Transcription
Insuring Dreams.Protecting the Future
Zenith General Insurance Company LimitedAnnual Report31 DECEMBER 2016
ContentsZenith General Insurance Company LimitedAnnual Report, 31 December 2016Financial Highlights.1-3Corporate information .4Directors' report .5-13Management's discussion and analysis . .14-22Statement of directors' responsibilities . .23Corporate governance report . .24-28Independent auditor's report . .29-31Reporting entity.32Statement of compliance with International Financial Reporting Standard.32Basis of preparation.32-37Signi cant accounting policies.,,,,,,,,,,,.37-47Required technical and other reserves by NAICOM .47Consolidated and separate statement of pro t or loss and other comprehensive income.48Consolidated and separate statement of nancial position.49Consolidated and separate statement of changes in equity.50-51Consolidated and separate statement of cash ows . .52Notes to the nancial statement1. Risk management .53-1012. Operating segment. .1023. Financial assets and liabilities.103-1064. Gross premium written.1075. Gross premium income. .1076. Reinsurance expenses.107-1087. Fees and commission income .1088. Claims expenses. .108-1099. Underwriting expenses.10910. Investment income .10911. Other operating income .11012. Management expenses.110-11113. Taxation.11114. Cash and cash equivalents.11215. Financial assetsInvestment securities - held to maturity . .112-113Investment securities - available for sale .113-114Loans and receivables.114-115Trade receivables.115-11616. Reinsurance assets.116-11717. Deferred acquisition cost.11718. Other receivables and prepayments.117-11819. Investment in subsidiaries.118-11920. Intangible assets.11921. Property and equipment .120-12322. Statutory deposit.12423. Insurance contract liabilities.124-12624. Investment contract liabilities.12725. Trade payables.12726. Provisions and other payables .127-128
ContentsZenith General Insurance Company LimitedAnnual Report, 31 December 201627. Current income tax liabilities.12828. Deferred taxation.129-13029. Share capital & Share premium.13030. Statutory contingency reserves.130-13131. Retained earnings.13132. Fair value reserves.13133. Earnings per share.13134. Discontinued operations.132-13335. Directors and employees.13436. Related party transaction.13537. Transactions with directors.13638. Contingent liabilities.13639. Capital commitments.13640. Litigations . .13641. Events after the reporting date.13642. Contravention, nes and penalties.136Other national informationI. Hypothecation of insurance assets .138-139ii. Age analysis of outstanding claims.140iii. General business revenue account.141-142iv. Statement of value added.143v. Financial summary.144-145
Zenith General Insurance Company LimitedAnnual Report, 31 December 2016Zenith General Financial HighlightsGPW (N 136GPW ( N M)201611,116201510,90620141.93%PBT (N M)13.65%PBT ( N 5,23620154,6074,3472014
Zenith General Insurance Company LimitedAnnual Report, 31 December 2016Zenith General Financial HighlightsCLAIMS INCURRED (N'M)14.1%201520164,5302,9263,3392014NET CLAIMS INCURRED ( N HOLDERS FUND(N'M)15.3%SHAREHOLDERS FUND ( N 01623,316201520,21217,6742014
Zenith General Insurance Company LimitedAnnual Report, 31 December 2016Zenith General Financial HighlightsTOTAL ASSETS (N'M)7.38%29,529TOTAL ASSETS ( N 38%3201636,626201534,1082014
