Enterprise Group Limited Facts Behind the Figures 18Th Oct 2018

Enterprise Group Limited Facts Behind The Figures 18th Oct 2018

Ghana Stock Exchange

1 Content • Overview • About Enterprise Group • Industry Overview • Economic Drivers • Regulatory Environment

• Business Highlight- 2017 • Strategic Objectives • Our Strengths • Partnerships • Awards • Financial Highlights

• Financial Review • Q2 Financial Summary • Financial Progress • Performance & Value Measures

• Conclusion & Outlook • Future Priorities

• Questions ABOUT ENTERPRISE GROUP Enterprise Group Limited is a Financial Service company offering products and services across the entire ‘human life's’ journey (cradle to grave) MISSION VISION

In all our markets, our pedigree will be recognized, our We provide all who come into contact with us their desired strength respected, our expertise valued and our advantage… because we are the best at what we do! solutions sought by ALL who desire an advantage in life

Our Core Values 3. Excellence 4. Professionalism 2. Trust

1. Friendliness

5. Reliability Evolution of EGL

 British Merchants acted as agents for home-based Insurance Companies [Alliance Insurance & Northern Assurance] 1920’s  Royal Exchange Assurance commenced business in the Gold Coast 1924  Royal Exchange Assurance merged with Guardian Assurance 1968  Merger resulted in incorporation of Guardian Royal Exchange Assurance 1971  40% shares of GRE sold to the Ghanaian public pursuant to an Insurance Decree 1973  Name change from GRE to Enterprise Insurance Company Limited 1977  EIC was listed on the Ghana Stock Exchange 1990  Ventures & Acquisitions acquired 40% of EIC shares 1998  EIC set up Life Company 2001  Restructured with a Holding Company : Enterprise Group Limited 2010 6 Entry into Markets 2001: Enterprise Life 1920/1971 2013: Enterprise Life Gambia Enterprise Insurance

2011: Enterprise Trustees

2010 Enterprise Group 2011: Enterprise Properties Limited 2015: Enterprise Funeral Services (Transitions) EGL –Legal Structure 2018

Enterprise Group Ltd

*Enterprise *Enterprise *Enterprise *Enterprise Life Insurance Properties Trustees 60% 60% 100% 60%

**Enterprise Life 7th Avenue Gambia Properties 75% 100%

Enterprise Funeral Services * Minority interest owned by Black Star Holding Limited (Transitions) ** Minority interest in Gambia held by The Trust Bank of Gambia 100% NB: EGL’s interest in EI , Properties and Trustees will be 75%/70%/80% by year end

8 Nature of Subsidiary Business

Enterprise Life Enterprise Insurance Enterprise Trustees o o Family Income Motor o Management of o Protection Plan Fire Pension Schemes o o Lifetime Needs Plan Marine o Administration of o o Educare General Accident Pension Schemes o Funeral Finance Plan o Engineering o Ladycare Plan o Aviation o High Networth Plan o Ghanaians abroad

Enterprise Properties Enterprise Funeral Services

o Property Management o Mortuary Services service to Group o Funeral Services o Development of Prime sites for sale and lease Key EGL Executives Kwame Ofori Managing Director Enterprise Keli Gadzekpo Nigel Nunoo Insurance Group CEO Group CRO

Jackie Benyi Managing Director Enterprise Life C C Bruce Jnr Amma Ansah Group COO Group Head HR Joseph Ampofo Managing Director Enterprise Trustees Daniel Larbi-Tieku Group CFO Alex Ahenkorah Group Head Audit Philip Amamoo GM Enterprise Properties

Sadia Chinery-Hesse Group Head Seyram Akotey Jodene Smith Legal & Compliance Group CIO GM Enterprise Funeral Services Page 10 EGL Share Structure: As at 30th September 170,817,825 shares in issue

 About 3,528 shareholders  Top 20 shareholders control 84.2%  Non-Ghanaian Shareholders control 30.2% of Top 20 share  Institutional shareholders constitute 87% with retail at 13%

26%

74%

Local Offshore 11 Group Income Composition

 Enterprise Group derives Income from 2% 2% 5 different sources 21%  Insurance Premium  Pension Fee Income 3%  Investment Income  Rental Income 72%  Funeral Services Fees  Strategy is to improve contribution of all income sources

Insurance Pension Investment Rental Others

12 Industry Overview We play in 4 different Sectors Insurance Sector . General Insurance . Life Insurance Pensions Industry Investment Property Development Funeral Services

