UAP INSURANCE RWANDA LIMITED Old Mutual Life Assurance | 2020 Annual Report and Financial Statements

ANNUAL REPORT & FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

LIVING

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contents

ABOUT US 6 Old Mutual Africa Our Purpose, Vision & Values UAP Old Mutual Group East Africa UAP Holding Limited East Africa UAP Holding PLC East Africa Our History Old Mutual Limited at a Glance Uap Insurance Rwanda Our Strategy Strategy Pillars Our Story

DIRECTORS 24 Board of Directors Director Profiles

KEY STATEMENTS 32 Chairman’s Statement Managing Director’s Report

CORPORATE REVIEW 38 Corporate Governance Report Risk Management Report

SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITY 52

DIRECTORS’ REPORT 60 Directors’ Report Statement of Directors’ Responsibilities Statement of Corporate Governance Report of the independent auditor to the shareholder of UAP Insurance Rwanda Limited

FINANCIAL STATEMENTS 70 Statement of Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cashflows Notes to Financial Statement

BETTER • SIMPLE • LIFE UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

ON 17 MAY 2020 OLD MUTUAL TURNED 175. This is an incredible milestone that we can be really proud of. It means we have succeeded in staying relevant to our customers and responsive to their changing needs, year after year for 175 years.

East Africa • Kenya • Uganda • Tanzania • Rwanda • South Sudan

OLD MUTUAL LIMITED AFRICA West Africa WHO WE ARE • Ghana Old Mutual was established in Cape Town in 1845 as South Africa’s first • Nigeria Southern mutual life insurance company, offering financial security in uncertain times. Africa • Namibia Today, the Group has grown into a premium pan-African financial services • Botswana Group that offers a broad spectrum of financial solutions to retail and corporate customers across key market segments in 14 countries, with • Zimbabwe listings on five stock exchanges. • Malawi We now employ about 30,000 people in our primary operations in South • Eswatini Africa and the Rest of Africa, and a niche business in China. • South Africa

◊ Africa (South Africa, Namibia, Botswana, Zimbabwe, Kenya, Malawi, Tanzania, Nigeria, Ghana, Uganda, Rwanda, South Sudan and eSwatini) ◊ Asia (China)

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OUR PURPOSE, VISION & VALUES

Always act with integrity

Agile innovation Champion the that makes a customer difference

Our purpose Our vision Our values Championing To be our customers’ most trusted The power of mutually positive lifetime partner, passionate Trust and diversity and futures every day. about helping them achieve their accountability inclusion financial goals.

Respect for each other and communities we serve

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UAP OLD MUTUAL GROUP UAP HOLDINGS PLC EAST AFRICA EAST AFRICA

The UAP Old Mutual Group is comprised of Faulu Microfinance UAP Holdings is an East African financial services group which comprises seven subsidiaries that Bank, UAP Holdings Limited and it’s subsidiaries and the underwrite life and non-life insurance risks in Kenya, Uganda, Tanzania, South Sudan and Rwanda, a stock Old Mutual Life Assurance and Asset Management Group of brokering company in Uganda and two property companies in Uganda and South Sudan. Companies, forming one of the largest financial services groups Our customers can now with a growing footprint in East Africa. The Group was formed be assured of holistic in 2015 after Old Mutual acquired a controlling stake in Faulu solutions and unrivalled Microfinance Bank in 2014 and UAP Holdings in 2015. convenience to enable ORGANISATIONAL STRUCTURE them realise their The Group pursues an integrated financial services model that dreams. avails to customers a comprehensive range of financial solutions KENYA which include Investment, Insurance, Banking and Savings, through a wide and more accessible distribution network. OLD MUTUAL HOLDINGS PETER MWANGI LIMITED The UAP Old Mutual Group is part of Old Mutual Limited (OML). GROUP CEO, UAP OLD As part of OML, UAP Old Mutual is able to leverage technology, MUTUAL GROUP technical expertise and to offer broad career growth prospects for 61.93% its employees. KENYA UAP HOLDINGS PLC (38.07% held by other shareholders) UAP HOLDINGS LIMITED EAST AFRICA 100% 100% 100% 65% 100% 65%

UAP Holdings is an East African Services Group offering Insurance, Investment Management, Property MAURITIUS KENYA KENYA UGANDA KENYA UGANDA Development & Investments, Security Brokerage and Financial Advisory. Currently, UAP Holdings has 11 UAP Global UAP Life UAP Insurance UAP Financial UAP Properties UAP Old Mutual Businesses operating in Kenya, Uganda, South Sudan, Rwanda and Tanzania Services Assurance Company Services Limited Kenya Limited Life Assurance Limited Limited Limited (Dormant) Uganda Limited (33% held by UAP Old Mutual Insurance (35% held by other Uganda & 2% held by shareholders) other shareholders)

11 100% 55% 100% 53% 100% BUSINESS SOUTH SUDAN UGANDA MAURITIUS UGANDA KENYA

UAP Insurance UAP Properties UAP Africa UAP Old Mutual UAP Investments South Sudan Limited (Uganda) Limited Insurance Uganda Limited Limited Limited (Dormant) (45% held by UAP Mutual 5 Insurance Uganda) COUNTRIES 70% 100% 60% • INSURANCE SOUTH SUDAN RWANDA TANZANIA • INVESTMENT MANAGEEMENT • PROPERTY DEVELOPMENT AND INVESTMENTS UAP Properties UAP Insurance UAP Insurance Limited Rwanda Limited Tanzania Limited • SECURITIES BROKERAGE (40% held by other • FINANCIAL ADVISORY (South Sudan) Shareholders)

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OUR HISTORY

OUR JOURNEY THROUGH 100 YEARS IN EAST AFRICA & 175 YEARS IN AFRICA

Expansion of private asset management Asserting presence in Expanding to A significant Old Mutual Old Mutual Asset the financial Tanzania acquisition enters the A fruitful Service Management Celebrating A humble becomes largest Organising industry UAP enters the Kenyan market UAP is merger expansion UAP makes a KES. Milestones beginning private asset the business Old Mutual Tanzanian market, 2B Corporate Bond Directed from Salisbury incorporated UAP Insurance Asset Management and Management acquires a the same year its issue and lists on UAP marks 100 Old Mutual is formed in until 1930, a branch is The Company Company is formed Investment Services are Company with KES. UAP Holdings controlling stake shares start trading the Fixed Income years in East Africa South Africa as a mutual opened in Nairobi on incorporates as Provincial after the merger of introduced to customers 30B AUM following Limited is formed in Nairobi stock over the counter. Also, Securities market while Old Mutual insurance company by Hartridge Street (now Insurance Company of Union Insurance and through the Old Mutual acquisition of to consolidate the broker Reliable Faulu converts into a segment of the Marks 175 years in John Fairbairn. Kimathi Street). East Africa. Provincial Insurance. Invesment Services. Barclays Trust. Group subsidiaries. Securities. microfinance Bank. NSE. Africa.

1845 1930 1978 1994 1997 2002 2007 2010 2013 2014 2020

1920 1973 1992 1996 2000 2004 2009 2012 2014 2015

UAP enters the Government Faulu’s Making strides Expanding A significant Bigger Kenyan Market legislation inception Exploring new in the industry to Rwanda acquisition & better affects Proudly UAP commences Faulu is born as a Micro- territories Faulu bank converts Rwanda Recapitalization Old Mutual acquires operations in Kenya. operations lending program in Kenyan UAP enters the to a Deposit Taking Business with KES. 2.7B by a majority 60.66 % Mathare Slums with a AXA acquires Old Mutual remains AXA divests and UAP Uganda Market. Microfinance, established Old Mutual, leads controlling stake in Capital of KES. 600,000. operational but is UAP is acquired by Kenyan regulated by CBK in 2012 to acquisition of a UAP Holdings. closed to new business UAP becomes part shareholders. and with a license to majority 67% stake acquisition following of AXA group, after mobilize deposits from in Faulu Bank. government legislation AXA acquires UAP the public. on income which in France. reduces concession on life assurance premiums and increases taxation on domestic life offices.

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OLD MUTUAL LIMITED UAP INSURANCE RWANDA AT A GLANCE UAP Insurance Rwanda is a member of the UAP Old Mutual Group in OLD MUTUAL IS AN AFRICAN FOCUSED East Africa, which is a subsidiary of Old Mutual Limited (OML) Africa. INVESTMENT, SAVINGS, INSURANCE & BANKING GROUP. The company was established in 2012, with a vision of being Rwanda’s revolutionary financial services company, committed to enhance the Old Mutual began in Cape Town in 1845 as South quality of life by delivering peace of mind and financial freedom. Africa’s first Mutual Life Insurance Company, offering financial security in uncertain times. Today, 174 years on, Old Mutual Limited offers a UAP Insurance Rwanda Key highlights broad spectrum of financial solutions to retail and corporate customers across key markets in 14 countries; serving a combined 11.3 million customers. 75 6 OLD MUTUAL LIMITED (OML) IS NOW EMPLOYEES BRANCHES ANCHORED IN AFRICA. WITH THE LISTING ON THE JOHANNESBURG STOCK EXCHANGE AND CROSS - LISTING ON EXCHANGES IN MALAWI, NAMIBIA AND ZIMBABWE, OML IS NOW AN AFRICAN BUSINESS FOCUSED ON SERVING 38,000 CUSTOMERS ACROSS THE CONTINENT. CORPORATE & RETAILS CUSTOMERS

Old Mutual’s customers are at the heart of Service offering everything it does. The success of the Company is as a result of the continued support and trust of its Corporate customers . Old Mutual aims to be the customers • Medical and employee benefits most trusted financial partner helping them • Terrorism & sabotage achieve their lifetime financial goals while investing • Directors & officers’ liability their funds in ways that will secure a positive future • Agriculture-Livestock and crop for themselves and their families. • Aviation, Engineering • Asset all risk, fire, marine

Retail • Home insurance • Travel insurance • Motor insurance (group & individuals) • Personal accident (group & individuals) 11.3M 14 • Family medical CUSTOMERS COUNTRIES • Fire & related perils • Agriculture- Livestock

SME R1,044.1 BN • Traders Comprehensive FUNDS UNDER MANAGEMENT • Motor Insurance • Personal accident • Fire & related perils • Agriculture – Livestock and crop

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OUR STRATEGY

Built on

Strong Trusted Enviable 29,830 Meaningful Agile and Driving financial base brand distribution committed contributor to the resilient transformation force employees green economy STRONG STRONG of history FOUNDATION Our high performing We will make it evident that WHY DO WE EXIST? Engaged employees Old Mutual Cares through will make meaningful Our purpose is to champion solutions and actions that Our refreshed strategy builds on a strong contributions to achieve mutually positive futures every support customers, their our purpose, vision and day foundation of serving customers for families, and communities more than 175 years, our trusted brand C E values and enviable distribution scale. We considered the environment that we operate in, changing customer needs WHERE DO WE WANT TO driven by technology, fierce competition We will aim to be Always BE? and sustainability in order to stay relevant present first by ensuring that We will deliver Solutions Our vision is to be our customers’ to all stakeholders in the longer term. propositions and advice are that lead in service available to customers when and performance, for 1st choice to sustain, grow and Our strategy is deliberate in building on and how they need them, insurance, investments protect their prosperity our foundation by aggressively driving and through our brand that is and supporting banking brand differentiation, providing solutions A always top of mind S needs that meet changing customer needs and enabling a seamless transition between face to face and digital journeys. We draw on our WHAT WE WILL ACHIEVE talented and engaged employees to achieve We believe that delivery on the these aspirations. We remain mindful of our CARES pillars will enable us to responsibility to society and the important We will build Rewarding digital engagement be our customers’ 1st CHOICE role we play in ensuring positive futures for through considerate and and responsibly build the MOST our customers and communities. effective use of advice Mutual VALUABLE BUSINESS in our and customer data R strategy industry

means a connection with means our employees means contributing to a our customers’ needs, feel a deep sense better society journeys and lives of belonging and Mutual Mutual connection with our Mutual strategy strategy purpose strategy

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STRATEGY PILLARS

OLD MUTUAL ALWAYS PRESENT REWARDING DIGITAL ENGAGED SOLUTIONS THAT CARES C FIRST A ENGAGEMENT R EMPLOYEES E LEAD S • We demonstrate “care” by • We will maintain our • We will convert our • We want all our employees • For solutions where we executing our Responsible dominance across our understanding of our to connect with, and be fully are already competitive Business framework through physical channels. We plan customers’ goals and aligned to our purpose, vision and market leading, we our seven focus areas, to on translating our success in circumstances to provide and strategy. By creating will focus on enhancing deliver shared value and these channels with digital personalised, regular and an environment where their flexibility and ease of make a positive impact to solutions that provide a meaningful engagement. employees find a deep sense use. We will continuously all of our stakeholders. Our seamless and integrated of connection and meaning improve solutions and launch focus areas are: Responsible customer experience across • At the centre of this intent in our purpose, we can ensure innovative and refreshed Investing, Environmental all touch points. Enhancing is ‘MyOldMutual’, a pan- that they will be passionate propositions. Impact, Financial Education our physical reach with a African digital platform that about delivering meaningful and Inclusion, Education, digital presence will help us aims to deliver a seamless customer experiences at • In this way, customers will be Skills Development, to be “always present”. and integrated customer every point of the customer able to meet all their primary Diversity and Inclusion and experience across our full journey. financial services needs with Entrepreneurship. • This will be supported by a suite of capabilities. This us with easy access. strong brand presence so includes financial advice, • We are also driving the • To drive financial inclusion that when customers think of financial education, rewards, requisite culture shifts to and support customers financial services, they think data driven nudges and a full create an agile and execution- through financial education, of us first. suite of modular products. focused organisation. we offer them accessible and This will enable us to offer affordable solutions. customers the right solutions at the right time, enabling them to reach their financial goals.

• To be known as a financial • To establish brand preference • To deliver a meaningful • Building a compelling • The delivery of new retail services provider that truly on the African continent and personalised customer employee value proposition product propositions that will cares for its stakeholders and through increased depth experience, that is integrated that attracts and retains key differentiate our protection, delivers shared value on the and scale of face to face and across digital and face to talent. Creating an engaged savings and income solutions. continent. digital distribution. This will face mediums through the workforce that embraces new These propositions will enable enable us to establish and MyOldMutual platform. ways of working to deliver key shifts that our customers maintain a leading market on strategic initiatives and require including customised

OUR share. • To deliver a meaningful always puts our customers solutions and the best advice and personalised customer first. delivered through a seamless

OBJECTIVE experience, that is integrated experience. across digital and face to face mediums through the MyOldMutual platform.

• Developing a climate change • Deliver brand differentiation • Increase active digital • Deliver focused culture • Strengthen the Old Mutual response that will enable us on the continent by having customers by at least interventions to drive Protect proposition through to make a meaningful impact fewer, but more impactful 50% through continued execution and agility to simplified underwriting, in Africa. brand initiatives and enhancement of the achieve an engagement further premium flexibility through the use of solution- MyOldMutual digital platform. index of over 5.0. and improved adviser • Launch new Financial led marketing. We aim to enablement. Education and Inclusion increase brand consideration • Increase the Rewards • Continued progression of initiatives across select across Africa by 5% –10%. programme member base remote working practices. • Launch of savings and African countries. and the contribution to life income proposition alongside • Drive a digital marketing sales by at least 40%. • Embedding shifts in reward the Old Mutual Protect • To grow our Listed Equity strategy to increase sales and structures to retain key talent range utilising the same core engagement. • Integrate a capability that and reward for substantial infrastructure.

MEDIUM Stewardship offering over asset portfolios not managed automates the matching performance to develop an by us to at least R20 billion. • Grow adviser and franchise of customer goals into ownership orientation to • Accelerate growth in footprint by at least 3% and MyOldMutual. create long term stakeholder transactional banking. TERM DELIVERIES This will provide an important platform to champion for 10%, respectively, in South value. change on key ESG issues. African segments. • Establishing a diverse and inclusive workforce in all countries we operate in.

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UAP Insurance Rwanda Limited is incorporated in Rwanda under certificate no.102628166 and licensed by National Bank of Rwanda with a trading license no.102628166 to write General Insurance.

UAP Insurance Rwanda is an owned subsidiary of UAP Holdings Limited, UAP Group a pan-African Financial Services Group with interests in Insurance, Investment Management, Property Investments and Developments, Financial Advisory and Securities Brokerage. The focus for our insurance business includes general insurance (property and casualty), health insurance and life insurance and savings.

UAP Insurance Rwandan offers a wide range of general insurance products that are tailor made to suit our clients’ need.

With our unwavering vision of being Rwandan’s revolutionary financial services company, UAP Insurance Rwanda is committed to enhancing the quality of life by delivering peace of mind and financial freedom.

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11 03 06

BOARD OF DIRECTORS OF BOARD 12 02 07 08 01 04 09 10 05

01 Vincent Rague 07 Arthur 02 Mike Harper 08 Shipiri 03 Clement Chinaka 09 James Muguiyi 04 George Maina 10 Susan Omanga 05 Nkirote Mworia Njiru 11 Richard Treagus 06 Dr. Joseph B. Wanjui CBS 12 Robert Mbugua 25

BETTER • SIMPLE • LIFE UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

THE BOARD

Year of Birth: 1977

Year of Birth: 1969 Date of appointment: 22 November 2016 Date of appointment: 8 July 2013 Experience:

Experience: John is currently the Chairman of the Board of Directors of KCB Bank Rwanda, Chairman of Arrow Richard is the Senior Partner of the law firm he Capital Ltd and a Director of Elon Construction and founded in 2004 . He is a member of the Rwanda VOTTO Ltd. Bar Association ; a fellow of the Africa Leadership Initiative and the Aspen Global Leadership Network. He previously served as the CEO of Crystal Richard has been a President of the East African Ventures Group for five years and was formerly a Law Society. Non-Executive Director of MTN Rwanda, Rwanda Investment Group, Ultimate Concepts, Mount Meru Formerly, he was the Manager, Procurement Soyco and CIMERWA. Prior to Crystal, he worked Policy and Legal affairs at the Rwanda National in investment banking with Bank of America’s Richard Mugisha Tender Board for over five years. In the academic John Bosco Birungi Global Industries Group in New York, in commercial Chairman / Independent Non-Executive domain, he has taught and conducted tutorials Independent Non-Executive Director banking with Fleet Boston Bank, market research Director at the University of Rwanda and Kigali Institute of AC Nielsen and in mergers and acquisitions with Management, Science and Technology. Richard MBA in Finance from Brandeis University in Trudeau & Trudeau Associates, a boutique M&A firm. Master of Laws (LLM) from New York University has led numerous assignments in Energy, Boston, Massachusetts . John is the founder of the Vision Sports Academy Bachelor of Laws degree(LLB) from the University Infrastructure & Mining as well as Banking and BSc in Quantitative Economics from Makerere in Rwanda and the President of the Rwanda Table of Lesotho in 1994 Finance and has been at the forefront of almost all University, Uganda. Tennis Federation. Bachelor of Arts degree (BA), the privatization deals in Rwanda.

Date of appointment: Year of Birth: 1965 5th Feb 2019

Date of appointment: Experience: 21 November 2017 Isaac is the Executive Head of Digital & Data, Rest of Experience: Africa for Old Mutual Limited , the Board Trustee of UAP Old Mutual Foundation as well as a member of Michael has over 18 years of strategic leadership the Technology, Digital & Innovation Committee of experience, and over 28 years of auditing and UAP Holdings PLC. management consulting experience. He joined the UAP Insurance Rwanda Board in December He is also a director, and a member of the audit 2017 when he also became the chairman of the committee at Telekom Network Malawi (TNM). Company’s Audit, Risk and Compliance Committee. Within the UAP Group, Michael is also the chairman Isaac was previously the Group COO for UAP Old of the Audit, Risk and Compliance Committee Mutual Group and has held various functions in of UAP Insurance Tanzania, and he is the deputy the group including serving as the Group MD for Chairman of UAP Insurance Kenya. medical business, as well as Acting MD for the General Insurance business. Before joining the group, Isaac was an executive with Aon Kenya, an Outside the UAP group, Michael holds the position Isaac Nzyoka Michael Sallu insurance broker. of Chairman of Claritas International Consulting Ltd Executive Director Independent Non-Executive Director and Ecobank Tanzania Ltd. Up until September 2017, Isaac is a past member of the General Insurance Michael was a partner at PricewaterhouseCoopers Doctorate in Business Administration (DBA) from MA and BCom degrees Council of The Association of Kenya Insurers (AKI); (PwC) where he was also a member of the governing Paris School of Business Fellow Certified Public Accountant (FCPA) In board of PwC Africa until 2015, and the Assurance past convenor of the Medical Committee of AKI Tanzania and, past chair of the Health Financing Committee Leader of PwC Tanzania. Year of Birth: 1973 of Kenya Healthcare Federation.

