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Annual Report & Financial Statements


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Profile of Directors
Top Management
Chairmans Report
Managing Directors Report
Directors Report
Certificate of Solvency
Report of the Auditors
Statement of Profit and Loss Account
Statement of Profit and Loss and Other
Comprehensive Income.

Balance Sheet
Statement of Changes in Equity
Cash Flow Statement
Notes to the Financial Statements
Corporate Information
DIRECTORS
Harry Owusu - Chairman
K. Achampong-Kyei - Director
E. Forkuo Kyei - Managing Director
Stephen Enchill (Dr.) - Director
Eddie Safo Kwakye - Director
Grant Kesse (H.E.) - Director
Sir Daniel Charles Gyimah - Director
SECRETARY
Andrew Achampong Kyei (ESQ)
REGISTERED OFFICE:
GLICO House
47 Kwame Nkrumah Avenue
P. O. Box 4251, Adabraka, Accra
AUDITORS:
Osei Kwabena & Associates
Chartered Accountants
98 Miamona Close
South Industrial Area
P. O. Box 10276
Accra North, Accra
SOLICITORS
Edward J. Mettle-Nunoo (ESQ)
Judina Chambers
Evergreen House
Community 4, Tema
BANKERS
Ghana Commercial Bank Ltd
Intercontinental Bank Ghana Ltd
The Trust Bank Ltd
Prudential Bank Ltd
National Investment Bank Ltd
ACTUARIES
Stallion Consultants Limited
P.O. Box CT 38170
Cantonments, Accra
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Annual Report & Financial Statements
3
Harry Owusu
Mr. Harry Owusu holds a BA (Education) Degree from the
University of Cape Coast and Graduate Diploma in
Communication Studies from the University of Ghana, Legon.
He received further training at the Economic Development Institute
of the World Bank, USA, the Development Finance Institute of the
Private Development Corporation of the Philippines and the Duke
Center for International Development, Duke University, North
Carolina, USA.
Between August 2001 and April 2009, he was the Executive
Secretary of the Revenue Agencies Governing Board now Ghana
Revenue Authority.
He has held senior management positions in the National
Investment Bank.
He has also served on several boards of corporations including
Rhecah Buffalo Ghana Limited, Accra Markets Limited, Ghana
Highway Authority, Ghana Stock Exchange, the Novotel Hotel,
Accra, the Gaming Commission, GETFUND and GCNet.
BOARD MEMBERS
PROFILE OF DIRECTORS
Annual Report & Financial Statements
4
Edward Forkuo Kyei
Kwame Achampong-Kyei
Mr. Kwame Achampong-Kyei established GLICO LIFE in 1987 as a
specialist life insurance company at a time when life insurance
business in Ghana was dormant. Today, he has organically grown the
component businesses: GLICO GENERAL, GLICO FINANCIAL,
GLICO HEALTHCARE, GLICO PROPERTIES and GLICO
PENSIONS which constitute the GLICO Group.
He is a visionary entrepreneur and a distinguished Insurance
Executive and practitioner with over thirty-five years active
experience in the insurance/financial industry gained through self
development initiatives, commitment to application of modern
insurance concepts and models both locally and internationally.
Mr. Achampong-Kyei has both academic and professional
qualifications and is an accredited recipient of the International
Quality Award as well as the Gold Award in Life Underwriting.
He is also an esteemed member of the Chartered Insurance Institute
and holds a B.Sc Degree in Business Studies, a Post Graduate
Diploma in Management Studies from the United Kingdom.
Mr. Achampong-Kyei serves as Chairman on the Executive Boards
and Committees of the GLICO GROUP. For thirteen years (1993-
2004), he assisted the National Insurance Commission-Ghana, in
establishing the foundations of the current Insurance Trade
Association as a General Secretary.
PROFILE OF DIRECTORS - Contd.
Mr. Edward Forkuo Kyei is the Chief Executive Officer and
Managing Director of GLICO LIFE. Hither to his appointments,
he held varied management positions within GLICO including
that of the Executive Director of GLICO LIFE.
Mr. Forkuo Kyei joined GLICO in 1992 when he was still a
student and has played a pivotal role in the growth and
success of the organization since its inception in 1987.
His wealth of knowledge and expertise spans across two and
half decades of working within the insurance and financial
service industry.
He is an Associate Member of the Chartered Insurance
Institute (UK), a fellow of Ghana Insurance Institute and a
member of the Life Council of the Ghana Insurers Association.
He also holds an MBA in Finance & Advanced Strategic
Management from Cardiff Business School, London (UK).
Further, he holds an M Sc in Insurance & Risk Management
from Cass Business School (UK). He is also a graduate with a
B Sc in Development Planning from the Kwame Nkrumah
University of Science and Technology (KNUST).
Mr. Forkou Kyei is passionate about insurance and has been
instrumental in the quest to advancing life insurance in Ghana;
he is indeed a valued resource for the Ghana Insurance
industry.
Annual Report & Financial Statements
5
Eddie Safo Kwakye
Mr. Eddie is an accomplished banker and Financial
Analyst, with extensive knowledge and expertise in Finance and
Management, Corporate and Financial Restructuring and Re-
engineering, Investment Advisory Services, Merger and
Acquisitions and Project Design, Set-up and Management.
He holds an MBA in Finance and Bachelor of Arts in Economics from
the University of Ghana, Legon. He is, in addition, an aluminus of top
academic and professional institutions with Certificates/Diplomas in
several courses with these institutions including the World Bank; the
IMF; Crown Agents (UK); University of Virginia, Darden Business
School, USA; Executive Leadership Training Centre, York
University, Toronto, Canada; and Boulders Institute of Microfinance,
Turin, Italy.
His rich working experience spans across local and international
financial institutions in senior and executive management positions
with SG-SSB Bank and Ecobank Transnational Incorporated (ETI).
In addition, he was Advisor and Coordinator for the Financial Sector
as well as Manager of the Financial Sector Reform Programme
(FINSSP / EMCB - FSR) implementation at the Ministry of Finance
(2001-2008).
As Team Leader, Eddie worked with the World Bank/IMF/Donor
Partners on the FINSSP/FSR implementation and also liaised with
financial sector regulators and several financial institutions in Ghana
and the outside world.
Safo Kwakye
Dr. Stephen Enchill
PROFILE OF DIRECTORS - Contd.
Dr. Stephen Enchill is a Business Executive and an Entrepreneur by
practice and a Chartered Accountant by profession. He has
acquired extensive experience in diverse business fields, both in
Ghana and internationally.
Dr. Enchill's working experience started from working with Ghana
Ports and Harbours Authority in 1985. He further acquired additional
skills from working as management person in UAC Ghana Limited
(now Uniliver Ghana Limited), PKF (a firm of Chartered
Accountants), Ghana National Petroleum Corporation, Ikam Limited
and GLICO Life Insurance Company Limited.
Dr. Enchill is currently the Executive Vice Chairman of First Capital
Plus Savings and Loan Limited. He also practises as a Chartered
Accountant and is the Senior Partner of Forbes Consult International
(Chartered Accountants and Management Consultants).
Professionally, he holds the finals of ICA (Ghana) and a
Member/Fellow of Institute of Chartered Accountants, Ghana. He is
also a member of the Association of MBAs (UK); after successfully
graduating from IFM of Manchester University and University of
Wales (UK) with an MBA in Finance and Management. He also
holds a Doctorate Degree in Business Administration with SMC
University in Switzerland.
Dr. Enchill has attended several seminars and courses both in Ghana and outside Ghana to enrich his knowledge base that
gives him urge in all his entrepreneurship business endeavours. As part of his drive, he lectured in Accounting and Financial
Management at the tertiary level and he is also an examiner for Institute of Chartered Accountants (Ghana) for the past 12
years.
Stephen serves on other boards including GLICO General Insurance Limited, First Capital Plus, Action Aid Ghana and
Ekumfiman Rural Bank.
Eddie has deep and extensive corporate governance experiences from serving on Boards of top-notch and diversified
numerous Corporate and Public Institutions. He presently serves on both GLICO Life and GLICO General Boards.
Annual Report & Financial Statements
6
H.E. Grant Ohemeng Kesse
Andrew Achampong-Kyei
Mr. Andrew Achampong-Kyei is a United Kingdom qualified Solicitor
and a Fellow of the Institute of Legal Executives. He has also been
called to the Ghana Bar Association. He is thus qualified to practise
both in Ghana and the United Kingdom.
He has extensive experience as a finance and project lawyer and has
worked with leading law firms in the United Kingdom.
Andrew holds a Bachelor of Law Degree from the University of Kent
(UK) and a Post - Graduate Diploma from the University of
Westminster (UK).
Prior to his appointment, Andrew had been working intermittently with
GLICO throughout schooling, whenever he was in Ghana. He
rejoined GLICO in 2010 as the Head of Legal and Special Risks with
unique skills in Management, Finance and Insurance Business.
Andrew is currently the Company Secretary of GLICO LIFE and sits
on the Executive Committees of the company.
PROFILE OF DIRECTORS - Contd.
His Excellency (H.E) Grant Ohemeng Kesse, a Planning and
Development Consultant, holds a Post-Graduate Diploma in
Planning (Notts), M.Sc. in Transportation Planning (London) and a
Diploma of Imperial College.
He is a Fellow and Past President of Ghana Institute of Planners.
From 1964 to 1976, H.E. Kesse worked in the Civil Service, rising to
the rank of Deputy Director, Town and Country Planning Department.
From 1976 to June 2006, he was the Chief Consultant of Kesse-
Tagoe & Associates, a firm of Planning and Development
Consultants. He was the Chairman of the Board of Directors of
Gemini Life Insurance Company (now GLICO LIFE) from 1995 to
2006.
He was a Member of Okyeman Lands Commission from 1990 to
2004, a Board Member of Ofori Panyin Secondary School,
Kukurantumi from 1991 to 2003 and the Board Chairman of St. Paul
Technical School, Kukurantumi from 1992 to 2002.
H. E. Kesse was also an external Examiner of the Kwame Nkrumah
University of Science and Technology, KNUST from 1974 to 1988,
and a member of the National Development Planning Commission
from 2002 to 2006.
H.E. Kesse was Ghana's Ambassador to the Federal Republic of
Germany, from July 2006 to February 2009 and is currently a Director
of Adonten Community Bank (New Tafo).
Annual Report & Financial Statements
7
PROFILE OF DIRECTORS - Contd.


Sir. Daniel Charles Gyimah
Sir Daniel Charles Gyimah is a professional Chemical Engineer as
well as a Chartered Banker with over thirty (30) years experience. He
is a Fellow of both the Ghana Institution of Engineers and Chartered
Institute of Bankers (Ghana).
For almost a decade, he was the Private Sector Adviser to the Ghana
Mission of the United States Agency for International Development
(USAID).
Sir Gyimah served as the Managing Director of Eximguaranty
Company (Ghana), a company engaged in Financial Guarantees
business in Ghana, from 1998 to 2001. He also served as the
Managing Director of the National Investment Bank from 2001 to
2009.
He has contributed immensely towards the development of many
institutions outside his normal appointments as the Chairman of the
Board of Directors of the Global Food Processing Company, Nestle
(Ghana) Ltd, and the First Ghana Building Company Ltd.
Additionally, Sir Gyimah was the Chairman of the Metro Mass Transit
Company Ltd, a company which runs intra and Inter-City Transport
Services in Ghana. He held Directorship positions of the Global
Petrochemical Company, the TOTAL (Ghana) Ltd and the AU
Development Company Ltd, a real estate development company.
In the field of academia, he was the Chairman of the Council of the
University for Development Studies, and also served as a member of
the Governing Board of the Catholic University of Ghana for ten (10)
years.
Currently, Sir Gyimah is an independent financial and engineering
consultant in the AS Johnson and Associates.