14 Competitive Landscape: General Insurance

 There are 27 registered General Insurance Prem Growth 2014 2015 2016 2017 CAGR Companies Enterprise 14.8% 43.5% 34.1% 19.2% 31.9%  Made up of 6 foreign and 21 local Sic General 1.1% 22.9% 15.2% 1.2% 12.7%  Top 7 in the industry control about 65% of the Star Insurance 25.0% 28.6% 30.7% 8.3% 22.1% market Vanguard 9.7% 25.1% 33.4% 2.4% 19.6%  Market growth influenced largely by Top 7 players Hollard 17.5% 22.1% 8.8% 6.5% 12.3%  CAGR for Enterprise above both Industry and Top 7 players Glico Gen 16.9% 47.9% 1.5% (1.1%) 14.1%  Enterprise Insurance is a strong No.2 Activa 23.9% 42.3% 6.7% 33.9% 26.7%  Industry premium at end of 2017 was Gh¢1.4b Industry 13.2% 30.7% 24.2% 26.8% 27.2% including Oil & Gas pool

Market Share 2014 2015 2016 2017  Very competitive industry: Low Enterprise 10.7% 11.7% 12.7% 13.6% pricing. Systemic industry risk?? Sic General 17.2% 16.1% 15.0% 13.7%  50% of market dominated by Motor Star Ass 10.8% 10.6% 11.2% 10.9% Vanguard 8.8% 8.5% 9.1% 8.4% Hollard 9.6% 9.0% 7.9% 7.5% Glico Gen 7.0% 8.0% 6.5% 5.8% General Industry ( Source: NIC 2017 Annual Report) Activa 4.1% 4.5% 3.8% 4.6% Competitive Landscape: Life Prem Growth 2014 2015 2016 2017 CAGR  There are 22 registered Life Companies Enterprise 26.2% 28.3% 17.4% 26.5% 24.0%  4 foreign controlled and 18 local SIC Life 24.4% 14.5% 17.5% 21.3% 17.7%  Industry CAGR 2014-2017 is 23.1% StarLife 27.6% 21.0% 28.0% 43.2% 30.4%  Enterprise Life CAGR at 24.% Glico 7.4% 8.8% 27.4% 19.4% 18.3%  Prudential Life is the fastest growing on a low base MET Life 22.1% 13.6% 5.6% 25.7% 14.7%  Industry premium as at 2017 was Gh¢1.1B Old Mutual 6.6% 38.2% 46.8% 66.4% 50.0%  Top 7 companies control 85% of market Prudential 118% 76.8% 63.2% 55.6% 64.9%  Enterprise Life is leader with 27.5% share Industry 23.6% 21.6% 21.7% 26.0% 23.1%

Market Share 2014 2015 2016 2017  Industry flooded with 2 main Enterprise 26.9% 28.4% 27.4% 27.5% products ( Risk and savings) SIC Life 27.3% 25.7% 24.8% 23.9%  Concentration around formal sectors Star Life 11.8% 11.7% 12.3% 14.0% of economy Glico 10.3% 9.2% 9.6% 9.1%  Huge market potential in informal sector Met Life 4.5% 4.2% 3.7% 3.7% Old Mutual 2.8% 3.2% 3.9% 3.7% Prudential 2.0% 2.9% 3.9% 4.9% Life Industry ( Source NIC 2017 Annual Report) Competitive Landscape: Pensions

 33 registered Corporate Trustees  With 66 Fund Managers and 16 custodian banks  Market share determined by AUM  Tier 2 and Tier 3  4 Corporate Trustees make up Peer group 1: 71% of share of market

AUM ‘000 2014 2015 2016 2017 Enterprise 648,000 1,095,011 1,711,000 Axis Pensions 491,069 623,976 Petra Trust 348,459 519,891 United Pensions 281,208 491,859

Others 589,819 751,633

Industry AUM 1,116,492 2,358,555 3,842,370 7,699,442

( Source NPRA 2016 Annual Report) Economic Drivers of Business

 Insurance costs are usually considered discretionary spending  Therefore influenced hugely by disposable incomes  Level of economic activity (GDP)  Inflation  Currency stability : both cost push (Cost of spare parts) and impact on general price levels  Stock market performance (CPI)  Money market performance (Interest rates)  Level of sophistication in the financial markets

18 Regulatory Environment

 3 main regulators  NIC  NPRA  SEC  GSE  Reviews:  No premium No cover  Minimum tariff for Third party Motor Insurance  Review of Investment guidelines of Pension schemes  Possible increase in minimum capital [implications:

19 Strategic Agenda Strategic Initiatives embarked on since 2015 focused on managing our businesses to achieve a GHS1B Income and enhance profitability

Create an Eco System Consistent & Quality Growth in Revenues Synergies from Shared Services 1 2 3 Capability and Capacity to provide Profitability, financial capability & Realize synergies from shared clients with financial security & Liquidity to maintain market Services and common business support with products and services leadership Systems and processes

Innovation & Technology Strategic Alliances to create value Develop full potential of staff

4 5 6

Continuous Innovation & Fit Relationships and partnerships to Release full potential of For purpose Technology Drive business objectives employees

Marketing & Branding 7 Market History of Leadership Growth & Management Progress Team

OUR STRENGTHS Partnerships Product Portfolio

Complimentary Industry businesses Potential  New Partnership with Leapfrog Strategic Africa Investments ( Majority owned by Prudential Financial, Inc. of the United States, which is not affiliated to Pru Plc headquartered in the UK)  Financial support for expansion ( Underwriting of RI)  US$50m realized from RI  Technical support (Reinsurances, Actuarial , Product development and pricing  Bancassurance partners  First Atlantic Bank  Republic Bank Ghana Limited  Barclays Bank Ghana Limited Entity Award Year Enterprise Life Leader in Financial Services Sector – 2010; 2011; GIPC Club 100 2012; 2014 Enterprise Life Highest ranked Insurance Company 2010-2016 in Ghana- GIPC Club 100 Enterprise Life Life Insurance Company of the year- 2009; 2011; CIMG 2013; 2017 Enterprise Life No.1 Premium Income Earner in 2015; 2016 Ghana Insurance -BFT Enterprise Trustees Most transparent corporate Trustee 2017 (NPRA) Enterprise Insurance CIMG Insurance Company of the year 2013; 2014 Enterprise Insurance CIMG Hall of Fame Insurance 2016; 2017 Enterprise Insurance Gold Award, BFT Awards 2008; 2010 Enterprise Life 3rd Most Prestigious Company, Club 2014

Numerous Awards Numerous 100 Awards Highlights- EGL 2017

Total Assets Total Net Income 28% The momentum 29% GH¢1.0b achieved out of the GH¢543m execution of various actions ROE Embedded Value from the strategic 35% 24.1% GH¢449m actions is yielding improved performance PAT 28% GH¢87m

25 Q2 Results Performance Summary- Q2 2018

Gh¢ ‘000 Q2 18 Q2 17 18 vs 17 Q1 18 vs Q1 17

Total Income 286,875 245,179 17.0% 41.8%

Total Expenses (264,633) (218,275) 21.2% 42.8%

Profit for the 18,977 22,864 (17.0%) 28.0% period Total Assets 1,284,681 923,347 39.1% 39.9%

Total Equity & 543,758 341,038 59.5% Reserves Financial Progress Market Cap Gh¢ M Share Price Evolution  Market Cap increases in line with share price appreciation  Market Cap higher than NAV since 2013  EIC Listed in 1990, delisted in 2010  Increased confidence on the part of investors  EGL listed in 2010  Market Cap grew from ¢50 million in 2011 to ¢495 million in 2017 Gh¢ M 2011 2012 2013 2014 2015 2016 2017  Market Cap at Sept 18 was ¢520 million EGL NAV 75 107 135 223 276 318 309

495 3.70 500 4.00 400 Gh¢ Million 320 321 3.00 2.40 2.40 1.88 1.75 300 247 231 2.00 200 1.00 0.50 0.38 0.48 63 100 50 - 2010 2011 2012 2013 2014 2015 2016 2017 0 2011 2012 2013 2014 2015 2016 2017 600 543 Group Net 500 Gh¢ M Income 421 400 349 288 300 231  Made up of : 200 146 96 1. Insurance Premium 100 2. Investment Income 3. Pensions Fee Income 0 2011 2012 2013 2014 2015 2016 2017 4. Rental Income 5. Others

 Growth at 50% + at early stages 59%  High 20% the last 4yrs 60% 52%  Drop in growth rate in 2014: Stock market 38% 40% 29% performance in 2014 @ 5.4% (2013 25% @78.8%) 21% 20% 20%  CAGR (2014-2017) at 24% 0% 2011 2012 2013 2014 2015 2016 2017  PBT growth in line with Income growth  Decline in 2015 due to Investment Profit After Tax returns (PAT Profit Before Tax PBT (GHSm)  PAT trend consistent with top line