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THE BOARD

Date of appointment: Date of appointment: 5th Feb 2019 15 May 2020

Experience: Experience:

Herbert has been a senior Executive in both private Jeff is an influential strategist and transformation sector companies and the United nations system. thought leader. His consulting and industry sector He is currently leading the Internal Control function experience spans more than 20 years, with senior in Congo, Democratic Republic for UNICEF focusing roles held at leading consulting firms such as of fraud risk and general risk and compliance Deloitte US and PwC Africa. As a Director leading management for UNICEF operations in DRC. the Strategy and Operations practice for East Africa Prior to the DRC function, Herbert has had a long and a member of the PwC Africa Business Group, he career within the United Nations system where advised boards, senior executives and champions he performed various functions within UNICEF in top tier institutions in USA, Europe, Asia and ranging from Supply chain Management, planning Africa. Jeff is currently the Regional Director, Africa and monitoring, development of management at Intellecap, a strategy advisory and investment reporting systems as well as Audit of UNICEF firm. Intellecap is part of the Aavishkaar-Intellecap Programmes and Operations in Africa, Asia and the Group which has over $600 Million in Assets under Middle East. Management and over 2500 employees in three continents. Hebert Kwizera Jeff Aludo In between the UN functions, Herbert held senior Independent Non-Executive Director Independent Non-Executive Director functions in private project financing where he Jeff is the Founder of The Aludo Group, an advisory worked with other business people and initiated firm that helps clients reimagine futures and MBA from Herriot-Watt University (Edinburg Master’s in Business Administration (MBA) and managed the commissioning of several private develop innovative and sustainable strategies. Business School) in Scotland ,Strategic Management, Texas A&M University sector investments in Rwanda ranging from an IT His currently co-developing an upcoming virtual Bachelor of Commerce (Hons) degree majoring in Master of Global Management Certificate, company, a quarrying business and in Agribusiness content platform, known as Metanoia, which Finance from Makerere University, Uganda Thunderbird University, The Garvin School of where he lead the process of establishing the seeks to develop and scale virtual platforms for Degree in Computer Systems from Niels Brock International Management. first Animal Feeds factory in Rwanda and the first transformative discussions, change in thinking, Copenhagen Business School in Denmark Bachelors of Business administration, International fish farming operation within the country. His direction and impact. Professional certification in internal audit and Risk Management, Texas Christian University. key responsibilities within these businesses were Management. project development, financing and management Year of Birth: 1973 especially in the start phases. Year of Birth: 1965

Year of Birth: 1976

Date of appointment: Studied Public and Non-Profit Management at 1 July 2019 New York University’s Robert F. Wagner Graduate School for Public Service. Experience:

Year of Birth: 1972 Annie has over 18 years’ experience in management and executive positions, 8 of which in Insurance Date of appointment: Industry in Rwanda. She also served the Banking 7 June 2018 and Telecoms Industries before she joined Insurance. Her professional path has led to Experience: strong ability to drive expertise in the technical, conceptual, and content development of sales Evangeline is currently at Clarity, an agency offering driven business corporations. She has built and strategic communications and public relations shaped her leadership skills especially mastered services, as its founder and Chief Executive Officer. in team motivation and talent management as the market requires innovation and personalized Prior to Clarity, she served with the United Nations Annie Nibishaka solutions. Managing Director Evangelina Soni Kayinamura headquarters for over ten years in the areas of Annie is currently the Managing Director UAP Independent Non-Executive Director public affairs, news and media and personnel management in peace operations. Currently pursuing an MBA in Leadership Insurance Rwanda where she served for about 8 Bachelor’s degree in Commerce in Management years in different capacities. She joined as the Head Bachelor’s in international political economy from Information System (MIS) from Concordia of Marketing & Distribution before she served as Rutgers University. University, Montreal, Canada. Deputy Managing Director.

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THE BOARD

Nkirote Mworia Njiru Group Company Secretary

LLB University of Reading, LLM Commercial Law, University of Cape Town, Global Executive , Masters, Business Administration, USIU & Columbia Business School, Higher National Diploma in Law (Kenya) and Higher National Diploma in Human Resource Management (Kenya).

Year of Birth: 1973

Date of appointment: 17 November 2014

Experience:

Nkirote is a lawyer and governance practitioner with a passion for sound governance, standard setting and policymaking.

She is an advocate of the High Court of Kenya, an active member of the Law Society of Kenya and a fellow of the Institute of Certified Secretaries of DRIVING Kenya where she served as an elected member of the Council and as the Vice Chairman of the Institute. GROWTH Besides practising law, Nkirote has worked in various IN EAST sectors in Kenya including telecommunications, retirement benefits and insurance in a wide range of activities involving setting up governance, legal AFRICA and operational structures; legal and regulatory risk analysis; legislative and policy development; supervision and capacity building across the East Africa region.

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Projects During the year, the company successfully completed various projects including the design of the Website which provides a host of benefits including allowing the business to carry out online quotations, integration of our CRM and Government’s NIDA which improves our KYC process and

CHAIRMAN’s REPORT CHAIRMAN’s compliance, and also digitizing out Motor certificates allowing us to serve customers digitally. These improvements are expected to create efficiency in the company’s processes and our ability to offer our customers superior customer experience.

Overall Performance Despite the challenging business environment, UAP Insurance Rwanda Ltd was able to gain market share and close at position 2 in the market from position 3 in 2019. Gross written premiums grew by 14% to close at RWF 12.6B from the RWF 11.1 B in 2019. Introduction On behalf of the Board of Directors, I am pleased to present to you Underwriting results stood at RWF 254 Million in 2020 up from 240 Million the 2020 Annual Report and Financial Statements of UAP Insurance in 2019. The increase in profitability owed to growth in GWP while properly Rwanda Limited. managing our loss ratios which closed at 58% in 2020 against 60% in 2019. Capital adequacy closed at 220% against the regulated 130% position. Highlights This mainly driven by returns from our investment vehicles. The company The year ended 31st December 2020 was very challenging not only for continues to hold a strong financial position, and this is expected to improve our company, but also regionally and globally mainly due to Covid-19 as the economic prospects also improve. Pandemic that significantly impacted the business environment. The financial results, however, reflect very strong business resilience Governance and the Board remains confident of the long-term growth prospects Good governance is a best practice that creates a healthy and conducive as the world, the country and our business gradually recover from business environment. During the year, we continued to uphold the the negative impact of this pandemic. governance structures of the Company Board and Management structure. The roles of board vis a vis management have been well defined. The Operational Environment board of UAP Insurance Rwanda discharged its responsibilities in 2020 in Rwanda continues to enjoy a stable political environment. Economic accordance with the Board Charter and its 2020 work plan that is normally growth remains the key focus but with the effects of pandemic, GDP articulated, discussed and agreed each year. Further details are provided in Growth rate closed at negative 3.6%. Critical sectors of the economy the Corporate Governance Statement in this report. including agriculture, tourism, hospitality remain subdued largely due to the raft of government measures put in place to minimize Appreciation the impact of Covid -19 Pandemic. With the trend showing reduction I wish to express my gratitude to my fellow Board members for their in reported cases, there is renewed optimism that the country will tremendous support and wise counsel, the entire Management and staff revert to the stellar economic growth that has been the highest in for their effort and commitment in placing UAP well and truly on course the region, and the future portends great opportunities for growth. to be a market leader in all aspect in the insurance industry in Rwanda. To all our customers thank you for growing with us, we are committed to continue offering you exceptional customer service. Richard Mugisha Chairman Lastly, we are grateful for the support and cooperation of UAP Holdings Limited, our holding company. I look forward to a great and prosperous future for UAP Insurance Rwanda Limited.

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to close at RWF 3.7B (2019: RWF 3.1B), while Health segment GWP actual closed at RWF 8.9B (2019: RWF 8B). Business acquisition was slowed down by the tough operating environment influenced mainly by the pandemic where we closed at 94% of our 2020 GWP targets.

We closed with a positive underwriting margin mainly due favourable claims experience for the year. GI business closed with loss ratio of 34%PBT closed at RWF 1.4B (2019: RWF 1.1B) due to good returns form our investments.

Expenses of Management Total expenses were up 26% in year 2020 compared to 2019 caused by impact

MANAGING DIRECTOR’s REPORT DIRECTOR’s MANAGING of Covid - 19 spending to enable staff to work from home, digitalization and PPEs spending in our office premises to comply with Government measures on staff safety. We also had a slight increase in provisions made on doubtful receivables. Management has set in place initiatives to contain expenses to maximize profitability.

Our people We are committed to winning the war on Talent to enhance staff productivity and promoting career development. We have created a culture of high performance through monthly performance reviews and creation Annie Nibishaka of learning groups that encourages specialization and career growth. The business has identified all the critical roles, successors and is currently in Managing Director the process of implementing interventions for the successors to be ready to step into the roles.

Prospects Industry Review Investment Market Rwanda continues to enjoy immense political stability and the economy Macroeconomic environment declined in the Our investment strategy is focussed on driving is expected to recover in 2021 after the negative impact of the pandemic year ended 2020 with year on year core inflation profitability while improving our capital adequacy GI business in 2020. General macroeconomic indicators remain weak in the aftermath averaging 5.5%, GDP trending below zero to close at and liquidity. In 2020, our asset allocation was as closed with loss of the pandemic but expected to rebound with improvement expected minus -3.6%, foreign exchange rate dropped further per our mandates with Government securities in inflation, exchange rate and a revert to positive GDP growth rate. Our from 942 to 992 to the dollar. Performance of the holding 49% of our portfolio. Deposits accounted ratio of 34%PBT strategic plan for 2021 – 2023 is anchored mainly on the economic growth key sectors of the economy was subdued due to for 48%. Our interest-bearing assets in total grow closed at RWF ensuring opportunities for new business, and on improvements of the Covid - 19 pandemic the main ones being tourism by 22% from 2019 to close at RWF 15B. rest of macroeconomic indicators. The company remains committed to and hospitality industry, travel, and SMEs. However, 1.4B (2019: RWF fulfilling the needs of clients and enhancing the formidable relationships our business still recorded strong performance with We continue to monitor liquidity as a key risk during we have with various stakeholders. positive underwriting results which stood at 254 the recovery from the pandemic while aiming to 1.1B) due to Having managed to improve our market position from 3 to 2 in 2020, we Million compared to 240 Million in 2019. The Future grow our investible assets even further. good returns look ahead with plenty of optimism to continue our ambitions to be the outlook presents growth opportunities pegged most trusted and preferred insurance provider for our customers. on successful recovery of the economy from the Operating Performance form our pandemic and continued political stability that Gross written premium (GWP) grew by 14% to investments. Appreciation Rwanda enjoys. close at RWF 14.2B compared to RWF 11.1B in 2019. Finally, I would like to thank all our stakeholders including customers, service General Insurance excluding Medical grew by 18% providers, and all the staff for their support that enabled us to achieve these good results. I would also like to thank the Board of Directors and the Group Executive Team for their oversight role and guidance to the management throughout the year.

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BETTER • SIMPLE • LIFE BETTER • SIMPLE • LIFE 37 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

CORPORATE GOVERNANCE REPORT

UAP Insurance Rwanda Limited (“UAP”) is impact on the Company. Every board committee The Chairman is responsible for: committed to adhering to the highest standards has its own terms of reference that sets out ◊ The leadership of the Board and ensuring that the Board functions are effectively carried of good corporate governance at all levels of its the scope and mandate of the Committee and out. operations. This commitment is rooted in our core its responsibilities to The Board. The Charter is ◊ Setting the Boards’ agenda while striking a balance between strategy and performance. values and beliefs. We have put in place governance reviewed on biennial basis to ensure that the ◊ Committees by ensuring that the Committees meet regularly and comprehensively report processes which comply with best practice as set principles set out therein are relevant and comply their activities to the Board. out in various codes on Corporate Governance. with the applicable laws and regulations. ◊ Ensuring that the Board and its Committees meet regularly, in adherence to the provisions of the Board Charter, and at such other times as are necessary Key Highlights The key functions of The Board include: ◊ Ensuring the quality, clarity, quantity and timeliness of the information that is provided to The key governance highlights for the year included: ◊ Managing the Company’s relationship with local the Board is sufficient to enable the Board to take sound decisions on all material issues ◊ Undertaking an independent board evaluation external stakeholders and regulators affecting the Company, monitor effectively the Company’s performance and enable it to exercise to assess the effectiveness of the Board, ◊ Ensuring that a formal risk, compliance and provide advice and guidance to promote the success of the Company the Chairman, the Managing Director, individual internal control assessment is carried out on ◊ Encouraging active engagement and appropriate challenges by the Board on the directors and board committees . a regular basis, in order to ensure that the Company’s risk and control environment. ◊ Participation in board development programmes governance and statutory requirements for itself ◊ Facilitating effective communication between the Board and the Senior Leadership team touching on the Effective Director , Group and its shareholders are met; inside and outside of the Board meeting framework. Governance Framework and Delegation of ◊ Review of the appointment and, where necessary, Authority, Anti Money Laundering and Combating the removal of Directors and, considering advice The Managing Director is responsible for: from the Group RemCom, in determining the ◊ Driving the implementation of the strategy and business as approved by the Board and Financing of Terrorism (AML/CFT) appropriate levels of executive remuneration in regularly reporting on the progress on execution. ◊ Review and update of The Board Charter and the Company; ◊ Maintaining and ensuring the effectiveness of the system of governance and controls terms of reference of each of The Boards’ ◊ Approving the appointment of the Managing that are in place across the Company’s activities committees to ensure that they optimally set out Director and ensuring the adequacy of the delegated responsibilities of each committee succession plans for other members of the Senior 1.1 Board and Committee Responsibilities and The Boards overall oversight role. Management; 1.1.1 Main Board ◊ Enhanced interactions with our stakeholders ◊ Approving the Delegation of Authority Matrix The Board meets at least once every quarter and may convene special meetings from time through adoption of a Stakeholder Relations which provides clarity on financial and to time depending on business exigencies. All Board meetings are scheduled in advance of Policy and revised our approach towards our transaction limits, responsibility, accountability the respective year through an annual rolling calendar of Board meetings which facilitates stakeholders are proactive, purposeful and value and the hierarchy of required approvals for planning and availability of the members. Board Committee meetings are scheduled in exchange driven interactions. specific decisions. advance of the Board meeting so that all technical matters are appropriately addressed ◊ Approving the Company’s medium and long- at the committee level and reported to the Board for ratification or approval. For the year 1. Board Functions and Responsibilities term direction and strategy and the approval of ended 31st December 2020, the Board met Four (4) times. For the financial year ended 31 December 2020, the any material changes to the strategy; Board was made up of Seven (7) directors, majority ◊ Approving the Company’s annual plans and The directors are given appropriate and timely information on key activities of the business of whom are Non-Executive Directors with one (1) budget; regularly and on request in order to carry out their roles. Specifically, the directors are Executive Director, with Four(4) being independent ◊ Approving of significant changes to the provided with all available information in respect of items to be discussed at a meeting of Non-Executive Directors. accounting policies or practices of the Company the Board or Committee prior to the meeting. on recommendation of the Audit & Risk The Board is responsible for the formulation, Committee; During the year, the following directors held office and attended meetings as follows: implementation and monitoring of the UAP ◊ Ensuring that the Company maintains an Insurance’s strategic plan with the ultimate aim adequate level of capital to fulfil both its statutory Name Role Attendance Average at qualifying attendance of achieving sustainable, profitable growth for the and internal capital requirements; meetings rate Company. ◊ Approving the Company’s risk strategy; ◊ Approving the Acquisition or Disposal of any Richard Mugisha Chairman-Independent, Non-Executive Director 4/4 100% (Rwandan) The Board considers that collectively, the directors material business or the cessation of any material have the breadth and depth of skills, knowledge part of the business Evangelina Soni Kayinamura Independent, Non-Executive Director (Rwandan) 4/4 100% and experience necessary to direct the Company. Dr. Isaac Nzyoka Executive Director ( Kenyan) 3/4 75% The directors on The Board represent a diverse The Board of Directors has delegated the day to day Michael SALLU Independent Non-Executive Director (Tanzanian ) 4/4 100% group of nationalities, skills and backgrounds to operations of the Company to the Management ensure that decisions of The Board encompass team which is headed by the Managing Director Jeff Aludo (Appointed 15th Independent Non-Executive Director (Kenyan) 2/2 100% May 2020) views from a wide reach of stakeholders. and supported by the Senior Leadership team. The roles and responsibilities of the Board and Peter Mwangi (Resigned on Executive Director (Kenyan) 1/1 100% The Board Charter together with the Articles Management are separate, further, the Chairman of 14th April 2020) of Association guide The Board of Directors in the Board and the Managing Director are different Hebert Kwizera Independent, Non-Executive Director (Rwandan) 4/4 100% the discharge of their duties as they set out the individuals each having their distinct duties and John Bosco Birungi Independent, Non-Executive Director (Rwandan) 4/4 100% expectation of The Board, Management and their responsibilities. Board Average Attendance 97%

BETTER • SIMPLE • LIFE 39 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

CORPORATE GOVERNANCE REPORT

The Board has incorporated Two (2) standing work plan and Terms of Reference; Board Induction and Development committees: Board Audit and Risk Committee and ◊ Reviewed reports on material litigation and The Board has in place a formal, detailed induction program to prepare new board Claims and Underwriting Strategy Committee. compliance or committee members for their role, by providing a foundation of knowledge and ◊ Received and considered reports on the understanding, which will enable them to effectively fulfil the functions of the role. The The Board has delegated the Remuneration legislative and regulatory changes impacting the induction program is facilitated and coordinated by the Group Company Secretary who responsibilities to the Remuneration Committee of Company. ensures that the new director meets with The Board Chairman, the Managing Director , UAP Holdings Limited (“Group RemCom”). Senior Leadership team and the Group Company Secretary or designee to obtain practical 1.1.2. Claims and Underwriting Strategy information pertaining to the company. A director is required to undertake and complete 1.1.2. Audit and Risk Committee Committee this induction program within six (6) months of their appointment.

Membership Attendance at Attendance Membership Attendance at Attendance In addition, each director is issued with a directors’ compendium which contains their during the year qualifying meetings average during the year qualifying meetings average appointment letter, copies of The Board Charter and Terms of Reference of relevant Michael SALLU 4/4 100% John Bosco Birungi 4/4 100% committees, The Board work plan, The Board calendar and relevant board policies. Evangelina Soni 4/4 100% Hebert Kwizera 4/4 100% Kayinamura Isaac Nzyoka 3/4 75% Director Trainings Peter Mwangi 1/1 100% The company continue to refine our Board development needs to ensure that training Board Average Attendance 92% interventions are timely and relevant. During the year under review, The Board attended Jeff Aludo 2/2 100% training on the Effective Director , Technical Insurance ,Group Governance Framework and Board Average Attendance 100% The Claims and Underwriting Strategy Committee Delegation of Authority, Anti Money Laundering and Combating Financing of Terrorism is constituted with a majority of the members being (AML/CFT). The Audit and Risk Committee is constituted with a Independent Non-Executive Directors. majority of the members being Independent Non- Conflict of Interest Executive Directors. The Committee is responsible for governance The Board Charter places an obligation on directors to make declarations on their personal oversight over the Underwriting and Claims or commercial interests with a view of avoiding any action, position or interest that conflicts The Committee is responsible for monitoring processes and procedures for General and Health or appears to conflict with a Company interest. This is a matter for active and ongoing the integrity of the financial statements and any Business of the Company through the Committee. consideration by all directors, and thus a standard declaration form has been developed formal announcements relating to the Company’s for recording and updating directors’ interests as they occur and on an annual basis. The performance, considering any significant issues and The Committee held four (4) meetings in the year declaration of interest arising from any specific issue on the agenda of a meeting is also judgements reflected in them before submission and considered the following matters: provided as standing agenda item for board and committee meetings. to The Board. ◊ Received and considered the quarterly GI Underwriting and Customer service Report; The Board continued to ensure compliance with the Conflict of Interest Policy which formally The Committee held four (4) meetings in the year ◊ Received and considered the quarterly codifies and augments the procedure adopted by The Board in respect of the review of and considered the following matters: Underwriting and Claims Report for Health conflicts. ◊ The 2020 Company’s interim and annual financial Business statements and related public announcements; ◊ Received and considered the quarterly GI Claims SHAREHOLDING STRUCTURE ◊ The External Auditors Report for the year ended Report; At 31 December 2020, UAP Insurance Rwanda Limited is owned 100% by UAP Africa Limited 31st December 2020, Interim Review Reports and ◊ Reviewed Company’s insurance underwriting a wholly owned subsidiary of UAP Holdings Limited the External Audit Plan Report; and reinsurance treaties ◊ Implementation of various changes to financial ◊ Received and considered the quarterly Actuarial Directors accounting policies and standards, in particular, report; The Directors of the Company, who held office during the year and up to the date of this the Committee receives quarterly reports on the ◊ Considered and recommend to The Board, the report, are: implementation of IFRS 17 2020 Technical Valuation Report; ◊ Quarterly reports on the financial performance ◊ Received and approved the Committee’s 2021 Richard Mugisha Rwandan Chairman- Independent, Non-Executive Director of the company ; work plan and Terms of Reference; Evangelina Soni Kayinamura Rwandan Independent, Non-Executive Director ◊ Quarterly Internal Audit report ; Considered and approved the Internal Audit Plan Dr. Isaac Nzyoka Kenyan Executive Director (Executive Head of Digital & Data, Rest of 2. Changes in the Board Africa for Old Mutual Limited) and Charter; During the year, the following resignation were ◊ Considered and received a report on the received: Michael SALLU Tanzanian Independent Non-Executive Director effectiveness of the internal audit function; Jeff Aludo Kenyan Independent Non-Executive Director ◊ Held an engagement with the auditors without Mr. Peter Mwangi as an Executive Director with (Appointed 15th May 2020) the Management present. effect from 14 April 2020. Peter Mwangi Kenyan Executive Director (Group Chief Executive Officer) ◊ Received and considered reports on key financial (Resigned on 14th April 2020) and operational risk issues; The Board appointed Jeff Aludo as Non-Executive Hebert Kwizera Rwandan Independent, Non-Executive Director (Rwandan) ◊ Considered and recommend to The Board, the Directors with effect from 15 May 2020. Combined Assurance Plan; John Bosco Birungi Rwandan Independent, Non-Executive Director (Rwandan) ◊ Received and approved the Committee’s 2021 The resignation of director listed above did not relate to the proper and fit Issues