OUR CUSTOMER SERVICE
At GLICO LIFE, we view every interaction with our
clients as an opportunity to grow their confidence in our
brand.
Our strength lies in our dedicated customer services:
our ability to consistently deliver quality and speedy
service to our clients; our ability to set benchmarked
standards; our ability to settle claims promptly and our
ability to offer precise products and services to manage
clients' unique and evolving risks.
Call our Customer Service Hotline on +233 (0)302 218
500 for absolute peace of mind.
F O C U S
Annual Report & Financial Statements
8
MANAGEMENT
Top
Annual Report & Financial Statements
9
CHAIRMANS REPORT
The year 2012 was no different from 2011 in terms of global economic outlook. According to the IMF
World Economic Outlook, October 2012, unemployment showed increasing and broad based
economic sluggishness in the first half of 2012 and no significant improvement in the third quarter.
Global manufacturing slowed sharply and the euro area periphery saw a marked decline in activity
driven by financial difficulties. Spillovers from advanced economies and homegrown difficulties held
back activities in emerging markets and developing economies. The results of these developments are
that growth once again had been weaker than projected. Growth has been forecasted at 1.3% for
advanced economies and 5.3% for emerging markets and developing economies. Although emerging
markets are viewed by most analysts, as the mainstay to ensure world economic growth, they are not
however unaffected by the developments in the developed world.
The Ghanaian economy as a result experienced effects of the economic spillovers. Albeit, it performed
remarkably well. With a stable macro-economic environment, GDP growth for 2012 was projected at
7.1% compared to sub-Saharan projected average growth of 4.8% and global projected growth of 3.2%.
The growth was driven by oil revenues, the services sector and the strong export performance of cocoa
and gold. Ghana's medium-term growth outlook remains positive, thanks to large investments in the
extractive industries, public infrastructure and commercial agriculture.
Inflation also had been on a downward trend since it peaked at 20.7% in June 2009. This fall in inflation
has been driven by a stable political and macroeconomic environment although there were
uncertainties with respect to the 2012 elections. Inflation as at May 2012 was 9.3% and ended at a
single digit of 8.8% and this trend is expected to continue in 2013.

The insurance industry still remained competitive in the year 2012 with the entrance of new companies
compounding the already fierce competition. On the whole, however, the industry continued to post
positive growth in gross written premiums. In 2011, the life sector premium income grew by 44.20% from
GH187,343,779 in 2010 to GH270,176,073 in 2011.
It is important to note the rate of growth of the life premiums and to state that for the past three years, the
life insurance business has contributed more to the industry's total premium income than the motor
business.
Economic Environment
Insurance Industry
Annual Report & Financial Statements
Harry Owusu
(Chairman)
The year just ended, 2012, was a year of achievements and positive
th
milestones as we celebrated in style our 25 anniversary celebrations. Now
GLICO LIFE is an iconic brand and has established itself in the industry as
pacesetters.
GLICO LIFE, Every passing year, GLICO LIFE grows in strength and size; and
I am pleased to report that this year, 2012, we once again achieved impressive
results to the admiration of our stakeholders. Net income before taxation
Overview
amounted to GH 18,505,000 compared to 3,735,000 of the previous year, while total assets increased
from GH 70,838,270 to GH101,209,000 in 2012.
10
CHAIRMANS REPORT - Contd.
If this trend is to continue, it is expected that the life premiums will outgrow the total non-life premiums in
less than five years. Critically, Micro insurance is expected to play a role in the expansion of the life
insurance industry.
The increasing small-and medium-sized informal businesses highlight the need for micro-insurance.
The National Insurance Commission (NIC) in collaboration with the German International Cooperation
(GIZ), have developed specific programs to develop the capacity and provide technical assistance to
companies providing micro-insurance services. Programs have also been designed to develop the
demand side of micro insurance as well.
In this regard, I am confident that there lies a blazing opportunity to penetrate the market and sell more life
insurance policies when the right strategies are adopted.

In 2012, the company realized a net premium of GH36, 022,000 which is a 5% growth over 2011's
performance of GH 34, 421,000.
Net Profit before tax for the year under review was GH 18,505,000. This shows an increase of 395%
when compared to last year's figures of GH 3,735,000.
In 2012, GLICO LIFE paid claims of GH17,199,000. This is a significant increase of 15.94% over the
previous year's claim payment of GH14, 834,000.
With the 2012 net profit position of GH16,374,000, the Board of Directors are proposing dividend of
GH1000, 000.

To boost further our product portfolio and to offer clients value-based solutions, two products Life
Savings Plan and Life Guaranteed Plan were redesigned to meet the exigencies of the markets. The
products are being piloted on the market and a re-launch is expected to take place in 2013.
In 2012, GLICO LIFE further made investments in ICT totaling GH 76,000 to complete the second phase
of its massive upgrade of ICT infrastructure and equipment throughout the organization. Delivery of world
class services to our customers has been greatly enhanced to ensure that we remain the life insurance
company of choice in Ghana

2011 Operating Results
Premium Income
Net Profit Before Tax
Claims
Dividend
New Products
ICT Platform
Annual Report & Financial Statements
11
CHAIRMANS REPORT - Contd.

GLICO LIFE's CSR policy focuses on four key areas: sports, health, education and community
relations. These are embedded at the heart of the organization and cut across all business operations.
GLICO LIFE is always looking for innovative ways to create value and provide value-added solutions to
meet its stakeholders satisfaction.
In 2012, the company spent as much as GH 86,876 in fulfilling its social responsiveness. Some of the
beneficiaries included Otumfuo Osei Tutu, Ghana Black Stars, Kumasi Academy School, Joy FM's
Easter Soup Kitchen's project, Ghana Heart Foundation, Ghana Medical Association, the Ghana
Military among others. GLICO LIFE will continue to support the needs of such institutions that meet our
set criteria.

th th
25 January 2012 saw the official launch of the 25 anniversary of GLICO LIFE. The event was
colourful and saw in attendance chieftains from the industry to grace the occasion. Other events that
were celebrated to mark the occasion included the Brokers Forum, organized to deepen and
strengthen business relations with the insurance brokers; Health Screening & Blood Donation Exercise
to the Korle Bu blood bank; Customer Service and CSR Month organized to reward customers.
On behalf of the Board of Directors, I say a very Big Thank You to the planning and implementation
committee who worked zealously for the successful anniversary celebrations.
The year 2013 is expected to be characterized by shocks of the elections amidst increasing concern
with regard to economic stability and peace of the country. The future for GLICO LIFE is bright with
Ghana's impressive growth rate and the opportunities that lie in the life insurance market.
Life insurance penetration rate is at 3% .although competition keeps increasing almost to cut-throat
levels in the market, there are still opportunities yet untapped for GLICO LIFE to steadily attain
impressive results.
GLICO LIFE will continue to focus on its prudent and sound management practices, customer- centric
approaches to services and good investment portfolio to yield maximum customer returns.

On behalf of the Board, I extend our appreciation to management and staff, stakeholders for their
immense contribution towards the GLICO LIFE's success of 2012. We shall continue to work in unity to
cushion our clients for life. To our clients and the uninsured public, we kindly implore you to be part of the
flourishing GLICO LIFE family.
Thank you.
HARRY OWUSU
CHAIRMAN
Corporate Social Responsibility
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25 Anniversary Celebrations
Outlook for 2013
Acknowledgement
Annual Report & Financial Statements
12
MANAGING DIRECTORS REPORT

Group Life accounted for 18.59% of the total gross premium, while Individual Life made premium
contribution of 49% representing a growth of 11% over 2011.
Other lines of business such as Micro-Insurance and Depositor's Administration/Pension
Scheme together accounted for 32.41% of the total premium realised.
Net profit grew by 39.5% in comparison to last year's figure of GH3,735,000.00. It is heart
warming to state that GLICO Life Insurance Company, in the face of keen competition and
macroeconomic challenges, improved generally on all its performance indicators.

The Ghanaian economy performed quite well in spite of challenges with developed economies on the
global front. With a projected GDP growth of 7.1% compared to sub-Saharan projected average growth
of 4.8% and a global projected growth of 3.2%, the Ghanaian economy can be said to have performed
relatively better notwithstanding the fact that 2012 was an election year.
The growth was driven by oil revenues, the services sector and the strong export performance of cocoa
and gold. Ghana's medium-term growth outlook remains positive, thanks to large investments in the
extractive industries, public infrastructure and commercial agriculture.
Inflation witnessed high volatility in the first half of 2012. However, by the third quarter it had stabilized to a
single digit of 8.8% compared to 2011 figure of 8.5% and this trend is expected to continue in 2013.
The fall in inflation has been largely the result of a stable political and macroeconomic environment
although there were uncertainties with respect to the 2012 elections.
Economic Overview
Annual Report & Financial Statements
Edward Forkuo Kyei
Managing Director
2012 BUSINESS REVIEW
Fellow Stakeholders,
th
2012 was quite an exciting year as it marked the 25 anniversary of our
company's highly successful insurance operations in Ghana. In spite of the
many challenges, we were able to achieve this unprecedented feat in the
annals of our company and we celebrated the milestone achievement in grand
style throughout the year. I am most grateful to all the people whose effort
th
ensured a memorable 25 Anniversary celebration. I wish to single out the
Silver Anniversary Committee, which with the support of Management,
planned and implemented all the activities that took place to mark our Silver
Jubilee, for special appreciation.
th
The volume of work regarding the 25 Anniversary Celebrations notwithstanding, we still managed to
work hard to achieve our financial targets and I now have the pleasure to present our financial results to
you.
13
MANAGING DIRECTORS REPORT -
Contd.
Product Development
Competition and Marketing of Products and Services
ICT Infrastructure
Corporate Social Responsibility
th
25 Anniversary Celebrations
I am happy to inform you that the actuarial revision of repackaged products such as Life Guaranteed
Plan, Life Savings Plan and Funeral Policy is gaining remarkable acceptance on the market by
contributing to premium income mobilization. These products contributed 0.33% to the 2012 gross
premium of GH36,022,000.00.
The National Insurance Commission continued the licensing of more underwriters in the year under
review and this continued to deepen the already intense competition within the industry. Having regard
to this kind of competition, our company had to institute re-training programmes to enrich our field
underwriters with refreshed product knowledge for sales to meet the increasing sophistication of
clients.

Satisfactory customer service delivery is the key to success in the life insurance industry and needless
to say, ICT has become the vehicle for effective customer service delivery and for this reason our
Company continued to invest heavily in our ICT infrastructure. Existing software was upgraded and new
ones relevant to our operations were acquired to improve upon our service delivery.