Zenith General Insurance Company LimitedAnnual Report, 31 December 2016Corporate InformationName of DirectorsRegistered Of ceJim OviaChairmanEbelechukwu NwachukwuManaging DirectorChukwuemeke IgumborNon-Executive DirectorJoseph OnwubuyaNon-Executive DirectorElaine DelaneyNon-Executive DirectorProfessor Oyewusi Ibidapo-ObeNon-Executive (Independent) DirectorVictor AbuleleNon-Executive (Independent) Director13th and 14th Floor,Civic Towers, Ozumba Mbadiwe Avenue,Victoria Island,Lagos.RC Number6761Company SecretaryEmeka Anyaeji13th and 14th Floor,Civic Towers, Ozumba Mbadiwe,Victoria Island,Lagos.AuditorPricewaterhouseCoopersLandmark Towers5B Water Corporation Drive, Oniru, LagosTel 234 1 271700www.pwc.com/ngMajor Banker(s)Zenith Bank PlcFirst Bank of Nigeria LimitedFirst CityMonument Bank LimitedDiamond Bank PlcActuaryHR Nigeria LimitedReinsurersAfrica Reinsurance CorporationMunich Reinsurance Company LimitedGhana Reinsurance Company LimitedSwiss Reinsurance Company LimitedContinental Reinsurance PlcWaica Reinsurance Corporation4
Zenith General Insurance Company LimitedAnnual Report, 31 December 2016Chairman’s statementcountry's foreign reserve, and the persuasive approachemployed by the Federal Government which broughtrelative calmness to the Niger Delta region therebyincreasing crude oil production and its prices atinternational market make us to believe that the worstmay have been over and our economy is on its way outof recession and also poised for a rebound.The Insurance industry also had its share of volatilitywith increased competition and rate rivalry in theindustry, 2016 was indeed a turbulent year. The marketwas undeniably tougher than it has been in the previousyears.Financial performanceDespite the array of challenges confronting theeconomy, Zenith General insurance Company Limitedwas able to thrive in the midst of it all and grow its pro tsyear on year by 13%.Distinguished Stakeholders, it gives me greatpleasure to present you our nancial results forthe year ended December 31, 2016. 2016 wasa year full of trials and challenges for the country and forbusinesses in general with the start of the economicrecession and the fall in value of the naira. However,despite the harsh operating environment, we were ableto weather the storm and demonstrate resilience byimproving on our 2015 nancial results.Economic climateNigeria's economy went into recession of cially in 2016,the rst since 1991. Most sectors of the economy wereplagued with dwindling revenues, excessive in ation,depreciation of the naira, and declining external reserves.The Gross domestic product in Africa's most-populouscountry declined by -2.06 percent compared to theprevious year.Lower prices and a generally low output of oil, Nigeria'sbiggest export, cut government revenue by about half andreduced the foreign currency available to import re nedfuel and factory inputs. A weakening naira contributed toin ation accelerating to the highest level in more than adecade, prompting the Central Bank to increase its keylending rate to a record 14 percent. Nigeria's economicissues were further aggravated by a ve-month delay inapproving spending plans for 2016 needed to stimulatebusiness activity.However, there is light at the end of the tunnel forNigerian Economy based on the gradual increase in the5The gross premium written was increased marginally to8.4 billion as against 8.1billion recorded the previousyear. Our pro t before tax was increased from 4.6billion to 5.2 billion while the earning per share (basic)increased from 310 kobo to 319 kobo respectively.With the gradual recovery of all economic indicatorsand relative stability of Naira, we hope to have betterresults from all indications in the year 2017.ConclusionI hereby express my sincere appreciation to everyonewho has played a part in the Company's 2016 story –the Board of Directors, the Management Team, ourdedicated and hardworking employees, our investors,developmental partners, regulators and our highlyesteemed customers who believed and remained withus.We say thank you for allowing us support your bestinterest.Regards.Jim OviaChairman, Zenith General Insurance Co. Ltd.