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CORPORATE GOVERNANCE REPORT

DIRECTORS’ REMUNERATION REPORT the financial services sector in East Africa. Non- As at the date of approval of the financial statements, Mr. Peter Mwangi had resigned from The Company has adopted a Remuneration Risk Executive Directors’ are entitled to the following being a director on the Board of UAP Insurance Rwanda Limited following his resignation Policy that sets out the guiding principles in respect fees and benefits in respect of their appointment from the Group. of remuneration for Executive and Non-Executive to The Board: Directors as follows: i) An annual fee for board membership prorated The Directors are responsible for the preparation and presentation of the consolidated and and paid monthly in arrears. company financial statements of the company set out on pages 13 to 17 which comprise ◊ Remuneration must align to the business drivers, ii) Sitting allowances for board and committee the consolidated and company statements of financial position at 31 December 2020, and corporate vision and strategic priorities of the attendance to compensate them for their time the consolidated and company statements of profit or loss, consolidated and company Company as approved by the shareholders. The in preparation and attendance in board and statements of other comprehensive income, consolidated and company statements of remuneration and incentive model shall support committee meetings. Premia apply in respect changes in equity and consolidated and company statements of cash flows for the year prudent decision-making, be consistent with the of payments made to Chairs of boards and then ended and notes to the financial statements, including a summary of significant risk appetite and shall not induce excessive or committees. accounting policies and other explanatory information. inappropriate risk-taking. iii) Enrolment to the Non-Executive Directors’ The Directors’ responsibilities include: determining that the basis of accounting described ◊ Executive remuneration should be fair and medical insurance schemes. in note 2 is an acceptable basis for preparing and presenting the financial statements in the responsible in the context of overall employee circumstances, preparation and presentation of financial statements in accordance with remuneration. iv) Reimbursement for travel expenses associated International Financial Reporting Standards and for such internal control as the directors with their official duties, where necessary, as determine is necessary to enable the preparation of financial statements that are free from ◊ Remuneration of employees who do similar work well as other direct business-related expenses. material misstatements, whether due to fraud or error. and employees whose work is of equal value must be aligned to the principle of Equal Pay for v) Directors’ Liability Cover to provide protection Under the Rwandan Companies Act, 2021, the Directors are required to ensure the Work of Equal Value. for undertaking their duties in such capacity. preparation financial statements for each financial period which give a true and fair view Non-Executive Directors are not covered by of the financial position of the Company as at the end of the financial period and of the ◊ Remuneration plans and policies must align the the Company’s incentive programs nor do they profit or loss of the Company for that period. It also requires the directors to ensure that the interests of executives with those of shareholders receive performance- based remuneration. annual accounts were disclosed to shareholders; delivered to the Registrar General. by rewarding the delivery of the chosen strategy and sustained performance against agreed No pension contributions are payable on their fees The directors accept responsibility for the annual consolidated and separate financial financial goals that create long- term shareholder and no director is entitled to any compensation at statements, which have been prepared using appropriate accounting policies supported value. the end of their tenure for loss of office. During the by reasonable and prudent judgments and estimates, in conformity with International year under review, there were no directors’ loans or Financial Reporting Standards and in the manner required by the Rwandan Companies The Board has mandated the Group Remuneration, directors’ shares scheme. Act, 2021. The directors are of the opinion that the consolidated and separate financial Nominations and Corporate Governance Committee statements give a true and fair view of the financial position of the Company and of the (RNCGC) to, inter alia, review the remuneration of Further details on The Board committee consolidated and separate profit or loss. Non-Executive Directors and senior management composition and activities undertaken by the and recommend changes from time to time. various board committees are included in the The directors further accept responsibility for the maintenance of accounting records which For the financial year ended 31 December 2020, the Corporate Governance Report. may be relied upon in the preparation of consolidated and separate financial statements, as consolidated directors’ fees and remuneration was well as adequate systems of internal financial control. Frw 72,075,000 (2019: Frw 77,407,000) Group Company The directors have made an assessment of the Company’s ability to continue as a going Executive directors concern and have no reason to believe the Company will not be a going concern for at least Non-Executive Directors As at 31 December 2020, the Company had two the next twelve months from the date of this statement. The Company offers a selection of financial and non- Executive Director, Mr. Peter Mwangi who was the financial rewards and benefits to Non-Executive Group Chief Executive Officer and Dr. Isaac Nzyoka Approval of the financial statements Directors. In determining the remuneration who is an Executive Head of Digital & Data, Rest of The financial statements, as indicated above, were approved and authorized for issue by The structure for Non-Executive Directors, the Company Africa for Old Mutual Limited. Board of Directors on 19 February 2021. has adopted a remuneration model that takes into account the size and nature of the business and comparative benchmarks of similar entities within

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RISK MANAGEMENT REPORT

OUR APPROACH TO RISK MANAGEMENT An important aspect of being our customers’ first choice and trusted financial partner and to deliver on our brand promise, is to be a certain friend in uncertain times. This provides the foundation for our risk RECOGNITION OF Diversification is key in insurance and is used to avoid excessive strategy: we want to ensure that we will be around to provide the benefits that our customers are expecting THE VALUE OF risk concentration, so that we do not depend excessively on things us to provide, especially in adverse financial conditions. Our reputation and success as a business is based DIVERSIFICATION going right in one particular area, and the sustainability of the whole on being financially strong and on treating our customers fairly. business is not undermined if something goes wrong in one area. Diversification can be applied across a broad-spectrum including Our risk management approach is aligned to the UAP Insurance Rwanda’s purpose and strategy. risk types, products, geographies, target markets and distribution A comprehensive and mature risk management framework is in place, which is anchored in the five channels. lines of defence model and includes a clear articulation of our risk strategy. It ensures disciplined risk- based decision making in the UAP and active control over the risk exposures to which our earnings and RECOGNITION OF We have developed adequate Risk mitigation techniques to help capital are exposed. This achieves a more sustainable delivery of headline earnings and RoNAV within our RISK MITIGATION manage risk exposures by passing on the risks third parties in the chosen risk appetite. We have a comprehensive suite of risk policies to direct how specific risks should be form of reinsurance for Insurance risks and having strong and well managed and controlled, aligned to our risk categorisation model. Appropriate escalation and response controlled internal processes in place to mitigate other types of risks mechanisms are in place for risk events and breaches in risk limits and targets. We apply a forward-looking like operational, business and strategic risks. solvency and liquidity assessment that enables us to assess the robustness of our balance sheet in adverse conditions, and we have modelled severe scenarios to ensure strong resilience of solvency capital. OPTIMISE Our aim is to focus on the risks where the expected return more than RETURNS ON A compensates us for the risk taken, and we want to avoid those risks PRINCIPLES UNDERLYING OUR RISK STRATEGY RISK-ADJUSTED where the expected return is too low. We will not sell new business at In developing our risk strategy, we therefore consider the following considerations: BASIS a loss or where the long-term expected return is less than our cost of equity, even if this means giving up potential market share. MAINTAINING Our reputation is founded on trust from our customers, employees, TRUST WITH shareholders, regulators, and society in general. Trust takes time to We also aim to take on risks that are efficient from a capital perspective STAKEHOLDERS be earned and can be undermined very quickly by poor decisions or as growing more capital efficient risk types will also optimise RoNAV. actions. Thus, there is a strong focus on risk types that result in the lowest marginal increase in capital requirements at a business level. A key part of our strategy is therefore based on treating customers fairly, and integrity continues to be one of our core values as we believe it is essential for sustainable long-term growth. To provide FOCUS ON RISKS Our aim is to focus generally on risks that we understand and can our customers with good value for money we will charge them a WHERE WE HAVE manage well which aligns to our business strategy to focus on reasonable price for the risks that we underwrite and the services SKILLS AND A winning where we have a competitive advantage and/or strong that we provide, and we recognise the importance of earning COMPETITIVE expertise. However, we recognise that remaining relevant to our competitive investment returns. ADVANTAGE clients and maintaining a competitive edge is dependent on continuously innovating our products and services which involves When selling new business, we aim to only sell products that meet growing in areas where we may not necessarily have a competitive our customers’ needs and which they can afford. Strong sales growth advantage or extensive experience. (with good persistency) will be the result of successfully meeting customers’ needs, rather than sales growth being an end. Good controls to manage operational risks also contribute to building trust by ensuring good customer service, clear communication, fraud RISK APPETITE MANAGEMENT prevention and quick action to fix mistakes. The key objective of the risk appetite framework is to ensure disciplined risk-based decision making in the business. Actively controlling the risk exposures to which our earnings and capital are exposed will result in more sustainable delivery of RoNAV within our chosen risk TOLERANCE FOR We want to avoid taking risks that could threaten our licence to appetite. UNCERTAINTY operate and the financial security of UAPIR in adverse financial conditions. However, our business strategy is predicated on strong Our Risk Appetite limits defines the level of risk exposure that UAPIR is willing to accept and responsible growth in market share and profits, and we will not in meeting its business objectives. That is, how much of a specific risk type that UAPIR is be able to do so successfully if our risk strategy is too prudent. prepared to take on. Risk appetite metrics have been developed to measure the level of We recognise that to provide protection for our customers, and to Capital (Solvency Capital), Earnings (Earnings at Risk) and Liquidity (Liquidity Coverage) provide them with good value for money, we need to accept certain risks and are used to manage our overall risk exposures and to express our tolerance for risks on their behalf. We are therefore willing to accept certain risks, uncertainty resulting from risks we take on. and there are some risk types for which we have a strong preference (as described later in this document). We will however ensure that risk taking is cognisant of the level of financial resources deployed to both general and medical businesses and our appetite for earnings volatility.

BETTER • SIMPLE • LIFE 45 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

RISK MANAGEMENT REPORT

MATERIAL RISK CLASSES Risks with high or moderate risk preferences are generally regarded as opportunities that we actively seek to create customer and shareholder value. Other risks are regarded as uncertainties that pose financial and non-financial obstacles to meeting business objectives and we seek to effectively manage or avoid these downside risks. The key risks we are exposed to are.

INSURANCE RISKS We face the risk of non-life claims deviating from expected EXTERNAL RISKS Failure to anticipate and respond to changes in global, regional or assumptions and have an adverse impact on earnings/capital. We local external conditions (Competition, changing customer needs, have developed strong underwriting skills and tools for adequate emerging laws and regulations, environmental, socio-political) could product pricing and reserving. We also leverage on strong result in UAP inability to deliver value and meet financial projections reinsurance programs against adverse claims experiences and on in a given market. Through digitalisation, we are developing solutions technical underwriting skills to compliment our internal capabilities that improve our customer value proposition and experience and address current and anticipated customer needs. Emerging risk identification and response is also core to our strategy development Effects of Covid-19 Following the declaration of Covid-19 Pandemic, management and execution. to UAPIR activated the CMT (Crisis Management Team) to lead actions towards incidence response to the pandemic. The priority of the CMT was on ensuring the health & safety of our employees & customers as well LIQUIDITY RISK The risk that the UAP will not be able to effectively meet expected as business continuity during the periods of movement restrictions. and unexpected current and future cash flows and collateral needs without affecting daily operations or the financial condition of the Immediate actions we took revolved around enabling our employees organisation. to work remotely. All our business premises have complied with government guidelines on Occupational Health & Safety in relation MARKET RISK We are exposed to adverse changes in our balance sheet or on to prevention of the spread of Covid-19. future earnings whether directly or indirectly, due to fluctuations in the market prices of financial instruments we hold and on property We have now shifted focus from crisis management to business valuations. We have a low appetite for market risk and are gradually resilience and have set up a nerve center to identify the priority reducing our exposure to volatile investments in the short to medium actions that are required to address the impacts of Covid-19, and set term. the business for success under the new normal.

INFORMATION Our key risks are around protecting the confidentiality, availability BUSINESS RISK This is the risk that our business performance will be below projections SECURITY AND and integrity of our data. The other key risk area is protecting our because of negative variances in new business volumes, high lapse CYBER SECURITY information systems against cyber attacks. This risk is elavated by rates and adverse expense experience. In response to these risks, RISK the remote working arrangements deployed in response to Covid-19 we have enhanced our product distribution channel through infection concerns. We have invested significantly in identifying and digitalisation to grow business volume and retention through wider mitigating vulnerabilities to our systems through implementation reach and improved customer experience. We have also driven of new technologies to support Information security enhancements prudent expense management through operational excellence. and business resilience.

CREDIT RISK We are exposed to credit risk through premium debtors and counterparty default risk from investments and reinsurance. We partner with re-insurance companies with high credit rating scores and have reduced our exposure to corporate bonds to highly rated institutions. Our premium debtors default risk exposure is managed through primarily applying “cash and carry” on policies and only extending short term credit where the law allows, and the clients have a strong internal credit score

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BETTER • SIMPLE • LIFE BETTER • SIMPLE • LIFE 49 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

SUSTAINABILITY REPORT

Our Responsible Business Agenda

Our heritage of 175 years across Africa and 100 years in East Africa is a testament of our belief in engage our customer and enable a • New website for Rwanda - The creating shared value for our investors, employees, customers and the communities we operate in. seamless customer experience. The digital team with the support of This has facilitated the long-term sustainability of the Group and enhanced our competitiveness. notable achievements include the IT completed the redesign and deployment of: development of Rwanda website Value created for our stakeholders • Contact Center - we completed in line with the group and Rwanda an upgrade of our Call Contact business requirements. This new infrastructure allowing for multiple site provides the capability to deliver concurrent calls to be responded new product and service solutions and engage with our customers and to address customer needs now and partners at the same time 24hrs. into the future.

Customers Employees Intermediaries Communities Claims and Salaries and Fees and Fees paid: Our benefits paid: benefits paid: commissions paid: Employees Rwf Rwf Rwf Tax: Rwf

Our staff are the center of our organization. Despite the challenges of Covid-19, our 5.3B 1.2B 1.4B 407.4M In 2020 we have put our key priorities on business has managed to keep all their CSR: RWF the following items to insure staff and achieve 92% staff retention. • Learning & Development • Cultivate a high-performance culture Staff welfare and participation is also 31.6M and a great place to work. a key component for facilitating the • Alignment of group policies with smooth running of the organization. A Our Rwandan Labour Laws to comply. series of initiatives to involve staff were Customers • Continuous staff Engagement undertaken as below: programs • E-learning program for staff, 38 • Rollout of the Human Resource e-learning courses were completed Our cultural is to always put the customer a global pandemic in March 2020 saw Information System (Workday) • A free leave day dubbed ‘duvet day’ first. In everything we do, our customers communities and economies severely was gifted to all staff working in come first. Our history and achievements impacted. These key elements seek to ensure the company in 2020 in honour of across Africa has been largely supported • Offering facilities and flexibility to continuity of business operations, celebrating 175 year in Africa. This by our customers and the relationships allow customers to afford premium seamless engagement with our served as a token of appreciation we have established with them over the payment customers and partners. We have also for the role they play in the ongoing years we have been in operation. • Operational service centers with contained operational costs through success of the organisation. essential staff to address urgent automation of critical process enhancing • Equip the staff working from home Even though 2020 has been a challenging case of walking ins customers business efficiencieshe with all necessary tools to ensure year, we maintained the best level of • Grant test of Covid-19 and treatment excellent service to our customers service delivered as highlighted below: to our medical customers Further, it seeks to attract and retain the • The performance cycle for 2020 • Increasing service accessibility right candidates at all levels with visible was successfully completed with an • A GI market growth of 14% and by implementation of call center staff growth in line with their career average performance score of 2.8; overall business growth of 16% operating 24/7 paths. Transformational leadership that 2020 review cycle has been engaging • The overall Net promoter score • Continuously expand providers exhibits the new culture and brand and at all levels with inclusion of candid (NPS) index of 92% panel for service proximity for the lives by the organizational values is a core feedback sessions between line • The overall business partners convenience of our customer priority as well as having an engaged, managers and subordinates. satisfaction of 63.5% • Equip the staff working from home motivated, and competitive workforce • Awareness campaign on preventing • The overall claim experience of 58% with all necessary tools to ensure that thrives on a co-created high- Covid-19, self-quarantine and excellent service to our customers performance culture. working from home tips We have taken actions to deliver the • Psychological support for the staff best service and ensures controls in We made significant strides in the digital affected by Covid-19 pandemic place to the declaration of COVID-19 as transformation journey to effectively

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SUSTAINABILITY REPORT

Our Contribution to The United Nations Sustainable Development Goals

Our The Sustainable Development Goals are a universal call to action to end poverty, Employees protect the planet and ensure that all people enjoy peace and prosperity. Here is a snapshot of our contribution towards some of these Global Goals. Staff were also trained on COVID-19 pandemic response • Fraud Management Through partnerships and self-driven • Maadili charter (Code of Conduct) initiatives, we contributed to various OUR CONTRIBUTION: Gender distribution for • OM Gift Policy programmes in support of the COVID-19 GENDER permanent staff stands at 21 Female and 28 Male. • Financial Crimes and Compliance National response, in line with our The total number of Female translates to 43% of the • Whistle Blowing Policy Responsible Business ethos as below: 5 EQUALITY total permanent staff. The business has 50% female • Risk Mgt & Internal Controls in staff in senior leadership. THE NEED: Financial Institutions A video production with useful tips on the To provide gender parity This is a result of continuous management’s effort • Customer Experience during the prevention of COVID-19 in partnership in the organization in mentoring, coaching and empowering women and empower women times of COVID-19 with King Faisal Hospital Kigali at a cost through the Old Mutual Women Network Forums; • Talking difficult conversation of RwF 1.8M was developed to sensitize through leadership positions Establish Rwanda Talent management strategy during/after covid-19 by Strathmore the general public on the importance of aligned to the overall EA talent strategy. Business School washing hands to prevent the spread of • Board Readiness Program the virus. • Various Technical Trainings were done mostly for Operations A donation of food worth RwF 29.8M was OUR CONTRIBUTION: We have employed more than department made to the Rwanda football federation DECENT WORK 100 people including permanent and temporary staff members and their families. AND ECONOMIC and retained the same workforce in 2020 despite 8 GROWTH the pandemic. Our THE NEED: To promote sustained Stakeholders economic growth, higher levels of productivity and technological innovation. Our stakeholders are integral to the growth of the organization. we seek to create value for enhance our relationship with them and ensure best service delivery. Various initiatives have been rolled out to in that regards:

• Completed the integration of our core policy administration system (AIMS) OUR CONTRIBUTION: We have provided digital Industry products through to meet customers at their point with RURA & IREMBO - This integration enables the two entities to get the Innovation and of need. motor policies details which enable for the public to apply for the Transport 9 Infrastructure Authorization and give to RURA to validate the insurance of cover. THE NEED: • Commenced the development of BeyondTech-ASSAR Integration - We To invest in infrastructure and provide innovations commenced the development of a real-time integration of our policy to solve emerging needs administration to Beyontech-ASSAR to enable electronic exchange of insurance and grow the economy. certificates (through sms & mail) in compliance with the requirements of the market and the regulator

Partnership OUR CONTRIBUTION: We have provided digital for the Goals products through to meet customers at their point 17 of need. THE NEED: To invest in infrastructure and provide innovations to solve emerging needs and grow the economy.

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Management is responsible for building an appropriate risk culture that supports financial crimes prevention and detection through procedures and controls to identify, prevent and report Financial Crime, including ensuring periodic risk assessments are conducted on key business processes and controls and taking timely management, disciplinary and legal action in response to incidents.

We ensure that all employees (full time and temporary) undergo structured periodic training on the UAP Code of Ethics, the Financial Crime policy and the related processes and controls in place to mitigate these risks, including the mechanisms for reporting Financial Crime and the making of Protected Disclosures. Clauses relating to the requirement to abide by the Code of Ethics and the financial crime policy are included in all contracts with temporary employees, agents and contractors.

Fraud Awareness Training FORENSIC In FY 2020, Fraud Awareness training sessions for staff were held through online channels.

Reported Cases In FY 2020, No fraud cases were reported.