In 2012, our company fulfilled its corporate social responsibilities to the public by continuing to focus on
Sports, Education, Health and Community Development. Some of the beneficiaries of our
programmes, sponsorships and donations included Otumfuo Osei Tutu II Educational Fund, Ghana
Black Stars, Ghana Heart Foundation, Ghana Medical Association, Korle Bu Blood Bank, Multimedia
Group (Joy FM Easter Soup Kitchen) the Ghana Military, Ghana Prisons among others. GLICO LIFE
will continue with the implementation of its effective Corporate Social Responsibility, especially with the
establishment of a Corporate Affairs Department to support GLICO.

As already indicated in the preceding pages, the year under review was a special year in the history of
GLICO LIFE and indeed the entire GLICO GROUP. It was the twenty-fifth year of our successful
insurance operation in Ghana and several activities were carried out to ensure a successful Silver
Jubilee Celebration.
Events organised to mark the year-long celebrations included a grand launch of the celebrations, which
attracted several dignitaries; Brokers Forum organized to deepen and strengthen business relations
with the insurance brokers; Health Screening & Blood Donation Exercise; Customer Service and CSR
Month organized to recognize and reward customers among others.
I am grateful to all the stakeholders who contributed in diverse ways for us to have an all-year-long
th
impressive 25 Anniversary celebrations.
ncrease attests to our operational efficiency in spite of keen competition. i

Annual Report & Financial Statements
14
MANAGING DIRECTORS REPORT -
Contd.
Financial Results
The Future
Gratitude
The year 2012 was a tough one for business growth amidst economic hardships and the uncertainty that
surrounded the general elections. That notwithstanding, we managed to post very commendable results
in spite of the challenges:
Net premium income grew by 5% from GH34,421,000 in 2011 to GH36,022,000 in 2012. The
ncrease attests to our operational efficiency in spite of keen competition.
Investment income also continued to grow impressively. Through prudent investments, we
registered 98% increase over previous year's figures in spite of declining government security
rates.
On the other hand, cost control measures were strictly adhered to by Management, in spite of the
th
25 Anniversary celebrations and broadened operational activities to ensure increased premium,
we managed to maintain operating cost at 20% of Gross Premiums, same as 2011.

With our knack for astute and strategic long-term investments, we invested in real estate and this
has resulted in an increase in our asset base. Total assets grew substantially by 39.44% from
GH72,587.000 in 2011 to GH101,209,000 in 2012.
Expectedly and in much the same vein, shareholders value also had a marginal growth with total
shareholders' funds increasing by 51.57% from GH31,101,000 to GH47,142,000 for the
period under review compared to 14.20% in 2010/2011 year.
In 2013 and beyond, we shall continue to consolidate the structures put in place to enable us efficiently
and effectively handle the keen competition in the industry. This would include the continuous upgrading
of our ICT systems to enable us provide speedy, effective and efficient service to our numerous policy
holders. We shall also continue to develop products that meet the needs of the insuring public.
With our commitment to customer service delivery, we shall continue to pursue excellence in service
delivery by re-engineering our sales force, training employees in the value chain to equip them with the
requisite skills for satisfactory service delivery.
In conclusion, my sincere gratitude goes to the Board for their direction and support towards building a
profitable GLICO LIFE. To all Management, Staff, Sales Executives, your commitment and dedication to
duty is greatly appreciated.
Finally, the Almighty God has been most merciful and He deserves the paramount gratitude.
Thank you.
E. FORKUO KYEI
MANAGING DIRECTOR

i


Annual Report & Financial Statements
15
The Directors submit their report together with the audited financial
statements of GLICO Life Insurance Company Limited for the year ended 31
December 2012, which disclose the state of affairs of the company.
The Ghana Companies Code 1963 (Act 179) requires the directors to
prepare financial statements for each financial year which give a true and fair
view of the state of affairs of the company at the end of the financial year and
of the profit or loss of the company for that year.
The Directors believe that in preparing the financial statements, they have
used appropriate accounting policies, consistently applied and supported by
reasonable and prudent judgements and estimates and that all international
accounting standards which they consider to be appropriate have been
followed.
The Directors are responsible for ensuring that the company keeps
accounting records which disclose with reasonable accuracy the financial
position of the company and which enable them to ensure that the financial
statements comply with the Companies Code, 1963 (Act 179) and Insurance
Act 2010 (Act 724).
They are also responsible for taking such steps as are reasonable to
safeguard the assets of the company and to prevent and detect fraud and
other irregularities.
The above statements which should be read in conjunction with the
statement of the auditors responsibilities on page 18 is made with a view to
distinguishing for shareholders the respective responsibilities of the
directors and the auditors in relation to the financial statements.
The principal activities of the company continued to be the undertaking of the
business of insurance and other business incidental thereto.
Statement of Directors' Responsibilities
Principal Activities
2012
Financial Results
GH'000
The balance brought forward on income surplus account at 1 January was 10,636

To which must be added:
Profit for the year after charging all expenses, depreciation and taxation of 16,374

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

27,010

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

26,650
Dividend Paid (1,000)
Leaving a balance to be carried forward on income surplus account of 25,650
2011
GH'000
7,040
3,678
260
10,978
(342)
10,636
-
10,636
DIRECTORS' REPORT
Annual Report & Financial Statements
16
Dividend
Auditors
The directors propose the payment of dividend of GH 1,000,000 for the
year ended 31 December 2012.
In accordance with section 134(5) of the Companies Code 1963, (Act
179) the auditors, Messrs. Osei Kwabena & Associates, will continue in
office as auditors of the company.
By order of the board
Director: .............................................
Director: .............................................
......................... 2013
DIRECTORS' REPORT - Contd.

TH
13 AUGUST,
Annual Report & Financial Statements
17
We have conducted an actuarial valuation of the life assurance business of
GLICO Life Insurance Company Ltd. as at 31 December 2012.

The valuation was conducted in accordance with generally accepted
actuarial principles and in accordance with the requirements of the
Insurance Act, 2006 (Act 724). Those principles require prudent provision
for future outgo under contracts, generally based upon the assumptions
that current conditions will continue. Provision is therefore not made for all
possible contingencies.
In completing the actuarial valuation, I have relied upon the financial
statements of the Company.
In our opinion, the Life Assurance business of the Company was (not)
financially sound and the actuarial value of the liabilities in respect of all
classes of life insurance business did (not) exceed the amount of funds of
the life assurance business at 31 December 2012.
Signed: ............................................................
Date: ...............................................................
Name of Actuary: Stallion Consultants Limited
CERTIFICATE OF SOLVENCY
(CHARTERED ACCOUNTANTS)
OSEI KWABENA & ASSOCIATES
TH
29 APRIL, 2013
Annual Report & Financial Statements
TO THE MEMBERS OF GLICO LIFE INSURANCE CO. LTD.
Report on Financial Statements
Directors' Responsibility for the Financial Statements
Auditors' Responsibility

We have audited the accompanying financial statements of GLICO Life
Company Limited, as at 31 December, 2012, set out on pages 20 to 59,
which have been prepared on the basis of the significant accounting policies
on page 27 to 39 and other explanatory notes on pages 40 to 59.
The directors are responsible for the preparation and fair presentation of
these financial statements in accordance with the Companies Code 1963,
(Act 179) and the Insurance Act 2006 (Act 724). These responsibilities
include: designing, implementing and maintaining internal control relevant to
the preparation and fair presentation of financial statements that are free
from material misstatement, whether due to fraud or error; selecting and
applying appropriate accounting policies; and making accounting estimates
that are reasonable in the circumstances.
Our responsibility is to express an opinion on these financial statements
based on our audit. We conducted our audit in accordance with International
Standards on Auditing.
Those standards require that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assurance as to whether the
f i nanci al st at ement s are f ree f rom mat eri al mi sst at ement .
An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial statements. The procedures
selected depend on the auditor's judgement, including the assessment of
the risks of material misstatement of the financial statements, whether due to
fraud or error.
In making those risk assessments, the auditor considers internal control
relevant to the entity's preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by management, as well as
evaluating the overall presentation of the financial statements.
INDEPENDENT
AUDITORS' REPORT
18
Annual Report & Financial Statements
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
In our opinion, the financial statements give a true and fair view of the
financial position of the company as at 31 December 2012, and of its
financial performance and cash flow for the year then ended and are drawn
up in accordance with the International Financial Reporting Standards,
i ssued by the Internati onal Accounti ng Standards Board.
Opinion
Report on Other Legal and Regulatory Requirements
The Ghana Companies Code, 1963 (Act 179) requires that in
carrying out our audit work we consider and report on the following
matters. We confirm that:
We have obtained all the information and explanations which to
the best of our knowledge and belief were necessary for the
purposes of our audit;
In our opinion proper books of accounts have been kept by the
company, so far as appears from our examination of those
books; and
The balance sheet and income statement of the company are
in agreement with the books of accounts.
In accordance with section 78(1) (a) of the Insurance Act, 2006, (Act
724), the company has kept accounting records that are sufficient to
explain its transactions and financial position with respect to its
insurance businesses and any other business that it carries on.
i.
ii.
iii.
..

Partner Number: .........
.....................................2013
INDEPENDENT
AUDITORS' REPORT - Cond
19
TH
29 APRIL, 2013
I CAG / P / 1161
(CHARTERED ACCOUNTANTS)
OSEI KWABENA & ASSOCIATES
Annual Report & Financial Statements
2012 2011
Note Gh000 Gh000
Insurance Premium Revenue 6
Insurance Premium Ceded to Reinsurers 6
Increase in Life Fund
Investment Income 7
Insurance Claims 9
Ordinary Life Surrenders

Net Insurance Benefits and Claims
Operating and Other Expenses 10
Results of Operating Activities
Finance costs
36,022
(52)
(10,908)
6,131




20
STATEMENT OF PROFIT
AND LOSS ACCOUNT
34,421
(206)
(10,854)
3,097
14,149
3,050
19,135
7,648
12,858
1,976
16,069
6,958
3,854
(119)
18,948
(443)
Net Insurance Premium Revenue 35,970 34,215
Other Operating Income 8

Net Income
14,538
9,761
45,731
423
(7,334)
26,881
Commissions 1,936 1,235
Expenses 26,783 23,027
Profit Before Tax
Income Tax Expense 11
Profit for the Year


3,735
(57)
3,678
18,505
(2,131)
16,374
Annual Report & Financial Statements
Change in Available-for-sale Financial Assets
Fair Value Gains on Property, Plant and Equipment
Profit for the year
2012 2011
Note Gh000 Gh000
21
STATEMENT OF PROFIT AND LOSS
AND OTHER COMPREHENSIVE INCOME
-
314
16,374
(154)
-
3,678
Total Comprehensive Income for the Year

16,688 3,524
Annual Report & Financial Statements
Note 2012 2011
GH'000 GH'000
Assets
Property, Plant and Equipment 12
Investment Property 13
Equity Securities 14
Debt Securities 15
Loans and Receivables 16
Insurance Receivables 17
Bank and Cash Balances 19







1,317
51,883
12,556
23,694
7,200
1,918
2,641
Equity and Liabilities
Stated Capital 20
Contingency Reserve
Other Reserves 22
Income Surplus