Zenith General Insurance Company LimitedAnnual Report, 31 December 2016MD/Chief Executive's Statementgenerated nosedived below projections for the year.Financial scorecardIn spite of all these challenges, our Company was ableto emerge with good performance and remainpro table with a moderate growth ratio. Our grosspremium written was increased to 11.1billion asagainst 10.9billion recorded the previous year. Ourpro t before tax was increased from 4.6billion to5.2billion while earning per share (basic) was increasedfrom 310kobo to 319kobo respectively.As we all know that our company is in the business ofpaying claims, we were able to do this creditably wellwithin the year as our total claims paid in 2016 was tothe tune of 3.3 billion. This translates to an increase of13% from the position in 2015, however we stillmaintained a healthy claims ratio of 30%IntroductionThe Chairman, distinguished Shareholders, fellow boardmembers, Ladies and Gentlemen. It gives me greatpleasure to present the results of our company for the last nancial year ended 31st December 2016.We thought 2015 was challenging due to some certainevents that occurred, especially the general election andchange of government from one political party to anotherbut 2016 proved to be even more challenging forbusinesses to thrive.Economic OutlookAt the start of 2016,we had high expectations of theeconomy and operating environment more so that theincoming government was to prepare and implementtheir full budget for the year hoping that the successfulimplementation will translate to an economic boost, butthe reverse was the case as the economy slipped torecession within the year under review.In ation rate became very high (18.55%) and prices ofgoods and stable consumable became high therebyreducing most individual’s disposable income. Insurancecompanies were de nitely affected by the massive slowdown in economic activity as the volume of revenue6Industry DevelopmentOur regulator, the National Insurance Commission(NAICOM) brought again to the forefront the RiskBased supervision model and a draft roadmap forimplementation was released in October 2016.Weanticipate that this may lead to a number of mergersand capital raising for the industry but we assure ourstakeholders that Zenith Insurance would remainstrong and adequately capitalized.Business OutlookZenith Insurance is strategically growing its branchnetwork with the opening of agency of ces in Uyo,Aba and Ikeja. In 2017, we intend to expand thissigni cantly covering major cities within the shortestpossible time. We are also revamping our retailstrategy with the aim of building our retail portfolio toover 30% of the overall portfolio.We are improving on our channels of distribution tomake use of innovative technology to leverage on ourrobust network and organizational synergies. We arecommitted to excellent service delivery which we arereputed for in the industry.Staff TrainingIn order to improve on the overall productivity of ourstaff, training and professional development havecontinued to receive deserved attention. Series ofseminars and professional trainings are organizedperiodically for our staff to sharpen their skills. As it isour usual practice that every member of staff mustattend at least one job related training and one skill
MD/Chief Executive's StatementZenith General Insurance Company LimitedAnnual Report, 31 December 2016related within the year and we intend to continue this as we believe that our staff are our greatest assets.Let me state here that as we continue to expand, we shall also continue to recognize and reward the dedication andhard work of every member of staff who have distinguished themselves in their various functions.ConclusionOnce again I would like to thank everyone – the Board of Directors, Distinguished Shareholders, valuableCustomers and Brokers who have helped us and have become part and parcel of our success story. You areindeed the reason why we exist.May 2017 be a more prosperous year for everyone.Thank you.Ebelechukwu NwachukwuManaging Director/CEO7
Zenith General Insurance Company LimitedAnnual Report, 31 December 2016Directors’ ReportFor the year ended 31 December 2016The directors have the pleasure in submitting theirannual report together with the auditedConsolidated and Separate nancial statementsfor the year ended 31 December 2016 which disclosesthe state of affairs of the Zenith General InsuranceCompany Limited ("the Company") and its subsidiaries("together referred to as "the Group").The registered of ce of the Company is: 13th & 14thFloor, Civic Towers, Ozumba Mbadiwe Avenue,Victoria Island, Lagos.Up until April 2016, the Company has two whollyowned subsidiaries, Zenith Life Assurance and ZenithMedicare Limited. Zenith Life Assurance is a privatelimited liability company incorporated on 30 March2001 to carry out the business of life assurance.Legal form and principal activityThe Company was incorporated in 1970 as PiccadillyInsurance Company Limited and it was traded in this nameuntil 2003 when it was acquired by Zenith Bank Plc. Thename was changed to Zenith General InsuranceCompany Limited in 2004. Zenith General InsuranceCompany Limited is incorporated in Nigeria under theCompanies and Allied Matters Act as