Fraud Risk Assessments Fraud Risks Assessments were conducted for UAP Insurance Rwanda has set out a financial crime policy Incidents of Financial Crime are reported to the General Insurance and management actions that is a subset of the Group’s Operational risk policy. Our the Group’s Forensics team that is responsible and controls to address the risks were identified. Financial Crimes Policy forms part of the Group’s Governance for Investigation of Financial Crime. The scope The purpose of the assessments was to assist the Framework and Its objective is to set the Group-wide principles of policy requirements covers employees, business identify inherent fraud risks and come for the management of Financial Crime risk, including Bribery intermediaries and contractors. Whenever up with management actions to mitigate risk & Corruption risk and to prescribe the UAPIR requirements for Protected Disclosures are made, we ensure that identified. the making of Protected Disclosures. the individual making disclosures is protected and not subject to occupational detriment, harassment Financial Crime E-learning modules The board receive and review regular reports on the nature and or victimisation. An important aspect to encourage 6 E-Learning modules were rolled out to all staff extent of Financial Crime risks to the business, the occurrence accountability and transparency within the covering Fraud & Theft, Anti-bribery and Corruption, of material Financial Crime-related risk events (including company , we have put in place a mechanism to our Gifts policy, Whistleblowing, Conflict of Interest, control breaks) and the adequacy and effectiveness of related enable all individuals to voice concerns internally and Internal Irregularities. The modules are meant controls and/or mitigating management actions (including the in a responsible and effective manner when they to enhance employee’s awareness and alertness to results of disciplinary and legal actions). discover information which they believe shows areas of financial crime and improve the financial serious malpractice. This is through an outsourced crime risk culture of the organisation. Tip of Anonymous line and email address.

BETTER • SIMPLE • LIFE 55 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

BETTER • SIMPLE • LIFE BETTER • SIMPLE • LIFE 57 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

Directors’ Report Statement of Directors’ Responsibilities

The directors submit their report together with the audited financial statements for the year The Company’s directors are responsible for the preparation of financial statements that give ended 31 December 2020, which disclose the state of affairs of UAP Insurance Rwanda Limited a true and fair view of UAP Insurance Rwanda Limited financial statements comprising the (the “Company”). statement of financial position as at 31 December 2020, and the statements of comprehensive income, changes in equity and cash flows for the year then ended, and the notes to the financial INCORPORATION statements, which include a summary of significant accounting policies and other explanatory UAP Insurance Rwanda Limited is incorporated as a limited liability company and is domiciled notes set out on pages 12 - 62, in accordance with International Financial Reporting Standards in Rwanda. The Company’s registered office is: and in the manner required by the Law No.17/2018 of 13/04/2018 governing companies.

P.O BOX 6644 The directors are also responsible for such internal control as the directors determine is necessary Kigali, Rwanda to enable the preparation of financial statements that are free from material misstatement, 7thFloor, Grand Pension Plaza whether due to fraud or error, and for maintaining adequate accounting records and an effective system of risk management. PRINCIPAL ACTIVITIES The company underwrites all classes of non-life insurance risks as defined by the Rwandan The directors have made an assessment of the ability of the Company to continue as going Insurance Law. concern and have no reason to believe that the business will not be a going concern in the year ahead. RESULTS AND DIVIDEND The profit for the year of FRW 1,446,576,000 (2019 profit: FRW 1,108,445,000) has been added to The directors acknowledge that the independent audit of the financial statements does not the retained earnings. relieve them of their responsibility.

The Directors do not recommend payment of a dividend for the year ended 31 December 2020 Approval of Financial statements (2019: Nil). The financial statements of the Company from pages 13 - 59 were approved for issue by the board DIRECTORS of directors on 24th March 2021 and signed on its behalf by: The directors who held office during the year and as at the date of this report were:

Mr. Richard Mugisha - Chairman (Independent, Non-Executive) Mr. Michael Sallu (Independent, Non-Executive) Mr. John Bosco Birungi (Independent, Non-Executive) Chairman Director Ms.Evangelina Soni Kayinamura (Independent, Non-Executive) Mr. Herbert Kwizera (Independent, Non-Executive) Dr. Isaac Nzyoka (Executive) Mr. Jeff Aludo (Independent, Non-Executive) Appointed 15 May 2020 Managing Director Mr. Peter Mwangi (Executive) Resigned 14 April 2020

AUDITOR PricewaterhouseCoopers Rwanda Limited’s term will come to an end following the conclusion of the current year audit in line with regulatory requirements in Rwanda.

BY ORDER OF THE BOARD

Mrs Nkirote Njiru Company Secretary

24th March 2021

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Statement of Corporate Governance

UAP Insurance Rwanda Limited is wholly owned by Board Meetings declaration of any conflict of interests. Any such business transacted with UAP must be at UAP Africa Limited, a wholly owned subsidiary of The full Board meets at least four times a year. The arm’s length, fully disclosed to the Board which must consider and approve it. A director UAP Holdings Plc. Board deals with all significant matters including must refrain from discussion or voting on matters of potential conflict of interests. strategic direction of the Company; ensuring UAP Insurance Rwanda Limited (“UAP”) is competent management of the business; internal Committees of the Board committed to adhering to the highest standards control; compliance with laws and regulations Subject to fundamental, strategic, policy and formal matters reserved for its decision, the of good corporate governance at all levels of its and reporting performance to shareholders. On Board has delegated some of its responsibilities to a number of standing committees which operations. This commitment is rooted in our core a quarterly basis, the Board reviews the business operate within defined terms of reference laid down by the Board in the Board Charter. The values and beliefs. We have put in place elaborate operational plan to monitor compliance with the Board has two standing committees as namely:- governance processes which comply with best strategic plan while at the 4th quarter of each year, practice as set out in various codes on Corporate a strategic retreat is undertaken to review business Audit and Risk Committee Governance. performance and forecast for the coming year. The committee meets four times a year or as necessary. Its responsibilities include review of financial information in particular half year and annual financial statements, evaluation Board of Directors Information to directors of compliance and effectiveness of internal controls in liaison with the Internal Auditor, risk The Board consists of six independent non-executive The directors are given appropriate and timely management and oversight, liaison with the external auditors, remuneration of external directors. The Board is composed of directors with information on key activities of the business on a auditors and maintaining oversight on internal control systems. The Committee is made up a good mix of skills, experience and competencies regular basis and on request in order to carry out of the three members of the Board of which the majority shall be non-executive Directors. in the relevant fields of expertise and is well placed their roles. Specifically the directors are provided The chairman of the committee should be an independent Director .The Chief Executive to take the business forward. Appointments to with all available information in respect of items Officer, Finance Manager, Internal Audit Manager and the Company Actuary, company Risk the Board are made after careful consideration. At to be discussed at a meeting of the Board or and Compliance officer and Representatives of External Auditors attend all meetings of the every Annual General Meeting at least one-third of Board Committee prior to the meeting. They may committee. Current members of the committee are Michael Sallu (chairperson), Evangelina the Directors are required to retire with a provision also seek independent professional advice, at the Kayinamura and Jeff Aludo. for re-election. The Directors are: Company’s expense, concerning the affairs of the Company in consultation with the Chief Executive Claims and Underwriting Strategy Committee 1. Mr. Richard Mugisha – Chairman Officer and the Company Secretary. The committee meets at least 4 times a year or as required. Its responsibilities include (Independent, Non-Executive) review, approve, and monitor overall risk tolerance and risk appetite; establishment of 2. Mr. Michael Sallu (Independent, Non-Executive) Separation of role of Chairman and Chief Executive policy on fraud detection and prevention; establish company’s models and metrics to 3. Mr. John Bosco Birungi (Independent, Non- Officer evaluate the underwritten risk; establish and reviewing claims policies and procedures; Executive) The Chairman is responsible for managing the review periodically the policies and guidelines governing the Company’s insurance 4. Ms.Evangelina Soni Kayinamura (Independent, Board and providing leadership to the Company underwriting and reinsurance treaties; review on periodic basis, the Company’s insurance Non-Executive) while the Chief Executive Officer is responsible to underwriting and reinsurance processes and procedures; monitor compliance with 5. Mr. Herbert Kwizera (Independent, Non- the Board for running the business in accordance approved underwriting policies and guidelines; review ceded reinsurance programs and Executive) with instructions given by the Board. The Chief practices; review and approve acquisitions and disposals of lines of business, joint ventures 6. Mr. Jeff Aludo (Independent, Non-Executive) Executive Officer directs the implementation of and strategic equity investments; review and assess on a regular basis the policy on 7. Dr. Isaac Nzyoka (Executive) Board decisions and instructions and the general technical provisions of an insurer; review on a regular basis pricing’s policy and strategy management of the business with the assistance and review and approve re-insurance strategy of re-insurer. The Committee Chairman Board Charter and Work Plan of the management team. reports formally to the board on committee proceedings after each meeting on all matters The Board Charter contains provisions that ensure within its duties and responsibilities. The Committee acts independently of management that the Board observes best practice in corporate Conflicts of interest and is authorized by the board to obtain outside legal, accounting or other independent governance and contains among other things; the The directors of the company are under a fiduciary professional advice and it can secure attendance of outsiders with relevant experience and size, role and functions of the Board; appointments, duty to act honestly and in the best interests of the expertise if it considers this necessary. The Committee is made up of the three members of induction and tenure of directors and Board Company. UAP has put in place a policy to ensure the Board, with the majority of the members being non-executive directors/members. The performance evaluation and remuneration of that directors avoid putting themselves in positions Chief Executive Officer, Finance Manager, Chief Operations Officer, Underwriting Manager, directors. The Work Plan has a formal schedule where their self-interest conflicts with their duty to Actuarial Executive and claims Manager normally attend all meetings of the committee. of matters specifically reserved for the Board’s act in the best interests of the Company. This policy Current members of the committee are Jean Bosco Birungi (Chairperson), Isaac Nzyoka and attention to ensure it exercises full control over provides that directors, their immediate families Hebert Kwizera. all significant matters. It sets out the schedule of and companies where directors have interests meetings of the Board and its committees and the must not transact business with UAP without main business to be dealt with at those meetings. express approval from the Board. The policy further Additional meetings are scheduled as and when requires that all directors complete an annual the need arises.

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Statement of Corporate Governance

Management Committee of internal control and risk management, the other information in this annual report that they consider useful to shareholders and other The Board applies a formal process of delegated Board takes into account the results of all the work stakeholders. All shareholders are invited to the Annual General Meeting and are free to put authority to Management and these responsibilities carried out to audit and review the activities of the questions to the Board and the auditors on matters concerning operations and financial are attended to by the Management Committee, Company by both external and internal assurance statements of the Company. which convenes formally and maintains records providers. The Board has reviewed the Company’s of its proceedings for tracking and accountability. system of internal control and is satisfied that the Board Attendance Among its several areas of delegated authority, system is effective. During the year, the Board convened and held four (4) ordinary meetings. All the meetings the Management Committee is responsible for convened had sufficient quorum. A review of attendance to meetings by individual members oversight over the assets and liabilities of the Conduct of Business and Performance Reporting during the period under review indicates that all the members gave sufficient time and Company and for reporting on the same to the The Company’s business is conducted in attention to the affairs of the Board The board members gave prior notice of inability to Board, at its quarterly meetings. Members of the accordance with a carefully formulated strategy, attend and gave meaningful input on the agenda items as appropriate. management committee are Finance Manager, annual business plans and budgets which set out Underwriting and Reinsurance Manager, Health very clear objectives. Roles and responsibilities have Manager, Business Development Officer and been clearly defined with approved authority being Claims Manager. delegated. Performance against the objectives is Name and Nationality Date appointed/ Meetings Meetings reviewed and discussed monthly and quarterly by resigned eligible attended Risk management the management team. Management prepares a to Attend quarterly business review report which is presented Mr. Richard Mugisha – Chairman 8 July 2013 4 4 The Board recognizes that managing risks to to the Board. In this way performance trends, (Independent, Non-Executive) Rwandese ensure an optimal mix between risk and return is forecasts as well as actual performance against an integral part of achieving corporate goals. The budgets and prior periods are closely monitored. Ms.Evangelina Soni Kayinamura 7 June 2018 4 4 board has therefore charged the Audit Committee (Independent, Non-Executive) Rwandese with the responsibility of overseeing the key Compliance with Laws Dr. Isaac Nzyoka (Executive) Kenyan 5 February 2019 4 3 risks and monitoring the implementation of risk The Board is satisfied that the Company has, to mitigation actions to ensure the risk of failure the best of their knowledge, complied with all Mr. Michael SALLU 21 November 2017 4 4 to achieve business objectives is appropriately applicable laws and conducted its business affairs (Independent, Non-Executive), Tanzanian mitigated. In addition, the Risk and Compliance in accordance with the law. To the knowledge Mr. Jeff Aludo 15 May 2020 2 2 Department has been operational and has taken of the Board, no director, employee or agent of (Independent, Non-Executive), Kenyans full time management of all matters touching on the Company acted or committed any indictable risk. offence under the Anti-Corruption laws in Mr. Peter Mwangi Resigned on 14 1 1 conducting the business of the Company or was (Independent, Non-Executive), Kenyan April 2020 Internal Controls involved or used as a conduit for money laundering Mr. Hebert Kwizera 5 February 2019 4 4 The Board has a collective responsibility for the or any other activity incompatible with the relevant (Independent, Non-Executive)y, Rwandese Company’s systems of internal control and for laws. Mr. John Bosco Birungi 22 Nov 2016 4 4 reviewing their effectiveness. In this respect the (Independent, Non-Executive), Rwandese Board relies on Management to establish and Accountability, Audit and Shareholder Relations manage appropriate systems and controls in The Board recognizes its responsibility to present the running of the business of the Company and a balanced and understandable assessment of the providing assurance to the Board that they have Company’s financial position and prospects. The done so. The system of internal control in place has Company’s financial statements are prepared in defined procedures and operational and financial accordance with International Financial Reporting Mrs Nkirote Njiru controls to ensure that assets are safeguarded, Standards (IFRS) and the requirements of the Company Secretary transactions are authorized and recorded properly, Companies Act and are audited in accordance with and that material errors and irregularities are either International Auditing Standards. The directors 24th March 2021 prevented or detected within a reasonable period of recognize and have confirmed their responsibility time. In reviewing the effectiveness of the systems over the financial statements and have provided

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REPORT OF THE INDEPENDENT AUDITOR TO THE REPORT OF THE INDEPENDENT AUDITOR TO THE SHAREHOLDER OF UAP INSURANCE RWANDA LIMITED SHAREHOLDER OF UAP INSURANCE RWANDA LIMITED

Report on the audit of the financial statements How our audit addressed the key Key audit matter audit matter Our opinion Determination of insurance contract Our testing approach included amongst In our opinion, UAP Insurance Rwanda Limited (the “Company”) financial statements give a liabilities Insurance contract liabilities others, the following procedures with the true and fair view of the financial position of the Company as at 31 December 2020, and of its included in note 25 of the financial assistance of our actuarial specialists: financial performance and its cash flows for the year then ended in accordance with International statements are made up of reported claims • Evaluating and testing the controls around Financial Reporting Standards and the requirements of Law No.17/2018 of 13/04/2018 Governing and incurred but not reported (“IBNR”) the claim reserving and settlement Companies. claims. These were considered a matter of process; most significance to the current year audit • Evaluating managements’ process for What we have audited for the following reasons: reviewing the adequacy of the provisions; UAP Insurance Rwanda Limited’s financial statements as set out on pages 13 - 59 comprise: • The estimation of the provisions • Checked the accuracy of the data used • the statement of financial position as at 31 December 2020; involves significant judgement given by the statutory actuary by tracing the • the statements of comprehensive income; the inherent uncertainty in estimating policyholder valuation input data, such as • the statement of changes in equity for the year then ended; expected future outflows in relation to premiums, claims and expense data used • the statement of cash flows for the year then ended; and claims incurred. in the valuation model to information • the notes to the financial statements, which include a summary of significant • The valuation of these liabilities relies contained in the administration and accounting policies. on the accuracy of claims data and accounting systems. the assumption that future claims • Comparing, for a sample of claims, the Basis for opinion development will follow a similar pattern amounts as recorded in the claims systems We conducted our audit in accordance with International Standards on Auditing (ISAs). Our to past claims development experience. to source documents; responsibilities under those standards are further described in the Auditor’s responsibilities for • The magnitude of the insurance contract • Performed a review of the methodology the audit of the financial statements section of our report. liabilities balance (FRW 8,344,577,000) and assumptions used to compute the in relation to total liabilities of (FRW liabilities against generally accepted We believe that the audit evidence we have obtained is sufficient and appropriate to provide a 14,305,052). actuarial practise approaches, in relation basis for our opinion. Any change to these assumptions and to the business written and expected risks; methodology can result in a material impact and Independence to the valuation of insurance contract • Tested the robustness of the reserving We are independent of the Company in accordance with IESBA International Code of Ethics for liabilities. process by performing an actual vs Professional Accountants (including International Independence Standards). We have fulfilled expected analysis on prior years’ reserves our other ethical responsibilities in accordance with the IESBA Code. to assess this for any surpluses or shortfalls. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance Other information in our audit of the financial statements of the current period. These matters were addressed in Directors are responsible for the other information. The other information comprises the the context of our audit of the Company financial statements as a whole, and in forming our Directors’ report, Statement of directors’ responsibilities, statement of corporate governance opinion thereon, and we do not provide a separate opinion on these matters. and supplementary information but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Pricewaterhouse Coopers Rwanda Limited, 5th Floor, Blue Star House, 35 KG 7 Ave, Kacyiru Pricewaterhouse Coopers Rwanda Limited, 5th Floor, Blue Star House, 35 KG 7 Ave, Kacyiru P. O. Box 1495 Kigali, Rwanda P. O. Box 1495 Kigali, Rwanda Tel: +250 (252) 588203 / 4 / 5 / 6, www.pwc.com/rw Tel: +250 (252) 588203 / 4 / 5 / 6, www.pwc.com/rw Directors: M Karanja M Nyabanda B Kimacia P Ngahu Directors: M Karanja M Nyabanda B Kimacia P Ngahu

BETTER • SIMPLE • LIFE 65 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

REPORT OF THE INDEPENDENT AUDITOR TO THE REPORT OF THE INDEPENDENT AUDITOR TO THE SHAREHOLDER OF UAP INSURANCE RWANDA LIMITED SHAREHOLDER OF UAP INSURANCE RWANDA LIMITED

Responsibilities of the directors for the financial statements • Evaluate the overall presentation, structure and content of the financial statements, including Directors are responsible for the preparation of the financial statements that give a true and the disclosures, and whether the financial statements represent the underlying transactions fair view in accordance with International Financial Reporting Standards and the requirements and events in a manner that achieves fair presentation. of Law No.17/2018 of 13/04/2018 Governing Companies, and for such internal control as directors determine is necessary to enable the preparation of financial statements that are free from We communicate with the directors regarding, among other matters, the planned scope and material misstatement, whether due to fraud or error. timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. In preparing the financial statements, directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern We also provide the directors with a statement that we have complied with relevant ethical and using the going concern basis of accounting unless the directors either intend to liquidate requirements regarding independence, and to communicate with them all relationships the Company or to cease operations, or have no realistic alternative but to do so. and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. Directors are also responsible for overseeing the Company’s financial reporting process. From the matters communicated with the directors, we determine those matters that were of Auditor’s responsibilities for the audit of the financial statements most significance in the audit of the financial statements of the current period and are therefore Our objectives are to obtain reasonable assurance about whether the financial statements as the key audit matters. We describe these matters in our auditor’s report unless law or regulation a whole are free from material misstatement, whether due to fraud or error, and to issue an precludes public disclosure about the matter or when, in extremely rare circumstances, we auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but determine that a matter should not be communicated in our report because the adverse is not a guarantee that an audit conducted in accordance with ISAs will always detect a material consequences of doing so would reasonably be expected to outweigh the public interest misstatement when it exists. Misstatements can arise from fraud or error and are considered benefits of such communication. material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Report on other legal and regulatory requirements Article 132 of Law No.17/2018 of 13/04/2018 Governing Companies requires that in carrying out As part of an audit in accordance with ISAs, we exercise professional judgment and maintain our audit we consider and report to you on the following matters. We confirm that: professional scepticism throughout the audit. We also: i. We have no relationship, interest or debt with UAP Insurance Rwanda Limited. As indicated • Identify and assess the risks of material misstatement of the financial statements, whether in our report on the financial statements, we have complied with the required ethical due to fraud or error, design and perform audit procedures responsive to those risks, and requirements. These are the International Ethics Standards Board for Accountants’ Code obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. of Ethics for Professional Accountants (IESBA Code) which includes comprehensive The risk of not detecting a material misstatement resulting from fraud is higher than for independence and other requirements; one resulting from error, as fraud may involve collusion, forgery, intentional omissions, ii. We have obtained all the information and explanations which to the best of our knowledge misrepresentations, or the override of internal control. and belief were necessary for the purposes of our audit; iii. In our opinion, proper books of account have been kept by the Company, so far as appears • Obtain an understanding of internal control relevant to the audit in order to design audit from our examination of those books; and procedures that are appropriate in the circumstances, but not for the purpose of expressing iv. We have communicated to the Company’s Board of Directors, through a separate an opinion on the effectiveness of the Company’s internal control. management letter, internal control matters identified in the course of our audit including our recommendations in relation to those matters. • Evaluate the appropriateness of accounting policies used and the reasonableness of v. According to the best of the information and the explanations given to us as auditors, as accounting estimates and related disclosures made by the directors. shown by the accounting and other documents of the company, the annual accounts comply with Article 123 of Law No.17/2018 of 13/04/2018 Governing Companies. • Conclude on the appropriateness of director’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to For PricewaterhouseCoopers Rwanda Limited, Kigali, events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or Moses Nyabanda 31 March 2021 conditions may cause the Company to cease to continue as a going concern. Director