22
BALANCE SHEET
31,461
11,585
16,901
1,364
7,388
1,577
2,311
17,989
2,200
1,303
25,650
17,989
10,636
1,840
637
Total Assets 101,209 72,587
Total Equity 47,142 31,101
Annual Report & Financial Statements
Approved on .. 2013
.... Director ....... Director
Liabilities
Insurance Liabilities 24
Borrowings 25
Trade and Other Payables 26
Deferred Income Tax 18
Current Income Tax Liabilities 11










23
Annual Report & Financial Statements
BALANCE SHEET - Contd.
48,117
-
3,190
2,730
30
37,209
1,192
2,458
599
28

th
15 August,
Total Liabilities 54,067 41,486
Total Equity and Liabilities 101,209 72,587
Company
Stated
Capital
Contingency
Reserve Other Reserves
Income Surplus
Account Total
Gh000 Gh000 Gh000 Gh000 Gh000
Balance at 1 January 2012 17,989 1,840 637 10,636 31,102
Profit / (loss) for the Year - - - 16,374 16,374
Net Change in Fair Value of -
Available-for-sale Financial Assets, Net of Tax 352 352
Revaluation Gains on Property, Plant and -
Equipment 314 314
360 (360) -
(1,000) (1,000)
STATEMENT OF CHANGES IN EQUITY
17,989 2,200 1,303 25,650 47,142
Transfer from Income Surplus
Dividends to Company Shareholders
Balance at 31 December 2012
24
Annual Report & Financial Statements
STATEMENT OF CHANGES IN EQUITY
Balance at 1 January 2011 17,989 1,497 1,050 7,041 27,577
Profit / (loss) for the Year - - 3,678 3,678
Net Change in Fair Value of -
Available-for-sale Financial Assets, Net of Tax - (154) - (154)
Revaluation Gains on Property, Plant and -
Equipment Disposed, Net of Tax (260) 260
Transfer From Income Surplus
Dividends to Company Shareholders
STATEMENT OF CHANGES IN EQUITY - Contd.
Company
Stated
Capital
Contingency
Reserve Other Reserves
Income Surplus
Account Total
Gh000 Gh000 Gh000 Gh000 Gh000
- -
342 - (342) -
- - - - -
17,989 1,840 637 10,636 31,101 Balance at 31 December 2011
25
Annual Report & Financial Statements
STATEMENT OF CHANGES IN EQUITY - Contd.
Note
Cash Generated from Operating Activities
Profit Before Taxation
Adjusted for:
Loss on Disposal of Property, Plant and Equipment 12
Depreciation and Amortisation 12
Change in Fair Value of Investment Property 13
Change in Provision for Bad Loans 16
Foreign Exchange Gain 8
Change in Provision for Life Fund 24
Operating Cash Flow Before Investment in Working Capital
Increase in Loans and Receivables 16
Increase in Insurance Receivables 17
Increase in Trade and Other Payables 26
Tax Paid 11
Cash Flows from Investing Activities
Addition to Investment Properties 13
Disposals of Investment Properties 13
Purchases of Property, Plant and Equipment 12
Proceeds from Sale of Property, Plant and Equipment 12
Purchases of Equity Securities 14
Cash Flows from Financing Activities
Proceeds from Borrowings 25
Repayments of Borrowings 25
Dividends Paid to Company's Shareholders
Increase in Cash and Cash Equivalents
Cash and Bank Overdrafts at Beginning of Year 27
2011
GH'000








(99)


(153)



2012
GH'000









18,505
-
605
(14,133)
7
(15)
10,908
15,877
181
(341)
732
(1)
(6,266)
-
(243)
-
(624)
-
(1,192)
(1,000)
7,123
19,212
26
STATEMENT OF CASHFLOWS
3,735
357
549
(110)
10
-
10,854
15,395
(688)
(1,672)
(61)
(4,778)
1,296
(393)
140
-
(968)
(812)
7,207
12,005
Net Cash (used in) / from Financing Activities


(2,192) (1,780)
Cash and Bank Overdrafts at End of Year 27



26,335 19,212
Net Cash used in Investing Activities




(7,133) (3,888)
Net Cash from Operating Activities




16,448 12,875

Annual Report & Financial Statements
1. GENERAL INFORMATION
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Preparation
(b) Insurance Contracts
I. Classification
The Company is a limited liability company incorporated in Ghana under the Companies Code 1963,
(Act 179) and domiciled in Ghana. The address of its registered office is GLICO House, No.47
Kwame Nkrumah Avenue, Accra.
The company's main business is Life assurance. Life assurance business relates to the underwriting
of risks relating to death of an insured person, and includes contracts subject to the payment of
premiums for a term dependent on the termination or continuance of the life of an insured person.
The principal accounting policies adopted in the preparation of these financial statements are set out
below. These policies have been consistently applied to all years presented, unless otherwise stated.
The financial statements are prepared in compliance with International Financial Reporting
Standards (IFRS). Additional information required by the Companies Code, 1963, (Act 179) and the
insurance act 2006 (Act 724) are included where appropriate. The measurement basis applied is the
historical cost basis, except as modified by the revaluation of land and buildings, investment property,
available-for-sale financial assets, and financial assets and financial liabilities at fair value through
income. The financial statements are presented in Ghana Cedis (GH).
The preparation of financial statements in conformity with IFRS requires the use of estimates and
assumptions. It also requires management to exercise its judgement in the process of applying the
Company's accounting policies. The areas involving a higher degree of judgement or complexity, or
where assumptions and estimates are significant to the financial statements, are disclosed in Note 3.
The Directors have assessed the relevance of the new standard and interpretations, and
amendments to existing standards with respect to the Company's operations and concluded that
they will not have any impact on the Company's financial statements, other than for the amendments
to IAS 1 - Presentation of Financial Statements, which will require non-owner changes in equity to be
presented in a 'Comprehensive Statement of Income'.

The Company issues contracts that transfer insurance risk or financial risk or both. Insurance
contracts are those contracts that transfer significant insurance risk. Such contracts may also
transfer financial risk. As a general guideline, the Company defines as significant insurance risk, the
possibility of having to pay benefits on the occurrence of an insured event that are at least 10% more
than the benefits payable if the insured event did not occur.
Investment contracts are those contracts that transfer financial risk with no significant insurance risk.
See accounting policy for these contracts under Note 2(d).
Insurance contracts and investment contracts are classified into two main categories, depending on
the duration of risk and in accordance with the provisions of the Insurance Act 2006 (Act 724).
28
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
Annual Report & Financial Statements
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
(b) Insurance Contracts - Continued
II. Recognition and Measurement
i. Premium Income
ii. Claims and Policy Holder Benefits Payable
iii. Commissions Payable

The company therefore is engaged in only Life insurance business.
Life insurance business Includes insurance business of all or any of the following classes, namely, life
assurance business, superannuation business, industrial life assurance business and bond
investment business and business incidental to any such class of business;
Life assurance business means the business of, or in relation to, the issuing of, or the undertaking of
liability to pay money on death (not being death by accident or in specified sickness only) or on the
happening of any contingency dependent on the termination or continuance of human life (either with
or without provision for a benefit under a continuous disability insurance contract), and include a
contract which is subject to the payment of premiums for term dependent on the termination or
continuance of human life and any contract securing the grant of an annuity for a term dependent
upon human life.
Superannuation business means life assurance business, being business of, or in relation to, the
issuing of or the undertaking of liability under superannuation, group life and permanent health
insurance policy.

For Life insurance business, premiums are recognised as revenue when they become payable by the
contract holder. Premiums are shown before deduction of commission.
Some life insurance contracts contain both an insurance component and a deposit component. The
insurance company is required to unbundle the deposit components from the insurance components.
Unbundling should however not be done where the deposit component cannot be separately
measured. (The NIC however requires life insurance companies to design all life products such that is
will be possible to separately measure the deposit component).
For Life insurance business, benefits are recorded as an expense when they are incurred. Claims
arising on maturing policies are recognised when the claim becomes due for payment. Death claims
are accounted for on notification. Surrenders are accounted for on payment.

A proportion of commission's payable is deferred and amortised over the period in which the related
premium is earned.
29
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
Annual Report & Financial Statements
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
(b) Insurance Contracts - Continued
iv. Receivables and Payables Related to Insurance Contracts
v. Salvage and Subrogation Reimbursements
(c) Revenue Recognition
(i) Insurance Premium Revenue
(ii) Commissions
(iii) Interest Income

Receivables and payables are recognised when due. These include amounts due to and from agents,
brokers and insurance contract holders. If there is objective evidence that the insurance receivable is
impaired, the Company reduces the carrying amount of the insurance receivable accordingly and
recognises that impairment loss in the income statement. The Company gathers the objective evidence
that an insurance receivable is impaired using the same process adopted for loans and receivables.
The impairment loss is also calculated under the same method used for these financial assets. These
processes are described in Note 2 (j).
Some insurance contracts permit the Company to sell (usually damaged) property acquired in settling a
claim (for example, salvage). The Company may also have the right to pursue third parties for payment
of some or all costs (for example, subrogation).
Estimates of salvage recoveries are included as an allowance in the measurement of the insurance
liability for claims, and salvage property is recognised in other assets when the liability is settled. The
allowance is the amount that can reasonably be recovered from the disposal of the property.
Subrogation reimbursements are also considered as an allowance in the measurement of the
insurance liability for claims and are recognised in other assets when the liability is settled. The
allowance is the assessment of the amount that can be recovered from the action against the liable third
party.
For all insurance contracts, premiums are recognised as revenue (earned premiums) proportionally
over the period of coverage. The portion of premium received on in-force contracts that relates to
unexpired risks at the balance sheet date is reported as the unearned premium liability. Premiums are
shown before deduction of commission and are gross of any taxes or duties levied on premiums.
Commissions receivable are recognised as income in the period in which they are earned.
Interest income for all interest-bearing financial instruments, including financial instruments measured
at fair value through income statement is recognised within 'investment income' (Note 7) in the income
statement using the effective interest rate method. When a receivable is impaired, the Company
reduces the carrying amount to its recoverable amount, being the estimated future cash flow
discounted at the original effective interest rate of the instrument, and continues unwinding the discount
as interest income.
30
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
Annual Report & Financial Statements
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
(iv) Dividend Income
(d) Investment Contracts
Dividend income for equities is recognised when the right to receive payment is established - this
is the ex-dividend date for equity securities.
The Company issues investment contracts without fixed terms (unit-linked) and investment contracts
with fixed and guaranteed terms (fixed interest rate). The investment contracts include funds
administered for a number of retirement benefit schemes.
Investment contracts without fixed terms are financial liabilities whose fair value is dependent on the
fair value of underlying financial assets, derivatives and/or investment property (these contracts are
also known as unit-linked investment contracts) and are designated at inception as at fair value
through profit or loss. The Company designates these investment contracts to be measured at fair
value through income statement because it eliminates or significantly reduces a measurement or
recognition inconsistency (sometimes referred to as 'an accounting mismatch') that would otherwise
arise from measuring assets or liabilities or recognising the gains and losses on them on different
bases.
The best evidence of the fair value of these financial liabilities at initial recognition is the transaction
price (i.e. the fair value received) unless the fair value of that instrument is evidenced by comparison
with other observable current market transactions in the same instrument or based on a valuation
technique whose variables include only data from observable markets. When such evidence exists,
the Company recognises profit on day 1. The Company has not recognised any profit on initial
measurement of these investment contracts because the difference is attributed to the prepayment
liability recognised for the future investment management services that the Company will render to
each contract holder.
Financial liabilities for investment contracts without fixed terms is determined using the current unit
values in which the contractual benefits are denominated. These unit values reflect the fair values of
the financial assets contained within the Company's unitised investment funds linked to the financial
liability. The fair value of the financial liabilities is obtained by multiplying the number of units attributed
to each contract holder at the balance sheet date by the unit value for the same date.
For investment contracts with fixed and guaranteed terms, the amortised cost basis is used. In this
case, the liability is initially measured at its fair value less transaction costs that are incremental and
directly attributable to the acquisition or issue of the contract.
Subsequent measurement of investment contracts at amortised cost uses the effective interest
method. This method requires the determination of an interest rate (the effective interest rate) that
exactly discounts to the net carrying amount of the financial liability, the estimated future cash
payments or receipts through the expected life of the financial instrument or, when appropriate, a
shorter period if the holder has the option to redeem the instrument earlier than maturity.
31