a private limitedcompany and it is domiciled in Nigeria. By 2015 ZenithBank relinquished its stake in the company to VeritasRegistrars in line with regulatory requirements to divest itscore banking operations.Zenith Medicare Limited engages in the provision ofhealth care services through health care providers andfor that purpose is accredited with the National HealthInsurance Scheme. Zenith Life Assurance CompanyLimited, one of the subsidiaries, was disposed duringthe year.The principal activities of the Group are the provision ofMarine insurance, Motor insurance, Accident insurance,Fire insurance, other non-life insurance services, Healthinsurance, Life assurance till April 2016, Claimssettlement and other investment activities.Operating resultsHighlights of the Group’s nancial performanceis as 3,5984,843,598(968,720)Retained earnings for the yearRetained earnings beginning of yearDividend 74,8787,054,891(2,777,500)Retained earnings, end of k453k334kGross premium writtenPro t before taxationTaxationPro t after taxationPro t attributable to the groupPro t from discontinued operationPro t for the yearEarning per share - basic (in kobo)8
Directors' ReportZenith General Insurance Company LimitedAnnual Report, 31 December 2016DividendDuring the 2015 nancial year, the directors declared andpaid a nal dividend of N1 per share on the issued and paidup capital of 1,450,000,000 ordinary share of N1.00 eachfor the year ended 31 December 2015 amounting toN1.45billion. Subsequent to year end and subject toapproval at the next Annual General Meeting, thedirectors proposed a nal dividend of N2.42 (2015:N1.45) per share on the issued and paid up capital ofN1,450,000,000 ordinary shares of N1.00 each forthe nancial year ended 31 December 2016 amountingto N3.509billion (2015: N1.45billion). The naldividend proposed is not re ected in the nancialstatement.Directors proposed a nal dividend of N2.42 (2015: N1.45)per share on the issued and paid up capital of N1,450,000,000ordinary shares of N1.00 eachDirectorsEbelechukwu NwachukwuChukwuemeke IgumborChairmanManaging DirectorNon-ExecutiveElaine DelaneyJoseph OnwubuyaProfessor Oyewusi Ibidapo-ObeNon-Executive DirectorNon-Executive DirectorNon-Executive (Independent) DirectorJim OviaRetirement of DirectorsVictor AbuleleNo director retired during the periodNon-Executive (Independent) Director9
Directors' ReportZenith General Insurance Company LimitedAnnual Report, 31 December 2016For the year ended 31 December 2016Major shareholding31-Dec-2016No. of sharesVeritas Registrars LimitedBlakeney LPHeviben LP and othersBlakeney InvestorsRon Stanley LPAustin Alpha LPOnyx LPPalo Alto LPMenafrika LPCC Development Partners LPIthaca LPBlakeney Sand Hill LPJim OviaAccording to the register of members asat 31 December 2016, no individualshareholder held more than31-Dec-2015% holdingNo. of ,449,999,9995%of the issued of the issued capital of theCompany except the following;31-Dec-2016Veritas Registrars LimitedBlakeney LPHeviben LP and others% holdingNo. of shares1,449,999,999-31-Dec-2015% holding99.99-No. of shares944,275,000% g to the Register of Members, analysis of shareholders based on geographical location is provided below:31 December 2016Number ofshareholdersNumber of holding2Local shareholders1 - 1,000,000,000Foreign shareholders1 - 1,000,000,000-31 December 20152Number ofshareholdersNumber ofshares held1,450,000,0001,450,000,000Number ofshares haresoldingNumber of holding1944,275,00065.12Local shareholders1 - 1,000,000,00011505,725,00034.88Foreign shareholders1 - 1,000,000,000121,450,000,00010010
Directors' ReportZenith General Insurance Company LimitedAnnual Report, 31 December 2016None of the directors has noti ed the Company, for thepurpose of section 277 of the Companies and AlliedMatters Act, of their direct or indirect interest in contractsor proposed contracts with the Group during the year.and promotion of disabled persons should, as far aspossible, be identical with those of other employees.During the year under review there was no disabledperson in its employment.Property and equipmentInformation relating to changes in property andequipment during the year is given in Note 21 to the nancial statements.Employee health, safety and welfareThe Group's employees are adequately insured againstoccupational hazards. In addition, medical facilities atspeci ed limits are provided to employees and theirimmediate families at the Group's expense.Employment of disabled personsThe Group operates a non-discriminatory policy onrecruitment. Applications by disabled persons are alwaysfully considered, bearing in mind the respective aptitudesand abilities of the applicants concerned. In the event ofmembers of staff becoming disabled, every effort is madeto ensure that their employment with the Groupcontinues and that appropriate training is arranged. It is thepolicy of the Group that the training, career development11Employee training and involvementThe Group places considerable value on theinvolvement of its employees and has continued itspractice of keeping them informed on matters affectingthem as employees and the various factors affecting theperformance of the Group. This is achieved throughregular meetings between management and staff of theGroup.