Pricewaterhouse Coopers Rwanda Limited, 5th Floor, Blue Star House, 35 KG 7 Ave, Kacyiru Pricewaterhouse Coopers Rwanda Limited, 5th Floor, Blue Star House, 35 KG 7 Ave, Kacyiru P. O. Box 1495 Kigali, Rwanda P. O. Box 1495 Kigali, Rwanda Tel: +250 (252) 588203 / 4 / 5 / 6, www.pwc.com/rw Tel: +250 (252) 588203 / 4 / 5 / 6, www.pwc.com/rw Directors: M Karanja M Nyabanda B Kimacia P Ngahu Directors: M Karanja M Nyabanda B Kimacia P Ngahu

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BETTER • SIMPLE • LIFE BETTER • SIMPLE • LIFE 69 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

Statement of Comprehensive Income Statement of Financial Position

2020 2019 2020 2019 Notes FRW’000 FRW’000 Notes FRW’000 FRW’000 Gross written premium 5 12,676,098 11,127,599 Assets Change in unearned premium (680,388) (561,310) Cash and bank balances 13 1,614,096 814,026 Gross earned premiums 5 11,995,711 10,566,289 Deposits with financial institutions 14 7,346,023 6,574,930 Premiums ceded to reinsurers (2,829,903) (2,686,985) Government securities at amortized cost 15 8,666,113 6,537,585 Net earned premiums 9,165,808 7,879,304 Corporate bond 16 - - Commissions earned 940,974 750,384 Investments at fair value through other comprehensive income 17 12,000 13,250 Investment income 6 1,485,253 1,160,133 Deferred acquisition costs 18 169,099 237,217 Foreign exchange losses 7 (126,307) (289,744) Other assets 19 61,454 84,629 Total operating income 11,465,727 9,500,077 Receivables arising out of reinsurance arrangements 20 278,556 295,039 Gross claims and policyholders’ benefits payable 8 (6,728,534) (6,299,172) Receivables arising out of direct insurance arrangements 21 499,735 782,699 Less : amount recoverable from reinsurers 1,367,582 1,538,786 Withholding tax recoverable 329,255 252,603 Net claims and policyholders benefits payable (5,360,953) (4,760,386) Reinsurers’ share of insurance liabilities 22 2,046,178 1,736,337 Commissions payable (1,412,825) (1,165,519) Deferred income tax 29 162,314 - Operating and other expenses 9 (2,837,344) (2,465,077) Equipment and motor vehicles 23 65,621 93,727 Total expenses (9,611,121) (8,390,982) Intangible assets 24 8,435 13,008 Profit before income tax 1,854,606 1,109,095 Right-of-use assets 25 379,038 444,492 Income tax expense 11 (407,498) - Total assets 21,637,917 17,879,542 Profit after income tax expense 1,447,108 1,109,095 Liabilities Other comprehensive income: Insurance contract liabilities 26 8,344,577 7,151,041 Items that may be reclassified to profit or loss Creditors arising from reinsurance arrangements 722,210 629,920 Changes in fair value of assets at fair value through other 17 (1,250) (650) Lease liabilities 25 422,595 484,984 comprehensive income Current income tax payable 569,812 - Total comprehensive income 1,445,858 1,108,445 Other payables 28 4,196,698 3,677,430 Total liabilities 14,255,892 11,943,375 The notes on pages 17 - 59 are an integral part of these financial statements. Equity Share capital 12 9,177,614 9,177,614 Fair value reserve 17 3,475 4,725 Accumulated losses (1,799,064) (3,246,172) Shareholders' funds 7,382,025 5,936,167 Shareholders’ funds and liabilities 21,637,917 17,879,542

The notes on pages 17 - 59 are an integral part of these financial statements.

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Statement of Changes in Equity Statement of Cashflows

Notes Share Fair value Accumulated 2020 2019 Capital reserve losses Total Notes FRW’000 FRW’000 FRW ‘000 FRW’000 FRW’000 FRW’000 Cash generated (used in)/ from operating activities 32 2,564,344 1,100,509 At start of the year 9,177,614 5,375 (4,355,267) 4,827,722 Tax paid (76,652) (47,143) Total comprehensive income Net cash flows from operating activities 2,487,692 1,053,366 Profit for the year - - 1,109,095 1,109,095 Other comprehensive income - (650) - (650) Cash flow from investing activities: Total comprehensive income - (650) 1,109,095 1,108,445 for the year At 31 December 2019 9,177,614 4,725 (3,246,172) 5,936,167 Purchase of property and equipment (28,035) - Interest received 1,485,253 1,035,513 Investment in deposits with financial institutions (836,977) 276,379 Notes Share Fair value Accumulated Investment in government securities (2,112,522) (2,017,513) Capital reserve losses Total FRW ‘000 FRW’000 FRW’000 FRW’000 Net cash flows utilized in investing activities (1,492,281) (1,275,306) At start of the year 9,177,614 4,725 (3,246,172) 5,936,167 Total comprehensive income Cash flow from financing activities: Profit for the year - - 1,447,108 1,447,108 Other comprehensive income - (1,250) - (1,250) Lease repayments during the year (195,341) - Total comprehensive income - (1,250) 1,447,108 1,445,858 Proceeds from issue of shares - - for the year Net cash generated from financing activities (195,341) - At 31 December 2020 9,177,614 3,475 (1,799,064) 7,382,025

(Decrease)/ increase in cash and cash equivalents 800,070 (221,940) The notes on pages 17 - 59 are an integral part of these financial statements. At 1 January 814,026 1,035,967 At 31 December 13 1,614,096 814,026

The notes on pages 17 - 59 are an integral part of these financial statements.

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NOTES TO THE FINANCIAL STATEMENTS

1. General information The Company also elected to adopt the following For insurance contracts with direct participation features, the variable fee approach applies. amendments early: 8 The variable fee approach is a variation on the general model. When applying the variable fee UAP Insurance Rwanda underwrites short-term approach, the entity’s share of the fair value changes of the underlying items is included in insurance business (non-life) risks. The company • Annual Improvements to IFRS Standards 2018- the contractual service margin. As a consequence, the fair value changes are not recognised is a limited liability company incorporated and 2020 Cycle. in profit or loss in the period in which they occur but over the remaining life of the contract. domiciled in Rwanda. The registered office is: The amendments listed above did not have any Other standards are not expected to have a material impact on the entity in the current or UAP Insurance Rwanda Limited impact on the amounts recognised in prior periods future reporting periods and on foreseeable future transactions. 7th Floor, Grand Pension Plaza and are not expected to significantly affect the P.O. Box 6644 current or future periods. i) Classification Kigali, Rwanda iv) New standards and intepretations not yet The Company issues contracts that transfer insurance risk. Insurance contracts are those 2. Summary of significant accounting policies adopted contracts that transfer significant insurance risk. As a general guideline, the company defines Certain new accounting standards and as significant insurance risk, the possibility of having to pay benefits on the occurrence of This note provides a list of the significant interpretations have been published that are not an insured event that are at least 10% more than the benefits payable if the insured event accounting policies adopted in the preparation of mandatory for 31 December 2020 reporting periods did not occur. these financial statements to the extent they have and have not been early adopted by the group. The not already been disclosed in the other notes above. most significant is IFRS 17 Insurance Contracts. The Insurance contracts issued by the Company are classified as general insurance business These policies have been consistently applied to all directors are currently assessing the impact of the based on the duration of the risk insured. Classes of general insurance include Aviation the years presented, unless otherwise stated. standard on the financial statements. insurance, Engineering insurance, Fire insurance -domestic risks, Fire insurance - industrial and commercial risks, Liability insurance, Marine Insurance, Motor insurance - private vehicles a) Basis of preparation IFRS 17, ‘Insurance contracts’ is applicable for annual , Motor insurance - commercial vehicles, Personal accident insurance, Theft insurance, periods beginning on or after 1 January 2023. Early Workmen’s Compensation and Employer’s Liability insurance and Miscellaneous insurance i) Compliance with IFRS application is permitted for entities that apply IFRS (i.e. class of business not included under those listed above) . The financial statements of the Company have been 9, ‘Financial Instruments’, and IFRS 15, ‘Revenue prepared in accordance with International Financial from Contracts with Customers’, at or before the Motor insurance business means the business of affecting and carrying out contracts of Reporting Standards (IFRS) and interpretations date of initial application of IFRS 17 insurance against loss of, or damage to, or arising out of or in connection with the use of, issued by the IFRS Interpretations Committee (published May 2017). motor vehicles, inclusive of third party risks but exclusive of transit risks. (IFRS IC) applicable to companies reporting under Personal Accident insurance business means the business of affecting and carrying out IFRS. The financial statements comply with IFRS as The IASB issued IFRS 17, ‘Insurance contracts’, contracts of insurance against risks of the persons insured sustaining injury as the result of issued by the International Accounting Standards and thereby started a new epoch of accounting an accident or of an accident of a specified class or dying as the result of an accident or of Board (IASB). for insurers. Whereas the current standard, IFRS an accident of a specified class or becoming incapacitated in consequence of disease or of 4, allows insurers to use their local GAAP, IFRS disease of a specified class. ii) Historical cost convention 17 defines clear and consistent rules that will The financial statements have been prepared significantly increase the comparability of financial Fire insurance business means the business of affecting and carrying out contracts of on a historical cost basis, except for the certain statements. For insurers, the transition to IFRS 17 insurance, otherwise than incidental to some other class of insurance business against financial assets carried at fair value through other will have an impact on financial statements and on loss or damage to property due to fire, explosion, storm and other occurrences customarily comprehensive income. key performance indicators. included among the risks insured against in the fire insurance business. iii) New and amended standards adopted by the Under IFRS 17, the general model requires entities Short term business is normally of single-year duration. Company to measure an insurance contract at initial The Company has applied the following standards recognition at the total of the fulfilment cash flows ii) Recognition and measurement and amendments for the first time for their annual (comprising the estimated future cash flows, an reporting period commencing 1 January 2020: adjustment to reflect the time value of money and 1. Premium income an explicit risk adjustment for non-financial risk) • Definition of Material - amendments to IAS 1 and and the contractual service margin. The fulfilment Premium income is recognised on assumption of risks, and includes estimates of premiums IAS 8 cash flows are remeasured on a current basis each due but not yet received less unearned premium. Unearned premiums represent the • Definition of a Business – amendments to IFRS 3 reporting period. The unearned profit (contractual proportion of the premiums written in periods up to the accounting date that relates to the • Interest Rate Benchmark Reform – amendments service margin) is recognised over the coverage unexpired terms of policies in force at the financial reporting date, and is computed using to IFRS 9, IAS 39 and IFRS 7 period. the 365ths method. Premiums are shown before deduction of commission and are gross of • Revised Conceptual Framework for Financial any taxes or duties levied on premiums. Reporting Aside from this general model, the standard provides, as a simplification, the premium allocation approach. This simplified approach is applicable for certain types of contract, including those with a coverage period of one year or less.

BETTER • SIMPLE • LIFE 75 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

NOTES TO THE FINANCIAL STATEMENTS

2. Claims and policyholder benefits payable short-term balances due from reinsurers, as well Estimates of salvage recoveries are included as an allowance in the measurement of the as longer term receivables that are dependent on insurance liability for claims, and salvage property is recognised in other assets when the Claims incurred comprise claims paid in the year the expected claims and benefits arising under the liability is settled. The allowance is the amount that can reasonably be recovered from the and changes in the provision for outstanding related reinsured insurance contracts. Amounts disposal of the property. claims. Claims paid represent all payments made recoverable from or due to reinsurers are measured during the year, whether arising from events consistently with the amounts associated with the Subrogation reimbursements are also considered as an allowance in the measurement during that or earlier years. Outstanding claims reinsured insurance contracts and in accordance of the insurance liability for claims and are recognised in other assets when the liability is represent the estimated ultimate cost of settling with the terms of each reinsurance contract. settled. The allowance is the assessment of the amount that can be recovered from the all claims arising from incidents occurring prior to Reinsurance liabilities are primarily premiums action against the liable third party. the financial reporting date, but not settled at that payable for reinsurance contracts and are date. Outstanding claims are computed on the recognised as an expense when due. c) Revenue recognition basis of the best information available at the time the records for the year are closed, and include The company assesses its reinsurance assets for i) Insurance premium revenue provisions for claims incurred but not reported impairment on a quarterly basis. If there is objective The revenue recognition policy relating to insurance contracts is set out under note (“IBNR”). Outstanding claims are not discounted. evidence that the reinsurance asset is impaired, the company reduces the carrying amount of the ii) Commissions 3. Commissions payable and deferred reinsurance asset to its recoverable amount and Commissions receivable are recognized as income in the period in which they are earned. acquisition costs (“DAC”) recognises that impairment loss in the income statement. The company gathers the objective iii) Interest income A proportion of commission’s payable is deferred evidence that a reinsurance asset is impaired using Interest income for all interest-bearing financial instruments, including financial instruments and amortised over the period in which the related the same process adopted for financial assets measured at fair value through profit or loss, is recognized within ‘investment income’ in premium is earned. Deferred acquisition costs held at amortised cost. The impairment loss is also the Statement of comprehensive income using the effective interest rate method. When a represent a proportion of acquisition costs that calculated following the same method used for receivable is impaired, the Company reduces the carrying amount to its recoverable amount, relate to policies that are in force at the year end. these financial assets. These processes are set out being the estimated future cash flow discounted at the original effective interest rate of the in Note 4. instrument, and continues unwinding the discount as interest income. 4. Liability adequacy test 6. Receivables and payables related to d) Financial assets At each financial reporting date, liability adequacy insurance contracts tests are performed to ensure the adequacy of the i) Classification insurance contract liabilities net of related DAC. In Receivables and payables are recognised when The Company classifies its financial assets in the following measurement categories: performing these tests, current best estimates of due. These include amounts due to and from · those to be measured subsequently at fair value through OCI; and future contractual cash flows and claims handling agents, brokers and insurance contract holders. · those to be measured at amortised cost. and administration expenses, as well as investment The classification depends on the entity’s business model for managing the financial income from the assets backing such liabilities, are If there is objective evidence that the insurance assets and the contractual terms of the cash flows. used. Any deficiency is immediately charged to receivable is impaired, the company reduces profit or loss. the carrying amount of the insurance receivable For assets measured at fair value, gains and losses will either be recorded in profit or loss or accordingly and recognises that impairment loss in OCI. For investments in equity instruments that are not held for trading, this will depend on 5. Reinsurance contracts the income statement. The company gathers the whether the Company has made an irrevocable election at the time of initial recognition objective evidence that an insurance receivable to account for the equity investment at fair value through other comprehensive income Contracts entered into by the company is impaired using the same process adopted for (FVOCI). with reinsurers under which the company is loans and receivables. The impairment loss is also compensated for losses on one or more contracts calculated under the same method used for these The Company reclassifies debt investments when and only when its business model for issued by the company and that meet the financial assets. These processes are described in managing those assets changes. classification requirements for insurance contracts Note 4. are classified as reinsurance contracts held. ii) Recognition and derecognition Contracts that do not meet these classification 7. Salvage and subrogation reimbursements Regular way purchases and sales of financial assets are recognised on trade-date, the requirements are classified as financial assets. date on which the Company commits to purchase or sell the asset. Financial assets are Insurance contracts entered into by the company Some insurance contracts permit the company to derecognised when the rights to receive cash flows from the financial assets have expired under which the contract holder is another insurer sell (usually damaged) property acquired in settling or have been transferred and the Company has transferred substantially all the risks and (inwards reinsurance) are included with insurance a claim (for example, salvage). The company rewards of ownership. contracts. may also have the right to pursue third parties for payment of some or all costs (for example, iii) Measurement The benefits to which the company is entitled subrogation). At initial recognition, the Company measures a financial asset at its fair value plus, in the under its reinsurance contracts held are recognised case of a financial asset not at fair value through profit or loss (FVPL), transaction costs as reinsurance assets. These assets consist of that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.

BETTER • SIMPLE • LIFE 77 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

NOTES TO THE FINANCIAL STATEMENTS

Debt instruments iv) Impairment Offsetting of financial instruments The Company assesses on a forward looking basis Subsequent measurement of debt instruments the expected credit losses associated with its Financial assets and liabilities are offset and the net amount reported in the balance sheet depends on the Company’s business model debt instruments carried at amortised cost. The when there is a legally enforceable right to offset the recognised amounts and there is an for managing the asset and the cash flow impairment methodology applied depends on intention to settle on a net basis or realise the asset and settle the liability simultaneously. characteristics of the asset. There are two whether there has been a significant increase in measurement categories into which the Company credit risk. f) Property and equipment classifies its debt instruments: For receivables arising from direct and reinsurance All categories of property and equipment are initially recorded at cost and subsequently · Amortised cost: Assets that are held for collection arrangements, the Company applies the simplified stated at historical cost less depreciation. Historical cost includes expenditure that is directly of contractual cash flows where those cash approach permitted by IFRS 9, which requires attributable to the acquisition of the items. flows represent solely payments of principal expected lifetime losses to be recognised from and interest are measured at amortised cost. initial recognition of the receivables. Subsequent costs are included in the asset’s carrying amount or recognised as a separate Interest income from these financial assets is asset, as appropriate, only when it is probable that future economic benefits associated with included in finance income using the effective e) Financial liabilities the item will flow to the Company and the cost of the item can be measured reliably. All interest rate method. Any gain or loss arising other repairs and maintenance are charged to the income statement during the financial on derecognition is recognised directly in profit In both the current and prior period, financial period in which they are incurred. or loss and presented in other gains/(losses) liabilities are classified as subsequently measured together with foreign exchange gains and at amortised cost. Depreciation on other assets is calculated using the straight line method to write down losses. Impairment losses are presented within their cost to their residual values over their estimated useful lives, as follows: operating and other expenses the statement of Financial liabilities are derecognised when they are Equipment and motor vehicles 3 - 8 years profit or loss. extinguished (i.e. when the obligation specified in · FVOCI: Assets that are held for collection of the contract is discharged, cancelled or expires). The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each contractual cash flows and for selling the financial reporting date. An asset’s carrying amount is written down immediately to its financial assets, where the assets’ cash flows The exchange between the Company and estimated recoverable amount if the asset’s carrying amount is greater than its estimated represent solely payments of principal and its original lenders of debt instruments with recoverable amount. interest, are measured at FVOCI. Movements substantially different terms, as well as substantial in the carrying amount are taken through OCI, modifications of the terms of existing financial Gains and losses on disposal of property and equipment are determined by reference to except for the recognition of impairment gains liabilities, are accounted for as an extinguishment of their carrying amount and are included in the income statement. or losses, interest income and foreign exchange the original financial liability and the recognition of gains and losses which are recognised in profit a new financial liability. The terms are substantially g) Intangible assets or loss. When the financial asset is derecognised, different if the discounted present value of the the cumulative gain or loss previously recognised cash flows under the new terms, including any The company’s intangible assets relate to computer software. Acquired computer software in OCI is reclassified from equity to profit or loss fees paid net of any fees received and discounted licences are capitalised on the basis of the costs incurred to acquire and bring to use the and recognised in other gains/(losses). Interest using the original effective interest rate, is at least specific software. These costs are amortised over their estimated useful lives of three years. income from these financial assets is included 10% different from the discounted present value of in finance income using the effective interest the remaining cash flows of the original financial Development costs that are directly associated with the production of identifiable and rate method. Foreign exchange gains and liability. In addition, other qualitative factors, such as unique software products controlled by the company, and that will probably generate losses are presented in other gains/(losses) and the currency that the instrument is denominated in, economic benefits exceeding costs beyond one year, are recognised as intangible assets if:- impairment expenses are presented as separate changes in the type of interest rate, new conversion - It is technically feasible to complete the software product so that it will be line item in the statement of profit or loss. features attached to the instrument and change available for use; in covenants are also taken into consideration. If - Management intends to complete the software product and use or sell it; Equity instruments an exchange of debt instruments or modification - There is an ability to use or sell the software product; of terms is accounted for as an extinguishment, - It can be demonstrated how the software product will generate probable future The Company subsequently measures all equity any costs or fees incurred are recognised as part economic benefits; investments at fair value. Where the Company’s of the gain or loss on the extinguishment. If the - Adequate technical, financial and other resources to complete the development management has elected to present fair value exchange or modification is not accounted for and use or sell it are available; and, gains and losses on equity investments in OCI, as an extinguishment, any costs or fees incurred - The expenditure attributable to the software product during its development there is no subsequent reclassification of fair value adjust the carrying amount of the liability and are can be reliably measured. gains and losses to profit or loss following the amortised over the remaining term of the modified derecognition of the investment. Dividends from liability. Direct costs include the software development, employee costs and an appropriate portion such investments continue to be recognised in of relevant overheads. Other development expenditure that do not meet these criteria are profit or loss as other income when the Company’s recognised as an expense as incurred. Development costs that have been expensed are not right to receive payments is established. recognised as an asset in a subsequent period.