NOTES TO THE FINANCIAL
STATEMENTS - Contd.
Annual Report & Financial Statements
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
(d) Investment Contracts - Continued
(e) Property and Equipment
Buildings 33 years
Leasehold Property 17 years
Furniture and Fittings 10 years
Office Equipment 5 years
5 years Motor Vehicles
Computer Equipment 3 years

The Company re-estimates at each reporting date the expected future cash flows and recalculates
the carrying amount of the financial liability by computing the present value of estimated future cash
flows using the financial liability's original effective interest rate. Any adjustment is immediately
recognised as income or expense in the income statement.
All categories of property and equipment are initially recorded at cost. Buildings and freehold land are
subsequently shown at fair value, based on periodic, but at least triennial, valuations by external
independent valuers, less subsequent depreciation for buildings. All other property and equipment is
stated at historical cost less depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to
the Company and the cost of the item can be measured reliably. All other repairs and maintenance are
charged to the income statement account during the financial period in which they are incurred.
Increases in the carrying amount arising on revaluation are credited to other comprehensive income.
Decreases that offset previous increases of the same asset are charged against the revaluation
surplus in the other comprehensive income; all other decreases are charged to the income statement
account. Each year the difference between depreciation based on the revalued carrying amount of
the asset (the depreciation charged to the income statement account) and depreciation based on the
asset's original cost is transferred from the revaluation surplus to retained earnings.
Free hold land is not depreciated. Leasehold land that qualify as a finance lease, have lease
payments amortised over the period of the lease. Depreciation on other assets is calculated using the
straight line method to allocate their cost or revalued amounts less residual values over their
estimated useful lives, as follows:

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at
each balance sheet date.
32
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
Annual Report & Financial Statements
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
(e) Property and Equipment - Continued
(f) Investment Properties
(h) Impairment of Non-Financial Assets
An asset's carrying amount is written down immediately to its estimated recoverable amount if the
asset's carrying amount is greater than its estimated recoverable amount (see 2 (h) below).
Gains and losses on disposal of property and equipment are determined by reference to their carrying
amount and are included in the income statement account. On disposal of revalued assets, amounts
in the revaluation surplus relating to that asset are transferred to income surplus.
Buildings, or part of a building, (freehold or held under a finance lease) and land (freehold or held
under an operating lease) held for long term rental yields and/or capital appreciation and are not
occupied by the Company are classified as investment property. Investment property is carried at fair
value, representing open market value determined annually by external valuers. Changes in fair
values are included in other operating income in the income statement account.

Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and
bring to use the specific software. These costs are amortised over their estimated useful lives (three
to five years).
Costs associated with developing or maintaining computer software programmes are recognised as
an expense as incurred. Costs that are directly associated with the production of identifiable and
unique software products controlled by the Company, and that will probably generate economic
benefits exceeding costs beyond one year, are recognised as intangible assets. Direct costs include
the software development employee costs and an appropriate portion of relevant overheads.
Computer software development costs recognised as assets are amortised over their estimated
useful lives (not exceeding five years).

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for
impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. An impairment
loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in
use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash flows (cash-generating units). Non-financial assets other than
goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each
reporting date.
33
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
Annual Report & Financial Statements
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
(i) Financial Assets
(i) Financial Assets at Fair Value Through Profit or Loss
(ii) Loans, Advances and Receivables
(iii) Held-to Maturity
(iv) Available-for-Sale
The Company classifies its financial assets into the following categories: financial assets at fair value
through profit or loss; loans, advances and receivables; held-to-maturity financial assets; and available-
for-sale assets. Management determines the appropriate classification of its financial assets at initial
recognition.
This category has two sub-categories: financial assets held for trading, and those designated at fair value
through profit or loss at inception. A financial asset is classified as held for trading if acquired principally for
the purpose of selling in the short term. Derivatives are also categorised as held for trading. Financial
assets are designated at fair value through profit or loss when:
- doing so significantly reduces or eliminates a measurement inconsistency; or
- they form part of a group of financial assets that is managed and evaluated on a fair value basis in
accordance with a documented risk management or investment strategy and reported to key management
personnel on that basis.
Loans, advances and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market, other than: (a) those classified as held for trading and those that the
Company on initial recognition designates as at fair value through income statement; (b) those that the
Company upon initial recognition designates as available-for-sale; or (c) those for which the holder may
not recover substantially all of its initial investment, other than because of credit deterioration.

Held-to-maturity assets are non-derivative financial assets with fixed or determinable payments and fixed
maturities that management has the positive intention and ability to hold to maturity. Were the Company to
sell more than an insignificant amount of held-to-maturity assets, the entire category would have to be
reclassified as available for sale.
Available-for-sale assets are non-derivatives that are either designated in this category or not classified in
any other categories.
Regular way purchases and sales of financial assets at fair value through profit or loss, held-to-maturity
and available-for-sale are recognised on trade-date - the date on which the Company commits to purchase
or sell the asset.
Financial assets are initially recognised at fair value plus, for all financial assets except those carried at fair
value through profit or loss, transaction costs. Financial assets are derecognised when the rights to
receive cash flows from the financial assets have expired or where the Company has transferred
substantially all risks and rewards of ownership.
34
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
Annual Report & Financial Statements
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
(I) Financial Assets - Continued
(j) Impairment of Financial Assets

Loans, advances and receivables and held-to-maturity financial assets are carried at amortised cost
using the effective interest method. Available-for-sale financial assets and financial assets at fair
value through profit or loss are carried at fair value. Gains and losses arising from changes in the fair
value of 'financial assets at fair value through profit or loss' are included in the income statement
account in the period in which they arise. Gains and losses arising from changes in the fair value of
available-for-sale financial assets are recognised directly in equity until the financial asset is
derecognised or impaired, at which time the cumulative gain or loss previously recognised in equity is
recognised in the profit or loss account. However, interest calculated using the effective interest
method is recognised in the income statement account. Dividends on available-for-sale equity
instruments are recognised in the income statement account when the Company's right to receive
payment is established.
Fair values of quoted investments in active markets are based on current bid prices. Fair values for
unlisted equity securities are estimated using valuation techniques. These include the use of recent
arm's length transactions, discounted cash flow analysis and other valuation techniques commonly
used by market participants. Equity securities for which fair values cannot be measured reliably are
recognised at cost less impairment.

The Company assesses at each balance sheet date whether there is objective evidence that a
financial asset or a group of financial assets is impaired. A financial asset or a group of financial
assets is impaired and impairment losses are incurred only if there is objective evidence of
impairment as a result of one or more events that occurred after initial recognition of the asset (a 'loss
event') and that loss event (or events) has an impact on the estimated future cash flows of the financial
asset or group of financial assets that can be reliably estimated. The criteria that the Company uses
to determine that there is objective evidence of an impairment loss include:
- Delinquency in contractual payments of principal or interest;
- Cash flow difficulties experienced by the borrower (for example, equity ratio, net income

percentage of sales);
- Breach of loan covenants or conditions;
- Deterioration of the borrower's competitive position; and
- Deterioration in the value of collateral;
The estimated period between a loss occurring and its identification is determined by management
for each identified portfolio. In general, the periods used vary between 6 and 12 months.
35
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
Annual Report & Financial Statements
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
(j) Impairment of Financial Assets - Continued
(ii) Assets Carried at Fair Value
(iii) Renegotiated Loans
(k) Accounting for Leases
(l) Cash and Cash Equivalents

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognised (such as an
improvement in the debtor's credit rating), the previously recognised impairment loss is reversed by
adjusting the allowance account. The amount of the reversal is recognised in the income statements.

In the case of equity investments classified as available for sale, a significant or prolonged decline in
the fair value of the security below its cost is considered in determining whether the assets are
impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss -
measured as the difference between the acquisition cost and the current fair value, less any
impairment loss on that financial asset previously recognised in profit or loss - is removed from equity
and recognised in the income statement account. Impairment losses recognised in the income
statement account on equity instruments are not reversed through the income statement account. If,
in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases
and the increase can be objectively related to an event occurring after the impairment loss was
recognised in profit or loss, the impairment loss is reversed through the income statement.

Loans that are either subject to collective impairment assessment or individually significant and whose
terms have been renegotiated are no longer considered to be past due but are treated as new loans. In
subsequent years, the renegotiated terms apply in determining whether the asset is considered to be
past due.

Leases of property, plant and equipment where the Company assumes substantially all the risks and
rewards of ownership are classified as finance leases. Assets acquired under finance leases are
capitalised at the inception of the lease at the lower of their fair value and the estimated present value
of the underlying lease payments. Each lease payment is allocated between the liability and finance
charges so as to achieve a constant rate on the finance balance outstanding. The corresponding rental
obligations, net of finance charges, are included in non-current liabilities. The interest element of the
finance charge is charged to the income statement account over the lease period. Property, plant and
equipment acquired under finance leases is depreciated over the estimated useful life of the asset.
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor
are classified as operating leases. Payments made under operating leases are charged to the income
statement account on a straight-line basis over the period of the lease.

Cash and cash equivalents includes cash in hand, deposits held at call with banks and other short term
highly liquid investments with original maturities of three months or less.
36
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
Annual Report & Financial Statements
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
(m) Employee Benefits
(i) Retirement Benefit Obligations
(ii) Other Entitlements
(n) Current and Deferred Income Tax
(o) Dividends


The Company operates a defined contribution retirement benefit scheme for its employees. The
Company and all its employees also contribute to the National Social Security Fund, which is a
defined contribution scheme. A defined contribution plan is a retirement benefit plan under which the
Company pays fixed contributions into a separate entity. The Company has no legal or constructive
obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees
the benefits relating to employee service in the current and prior periods.
The assets of all schemes are held in separate trustee administered funds, which are funded by
contributions from both the company and employees.
The Company's contributions to the defined contribution schemes are charged to the income
statement account in the year in which they fall due.
The estimated monetary liability for employees' accrued annual leave entitlement at the balance
sheet date is recognised as an expense accrual.
Income tax expense is the aggregate of the charge to the income statement account in respect of
current income tax and deferred income tax. Tax is recognised in the income statement account
unless it relates to items recognised directly in equity, in which case it is also recognised directly in
equity.
Current income tax is the amount of income tax payable on the taxable profit for the year determined
in accordance with the Internal Revenue Act 2000 (Act 592).
Deferred income tax is recognised using the liability method, on all temporary differences arising
between the tax bases of assets and liabilities and their carrying values for financial reporting
purposes. However, the deferred income tax is not accounted for if it arises from the initial recognition
of an asset or liability in a transaction other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined
using tax rates and laws that have been enacted or substantively enacted at the balance sheet date
and are expected to apply when the related deferred income tax liability is settled.