100 growth trends  90 Gh¢23.7m in 2011 to Gh¢87m in 2017 80  70 76 CAGR for period at 24.56% 60 59 48 600 40 33 25 542.7 20 500 - 2011 420.5 2012 2013 400 2014 2015 2016 349.3 2017 300 PBT y-o-y change 288.4 50% 46% 46% 230.9 200 40% 29% 30% 145.7 28% 87.1 100 95.9 61.3 68.0 20% 39.7 51.6 19% 23.7 29.9 10% 0 0% 2012 2011 2012 2013 2014 2015 2016 2017 -10% 2013 2014 2015 PAT Income -20% 2016 2017 -15% Subsidiary Contribution to Group Net Income

3% 0%  Enterprise Life Assurance (70%) 4%

 Ghana 20%  Gambia  Enterprise Insurance (20%)  Enterprise Trustees (2.5%)  Enterprise Properties (4%) 70%  Enterprise Funeral Services (0.4%)

Life Insurance Trustees Properties EFSG

387 400 304 300 256 GI Life 203 200 166 106 94 112 69 100 65 46 59 27 27 26 24 23 44 0 0 19 0 2011 2012 2013 2014 2015 2016 2017 32 Subsidiary Contribution to PBT Subsidiary contribution to PBT

3% 7%

 Enterprise Life Assurance (72%) 17%  Ghana  Gambia  EFS  Enterprise Insurance (17%) 72%  Enterprise Trustees (7%) Life (incl EFS) EI ET EP (incl Inv)  Enterprise Properties & Investments (3%) PBT 80 60 68 40 45 56 23 41 9 15 23 20 16 2 4 6 8 13 26 - 11 13 -20 2011 5 16 2012 2013 7 2014 2015 2016 -6 2017

GI Life Other

33 Embedded Value • Investors will have noted that EGL discloses the Embedded Value of Enterprise Life, in line with the best practice of most international life insurers. • The reason that EV reporting has gained such prevalence is due to the recognition that the net asset value of a life insurer is often well understated. This is due to prudent requirements in the determination of the liabilities of such companies which can be very long-term in nature. In addition to depressing the net asset value, this prudence often results in a delayed recognition of profits particularly in the case of a rapidly growing company like Enterprise Life. • EV methodology introduces a component called the Value of In-force (VIF) to compensate for the understatement of the net asset value. Simply put the VIF capitalises the expected surplus that is expected to emerge from the existing in-force book in the future. All else being equal as experience emerges which is less onerous than that assumed in setting up the liabilities, additional surplus will emerge. The VIF calculation anticipates the emergence of this surplus and applying a risk discount factor that reflects both the time value of money (as well as a more subjective determination of the likelihood of the emergence). • The EV itself is the addition of the net asset value and the VIF. The table below sets out the NAV of EGL and the EV of EL (which comprises of the NAV + VIF of EL) :

• It can be seen from the table that the VIF, the discounted value of future surpluses anticipated on the existing book of EL was more than double the NAV of EL at the end of 2017. • (The Cost of Capital (CoC) is a somewhat theoretical additional component which gives recognition that capital is required to be held for a block of business over its entire anticipated duration. This is released back to the business in time but there is a cost as it too needs to be discounted at the risk discount rate – which is higher than what the company can expect to earn on the capital). • The EV of EL can be seen to be roughly three times the NAV of EL at 31 December 2017. Embedded Value Earnings

• Enterprise Life all discloses its Embedded Value Earnings. • This is simply the increase in embedded value from one reporting period to the next, giving due recognition to any capital movements. In the case of Enterprise Life this most typically involves adding back to the earnings the quantum of dividend that was paid to shareholders.

EV earnings (GHSm) EV earnings y-o-y change 120%

180 100% 95% 159 160 140 80% 65% 120 60% 100 76 81 80 72 73 40%

60 44 20% 11% 40 5% 20 0% 0 2013 2014 2015-3% 2016 2017 2012 2013 2014 2015 2016 2017 -20% Performance Measures  Directs our market leadership  Above market growth for both Life & Insurance Premium General Investment Income Income  Life is No.1 Life Insurance Company  General is No.2 General Insurance Company

 Currently contributes about 25% to Total Income 29% 30% 24% 24% 23%  Ensures value for money for our clients 21%  Determines the unit price for our policies 20%

10%

0% 2014 2015 2016 2017 CAGR 150 135 ¢ M 85 100 68 75 75 2014 2015 2016 2017 50 32 15 E/Life 26% 26% 16% 25%