BETTER • SIMPLE • LIFE 79 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

NOTES TO THE FINANCIAL STATEMENTS

Computer software development costs recognised Its employees also contribute to the appropriate Deferred income tax assets and liabilities are offset when there is a legally enforceable as assets are amortised over their estimated useful national Social Security Fund, which are defined right to offset current tax against current tax liabilities and when the deferred income taxes lives (not exceeding three years). Costs associated contribution schemes. assets and liabilities relate to income taxes levied by the same taxation authority on either with maintaining computer software programmes the same taxable entity or different taxable entities where there is an intention to settle the are recognised as an expense as incurred. ii) Other entitlements balances on a net basis. Employee entitlements to long service awards h) Foreign currency translation are recognised when they accrue to employees. A m) Dividend distribution provision is made for the estimated liability for such a) Functional and presentation currency entitlements as a result of services rendered by Dividends payable to the Company’s shareholders are charged to equity in the period in Items included in the financial statements are employees up to the financial reporting date. which they are declared. Proposed dividends are shown as a separate component of equity measured using the currency of the primary until declared. economic environment in which the entity The estimated monetary liability for employees’ operates (‘the functional currency’). The financial accrued annual leave entitlement at the financial n) Provisions statements are presented in Rwanda Francs which reporting date is recognised as an expense accrual. is the Company’s functional currency. Provisions for legal claims are recognised when: the company has a present legal or l) Income tax expense constructive obligation as a result of past events; it is probable that an outflow of resources b) Transactions and balances will be required to settle the obligation; and the amount has been reliably estimated. Foreign currency transactions are translated Income tax expense is the aggregate of the charge Provisions are not recognised for future operating losses. into the functional currency using the exchange to the profit and loss account in respect of current rates prevailing at the dates of the transactions. income tax and deferred income tax. Current Where there are a number of similar obligations, the likelihood that an outflow will be Foreign exchange gains and losses resulting from income tax is the amount of income tax payable required in settlement is determined by considering the class of obligations as a whole. the settlement of such transactions and from the on the taxable profit for the year determined in A provision is recognised even if the likelihood of an outflow with respect to any one item translation at year-end exchange rates of monetary accordance with Rwanda tax laws. included in the same class of obligations may be small. assets and liabilities denominated in foreign currencies are recognised in the profit and loss Deferred income tax is provided in full, using the Provisions are measured at the present value of the expenditures expected to be required account. liability method, on all temporary differences arising to settle the obligation using a pre-tax rate that reflects current market assessments of the between the tax bases of assets and liabilities time value of money and the risks specific to the obligation. The increase in the provision Foreign exchange gains and losses that relate and their carrying values for financial reporting due to passage of time is recognised as interest expense. to borrowings and cash and cash equivalents purposes. However, if the deferred income tax arises are presented in the profit or loss within ‘finance from the initial recognition of an asset or liability in income or cost. All other foreign exchange gains a transaction other than a business combination 3. Critical accounting judgements and key sources of estimation uncertainty and losses are presented in the profit and loss that at the time of the transaction affects neither account within ‘other income. accounting nor taxable profit nor loss, it is not The Company makes estimates and assumptions that affect the reported amounts of accounted for. assets and liabilities within the next financial year. Estimates and judgments are continually i) Share capital evaluated and based on historical experience and other factors, including expectations of Ordinary shares are classified as ‘share capital’ Deferred income tax is determined using tax rates future events that are believed to be reasonable under the circumstances. in equity. Any premium received over and above and laws that have been enacted or substantively the par value of the shares is classified as ‘share enacted at the reporting date and are expected to The ultimate liability arising from claims made under insurance contracts premium’ in equity. apply when the related deferred income tax liability The estimation of the ultimate liability arising from claims made under insurance contracts is settled. is the Company’s most critical accounting estimate. There are several sources of uncertainty j) Cash and cash equivalents that need to be considered in the estimate of the liability that the Company will ultimately Deferred income tax assets are recognised only to pay for such claims that we have considered under note 4 – Insurance risk. Cash and cash equivalents includes cash in hand, the extent that it is probable that future taxable deposits held at call with banks, other short term profits will be available against which the temporary Impairment losses on financial assets highly liquid investments with original maturities differences can be utilised. The loss allowances for financial assets are based on assumptions about risk of default and of three months or less, and bank overdrafts. Bank expected loss rates. The group uses judgement in making these assumptions and selecting overdrafts are shown within borrowings in current Deferred income tax is provided on temporary the inputs to the impairment calculation, based on the Company’s past history, existing liabilities on the Statement of Financial Position. differences arising on investments in associates, market conditions as well as forward looking estimates at the end of each reporting period. except where the timing of the reversal of the k) Employee benefits temporary difference is controlled by the Company Refer to credit risk management under note 4 below for further details. and it is probable that the temporary difference will i) Retirement benefit obligations not reverse in the foreseeable future. The Company’s contributions to the defined contribution schemes are charged to the profit or loss account in the year to which they relate.

BETTER • SIMPLE • LIFE 81 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

NOTES TO THE FINANCIAL STATEMENTS

Critical judgements in determining the lease term the income tax and deferred tax provisions in the aggravate insurance risk include lack of risk diversification in terms of type and amount of In determining the lease term, management period in which such determination is made. risk, geographical location and type of industry covered. considers all facts and circumstances that create an economic incentive to exercise an extension In the current year, the directors have recognised a The frequency and severity of claims can be affected by several factors. The most significant option, or not exercise a termination option. deferred income tax asset of Frw 163,314,000 (2019: the increase in the number of cases coming to court that have been inactive or latent for Extension options (or periods after termination nil) because they are of the view that this will be a long period of time. Estimated inflation is also a significant factor due to the long period options) are only included in the lease term if the recovered in future periods. typically required to settle these cases. The Company manages these risks through its lease is reasonably certain to be extended (or not underwriting strategy, adequate reinsurance arrangements and proactive claims handling. terminated). Potential future cash outflows of FRW 4. Management and insurance and financial The underwriting strategy attempts to ensure that the underwritten risks are well diversified 389,193,406 (undiscounted) have been included in risks in terms of type and amount of risk, industry and geography. the lease liability because it is reasonably certain The Company’s activities expose it to a variety of that the leases will be extended. risks, including insurance risk, liquidity risk, credit The following tables disclose the concentration of casualty insurance liabilities by class and risk, and the effects of changes foreign currency by the maximum insured loss limit included in the terms of the policy. The amounts are For the leases of office space, the following factors exchange rates and interest rates. The company’s the carrying amount of the insurance liabilities (gross and net of reinsurance) arising from are normally the most relevant: overall risk management programme focuses on casualty insurance contracts. the identification and management of risks and • If there are significant penalties to terminate (or seeks to minimise potential adverse effects on Frw Frw Frw not extend), the company is typically reasonably its financial performance, by use of underwriting 31 Dec 2020 Notes 0m - 116m 116m – 1,938m 1,938m – 7,751m Total certain to extend (or not terminate). guidelines and capacity limits, reinsurance • If any leasehold improvements are expected to planning, credit policy governing the acceptance Motor Gross 16,241,674,023 14,769,639,191 - 16,241,674,023 have a significant remaining value, the company of clients, and defined criteria for the approval Net 16,222,474,023 14,769,639,191 - 16,222,474,023 is typically reasonably certain to extend (or not of intermediaries and reinsurers. This section terminate). summarises the way the Company manages these Fire Gross 35,100,137,035 110,288,292,999 723,122,658,731 35,100,137,035 • Otherwise, the company considers other factors risks. Net 35,102,137,034 80,005,183,992 31,395,425,949 35,102,137,034 including historical lease durations and the costs and business disruption required to replace the a) Insurance risk Accident Gross 2,684,468,449 10,067,776,927 2,270,063,868 2,684,468,449 leased asset. Most extension options in offices The risk under any one insurance contract is the Net 3,100,612,667 10,339,776,927 2,270,063,868 3,100,612,667 and vehicles leases have not been included in possibility that the insured event occurs and the the lease liability, because the company could uncertainty of the amount of the resulting claim. Other classes Gross 13,726,659,609 59,841,645,053 196,485,921,409 13,726,659,609 replace the assets without significant cost or By the very nature of an insurance contract, this Net 17,033,266,586 39,535,183,402 93,679,568,861 17,033,266,586 business disruption. risk is random and therefore unpredictable. Totals Gross 67,752,939,116 194,967,354,170 921,878,644,008 1,184,598,937,294 The lease term is reassessed if an option is actually For a portfolio of insurance contracts where the Net 71,458,490,310 144,649,783,512 127,345,058,678 343,453,332,500 exercised (or not exercised) or the company theory of probability is applied to pricing and becomes obliged to exercise (or not exercise) it. provisioning, the principal risk that the Company 31 Dec 2019 The assessment of reasonable certainty is only faces under its insurance contracts is that the actual revised if a significant event or a significant claims and benefit payments exceed the carrying Motor Gross 13,944,140,102 10,257,972,464 - 13,944,140,102 change in circumstances occurs, which affects amount of the insurance liabilities. This could occur Net 13,885,140,102 10,257,972,464 - 13,885,140,102 this assessment, and that is within the control of because the frequency or severity of claims and the lessee. During the current financial year, the benefits are greater than estimated. Insurance Fire Gross 33,297,595,673 120,885,746,252 247,532,293,316 33,297,595,673 financial effect of revising lease terms to reflect events are random and the actual number and Net 33,192,158,473 91,311,844,334 14,386,430,871 33,192,158,473 the effect of exercising extension and termination amount of claims and benefits will vary from year options was an increase in recognised lease to year from the level established using statistical Accident Gross 10,296,237,055 14,663,439,739 6,935,831,868 10,296,237,055 liabilities and right-of-use assets of FRW 33,401,439. techniques. Net 10,000,917,469 15,978,625,720 5,088,263,868 10,000,917,469

Income taxes Experience shows that the larger the portfolio Other classes Gross 14,588,715,248 73,032,890,616 248,747,367,533 14,588,715,248 Judgement is required in determining the of similar insurance contracts, the smaller the Net 18,492,972,596 45,782,369,305 48,548,408,507 18,492,972,596 Company’s provision for income taxes. There are relative variability about the expected outcome will many transactions and calculations for which the be. In addition, a more diversified portfolio is less Totals Gross 72,126,688,078 218,840,049,071 503,215,492,717 794,182,229,866 ultimate tax determination is uncertain during likely to be affected across the board by a change Net 75,571,188,640 163,330,811,823 68,023,103,246 306,925,103,709 the ordinary course of business. The Company in any subset of the portfolio. The Company has recognises liabilities for anticipated tax audit developed its insurance underwriting strategy The insurance risks exposure decreased primarily as a result of decrease in Fire and Motor issues based on estimates of whether additional to diversify the type of insurance risks accepted contracts in the current year. taxes will be due. Where the final tax outcome of and within each of these categories to achieve a these matters is different from the amounts that sufficiently large population of risks to reduce the were initially recorded, such differences will impact variability of the expected outcome. Factors that

BETTER • SIMPLE • LIFE 83 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

NOTES TO THE FINANCIAL STATEMENTS

Sources of uncertainty in the estimation of future These risks arise from open positions in interest Sensitivity claim payments rates, currency exchange rates and equity securities As shown in the table on above, the Company is primarily exposed to changes in US/Rwf prices, all of which are exposed to general and exchange rates. The sensitivity of profit or loss to changes in the exchange rates arises Claims on casualty contracts/general risks are specific market movements. The risks that the mainly from the US-dollar denominated financial instruments above. payable on a claims-occurrence basis. The Company company primarily faces due to the nature of its is liable for all insured events that occurred during investments and liabilities are liquidity risk and At 31 December 2020, if the currency had weakened/strengthened by 5% against the US the term of the contract, even if the loss is discovered interest rate risk. dollar with all other variables held constant, the post tax profit for the year would have been after the end of the contract term. As a result, liability FRW 21,505,403 lower/higher (2019: FRW 62,181,282 higher/lower). claims are settled over a long period of time, and The Company manages exposure to these risks The Company’s exposure to other foreign currencies is not material. a larger element of the claims provision relates to through policies developed by the Finance and incurred but not reported claims (IBNR). There are Investment Committee (FIC) at the group level. iii) Cash flow and fair value interest rate risk several variables that affect the amount and timing These policies have been developed to achieve long- of cash flows from these contracts. These mainly term investment returns in excess of the company’s Fixed interest rate financial instruments expose the company to fair value interest rate risk. relate to the inherent risks of the business activities obligations under insurance and investment Variable interest rate financial instruments expose the company to cash flow interest rate carried out by individual contract holders and contracts. The principal technique of the Company’s risk. the risk management procedures they adopted. FIC is to match assets to the liabilities arising from The compensation paid on these contracts is the insurance and investment contracts by reference The Company’s fixed interest rate financial instruments are deposits with financial monetary awards granted for bodily injury suffered to the type of benefits payable to contract holders. institutions. The Company had no variable interest rate financial instrument as of 31 by employees (for employer’s liability covers) or For each distinct category of liabilities, a separate December 2020. No limits are placed on the ratio of variable rate financial instruments to members of the public (for public liability covers). portfolio of assets is maintained. fixed rate financial instruments. Investment contracts with fixed and guaranteed terms Such awards are lump-sum payments that are deposits with financial institutions held to maturity are accounted for at amortised cost and calculated as the present value of the lost earnings Market risk their carrying amounts are not sensitive to changes in the level of interest rates. and rehabilitation expenses that the injured party will incur as a result of the accident. i) Foreign exchange risk iv) Price risk

The IBNR has been determined by the actuaries The company maintains foreign currency The company is exposed to equity price risk because of investment in quoted securities and compared with the statutory minimum denominated current accounts with local banks. as fair value through other comprehensive income. The exposure to price risk is managed requirement of 15% of the outstanding claims This exposes the company to foreign exchange primarily by setting limits on the percentage of net assets available for benefits that may be payment for the preceding year. The actuaries risk arising from the various currency exposures, invested in equity, and by ensuring sufficient diversity of the investment portfolio. use various methods to project IBNR including primarily with respect to the US dollar. Foreign Chain ladder technique, the Bornhuetter-Ferguson exchange risk arises from future commercial Credit risk technique or a blend of the two. The table below transactions and recognised assets and liabilities The Company has exposure to credit risk, which is the risk that a counterparty will be unable shows the range of reserves from the regulatory and is managed primarily through setting limits to pay amounts in full when due. Key areas where the Company is exposed to credit risk minimum to the actuarially computed reserves. on the maximum exposure to any one currency. are receivables arising out of direct insurance arrangements, receivables arising out of This exposes the company to foreign exchange reinsurance arrangements, reinsurers’ share of insurance liabilities, loans, other receivables, FRW’ 000 Regulatory Actuarially computed risk arising from the various currency exposures, deposits and cash at bank. primarily with respect to the US Dollar, Kenya Gross IBNR 416,862 753,885 Shilling and Uganda Shilling. The Company has no significant concentrations of credit risk. The Company structures the Net IBNR 345,768 338,999 levels of credit risk it accepts by placing limits to counterparty, or groups of counterparties, At 31 December 2020 the company recognised a and to industry segments. Such risks are subject to an annual or more frequent review. loss on foreign exchange on current liabilities of Limits on the level of credit risk are approved by the Board of Directors. b) Financial risk FRW 132,174,829. The Company is exposed to financial risk through Reinsurance is used to manage insurance risk. This does not, however, discharge the its financial assets, financial liabilities (investment 31 Dec 31 Dec company’s liability as primary insurer. If a reinsurer fails to pay a claim for any reason, the contracts and borrowings), reinsurance assets and 2020 2019 USD company remains liable for the payment to the policyholder. The creditworthiness of insurance liabilities. In particular the key financial USD FRW’000 reinsurers is considered on an annual basis by reviewing their financial strength prior to risk is that the proceeds from its financial assets are Cash and equivalents 476,087 217,413 finalisation of any contract. The exposure to individual counterparties is also managed by not sufficient to fund the obligations arising from other mechanisms, such as the right of offset where counterparties are both debtors and its insurance and investment contracts. The most Trade receivables - - creditors of the Company. Management information reported to the company includes important types of risk are credit risk, liquidity risk, Trade payables 1,099,432 2,019,769 details of provisions for impairment on loans and receivables and subsequent write-offs. market risk and other operational risks. Market risk Management makes regular reviews to assess the degree of compliance with the Company includes currency risk, interest rate risk and equity Lease liabilities - - procedures on credit. Exposures to individual policyholders and groups of policyholders are price risk. Net position 623,345 1,802,356 collected within the on-going monitoring by the management.

BETTER • SIMPLE • LIFE 85 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

NOTES TO THE FINANCIAL STATEMENTS

Maximum exposure to credit risk 31 Dec 2020 31 Dec 2019 USD USD FRW’000 Cash and bank balances 1,614,096 811,446 Frw ‘000 2020 2019 Deposits with financial institutions 7,411,907 6,574,930 Opening loss allowance as at 1 January 160,381 128,042 Government securities at amortised cost 8,650,107 6,537,585 Increase in loan loss recognized in profit or loss during the year 112,204 32,340 Corporate bonds - - At 31 December 272,586 160,381 Other assets 61,453 84,629 Expected loss rate 52% 28% Receivables arising out of reinsurance arrangements 278,556 295,039 Carrying amount (Frw’000) 578,774 412,445 Receivables arising out of direct insurance arrangements 499,735 782,699 Loss allowance (300,219) (117,406)

18,515,854 15,086,328 The closing loss allowances as at 31 December 2020 reconcile to the opening loss allowances as follows; No collateral is held for any of the above assets. All for receivables arising out of direct insurance receivables that are neither past due or impaired arrangements. The expected loss rates are based At start of year 117,406 117,406 are within their approved credit limits, and no on the payment profiles of premiums over a period Increase in expected credit losses 182,813 - receivables have had their terms renegotiated. of 36 months before 31 December 2020 respectively None of the Company’s credit risk counterparties and the corresponding historical credit losses At end of year 300,219 117,406 are rated. experienced within this period. The historical loss rates are adjusted to reflect current and forward- Receivables are written off when there is no reasonable expectation of recovery. Indicators None of the above assets are past due or impaired looking information on macroeconomic factors that there is no reasonable expectation of recovery include, amongst others, the failure of a except for amounts in receivables arising out of affecting the ability of the customers to settle the debtor to engage in a repayment plan with the Company, and a failure to make contractual direct insurance arrangements which are due on receivables. payments for a period of greater than 90 days past due. inception of insurance cover: On that basis, the loss allowance as at 31 December Impairment losses are presented as net impairment losses within operating profit. The Company applies the IFRS 9 simplified 2020 was determined as follows for receivables Subsequent recoveries of amounts previously written off are credited against the same line approach to measuring expected credit losses arising out of direct insurance arrangements and item. which uses a lifetime expected loss allowance reinsurance arrangements as follows. Deposits with financial institutions, cash at bank, government securities Deposits with financial institutions, cash at bank and government securities are considered to have low credit risk, and the loss allowance recognised during the period was therefore 31 December 2020 2019 limited to 12 months’ expected losses. Management consider ‘low credit risk’ for these financial assets as they have a low risk of default and the issuer has a strong capacity to meet its contractual cash flow obligations in the near term. The loss rate assigned to these Expected loss rate 35% 17% has been determined to be 0.17% for deposits with financial institutions and cash at bank which is the probability of default assigned to a B+ investment grade by Standard & Poors Carrying amount (Frw’000) 772,321 943,080 rating agency. The loss rate assigned to government securities has been determined to be Loss allowance (272,586) (160,381) 0.46% which is the probability of default assigned to a B+ sovereign grade by Standard & Poors rating agency. The closing loss allowances as at 31 December 2020 reconcile to the opening loss allowances as follows; The reconciliation of the loss allowance for deposits with financial instituions and government securities at amortised cost is disclosed under note 14 and note 15 respectively. The identified impairment loss on cash at bank and other assets was immaterial.

Liquidity risk 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.