Dividends payable to the company's shareholders are charged to equity in the period in which they
are declared.
37
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
Annual Report & Financial Statements
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
(m) Employee Benefits
(i) Retirement Benefit Obligations
(ii) Other Entitlements
(n) Current and Deferred Income Tax
(o) Dividends


The Company operates a defined contribution retirement benefit scheme for its employees. The
Company and all its employees also contribute to the National Social Security Fund, which is a
defined contribution scheme. A defined contribution plan is a retirement benefit plan under which the
Company pays fixed contributions into a separate entity. The Company has no legal or constructive
obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees
the benefits relating to employee service in the current and prior periods.
The assets of all schemes are held in separate trustee administered funds, which are funded by
contributions from both the company and employees.
The Company's contributions to the defined contribution schemes are charged to the income
statement account in the year in which they fall due.
The estimated monetary liability for employees' accrued annual leave entitlement at the balance
sheet date is recognised as an expense accrual.
Income tax expense is the aggregate of the charge to the income statement account in respect of
current income tax and deferred income tax. Tax is recognised in the income statement account
unless it relates to items recognised directly in equity, in which case it is also recognised directly in
equity.
Current income tax is the amount of income tax payable on the taxable profit for the year determined
in accordance with the Internal Revenue Act 2000 (Act 592).
Deferred income tax is recognised using the liability method, on all temporary differences arising
between the tax bases of assets and liabilities and their carrying values for financial reporting
purposes. However, the deferred income tax is not accounted for if it arises from the initial recognition
of an asset or liability in a transaction other than a business combination that at the time of the
transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined
using tax rates and laws that have been enacted or substantively enacted at the balance sheet date
and are expected to apply when the related deferred income tax liability is settled.

Dividends payable to the company's shareholders are charged to equity in the period in which they
are declared.
38
Annual Report & Financial Statements
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
(p) Stated Capital
(q) Cash and Cash Equivalents

Ordinary shares are classified as equity where the company has no obligation to deliver cash or other
assets to shareholders. All shares are issued at no par value.

For the purposes of the cash flow statement, cash and cash equivalents comprise cash in hand,
balances with banks with less than three months' maturity from the date of acquisition, including:
cash, treasury bills and other eligible bills, loans and advances to banks, amounts due from other
banks and short-term government securities less bank overdrafts.
39
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
Annual Report & Financial Statements
3. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING ACCOUNTING
POLICIES
(a) Estimate of Future Benefit Payments and Premiums Arising from Long-Term Insurance
Contracts.
(b) Impairment of Available For-Sale Equity Investments
(c) Fair Value of Financial Instruments

The Company makes estimates and assumptions concerning the future. Estimates and judgements
are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances. The resulting
accounting estimates will, by definition, seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year are addressed below.

The determination of the liabilities under long-term insurance contracts is dependent on estimates made
by the Company. Estimates are made as to the expected number of deaths for each of the years in which
the Company. is exposed to risk. The Company bases these estimates on standard industry and national
mortality tables that reflect recent historical mortality experience, adjusted where appropriate to reflect
the Company own experience. For contracts that insure the risk of longevity, appropriate but not
excessively prudent allowance is made for expected mortality improvements.
The estimated number of deaths determines the value of the benefit payments and the value of the
valuation premiums. The main source of uncertainty is that epidemics such as AIDS, and wide-ranging
lifestyle changes, such as in eating, smoking and exercise habits, which could result in future mortality
being significantly worse than in the past for the age groups in which the Company has significant
exposure to mortality risk. However, continuing improvements in medical care and social conditions
could result in improvements in longevity in excess of those allowed for in the estimates used to
determine the liability for contracts where the Company is exposed to longevity risk.

The Company determines that an available-for-sale equity investment is impaired when there has been
a significant or prolonged decline in its fair value below its cost. This determination of what is significant
or prolonged requires judgement. In making this judgement, the Company evaluates among other
factors, the normal volatility in share price. In addition, impairment may be appropriate when there is
evidence of deterioration in the financial health of the investee, industry and sector performance,
changes in technology, and operational and financing cash flows.
The carrying amounts of available for sale investments at end of the current and previous year are set
out in note 15.

The fair value of financial instruments where no active market exists or where quoted prices are not
otherwise available are determined by using valuation techniques. In these cases the fair values are
estimated from observable data in respect of similar financial instruments or using models. Where
market observable inputs are not available, they are estimated based on appropriate assumptions.
Where valuation techniques (for example, models) are used to determine fair values, they are validated
and periodically reviewed by qualified personnel independent of those that sourced them. All models are
certified before they are used, and models are calibrated to ensure that outputs reflect actual data and
comparative market prices. To the extent practical, models use only observable data; however, areas
such as credit risk (both own credit risk and counterparty risk), volatilities and correlations require
management to make estimates.
40
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
Annual Report & Financial Statements
4. CHANGES IN ACCOUNTING POLICY AND DISCLOSURES
New and Amended Standards and Interpretations
The accounting policies adopted are consistent with those of the previous financial year, except for
the following new and amended IFRS and IFRIC interpretations effective as of 1 January 2011:
The Adoption of the Standards or Interpretations is Described Below:
IAS 24 Related Party Disclosures (amendment) effective 1 January 2011.
IAS 32 Financial Instruments: Presentation (amendment) effective 1 February 2010.
IFRIC 14 Prepayments of a Minimum Funding Requirement (amendment) effective 1 January 2011.
Improvements to IFRSs (May 2010).

IAS 24 Related Party Transactions (Amendment)The IASB issued an amendment to IAS 24 that
clarifies the definitions of a related party. The new definitions emphasise a symmetrical view of related
party relationships and clarifies the circumstances in which persons and key management personnel
affect related party relationships of an entity. In addition, the amendment introduces an exemption
from the general related party disclosure requirements for transactions with government and entities
that are controlled, jointly controlled or significantly influenced by the same government as the
reporting entity. The adoption of the amendment did not have any impact on the financial position or
performance of the company.
IAS 32 Financial Instruments: Presentation (Amendment)The IASB issued an amendment that alters
the definition of a financial liability in IAS 32 to enable entities to classify rights issues and certain
options or warrants as equity instruments. The amendment is applicable if the rights are given pro
rata to all of the existing owners of the same class of an entitys non-derivative equity instruments, to
acquire a fixed number of the entitys own equity instruments for a fixed amount in any currency. The
amendment has had no effect on the financial position or performance of the company because the
company does not have these types of instruments.
IFRIC 14 Prepayments of a Minimum Funding Requirement (Amendment)The amendment removes
an unintended consequence when an entity is subject to minimum funding requirements and makes
an early payment of contributions to cover such requirements. The amendment permits a prepayment
of future service cost by the entity to be recognised as a pension asset. The company is not subject to
minimum funding requirements, therefore the amendment of the interpretation has no effect on the
financial position nor performance of the company.

41
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
Annual Report & Financial Statements
4. CHANGES IN ACCOUNTING POLICY AND DISCLOSURES - Continued
There are Separate Transitional Provisions for Each Standard.
Improvements to IFRSsIn May 2010, the IASB issued its third omnibus of amendments to its standards,
primarily with a view to removing inconsistencies and clarifying wording.

The adoption of the following amendments resulted in changes to accounting policies, but no impact on
the financial position of the company
IFRS 7 Financial Instruments Disclosures: The amendment was intended to simplify the
disclosures provided by reducing the volume of disclosures around collateral held and improving
disclosures by requiring qualitative information to put the quantitative information in context.
IAS 1 Presentation of Financial Statements: The amendment clarifies that an entity may present an
analysis of each component of other comprehensive income either in the statement of changes in
equity or in the notes to the financial statements.
Other amendments resulting from Improvements to IFRSs to the following standards did not have any
impact on the accounting policies, financial position or performance of the company:
IFRS 3 Business Combinations (Contingent consideration arising from business combination prior to
adoption of IFRS 3 (as revised in 2008))
IFRS 3 Business Combinations (Un-replaced and voluntarily replaced share-based payment awards)
IAS 27 Consolidated and Separate Financial Statements

IAS 34 Interim Financial Statements
The following interpretation and amendments to interpretations did not have any impact on the
accounting policies, financial position or performance of the company:
IFRIC 13 Customer Loyalty Programmes (determining the fair value of award credits)
IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
IFRS 3 Business Combinations: The measurement options available for non-controlling interest
(NCI) were amended.

Only components of NCI that constitute a present ownership interest that entitles their holder to a
proportionate share of the entitys net assets in the event of liquidation should be measured at either fair
value or at the present ownership instruments proportionate share of the acquirees identifiable net
assets. All other components are to be measured at their acquisition date fair value.
The amendments to IFRS 3 are effective for annual periods beginning on or after 1 July 2011. The
company, however, adopted these as of 1 January 2011 and changed its accounting policy
accordingly as the amendment was issued to eliminate unintended consequences that may arise
from the adoption of IFRS 3.

42
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
Annual Report & Financial Statements
5. MANAGEMENT OF INSURANCE AND FINANCIAL RISK
This section Summarises The Way The Company Manages Key Risks:
Insurance Risk
(a) Frequency and severity of claims

The Company's activities expose it to a variety of risks, including insurance risk, financial risk, credit
risk, and the effects of changes in debt and equity market prices, foreign currency exchange rates and
interest rates. The Company's overall risk management programme focuses on the identification and
management of risks and seeks to minimise potential adverse effects on its financial performance, by
use of underwriting guidelines and capacity limits, reinsurance planning, credit policy governing the
acceptance of clients, and defined criteria for the approval of intermediaries and reinsurers.
Investment policies are in place which help manage liquidity, and seek to maximise return within an
acceptable level of interest rate risk.
The risk under any one insurance contract is the possibility that the insured event occurs and the
uncertainty of the amount of the resulting claim. By the very nature of an insurance contract, this risk is
random and therefore unpredictable.
For a portfolio of insurance contracts where the theory of probability is applied to pricing and
provisioning, the principal risk that the Company faces under its insurance contracts is that the actual
claims and benefit payments exceed the carrying amount of the insurance liabilities. This could occur
because the frequency or severity of claims and benefits are greater than estimated. Insurance
events are random and the actual number and amount of claims and benefits will vary from year to
year from the level established using statistical techniques.
Experience shows that the larger the portfolio of similar insurance contracts, the smaller the relative
variability about the expected outcome will be. In addition, a more diversified portfolio is less likely to
be affected across the board by a change in any subset of the portfolio. The Company has developed
its insurance underwriting strategy to diversify the type of insurance risks accepted and within each of
these categories to achieve a sufficiently large population of risks to reduce the variability of the
expected outcome.
Factors that aggravate insurance risk include lack of risk diversification in terms of type and amount of
risk, geographical location and type of industry covered.