Directors' ReportZenith General Insurance Company LimitedAnnual Report, 31 December 2016Gender analysisThe number and percentage of male and female employed during the nancial year vis-a-vis total workforce was as follow:31 December 129MalePercentage50%FemalePercentage50%Gender analysis of the Board and top management is as follows:Board52771%29%Top ePercentage44%Detailed analysis of the Board and top management is as follows:Assistant ManagerDeputy ManagerManagerSenior ManagerPrincipal ManagerAssistant General ManagerDeputy General ManagerExecutive Director /CEONon-executive DirectorTotal31 December 2015EmployeesFemalePercentage56%Gender analysis of the Board and top management is as follows:BoardTop d analysis of the Board and top management is as follows:Assistant ManagerDeputy ManagerManagerSenior ManagerPrincipal ManagerAssistant General ManagerDeputy General ManagerExecutive Director /CEONon-executive tions and giftsThe Group made no contributions to charitable and non-political organizations during the year. (2015: Nil)Acquisition of own sharesThe Group did not purchase any of its own shares during the year. (2015:Nil)12
Zenith General Insurance Company LimitedAnnual Report, 31 December 2016Directors' ReportEvents after reporting dateThere was no material event subsequent to year end that could impact on the nancial statements.AuditorsMessrs Price waterhouseCoopers (chartered accountants) were appointed as auditor of the company subsequent to the expiration ofthe tenor of the former auditors- Messrs KPMG Professional Services. The new auditors, Messrs PricewaterhouseCoopers(Chartered Accountants) have indicated their willingness to continue as auditors of the company in accordance with section 357 (2) ofthe Companies and Allied Matters Act.By Order of the BoardEmeka AnyaejiCompany SecretaryFRC/2014/NBA/000z0000240913th & 14th Floor, Civic TowerCivic Tower, Ozumba MbadiweVictoria Island, Lagos6th February, 201713
Zenith General Insurance Company LimitedAnnual Report, 31 December 2016Management’s Discussion and AnalysisThis Management’s Discussion and Analysis(“MD&A”) is designed to provide the reader witha greater understanding of the Group’s business,business strategy and performance, as well as how itmanages risk and capital resources.document, and are subject to change after this date.These forward-looking statements are not historicalfacts but re ect the Company’s current expectationsconcerning future results and events. They also re ectmanagement’s current assumptions regarding the risksand uncertainties referred to below and theirrespective impact on the Company. The Companydoes not undertake any obligation to update publicly orto revise any such forward looking statements, unlessrequired by applicable legislation or regulation.In this Annual Report – Financial Review, forwardlooking statements include the Company’s expectationthat:It is intended to enhance the understanding of the auditedannual consolidated nancial statements andaccompanying notes, and should therefore be read inconjunction with these documents. Reference in thisMD&A to the “Company” or to “Zenith GeneralInsurance Company Limited” means, as the context mayrequire, Zenith General Insurance Group and all or someof its subsidiaries.The Company ’s quarterly and annual nancialstatements, its annual returns and other nancialdocuments are available in our various of ces nationwideand with the National Insurance Commission. Unlessotherwise indicated, all nancial information pres
The Insurance industry also had its share of volatility with increased competition and rate rivalry in the industry, 2016 was indeed a turbulent year. The market was undeniably tougher than it has been in the previous years. Financial performance Despite the array of challenges confronting the economy, Zenith General insurance Company Limited