BETTER • SIMPLE • LIFE 87 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

NOTES TO THE FINANCIAL STATEMENTS

Liquidity risk (continued) forecasts and actual cash flows, and maintaining The company is exposed to daily calls on its banking facilities to cover any shortfalls. 2020 2019 available cash resources for claims settlement and Frw 000 Frw 000 other administration expenses. The Company does The table below presents the cash flows payable not maintain cash resources to meet all of these by the Company under financial liabilities by i) Admitted assets 18,977,758 14,719,220 needs as experience shows that a minimum level of remaining contractual maturities (other than ii) Admitted liabilities 14,261,197 10,466,059 reinvestment of maturing funds can be predicted insurance contract liabilities which are based on with a high level of certainty. The Company expected maturities) at the financial reporting Solvency margin 4,716,561 4,353,161 manages liquidity risk by continuously reviewing date: Required solvency margin 1,712,307 1,513,611 Surplus/Deficiency 3,004,254 2,739,550 Up to 1 1-3 3-12 1-5 Solvency coverage ratio 275% 281% At 31 December 2020 month months months years Total Creditors arising from Fair value estimation reinsurance arrangements 22,663 219,143 356,977 123,426 722,210 The valuation hierarchy, and types of instruments classified into each level within that hierarchy, is set out below: Lease liabilities - 33,295 1,671 375,630 410,596 Other payables 173,422 963,969 868,045 1,537,141 3,542,577 Level 1 Level 2 Level 3 196,085 1216,407 1,226,693 2,036,197 4,573,383 Fair value Unadjusted quoted Valuation model Valuation models determined using: prices in active with directly or using significant 31 Dec 2019 market for identical indirectly market non-market Creditors arising from assets and liabilities observable inputs observable inputs reinsurance arrangements 314,960 188,976 125,984 - 629,920 Lease liabilities - 37,756 105,349 534,153 677,258 Types of financial Actively traded Corporate and other Highly structured Other payables 451,347 631,885 722,155 2,074,720 3,880,107 assets: government and governments and OTC derivatives 766,307 858,617 953,488 2,608,873 5,187,286 other agency loans with unobservable securities parameters Capital management The Company’s objectives when managing capital, General insurance businesses are required to which is a broader concept than the ‘equity’ on the maintain a solvency margin (admitted assets less Types of financial Listed equities Unlisted equities Highly structured Statement of financial position are: admitted liabilities) equivalent to the higher of Frw liabilities: OTC derivatives • to comply with the capital requirements as set 500 million or 20% of the net premium income with unobservable out in the Insurance Regulations; during the preceding financial year. parameters • to comply with regulatory solvency requirements as set out in the Insurance Regulations; The capital and regulatory solvency thresholds • to safeguard the Company’s ability to continue were effective from July 2011 and the company was Listed derivative Over-the-counter as a going concern, so that it can continue to therefore required to comply with them for the instruments derivatives provide returns to shareholders and benefits for period ended 31 December 2020. During the year other stakeholders; and the Company held the minimum capital required • To provide an adequate return to shareholders to meet the solvency margins. Valuation methods and assumptions by pricing insurance and investment contracts Reinsurance assets, insurance receivables, other receivables, deferred acquisition cost, due commensurately with the level of risk. The Company’s paid up Capital at the end of from related parties, insurance contract liabilities, trade and other payables, due to related 2020 is presented on note 12. The table below parties, approximate their carrying value amounts due to the short-term maturities of these The Insurance Law (Law No. 05/2009 of 29/07/2009 summarises the solvency margin of the Company instruments. on licensing and other requirements for carrying at 31 December 2020 and 2019: insurance business in Rwanda) requires separation The following tables provide the fair value measurement hierarchy of the company’s assets of the life and non-life insurance businesses into and liabilities. The tables below include items that have recurring fair value measurements separate companies and each of the companies to (i.e. financial assets at FVOCI or FVPL). The fair value measurement also shows the fair value hold a minimum level of paid up capital of Frw 1 measurement of financial assets at amortised cost: billion.

BETTER • SIMPLE • LIFE 89 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

NOTES TO THE FINANCIAL STATEMENTS

Fair value estimation (continued) Premiums ceded to reinsurers 2019 2020 2019 Reinsurer Ratings 00 Frw’000 Frw’000 Quoted Swiss Re S&P AA- 163,127 107,470 prices in Significant Significant active observable unobservable Africa Reinsurance Co AM Best A 1,150,549 973,593 Carrying market inputs inputs Continental Re AM Best B+ 4,972 4,011 FRW ‘000 amount Fair value Level 1 Level 2 Level 3 East Africa Re AM Best B 15,116 10,170 At 31 December 2020 Kenya Re AM Best B+ 533,169 439,452 Government securities at SCOR Africa Limited S&P A- 41,830 30,309 amortised cost (previously held to maturity) 8,650,107 8,650,107 - 8,650,107 - Zep Re AM Best B++ 639,408 551,214 Investments at FVOCI Africa Trade Insurance Agency S&P A 10,383 9,870 (previously available for sale) 12,000 12,000 12,000 - - Facultative arrangements 271,349 560,896 Total 8,662,107 8,662,107 12,000 8,650,107 - Premium ceded 2,829,903 2,686,985

31 December 2019 6. Investment income

Government securities at Interest from treasury bonds and bills 815,846 664,011 amortised cost (previously held to maturity) 6,537,385 6,537,385 - 6,537,385 - Interest from bank deposits 665,967 490,958 Investments at FVOCI Loan interest receivable 3,440 2,301 (previously available for sale) 13,250 13,250 13,250 - - Interest from corporate Bonds - 2,283 Total 6,550,635 6,550,635 13,250 6,537,385 - Dividends from equities - 580 For all other financial assets and liabilities, their carrying value approximates the fair value. Total 1,485,253 1,160,133

5. Premiums Gross written premium Gross earned premium 7. Foreign exchange losses Realised gains / (losses) on foreign exchange transactions 2020 2019 2020 2019 9,030 (49,522) Frw’000 Frw’000 Frw’000 Frw’000 Unrealised losses on foreign demonimated balances (135,337) (240,223) Short term insurance business Total (126,307) (289,744) Medical 8,994,770 8,002,230 8,617,976 7,536,886 8. Claims and policyholder benefits payable Motor 1,696,168 1,399,271 1,575,917 1,346,709 Medical Fire 840,763 539,994 684,461 544,037 5,634,627 5,438,322 Engineering 324,442 212,206 298,215 184,894 Motor 754,563 592,609 Liability 339,511 245,838 291,071 212,254 Fire 53,384 124,528 Personal accident 115,236 196,591 102,556 248,881 Marine 7,264 -3,207 Theft 119,775 149,355 112,983 154,108 Personal accident 7,101 9,722 Others 136,746 227,303 139,962 260,360 Misc 35,965 136,344 Marine 59,565 102,747 60,953 96,317 Compensation (510.97) 6,749 Workmen’s compensation 49,123 52,064 111,617 (18,157) Theft 41,981 -19,546 Total 12,676,098 11,127,599 11,995,711 10,566,289 Engineering 188,304 38,306 Liability 5,857 -24,655 6,728,534 6,299,172

BETTER • SIMPLE • LIFE 91 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

NOTES TO THE FINANCIAL STATEMENTS

2020 2019 2020 2019 9. Operating and other expenses Frw’000 Frw’000 Frw’000 Frw’000

Employees benefits (Note 10) 1,208,728 1,147,203 Profit before income tax 1,854,606 1,108,473 Advertising and branding 104,091 209,482 Tax calculated at the statutory income tax rate of 30% (2019 - 30%) 556,382 332,542 Printing and stationery 45,028 116,211 Tax effect of: Communication expense 57,573 64,084 Expenses not deductible for tax purposes 39,461 89,813 Travelling 7,764 19,619 Deferred income tax asset not recognised - (422,355) Operating lease rentals 167,665 146,227 Recognised deferred income tax asset from prior year (164,652) - Depreciation of equipment and motor vehicles (Note 23) 56,141 55,959 Prior year understatement on deferred income tax asset (23,693) - Amortisation of intangible assets 4,574 711 Income tax expense 407,498 - Directors’ expense 72,075 77,407 Net impairment losses on financial assets (note 20 and 21) 295,018 32,553 12. Share capital and reserves Auditors’ remuneration 22,690 28,261 Number of Ordinary shares shares Frw’000 Staff recruitment and training 12,557 57,789 At 1 January 2019, 1 January 2020 9,177,614 9,177,614 Software expenses 60,713 96,277 At 31 December 2020 9,177,614 9,177,614 Licenses 60,828 37,806 The total number of authorised shares is 9,177,614 with a par value of VAT expensed 109,415 107,648 FRW 1,000 per share Tax assessment expense 150,000 129,000 13. Cash and bank balances Other expenses 402,484 279,557 2,837,344 2,465,077 Bank balances under current accounts 1,613,796 813,634 Cash in hand 300 392 10. Employee benefit expense 1,614,096 814,026

Salaries and wages 911,310 868,185 14. Deposits with financial institutions Staff benefits- housing - Deposits with financial institutions have an average maturity of 12 Contributions to the Social Security Fund of Rwanda 49,875 39,712 months Other staff costs 247,543 239,306 Bank of Kigali Plc 1,238,363 2,090,055 1,208,728 1,147,203 GT Bank Rwanda Plc 363,377 515,164 KCB Rwanda Plc - - 11. Income tax expense I&M Bank Plc 2,523,241 1,055,263 Current income tax charge 569,812 - AB Bank Rwanda Plc 862,055 547,850 Deferred income tax credit (note 29) (162,314) - Access Bank Rwanda Plc 411,096 203,244 407,498 - Eco Bank Rwanda Plc 778,438 778,723 There is no current income tax charge arising in the year owing to accumulated tax losses (2019: Nil). A Equity Bank Rwanda Plc - 209,162 deferred tax asset has not been recognised on accumulated tax losses and other temporary differences in Letshego Bank Plc 218,323 105,533 accordance with the company’s policy. NCBA Rwanda Plc - 305,696 The income tax expense on the Company’s profit before income tax differs from the theoretical amount Banque Populaire du Rwanda Plc 1,017,014 764,240 that would arise using the statutory income tax rate as follows: Expected credit losses (65,884) - 7,346,023 6,574,930

BETTER • SIMPLE • LIFE 93 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

NOTES TO THE FINANCIAL STATEMENTS

2020 2019 2020 2019 15. Government securities at amortised cost Frw’000 Frw’000 19. Other assets Frw’000 Frw’000

At start of year 6,580,644 4,512,359 Amounts due from related companies 229 232 Additions 2,156,056 2,068,285 Staff loans and advances 61,224 20,821 Expected credit loss (70,587) (43,059) Prepayments - 63,576 At 31 December 8,666,113 6,537,585 At 31 December 61,453 84,629 Current 1,268,933 842,391 All the other assets are classified as current in nature. The fair Non-current 7,397,180 5,695,194 values of these balances approximate their carrying values.

The government bonds have a maturity period of 3-15 years 20. Receivables arising out of reinsurance arrangements Gross balance 578,774 412,445

16. Corporate bond Expected credit losses (300,219) (117,406) At start of year - 50,772 278,555 295,039 Accrued interest - - Movement in provision for impairment of receivables Redeemption - (50,772) arising out of reinsurance At 31 December - - At start of year 117,406 117,406 Current Increase in expected credit losses 182,813 - Non-current At end of year 300,219 117,406 17. Equity investments at fair value through other 21. Receivables arising from direct insurance comprehensive income arrangements At start of year 13,250 13,900 Gross balance 772,321 943,080 Fair value loss (1,250) (650) Expected credit losses (272,586) (160,381) At 31 December 12,000 13,250 At end of year 499,735 782,699 Movement in fair value reserves Movements in the provision for impairment of receivables At start of year 4,725 5,375 arising out of direct insurance arrangements are as follows: Current year loss (1,250) (650) At start of year 160,381 128,042 Balance at end of year 3,475 4,725 Increase in expected credit losses 112,205 32,339 These are investments in BK Group Plc which are listed on Bad debt written off - - the Rwanda Stock Exchange. The quoted price of share as at 31 December 2020 was Frw 233 (2019: Frw 265). At end of year 272,586 160,381

18. Deferred acquisition costs 22. Reinsurers’ share of insurance liabilities

At start of year 237,217 176,412 Reinsurers’ share of: Additions 156,315 225,889 - Unearned premiums (Note 26) 1,233,222 943,713 Amortisation charge (224,433) (165,084) - Notified claims (Note 25) 473,957 654,542 At 31 December 169,099 237,217 - Incurred but not reported claims (Note 25) 338,999 138,082 2,046,178 1,736,337

BETTER • SIMPLE • LIFE 95 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

NOTES TO THE FINANCIAL STATEMENTS

23. Equipment and motor vehicles 24. Intangible assets (continued)

At 31 December 2020 (5,285) Office furniture Computer Motor Telephone and equipment equipment Vehicle equipment Total Net book value 8,435 Frw’000 Frw’000 Frw’000 Frw’000 Frw’000 Cost: At 1 January 2019 - Cost: Additions 13,720 At 1 January 2020 356,923 148,194 23,955 20,470 549,543 At 31 December 2019 13,720 Additions 2,430 25,605 - - 28,035 Accumulated depreciation At 31 December 2020 359,353 173,799 23,955 20,470 577,578 At 1 January 2019 - Accumulated Charge for the year (711) depreciation: At 31 December 2019 (711) At 1 January 2020 (288,433) (122,958) (23,955) (20,470) (455,816) Net book value 13,008 Charge for the year (40,355) (15,786) - - (56,141) 2020 2019 At 31 December 2020 (328,788) (138,744) (23,955) (20,470) (511,957) 25. Leases Frw’000 Frw’000 Net Book Value 30,565 35,055 - - 65,621 i) Amounts recognised in the statement of financial position Cost: Right of use assets: Buildings At 1 January 2019 349,881 122,540 23,955 20,470 516,846 Cost: Additions 7,043 25,654 - - 32,697 At 1 January 523,269 523,269 At 31 December 2019 356,923 148,194 23,955 20,470 549,543 Additions 60,519 - Accumulated 583,788 523,269 depreciation: At 31 December At 1 January 2019 (242,917) (112,515) (23,955) (20,470) (399,857) Accumulated depreciation: Charge for the year (45,516) (10,443) - - (55,959) At 1 January (78,777) - Charge for the year (125,973) (78,777) At 31 December 2019 (288,433) (122,958) (23,955) (20,470) (455,816) At 31 December (204,750) (78,777) Net book value 68,491 25,236 - - 93,727 Net book value 379,038 444,492 24. Intangible assets Lease liabilities At 1 January 484,984 - Cost: Frw’000 Additions 60,518 523,269 At 1 January 2020 Finance costs 72,433 67,450 Additions 13,720 Repayments (195,341) (105,735) At 31 December 2020 - At 31 December 422,595 484,984 13,720 Of which are Accumulated depreciation: Current 61,599 49,208 At 1 January 2020 (711) Non current 360,996 435,776 Charge for the year (4,574) At 31 December 422,595 484,984

BETTER • SIMPLE • LIFE 97 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

NOTES TO THE FINANCIAL STATEMENTS

2020 2019 To determine the incremental borrowing rate, the Company: 25. Leases Frw’000 Frw’000 • where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing conditions since third party financing was received During the year, there were additions to the right of use assets • uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk were Frw 60,518,000 (2019: Frw 523,239,000). for leases held by the Company, which does not have recent third-party financing, and ii) Amounts recognised in the statement of • makes adjustments specific to the lease, eg term, country, currency and security. comprehensive income If a readily observable amortising loan rate is available to the individual lessee (through Depreciation of right of use assets 95,232 78,777 recent financing or market data) which has a similar payment profile to the lease, then the Finance costs 72,433 67,450 group entities use that rate as a starting point to determine the incremental borrowing rate.

Expense related to leases of low value assets that are not shown - - The Company is exposed to potential future increases in variable lease payments based on above as short term leases (included in administrative expenses) an index or rate, which are not included in the lease liability until they take effect. When Expense relating to variable lease payments not included in lease - - adjustments to lease payments based on an index or rate take effect, the lease liability is liabilities (included in administrative expenses) reassessed and adjusted against the right-of-use asset.

Lease payments are allocated between principal and finance cost. The finance cost is iii) The Company’s leasing activities and how • the exercise price of a purchase option if the charged to profit or loss over the lease period so as to produce a constant periodic rate of these are accounted for group is reasonably certain to exercise that interest on the remaining balance of the liability for each period. option, and The Company leases various offices. Rental • payments of penalties for terminating the lease, Right-of-use assets are measured at cost comprising the following: contracts are typically made for fixed periods of 6 if the lease term reflects the group exercising • the amount of the initial measurement of lease liability months to 4 years but may have extension options that option. • any lease payments made at or before the commencement date less any lease incentives as described in (v) below. received Lease payments to be made under reasonably • any initial direct costs, and Contracts may contain both lease and non- certain extension options are also included in the • restoration costs. lease components. The Company allocates the measurement of the liability. consideration in the contract to the lease and non- Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and lease components based on their relative stand- The lease payments are discounted using the the lease term on a straight-line basis. If the Company is reasonably certain to exercise a alone prices. However, for leases of real estate interest rate implicit in the lease. If that rate cannot purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life. for which the Company is a lessee, it has elected be readily determined, which is generally the case While the group revalues its land and buildings that are presented within property, plant and not to separate lease and non-lease components for leases in the group, the lessee’s incremental equipment, it has chosen not to do so for the right-of-use buildings held by the Company. and instead accounts for these as a single lease borrowing rate is used, being the rate that the component. individual lessee would have to pay to borrow the Payments associated with short-term leases of equipment and vehicles and all leases of funds necessary to obtain an asset of similar value low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short- Lease terms are negotiated on an individual basis to the right-of-use asset in a similar economic term leases are leases with a lease term of 12 months or less without a purchase option. Low- and contain a wide range of different terms and environment with similar terms, security and value assets comprise IT equipment and small items of office furniture. conditions. The lease agreements do not impose conditions. any covenants other than the security interests in iv) Variable lease payments the leased assets that are held by the lessor. Leased Lease payments to be made under reasonably assets may not be used as security for borrowing certain extension options are also included in the There are no leases with variable lease payments. purposes. measurement of the liability. v) Extension and termination options Assets and liabilities arising from a lease are initially The lease payments are discounted using the measured on a present value basis. Lease liabilities interest rate implicit in the lease. If that rate cannot Extension and termination options are included in a number of property and equipment include the net present value of the following lease be readily determined, which is generally the case leases across the group. These are used to maximise operational flexibility in terms of payments: for leases in the Company, the lessee’s incremental managing the assets used in the group’s operations. The majority of extension and • fixed payments (including in-substance fixed borrowing rate is used, being the rate that the termination options held are exercisable only by the group and not by the respective lessor. payments), less any lease incentives receivable individual lessee would have to pay to borrow the • variable lease payment that are based on an funds necessary to obtain an asset of similar value index or a rate, initially measured using the to the right-of-use asset in a similar economic index or rate as at the commencement date environment with similar terms, security and • amounts expected to be payable by the group conditions. under residual value guarantees

BETTER • SIMPLE • LIFE 99 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

NOTES TO THE FINANCIAL STATEMENTS

2020 2019 The Company uses the chain ladder techniques to estimate the ultimate cost of claims and 26. Insurance contract liabilities Frw’000 Frw’000 the IBNR. Chain ladder techniques are used as they are an appropriate technique for ma- ture classes of business that have a relatively stable development pattern. This involves the analysis of historical claims development factors and the selection of estimated develop- ment factors based on this historical pattern. The selected development factors are then ap- Claims reported and claims handling expenses 2,779,077 2,566,948 plied to cumulative claims data for each accident year that is not fully developed to produce Claims incurred but not reported 753,885 452,866 an estimated claims cost for each year. The development of insurance liabilities provides a measure of the Company’s ability to estimate the ultimate value of claims. The table below 3,532,963 3,019,814 illustrates how the Company estimates of total claims outstanding for each accident year has changed at successive year ends based on available information. 2020 The Company uses the chain ladder techniques to estimate the ultimate cost of claims and Movement in insurance contract liabilities Gross Reinsurance Net the IBNR. Chain ladder techniques are used as they are an appropriate technique for ma- and reinsurance assets : Frw’000 Frw’000 Frw’000 ture classes of business that have a relatively stable development pattern. This involves the analysis of historical claims development factors and the selection of estimated develop- Notified claims 2,566,948 (654,460) 1,912,488 ment factors based on this historical pattern. The selected development factors are then ap- Incurred but not reported 452,866 (138,082) 314,785 plied to cumulative claims data for each accident year that is not fully developed to produce an estimated claims cost for each year. Total at beginning of year 3,019,814 (792,542) 2,227,272 Cash paid for claims settled in year (6,215,386) 1,347,168 (4,868,218) Short term insurance contract liabilities Increase in liabilities: - Arising from previous year claims 6,468,920 (1,372,357) 5,096,563 2016 2017 2018 2019 2020 Total - arising from current year claims 259,614 4,775 264,389 Accident year Frw’000 Frw’000 Frw’000 Frw’000 Frw’000 Frw’000 Total at end of year 3,532,963 (812,956) 2,720,007 Estimate of ultimate claims costs Notified claims 2,779,077 (473,957) 2,305,121 At end of accident year 2,923,004 3,844,926 4,846,622 9,822,079 6,739,342 28,175,973 Incurred but not reported 753,885 (338,999) 414,886 One years later 3,290,789 5,159,892 6,529,968 10,445,917 - 25,426,566 Total at end of year 3,532,963 (812,956) 2,720,007 Two years later 3,736,017 5,180,423 6,383,352 - - 15,299,792 2019 Three years later 3,678,167 4,924,374 - - - 8,602,541 Four years later 3,698,993 - - - - 3,698,993 Gross Reinsurance Net Frw’000 Frw’000 Frw’000 Current estimate of 3,698,993 4,924,374 6,383,352 10,445,917 6,739,342 32,191,978 Notified claims 3,223,947 (1,490,254) 1,733,693 cumulative claims Incurred but not reported 652,934 (307,931) 345,003 Less: Cumulative (3,646,329) (4,819,856) (5,981,933) (9,894,783) (5,083,656) Total at beginning of year 3,876,881 (1,798,185) 2,078,696 payments to date (29,426,557) Cash paid for claims settled in year (7,156,239) 1,615,759 (5,540,480) Liability in the balance 52,664 104,519 401,419 551,134 1,655,686 2,765,422 sheet Increase in liabilities: Liability in respect to prior - - - - 13,655 13,655 - Arising from previous year claims 5,475,182 (1,023,506) 4,451,676 years - arising from current year claims 823,990 413,390 1,237,380 Incurred but not reported 2,677 4,548 2,566 74,800 669,295 753,885 Total at end of year 3,019,814 (792,542) 2,227,272 Total gross claims Notified claims 2,566,948 (654,460) 1,912,488 included in the balance 55,341 109,067 403,985 625,934 2,338,636 3,532,963 Incurred but not reported 452,866 (138,082) 314,785 sheet Total at end of year 3,019,814 (792,542) 2,227,272