The frequency and severity of claims can be affected by several factors. Estimated inflation is also a
significant factor due to the long period typically required to settle these cases. The company
manages these risks through its underwriting strategy, adequate reinsurance arrangements and
proactive claims handling.
The underwriting strategy attempts to ensure that the underwritten risks are well diversified in terms of
type and amount of risk, and industry. Underwriting limits are in place to enforce appropriate risk
selection criteria. For example, the company has the right not to renew individual policies, it can
impose deductibles and it has the right to reject the payment of a fraudulent claim. Insurance
contracts also entitle the company to pursue third parties for payment of some or all costs (for
example, subrogation).

43
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
Annual Report & Financial Statements
5. MANAGEMENT OF INSURANCE AND FINANCIAL RISK - Continued
Insurance Risk (continued)
(b) Sources of Uncertainty in the Estimation of Future Claim Payments
Claims on insurance contracts are payable on a claims-occurrence basis. The company is liable for
all insured events that occurred during the term of the contract, even if the loss is discovered after the
end of the contract term. As a result, liability claims are settled over a long period of time, and a larger
element of the claims provision relates to incurred but not reported claims (IBNR). There are several
variables that affect the amount and timing of cash flows from these contracts. These mainly relate to
the inherent risks of the business activities carried out by individual contract holders and the risk
management procedures they adopted. The compensation paid on these contracts is the monetary
awards granted for damages and bodily injury suffered by the insured.
The estimated cost of claims includes direct expenses to be incurred in settling claims, net of the
expected subrogation value and other recoveries. The company takes all reasonable steps to ensure
that it has appropriate information regarding its claims exposures. However, given the uncertainty in
establishing claims provisions, it is likely that the final outcome will prove to be different from the
original liability established. The liability for these contracts comprises a provision for IBNR, a
provision for reported claims not yet paid and a provision for unexpired risks at the end of the reporting
period. The amount of claims is particularly sensitive to the level of court awards and to the
development of legal precedent on matters of contract and tort. General insurance contracts are also
subject to the emergence of new types of latent claims, but no allowance is included for this at the end
of the reporting period.
In calculating the estimated cost of unpaid claims (both reported and not), the company estimation
techniques are a combination of loss-ratio-based estimates (where the loss ratio is defined as the
ratio between the ultimate cost of insurance claims and insurance premiums earned in a particular
financial year in relation to such claims) and an estimate based upon actual claims experience using
predetermined formulae where greater weight is given to actual claims experience as time passes.
The estimation of IBNR is generally subject to a greater degree of uncertainty than the estimation of
the cost of settling claims already notified to the Group, where information about the claim event is
available. IBNR claims may not be apparent to the insured until many years after the event that gave
rise to the claims. For casualty contracts, the IBNR proportion of the total liability is high and will
typically display greater variations between initial estimates and final outcomes because of the
greater degree of difficulty of estimating these liabilities.
In estimating the liability for the cost of reported claims not yet paid, the company considers any
information available from loss adjusters and information on the cost of settling claims with similar
characteristics in previous periods. Large claims are assessed on a case-by-case basis or projected
separately in order to allow for the possible distortive effect of their development and incidence on the
rest of the portfolio.
44
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
Annual Report & Financial Statements
5. MANAGEMENT OF INSURANCE AND FINANCIAL RISK (Continued)
Insurance Risk (Continued)
Financial Risk
Market Risk
(i) Foreign Exchange Risk
(ii) Price Risk
Where possible, the company adopts multiple techniques to estimate the required level of provisions.
This provides a greater understanding of the trends inherent in the experience being projected. The
projections given by the various methodologies also assist in estimating the range of possible
outcomes. The most appropriate estimation technique is selected taking into account the
characteristics of the business class and the extent of the development of each accident year.
The company's activities expose it to a variety of financial risks: Market risk (including currency risk,
interest rate risk, and price risk), credit risk and liquidity risk. The company's overall risk management
programme focuses on the unpredictability of financial markets and seeks to minimise potential
adverse effects on its financial performance, but the company does not hedge any risks.
The Company manages financial risks via the Board Investment Committee (BIC) which is mandated
to achieve long-term investment returns in excess of the Company's obligations under insurance and
investment contracts. The principal technique of the Company's BIC is to match assets to the liabilities
arising from insurance and investment contracts by reference to the type of benefits payable to
contract holders. For each distinct category of business, a separate portfolio of assets is maintained.


The Company is not exposed to significant foreign exchange risk arising from various currency
exposures. Foreign exchange risk arises from future commercial transactions, recognised assets
and liabilities.

The Company is exposed to equity securities price risk because of investments in quoted and
unquoted shares classified either as available-for-sale or at fair value through profit or loss. To
manage its price risk arising from investments in equity and debt securities, the Company diversifies
its portfolio. Diversification of the portfolio is done in accordance with limits set by the Company. All
quoted shares held by the Company are traded on the Ghana Stock Exchange (GSE).
45
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
Annual Report & Financial Statements
5. MANAGEMENT OF INSURANCE AND FINANCIAL RISK (Continued)
Market Risk (Continued)
(iii) Interest Rate Risk
Credit Risk
Fixed interest rate financial instruments carried at fair value expose the Company to fair value interest
rate risk. Variable interest rate financial instruments expose the Company to cash flow interest rate
risk.
The Company's fixed interest rate financial instruments are government securities, deposits with
financial institutions and borrowings. The Company does not hold variable interest rate financial
instruments.
The Company has exposure to credit risk, which is the risk that a counterparty will be unable to pay
amounts in full when due. Key areas where the Company is exposed to credit risk are:
- Receivables arising out of direct insurance arrangements;
- Receivables arising out of reinsurance arrangements; and
- Reinsurers' share of insurance liabilities.
Other areas where credit risk arises include cash and cash equivalents, corporate bonds and
deposits with banks and other receivables.
The Company has no significant concentrations of credit risk. The Company structures the levels of
credit risk it accepts by placing limits on its exposure to a single counterparty, or groups of
counterparty, and to geographical and industry segments. Such risks are subject to an annual or
more frequent review. Limits on the level of credit risk by category and territory are approved quarterly
by the Board of Directors.
Reinsurance is used to manage insurance risk. This does not, however, discharge the Company's
liability as primary insurer. If a reinsurer fails to pay a claim for any reason, the Company remains
liable for the payment to the policyholder. The creditworthiness of reinsurers is considered on an
annual basis by reviewing their financial strength prior to finalisation of any contract.
46
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
Annual Report & Financial Statements
5. MANAGEMENT OF INSURANCE AND FINANCIAL RISK - Continued
(c) Liquidity Risk
(d) Capital Management
2 0 1 2 2011
GH,000 GH'000
i) Total Assets 101,209 72,587
ii) Total Liabilities 54,067 41,486
iii) Net Assets 47,142 31,101
Solvency Margin = (Net Assets / Total Liabilities) 87% 75%

Liquidity risk is the risk that the Company is unable to meet its payment obligations associated with its
financial liabilities as they fall due and to replace funds when they are withdrawn.
The Company is exposed to daily calls on its available cash for claims settlement, withdrawals from
deposit administration schemes and administration expenses. The Company does not maintain cash
resources to meet all of these needs as experience shows that a minimum level of reinvestment funds
from maturing policies can be predicted with a high level of certainty. The Board sets limits on the minimum
level of bank overdraft facilities that should be in place to cover expenditure at unexpected levels of
demand.

The company's objectives when managing capital, which is a broader concept than the 'equity' on the
balance sheets, are:
- To comply with the capital requirements as set out in the Insurance Act 2006 (Act 724);
- To comply with regulatory solvency requirements as set out in the Insurance Act 2006 (Act 724).
- To safeguard the Company's ability to continue as a going concern, so that it can continue to provide
returns to shareholders and benefits for other stakeholders; and
- To provide an adequate return to shareholders by pricing insurance and investment contracts
commensurately with the level of risk.
The Insurance Act 2006 (Act 724) requires each insurance Company to hold the minimum level of paid
up capital to the equivalent of one million dollars ($ 1 million).
Capital adequacy and solvency margin are monitored regularly by management. The required
information is filed with the National Insurance Commission on a quarterly basis. During the year the
Company held the minimum paid up capital required as well as met the required solvency margins.
The Company's paid up Capital at the end of 2012 and 2011 is presented on Note 21. The table below
summarises the solvency margin of the Company at 31 December 2012 and comparative for 31
December 2011:






Insurance companies are required to have a financial solvency margin of 50% or the minimum capital
which ever is higher in order to be solvent. During those two years, the company complied with all of the
externally imposed capital requirements it is subject to.
47
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
Annual Report & Financial Statements
5. MANAGEMENT OF INSURANCE AND FINANCIAL RISK - Continued
(e) Fair Values of Financial Assets and Liabilities
6. Net Insurance Premium Revenue
The gross earned premium income of the Company can be analysed between the main classes of
business as shown below:
Premium Revenue Arising from Insurance Contracts Issued

The fair value of held-to-maturity investment securities at 31 December 2012 is estimated at GH
23.6 million (2011: GH 16.9 million). The fair values of the Company's financial assets and liabilities
approximate the respective carrying amounts, due to the generally short periods to contractual
repricing or maturity dates as set out above. Fair values are based on discounted cash flows using a
discount rate based upon the borrowing rate that the directors expect would be available to the
Company at the balance sheet date.
2012 2011
GH'000 GH'000
Individual Life Assurance

Group Life Assurance

Micro Insurance

Deposit Administration / Pension scheme




Premium Revenue Ceded to Reinsurers
on Insurance Contracts Issued (206)

Individual Life Assurance
Universal Endowment Assurance
Ordinary Life Assurance


17,636
6,699
8,468
3,122


(52)

14,899
8


36,022
48
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
15,902
5,575
-
6,724
34,421
14,073
31
Net Insurance Premium Revenue 34,215

35,970
Bancassurance 97 6,220
Temporary Assurance

3,966

18,873
2,990
17,094
Premium Refunds


(1,237)


17,636

15,902

(1,192)
Annual Report & Financial Statements
7 Investment Income 2012 2011
GH'000 GH'000
Interest Income

Interest Expense

Rental Income

Dividend Income
Loans and Receivables Interest Income
8 Other Business Income
Fair Value Gains on Investment Property
Documentation Fee
Miscellaneous Income
9 Insurance Claims
2012 2011
GH'000 GH'000
Death Claims

Matured Claims

Temporary Assurance

Micro Insurance Matured Claims

DAS claims

Partial Withdrawal Option





4,273
-
1,429
122
189
1,950
2,881

1,038

4,631

331
3,318

49
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
1,334
-
1,555
5

111



GH'000
14,156
2012 2011
GH'000




347
20



110
295
18
1,212
2,250
374
3,561
2,336
3,124
Cash and Cash equivalents Interest Income 118
6,131
92
3,097
Exchange Gain
14,538

15

-
423
Other Claims

-

14,149
1
12,858
Annual Report & Financial Statements
10 Operating and Other Expenses
2011
GH'000
Employee Benefits Expense
Administrative Expenses
Auditors' Remuneration
Directors Remuneration
Depreciation
Operating Lease Rentals

Actuarial Fees

Bad Debt Expense

Other Operational Expenses


Employee Benefits Expense Include:
2012 2011
Retirement Benefit Costs:
GH'000 GH'000
11 Income Tax Expense
2012 2011
GH'000
Deferred Income Tax

