risk of a default occurring on the financial instrument at the
reporting date based on the remaining maturity of the instrument with the risk of a default occurring that
was anticipated for the remaining maturity at the current reporting date when the financial instrument was
first recognised. In making this assessment, the Company considers both quantitative and qualitative
information that is reasonable and supportable, including historical experience and forward-looking
information that is available without undue cost or effort, based on the Company's historical experience
and expert credit assessment including forward-looking
Multiple economic scenarios form the basis of determining the probability of default at initial recognition
and at subsequent reporting dates. Different economic scenarios will lead to a different probability of
default. It is the weighting of these different scenarios that forms the basis of a weighted average probability
of default that is used to determine whether credit risk has significantly increased.
As a back-stop when an asset becomes 30 days past due, the Company considers that a significant increase
in credit risk has occurred and the asset is in stage 2 of the impairment model, i.e. the loss allowance is
measured as the lifetime ECL.
(x) Modification and derecognition of financial assets
A modification of a financial asset occurs when the contractual terms governing the cash flows of a
financial asset are renegotiated or otherwise modified between initial recognition and maturity of the
financial asset. A modification affects the amount and/or timing of the contractual cash flows either
immediately or at a future date. In addition, the introduction or adjustment of existing covenants of an
existing loan would constitute a modification even if these new or adjusted covenants do not yet affect the
cash flows immediately but may affect the cash flows depending on whether the covenant is or is not met
(e.g. a change to the increase in the interest rate that arises when covenants are breached).
When a financial asset is modified the Company assesses whether this modification results in derecognition.
In accordance with the Company's policy a modification results in derecognition when it gives rise to
substantially different terms. To determine if the modified terms are substantially different from the
original contractual terms the Company considers the following:
Qualitative factors, such as contractual cash flows after modification are no longer SPPI, change in
currency or change of counterparty, the extent of change in interest rates, maturity, covenants. If these do
not clearly indicate a substantial modification, then;
A quantitative assessment is performed to compare the present value of the remaining contractual cash
flows under the original terms with the contractual cash flows under the revised terms, both amounts
discounted at the original effective interest.
In the case where the financial asset is derecognised the loss allowance for ECL is remeasured at the date of
derecognition to determine the net carrying amount of the asset at that date. The difference between this
revised carrying amount and the fair value of the new financial asset with the new terms will lead to a gain
or loss on derecognition. The new financial asset will have a loss allowance measured based on 12-month
ECL except in the rare occasions where the new loan is considered to be originated-credit impaired. This
applies only in the case where the fair value of the new loan is recognised at a significant discount to its
revised per amount because there remains a high risk of default which has not been reduced by the
modification. The Company monitors credit risk of modified financial assets by evaluating qualitative and
Statement of Significant Accounting Policies
Page 48 ARM Life Plc
Annual Report & Financial Statements
For the year ended 31 December 2019
quantitative information, such as if the borrower is in past due status under the new terms.
When the contractual terms of a financial asset are modified and the modification does not result in
derecognition, the Company determines if the financial asset's credit risk has increased significantly since
initial recognition by comparing:
Ÿ The remaining lifetime PD estimated based on data at initial recognition and the original contractual
terms; with the remaining lifetime PD at the reporting date based on the modified terms.
The Company derecognises a financial asset only when the contractual rights to the asset's cash flows expire
(including expiry arising from a modification with substantially different terms), or when the financial asset
and substantially all the risks and rewards of ownership of the asset are transferred to another entity. If the
Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to
control the transferred asset, the Company recognises its retained interest in the asset and an associated
liability for amounts it may have to pay. If the Company retains substantially all the risks and rewards of
ownership of a transferred financial asset, the Company continues to recognise the financial asset and also
recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and
the sum of the consideration received and receivable and the cumulative gain/loss that had been
recognised in OCI and accumulated in equity is recognised in profit or loss, with the exception of equity
investment designated as measured at FVTOCI, where the cumulative gain/loss previously recognised in
OCI is not subsequently reclassified to profit or loss.
On derecognition of a financial asset other than in its entirety (e.g. when the Company retains an option to
repurchase part of a transferred asset), the Company allocates the previous carrying amount of the
financial asset between the part it continues to recognise under continuing involvement, and the part it no
longer recognises on the basis of the relative fair values of those parts on the date of the transfer. The
difference between the carrying amount allocated to the part that is no longer recognised and the sum of
the consideration received for the part no longer recognised and any cumulative gain/loss allocated to it
that had been recognised in OCI is recognised in profit or loss. A cumulative gain/loss that had been
recognised in OCI is allocated between the part that continues to be recognised and the part that is no
longer recognised on the basis of the relative fair values of those parts. This does not apply for equity
investments designated as measured at FVTOCI, as the cumulative gain/loss previously recognised in OCI
is not subsequently reclassified to profit or loss.
Financial liabilities
Classification and subsequent measurement:
i. Amortized cost,
ii. Fair Value through Profit or Loss (FVTPL)
Financial Liabilities at fair value through profit or loss
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. At initial recognition, the best evidence
of the fair value of a financial instrument is the transaction price (i.e. the fair value of the consideration paid
or received), unless the fair value of that instrument is evidenced by comparison with other observable
current market transactions in the same instrument, without modification or repackaging, or based on
valuation techniques such as discounted cash flow models and option pricing models whose variables
include only data from observable markets.
Statement of Significant Accounting Policies
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ARM Life Annual Report 2019
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