BETTER • SIMPLE • LIFE 101 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

NOTES TO THE FINANCIAL STATEMENTS

27. Unearned premium reserve 29. Deferred income tax

Unearned Premium Reserves (UPR) represents the liability for short term business contracts where the Deferred income tax is calculated using the enacted income tax rate of 30% (2019:30%). The movement Company’s obligations are not expired at the year end. Movements in the reserve are shown below: on the deferred income tax account is as below. Deferred tax asset is not recognized until such a time that the entity will make sufficient and consistent profits to utilize the asset:

2020 1 Jan 19 (Credit)/debit to SOCI 31 Dec 2019 Gross Reinsurance Net Frw’000 Frw’000 Frw’000 Frw’000 Frw’000 Frw’000 Deferred income tax liabilities: At start of year: 4,131,227 (943,713) 3,187,514 Property and equipment: 6,187 (2,483) 3,704 Increase/(decrease) in the year 680,388 (289,509) 390,879 Deferred income tax assets: 4,811,615 (1,233,222) 3,578,393 Income tax losses (544,123) 471,859 (72,264) 2019 Provisions for expenses (49,071) (47,021) (96,092) Net deferred income tax asset (587,007) 422,355 (164,652) At start of year: 3,569,917 (1,064,634) 2,505,284 Unrecognised deferred income tax asset 587,007 (422,355) 164,652 Increase/(decrease) in the year 561,310 120,921 682,230 - - - 4,131,227 (943,713) 3,187,514 Property and equipment 3,704 (5,646) (1,942) Deferred income tax assets: Income tax losses (72,264) 72,264 - 28. Other payables 2020 2019 Frw’000 Frw’000 Provision for expenses (96,092) (64,280) (160,372) Due to related parties (Note 31) 1,537,141 2,343,392 Deferred income tax asset (164,652) 2,338 (162,314) Accrued expenses 50,301 179,146 In the current year, the directors have recognized the deferred income tax assets since it is now certain Accrued leave 38,897 37,422 that this can be recovered during the ordinary course of business in future years. Government creditors 593,660 248,127 Staff pension payable - 13,759 30. Lease liabilities 2020 2019 Cash guarantees 161,025 96,192 Frw’000 Frw’000

Other liabilities 1,865,552 759,392 At 1 January 484,984 - 4,246,576 3,677,430 Additions 60,518 523,269 Finance costs 72,433 67,450 Repayments (195,341) (105,735) At 31 December 422,595 484,984

Current 61,599 49,208 Non current 360,996 435,776 At 31 December 422,595 484,984

BETTER • SIMPLE • LIFE 103 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

NOTES TO THE FINANCIAL STATEMENTS

31. Related party transactions 31-Dec 31-Dec 32. Cash flow from operating activities 2020 2019 The Company is controlled by UAP Holdings Limited incorporated in Kenya. The ultimate parent and Frw’000 Frw’000 ultimate controlling party of the Company is Old Mutual Plc, incorporated in South Africa. There are other companies that are related to UAP Insurance Rwanda Limited through common shareholdings or Profit before income tax 1,854,606 1,109,095 common directorships. Adjustments for:

The following transactions were carried out with related parties: Depreciation 56,141 134,736 Investment income (1,485,253) (1,160,133) 2020 2019 Accruals and provisions Frw’000 Frw’000 Amortization charge on intangible assets 4,573 711 a) Directors remuneration Depreciation ROU 125,973 Directors’ fees 72,075 77,407 Finance costs Lease Liability 72,433 b) Key management remuneration Salaries 345,307 271,916 Changes in working capital Other benefits 14,089 33,488 - Unearned premiums 680,388 561,310 - Insurance contract liabilities 513,148 (856,317) 359,395 305,404 - Reinsurance creditors 92,290 (1,846,505) c) Purchase of services - Premium debtors 282,964 (192,214) Group shared services costs payable 1,537,141 2,343,392 - Reinsurance share of technical reserves (309,841) 1,126,482 d) Outstanding balances with related parties - Reinsurance receivables 16,483 (159,244) Amounts receivable from the related parties (229) ( 232) - Other assets 23,175 55,980 Amount payable to related parties 1,537,370 2,343,624 - Deferred acquisition costs 68,118 (60,805) 1,537,141 2,343,392 - Other payables and provisions 569,146 2,387,413 Cash generated from / (used in) operations 2,564,344 1,100,509 The amounts payable and receivable arise from the normal operations of the business and are short term in nature. 33. Contingent liabilities

In common with the insurance industry, the company is subject to litigation arising in the normal course of insurance business. Other than the amounts already provided for, the directors are of the opinion that these litigations will not have a material effect on the financial statements of the Company.

34. Impact of Covid 19 to the Company

The Covid 19 pandemic had significant financial impact on the business mainly in • Budget achievement - the business achieved only 94% of its 2020 targets due to clients impacted by the lockdown measures that could not renewal their covers and minimized new business opportunities as the economic growth was negatively impacted.

• Debtors and collections - the pandemic affected clients ability to promptly pay their premiums as all business took measures to manage their liquidity risks. As a result we saw growth in outstanding debts necessitating carrying of higher provisions.

• Claims experience - wiht the raft of measures taken by the Government of Rwanda especially the lockdown and curfew, the claims volumes dropped due to reduced hospital visits and also movements with vehicles reducing accidents.

BETTER • SIMPLE • LIFE 105 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

NOTES TO THE FINANCIAL STATEMENTS

I. Calculation of Solvency Margin II. B Deductions for Assets Subject to Maximum Admissible Percentages Required Solvency Margin Amount Maximum Gross premium less reinsurance ceded last preceding year 8,561,534,740 Admissible Solvency Margin Required: 20% of 1.1 or Rwf 500 million whichever is greater 1,712,306,948 Required Solvency Margin Amount Percentage Deductions Compliance with Solvency Margin A B (A less AXB) Total Assets 20,807,686,297 Investment in equities, listed 12,000,000 90% 1,200,000 Less: Non-Admitted Assets as per II.A.7 537,879,984 Investment in equities, unlisted - 70% - Less deductions for assets subject to maximum admissible % as per II.B.7 1,292,048,080 Investments in debt securities - 70% - Admitted Assets I.3 less I.4 and I.5 18,977,758,233 Investments in properties - 80% - Less admitted Liabilities as per III.C.3 14,261,197,235 Receivables from reinsurers which are not - 90% - Solvency Margin Available (I.6 less I.7) 4,716,560,998 overdue Excess or (Deficiency) of solvency required (I.8 less I.2) 3,004,254,050 a) All other assets (total assets less II.A.7 20,257,806,312 Solvency Coverage Ratio (I.8 divided by I.2) 275% and II.B.A 1,2,3,4 and 5) II.A. Non -Admitted Assets Less: Intangible assets 8,434,977 (-) cash 1,614,095,872 Exposures (Loans& Investments) to connected persons 63,753,844 (-)Deposits balances 7,411,906,853 Loans to insurance intermediaries overdue for more than 6 months - (-)Government securities 8,650,107,428 Receivables from reinsurers overdue for more than 6 months - b) All other assets subject to maximum % 2,581,696,159 50% 1,290,848,080 Loans and other receivables overdue for more than 6 months - Total deductions (Add II.B.1,2,3,4,5 and 6b) 2,593,696,159 1,292,048,080 Deferred expenses, deferred taxes and prepayments 465,691,163 Total Non-Admitted Assets (add II.A.1 to 6) 537,879,984 III. C Admitted Liabilities Amount Additional on Balance percentage Admitted Sheet factor liabilities A B (A plus AXB)

Technical Provision 4,811,614,709 10% 5,292,776,180 - Unearned premium 10% - - Unexpired risk 2,779,077,359 10% 3,056,985,095 - Outstanding claims 753,885,256 10% 829,273,781 - IBNR 5,082,162,179 none 5,082,162,179 All other liabilities (Total liabilities less 4,811,614,709 10% 5,292,776,180 Technical Provisions) Total Admitted Liabilities 14,261,197,235

BETTER • SIMPLE • LIFE 107 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

Health Health 471,851 471,851 418,449 418,449 1,165,519 1,165,519 494,515 238,707 238,707 636,521 4,131,227 3,187,514 3,187,514 7,156,239 7,156,239 4,811,615 3,019,814 3,019,814 8,561,535 8,561,535 3,569,917 3,569,917 3,187,514 3,187,514 4,131,227 11,127,599 11,127,599 1,412,825 1,412,825 Frw’000 Frw’000 2,227,272 2,227,272 3,876,881 3,019,814 3,019,814 2,505,283 6,215,386 3,007,366 3,007,366 2,465,077 2,465,077 2,227,272 2,227,272 2,465,077 2,465,077 3,532,963 6,299,172 6,299,172 3,578,393 3,578,393 4,868,218 9,556,687 9,556,687 5,540,480 5,540,480 1,015,862 1,015,862 2,720,007 2,720,007 11,995,711 11,995,711 9,929,768 9,929,768 2,838,490 2,838,490 8,671,293 7,640,598 7,640,598 7,879,304 7,879,304 4,760,386 4,760,386 9,165,808 9,165,808 5,360,953 5,360,953 12,676,098 12,676,098 6,728,534 6,728,534 10,566,289

10,979,849 10,979,849

130,518 130,518 117,272 117,272 Health Health 337,642 337,642 647,852 647,852 337,642 337,642 643,868 643,868 723,853 647,852 647,852 (61,471) 782,646 782,646 1,684,721 1,684,721 857,952 857,952 6,319,655 6,319,655 1,452,243 1,452,243 1,452,243 1,452,243 Frw’000 Frw’000 2,443,451 2,443,451 657,944 657,944 1,004,041 1,004,041 1,401,545 1,401,545 1,401,545 1,401,545 1,439,090 1,439,090 5,232,105 1,050,373 1,050,373 6,229,560 2,296,885 4,852,599 2,908,796 8,002,230 5,707,491 5,707,491 7,053,095 7,053,095 6,112,026 6,112,026 2,453 3,285,590 4,148,206 2,296,885 5,438,322 2,908,796 5,768,962 5,768,962 5,634,627 5,634,627 7,534,433 7,534,433 4,186,200 7,536,886 7,536,886 7,760,024 2,580,009 2,580,009 8,994,770 8,994,770 6,769,970 6,769,970 8,617,976 8,617,976 4,593,210

6,181 6,181 8,318 11,823 2,775 2,775 18,219 114,116 82,719 13,164 13,164 82,719 8,864 34,051 32,226 24,010 24,010

99,952 99,952 39,330 39,330 114,116 13,685 13,685 13,685 13,685 19,679 19,679 66,895 13,164 13,164 8,300 38,200 32,597 32,597 57,715 57,715 31,222 Misce- Misce- (11,381) 66,895 113,583 53,910 53,910 36,498 36,498 63,680 63,680 38,200 44,385 227,303 227,303 35,965 35,965 26,663 26,663 82,247 82,247 9,070 136,746 136,746 251,289 (4,559) 124,826 136,344 (21,019) 139,962 139,962 (80,441) 260,360 260,360 Frw’000 Frw’000 llaneous llaneous

Theft Theft 12,578 12,578 12,578 12,578 16,835 24,710 24,710 25,271

111,945 111,945 32,617 32,617 31,035 31,035 26,477 26,477 31,502 31,502 85,195 85,195 85,195 85,195 29,463 29,463 16,835 20,639 20,639 49,566 49,566 24,093 24,093 20,650 20,650 54,620 24,710 24,710 115,817 41,981 41,981 123,732 123,732 33,246 33,246 27,465 27,465 66,276 66,276 20,639 20,639 119,775 119,775 49,566 49,566 149,355 149,355 24,920 24,920 19,509 45,809 31,409 154,108 53,894 8,854 83,990 119,775 119,775 119,775 119,775 112,983 (1,776) 115,398 171,706 171,706 105,421 160,421 160,421 (19,546) 134,599 Frw’000 Frw’000 (47,439) (66,286)

7,101 7,101 7,305 7,305 7,305 7,305 20,152 20,152 85,315 5,522 5,522 13,454 13,454 20,130 20,130 13,454 13,454 20,152 20,152 29,197 29,197 23,862 29,197 29,197 83,569 18,347 18,347 20,130 20,130 48,362 23,884 45,061 45,061 40,728 40,728 196,591 40,728 40,728 19,948 19,948 33,025 33,025 33,025 33,025 191,862 44,027

45,705 45,705 43,589 43,589 115,236 40,297 40,297 98,812 113,428 113,428 171,630 171,630 171,630 171,630 97,564 97,564 94,252 151,982 248,881 222,319 102,556 102,556 246,234 9,722 9,722 217,449 217,449 9,722 9,722 150,069 150,069 Frw’000 Frw’000 (119,763) accident accident Personal Personal Personal Personal (119,884)

986 986 (511) (511) 5,750 5,750 1,962 1,962 3,950 3,950 2,453 2,453 3,950 3,950 10,275 10,275 21,997 21,997 10,275 10,275 49,123 49,123 47,618 47,618 23,891 27,141 27,141 20,724 20,724 37,727 37,727 85,223 81,810 111,617 111,617 25,690 25,690 24,250 26,007 26,007 86,744 86,744 84,159 39,022 27,458 27,458 108,951 (18,157) (57,180) (60,969) Frw’000 Frw’000 (23,243) 6,749 6,749 Workmen’s Workmen’s Workmen’s Workmen’s

16,523 45,931 45,931 16,050 16,050 5,750 5,750 85,223 8,549 8,549 52,064 52,064 86,744 86,744 compensation compensation 30,171 30,171 91,644 91,644 38,225 Motor Motor 90,288 90,288 Motor Motor 65,163 65,163 277,410 277,410 88,682 88,682 150,823 150,823 179,027 179,027 150,823 150,823 514,432 514,432 273,332

87,369 87,369 749,475 87,369 87,369 (17,910) 649,722 649,722 583,605 583,605 88,682 88,682 109,236 109,236 58,488 208,989 159,100 159,100 161,490 161,490 109,854 109,854 437,126 437,126 (14,133) 276,250 276,250 230,183 230,183 514,432 514,432 186,239 186,239 872,710 643,146 643,146 453,171 453,171 204,912 649,722 649,722 280,373 430,657 430,657 Frw’000 298,283 290,383 290,383 364,318 333,626 333,626 578,353 578,353 358,926 358,926 Frw’000 704,573 704,573 (219,427) (340,255) commercial

commercial

81,954 Motor Motor 411,310 411,310 Motor Motor 373,183 373,183 105,734 105,734 417,489 417,489

private 525,588 525,588 473,013 473,013 150,913 150,913 131,206 1,161,457 1,161,457 466,027 466,027 512,767 512,767 876,154 876,154 private 58,027 58,027 499,898 499,898 1,121,860 1,121,860 341,745 341,745 1,167,722 1,167,722 499,898 499,898 391,787 391,787 473,013 473,013 701,266 701,266 701,266 701,266 174,373 1,035,111 1,035,111 483,373 1,125,506 1,125,506 1,105,243 1,105,243 974,441 974,441 520,456 520,456 301,392 301,392 295,674 295,674 128,959 466,027 466,027 Frw’000 232,237 (22,669) (22,669) 1,083,948 1,083,948 1,125,506 1,125,506 Frw’000 1,211,599 1,066,336 1,259,042 1,259,042 1,153,572 1,153,572 1,089,005 1,089,005

1,083,948 1,083,948 1,193,669 1,193,669 1,240,409 1,240,409 1,050,527 1,050,527

1,064,710 1,064,710

900 9,493 18,172 18,172 14,135 14,135 11,943 11,943 1,067 1,067 16,871 15,527 15,527 9,493 54,919 14,027 17,341 17,341 14,027 25,376 25,376 4,617 10,101 10,101 11,943 11,943 15,014 15,014 17,341 17,341 23,213 7,264 7,264 24,602 24,602 60,121 60,121 22,301

15,660 15,660 15,690 15,690

61,771 61,771 27,633 27,633 37,857 37,857 59,565 59,565 102,747 102,747 31,786 96,317 36,196 36,196 69,751 69,751 34,853 34,853 22,663 22,663 24,602 24,602 Marine 1,436 1,436 Marine 40,184 40,184 (3,207) 60,953 60,953 54,449 (8,797) (21,586) Frw’000 461 Frw’000 2,303

1,271 1,271 13,177 13,177 13,177 13,177 23,331 23,331 37,737 37,737 91,511 13,177 13,177 13,177 13,177 (605) 11,302 38,426 74,858 74,858 5,857 5,857 17,763 17,763 147,918 147,918 30,604 30,604 33,015 33,015 44,038 44,038 92,105 92,105 63,505 42,715 63,505

339,511 339,511 39,166 39,166 36,965 108,442 108,442 30,638 56,888 245,838 245,838 (23,193) 122,150 156,882 212,254 104,247 104,247 104,247 104,247 291,071 291,071 108,442 108,442 Liability Liability 169,540 136,658 136,658 175,824 175,824 Frw’000 166,992 204,424 124,079 124,079 Liability Liability (24,654)

Frw’000 595

595

Fire Fire Fire Fire

1,414 1,414 99,731 99,731 75,831 75,831 23,024 23,024 45,334 87,866 87,866 46,538 99,078 71,902 57,258 57,258 109,951 109,951 93,727 93,727 109,951 109,951 77,057 77,057 119,733 119,733 119,733 119,733 122,474 122,474 175,230 175,230 145,215 171,383 314,302 191,193 48,310 134,718 58,055 58,055 259,905 259,905 122,474 122,474 205,631 205,631 174,822 174,822 (4,762) 314,302 801,578 801,578 501,732 501,732 171,383 326,499 326,499 192,972 201,703 201,703 (24,396) 189,779 189,779 260,186 260,186 143,648 143,648 646,461 Frw’000 386,276 386,276 308,759 Frw’000 500,989 500,989 111,754 111,754 172,125 172,125 Industrial 71,902

Industrial

Fire Fire 823 Fire Fire 6,257 7,591 7,591 7,591 7,591 15,152 15,152 5,919 5,919 30,231 30,231 27,461 27,461 15,152 15,152 19,328 19,328 27,461 27,461 17,968 17,968 17,402 17,402 34,195 16,920 20,702 39,005 39,005 39,185 39,185 30,231 30,231 59,143 59,143 29,802 29,802 15,982 17,402 17,402 18,588 33,602 33,602 56,939 24,797 24,797 22,645 22,645 29,234 29,234 29,234 29,234 37,010 37,010 24,706 24,706 56,371 56,371 71,586 29,802 29,802 24,862 58,146 58,146 32,772 32,772 42,305 68,953 86,607 86,607 38,000 38,000 90,600 90,600 (29,281) (31,942) Frw’000 (53,835) Frw’000 (52,600) 823 domestic domestic

6,149 6,149 7,772 7,772 15,710 15,710 41,041 41,041 41,041 41,041 21,416 21,416 9,940 9,940 41,748 41,748 21,108 21,108 60,810 60,810 36,683 36,683 34,738 34,738 10,543 10,543 10,543 10,543 41,748 41,748 54,161 34,738 34,738 153,761 153,761 82,859 83,889 16,509 44,736 44,736 54,469 75,782 75,782 55,299 127,534 127,534 140,158 140,158 95,730 57,460 57,460 (21,621) 222,280 184,894 298,215 324,442 324,442 281,706 281,706 (38,270) 188,304 Frw’000 Frw’000 21,108 21,108 127,534 127,534 16,592 61,976 61,976 28,147 28,147 212,206 100,222 100,222 32,387 33,240 33,240 38,306 38,978 38,978 Engineering Engineering Gross Claims outstanding:Gross Gross Claims outstanding:Gross Net Claims outstanding: Commission Management expenses expenses Total Net Claims paid 31 December At Net underwriting profit Net earned premium Net earned 1 JanuaryAt Net Claims incurred Gross underwritingGross profit premium Net written Unearned premium premium Unearned 1 January premium Unearned 31 DEC Gross Claims incurred Gross Commission Management expenses expenses Total Net underwriting profit Gross written premium written Gross 1 premium Unearned January Unearned premium 31 premium Unearned DEC earned Gross premium Claims paid Gross 2019 31 December At 1 JanuaryAt 2019 Gross written premium written Gross Unearned premium 1 premium Unearned January 31 premium Unearned DEC Gross earned earned Gross premium Gross Claims paid Gross At 31 December 2019 31 December At At 1 JanuaryAt 2019 Gross Claims incurred Gross Commission Management expenses Total expenses Total Gross underwritingGross profit Net written premium Net written Unearned premium premium Unearned 1 January premium Unearned 31 DEC Net earned premium Net earned Net Claims paid Net Claims outstanding: At 31 December At At 1 JanuaryAt Net Claims incurred Commission Management expenses Total expenses Total REVENUE ACCOUNT 2020 ACCOUNT REVENUE 2019 ACCOUNT REVENUE

BETTER • SIMPLE • LIFE 109 UAP INSURANCE RWANDA | 2020 Annual Report and Financial Statements

BETTER • SIMPLE • LIFE 111 LIVING EXCEPTIONALLY STARTS TODAY

BETTER • SIMPLE • LIFE