GH'000
2,131

2012
GH'000



Company
Year of Balance at Payment Charge Balance
Assessment 1 January for year 31 December


2009 (14) (35) 30 (19)
2010 (19)

(27)

57

11

2011 11

(61)

78

28

2012 31

(1)

-

30


- Defined Contribution Scheme
- National Social Security Fund
65 59
147 129
2,311
1,928
36
357
605
143
19
7
2,242
50
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
(21)
GH'000 GH'000 GH'000 GH'000
1,717
2,423
35
273
549
130
16
10
1,805
6,958




7,648
Current Income Tax -
2,131
78
57
Annual Report & Financial Statements
11 Income Tax Expense - Continued
Profit before income tax
Tax calculated at the statutory income tax rate of
25% (2010: 25%)
Less: tax effect of income not subject to tax
Add: tax effect of expenses not deductible for tax purposes
tax effect of loss not carried forward
The tax on profit before tax for the year differs from the standard rate of corporation tax in
Ghana of 25%.
The differences are set out below:
2012
Gh000
12 Property, plant and equipment
Company At Revaluation At
1 Jan Surplus Additions Disposals 31 Dec
Cost / Valuation Gh000 Gh000 Gh000 Gh000 Gh000
Land & buildings - Residential 230

-

314

544
Land & buildings - Office -

-

-

-
Motor vehicle 657

48

-

705
Furniture & Fittings 406 112 - 517
Office equipment 454 8 - 462
Computer equipment 832 76 - 908
Leasehold property 11 - - 11
Comprising
Cost of assets revalued 230

230
Revaluation surplus -

314 314
Cost of assets not revalued 2,359

243

-
2,603
18,505
4,626
(9,805)
4,501
662
2,590

243

314 - 3,147
2,590 243 314 - 3,147
51
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
2011
Gh000
3,735
934
(5,868)
3,907
1,105
-
78
prior year charge per tax audit
Income tax expense
-
(15)
Annual Report & Financial Statements
At Charge for At
1Jan the year Disposals 31Dec
Gh000 Gh000 Gh000 Gh000
Depreciation
Land & Buildings - Residential 20

16

-

37
Land & Buildings - Office -

-

-

-
Motor vehicle 309

141

-

450
Furniture & Fittings 100

52

-

151
Office Equipment 197

92

-

289
Computer Equipment 598

303

-

900
Leasehold Property 2

1

3
At 31 December 2012 1,317
At 31 December 2011 1,364
The land and buildings were revalued by Valuation & Appraisal Consult, Professional
Valuers, at open market values 26th March, 2012.
-
Net Book Value
1,225

605

-

1,830
52
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
Annual Report & Financial Statements
13 Investment Property
2012 2011
Gh000 Gh000
Balance at 1 January

27,869
Additions

Disposals
Fair Value Gains/(Losses)

Balance at 31 December
14 Available-for-sale Equity Investments
2012 2011
Unlisted securities:
Gh000 Gh000
Balance at 1 January

Additions

Balance at 31 December

Listed Securities:
Balance at 1 January
Additions

Disposals
Fair Value Gains/(Losses)

Balance at 31 December

Total Equity Securities - Available for Sale 11,585
31,461
6,266
-
14,156
51,883
11,029
624
11,653
551
-
-
352
903
12,556
53
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
4,778
(1,296)
110
31,461

10,881


153


11,034

705
-
-
(154)
551
Annual Report & Financial Statements
15 Debt Securities
2012 2011
Treasury Bills and Bonds Maturing:
Gh000 Gh000
- Within 1 Year from Acquisition
- In 1-5 Years from Acquisition
- After 5 Years from Acquisition
Listed Bonds (HFC):
- Housing Bonds
- Real Estate Investment Trust (REIT)
- Unit Trust
Other Securities
Debt Securities are all Classified as Held to Maturity.
16 Loans and Other Receivables
Loans and Receivables:
- Policy Loans
- Agents' Loans
- Micro Insurance Loans
- Deposits and Prepayments
- Staff Debtors
- Other Debtors
- Less Provision for Impairment of Loans and Other
Receivables
17 Insurance Receivables
Insurance Receivables:
- Due from Contract Holders
- Less Provision for Impairment of Receivables from
Contract Holders
2012
Gh000
2012
Gh000
1,918
-
1,918
5,745
168
467
555
31
306
(73)
7,200
16,147
-
-
6
48
13
7,479
23,694
54
NOTES TO THE FINANCIAL
STATEMENTS - Contd.

11,775

-

-
6
49
13

5,058

2011
Gh000

5,656


374


581


415


48

380
(66)

2011
Gh000
1,577
-
16,901
Total Loans and Receivables


7,388
1,577
Annual Report & Financial Statements
18 Deferred Income Tax
2012 2011
Gh000 Gh000

Balance at 31 December 2,730 599
Deferred tax is calculated, in full, on all temporary differences under the liability method using a
principal tax rate of 25% (2011: 25%). The movement on the deferred income tax account is as
follows:
Company At Charged to Charged to At
1 Jan P & L Equity 31 Dec
GH'000 GH'000 GH'000 GH'000
Year Ended 31 December 2012
Property and Equipment:
- On Historical Cost Basis (240) (39) - (279)
- On Revaluation Surpluses 188 - - 188
Investment Property Fair Value Gains 651 2,170 - 2,821
Provisions for Impairment -

-

-

-
Net Deferred Tax Liability 599

2,131

-

2,730
Year ended 31 December 2011
Property and Equipment:
- On Historical Cost Basis (202)

(38)

-

(240)
- On Revaluation Surpluses 188

-

-

188
Investment Property Fair Value Gains 634

17

-

651
Provisions for Impairment -

-

-

-
Net Deferred Tax Liability 620

(21)

-

599
19 Bank and Cash Balances
2012 2011
GH'000 GH'000
Total 2,641 2,311
Deferred tax assets and liabilities, deferred tax charge/(credit) in the income statement, and
deferred tax charge/(credit) in equity are attributable to the following items:
Balance at 1 January 599 620
Income Statement (Credit)/Charge (Note 11) 2,131 (21)
Current Accounts 2,615

2,251

Cash in Hand 26 60
55
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
Annual Report & Financial Statements
20 Stated Capital
2012 2011
GH'000
i)
are as Follows:-
The Number of Shares Authorized and Issued
Ordinary:
ii) Proceeds from the issued shares are as follows:-
Ordinary Shares:


21 Contingency Reserve
The Company sets aside on an annual basis, a contingency reserve of not less than one per cent
of the total premiums or twenty per cent of net profit whichever is greater as required by the
Insurance Act (Act 724).
Movements in the contingency reserve are shown in the statement of changes in equity on pages
24 and 25.
22 Other Reserves
Capital Surplus
Reserve
Available for
Sale Reserve
Total
Gh000 Gh000 Gh000
Balance at 1 January 2012 307

330 637
Net change in fair value of available-for-sale financial assets -

352 352
Revaluation gains on property, plant and equipment 314

- 314
Tax effect of revaluation gains on PPE disposed -

- -
Balance at 31 December 2012 621 682 1,303

Issued 577,794,985 577,794,985
Authorized 2,000,000,000 2,000,000,000
Issued for Cash
Issued for Consideration Other Than Cash
Transfer from Income Surplus Account
Transfer from Capital Surplus Account
The capital surplus represents solely the surplus on the revaluation of buildings
and freehold land (included within property and equipment), net of deferred tax.
The reserve is not distributable.
2
7,995
3,493
6,500
56

NOTES TO THE FINANCIAL
STATEMENTS - Contd.
2
7,995
3,493
6,500
GH'000

Total


17,989 17,989
Annual Report & Financial Statements
23 Income Surplus

The income surplus balance represents the amount available for dividend distribution to the
members of the Company, except for cumulative revaluation surplus on the Company's investment
properties of GH 14,470,482 (2011: GH 4,338,962) whose distribution is subject to restrictions
imposed by Companies Code 1963 (Act 179) and regulation to the Insurance Act 2006 (Act 724).
Movements in the income surplus account are shown in the statement of changes in equity on
pages 24 and 25.
24 Actuary Liability

The Company determines its liabilities on Actuary liability contracts based on assumptions in relation to
future deaths, voluntary terminations, investment returns and administration expenses. A margin for
risk and uncertainty is added to these assumptions. The liabilities are determined on the advice of the
consulting actuary and actuarial valuations carried out on an annual basis.
The latest actuarial valuation of the Actuary liability was carried out as at 31 December 2012 by Stallion
Consultants Ltd, consulting actuaries, using the Gross Premium Reserve method for traditional
products. For Group Plans, the reserves were calculated by estimating the unearned premium reserve
as at valuation date, whilst the Account Values of the investment-linked policies as of the valuation date
was used to approximate the solvency reserve.
Significant valuation assumptions are summarised below. The assumptions changed in 2012.
Valuation Assumptions
The mortality rate are in accordance with the 1956 - 62 South African Ultimate Mortality Tables
published by th Actuarial Society of South Africa. This mortality rates were adjusted for the
Ghanaian market.
A weighted average rate of investment return is derived with reference to the portfolio that backs the
liabilities. For the current valuation, the rate of return was 15% (2011: 5%)
The current level of expenses is taken to be an appropriate expense base. An expense loading
corresponding to 15% of gross premium was used to cover future extra expenses. It has been
assumed that the current tax legislation and rates continue unaltered. However,future expenses will
increase at a rate of 10% per annum.
(a) Mortality
(b) Investment Returns
(c) Expenses, Tax and Inflation
Balance at 1 January
Transfer to Profit and Loss Account
37,209
10,908
57
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
2012
Gh000 Gh000
2011
26,355
10,854
Balance at 31 December

48,117 37,209
Annual Report & Financial Statements
25 Borrowings
Bank Loans
Current Portion
Non-Current Portion
Movement in Borrowings are as Follows:
At 1 January
Draw Down
Repayment
26 Trade and Other Payables
Managed Funds
Sundry Creditors
Accrued Expenses
Dividend Payable
Commission Payable
Unearned Interest
The total borrowings are in respect of a 2 year bank facility secured with a
mortgage over investment property of the company. Repayment is in 24
equal monthly principal and interest instalments ending December 2012.
58
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
2012
Gh000
0.00
1,192
-
(1,192)
Gh000
2011
1,192
1,192
1,192
2,160
(968)
1,192
-
-

2012
Gh000
-
1,114
1,490
-
-
575
2011
Gh000
301
1,677
-
-
476
At 31 December -

Total borrowings 0.00
Other Payables 11
3,190
4
2,458
Annual Report & Financial Statements
27 Cash and Cash Equivalents
For the purposes of the cash flow statement, cash
and cash equivalents comprise the following:
Cash and Bank Balances
Deposits with Financial Institutions
28 Related Party Transactions
Directors' Remuneration
Directors' Fees
59
NOTES TO THE FINANCIAL
STATEMENTS - Contd.
2012
Gh000




2012
Gh000

299
2,641
7,547
2011
Gh000
2,311
5,126


2011
Gh000
175

Treasury Bills Maturing Within
90 days of the Date of Acquisition 16,147
26,335
11,775
19,212
Other Remuneration

58
357
98
273
Annual Report & Financial Statements

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