0 Industry 23% 22% 22% 26% 2011 2012 2013 2014 2015 2016 2017

E/Insurance 16% 43% 30% 12%

Industry 13% 30% 25% 11%  An indicator of efficiency and profitability Total Expense Ratio  Total expense as a % of Net Earned Premium  International acceptable ratio is <40% Claims Ratio: General Insurance 2014 2015 2016 2017 E/Life 36% 37% 36% 35%  How well an Insurance company pays claims: Fair customer treatment Industry 61% 65% 65% 64%  International standard ranges between 40% to 60% E/Insurance 55% 50% 51% 59%  Measures how much policyholders get back for every cedi of premium Industry 92% 115% 89% 86%  Enterprise Insurance has consistently out performed market (below market average) Keeping Our Promise-Claims Keeping Our Promise to Our Customers - Benefit & Claims Paid

300.0 275.7 40.0% 80% 37.1% 62% 63% 61% 35.0% 53% 250.0 33.1% 60% 207.2 30.0% 200.0 178.1 37% 37% 39% 37% 25.0% 40% 129.9 150.0 114.7 20.0% 16.3% 15.0% 20% 100.0 13.2% 10.0% 50.0 0% 5.0% 2014 2015 2016 2017 - 0.0% 2013 2014 2015 2016 2017

Net Benefits & Claims Net Benefits & Claims Growth Dividend Trends ROE  EGL is a dividend paying company  Policy is to pay dividend reflecting real growth  Weighted average return higher than 1 Yr risk  Special dividend of Gh0.19/share declared in 2014 free return in addition to normal payout

0.25 0.215 Dividend /share 0.2 0.15 35.00% 0.1 0.045 0.05 30.70% 0.032 30.00% 0.05 27.30% 0 25.00% 24.10% 22.40% 22.5% 2012 2013 2014 2015 21.20% 20.00% 20.9% 19.2% 19.0% 21.6% 16.2% 15.00% 14.60% 13.30% 11.8% Gh¢’000 2011 2012 2013 2014 2015 2016 2017 10.00% Dividend 0 4,199 5,904 28,356 6,691 0 0 5.00% Amt 0.00% 2011 2012 2013 2014 2015 2016 2017 ROE 1Yr TB Total Assets 1200 1035  Total Assets increased from Gh¢153m in 1000 2011 to Gh¢1,035m in 2017 812 800 TA 633 600 486 Others PPE 7% 346 4% 400 Cash 224 14% 153 200 Securites 55% 0 Properties 2011 2012 2013 2014 2015 2016 2017 20% Capital-Solvency

Cash flow CAR :  NIC insists on minimum of 150%  Generated positive and increasing cash  Trend shows stability and financial strength flow from operating activities

Enterprise Enterprise GhC M 153.6 153.8 Life Insurance 160 140 2011 181% 250% 120 2012 219% 254% 100 80 2013 227% 208% 52.1 60 41.6 2014 273% 218% 40 17.4 14.2 15.2 20 2015 452% 182% 0 2011 2012 2013 2014 2015 2016 2017 2016 408% 204% 2017 405% 137% Future and Priorities Key Challenges

 Pressure on disposable incomes

 Variety of well structured long term financial assets

 Fight for talent

 General Reputation & Perception people have on insurance in Ghana  Delayed Claims payments  Misselling  Transparency CONCLUSION

Outlook remains optimistic,

But we must………  Focus on our entry into Nigeria as it presents further growth into the future  Continuously improving contribution of each segment to minimize over reliance on a single line  Repositioning Enterprise Properties to extract maximum value from idle assets  Consolidate Group wide Shared services for synergies, efficiencies and cost optimization  Leverage on our IT drive to enable cross-selling across businesses in the operating companies  Focus on retail segment and a well structured premium collection system  Full let of Advantage Place  Continuous education and improved customer service to make Insurance a necessary commodity  Channeling customer feedback into innovative product design Contact Information

PHYSICAL ADDRESS Enterprise House Investor Relations Desk No.11 High Street 1. Daniel Larbi-Tieku (GCFO) Accra [email protected] Ghana

POSTAL ADDRESS Enterprise Group 2. Keli Gadzekpo (GCEO) PMB 150, GPO Accra [email protected] Ghana CONTACT DETAILS Tel # +233 302 634777 Fax # +233 302 677073 3. Sadia.Chinery-Hesse (Group Legal) E: sadia.chinery- [email protected] [email protected] www.enterprisegroup.net.gh THANK YOU